Advancing the harmonization of economic sovereignty in Indian country


At a recent conference on gaming law that focused extensively on the
relationship between Indian country and its local and state neighbors, one
speaker stood out by emphasizing that every tribe and every situation is
different. It is trite but important to endorse this simple observation in
the context of tribal sovereignty because of the invaluable treasure of
diverse Native cultures and customs that have populated the Americas since
time immemorial, and because sovereignty and collective identity feed into
each other.

Professor Joseph Kalt complemented this observation in an important way at
the recent RES 2005 conference when he reported some of the findings of the
Harvard Project on American Indian Economic Development. Kalt stated that
the impetus for, and sustainability of, modern tribal economic development
-sometimes referred to as "economic self-determination" or "economic
sovereignty" - are wholly dependent on the legitimate implementation and
development of a tribal community's collective values. These are achieved

Accountable public decision-making;

The exercise and assertion of sovereignty (i.e., collective
self-determination in the interests of community survival) as a driver of a
distinct social culture within the community and of responsive governance
institutions in that community;

A match between the social culture of the community and the self-directed,
self-legitimized institutions of the community; and

Leadership possessed of vision, knowledge of the tools with which to
implement vision and the capacity to educate the community in those

The important surprise in the Harvard Project's report was the indication
that it is not material wealth that is the foundation upon which
sustainable economic sovereignty is based, but rather other key aspects of
self-determination and self-governance. These reside more in the nature of
collective identity and collective organizational processes that best
facilitate sustainable economic sovereignty.

These issues are of critical importance not only to individual tribes in
their deliberations, but to Indian country as a group of interested
societies and governments. They are so important because, as Kalt noted,
tribal sovereignty is under attack in the courts, in the policies of
competing non-tribal governments and in many aspects of the surrounding
non-Indian mainstream community's political ethos, where individual rights
have replaced collective rights as a priority.

Indeed, the tribal governments with whom this writer discussed these
issues, casino owners or not, proudly identified sovereignty as a core
value that would in no way be compromised and would be protected at all

One need only refer to a column written last year for Indian Country Today
by Anthony Pico, chairman of the Viejas Band of Kumeyaay Indians, in which
he stated: "As the Viejas Band of Kumeyaay Indians moves forward on the
path to economic viability, I have come to learn some valuable political
lessons. The first is that sovereignty is the most important attribute we
have, and that the purpose of tribal government programs and enterprise is
to enhance our sovereign right to self-governance."


The enduring challenges associated with a historical war waged by tribes
against institutionalized educational deprivation, entrenched poverty,
collective dispossession and displacement, and cultural and social genocide
have begun to give way to the tenuous promise of an emerging era of
peaceful self-regeneration for Native people. Many Indian nations are
availing themselves of economic springboards -including but not limited to
gaming - which have permitted them to pursue the complex path toward the
kind of economic self-determination that the Harvard Project considers.

In this emerging environment of cautious optimism, a great tribal challenge
is to balance individual historical identity and modern interests with
inter-tribal solidarity in addressing the shifting policy framework that
will define the future of economic sovereignty in Indian country.

That balancing process will probably define the nature and scope of
economic sovereignty throughout Indian country in view of a plethora of
minefields that mar the path forward. The core minefield is the challenge
to tribal sovereignty that threatens to narrow the emerging recognition of
economic sovereignty that only began to appear a short time ago.

Other minefields include not only external threats but also internal
challenges, including:

The danger of being relegated to the collective status of an otherwise
legally and politically indistinguishable minority interest;

The danger of being shamed in the mass media for emerging tribal government
and Native entrepreneurial success stories;

The insidious danger of once again being divided and conquered in response
to unwarranted measures that would attempt to split apart common tribal
economic policy interests;

The danger of falling prey to the illusion that a limited window of cash
flow from profit-rich sectors will, in itself, substitute for the
implementation of the culturally-informed procedural and organizational
institutions that build and sustain a socially cohesive community;

The danger of reliance on such a cash flow as a substitute for a
diversified economic development strategy;

The danger of failing, today, to reinforce a collectively fertile Native
economy by failing to seed the promising start-up opportunities of tomorrow
conceived by Native entrepreneurs and sister nations alike; and

The failure to affirm that common tribal ground must be sought, as a
collective priority, to define a broader community of policy and economic
interests, and to identify those unacceptable policies pursued by competing
non-tribal authorities and institutions which would inappropriately limit
American Indian economic sovereignty and self-determination.

Perhaps the advisability for Indian nations to ardently pursue such
solidarity is best exemplified by a meeting of Western governors in Denver
at the end of this month at which the agenda is expected to focus on issues
relating to the recognition of Indian lands, including lands for use in
tribal casino developments. This subject matter is perhaps a classic case
for consideration of the themes of sovereignty, collective Native interests
and tribal solidarity raised above.


State governments, which are generally suffering from the hangover of
monumental fiscal deficits, tend to hold American Indian nations ransom to
substantial participation fees in relation to proposed new casino compacts,
in an unbalanced bargaining environment endorsed by certain court
decisions. Such decisions have held that state governments, by merit of
governmental immunity, are not accountable to observe "good faith"
standards, much less the fiduciary trust obligations borne by the federal

The federal government, for its part, purports to exercise its fiduciary
trust duty by endorsing tribal compacts which grant participation rights to
states, and the related recognition of "new" Indian lands for casino
development purposes, only in circumstances where a tribe receives
"valuable consideration" from the state, over and above the inherent value
of the gaming license contemplated by the compact. Such "valuable
consideration" is usually characterized as a preferred location benefit
and/or a general or limited "exclusivity" benefit of some kind.

The slippery slope towards a degraded and inequitable compact negotiation
process, in which such so-called "benefits" continue to be more and more
limited (usually at the expense of a group of tribes thrust into a
competitive position against each other for the resources of location and
other market advantages) and in which state demands for percentage
participation concessions continue to grow in size, is threatening to
accelerate rapidly, contrary to the common interests of Indian country.

It is of concern that such states are benefiting from what some have termed
"excessive" participation fees which seem to be moving in an even more
excessive direction with each successive new compact.

The view that such state participation levels are excessive is best
illustrated with reference to the fact that a currently popular state
participation rate of 25 percent of gross revenues (or "win") is
substantially in excess of the combined levy of most state corporate tax
rates plus any state-imposed gaming licensing fee rates (currently just
over 6 percent in Nevada) charged to non-tribal commercial gaming
companies. This prompted one speaker at the conference to comment that even
though tribes are not legally subject to state taxes as a function of
sovereign immunity, they would be better off, fiscally, to have acceded to
such taxes as a standard because they are now being cornered into the
position of paying even higher participation fees due to inequities in the
respective bargaining positions.

A noteworthy point made by Seattle attorney Deborah Juarez is that many
tribal casinos, existing and planned, have only secondary or tertiary
locations and only moderate margins which could suffer undue hardship under
excessive state participation demands, and the absence of state exclusivity

Accordingly, one alarming concern is that a state may indirectly lead
successful incursions into the field of tribal sovereignty, notwithstanding
that, as many advocate, economic sovereignty in particular should be better
compartmentalized and respected in view of historical injustices and simply
on principle. After all, gaming is a tribally-operated economic development
project of a type whose legitimacy was based on court-made authority (under
the 1988 Cabazon case) which recognized the sovereign right of tribes to be
free from state interference in their gaming economies.

However, this concern over sovereignty does not even consider the
additional, significant background issue arising from the fact that various
states are purporting to grant compacts and locations in satisfaction of
outstanding tribal land claims and to demand, in addition to the benefit of
the extinguishment of any state liability related thereto, "excessive"
participation fees.

It is advisable, then, that any compact negotiation process and Indian land
set-aside negotiation should involve the isolation and theoretical
compartmentalization of each and every type of "benefit" granted by a
state. In this way, a tribe may evaluate and differentiate a "fair"
allocation of each such "benefit" to either the "land claim" account under
which it should be receiving benefits as of right (and respecting which it
should not theoretically be expected to grant gaming revenue percentage
rights to states), or the "compact" account, under which it may (or may
not) be receiving benefits of location, exclusivity or other "market
advantage" respecting which the tribe may be legally asked to grant gaming
participation concessions.

(Note that on a purely logical analysis, such a benefit would properly be
considered a "benefit" for "concession-giving" purposes only if the benefit
were to provide market advantage over and above the sovereignty-protected
platform the tribe should otherwise enjoy by merit of the location of its
traditional tribal lands or existing reservation.)

Kevin Washburn, a University of Minnesota School of Law professor, made the
point in his address that compact agreements need to be rigorously
rationalized in terms of the quantification of "benefits" granted by a
state under any such negotiation for purposes of BIA approval, in order to
ensure standards of fairness in the bargaining process between tribal
nation and state, and in order to arrest the "slippery slope" danger
through prudent BIA exercise of administrative powers and duties.

I would further suggest that American Indian nations might be well-advised
to take the initiative and assert sovereignty by collectively establishing
recommendations as to quantification standards regarding the measurement of
"benefits" to evaluate fair and reasonable state participation levels in
order to arrest the acceleration of the slippery slope.

In any event, the following questions have been raised by tribal leaders as
a result of the foregoing concerns:

Where is the recognition of tribal sovereignty today?

Where is the established legal canon of construction that provides that
statutes such as the Indian Gaming Regulatory Act (IGRA) should be
construed in a manner consistent with the historical
government-to-government relationship and the fiduciary trust obligation,
such that it is broadly and liberally applied in favor of tribal interests?

Do the IGRA and/or the policies underlying its application need to be
re-engineered in order to better address these issues?

And are states being permitted to "double dip" by simultaneously resolving
liabilities pertaining to historical land claim disputes while benefiting
from increasingly excessive participation in tribal casino revenues in
exchange for integrated, so-called "benefits" which ignore tribal
sovereignty, historical injustices and, some would say, the mutual respect
that is supposed to characterize government-to-government relations?


It is interesting to note the rationalization message of one speaker, an
adviser to a governor who has been particularly expressive in his view that
his state is only trying to restructure an environment in which tribal
interests will be required to pay their "fair share." The rationalization,
in this adviser's words, was based on a treaty theory endorsed by Dr. Henry
Kissinger and based on the European peace treaty model that followed the
Napoleonic wars of the 1800s. The theory propounds that any post-war treaty
settlement must be expressly designed to leave both sides at the table with
certain reservations, such that while being substantially satisfied and
invested in maintaining the bargained peace, neither side has been wholly
appeased, in order to avoid a one-sided settlement that would result in an
unstable dynamic in which the wounds of war would fester and give rise to a
renewal thereof.

Responding to this view at a subsequent public address at the same
conference, an interesting comment emerged from Mark Van Norman, executive
director of the National Indian Gaming Association. Van Norman noted that
the historical framework and theoretical mindset for the treaty theory
endorsed by that governor was more or less contemporaneous with the
historical framework and governmental mindset in which the Emperor Napoleon
purported to sell to the United States those North American lands
contemplated by the Louisiana Purchase ... and that the Louisiana Purchase,
which was conducted without consent or consultation on the part of American
Indians, was conducted with total disregard for the realities of the
sovereign tribes' continuous use and occupation of those lands since time

The suggestion is that the genesis of this governor's underlying
theoretical basis for supporting state incursions into asserted American
Indian sovereignty on the issue of participation in Native casino revenues
is not only archaic, but also inappropriate in worldview and, at the very
least, historically insensitive to the tribal perspective. These concerns
over the fact that this archaic worldview seems to be informing the state
perspective on issues of current vital interest to Indian country is also
surprising, from the perspective that it appears to be used to justify
efforts to re-characterize the reality of casino-related state
government-to-tribal government relationships, from a strictly pragmatic
state deficit reduction campaign into some kind of postwar stabilization
effort. And, incredible as it seems, the implication is that this state is
the unstable loser of the "war" that has inspired the aggressively shifting
position of that state and some other states in respect of the IGRA
"treaty," such that the failure of the state to rebalance in its own favor
a progressively greater entitlement respecting tribal casino revenues, will
somehow contribute to a failure in the peace supported by that "treaty."

Let us revisit the questions of war and peace, what is the war, and where
can the peace be found for present purposes.


If the Native view of the "war" is that it has been, for centuries, a war
against educational deprivation, poverty, collective dispossession and
displacement, cultural and social genocide, breaches of trust and other
documented injustices; and if it is true that there has been a tenuous
emergence into a limited victory over the alleviation of some of these
conditions in some places for some of the Native community; and if the
opinion represented by this state referred to above is that a new treaty
dynamic needs to emerge from this Native "victory" which is necessary to
secure the peace; one must wonder whether the Native message to this state
and all others involved should not be that Native nations would
collectively prefer to "win the peace" than accede to yet another "treaty"
with uncertain parameters and a divisive and slippery slope.

If this is the case, and the Native community would prefer - as some have
advocated - to pursue the reform of the IGRA and/or the rules, policies and
procedures pertaining to the implementation of IGRA as would be required to
better respect inherent tribal sovereignty and require a more accountable
state standard for the process of implementation of compacts under IGRA,
then that process might be saved from the danger of descending into a
commercial morass in which sovereign American Indian nations are reduced to
being allocated preferred casino locations in exchange for their ability to
produce the highest financial bid: a result that would reflect anything but
tribal economic sovereignty.

Would it not be the higher achievement to win the peace, in the interests
of American Indian sovereignty and solidarity, in the interests of the
historical tribal entitlement to federal fiduciary respect, in the
interests of the correction of historical injustices and in the interests
of stability and legitimacy in the historical government-to-government
relationship? We must recognize, however, that history informs us it is
often more challenging to win the peace than to win the war. This, if
nothing else, could well be the rallying message in favor of concerted
tribal solidarity as these issues unfold in Indian country.

Paul Frits is a Mohawk member of the Six Nations of the Grand River. He was
a member of the board of his First Nation's Business Development Corp.
through most of the 1990s and continues to be an honorary member of that
corporation. He practiced Native law for many years and represented many
tribal administrations' public governance matters and economic development
initiatives, including casino/hospitality, energy, natural resources,
services, manufacturing, telecommunications and information technology,
cultural and other industries. Frits took a sabbatical from practice in
2000 to pursue other interests, including volunteering his time to research
and write perspective columns on matters of interest to the Native