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Tribal economic relations in the shadow of NLRA

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The current trend in American Indian reservation economic development tends toward tribal government ownership and management of business. Until a few decades ago, most businesses on Indian reservations were owned by non-Indians. In recent years, patterns of business ownership on reservations have shifted toward tribal enterprises and more local tribal businesses. Although models of independent entrepreneurs are easily found with the U.S. economy, many tribal communities, with community organization and values not directly supportive of individual market engagement, prefer to manage business through tribal governments, through tribal corporations or through economic development agencies. Some interesting examples are the Alaska Native Corporations; Ho-Chunk Inc., operated by the Winnebago Tribe of Nebraska; or Pechanga Development Corporation. This is not to say that some tribal communities may elect now or in the future to support individual tribal enterprise, but for the moment, tribal communities seem to prefer more community-based economic investments and returns. Tribal communities prefer more tribally based methods of political-economic organization, and more emphasis on redistribution of market-accumulated wealth within the community. Most tribal leaders now agree that the path to greater cultural autonomy and exercise of self-government will require capability to acquire economic assets and wealth through participation in the national and international market.

The path to economic self-sufficiency and government self-determination, however, will not be so straightforward for many - perhaps the most successful - tribes. As tribal government enterprises and individual tribal businesses gain momentum, they may run into more regulation by federal and state agencies. Such engagement with greater federal regulation is not the vision for greater tribal self-sufficiency and tribal government capability that most tribal communities want to obtain. Nevertheless, federal regulation of increasingly successful tribal economic enterprise is on the horizon, and tribal leaders and communities will need to negotiate a path that accommodates regulation and fulfills tribal cultural, political and economic needs.

On Feb. 9, 2007, the District of Columbia Circuit Court ruled that the National Labor Relations Act applied to casino operations owned and managed by the San Manuel Band of Serrano Indians. In the language of the NLRA, San Manuel Casino was an employer, and not a tribal government. The San Manuel lawyers have not tried to appeal the case to the Supreme Court, fearing the facts of the case may incur even more disadvantageous court decisions.

Several longstanding precedents were reinterpreted in the labor relations case. American Indians argue that tribal governments have inherent rights to self-government that precede the formation of the United States, and are preserved through treaties and other agreements. The Supreme Court, however, has not supported this argument of inherent rights to self-government, but uses a model more akin to American political and legal theory that suggests laws and rights are negotiable and change over time. Consequently, American Indian government powers must also change according to new political and economic conditions. So what has changed, and why is the NLRA applied to Indian country when it was never applied before?

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The main legal basis for congressional powers in Indian relations is the Commerce Clause in the Constitution which empowers Congress to regulate trade with the Indians. In the 1780s, when the Constitution was written, the primary purpose of the Commerce Clause was to centralize control over Indian affairs in the federal government, and in this way prohibiting states from making Indian policy, treaties or land transactions with Indians. Regulating commerce with Indians meant making commercial and trade agreements, but not regulating internal labor issues in Indian country. Now tribal communities are actively engaged in approaching the marketplace, and gaming is a major means of doing so. Furthermore, in its most lucrative form, Indian gaming caters to a large non-Indian customer base. Furthermore, most highly successful tribal casinos employ thousands of non-Indian employees. Similarly, many reservation communities nowadays have majority non-Indian populations. The non-Indians significantly outnumber Indians on many reservations, especially those with significant-size towns on or near the reservation. In the Oliphant v. Susquamish Indian Tribe case, decided by the U.S. Supreme Court in 1978, the majority opinion argued that the United States never intended that non-tribal U.S. citizens would be subject to the laws and courts of Indian governments. Therefore, tribal courts cannot prosecute non-tribal U.S. citizens for criminal offenses. In the San Manuel labor relations case, the majority of employees are non-Indians. The Hotel and Restaurant Employees union argued that San Manuel was employing unfair labor practices, since the tribe was not conforming to the rules and processes of the NLRA and the National Labor Relations Board.

The D.C. circuit court ruled on the case in a way that it believes preserved tribal sovereignty. The ruling affirms that tribal governments do not have jurisdiction over non-Indian U.S. citizens, which describes most of San Manuel's casino employees. The NLRA excludes state and local government employees, and allows state and local governments to manage their own labor relations. This exception to the NLRA is not affirmed for tribal governments, since according to the court, the extension of the NLRA to tribal governments does not impair any treaty, does not impair any purely intramural tribal issues, and there is no explicit congressional intention that the NLRA not apply to Indian country (Donovan v. Coeur d'Alene Tribal Farm, 1960). Consequently, general statues can apply to Indian country without impairing tribal sovereignty (Federal Power Commission v. Tuscarora Indian Nation, 1985). According to this view, if tribal governments and enterprises employ or are engaged in business with primarily non-Indian U.S. citizens, then, most likely, U.S. federal law and not tribal law will prevail over labor and economic relations in significant sectors of reservation economies.

Does this mean the end of tribal sovereignty? Perhaps not, but the exercise of tribal sovereignty will be different. Many tribal communities may decide that businesses that serve significant non-Indian populations will need to be restricted to specific economic development zones, like casinos. Some tribal communities may choose to engage only in market enterprises that do not attract significant numbers of non-Indian employees or on-reservation non-Indian customers. Some tribal governments have enhanced tribal authority by transforming minor criminal offenses into civil offenses where tribal courts retain authority over non-Indians on reservations. Increasingly, tribal communities may have to accommodate multiple criminal and labor codes on reservations, where federal and/or state laws apply to non-Indian U.S. citizens, and tribal laws apply to tribal members.