NIGA Member Tribes
Chairman Ernest L. Stevens Jr.
Jason C. Giles, Executive Director
Danielle Her Many Horses, Deputy Executive Director/General Counsel
Comment Period Ending on Whether to Update 25 CFR part 140, "Licensed Indian Traders"
April 5, 2017
On December 9, 2016, The Bureau of Indian Affairs published in the Federal Register an advance notice of proposed rulemaking to seek comments on whether to update 25 CFR part 140, "Licensed Indian Traders." Specifically, the notice seeks comments on:
- Should the Federal government address trade occurring in Indian Country through an updated 25 CFR part 140, and why?
- Are there certain components of the existing rule that should be kept, and if so, why?
- How can revisions to the existing rule ensure that persons who conduct trade are reputable and that there are mechanisms in place to address traders who violate Federal or Tribal law?
- How do Tribes currently regulate trade in Indian Country, and how might revisions to 25 CFR part 140 help Tribes regulate trade in Indian Country?
- What types of trade should be regulated and what types of traders should be subject to regulation?
- How might revisions to the regulations promote economic viability and sustainability in Indian Country?
- What services do Tribes currently provide to individuals or entities doing business in Indian Country and what role do tax revenues play in providing such services?
NIGA has a standing resolution calling upon the Interior Department to amend 25 CFR Part 140 to protect tribal governments and communities from the effects of the dual taxation that occurs under the current regulation and we encourage our member tribes to submit comments in favor of updating 25 CFR part 140 as under the current regulations Indian nations and tribes have struggled under a burden of dual state taxation that interferes with tribal tax collection in Indian country. The comment period closes on April 10, 2017. A model comment letter is attached.
The notice can be found here:
Comments may be mailed to Elizabeth K. Appel, Director, Office of Regulatory Affairs & Collaborative Action, Indian Affairs, U.S. Department of the Interior, 1849 C St. NW., Mail Stop 3642-MIB, Washington, DC 20240; or submitted electronically through the federal rulemaking portal(http://www.regulations.gov) where the rule is listed under the agency name "Bureau of Indian Affairs," and has been assigned Docket ID: BIA-2016-0007.
From the first days of the United States, Congress has regulated Indian Commerce through the Federal Indian Traders Statutes. The Supreme Court has held that the Federal Indian Traders Statutes pre-empt state taxation on Federal Indian traders and non-Indian business partners of Indian nations and tribes in relation to Indian Commerce. Warren Trading Post, (1965); Central Arizona Machinery v. Ariz. Tax Comm'n, (1980).
Yet, the Supreme Court has allowed dual state taxation in certain cases, such as Cotton Petroleum, (1989) without regard to the interference with tribal economic development.
Indian nations and tribes need a clear statement of support for tribal economic development:
The United States' Indian Self-Determination Policy promotes tribal self-government, economic development, and self-sufficiency. Indian tribes have authority to tax Indian Commerce on their Indian lands, and state taxation on the same subjects and transactions interferes with tribal self-government.
States may not tax Indian Commerce on Indian lands or between Indian lands.
If you have any questions, please contact Veronica Watters at firstname.lastname@example.org or 202-548-3803.
Ms. Elizabeth K. Appel, Director
Office of Regulatory Affairs & Collaborative Action
Indian Affairs, U.S. Department of the Interior
1849 C St. NW., Mail Stop 3642-MIB
Washington, DC 20240
Re: Docket ID: BIA-2016-0007, Comments on ANPRM for 25 CFR Part 140
Dear Director Appel:
On behalf of the [TRIBE/NATION] I submit the attached comments regarding the Department of the Interior's Advance Notice of Proposed Rule Making (ANPRM) issued on December 9, 2016 (see Federal Register V. 81, No. 237, 89105-89107), on whether the Department should comprehensively update the Bureau of Indian Affair's Licensed Indian Traders Regulations, codified at 25 CFR Part 140.
For several years, Indian nations and tribes have been at the forefront of calling upon the Secretary of the Interior to update and amend the Federal Indian Traders License Regulations to announce a clear policy of support for Indian Self-Determination, Economic Development and Economic Self-Sufficiency in order to promote tribal authority over Indian trade and commerce. Therefore, we appreciate the Department of Interior seeking input on undertaking this important endeavor. We attach the following statement to address your notice.
STATEMENT ON FEDERAL INDIAN TRADERS LICENSES:
The Bureau of Indian Affairs is conducting a consultation on whether and how to update the Federal Indian Traders License Regulations.
The Federal Indian Traders License system is older than the American Republic, having begun under British and Colonial governments. The Constitution empowers Congress to Regulate Commerce with the Indian Tribes. United States Constitution, Art. I, sec. 8, cl. 3.
The Federal Indian Traders License Statutes and Regulations are an integral part of Congress's regulation of Indian commerce under the Constitution, and these trade and commerce polices are set forth in Indian treaties as well.
Accordingly, the Secretary of the Interior should update the Federal Indian Traders License Regulations to promote the Indian Self-Determination, Economic Development, and Self-Sufficiency and accord Indian tribes the maximum discretion to enact tribal laws to regulate Indian commerce. Conversely, the Secretary should expressly preempt dual state taxation and state regulation of Indian commerce because that conflicts with Indian Self-Determination, tribal self-government, and economic self-sufficiency.
Indian nations were independent sovereign nations prior to the formation of the United States. In the Declaration of Independence, the United States of America declared that the foundation of American law is natural law:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.
The United States acknowledged Indian nations as prior sovereigns, see McClanahan v. Arizona Tax Comm'n, (1974), so the first American policy towards Indian affairs acknowledged the liberty and self-governance of Indian nations and tribes. The 1778 Treaty with Delaware Nation recognizes the Delaware as a nation, with the right of self-government and its own territory. In this first treaty, the United States pledges to secure a "well regulated trade" with the Delaware Nation.
The 1787 Northwest Ordinance provides, "The utmost good faith shall always be observed towards the Indians. In their liberty and property, they shall never be invaded except in just wars authorized by Congress." This early Indian nation-to-nation policy is enshrined in the Constitution's Treaty and Supremacy Clauses, which affirms the earliest treaties ratified by the Articles of Confederation and authorizes future treaties. More than 375 Indian treaties were ratified pursuant to the Constitution. The Northwest Ordinance was amended and re-enacted in 1789 by the Congress and President George Washington.
In the 1803 Louisiana Purchase Treaty, the United States pledged to honor existing International law treaties with Indian nations, until it entered treaties of its own based upon "mutual consent."
In 1825, the United States entered into a series of treaties with the Teton, Yankton, and Yanktonai Dakota, Cheyenne, Mandan, Hidatsa, and Arikara, wherein the United States promised to secure "fair and equitable trade" with the Indian nations and tribes.
In 1867-68, the Indian Peace Commission negotiated more than 30 treaties, acknowledging Indian nations and tribes as self-governing native sovereign nations with our own territory and laws and pledged to respect our reservation lands as the "permanent homes" of our native peoples.
The Constitution of the United States refers to the citizens of Native nations as "Indians not taxed," and we were excluded from voting because our people had our own governments: Indian nations. This recognition of tribal citizens as first and foremost "subject to the jurisdiction" of Indian nations and tribal law was repeated in the 14th Amendment Citizenship and Apportionment Clauses. When American Indians were made citizens by the 1924 Indian Citizenship Act, our people retained our tribal citizenship and our connection to our Indian nations.
FEDERAL INDIAN TRADERS LICENSES
Even before the Declaration of Independence, the Continental Congress had enacted Federal Indian Traders License laws in 1775, which built on the British law tradition established by the King of England in the 1763 Royal Proclamation. The Federal Indian Traders License Laws were carried forward under the Articles of Confederation.
Upon the Constitution's ratification, the first Congress once again enacted Federal Indian Traders License Laws:
In 1790, Congress passed a statute regulating the licensing of Indian traders. Act of July 22, 1790, ch. 33, 1 Stat. 137. Ever since that time, the Federal Government has comprehensively regulated trade with Indians to prevent "fraud and imposition" upon them. H.R. Rep. No. 474, 23d Cong., 1st Sess., 11 (1834)(Committee Report with respect to Indian Trade and Intercourse Act of 1834,ch. 161, 4 Stat. 729). In the current regulatory scheme, the Commissioner of Indian Affairs has "the sole power and authority to appoint traders to the Indian tribes and to make . . . rules and regulations . . . specifying the kind and quantity of goods and the prices at which such goods shall be sold to the Indians." 25 U.S.C. § 261. All persons desiring to trade with Indians are subject to the Commissioner's authority. 25 U.S.C. § 262.
Central Machinery v. Arizona Tax Comm'n, 448 U.S. 160 (1980). Against this background, the Supreme Court held that the existence of the Federal Traders License Statutes and not their enforcement, pre-empted state taxation of Indian tribes and Indian commerce.
Over the past several decades under the Indian Self-Determination Policy, the Secretary of the Interior deferred enforcement of the Indian Traders Regulations to provide Indian nations and tribes the opportunity to enforce our tribal business license laws. Now, it is time for the Secretary to make that policy express:
- Declare the Indian Self-Determination Policy;
- Announce that Indian Self-Determination, includes the Federal Policy promoting Indian Economic Self-Sufficiency, per President Reagan's Statement on American Indian Policy (1983); and
- Update the Federal Indian Traders License Regulations to provide modern protections for Indian commerce, and preempt dual state taxes and regulations; and
- Recognize that Tribal Business License Laws are Essential to Regulate Indian Commerce; and
- Delegate Authority to Indian Nations and Tribes to Enforce the Federal Indian Traders License Statutes and Regulations with the Support and the Assistance of the Secretary of the Interior.
Accordingly, we call upon the Secretary of the Interior to continue forward with the effort to modernize the Federal Indian Trade Regulations, venerable laws that go back to the very formation of the United States.
Concerning the specific questions posed by the BIA to Indian nations and tribes concerning the Federal Indian Traders License you will find our response below:
1. Should the government address trade occurring in Indian Country through updates and why?
Yes. Following the principal of self-determination, the regulation can and should recognize the tribe's authority to regulate Indian commerce on Indian lands. The legislative history of the 1834 Indian Trader law supports tribal self-regulation of trade. The House reported with respect to regulation of trade with and among tribes, "each tribe, by adopting those laws as their own, and establishing competent tribunals, may relieve us from the burden of executing them, and it is hoped that this will be done...such regulations must be made either by the United States, or by the tribes. They will be more satisfactory if made by them, than if made by us, and it must be our desire to do nothing for them which they can do for themselves." H.R. Rep. No. 23-474 at 19 (May 20, 1834).
Accordingly, the Secretary should reaffirm the Indian Self-Determination Policy, affirm tribal authority to regulate Indian commerce on Indian lands, preempt dual state taxation and regulation, and delegate authority to Indian nations and tribes to enforce the Federal Indian Traders License Regulations.
In sum, the regulations can be updated in a manner that empowers Indian nations and tribes to regulate Indian commerce and clears the way for tribal regulation to take place. Updates to the regulations can and should reflect related purposes of supporting Indian Self-Determination, tribal economic development and promoting tribal self-government.
2. Are there certain components of the existing rule that should be kept and, if so, why?
Yes. The prohibition on Indian commerce without the requisite Federal Indian Traders License and licenses that were issued to businesses under 25 CFR Part 140 should be grand-fathered and continue to be valid, but subject to deferred enforcement where the governing Indian nation or tribe enforces its business license laws, provided businesses comply with the same.
3. How can revisions to the existing rule ensure persons who conduct trade are reputable and that there are mechanisms in place to address traders who violate Federal or Tribal law?
As the Department sought to achieve with its updates to 25 CFR 162 and 169 (leasing and rights-of-way regulations), it should update the Trader regulations to limit BIA's involvement in regulating business in Indian Country and defer to tribes to manage their own affairs in trade and commerce. Updates to the Trader regulations should require the BIA to recognize and acknowledge the governing nation or tribe's laws regulating Indian commerce and business activities on its land. As with 25 CFR Parts 162 and 169, the regulations can allow tribal laws to supersede or modify 25 CFR Part 140 provisions, as long as certain conditions are fulfilled (for e.g., the tribe notifies BIA of the modifying or superseding effect and/or the tribe's regulations meet minimum standards).
4. How do tribes currently regulate trade and how might revisions to 25 CFR Part 140 help tribes regulate business in Indian Country?
Many tribes are regulating business and commerce through their own laws. Tribes commonly address safety, quality, standards, environmental protection, taxation and other matters by their regulations. In fact, Tribes are in a better position to regulate trade and commerce on their land in a manner that the federal government simply cannot. Tribes understand the particular needs of their community, the impact of competing regulation from state and local governments, and the general market conditions which would attract and retain business on their lands. Therefore, the Trader regulations should defer to tribal laws and authority to the maximum extent possible.
5. What types of trade, and what type of trader, should be subject to the regulations.
All commerce on Indian land should be covered by 25 CFR Part 140. This should include activities related to oil, gas, minerals and natural resources. Trader regulation definitions should be modernized to encompass all actors and activities in relation to Indian commerce, and particularly to permit tribes to regulate (and tax) non-Indian economic activity on their lands. The Secretary of Interior has broad authority under Indian Trader Statute to do this. The Indian Trader Statutes are a delegation of Congress's power to regulate commerce with the Indian tribes, and provide broad regulatory authority to the Department of Interior. The statute at 25 U.S.C. 262 covers "any person desiring to trade with the Indians" and authorizes any regulations Interior "may prescribe for the protection of said Indians."
Updates can also address tribal preference laws. As the BIA stated in 25 CFR 162, "Tribes have a sovereign interest in achieving and maintaining economic self-sufficiency, and the federal government has an established policy of encouraging tribal self-governance and tribal economic self-sufficiency. A tribe's specific preference in accord with tribal law ensures that the economic development of a tribe's land inures to the tribe and its members. Tribal sovereign authority, which carries with it the right to exclude non-members, allows the tribe to regulate economic relationships on its reservation between itself and non-members."
6. How might revisions to the regulations promote economic viability and sustainability in Indian Country?
Regulatory change is absolutely necessary to promote the sovereign authority of tribes to create a fiscal environment to stimulate the flow of investment, technology and services to Indian Country. To that end, updates to the Trader regulations should address the following areas which are critical to developing sustaining economies in Indian Country: 1) enable tribal regulatory authority and authorize any person to engage in trade within Indian reservations pursuant to the laws of the tribal government; 2) provide clear rules for tribal jurisdiction over business activity; 3) provide clarity and certainty as to the taxation of commerce in Indian Country; and 4) delete regulatory burdens that are not necessary for BIA to meet its statutory and trust responsibilities and include provisions supporting tribes' sovereign rights.
In particular, the regulations should address the discriminatory effect of singling out commercial activity and natural resource development in Indian Country with dual taxation. Assessment of State and local taxes obstructs Federal policies supporting tribal economic development, self-determination, and strong tribal governments. And, the presence of federal regulatory pronouncements with respect to state taxing authority has ever-increasing importance to protecting on-reservation commercial activity. As the Department did with its recent update to regulations governing leasing and rights-of-way on trust lands, by updating the Trader regulations it can reaffirm the Warren Trading principles that, ''Congress has taken the business of Indian trading on reservations so fully in hand that no room remains for State laws imposing additional burdens upon traders.''
State and local taxation also threatens substantial tribal interests in effective tribal government, economic self-sufficiency, and territorial autonomy. An important aspect of tribal sovereignty and self-governance is the power to tax. The regulations should underscore and promote this sovereign right and, to that end, pre-empt state and local tax of natural resource development, commercial activity, and personal property on tribal trust land.
In the absence of a clear Secretarial policy on Indian commerce, reservation economies lose millions of dollars to state treasuries, which are spent outside of Indian country. State and local governments are generally not investing in tribal communities commensurate with the tax revenue they receive from economic activity on our trust lands. At the same time, tribal governments have increasing responsibility to fund tribal community services, as well as the very infrastructure that is creating the tax-generating activity. This dilemma is fundamentally unfair to tribal governments, undermines the Constitution's promise of respect for tribal sovereignty, and keeps Indian reservations the most underserved communities in the nation. NCAI recently passed Resolution SD-15-045: "Urging the Department of Interior to Address the Harms of State Taxation in Indian Country and Prevent Dual Taxation of Indian Communities," which Indian tribes fully support.
Additional State or local taxes make business in Indian Country less viable and economically attractive, further discouraging development in Indian country. Indeed, uncertainty as to taxing jurisdiction and one's ultimate tax burden is seen as the single greatest impediment to non-Indian investment and location of businesses in Indian Country.
7. What services do tribes currently provide to individuals or entities doing business in Indian Country and what role do tax revenues play in providing those services?
Indian nations and tribes are sovereigns, and the power to tax Indian commerce on Indian lands is an essential aspect of Indian sovereignty and tribal self-government. Tribes have authority to tax Indian commerce, including economic activity and development on Indian lands, such as gaming, hospitality, retail sales, services, and natural resource development. See Merrion v. Jicarilla Apahe Tribe, (1982).
Tribes provide services for public safety, environmental services, infrastructure (roads, water, sewer), judiciary, licensing/permitting, and so on. For their citizens, the essential government services also include housing, health care, public facilities, community support, legal assistance, and so on. The tax revenue is never enough to cover all of these expenditures.
The imposition of state and local taxes frustrates the Indian Self-Determination Policy and undermines the tribe's ability to fully fund these essential support services through their own tax revenues. And, the failure of states to reinvest the tax revenue they receive from Indian commerce back into Indian Country does serious harm to tribes, their citizens, and the neighboring communities. This is harm that the Department should address through reform of the Trader Regulations.
Thank you for the opportunity to submit our views on the important subject of the modernization of the Federal Indian Traders License Regulations.
[Tribal Leader Name]