Piliero Mazza & Pargament, PLLC   Vol. 4, Issue 7  July/August 2002

Addressing Tribal and Alaska Native Corporation Legal and Business Issues

The articles shown here are excerpts -- if you'd like to subscribe to Tribal Advocate, please contact Susan Brock at (202) 857-1000 or at   

  A R T I C L E S

GOVERNMENT CONTRACTING:  Tribal Holding Companies May Trigger Finding of Affiliation

FEDERAL:  Trust Reform Task Force Issues Report

BUSINESS:  Indian Telecom Training Initiative 2002 to be Held September 7-10

ON THE HILL:  Senate Subcommittee on Financial Institutions Holds Hearing on Capital Investment in Indian Country

LEGISLATION:  House Pases the Small Business Advocacy Improvement Act

REGULATIONS:  Final Rule Implemented for Indian Incentive Program

COURT WATCH:  Supreme Court Ruling Expands "Direct Threat" Defense Available to Employers in ADA Action


Tribal Holding Companies May Trigger Finding of Affiliation

Tribally-owned companies are generally exempt from findings of affiliation for size purposes due to joint tribal ownership.  This means that a tribally-owned company's size is not combined with the size of other companies owned by the same tribe in determining whether a company is eligible to compete for small business contracts or participate in small business programs, such as the HUBZone or 8(a) Programs. (See the April 2000 issue of Tribal Advocate for the article discussing tribal affiliation exemptions.)  In an effort to protect tribal sovereignty and to insulate tribal assets from business risks, many tribes own businesses through holding companies.  Under these scenarios, the businesses are 100% owned by the holding company which is, in turn, wholly owned by the tribe.

This ownership structure appeared to provide a workable solution to the sovereignty issues unique to Indian tribes.  However, the Small Business Administration's,Office of Hearings and Appeals ruled in Size Appeal of HCI Construction Company that businesses owned through a holding company are not eligible for the tribal exemption from the general affiliation rules.  The issue arose when HCI applied for certification as a HUBZone small business concern.  During the course of a size determination, it was discovered that HCI was wholly owned by a holding company that was, in turn, wholly owned by the Winnebago Tribe of Nebraska. The holding company also owned 100% of the stock in 15 other tribal companies.



Trust Reform Task Force Issues Report

On June 4, 2002, the Tribal Leaders/Department of Interior Trust Reform Task Force issued a report to Secretary Gale Norton suggesting several alternatives to Norton's proposed Bureau of Indian Trust Asset Management, a plan that was rejected by tribes after it was presented in November 2001. The Task Force was formed in December 2001 in an effort to include tribes in the trust management reformation process.

Since its formation, the Task Force has focused its efforts mainly on high-level reorganization options.  Once upper level structure issues have been resolved, the Task Force intends to turn its attention to regional and field-level organizational structure. Although some lower level organizational options were included in the report, these options were intended as examples, not formal proposals. The report includes five proposed organizational options, three of which were deemed to merit further consultation and discussion.



Indian Telecom Training Initiative 2002 to be Held September 7-10

The Federal Communications Commission (FCC), in conjunction with the National Exchange Carrier Association will hold the Indian Telecom Training Initiative (ITTI) 2002 at Bally's Hotel in Las Vegas, Nevada on September 7-10.

The ITTI 2002 program will provide American Indian tribal leaders, Alaska Native Village leaders and other interested parties with information regarding the deployment of telecommunications services in Indian Country.  The information provided will enable tribal governments to set their own telecommunications development agendas and priorities for increasing services in Indian Country.  The program will provide information and insight from experts from the FCC, other government agencies and the telecommunications industry to discuss how different service technologies, regulatory rules and government programs can be used to benefit tribal communities throughout Indian Country.



Senate Subcommittee on Financial Institutions Holds Hearing on Capital Investment in Indian Country

On June 6, 2002, the U.S. Senate Committee on Banking, Housing and Urban Affairs, Subcommittee on Financial Institutions held a hearing seeking information regarding the state of capital investment in Indian Country.  Testimony was received from representatives of Indian tribes, Indian-owned financial institutions and associations, Fannie Mae and the Community Development Financial Institutions (CDFI) Fund.  The testimony focused on the barriers to capital access facing Indian communities and proposed solutions.

Roger Boyd, Program Manager of the CDFI Fund, testified regarding the results of a study conducted on lending and investment practices on Indian reservations and other trust lands.  The CDFI Fund is a government corporation created within the U.S. Department of Treasury to assist in "expand[ing] the capacity of financial institutions to provide capital, credit, and financial services in underserved markets."



House Pases the Small Business Advocacy Improvement Act

On May 21, 2002, the House of Representatives passed H.R. 4231, the "Small Business Advocacy Improvement Act of 2002."  The bill, sponsored by Rep. Donald Manzullo (R- IL) is an attempt to make the Small Business Administration (SBA) Office of Advocacy more independent.  The bill would accomplish this primarily through increased funding and additional personnel, better lines of communication with the SBA, Congressional small business committees and the President and the political neutralization of the office by requiring that the appointment of Chief Counsel be made without consideration of political affiliation.

The Advocacy Improvement Act establishes a budget of $12 million in funding for fiscal year 2003 that would increase to $14 million in FY 2005.   It also provides for a protected line item in the presidential budget.  It is believed that the Office of Advocacy currently receives about $8 million in funding through the SBA. The bill also would create the position of deputy counsel for regulations and another for economic research, as well as regional advocates in each of the ten federal regions.



Final Rule Implemented for Indian Incentive Program

On May 31, 2002, the Department of Defense (DOD) issued the final rule for the Indian Incentive Program.  The final rule adopted, without change, an interim rule that was published on September 11, 2001.

The Indian Incentive Program provides that DOD will reimburse up to five percent of the dollar amount subcontracted to Indian organizations or Indian-owned economic enterprises, when authorized under the terms of the contract.  To obtain payment, prime contractors must submit requests for incentive payments to DOD contracting officers.



Supreme Court Ruling Expands Direct Threat Defense Available to Employers in ADA Action

On June 10, 2002, the United States Supreme Court issued a unanimous decision in Chevron U.S.A., Inc. v. Echazabal, expanding the definition of direct threat under the Americans with Disabilities Act (ADA).  This decision reversed the September 2000 ruling of the Ninth Circuit Court of Appeals, which held that an employer could not use the direct threat defense where the risk posed was to an individual's own health and safety - as opposed to the health and safety of others.

Mario Echazabal worked for independent contractors at one of Chevron's oil refineries. Based upon reports from its doctors that Mr. Echazabal's continued employment in the refinery would exacerbate his existing liver condition, Chevron asked that Mr. Echazabal be either reassigned to a job without exposure to toxins or remove him from the refinery.  In response to this request, the contractor terminated Mr. Echazabal's employment.



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