Piliero Mazza & Pargament, PLLC Vol. 3, Issue 3 March 2001

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


GOVERNMENT CONTRACTING Proposed Changes to New "Blacklisting" Regulations May Suspend Effective Date

TRIBAL EMPLOYMENT Avoiding Post-employment Reference Claims

FEDERAL IRS Updates List of Entities Eligible for Special Tax Treatment


REGULATIONS DOI Issues Final Loan Guaranty, Insurance and Interest Subsidy Rule

BIA Delays Effective Date for Land Acquisition Regulations

TRIBAL LAND Effective Date for ITLAP Regulations Delayed


Proposed Changes to New "Blacklisting" Regulations May Suspend Effective Date

The so-called "blacklisting" regulations are currently the hottest issue in government contracting.  As a result of the vigorous objections to these regulations by both the contracting community and many federal agencies, a number of actions are underway to delay their implementation.  A proposed change circulating among federal agencies would reinstate the previous responsibility certification requirements and would suspend the controversial "blacklisting" regulations that took effect on January 19, 2001. In addition, a number of agencies have independently issued waivers that delay the implementation of these highly controversial regulations. At present, the Department of Transportation, the Department of Interior, NASA and the General Services Administration have delayed implementation of the regulations.

These new "blacklisting" regulations revise the responsibility regulations at FAR Part 9, which require federal contracting officers to consider a prospective contractor's record of compliance with non-procurement related laws when awarding federal contracts.  Under the revised regulations, contracting officers will be required to consider whether prospective awardees have violated a variety of federal laws, including tax, labor and employment, environmental, antitrust and consumer protection laws.  Opponents of the regulations contend that they will result in "blacklisting" contractors for violations of laws that are wholly unrelated to the contractor's ability to responsibly perform a government contract.



Avoiding Post-employment Reference Claims

Although tribes are generally protected from suit by sovereign immunity, tribally-owned businesses may not enjoy such immunity, depending upon their location and the extent of tribal ownership.  As such, tribes should be aware of the consequences of giving negative employment references, particularly by tribal enterprises which are performing government contracts and have waived their sovereign immunity.  As discussed below, employment references are often given by employers without realizing the risks they may encounter if a former employee is denied a job or otherwise allegedly damaged because of the reference.   If given a negative reference, the former employee may sue his or her former employer for defamation.  Given this potential exposure, employers should consider taking measures to protect themselves from claims by former employees.

The most common cause of action against a former employer for a bad reference is a defamation suit.  To prevail on such a claim, an employee must prove that the employer made a false statement to a third person that imputed to the former employee a lack of capacity or qualification to properly fulfill the duties or responsibilities of his or her job.  The former employee must also demonstrate that the employer made the statement knowing it was false or with reckless disregard for the truth or falsity of the statement.  In addition, the employee must demonstrate that he or she was actually damaged by the communication.  To prove the last element, the former employee need only show that his or her job application was rejected because of the critical reference.




IRS Updates List of Entities Eligible for Special Tax Treatment

On January 29, 2001, the Internal Revenue Service (IRS) issued an updated list of tribes and Alaska Native entities eligible for special tax treatment under the Indian Tribal Governmental Tax Status Act of 1982 ("the Act").

The Act allows certain tribal and Alaska Native governments to be treated as states for certain tax purposes.  For example, under the Act, charitable contributions to or for the use of a tribal or Alaska Native government may be deductible in certain situations under the federal income, gift, and estate tax laws.  Additionally, the law exempts these governments from certain excise taxes, and allows certain taxes imposed by these governments to be deductible.



Interview with Fred Hamren

As part of our "Interviews with Tribal Leaders" series, the Tribal Advocate recently had the pleasure of speaking Fred Hamren, President and CEO of Akima Corporation, a company owned by two Alaska Native Corporations (ANCs). Mr. Hamren offered the following comments.

TA:  How and when was Akima formed?

HAMREN:  Akima was formed in 1995 as a small 8(a) company when the NANA Regional Corporation purchased controlling interest in a construction company that was owned by the Aleut Corporation, another (ANC).  The two owners changed the name to Akima, an Eskimo word meaning "to win" and also changed the focus to government service contracting.  Akima retained its Small Business Administration (SBA) 8(a) status that had been granted to the original company in 1994.

TA:   Please summarize government programs designed to offer incentives to Akima and other ANCs.

HAMREN:   Let me begin with two clarifications.  Native Alaskan Corporations are defined as tribally-owned, as opposed to individually-owned.  Federal laws and derivative statues offer assistance to all economically and disadvantaged native companies, including those owned by Native Americans from the lower 48 and Hawaii, as well as, Indians, Aleuts and Eskimos from Alaska.  However, what is not realized by many is the fact that the Alaskan Native Claims Settlement Act (ANCSA) passed by Congress in 1971 established that ANC (Native Alaskan) shareholders were so socially disadvantaged that they did not need to meet the economic standard to qualify as an 8(a) company. ANCs are automatically deemed disadvantaged by location and by law.



DOI Issues Final Loan Guaranty, Insurance and Interest Subsidy Rule

On January 17, 2001, the Department of the Interior (DOI), Bureau of Indian Affairs (BIA) issued a final rule revising the regulations that implement the Loan Guaranty, Insurance and Interest Subsidy Program.  This program authorizes the Secretary of the DOI to guarantee or insure loans made by private lenders to individual Indians and to organizations of Indians, and to assist qualified borrowers with a portion of their interest payments.  The new rules clarify prior regulatory language and address new issues that were not addressed in the prior regulations.

The intent of the regulations is to encourage the development of viable Indian businesses through conventional lender financing.  Under these regulations, the BIA may guarantee or insure any loan made by a qualified lender to a qualified borrower for the purpose of conducting a lawful business organized for profit as long as the following criteria are satisfied: (1) the business contributes to the economy of an Indian Reservation or tribal service area recognized by the BIA, (2) the loan is not used for re-lending purposes, (3) no portion of the loan is used to refinance an existing loan, and (4) the BIA is satisfied that the lender would not be willing to extend the requested financing without a BIA guarantee or insurance coverage.



Effective Date for ITLAP Regulations Delayed

On January 9, 2001, the Department of Agriculture issued a final rule consolidating and revising the Indian Tribal Land Acquisition Program (ITLAP) regulations.  The final rule made many changes to the ITLAP regulations including eliminating the reserve requirement and waiver of sovereign immunity for all new loans; allowing borrowers to use the loan reserve accounts as either an extra payment on their loans or for other tribal needs; providing borrowers with additional servicing options; allowing ITLAP funds to be used for certain refinancing activities; expanding the allowable uses for land purchased with ITLAP funds; requiring that ITLAP applications include a copy of the borrower=s option to purchase the land; and providing for subsequent loans to ITLAP borrowers.  The rule was originally set to become effective on February 8, 2001.  However, pursuant to the memorandum issued by White House Chief of Staff, Andrew Card, on January 20, 2001, the effective date of the new rule has been postponed until April 9, 2001.



BIA Delays Effective Date for Land Acquisition Regulations

On February 5, 2001, the Bureau of Indian Affairs published a notice delaying the effective date of the Land Acquisition Regulations to March 17, 2001.  The final regulations were published in the Federal Register on January 16, 2001, and were originally scheduled to become effective on February 15, 2001.  Tribes should take advantage of this delay to ensure that any pending trust applications meet the non-retroactivity requirements set forth in the new regulations and to submit new applications prior to the effective date.  (See February 2001 issue of the Tribal Advocate for an in depth review of the final regulations.) 


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