Piliero Mazza &
Pargament, PLLC

Vol. I, Issue 9
October 1999

Addressing Tribal and Alaska Native Corporation
Legal and Business Issues

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Extending Sovereignty

Unionization of Indian
Employees Under
Federal Law

Distribution Downside

SBA Certification
Required for SDBs
Beginning October 1

Tribal Enterprises and
ANCs May Benefit
from HUBZone Program

Michael Anderson,
Deputy Assistant Secretary
for Indian Affairs
Department of
the Interior

House Passes Interior
Appropriations Bill




Extending Sovereignty
to Tribally-Owned Businesses

As tribes seek to expand their revenue base by embarking upon new business ventures, they often ask a fundamental question -- can the tribe’s sovereign immunity be extended to the new business? Unfortunately, the short answer to this question is – it depends. Indeed, there are several factors that have been used by courts to determine whether sovereignty should be extended to tribally-owned businesses. These factors should be considered by tribes prior to forming tribal businesses.

By way of background, neither tribal governments nor tribal officials acting within the scope of their authority are subject to nonconsensual suit in tribal, state or federal courts. Although tribal immunity can be waived by the tribe or by Congress, it must be "unequivocally expressed" – waiver will not be implied by conduct.

Tribal governmental immunity also can extend to a tribe’s commercial activities, and does not necessarily stop at the reservation’s boundaries. Federal courts have applied a number of factors in deciding whether to extend tribal governmental immunity to a new business organization. Some of the more significant factors are reviewed below.

Although the tribe should have ultimate authority over the business, if the business is incorporated under state law, care should be taken to maintain the independence of the corporation through observation of corporate formalities.


Unionization of Indian Employees
Under Federal Law

The applicability of federal labor laws to tribal business enterprises recently has drawn much attention and has been addressed in a variety of contexts. One such context involves the rights of tribal employees to unionize under the National Labor Relations Act ("NLRA" or the "Act"). The NLRA generally permits employees to form unions and to bargain collectively with their employers. Because unionization dramatically alters the relationship between employers and employees, it is important for tribes and tribal employers to recognize those circumstances under which tribal employees may be allowed to unionize under the NLRA.

While the NLRA does not contain explicit language making the Act applicable to tribes, the Act also does not expressly exempt tribes from its reach. Rather, the NLRA specifically exempts "government entities." The National Labor Relations Board ("NLRB" or the "Board"), the entity which first adjudicates disputes under the Act and courts have traditionally interpreted "government entities" to mean federal and state governments.

Both the Board and courts, however, recognize that Indian tribes occupy a unique status under the law as sovereign entities. Tribal sovereignty is inherent to tribes, and tribes have been equated to both the federal and state governments for purposes of examining whether the Act is applicable to tribal enterprises. Therefore, both courts and the NLRB have held that, under certain circumstances, tribal employers are exempt from the Act, and therefore may proscribe tribal employees’ right to unionize.

If a business is (i) owned, operated and controlled by a tribe, especially with respect ro the business' labor and employment policies; and (ii) located on tribal reservation land, then the business likely will be exempt from the NLRA.


Distribution Downside

Tribal members may be ineligible to receive funds under various federal programs due to the inclusion of tribal distributions in the calculation of annual income for each of the Tribal members. Tribes should consider this issue when structuring their distribution plans, and may wish to consider alternative distribution plans so as to lessen the likelihood of tribal members being excluded from federal funding programs.

The Native American Housing and Self-Determination Act ("NAHASDA") is a prime example of this type of federal funding program. NAHASDA was enacted in an effort to reorganize the system of Federal housing assistance to Native Americans by eliminating individual assistance programs and replacing them with a single program, commonly referred to as the Indian Housing Block Grant Program. Amounts disbursed pursuant to this Program are determined based upon two distinct criteria, including the extent of low income housing programs currently in operation by the Tribe and the Tribe’s relative need for low-income housing.

NAHASDA is only one example where Tribal Distributions are considered to determine an individual’s eligibility for funding. There are many other programs, such as federal and state healthcare provisions that may be affected as well. In light of these considerations, Tribes should seriously evaluate the timing and structure of any Distribution amounts if they are receiving federal or state funding or are planning to apply for such funding in the future.



Tribal Enterprises and ANCs
May Benefit from HUBZone Program

Q. What is the HUBZone Program, and how may tribal enterprises and ANCs participate in the program?

The Historically Underutilized Business Zone ("HUBZone") Empowerment Contracting Program was designed to stiumulate economic development and create jobs in urban and rural communities by providing contracting preferences to small businesses that are located in a HUBZone and that hire employees who live in a HUBZone.

HUBZone businesses may negotiate sole source contracts and participate in restricted competition limited to HUBZone firms. Also, small businesses located in HUBZones are allowed a 10% price evaluation preference in full and open competitions. In other words, the price offered by a HUBZone firm will be considered lower than the price offered by a non-HUBZone firm as long as th HUBZone firm's price is not more than 10% higher than the price offered by the otherwise lowest responsive offeror.



Tribal Advocate Speaks with Michael Anderson,
Deputy Assistant Secretary for Indian Affairs
Department of the Interior
Regarding the BIA's Stand on
Pertinent Indian Issues
As the Deputy Assistant Secretary - Indian Affairs (DAS-IA) Mr. Anderson provides policy guidance to the Office of the Assistant Secretary - Indian Affiars and the Bureau of Indian Affairs.

He is a tribal member of the Muskogee Creek Nation.

This is the second of a two-part interview with Mr. Anderson, discussing issues of current relevance to tribes. The first part of this interview was published in the September issue of the Tribal Advocate. The interview was conducted on August 16, 1999.

Tribal Advocate (TA): What is the statur of the Tribal Priority Allocation ("TPA") study and the BIA's position with regard to needs-based testing?

Michael Anderson (Anderson): The study has been submitted to Congress. Its essential conclusion is that the Bureau of Indian Affairs does not support means testing - although we do believe that the Congress mus take "need" into account much more than it has in the past, particularly with respect to Tribal Priority Allocations. However, the current TPA system is not going to be changed, and we will be using the same basic formula. If there are future increases above TPAs that are in place now, we would certainly ask Congress to consider whether more needy tribes might receive a greater share of that allocation. However, we are not asking for any changes with regard to the current allocations. There are some programs that are already using means-based testing, such as individual programs like Tribal General Assistance. Obviously, one must meet the poverty and income eligibility requirements to receive General Assistance, and these types of needs-based assessments will continue.

TA: Are there any other recent developments regarding the issue of Tribal Priority Allocations?

Anderson: Yes. The other development in terms of the legislation is last year’s House Committee Report, along with the legislation in the appropriations bill, allowing the BIA to accept return of funds from those tribes that wish to return them and dedicate them to another appropriated purpose. A number of tribes have agreed to return their TPA funding and have directed that it be allocated to other tribes.


SBA Certification Required for SDBs
Beginning October 1

Alaska Native Corporations and tribal enterprises may benefit from participating in the Small Disadvantaged Business ("SDB") Program, which is managed by the Small Business Administration ("SBA"). The eligibility requirements for the SDB Program are very similar to those that apply to the 8(a) Program: Only small firms that are owned by socially- and economically- disadvantaged individuals or Alaska Native Corporations, Community Development Corporations, Native Hawaiian Organizations, and Indian tribes are eligible to participate in the SDB program.

Under current law, a small business may self-certify that it is an SDB. Beginning October 1, 1999, however, a business must be certified by the Small Business Administration before it may participate in the program. Therefore, we encourage ANCs and tribal enterprises who anticipate doing business with the federal government or federal prime contractors to move quickly in applying for SDB certification.



House Passes Interior Appropriations Bill

On July 15, 1999, the House of Representatives passed H.R.2466, the FY 2000 appropriations bill for the Department of the Interior by a vote of 377-47. This measure includes funding for the Bureau of Indian Affairs and for most Indian programs. Funding for Indian programs was provided as follows:
Operation of Indian Programs:
$1.63 billion
Construction, repair, improvement, and maintenance of Indian facilities/acquisition of lands:
$126 million
Indian land and water claims settlements/Miscellaneous payments to Indians:
$25.9 million
Indian Guaranteed Loan Program account $4.5 million
Federal trust programs for Indians $90 million
Indian land consolidation pilot program $5 million
Indian Health Services $2.09 billion
Indian health facilities $312.5 million
Salaries and expenses of Office of Navajo and Hopi Indian Relocation $13.4 million
As this issue of the Tribal Advocate went to print, the Senate was considering its version of the Interior appropriations bill. In the next issue, we will provide details from the Senate bill and report on any other developments regarding funding for Indian programs.

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