Fixing Carcieri for Michigan

Matthew L.M. Fletcher

Congressional action to correct the Supreme Court’s decision in Carcieri v. Salazar would cost American taxpayers nothing and would be an enormous win for Michigan tribes and the Michigan economy. Carcieri, a decision that undermines the certainty of the Department of Interior’s authority to acquire land in trust for some Indian tribes, makes borrowing money for several Michigan tribes more difficult and more expensive – for some Michigan tribes, the price to borrow money for capital growth increases by millions in increased interest or even the inability to borrow. In short, Carcieri costs the Michigan economy jobs and economic growth.

The Carcieri Decision

The Carcieri decision held that the Department of Interior could not take land into trust for the benefit of the Narragansett Indian Tribe in Rhode Island under Section 5 of the Indian Reorganization Act (“IRA”), a statute that authorizes the Secretary of Interior to do so for any Indian tribe. The IRA’s definition of “Indian tribe” includes any tribe “now under federal jurisdiction.” The Interior Department had interpreted the IRA to authorize trust land acquisitions for tribes under federal jurisdiction at the time of the application, using federal recognition as a proxy for federal jurisdiction. But the Supreme Court held that the Narragansetts were under state jurisdiction at the time of the enactment of the IRA in 1934, and so Interior could not take land into trust for them.

The Department of Interior had “administratively terminated” several Michigan Indian tribes – all of the six Ottawa and Potawatomi tribes now federally recognized – in the late 19th century. These tribes are “treaty tribes,” meaning that they have an ongoing treaty relationship with the federal government that has never been extinguished by Congress. The Sixth Circuit has recognized that “administrative termination” was an illegal administrative act, and the concurrences and dissent in Carcieri also recognized that the Michigan tribes probably were “under federal jurisdiction” in 1934. Still, those tribes, and two other tribes in the Upper Peninsula that became federally recognized in the 1970s and 1980s may be affected by Carcieri.

Impacts on Michigan Tribes

The Michigan tribes are among the tribes most adversely affected by the Carcieri decision, even though every one of them is a treaty tribe. They are affected in two important ways:

First, each of the tribes potentially affected by Carcieri may be forced to engage in a costly, protracted historical and legal determination by the Interior Department that they were “under federal jurisdiction” in 1934. In other words, the tribes may have to expend precious tribal resources to prove that they are eligible tribes in the frivolous lawsuits that are destined to be filed. There are currently 62 non-gaming related Michigan tribes trust applications pending in the Department of Interior now. These applications are for agriculture, housing, public safety, and other infrastructure projects. Many of these projects involve multi-million dollar construction jobs and long-term job creation. Every day that these trust applications are delayed slows down Michigan job growth and economic development. Nationally, a Carcieri fix is estimated to generate 140,000 jobs, many of those in Michigan.

Derek Bailey, the former chairman of my tribe, the Grand Traverse Band of Ottawa and Chippewa Indians, testified before Congress in 2009 about the clear economic consequences of trust land acquisition delays:

As one example, Parcel 45 in Antrim County is a 78-acre parcel that is zoned for residential development by the local township and county. In order to obtain this zoning, we spent 1.5 million dollars of tribal money for roads and for sewer, water, and electrical infrastructure to render the parcels ready for individual housing. The parcel contains two homes owned by tribal members, two Grand Traverse Band rental homes, and 22 empty lots available for Tribal members to construct housing. However, until the land is placed into trust, tribal members cannot obtain the Bureau leases necessary to secure housing financing.

Second, the cloud of Carcieri stifles any development project by potentially affected Michigan tribes. Carcieri increases risks to lenders – the risk that a court finds that a tribe is not eligible because of the Carcieri case, even if low, increases exposure – and that translates to millions of dollars in increased interest rates and occasionally shuts down the project altogether by eliminating the ability of the tribe to borrow money at all. Carcieri has all but killed off investment in Indian country. This issue extends to tribes that may have a Carcieri problem and tribes that already have established economic enterprises. Lower Michigan tribes, especially in southwest Michigan, are enormous economic engines that have generated massive economic growth despite the specter of Carcieri. Relieving these economic engines of this unnecessary burden is only going to improve Michigan’s economy.

In conclusion, fixing Carcieri is costless to American taxpayers and a big win-win for Michigan and Michigan tribes.