Tribal Tax Status Act

Complaint re: Software Used by Tribes for TANF Administration

Matthew L.M. Fletcher

Here is the complaint in EagleSun Systems Inc. v. FrontRange Solutions USA, Inc. (D. Colo.):

Complaint

Excerpts:

1. This is an action for relief related to copyright infringement and misuse of trade secrets and confidential information, in connection with FrontRange’s intentional and unauthorized copying and use of ESP’s protected property. ESP seeks appropriate damages and requests the Court to issue orders protecting the confidential information and copyrighted property of ESP, and prevent FrontRange from continuing to profit from ESP’s protected work.

And:

7. ESP is a software company that authors and provides software primarily to Indian tribes and tribal affiliated entities for case management and organization of federally-funded tribal social welfare programs. To that end, ESP developed a product known as “TAS: Tribal Assistance System.”

8. ESP is the sole author and owner of the software titled as TAS. TAS has gained renown within the Tribal Temporary Assistance for Needy Families (“TTANF”) community and is utilized by over fifty different Indian tribes to administer TTANF and other social service programs.

And:

30. FrontRange is attempting to incorporate TAS into a version of its GoldMine Enterprise Edition software specifically for AVCP. In addition, FrontRange markets this accomplishment to the industry. It is unknown, without discovery, if other products created and sold by FrontRange, including other versions of GoldMine, incorporate parts of TAS.

New Scholarship on Tribal Bonds

Matthew L.M. Fletcher

Bill Maurer and Justice Richland have posted their paper, “Lex Llewellyn and the Tribal Tax Status Act: ‘Fallible Gropings’ in Law and Society,” on SSRN.

Here is the abstract:

This article is the result of our inquiry into two proximate fields in which issues of law, custom and markets arise in sociolegal scholarship and praxis: the mid-20th century jurisprudence of the legal realist Karl Llewellyn and the contemporary debates surrounding efforts by tribal governments in the U.S. to issue tax-exempt bonds. Both are sites for efforts by legal scholars and practitioners to grapple with the convergence of social categories that, until very recently, are normally held apart – Native Americans, law, and commerce. We first explore Llewellyn’s efforts at drafting the Uniform Commercial Code, and the extent to which in this and his The Cheyenne Way (written at virtually the same time), he drew considerable influence from the American pragmatist philosophical tradition. In so doing, we find that his jurisprudence and lawmaking (often maligned for its circular reasoning) can be better understood as an effort to announce a philosophy of law and enact commercial legislation that was more a method for doing legal analysis and taking legal action than it was an expression of legal principles. Once understood in this way, we suggest it offers a fresh way of accounting for the performative force of law that can move sociolegal research beyond certain constructivist impasses. We then offer how such an approach can be brought to bear on the unfolding relationships among custom, law and commerce in the back and forth between scholars, law-makers, and tribal leaders around tribal tax-exempt bonds and their regulation.

Economic Stimulus Bill Expands Tribal Tax Exempt Bonding

bnewland3 Comments

The version of the American Recovery and Reinvestment Tax Act of 2009 (Stimulus Package) passed by the Senate on Tuesday contains language that comes closer to putting tribes on par with state and local governments for the purpose of issuing tax exempt bonds. This has long been a sore spot for tribes, as the IRS has interpreted existing law to prohibit tribes from issuing tax exempt bonds in the same manner as state and local governments.

The Internal Revenue Code allows tribes to issue tax exempt bonds for an “essential government function,” which is defined as a function that is customarily performed by a state or local unit of government with general taxing powers. The IRS has seized upon the word “customarily” to prohibit tribes from issuing tax exempt bonds from certain projects, such as golf courses, hotels, and other revenue-generating facilities – even where there are cases of states and cities issuing tax exempt bonds for the exact same types of projects. According to the IRS, the fact that states and cities sometimes issue tax exempt bonds for these types of projects does not mean that they are functions that they customarily perform.

The Stimulus Package addresses this issue by amending the Internal Revenue Code to allow tribes to issue “Tribal Economic Development Bonds.” (Note: The language of this amendment closely mirrors that of the Tribal Tax Exempt Bond Parity Act, which was introduced in the last Congress by Senators Max Baucus (D-MT) and Gordon Smith (R-OR).)

The amendment defines a “Tribal Economic Development Bond” as a bond issued by a tribe where the interest would be exempt from taxation if issued by a state or local government.

This amendment comes with three important caveats:

1.) The bonds cannot be used to finance any portion of a building in which Class II and Class III gaming is conducted, or any property used in the conduct of gaming;

2.) The bonds must be used to finance facilities located on the reservation; and,

3.) There is a national cap on the total value of Tribal Economic Development Bonds at $2 Billion, which must be allocated among tribal governments in the manner deemed appropriate by the Secretaries of Treasury and Interior.

While this amendment isn’t perfect, it is a significant and important step toward increasing access to the debt market for tribes and putting tribes on par with state and local governments. I hope that the Stimulus Package Conference Committee retains this amendment, and that the Secretaries engage tribal leaders in meaningful consultation when allocating the national cap among the tribes.

Please check back later for updates on the Stimulus Package and its Indian Country provisions.

Chief Justice Roberts & Federal Indian Law

Matthew L.M. Fletcher

Long before John G. Roberts, C.J. became life-tenured, he practiced. And he worked on at least three Indian law-related cases: Alaska v. Native Village of Venetie, Rice v. Cayetano, and (briefly) Roberts v. United States. Also, as part of President Reagan’s Office of Legal Counsel, he vetted several Acts of Congress related to Indian tribes.

Roberts won Venetie, representing the State of Alaska. He lost Rice, representing the State of Hawaii. And the Court denied his petition for cert on behalf of Hollis Roberts (no relation, one presumes) in Roberts v. U.S.

The now semi-notorious brief Roberts filed in Alaska v. Venetie is here: Venetie Petr Brief. It is notorious for the reversal of the “deadliest enemies” language in United States v. Kagama. The Kagama Court wrote that states and state citizens were the deadliest enemies of Indians and Indian tribes, but the Venetie brief (for no real good reason) altered the quote to mean that Indians and Indian tribes were the deadliest enemies of states and state citizens. Here’s my own paper on the archaic notion that states and tribes are “deadliest enemies.”

Hawaii’s brief in Rice v. Cayetano is here: Rice Resp Brief

Roberts’ cert petition in Roberts v. US is here: Roberts v. United States Cert Petn. This one is especially important since Roberts (and Roberts) brought a challenge to Section 465, the fee to trust statute. There is ongoing litigation involving Section 465 that may soon be appealed to the Supreme Court. To some extent, the legal challenge to Section 465 has morphed since the 1999 cert petition, but it is significant that Roberts, C.J. is aware of this kind of case.

Finally, we include the documents Roberts wrote as a member of the OLC. These came out during his Senate confirmation process.

Kickapoo OLC Memo

Reagan Indian Policy OLC Memo

Tribal Tax Status Act OLC Memo

Utah Paiute Act OLC Memo

Zuni OLC Memo

Shoalwater Bay OLC Memo

Las Vegas Paiute OLC Memo

I guess what these memos demonstrate is that young Roberts was a serious conservative and a funny guy (unless you were the subject of the humor).