National Congress of American Indians (NCAI)
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N A T I O N A L C O N G R E S S O F A M E R I C A N I N D I A N S October 30, 2017 Ms. Elizabeth K. Appel, Director Office of Regulatory Affairs & Collaborative Action Indian Affairs, U.S. Department of the Interior 1849 C St. NW., Mail Stop 3642–MIB E X ECUT IV E C OMMITTEE Washington, DC 20240 PRESIDENT Jefferson Keel electronically to: http://www.regulations.gov Chickasaw Nation FIRST VICE-PRESIDENT Aaron Payment Re: Docket ID: BIA–2016–0007, Supplemental Comments on ANPRM for 25 Sault Ste. Marie Tribe of Chippewa Indians of Michigan CFR Part 140 RECORDING SECRETARY Juana Majel-Dixon Pauma Band Mission Indians The National Congress of American Indians submits these comments to the TREASURER Department of the Interior (DOI) in response to its Advance Notice of Proposed W. Ron Allen Jamestown S’Klallam Tribe Rule Making issued December 9, 2016. These comments are intended to supplement NCAI’s previous comments submitted in April 2017. NCAI greatly R E G IO NAL V ICE - P RESIDENTS appreciates the opportunity to submit comments and DOI’s consultation efforts with ALASKA tribal leaders. In general, NCAI supports DOI’s effort to modernize the regulations Rob Sanderson, Jr. Tlingit & Haida Indian Tribes of at 25 C.F.R. Part 140 which implement the Indian Trader Statutes, 25 U.S.C. § 261 Alaska et seq. As the trustee to Indian tribes, please accept the following supplemental EASTERN OKLAHOMA Joe Byrd comments. Cherokee Nation GREAT PLAINS Larry Wright, Jr. I. Federal Preemption Discussion Ponca Tribe of Nebraska MIDWEST Roger Rader In a recent consultation with DOI, the Acting Assistant Secretary-Indian Affairs Pokagon Band of Potawatomi (AS-IA) John Tahsuda asked how modernizing the Indian Trader regulations would NORTHEAST Lance Gumbs affect current Supreme Court precedent. We would like to take a brief moment to Shinnecock Indian Nation discuss this important question. NORTHWEST Leonard Forsman Suquamish Tribe i. Supremacy Clause PACIFIC Willie Carrillo Tule River Tribe of California First, we note that the concept of federal preemption is rooted in the Supremacy ROCKY MOUNTAIN Darrin Old Coyote Clause. Article Six of the Constitution establishes that Federal law is “the supreme Crow Nation Law of the Land; and the Judges in every State shall be bound thereby, any Thing in SOUTHEAST Nancy Carnley the Constitution or Laws of any States to the Contrary notwithstanding.” U.S. Ma-Chis Lower Creek Indians CONST. Art. VI, cl. 2. SOUTHERN PLAINS Zach Pahmahmie Prairie Band of Potawatomi Nation SOUTHWEST Furthermore, the Supreme Court has described the Supremacy Clause as Joe Garcia Ohkay Owingeh Pueblo “’secur[ing]’ federal rights by according them priority whenever they come into WESTERN conflict with state law.” Chapman v. Houston Welfare Rights Organization, 441 U.S. Franklin Pablo, Sr. Gila River Indian Community 600, 613 (1979). As such, how federal preemption occurs is a matter left to the courts to determine. EXECUTIVE DIRECTOR Jacqueline Pata Tlingit In doings so, courts usually begin any preemption analysis assuming “that the NCAI HEADQUARTERS historic police powers of the State [are] not to be superseded by . Federal Act 1516 P Street, N.W. Washington, DC 20005 unless that [is] the clear and manifest purpose of the Congress.” Cipollone v. Liggett 202.466.7767 202.466.7797 fax Group, 505 U.S. 504, 516 (1992)(quoting Rice v. Santa Fe Elevator Corp., 331 U.S. www.ncai.org 218, 230 (1947)); See also Napier v. Atlantic Coast Line R. Co., 272 U.S. 605, 611 NCAI Supplemental Comments Docket ID: BIA-2016-0007 October 30, 2017 (1926); and Allen-Bradley Local v. Wisconsin Employment Board, 315 U.S. 740, 749 (1942). The result is that any preemption analysis is therefore dependent upon an analysis of congressional intent, and/or purpose. In analyzing congressional intent, the Supreme Court has divided its preemption analysis into three categories: express preemption, field preemption and conflict preemption. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73 (2000). Each of these preemption types addresses different sets of circumstances and is discussed briefly below. ii. Express Preemption Express preemption is where the Federal statute explicitly preempts state law through, for example, “inserting specific pre-emptive language into any of its enactments governing” a specific area of law. English v. General Elec. Co., 496 U.S. 72, 80 (1990). For instance, Section 5 of the Indian Reorganization Act (IRA) states, “Title to any lands or rights acquired pursuant to [the IRA] . shall be taken in the name of the United States in trust . , and such lands or rights shall be exempt from State and local taxation.” This express statutory language clearly exempts state and local taxation on lands and rights acquired in trust for Indian tribes under the IRA, and it also creates a presumption that all lands and rights generally held in trust for Indian tribes are exempt from such taxes. However, in addition to statutes, courts also look to applicable agency regulations since "[t]he phrase 'Laws of the United States' encompasses both federal statutes themselves and federal regulations that are properly adopted in accordance with statutory authorization.” City of New York v. FCC, 486 U.S. 57, 63 (1988). In fact, the Supreme Court has found that "a federal agency acting within the scope of its congressionally delegated authority may preempt state regulation" and hence render unenforceable state or local laws. Louisiana Public Service Comm'n v. FCC, 476 U. S. 355, 368-369 (1986). To this point, when Section 5 of the IRA is complimented by 25 C.F.R. § 162.7, which states that, “[S]ubject only to applicable Federal law,” permanent improvements on leased land, activities under a lease conducted on the leased land, and leasehold or possessory interests are not “subject to any fee, tax, assessment, levy or other charge imposed by any State or political subdivision of a State,” the congressional purpose and intent is clear, particularly with respect to taxes on leased land acquired under the IRA. Taken as a whole, the express preemption in Section 5 of the IRA continues to see success when challenged in Federal District Court. See, e.g., Confederated Tribes of the Chehalis Reservation v. Thurston County, 724 F.3d 1153, 1159 (9th Cir. 2013)(Holding that “Mescalero [Apache Tribe v. Jones, 411 U.S. 145 (1973)] sets forth the simple rule that § 465 preempts state and local taxes on permanent improvements built on non-reservation land owned by the United States and held in trust for the Indian tribe.”). With respect to the regulations at 25 C.F.R. § 162.7, the Chehalis court stated “[b]ecause this regulation ‘merely clarifies and confirms’ what § 465 ‘already conveys,’ we need not reach the applicability of this regulation.” Id. at 1157, n.6. iii. Implied Preemption If an express preemption cannot be found, then the court looks to whether preemption is implied. Implied preemption can be found in one of two ways: field preemption or conflict preemption. For field preemption to apply, the state law must exist in a field of law Congress intended federal law to 2 NCAI Supplemental Comments Docket ID: BIA-2016-0007 October 30, 2017 occupy exclusively. Fid. Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153 (1982)(quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).). In other words, after analyzing the applicable constitutional authority, statutes and regulations, it is determined that federal laws and regulations so thoroughly occupy the field at issue that it leaves no room for state law to apply. The Indian Trader Statutes have seen some significant success in this area. See, e.g., Cent. Mach. Co. v. Ariz. Tax. Comm’n (Central Machinery), 448 U.S. 160, 166 (1980)(Holding that “Congress ‘has undertaken to regulate reservation trading in such a comprehensive way that there is no room for the States to legislate on the subject’”); see also, Warren Trading Post Co. v. Ariz. Tax Comm’n, 380 U.S. 685, 690 (1965)(stating that “[t]hese . all-inclusive regulations and the statutes authorizing them would seem, in themselves, sufficient to show that Congress has taken the business of Indian trading on reservations so fully in hand that no room remains for state laws imposing additional burdens upon traders.”). That being said, modernized regulations, properly promulgated, that assert tribal tax jurisdiction, tribal court jurisdiction, and defer to tribal authority to regulate such conduct would be extremely helpful as discussed further below. Conflict preemption may apply in one of two ways: either where “compliance with both federal and state regulations is a physical impossibility,” (Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963).) or where the exercise of state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67 (1941). A recent example of conflict preemption is where the Supreme Court held, with respect to generic drugs, that federal law preempts any state law that would require a manufacturer to make changes in a drug label to provide more warnings since generic drug manufacturers are not permitted to make label changes under federal regulations. Pliva, Inc. v. Mensing, 131 S. Crt. 2567, 2579-82 (2011)(stating that “[t]he question for ‘impossibility’ is whether the private party could independently do under federal law what state law requires of it.”)(citing Wyeth v. Levine, 555 U.S. 555, 573 (2009).). iv. Special Preemption Analysis in Indian Country With respect to preemption and tax jurisprudence in Indian Country, absent an express preemption such as that found in Mescalero as discussed above, White Mountain Apache Tribe v.