Michigan's Tribal Economies

Michigan State University College of Law INDIGENOUS LAW & POLICY CENTER OCCASIONAL PAPER SERIES Michigan’s Emerging Tribal Economies: A Presentation to the Michigan House of Representatives Jake J. Allen, 2L, MSU College of Law Hannah Bobee, 2L, MSU College of Law Kathryn E. Fort, Staff Attorney, Indigenous Law and Policy Center Bryan Newland, 3L, MSU College of Law Wenona T. Singel, Associate Director, Indigenous Law and Policy Center Indigenous Law & Policy Center Working Paper 2007-07 April 13, 2007 Michigan's Emerging Tribal Economies I. II. Introduction Understanding Tribal Sovereignty III. Michigan Tribal Economies, Past and Present IV. Resources 2I. Introduction The territory now known as the state of Michigan has been populated by indigenous peoples who have governed themselves since time immemorial. Today, Michigan has twelve Indian tribes recognized by the federal government as exercising sovereignty. The 2000 Census reported that Michigan has approximately 125,000 people who identify as entirely or partially American Indian.<a href="#3_0">1 </a>Of those who identified solely as American Indian, Michigan has the twelfth largest population nationwide and the fourth largest American Indian population east of the Mississippi River. Each of the Tribes in Michigan exercise of the powers of self-government within the land defined as Indian country under federal law. Indian country is a legal term of art defined by federal statute, and it includes all lands within reservation boundaries, all allotments, and all dependent Indian communities.<a href="#3_1">2 </a>Trust lands, or lands which the federal government holds in trust for the benefit of Indian tribes, also constitute Indian country.<a href="#3_2">3 </a>In addition to Indian country, another term of art with significance for Indian selfgovernance is the concept of a service area. Service areas constitute clusters of counties within which each tribe provides important governmental services to the American Indian population. Examples of services include health care, housing assistance and social services. Although Indian country and service areas are areas of critical importance for tribal governance, these areas only capture a portion of Michigan’s American Indian population. Nationwide, only about one third of all tribal citizens live on reservation land. In other words, about two-thirds of all tribal citizens live off reservation. Many live in urban areas and consider themselves urban Indians. In Michigan, urban areas with large American Indian communities include Detroit, Grand Rapids and Lansing. Detroit has the tenth largest urban Indian population in the nation. The federally recognized tribes in Michigan are each part of a larger group known as the People of the Three Fires. The Three Fires Confederacy represents the Ottawas, Potawatomis and Ojibwe.<a href="#3_3">4 </a>Members of each of these tribes also refer to themselves as the Anishinaabeg.<a href="#3_4">5 </a>These tribes have been active in the economy of the region since before European contact, and the presence of these sovereigns is an economic and cultural benefit to the state of Michigan. 1 The American Indian and Alaska Native Population: 2000, Census 2000 Brief (2002). 2 18 U.S.C. § 1151 (2002). 3 Citizen Band Potawatomi Indian Tribe of Oklahoma v. Oklahoma Tax Commission, 888 F.2d 1301 (10th Cir. 1989) aff'd in part, rev'd in part on other grounds 498 U.S. 505 (1991). 4 The Ottawas also refer to themselves as Odawa, and the Ojibwe also use Ojibway, Ojibwa and Chippewa to refer to themselves. 5Clifton, James A., George L. Cornell, James M. McClurken, People of the Three Fires: The Ottawa, Potawatomi and Ojibway of Michigan (The Grand Rapids Inter-Tribal Council, 1986), iv-v 3II. Understanding Tribal Sovereignty Tribes are sovereign entities and were operating as such prior to European contact. Succinctly put, tribal sovereignty is the power to exercise self-rule.<a href="#4_0">6 </a>In Williams v. Lee, the first Indian law case decided by the Supreme Court in the modern era, the Court referred to tribal sovereignty as “the right of reservation Indians to make their own laws and be ruled by them.”<a href="#4_1">7 </a>Tribal sovereignty has two critical aspects. First, tribal sovereignty is an inherent power that predates European contact and the formation of the United States.<a href="#4_2">8 </a>As such, the sovereign powers exercised by tribes today constitute retained rather than delegated powers.<a href="#4_3">9 </a>Second, the scope and content of tribal sovereignty is not addressed in the United States constitution. Unlike the states, which waived aspects of their sovereignty to join the federal union, tribes did not participate in the Constitutional Convention and agree to the same concessions as the states.<a href="#4_4">10 </a>As a result, the Constitution’s restrictions on federal and state governments do not apply directly to tribes.<a href="#4_5">11 </a>The Constitution only refers to tribes in three brief sections described later in this paper. To understand the nature of tribal sovereignty and the retained rights of Indian tribes, we must look principally to the treaties entered into between tribes and the federal government and the opinions of the Supreme Court that interpret those treaties. The treaties negotiated by tribes generally constituted solemn agreements in which tribes retained the right to exercise self-government and agreed to cede portions of their territory in exchange for payments, services, and the permanent right to occupy reservations and exercise the power of self-government without the interference of nonIndians. In 1871, the federal government ceased treaty-making, but the treaties entered into prior to this moratorium remain the supreme law of the land, constitutionally guaranteed by the Supremacy Clause.<a href="#4_6">12 </a>A. Michigan Tribes and Treaties Treaties involving Michigan Indian tribes included provisions that provided for cessions of land by the tribes in exchange for reservations or allotments, payments, and services. For example, the Treaty with the Ottawa and Chippewa Nation of 1836, also known as the Treaty of Washington, required the federal government to set aside certain tracts as 6 Joseph P. Kalt & Joseph William Singer, Myths and Realities of Tribal Sovereignty: The Law and Economics of Indian Self-Rule, Faculty Research Working Papers Series 7 (Harv. U. March 2004) (available at http:// ksgnotes1.harvard.edu/Research/wpaper.nsf/rwp/RWP04-016?OpenDocument) 7 Williams v. Lee, 358 U.S. 217, 219 (1959). 8 McClanahan v. Arizona Tax Commission, 411 U.S. 164, 172 (1973) (“[the tribe’s] claim to sovereignty long predates that of our own Government”). 9 United States v. Wheeler, 435 U.S. 313, 323 (1978). 10 Some courts have termed this relationship as “extraconstitutional” or even “preconstitutional.” United States v. Lara, 541 U.S. 193, 213 (2004) (Kennedy, J., concurring) (“extraconstitutional”); Lara, 541 U.S. at 201 (“preconstitutional”). 11 Talton v. Mayes, 163 U.S. 376, 382 (1896). 12 U.S. Const. Art. VI (“This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.”). 4reservations, provide annuity payments, and provide additional funds for education, agricultural necessities, and medical goods and services.<a href="#5_0">13 </a>While there are many treaties between tribes in Michigan and the federal government, two are especially critical: the 1836 Treaty of Washington and the 1855 Treaty of Detroit. The 1836 Treaty of Washington was an agreement between tribes in Michigan and the federal government for the tribes to cede a large portion of what became Michigan to the United States Government in exchange for money. The land ceded by the 1836 Treaty constituted roughly the northern third of Michigan’s Lower Peninsula and the eastern half of its Upper Peninsula, with the exception of reservations that the tribes retained within this area. The Ottawa Chiefs and Headmen purchased lands in their name for all the members of their bands. Essentially, the tribes bought back parcels within the land that they had just sold, with the money they received in exchange for it. This was one way Michigan tribes were able to avoid the federal government’s attempt to remove them west of the Mississippi.<a href="#5_1">14 </a>The 1855 Treaty of Detroit was an agreement between certain tribes in Michigan and the federal government in 1855. The Treaty of Detroit ended the threat of forced removal to Kansas by the federal government by withdrawing from sale certain lands within the public domain to allow for the issuance of allotments and fee patents to individual Indians.<a href="#5_2">15 </a>The terms of this treaty required the United States Government to provide $538,400 for “the support of schools and to provide agricultural implants, household furnishings, and blacksmith shops.”<a href="#5_3">16 </a>The conditions on the land set aside for the tribes were extremely impoverished. The reduced land base led to complete economic dependence on the federal government for survival. B. Tribes and the Federal Government Because of the sovereign status of tribes, treaties, and certain portions of the Constitution, tribes and the federal government have a unique relationship. This relationship, sometimes called the trust relationship, is a sovereign-to-sovereign relationship. Aside from treaties, the political relationship between the tribes and the federal government can be traced to the Commerce Clause and Treaty Clause of the Constitution. The Commerce Clause states, “the Congress shall have Power . . . To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”<a href="#5_4">17 </a>According to the Handbook of Federal Indian Law, “The commerce clause has become the linchpin in the more general power over Indian affairs recognized by Congress and the courts.”<a href="#5_5">18 </a>The Commerce Clause, therefore, “anticipat[es] and affirm[s] federal law singl[ing] out Indian nations and their members for separate treatment.”<a href="#5_6">19 </a>13 Art. 4, 6 Stat. 491 (1836) 14 Our Land and Culture: A 200 Year History of Our Land Use. Little Bay Band of Odawa Indians (Nov. 2005). 15 Treaty of Detroit (11 Stat. 633). 16 Id. 17 U.S. Const. Art. I, §8, cl. 3; Art. II, §2 cl. 2 18 Cohen’s Handbook of Federal Indian Law, §5.01[4] (2005) 19 Cohen, §14.03[2][b][i] 5 Generally, the federal government has the sole authority to deal with tribes. This has been both a curse and a blessing for tribes, as federal policy toward tribes has shifted considerably over time. In certain time periods the federal government has tried to extinguish tribes, either through allotment of tribal lands, or termination of the relationship between tribes and the federal government. In other time periods, the federal government has encouraged self-governance and tribal sovereignty. In 1970, President Nixon stated that it was time for a “new national policy toward the Indian people: to strengthen the Indian’s sense of autonomy without threatening his sense of community . . . and . . . that Indians can be independent of Federal control without being cut off from Federal concern and Federal support.”<a href="#6_0">20 </a>This has been interpreted to mean that the current federal policy era is one of tribal self-governance and self-sufficiency. C. Tribes and the Supreme Court Because the federal government has exclusive authority to deal with tribes, most litigation surrounding tribes takes place in the federal court system. The Supreme Court has been hearing Federal Indian law cases since 1823. Starting with Johnson v. M’Intosh in 1823 and ending with Worcester v. Georgia in 1832, the Supreme Court heard three Indian law cases now termed “The Marshall Trilogy” after then-Chief Justice John Marshall. The trilogy forms the base for what is termed “Federal Indian law,” the Supreme Court’s interpretation of treaties and statutes applying to American Indian tribes. Like the federal government, the Supreme Court has swung dramatically between affirming tribal sovereignty and limiting tribal authority.<a href="#6_1">21 </a>There are a few principles on which, however, the Court has been relatively consistent. 1. Political Status of Tribes and Tribal Members In 1974, the Supreme Court upheld hiring preferences for qualified Indians to vacancies in the Bureau of Indian Affairs in the landmark case of Morton v. Mancari.<a href="#6_2">22 </a>The basis for giving preference in hiring was not an affirmative action, but based on the political status tribal members and tribal sovereignty. In Morton v. Mancari, Justice Blackmun reasoned that “[t]he preference, as applied, is granted to Indians not as a discrete racial group, but, rather, as members of quasi-sovereign tribal entities whose lives and activities are governed by the BIA in a unique fashion.” An equal protection analysis requiring a compelling state interest to justify overt racial discrimination is inapplicable to legislation 20 Message from the President of the United States Transmitting Recommendations for Indian Policy, H.R. Doc. No. 91-363, 91st Cong., 2nd Sess. (July 8, 1970), reprinted in Cases and Materials on Federal Indian Law, ed. David Getches, (4th ed., 1998) 226-7. 21 For example, compare Lone Wolf v. Hitchcock, 187 U.S. 553 (1903) to United States v. Winans, 198 U.S. 371 (1905), or Menominee Tribe of Indians v. United States, 391 U.S. 404 (1968) to Oliphant v. Suquamish Indian Tribe, 435 U.S. 191 (1978). 22 Morton v. Mancari, 417 U.S. 535 (1974). 6or governmental action toward tribal members because the policy of preference has been determined by the Court to be based on a political relationship, not race.<a href="#7_0">23 </a>Since that time, the Court has continued to affirm the political status of tribes and tribal members, and rarely subjects legislation to strict scrutiny under the 14th Amendment which would likely not pass constitutional muster if targeted at other protected groups. But since Congressional classifications in this field are political rather than racial, the courts apply the rational basis test and tend to uphold these statutes.<a href="#7_1">24 </a>In 2004, a U.S. Court of Appeals held “we therefore hold that the preference in § 8014(3), by promoting the economic development of federally recognized Indian tribes (and thus their members), is rationally related to a legitimate legislative purpose and thus constitutional.”<a href="#7_2">25 </a>2. Tribal Sovereign Immunity As sovereigns, tribes also enjoy the protection of sovereign immunity. A tribe cannot be sued without its permission, either in tribal, federal or state courts. Sovereign immunity is an inherent aspect of sovereignty, and both states and the federal government have sovereign immunity, except when expressly abrogated. Tribal sovereign immunity has been recognized by the U.S. Courts since 1895. In Thebo v. Choctaw Nation, the U.S. Court of Appeals for the Eighth Circuit held that it has been the policy of the United States to place and maintain the Choctaw Nation . . . so far as relates to suits against them, on the plane of independent states. A state, without its consent, cannot be sued by an individual. It is a well-established principle of jurisprudence in all civilized nations that the sovereign cannot be sued in its own courts or any other without its consent and permission; but it may, if it thinks proper, waive this privilege and permit itself to be made a defendant in a suit by individuals or by another state.<a href="#7_3">26 </a>The Supreme Court, in Santa Clara Pueblo v. Martinez, also recognized that tribes have “long been recognized as possessing the common law immunity from suit traditionally enjoyed by sovereign powers.”<a href="#7_4">27 </a>However, both cases also recognize Congress’s power to waive tribal sovereign immunity for specific cases and controversies, though the waiver must be express and unequivocal, much like the abrogation of a treaty.<a href="#7_5">28 </a>As 23 Washington v. Confederated Bands and Tribes of Yakima Indian Nation, 439 U.S. 463, 99 S.Ct. 740, 58 L.Ed. 2d 740 (1979). 24 For example, see United States v. Antelope, 430 U.S. 641, 646; and Mancari, 417 U.S. at 554 25 American Federation of Government Employees, AFL-CIO v. United States, 330 F.3d 513, 523-4 (D.C. Cir.) cert. denied, 540 U.S. 1033 (2004). 26 Thebo v. Choctaw Tribe of Indians, 66 F. 372, 375 (8th Cir. 1895). 27 Santa Clara Pueblo v. Martinez, 436 U.S. 49, 60 (1978). 28 Santa Clara Pueblo, 436 U.S. at 60. 7recently as 1998, in Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., the Court upheld the doctrine and deferred to Congress for express abrogation of immunity.<a href="#8_0">29 </a>This area, like all areas of Federal Indian law, is still subject to litigation, particularly as tribes operate both as tribes and corporations. D. Tribes and the State As self-governing sovereign communities, tribes are not political subdivisions of the state. They co-exist within the state, but are not of the state. The Michigan Supreme Court recently acknowledged that Indian tribes are “‘distinct political communities,’” whose sovereignty can be limited only by Congress.<a href="#8_1">30 </a>An older Michigan Supreme Court case has also held, “[Indians and Indian tribes] did not occupy their territory by our grace and permission, but by a right beyond our control. They were placed by the constitution of the United States beyond our jurisdiction, and we had no more right to control their domestic usages than those of Turkey or India.”<a href="#8_2">31 </a>While this is the case, tribes and states still need to find ways to address pragmatic concerns from policing to taxation to shared economies. A strong, sovereign-to-sovereign relationship between a tribe and a state can lead to solutions that make sense for both governments. In 2002, the State of Michigan entered into a Government-to-Government Accord with the 12 federally recognized tribes, acknowledging tribal sovereignty, tribal selfgovernance and cooperation between the state and tribes. This Accord was reaffirmed by the Governor in a 2004 Executive Directive. In doing so, the Governor demonstrated understanding of and respect to tribes as sovereigns, making it easier for the two governments to work together in other areas. Tax Agreement In 2002, seven tribes in Michigan signed Tribal-State Tax Agreements with the State of Michigan through the Department of Treasury.<a href="#8_3">32 </a>The tax agreements constitute negotiated agreements that clarify the extent to which Michigan’s Indian tribes and tribal citizens are exempt from and subject to several Michigan taxes. The clarification offered by the tax agreements is beneficial for the state and Michigan’s tribes because it offers certainty in an area where federal Indian law is riddled with broadly defined standards whose application is often difficult to predict. The taxes addressed by the tax agreements include the sales and use tax, the individual income tax, the motor fuels tax, the tobacco tax, and the single business tax. The tax agreements provide for limited waivers of sovereign immunity to allow for enforcement of the agreement’s terms, and they create “agreement areas” that specify the geographical areas within which the tax agreement’s provisions apply. 29 523 U.S. 751 (1998). 30 Taxpayers of Michigan Against Casinos v. State, 685 N.W.2d 221, 227 (Mich. 2004) (quoting Worcester v. Georgia, 31 U.S. 515, 557 (1832)), cert. denied, 543 U.S. 1146 (2005). 31 Kobogum v. Jackson Iron Co., 43 N.W. 602, 605 (1889) 32 Copies of the Michigan Tribal-State Tax Agreements are available at <a href="/goto?url=http://www.michigan.gov/taxes/0,1607,7-238-43513_43517---,00.html" target="_blank">http://www.michigan.gov/taxes/0,1607,7-238-43513_43517---,00.html. </a>

Michigan's Tribal Economies

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