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door to additional years of costly and potentially conflicting litigation (the very result that Title I seeks to avoid), the bill should clearly state the rules and the decisions with which the participants are supposed to be consistent.
While states and local governments may legitimately levy consumer taxes on non-Indian patrons of reservation businesses according to Oklahoma Tor Comm'n v. Citizen Band of Potowatomi Indian Tribe of Okla., 498 U.S. 505 (1991), these consumer taxes should be the subject of the tax compacts undertaken pursuant to the bill. Taxes that states have attempted to levy on the tribes themselves, however, are clearly not permitted without Congressional authorization, as stated in Oklahoma Tær Comm'n v. Chickasaw Nation, 515 U.S. 450 (1995). We feel that the Committee should unequivocally affirm and codify the rule that states may not tax the operations of tribal governments, and make it clear that it is not, by this or other legislation, providing Congressional authorization to do so.
STANDING ROCK SIOUX TRIBE
ON S. 2097,
RISK MANAGEMENT ACT OF 1998
JULY 15, 1998
Mr. Chairman and members of the Committee. I am Charles W. Murphy, the Chairman of the Standing Rock Sioux Tribe, presenting this written testimony in connection with the Committee's hearing on S. 2097. The Standing Rock Sioux Tribe supports the work of Senator Campbell in developing this bill, which seeks to address, among other things, tax disputes and tort claims in a manner consistent with the rights of the tribes. In our view, S. 2097 represents a major step in the right direction.
S. 2097 and the sovereign immunity hearings
I would begin by expressing our appreciation for the manner in which the Committee undertook its series of hearings on sovereign immunity. Those hearings clearly demonstrated that the doctrine of sovereign immunity is not some anachronistic legal concept, but is a necessary protection for tribal self-government. Without sovereign immunity, tribes would be subject to a broad range of lawsuits, including suits for money damages, which would have a devastating impact on our ability to provide vitally important services to our people. As the testimony at the hearings made clear, the states have not opened themselves up to unlimited suits for money damages, but rather have waived immunity only within carefully prescribed limits. Subjecting tribes against their will to unlimited liability, in a manner not faced by any other government, would place the future of the tribes in serious jeopardy.
Moreover, those hearings showed that the harsh medicine of waiving tribal immunity is not warranted by the record. On the contrary, effective mechanisms are being widely and effectively used to resolve disputes involving tribes -- across a wide range of issues. For example, most states have negotiated agreements with tribes regarding the collection of various state taxes. In fact, there are about 200 such agreements in place, in 19 states.
Our experience at Standing Rock underscores this point. For example, on the issue of taxes, we have long had a strong and positive relationship with the North Dakota Tax Commissioner's Office. In fact, we have the unique honor of having two former North Dakota Tax Commissioners now representing us in the Senate, and serving on this Committee -- Senator Dorgan and Senator Conrad. Some years back, when Senator Dorgan was the Tax Commissioner, certain legal issues regarding state taxes were not yet resolved, and we entered a friendly lawsuit to have those issues addressed. This was not a confrontational matter, but rather an agreed upon way to resolve uncertainty and move ahead together on issues of mutual interest. That experience set the tone for our relations with North Dakota. When Senator Conrad was Tax Commissioner, the Tribe and State worked on developing a cigarette tax agreement, which ultimately was implemented in 1993. We appreciate the good will and leadership of Senator Dorgan and Senator Conrad on these issues, and note that the model they set for working together with our Tribe on tax issues continues today -- as we are working with the current North Dakota Tax Commissioner to expand the scope of our tax agreement. Our experience shows that tribes and states can work together to address tax issues on a government to government basis -- without requiring waivers of immunity. Indeed, the testimony at the hearings reflects that tribal-state agreements on taxes are the norm across Indian country.
S. 2097 properly acknowledges that waiving tribal immunity from suit would undermine the ability of tribes to use existing mechanisms, such as tax agreements, to resolve important issues. Instead, the premise of S. 2097 is that all parties could benefit if additional, supplementary mechanisms were made available to assist in resolving disputes involving tribes, without waiving sovereign immunity. The Standing Rock Sioux Tribe strongly supports this approach as it protects the sovereignty of the tribes and acknowledges that in many cases existing mechanisms of dispute resolution are working.
Process for resolving tribal-state disputes
S. 2097 outlines a process for tribes and states to resolve their differences without litigation. There would be two basic components to the process. First, the bill provides for mediation of disputes -- with a mediator selected by the Secretary of the Interior. Second, if mediation does not lead to a resolution, the bill calls for the dispute to be submitted to an "Intergovernmental Alternative Dispute Resolution Panel” -- a special body established to deal solely with tribal-state disputes.
Standing Rock supports the concept of providing an alternative dispute resolution mechanism for tribes and states. At the same time, we respectfully suggest that a number of issues need to be addressed and clarified with regard to these provisions.
First, what is the scope of issues which can be brought and heard under these procedures? The bill clearly permits states to use the mediation and Panel procedures of the bill for claims regarding the collection of state taxes on sales to non-Indians in Indian country. Thus, the bill can be used affirmatively by the states on tax issues. But, the extent to which the tribes can use these procedures affirmatively is unclear.
The bill permits “counterclaims, setoffs, or related claims submitted or filed by the tribe in question regarding the original claim.” This language, in our view, should be modified to assure tribal access to the bill's alternative dispute resolution process on tax issues. For example, tribes should be able to use these procedures where states are seeking to collect state taxes from tribal members on their reservation. Unfortunately, in many instances the clear mandate of federal law is disregarded and tribal members are in fact charged state taxes that are not applicable.
We have been involved in one such situation which is ongoing. The South Dakota motor vehicle excise tax has been ruled to be preempted by federal law -- so the State can not lawfully impose the tax against tribal members on their reservation. United States (Cheyenne River Sioux Tribe) v. South Dakota, 105 F.3d 1352 (8th Cir. 1997), cert. denied, 139 L.Ed.2d 378 (1997). Last year, however, South Dakota simply refused to apply the Eighth Circuit's ruling on the Standing Rock Reservation -- and continued to impose the tax on our tribal members, although the Eighth Circuit had held the tax to be unlawful. We were forced to file a separate suit on behalf of Standing Rock, just to vindicate the principle that South Dakota had to comply with the Eighth Circuit's ruling and refrain from collecting the illegal tax on our Reservation. While our suit was successful in enjoining South Dakota's illegal conduct, it should not have been necessary. Nor was this simply an isolated example. In fact, South Dakota's efforts to collect the motor vehicle excise tax continue. South Dakota has recently issued proposed regulations under which tribal members would be required to pay a substantial portion of the same illegal motor vehicle excise tax. As a result, further litigation appears imminent.
As this example reflects, tribal-state tax disputes include many instances of state unwillingness to respect the rule of federal law. At a minimum, the procedures in S. 2097 must be available to tribes to address these circumstances.
Second, what is the scope of authority of the Intergovernmental Alternative Dispute Resolution Panel? In our view, the bill should be more detailed in this regard. For example, it is not clear whether the Panel would serve as a sort of super mediator, an arbitrator, or in some other capacity. It is not clear whether the Panel would hold trial type hearings, or operate with informal procedures. And, it is not clear what kinds of opinions the Panel would render. In our view, the Panel should be authorized to hear claims using informal procedures and render non-binding advisory opinions on the questions presented to it. The parties should be able to present written submissions to the Panel, and make oral arguments. Trial type hearings should not be necessary -- as much of the benefit of a process of this kind is the avoidance of the burdensome cost and lengthy time delays that typically occur in litigation.
Third, what would be the role of the Federal Mediation and Conciliation Service (“Service”) with regard to the work of the Panel? The bill specifies that the Federal Mediation and Conciliation Service would, among other things, “provide services” to the Panel, and "furnish employees to serve as neutrals” in resolving disputes before the Panel. This raises the question of the extent to which the actual work of the Panel would be handled by the Service. In our view, the Panel itself must engage in the process. The effectiveness of the Panel will turn, in large measure, on the confidence the parties have in the judgment and abilities of the Panel's members. If the parties respect the Panel members, they will be more likely to come to agreement based on the Panel's findings. The role of the Service, in our view, should be to serve as staff for the Panel -- not to usurp the direct role of the Panel members in deciding the questions presented.
Overall, the Tribe supports the approach contained in the bill of providing a nonbinding alternative dispute resolution mechanism for tribal-state tax issues.
Joint tribal-federal-state commission on intergovernmental affairs
The bill calls for the creation of a new Commission to advise the Secretary of the Interior on a broad range of issues affecting Indian tribes and other governments. We suggest that what is needed is not a new set of policy recommendations, but rather an independent review of the facts regarding conditions in Indian country.
Over the past couple of years, Congress has faced efforts to make unprecedented and harmful changes in the government's dealings with Indian tribes. These have ranged from sovereign immunity, to means testing, to taxation of tribal revenues, to limiting taking land into trust. In our view, these attempts have shared one thing in common -- they are based on a fundamental misunderstanding regarding the legal rights of tribes, and regarding the economic and other conditions in Indian country. In particular, these efforts have been fueled by the misperception that all Indians are now rich from gaming. This myth -- which has gained force through the disproportionate attention paid by the national media to the very few most successful gaming tribes -- has done the tribes a tremendous disservice. While tribes like Standing Rock struggle to address the enduring poverty, teen suicide and other terrible problems that have long plagued us, too many in Congress think that we are rich, and seek to change federal policies to our detriment.
In our view, the way to combat this myth is through the facts. Accordingly, we would suggest that S. 2097 be amended to provide for a comprehensive, independent report on conditions in Indian country. Such a report could document several things. First, it could provide information on tribal governmental activities, describing the schools, health care facilities, law enforcement and other functions undertaken by tribes. Second, the report could document the actual economic conditions of tribes -- which vary widely, but which includes massive poverty not currently understood by many in Congress. And third, it could review health, housing and social conditions -- to demonstrate the conditions under which Indians
actually live today in Indian country.
Such a review of conditions in Indian country would go a long way toward correcting the current misunderstandings which have made it so difficult for us in recent years. A current report could bring about a greater understanding of how tribal governments function,