CHAPTER 13 BASICS OF TRANSACTIONS WITH INDIAN TRIBES: CHOICE OF ENTITY AND DRAFTING ISSUES

• Jurisdiction: United States

Energy & Mineral Development in Indian Country
(Nov 2014)
CHAPTER 13
BASICS OF TRANSACTIONS WITH INDIAN TRIBES: CHOICE OF ENTITY AND DRAFTING ISSUES
Kent E. Ridley
Partner
Faegre Baker Daniels LLP
Minneapolis, Minnesota

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KENT E. RICHEY, a partner with Faegre Baker Daniels LLP in Minneapolis, Minnesota, is one of the nation's leading Indian Country business and finance attorneys. Kent has represented a variety of clients, including banks, investment banks, broker-dealers, insurance companies, credit enhancers, equipment vendors, developers, consultants, managers, and Indian tribes and their instrumentalities. More than 100 Indian tribes throughout the country have been involved in Kent's transactions, which in the aggregate exceed $10 billion in dollar value. These transactions have ranged from those involving energy (for example, oil and gas production and distribution, solar energy, wind energy, and recycling) to those involving gaming, hospitality, and health and governmental services. Relevant financings have taken a variety of forms, including bank loan and credit facilities (both syndicated and non-syndicated), leases (both financing and operating), and the offer and sale of indentured debt securities. In the course of this practice, Kent is called on to provide advice as to, among other things, the creation of limited purpose entities, the negotiation of acceptable dispute resolution procedures, compliance with various applicable regulatory requirements, and, if appropriate, drafting and adoption of appropriate tribal laws to facilitate the various transactions.

I. DISPUTE RESOLUTION CONSIDERATIONS

(A) Tribes and their instrumentalities have sovereign immunity from suit and legal process unless they waive that immunity.

(1) Immunity applies both on and off the Indian reservation, and whether or not a governmental or commercial activity is involved. As stated this year in the U.S. Supreme Court Case of Michigan v. Bay Mills Indian Community, 572 U.S. ___, (2014):

"The question in this case is whether tribal sovereign immunity bars Michigan's suit against the Bay Mills Indian Community for opening a casino outside Indian lands. We hold that immunity protects Bay Mills from this legal action. Congress has not abrogated tribal sovereign immunity from a State's suit to enjoin gaming off a reservation or other Indian lands. And we decline to revisit our prior decisions holding that, absent such an abrogation (or a waiver), Indian tribes have immunity even when a suit arises from off-reservation commercial activity." id. at __________ (emphasis added).

(B) Waivers of sovereign immunity are enforceable:

(1) A waiver is valid only if properly authorized.

a. Courts look to tribal law to see if the waiver of immunity has been authorized in the manner prescribed by that tribe's law. See, e.g., Dillner v. Seneca-Cyuga Tribe of Oklahoma, 2011 OK 61, 258 P. 3d 316 (Okla. 2011); Memphis Biofuels, LLC v. Chickasaw Nation Industries, Inc., 585 F.3d 917 (6th Cir. 2009).

b. Consistent with this approach, courts require that the individual signing a document containing a waiver must be properly authorized. Sanderlin v.

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Seminole Tribe of Florida, 243 F.3d 1282, 1287 (11th Cir. 2001) (apparent authority insufficient to vest tribe's chief with power to waive tribe's immunity; actual authority pursuant to tribal law required).

(2) Waiver must adhere to any special tribal law requirements. Some tribal constitutions or other laws impose express requirements as to the matters that must be addressed in a valid waiver of sovereign immunity, such as specific identification as to:

a. the waiver beneficiaries;

b. the courts in which the waiver applies;

c. the law which governs the agreement in which the waiver is contained;

d. the duration of the waiver;

e. the types of relief that may be sought; and

f. the assets against which enforcement or collection may be sought.

(C) Without a waiver of sovereign immunity, an Indian tribe cannot be sued in its own courts. There is a common misconception to the contrary.

(D) Sovereign immunity applies not only to a tribe but typically also applies to tribally created entities that are wholly owned or controlled, directly or indirectly, by the tribe. See, e.g. Myers v. Seneca Niagara Casino, 488 F.Supp2d 166, 168 n. 2;

"Tribal subagencies and corporate entities created by the Indian Nation to further governmental objectives, such as providing housing, health and welfare services, may also possess attributes of tribal sovereignty, and cannot be sued absent a waiver of immunity." Matter of Ransom v. St. Regis Mohawk Educ. & Community Fund (86 NY2d 553, 558-560); But see, Sue/Perior Concrete & Paving, Inc. v. Lewiston Golf Course Corporation, 2013 NY Slip Op 04471.

(E) Federal Court may not be available to resolve a dispute with a tribal party.

(1) Unless "federal question" jurisdiction exists for a dispute, a federal court may not have "diversity jurisdiction" to hear a matter, particularly if the tribe is a party, because some courts have held that tribes are not citizens of any state for purposes of such jurisdiction. See, e.g., Ninigret Development Corp. v. Narragansett Indian Wetuomuck Housing Authority, 207 F.3d 21, 27 (1st Cir. 2000); Romanella v. Hayward, 114 F.3d 15 (2d Cir. 1997); Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135, 1140 (8th Cir. 1974); American Vantage Companies, Inc. v. Table Mountain Rancheria, 2002 U.S. App. Lexis 11692 (9th Cir. June 14, 2002); Gaines v. Ski Apache, 8 F.3d 726, 729 (10th Cir. 1993).

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(2) But, an Indian tribe may incorporate as a federal corporation, governed by the terms of its charter, pursuant to § 17 of the Indian Reorganization Act (a so-called "Section 17 Corporation"). This corporate entity is considered a citizen of the state of its principal place of business for purposes of diversity jurisdiction. See American Vantage, 2002 U.S. App. LEXIS at *4 n.1; Gaines, 8 F.3d at 729; Veeder v. Omaha Tribe of Nebraska, 864 F. Supp. 889, 898-99 (N.D. Iowa 1994).

(3) There is a split in...