Guide To

 Doing Business
With Tribal Governments

The economic power of Native American tribes continue to grow, and present more and more opportunities for entrepreneurs and small businesses alike.

Here are some things to know if you are a small business owner, consultant or contractor interested in partnering with a Native American tribal government.

Contents

Tribal Governments Are Sovereign Nations

The United States recognizes that tribal nations are sovereign governments, with all the rights and powers of self-government. Tribal governments determine their own governance structures, pass laws, and enforce those laws through their own police departments and tribal courts. They are in essence separate nations existing within the borders of the United States.

Tribal sovereign What this means is that for businesses seeking to work with tribal governments, they must first understand they are seeking to work with a sovereign government, which not only operates under its own set of laws and law enforcement, but also have federal common-law sovereign immunity.

Tribal sovereign immunity protects tribal government employees and entities from civil lawsuits for damages, requests for injunctive relief, and even breach of contract. In 1998, the US Supreme Court ruled that a tribal government, the Kiowa Tribe of Oklahoma in this case, was still protected under sovereign immunity despite defaulting on a promissory note in a stock option purchase contract.

The court ruled that “Indian tribes enjoy sovereign immunity from civil suits on contracts, whether those contracts involve governmental or commercial activities and whether they were made on or off the reservation. As a matter of federal law, a tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity.”

Tribal Governments In other court cases, tribes have been held specifically immune from subpoena enforcement to compel production of tribal witnesses or documents. US courts have also upheld that sovereign immunity extends to off-reservation tribal properties such as casinos or tourist attractions.

In some instances, there may be a waiver of sovereign immunity prior to engaging in a business contract or agreement. However this waiver must be an explicit and unequivocal waiver by the tribe in order to be fully enforced.

This is not to suggest that partnering with a tribal nation may not be economically beneficial, or something that could greatly help your business grow and succeed. After all, there are a great many tax benefits - for example - in working on or near Native American reservations.

This is only to say that you should proceed with due diligence prior to engaging with tribal governments, due to the fact that any dispute resolutions will not run through the US court system as it does with other businesses or federal/state governments you may contract with.

Tribal Corporations

Just as each tribal government is a sovereign entity with its own laws, regulations and court system, they also have their own corporate structures through which most business and commerce is operated and controlled.

Section 17 Tribal Corporation
Many tribal entities that choose to incorporate do so through Section 17 of the Indian Reorganization Act of 1934 (IRA). Through a Section 17 incorporation, the tribe creates a separate legal entity to divide its governmental and business activities. The Section 17 corporation has a federal charter and articles of incorporation, as well as bylaws that identify its purpose, much like a business founded under state law.

In addition, tribal governments can charter their own tribal government-owned corporations under tribal law or federal law (Section 17). Tribally chartered enterprises hold the same status as the tribe itself for purposes of federal income tax exemptions and sovereign immunity from lawsuits. Tribal corporations, like tribal governments, are generally not subject to state laws.

In many instances, a tribal government or corporation may require a business license to be issued should you propose to be doing business on the reservation. This usually is not a difficult or expensive process, but - again - the license will be granted through a tribal entity, rather than a state government. You need to review all tribal laws and regulations to fully understand how to obtain a business license. Any business that operates on tribal land without a license could void any contract or agreement with the tribal government.

Tribal Corporations Despite the fact that tribal nations are sovereign, there are however, some federal laws that must be adhered to when applying or proposing to work on tribal land. For instance, some businesses may be required to obtain a federal Indian traders’ license, issued by the Bureau of Indian Affairs (BIA), prior to conducting commerce activities on tribal land. Again, check with both the tribal government for relevant laws and regulations, in addition to the BIA or other federal agencies tasked with Native American issues, to determine exactly what licenses or paperwork is required to proceed.

Some federal regulations can be particularly cumbersome if you are not familiar with them. For example, the aforementioned Indian traders’ license regulations were created in 1957 and have not been comprehensively updated since 1965. While the BIA is currently in the process of trying to modernize these regulations, it will still prove difficult to navigate the regulatory bureaucracy without assistance from experts in tribal law and business.

Regulatory Guidance and Information for Tribal Fortunately, many government agencies, such as the Economic Development Administration (EDA) and the Minority Business Development Agency, the BIA (Native American Business Development) as well as the Small Business Administration (Office of Native American Affairs), offers regulatory guidance and information at no cost.

In the private sector, there are several organizations such as the National Center for American Indian Enterprise Development (NCAIED), The American Indian Business Association (AIBA) and the National Congress of American Indians (NCAI), that can provide assistance as well.

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Indian Preference

When tribal governments publish Requests for Proposals (RFPs) seeking vendors to bid on certain projects or services, it is common to see the disclaimer that “Indian Preference applies.” This means exactly what it sounds like, that vendors or businesses whose owners are enrolled members of a tribal government will receive preferential treatment when it comes to the awarding of bids and contracts.

Non Native American Business Owners This may come as a surprise to non-Native American business owners, who are accustomed to employment laws which specifically forbid taking into account an applicant’s race or national origin for hiring purposes. However, Indian Preference is a federally recognized right of tribal governments to give first consideration to Native Americans for all employment, training, contracting, subcontracting, and business opportunities that exist on reservations, or tribal properties located off tribal lands.

As sovereign nations, tribal governments are exempt from Title VII of the Civil Rights Act and federal and state employment laws. Court rulings have upheld that Indian Preference is a political preference, not a racial preference, and as such, do not violate federal employment law. The US Supreme Court has ruled that tribal government employment preference law is grounded in its inherent sovereign powers of self-government. That tribal governments have the right to make their own law, and are not bound by the laws of Congress.

Tribal Nations Business Partners So if you or your business partners are enrolled members of a tribal nation it would certainly be worthwhile to explore working with tribal governments, including requesting the latest RFPs and contracting opportunities that are available. Most “Indian preference” laws require at least 51% of the business be owned and managed by tribal members to qualify. A tribe may require a certification process to verify your membership before proceeding.

However, if you are not Native American, that doesn’t mean you should give up on working with tribal governments. Many non-Native businesses enjoy fruitful, mutually beneficial business relationships with tribal governments.

They accomplish this by tailoring their business proposals to the unique needs, economy and culture of the tribal government they are seeking to work with. In other words, don’t worry if you do not qualify for Indian Preference, it does not necessarily mean you will be shut out of the procurement process so long as you have the skills or means to benefit the tribal nation.

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Understand That Each Tribe Is Different

When preparing your proposal there are some basics to keep in mind.

First, always remember that tribal governments are considered sovereign entities, and tribal employees do not see themselves as merely public service providers, but rather leaders of a sovereign government that is responsible for the well-being and welfare of their people.

Native American Household
Many tribal reservations experience extreme poverty. According to US Census figures, the per capita income of Native American households is under $20,000 per year. In fact, twenty percent of Native households make less than $5,000 per year in income, compared to just 6% of the overall US population. Twenty five percent of the Native American population was below the poverty level compared to 15 percent for the nation as a whole.

You will find most business opportunities will be geared towards helping alleviate poverty, and other societal problems that come with it - such as a lack of quality health care, education and help for drug and substance abuse. These opportunities often present themselves as ways to generate a new source of tribal revenue, which could then be used to help the people, delivering better services, or creating new economic growth, jobs, and opportunity on tribal lands. You should always keep these goals in mind, and gear your business proposal towards helping tribal governments achieve one of these outcomes no matter what your business entails.

Tribal - Business Leadership Take the time to read up on the priorities, challenges and policy goals of the tribal leadership. For the most part, tribal leadership is elected like any other Democratic government. There are press releases, policy statements, and news media reports. The more you understand what the leadership is trying to achieve the better you can tailor your proposal towards meeting those objectives.

More importantly, you need to understand that each tribal government has a culture and heritage that is unique and sacred to them. Strive to cultivate sensitivity to and a working grasp of the unique cultural, historical, and political aspects of the specific tribes with whom you will be working with. Prior to submitting a proposal, read up on that tribe’s unique traditions, religious beliefs, ceremonies, customs (including marriage and inheritance), and history (prehistoric and contemporary).

Do not try to schedule meetings on days of prayer or other holidays, like Native American Day. Don’t offer to meet tribal leaders for drinks if alcohol consumption is against their religion, or discuss gaming opportunities if the tribe has moral or religious opposition to gambling. You may laugh, it seems like common sense, but you’d be amazed at how many promising business deals have been scuttled by a lack of basic homework and utter carelessness.

Native American Economic Opportunity For non-Native American business owners, there’s a few other tips that might be helpful when meeting with tribal representatives. For example, it’s important to always be patient and respectful. Some Native American cultures place an emphasis on speaking very little at meetings, placing value in being reserved and unassuming. Always assume that they are listening, even if they may not be actively engaging in conversation.

In some tribes, English is still a second language, which can create communications breakdowns or misunderstandings. Again, it’s important to be respectful and patient, understanding that in these instances they are attempting to speak in your native language, rather than requiring you to try and communicate in theirs.

Above all else, Native American communities are not only rich in heritage and culture, but rich in economic opportunity. There are countless federal incentives, such as Opportunity Zones and investment tax credits, not to mention near countless federal and state grant and loan opportunities for operating a business enterprise on tribal land, economically depressed regions or for the benefit of minorities (or all three).

Despite the regulatory and legal hurdles that may exist, it could be very much worthwhile to explore open bids from tribal governments that may be outstanding or to speak directly with tribal leaders or tribal corporations to see how your business or idea could be a fit.

Not just for your own business and finances, but for the betterment of the Native American people as well.

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Building Capacity in Indian Country®