Joseph P. Kalt: Sovereignty: Your Best Tool for Development

Native Nations Institute

Harvard Project on American Indian Economic Development Co-Director Joseph Kalt share some innovative ways that Native nations have exercised their sovereignty in order to foster sustainable economic and community development.

Native Nations
Resource Type

Kalt, Joseph P. "Sovereignty: Your Best Tool for Development." Emerging Leaders seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. March 25, 2009. Presentation.

Joseph P. Kalt:

"What I'm going to do is...this is fun for me. Part of what our jobs let us do -- [because] we work for universities and we don't really have to work -- is we get to drive around a lot and see the world and see really cool things out there. And so the real title of my talk is ‘Some Cool Ideas We See Out There That Might Be Interesting to You.' [Because] part of our job...I had, actually, a tribal chairwoman up in the Pacific Northwest one time say to us, ‘Oh, I get you guys. You're just a pipeline; you suck up information over here and shoot it out the other end.' [Because] you guys are too busy. You don't work for universities; you don't get to run around like we do and just sort of hang out. Really, some cool ideas we see out there, maybe they'll be useful to you. But the theme is, the theme is ‘Sovereignty is your Best Tool for Development.' You can feel in these sessions the only policy that's ever worked to turn things around in Indian country -- rebuild the communities, give people jobs, rebuild families -- is self-determination. That's the only policy that's ever really worked. Why? Well, sovereignty is a tool of development. I'm just going to show you (if I can figure out how this works...see I can do it; here we go) some cool ideas, things we see out there, people using their sovereignty as an asset, just like having money in the bank.

Create a city: what a cool idea! All around the earth we human beings, everywhere, we create little towns. Just pause and think about it. We do that, that's what we do. And they usually have a title like alcalde, if you're in Mexico, or mayor or something like that, whatever. You go out in Indian Country and quite often, there's only one town with any government. It's in the central, where the tribal headquarters are. Why is that? Why don't we see more? Not just a little community, but a real self-governing town? We human beings do this because someone's got to decide what the speed limit is down there on the road. Someone's got to decide, 'Where are we going to locate the solid waste facility?' Somebody's got to decide these very local things that all over the world we human beings have to face, but you don't see it in Indian Country. The tribal government, the central tribal government does it all. Why is that? ['Jurisdiction.'] What do you mean? She says 'jurisdiction.'"

Audience Member:

"The town of Mission, on the Rosebud Reservation in South Dakota, is the only real city in Mission, South Dakota. And they have their own functioning city council and this kind of thing. So it's a jurisdictional issue for us because if a non-Indian gets a DUI, then the city sheriff would pick them up and haul them in."

Joseph P. Kalt:

"And one of the reasons everything out there is run through the central tribal government is because historically, when the feds controlled everything, they only wanted one government to deal with, partly so they could control everything. ‘If I channel all my money through you, name you tribal chair; well then I can control everything.' And so you've got this legacy out across Indian Country of -- like you say -- no towns, in the sense of little governments. Not big governments trying to rule the world, but just getting the little things of daily life done. Alright. So there's some real cool cases out there.

One of the fastest growing towns in Indian Country for the last ten years has been Kayenta on the Navajo [reservation]. Interesting. Notice how I wrote that. That's the way towns identify themselves. You don't see that in Indian Country, right? [Because] of this legacy of, ‘We're going to channel those dollars so the federal government and all the power through the central tribal government [because] we want to control that. We don't want real self-determination for tribes. We want to control it.' What did Kayenta do? Well, they went out and basically said, ‘Darn it, we're going to create a town,' basically, a township. And they said, ‘We're having trouble with things like, well...' It's no different than any other nation. They were complaining about the central Navajo Nation government, just the typical thing. There's nothing wrong with central Navajo Nation, it's just they had local needs down on the ground, so they go in and they create a township.

They didn't levy taxes. They're not called taxes; they're called fees, little business fees. And they convinced the local, very small business owners and so forth, ‘Look, if you'll pay small fees to support what we're doing, we'll go out and do things like go in and do all the archaeological surveys we need to do as one big block and create a little industrial or business area.' Because what was going on was every time anyone would want to open a business, it'd then take 18 months to do...’Well, we'll go do it ahead of time and figure out, okay, this is a safe place for our history. We can have some business. Oh, we'll also use our little fees to put in, oh, water lines, buy a fire engine,' the things that towns do, okay? Oh, and they promised the community business permits. ‘You submit a permit,' I think they said, ‘we'll have it to you within 10 working days,' not two years -- fast. We'll try to provide local service for you.

Here's another case. Quil Ceda. Quil Ceda Village at the Tulalip Tribes north of Seattle. This is a really cool case. Sort of like, ma'am, like what you were saying about Mission. Well, they're a little frustrated. They're sitting next to Marysville, Washington and Seattle sort of dominating them. So they went out and they created a village. And it's this chartered city. It's a separately chartered city. It's a separately chartered city. This is actually their charter. That's actually part of their charter. They said, ‘We're going to exercise our sovereignty and...' you can just eyeball it there. ‘There's going to be a village council, there's going to...' the bottom right-hand corner, ‘we're going to start putting in our own public utilities.' They actually now have a company that runs the fiber optic system on the rez and it's taking over the cable television operation and the telephone operation and all the data stuff and so forth. They have ordinances and resolutions about how they're going to operate. They have administrative departments of clerks and treasurers. They have boards and commissions. They have taxes. They basically created a town.

They went to the feds and got their congressmen -- lobby, lobby, lobby. It's a federally chartered city. It's only the second federally chartered city in the United States. Anybody know what the first is? What's the first federally chartered? Huh? Washington, D.C. And now the Tulalips have the second federally chartered city. Why'd they get it federally chartered? [Because] they're getting -- don't tell anybody else -- they're getting ready for a big fight with the State of Washington over taxation. And by getting themselves federally chartered they can build an argument that, ‘Hey, wait a minute, Washington. We're not a city of the State of Washington, we're a city of the United States. You state, you don't have jurisdiction over us.' Pretty cool little try they're doing.

And what did they end up with? They've ended up with this economic powerhouse, just an absolute economic powerhouse. Quickly, their two basic businesses are two shopping malls. They just opened a major casino a year ago April, but they basically built themselves on two shopping malls. There's one of them. Just the classic big box stores; Home Depot, Walmart, etc. And then they have one of these high-end outlet malls. And the payoffs for them: jobs. It turns out by creating a city, it's like running a business. There's lots of jobs. ‘Oh, I now have to have a crew, because I've made myself a city, I have to have a crew who takes care of the strips along the roads of the grass and so forth [because] you've got to keep vegetation a little ways off the roads so you don't have fires and so forth. Oh, and I have to have my own water company and I have to have my own cable TV company and I have to have my own building inspectors and I have...' and on and on and on. If you pause and think about it, it's actually a pretty good business because you create all these jobs.

They now are the economic powerhouse of their region. I think they employ something like three times more people than are members of the tribe, or at least adult members of the tribe. And most of their citizens are working for their tribal government. Go ahead and let somebody else stand behind the cash register at Walmart. Their tribal members are out there running the highest tech -- I took a tour recently of it -- running the highest-tech water treatment facility in the United States. They've got this, they've got a special -- I'm not very good at science -- but it has something to do with a membrane that you push the water through and so forth. And they're now being looked at around the United States as one of the best water companies in the United States. And they have fire departments and they have health inspectors and so forth -- income for people.

They started asserting jurisdiction. You gave me the perfect lead for this. They started asserting jurisdiction. Because now, ‘Wait a minute. No, thank you. Our cops will patrol here. No, thank you. Our school buses will go here. No, thank you. Our health inspectors, our fire inspectors...' Jobs, jobs, jobs. But also, jurisdiction, jurisdiction, jurisdiction: using that power to create a town, using sovereignty to create economic development, but also to expand their jurisdiction. Also, in the process, building an unbelievably qualified and capable set of employees. They're sitting there now as the economic powerhouse, as the economic powerhouse in their region.

So what happens? They get invited to every damn meeting. They're starting to complain. They basically are starting to be treated like another county or city [because] they're so powerful. All the other governments around them have to recognize their sovereignty and have to deal with them. And so they now have these employees who are getting so well trained, they go to the meetings and they're the dominant, they dominate the meetings. They go to the meetings with the surrounding counties and they're going to have a meeting on, they have big problems, they live right on an interstate highway and -- the weirdest thing I ever heard -- right on this interstate highway, whenever they need a medevac [helicopter], they close down I-5, right in front of the Tulalip's, and land helicopters and it causes all the traffic to have to get off the freeway and run through the middle of Tulalip. Well, this creates all this jurisdictional trouble. The tribe basically controls the process, because they've got the best traffic planners out there. They can tell you -- it's just fascinating -- they can tell you exactly the rate at which light posts will be demolished by cars at parking lots. You might think it's crazy but it's some crazy...They have to apparently replace like 65 light posts a year. They all cost like $8,000 or something like that. But they're in charge of this in building essentially a city that is dominating their region.

Jurisdiction: it also gives them pride. They're the ones calling the shots on water treatment. They're the ones calling the shots on traffic control. It may seem like little things, but now the kids grow up with a different image in their mind, don't they? The kids grow up thinking, ‘Hey, this is sort of cool. Yeah, we go down to that meeting with the counties and we're there. So they're kicking butt. We know what we're doing. We've got the best-trained people. We've got jurisdiction.' And you see that resurgence of pride. How did they do it? How did they do it? How did they do it?

They started to get a mentality -- when I talk to people there -- they start to get a mentality that they don't run grants and programs, they don't have a housing program, they don't have a fire prevention program, they don't have a street-paving program run on some grant. They have departments. They're a government. They're a city. They have to do all of these things. And it's a change in mentality to think, ‘We're not just here living from hand to mouth.' And if someone funds highways next year we'll have a highway program. Nuh uh. They're investing in the planning, building the infrastructure to be departments, if you will, not grants.

And codes for everything. Codes for everything. These guys are code mad. They have the health code, they've got the fire code, they have the code for how far the sidewalk has to be placed away from the street, how often the grass has to be cut next to the street. Why did they do that? Why would anybody...they spend all their time writing codes, writing codes. Jurisdiction. They describe it as just a shield. When somebody wants to assert, ‘You don't have authority to have your own fire department.' You pull out, ‘Yes, I do. See my code? See my code? I do too.' ‘Where'd you get it?' ‘Well, our government created it. Well, that's the same way you, City of Marysville, got your fire department is you created a code.' So this tribe very much is conscious of the number, one of the main tools they have now to fight with over this issue of jurisdiction, is they basically any time anyone comes at them, 'Well, you don't have a good health department.' 'Wait a minute, my health department's better than your health department.' They're very aggressive, very, very aggressive about this.

They also have an attitude. 'We're going to do it ourselves and we're going to do it better. We're going to do it ourselves and we're going to do it better. When we walk into that meeting, when we walk into that meeting with the counties on traffic flow, or whatever it is we're going to do, or sharing the cost on repaving a road that cuts across the res, we're going to be better prepared, we're going to have better training, we'll have harder numbers. And if you fail me, if you don't do your job and don't show up, you're not going to have this job anymore as the head of our highway department.' I'm picking on you, I don't know why. You look like a nice guy, too, I don't know. My point is, they have this attitude and they hold each other to it. It's an attitude of, ‘Look, guys, let's go out there and really, really be a nation.' In this case, be a city. They hire the best. They hire the best.

Now, that sometimes means they don't hire Indian, but it doesn't bother them because they say, ‘Well, we're in charge.' Now watch me pick on somebody. ‘I'll hire this white guy here to be my police chief.' Why? Because he's the former president of the State of Washington's police chief's association and no one's going to be able to come in and push him around. Now, sure, part of his job is to try to get a young Tulalip guy to come along and be the next police chief, but the attitude is one, ‘We're going to go out there and we're going to get the best, and I don't care if you're Native or not [because] we the city, our sovereignty, our jurisdiction controls you.'

And then taxes...and not grants. It's that same mentality. It's that same mentality. All over Indian Country, people have to live in this environment in which the governments are so weakened because people keep taking jurisdiction away. Most governments in the world, it's actually not an evil thing -- if you provide services back to your citizens, it's not an evil thing that you go out and levy taxes. And so this tribe is sitting there, taxing these businesses -- actually trying to tax even more -- starting to tussle with the state, as you can imagine. But again it's that mentality of being a real government. They don't spend their time with grant writers. They've got a couple, I think they have one grant writer, but that's not what they fundamentally do. They don't make their life and their livelihood off of that mentality. They say, 'Look, we're going to provide services to our citizens and to the people who are in our shopping malls. We're going to provide them services and we provide good services, actually people don't complain.' And the result of this is they are not putting pressure on their neighbors, these sort of horribly run cities around them, who are now having to reform themselves because the non-Indian citizens at the next town were saying, ‘Hey, wait a minute. Quil Ceda Village is much better run than the town of Marysville.' And so you start to see that assertion and the pride and the ability to get these things done.

Now maybe this works for you and maybe it doesn't. I don't know. But it's a pretty cool idea in terms of using your sovereignty, using sovereignty to really go out and make it an asset in the fight for development and jurisdiction. A couple more real quick ones. Start taxing: another cool idea. But maybe you don't call it that. It's still a bad word. I'm not stupid. But, well, maybe I am stupid; you guys can judge that later. But start taxing. Why? Because you're trying to get off of that system of, ‘Oh, is my department going to survive depending entirely on whether I can go get a grant,' and whether, ‘you got sick last year and didn't get the grant written,' or whatever it was. But to do it, you've got to do the first thing, in a sense. And it doesn't have to be a city. The message obviously is if you can provide capable and high-quality services to the people, they turn out not to fight you quite so much about that second thing up there.

Examples: 2002, the Navajo Nation instituted the first comprehensive sales tax in Indian Country. What did they do? They earmarked it for things that met their priorities, for their priorities -- trust fund, land acquisition, local governments. And then they had smart and culturally based exemptions. Cultural organizations not subject; if you're selling things and you're a non-profit, not subject to our sales tax, for example. [Because] you're trying to design a system that works for you, not somebody else's sales tax. The payoffs? Started to build the missing infrastructure. What do I mean by missing infrastructure? All around Indian Country, I'll give you an example, there are no street lights [because] the feds never fund street lights. Another one: dental clinics, eye clinics. It's real interesting, you look around Indian Country, as tribal governments start to generate their own resources under their own jurisdiction, you can see actually where the missing stuff is, the missing services. Things like eye care never was a priority. Teeth. ‘Oh, teeth didn't seem...' ‘Well, wait a minute. Why should some outsider tell me whether my teeth are important?' And also, again it's very interesting -- here's a guy standing up here to tell you to go tax your people, but in all honesty it starts to send a signal. This is our government. It's a government of us. It's a government of the people.

One last idea: leverage your sovereign immunity. What do I mean by that? Incorporate under your own laws. It's kind of a movement around Indian Country now. Why incorporate under the State of Montana law? Why incorporate under the State of New Mexico law? Why not incorporate under your own law? And so you have cases; here's a tribe actually in El Paso, Texas, Ysleta Del Sur [Pueblo], can't get any economic development going. They feel like every time, they've got kind of a racist government around them in the State of Texas, and they create their own laws of incorporation. That's just parts of it there, sort of again, it's what the Tulalips are doing: codes, codes, codes. Well, in this case, we're going to create our own through our own jurisdiction. You don't have to incorporate in the State of Delaware or the State of South Dakota. You can incorporate here at this nation. This just goes on and on. It's interesting, Ysleta Del Sur is a Tigua, is Tigua. And so notice down at the bottom there: 'Corporate name shall be in the Tigua...' This is their law. The State of Texas, I'll guarantee you, never would have said, ‘Any business incorporated in the State of Texas shall have a Tigua name.' Ain't gonna happen, guys.

Challenge the nation with sovereign immunity. Waiving sovereign immunity? Where did this idea of immunity come from? Do you know where the word sovereign comes from? Do you know who the sovereign is? It's the king. This idea of sovereign immunity comes from British and European kings saying, ‘I am above the law. You, my subjects, cannot ever sue me or come after me in anyway. I am above the law.' Well, that's interesting. So the idea of sovereign immunity actually comes out of these Western European kings. Here's what real nations do with sovereign immunity.

My first one is, who wants to be West Virginia? Here's an interesting little tidbit. The poorest state in the United States is West Virginia. What's West Virginia also known for? They get on TV now and then. Coal mining. When do we see them? Yeah, or when there's an accident and there are 32 miners trapped that's interesting, the government mine inspectors don't seem to work very well. We did a little analysis of the state constitutions around the United States. The State of West Virginia has the absolute strongest prohibition on any waivers of sovereign immunity of any state in the United States. You can't waive sovereign immunity in the State of West Virginia for anything. And they're the poorest place in the United States,

Now that's a tough issue, right? Wait a minute. Waive sovereignty? Well, waiving sovereign immunity isn't the same as waiving sovereignty. What real nations do all over the world because, face it guys, they're not going to lend you money unless there's some recourse. You're not going to get lended; no one's going to lend you money. So what governments do all over the world? They create international treaties. Example, the Treaty of Mauritius, [because] it was signed in this little country called Mauritius. A bunch of countries in the world said, ‘Okay, I'll deal with you, you deal with me. We'll set up our own separate court system. We'll set up our own separate court [because] I don't want to waive sovereign immunity into your courts and you don't want to waive sovereign immunity into my courts.'

Options: more and more tribes are succeeding in writing contracts in which they waive sovereign immunity on their company, but they don't waive sovereign immunity on the state, that is on their nation. They waive sovereign immunity into their own courts. 'Yes, you can sue my coal mine company. Yes, you can. I'm waiving immunity, but you've got to sue in my own courts.' That's what other governments do. That's what other governments do, except for West Virginia. West Virginia can't sue anybody from the state. And so those mine inspectors are just horrible, they have no accountability and they get on TV [because] they kill people. Waive sovereign immunity into your own courts. But to do that you have to have courts that work. You can talk a big talk, you can talk a big talk, but you have to have courts that work.

Second, waive sovereign immunity into international courts. Examples: Pacific Northwest. The Northwest Indian Tribal Court essentially says to a bank or a car dealer, ‘Hey, I'm going to waive my sovereign immunity, but we're going to waive it into the Northwest Indian Intertribal Court.' Oh, that's sort of cool. How's it work? Fundamentally it works if I'm a car dealer and I'm going to...'What tribe are you from? You're not Pacific Northwest. Okay, you're Tulalip. I'm going to waive...I'm going to sign a deal with you and if we get into a dispute, we're going to go into...Okay, I'll do it.' 'I'm the banker. I'll sign a deal with you. We're going to go into the Intertribal Court. We get to the Intertribal Court and nobody from your tribe can be on the hearing panel. We'll have judges from other tribes.' As long as you're not AIG, that's right. As long as you're not AIG, good point. So creating courts among tribes is one way by which you can provide assurances. Investors don't think the best things of state courts. It's not like people, like business people have great confidence in state courts. In fact the State of West Virginia has some of the worst courts in the United States. Indian tribes can out-compete by making yourself safer and a true rule of law.

Last point: waive yourself into arbitration. More and more tribes essentially say, 'We'll waive ourselves into arbitration,' meaning, you pick. 'If we get in a fight, you and the banker, we're going pick one person, I pick another, so we're equal and then they'll pick a so-called neutral and we'll least we'll have a level playing field.' But then you have the issue of -- and I'll tell you one last sort of cool story -- you have the issue of, if you have an arbitration award, who enforces it? Who enforces it if you have an arbitration award? 'You owe me money. The arbitrator, our arbitrator here just said you owe me $10,000,' and you go like this. You say, ‘I'm not going to pay you.' How do we enforce it? Very interesting. There's a very interesting case of a tribe borrowing like $110 million. They set up an arbitration clause and they had this big fight in the tribal council, should we waive sovereign immunity and here's what they did. It's kind of a cool idea. This is what I mean by challenging your own nation. We're trying to borrow $110 million. We don't want to waive sovereign immunity completely. We'll waive into arbitration. By that I mean, if we get in a fight, we'll go to arbitration and then on enforcement of an arbitration award, that will go to tribal court. If our tribal court won't enforce an otherwise proper arbitration award, then you can take us to state court.

This is a tribe that basically said, ‘Look, the tribal council meeting was cool. Look, we're talking big shots like we're sovereign and all that. We might as well back it up.' If we won't enforce our own agreements, what's it do? It puts the pressure then on the tribal council to make sure that they've got a good tribal court because that arbitration award, if it wasn't enforced by the tribal court, then it was going to go to state court. And the bank said, ‘Yes.' They've never had a fight, never had to do this, but it was enough for the investor to say, ‘Hey, we'll do it.' You waived yourself into your own courts.

Alright. I don't know, just kind of cool ideas we see out there, just kind of things we see that tribes are doing. Whether they work for you, I don't know. Everybody's different, but there's a lot of cool stuff going on out there."

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