Section 17 corporations

Robert Miller: Creating Sustainable Reservation Economies

Producer
Native Nations Institute
Year

In this informative and lively talk, law professor Robert Miller discusses the importance of Native nations building diversified, sustainable reservation economies through the cultivation and support of small businesses owned by their citizens, and offers some strategies for how Native nations can then leverage the economic activity of those businesses.

People
Native Nations
Resource Type
Citation

Miller, Robert. "Creating Sustainable Reservation Economies." Emerging Leaders Seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. November 7, 2013. Presentation.

Stephen Cornell:

"We want to turn our attention from courts to economies in this next presentation, and we're very fortunate that we were able to persuade Bob Miller to come down and talk with us this morning. It's my pleasure to introduce him. Robert Miller is a citizen of the Eastern Shawnee Tribe of Oklahoma. Bob's been engaged in Indian law for more than 20 years now. He's served as a judge, a justice, is now I think Chief Justice of the Court of Appeals at Grand Ronde and is currently Professor at the Sandra Day O'Connor College of Law at Arizona State University. You can read the details of his bio in the book...the curriculum booklet, but he's recently just a year ago published a new book called Reservation Capitalism: Economic Development in Indian Country that's now available out there and some of you may want to look for, but it's a pleasure to have Bob down to talk to us a little bit about creating Indigenous economies and sustainable communities. So please let me welcome Bob Miller."

Robert Miller:

"Thank you, Steve, and thank you all for being here and thank you for inviting me from Native Nations Institute. I gave this talk last night to a class at ASU [Arizona State University] and I took an hour and 40 minutes. I don't think I have an hour and 40 minutes today. In fact, I've been asked to talk for about 20 minutes and then leave the floor open for questions and we'll see what you want to talk about and what comments and questions you might have so I'm going to try...you have the materials and the slides in the book, the slides go way beyond 20 minutes so we're going to roar through this.

As Steve mentioned, I've been working on economic development ever since I was hired as a professor. In 1999, I was hired as a full-time professor at Lewis & Clark [College] in Portland, and the first topic I wanted to address was economic development in Indian Country. I do not think I'm overemphasizing this point: I think that economic development may be the most important issue you are facing as tribal leaders. As tribal communities, we need to create sustainable homelands where our people and our citizens -- if they choose of course -- where they can live and have access to adequate housing and adequate wage jobs. How are our reservations going to be sustainable communities, that next seven generations that we think about and talk about, how are we going to have young families able to live on reservations, to attend tribal colleges to learn language from elders, to learn culture from elders. So when I'm talking economic development, I'm talking about far more than just making money and I'm not talking about making the next Indian Donald Trump or making someone rich. We're talking about making reservations sustainable communities that continue to survive for those thousands of years that we already have.

So I have a couple of just sort of prime messages that I wanted to write in this book and the very first chapter is really just...let's look at all those really at the same time. So my number one chapter, I guess it's chapter two, but I'm trying to establish even for Native peoples, but certainly for the American society at large, that Native communities supported themselves by intelligent, hard work for centuries, and dare I say that it was entrepreneurial, family type businesses. We didn't...the picture of Americans is that Indians frolicked through the forest like wood nymphs living off the bounty of nature. I think there's a nefarious purpose for American society to have that vision. I think that helps their consciences feel less guilt about the taking of this reservation -- excuse me -- this continent and the resources. So they'd pretend that Natives didn't own private property, they'd pretend that Natives didn't know how to develop resources and to protect and marshal those resources to have an economic life that they could live and survive in.

I have a quote in my book that's interesting: What's the economic year? I'm not an economist and I don't use that many economic terms, but there's a few points I want to make today. Your economic year is how long it takes you to create...either to earn the money or create the resources for you to survive for a year. And what I've read is that most tribal peoples survived on a three- to four-month economic year. They could either grow, harvest, hunt or gather the products they needed to support themselves. What's your economic year now? What's the average American economic year? It's fifty weeks, isn't it? ‘Cause doesn't the average person only get...gee, whose economic system was better? So I'm trying to drive home a point to American Indians that we did work intelligently, we did know how to create economic valuable properties and we did understand private property. And let me address that because I think also American society thinks, ‘Oh, Indian people don't own property. Gee, you don't want to work, dude, because you don't own property.' Well, I dare ask you what that you have do you not consider your private property? Our lands, we view tribal governments as owning lands in common and that certainly has been our history and then sort of the legal property regime, but in chapter two of my book I talk about economic principles of tribal governments. Even though land was held in common for the tribe, individual families acquired private property rights. I cite the Hopi Tribe and various Pueblo tribes where various planter chiefs maybe, if that's the correct word, would assign plots and lots to various families, but they would then grow, harvest and those crops were theirs to use as they saw fit. And as long as that clan or family used that resource, it was in essence private property.

Where I'm from, the Pacific Northwest, I know a fair bit about the salmon cultures and the Columbia River. Native families up there would own prominent fishing rocks. Native families built wooden platforms to fish over the rapids at Celilo Falls, for example. Those were private property. No one else used those items without the permission of the tribal family. They were even inheritable property. That's something that some people, [it] would just boggle their mind that Native societies had a vision of private property. And in the tribes...the Makah Tribe at the very northwest tip of Washington and then their relatives up Vancouver Island, the Chul-nuth people, they took the ownership of what today we call intellectual property -- that's the second-to-the-last point I have there -- to a high degree that I think most Americans are unaware of. In the cultures of the northwest and into British Columbia, you owned songs, names, totem symbols, ceremonies, dances, and no one else would dare to use those privately owned intellectual pieces of property without permission of the recognized owners. The potlatch ceremony, I know Professor Trosper's written a lot about that. In fact, he's coming to speak at a conference at our school in February. So if any of you want to come to Arizona State February 27th and 28th, we are having a two-day conference about creating the tribal economy. So that's primarily what I'm interested in, what I'm talking about.

So the one economic term I'll put forward to you today is the idea of leakage and the multiplier effect. Again, I'm not an economist so I've learned these recently, but what do they mean? You've probably lived the idea of leakage. That is when money leaves a community sooner than is optimal. In 1994, I heard a Navajo tribal official say that 84 cents of every dollar a Navajo person receives leaves the reservation immediately. Now that is the case on practically every reservation I'm familiar with. Why is that? Because there are no businesses. There's no place to spend the money on the reservation. So the reservation that I'm actually the most familiar with is the Northern Cheyenne Reservation in Montana because I worked for the Tribal Housing Authority for over three years. The first time I went to Navajo or, excuse me, to Lame Deer to apply for the job I got the map out, saw how I would fly there and then drive there and I said, ‘Oh, I'll just stay at the motel at Lame Deer.' Now you know where this story's going don't you? Good thing I had my tent and my sleeping bag with me because I slept on the front yard of my friend's house. So I go, I show up in Lame Deer, there's nothing to eat, there's no place to buy anything. The only business is a tribal gas station and there is an IGA store owned by a non-Indian. So that really started to open my eyes to some of the issues that economics face in Indian Country.

So I should ask Professor [Ronald] Trosper this, but I think economists say that a dollar should circulate in your community five to seven times. That's sort of the optimal goal before it is then taken and spent elsewhere. So that's what's called leakage, but in Indian Country with almost nowhere to spend your money, what happens? We know that our people get in the car. Perhaps there's not even a bank on the reservation. At Northern Cheyenne there was no bank. No reservation in Oregon that I'm aware of. Well, I better preface that, very few banks on reservations. As of a few years ago and I cite that in my book, only eight tribes owned banks. My tribe purchased a bank. We're in a small trust land-only corner of northeastern Oklahoma, but we purchased a bank by buying shares in that bank so sort of a different way just through the stock we ended up buying a bank. I do not know the number of how many tribes own banks today, but banking in Indian Country as you are well aware is an issue and so where can you cash your check? So at Northern Cheyenne people would get whatever kind of check they got from working or government or whatever, 42 miles to Hardin, Montana, that's where they would cash their check. One hundred and two miles to Billings, that's where they could cash their check and that's where that money got spent. That's a disaster for economic development for what we call the multiplier effect being spent on the reservation.

So what I have been talking about is creating businesses in Indian Country and emphasizing the importance of economic development. I meant to read you a quote of a couple chairmen that I interviewed for my book. Because this idea that economic development is the most important issue in Indian Country, many people might go, ‘Wait a minute, what about sovereignty, what about jurisdiction, what about social welfare issues? All those things are important.' Well, what I mean is that all of those issues are tied up with having an economy and having economic resources so that a tribal government can engage in social welfare programs, economic development welfare programs, improving their court systems as we just heard about, and in doing all the things that government is expected to do and what we hope [for] from government. But economic development is also crucial for individual Indian families to support themselves and to contribute to supporting their community and to educate their children, feed their children and help just the lifestyle of the reservation -- lifestyle, wrong word, the improvement of economic conditions in Indian Country.

So here's what Chairman Clifford Marshall of the Hoopa Tribe in Northern California told me back in '99. He said, ‘There's nothing traditional about having the federal government take care of us. There is nothing cultural about that.' 'My idea,' the chairman said, ‘of tribal economic development is that sovereignty is economic independence. Until we get there, we are not independent.' Another chairman from the Umatilla Tribe, Antone Minthorn told me, ‘If you own the economy, it won't hurt culture.' So we always run up against that question, ‘Is economic development somehow anti-Indian?' And that was one of my primary goals in working on this book. Native people have always worked intelligently and hard and even at risky businesses. It's not safe and easy to go whaling, is it? It's not safe and easy to be a buffalo hunter, is it? These are dangerous occupations. But Native peoples knew how to acquire resources and how to use them, even if that included distributing and sharing resources through giveaways perhaps or the potlatch ceremonies from the northwest. We knew how to use resources to support our cultures and our societies and I think we're in that same place today or we need to be in that place today. So I'm going to just quickly slash through some of this. I don't want to spend any time on that.

I am tired also at looking at these statistics. Maybe you're tired of talking about these things. I want to talk about improving issues. I don't want American Indians to be the least-educated, specifically identifiable racial group in the United States. I don't want us to be the least healthy group in the United States. I want us to improve our situations. And can we rely on the United States to do that? Does the United States care? I have a statement in the book, ‘Okay, we've relied on arguing you owe us certain things under our treaties, you have a trust responsibility for us, help us, assist us.' Well, we've waited 200 years for that. How's that worked out for us? Well, here's the situation. So if we don't do it ourselves, who's going to do it? So that...when I'm talking about creating an economy, I'm talking about intelligent tribal government and intelligent tribal communities working together to create a public and private economy in Indian Country. We often do rely just on you folks, the elected tribal leaders and we think that it's the tribal government's job to create economies and that's not completely true, is it? You create the conditions in which an economy can thrive, just what we heard about the tribal court system. Without laws for commercial issues, without laws about how you incorporate on a reservation, how you lease land on a reservation, without effective bureaucracies -- which the Harvard Project has taught us -- without effective institutions economies can't thrive. Entrepreneurs will go elsewhere. I have a cite or two in my book, a quote or two, excuse me, about Arizona Natives who started a business and they said they were going to open that business in Phoenix and not on their reservation and they had some reasons they didn't want to do that. And so that like kind of hurts me. We hope that Native entrepreneurs will consider their own reservation, will create jobs, will become mentors, and will help that new generation of young people to see that, ‘Gosh, being an owner of your own business is very much Native and is very possible.' So that's what I keep pushing for.

These statistics are quite old. You can see this is based on the 1992 Census and this chart is created by ONABEN. I was on the Board of Directors for ONABEN for 12 years and that's why when I became a professor this was the topic I wanted to write about. ONABEN stands for the Oregon...look at that, I can't hold that pointer steady. You guys are making me nervous or something or maybe it's that I'm 62. Oregon Native American Business and Entrepreneurial Network. Four Oregon tribes created ONABEN in 1992 because they knew that they needed individual entrepreneurs to open businesses on their reservations. So ONABEN's mission is to help individual Indians learn to draft business plans that are fundable by a bank, that could perhaps be given a loan and then we used to teach classes, in fact a year-long class we taught on how to operate your business, accounting, management, employment, all sorts of issues. But ONABEN took these statistics for Oregon and you can already see the stats. So in Oregon as of 1992, white Oregonians owned a business per 1,000 people at the rate of 81. 81 Oregon...white Oregonians owned their private business. Look at where American Indians were and I don't know how much that number has changed even though these statistics are pretty old. We have enormous room to improve in creating economies on our reservation and to encourage entrepreneurial activities. These are statements from ONABEN and this is the effect of poverty on Indian Country so I guess...I should have worded these I guess in the negative. So poverty causes education, economic, social and health issues; it injures community cohesion. As we know, if our people have to leave the reservation to go to school, if our people have to leave the reservation to live, to find adequate housing and jobs, that's what we call the brain drain, isn't it? That's assets, those are positive benefits we need on the reservation, but because of the lack of certain services and opportunities on the reservation they have to go elsewhere so that hurts community cohesion. If the parents have to leave to work or to be educated, that hurts family stability. Ultimately it hurts many things that we do care about.

So here's what ONABEN says are the benefits. Earned income: there's pride from earning and supporting yourself. There's pride from being able to buy your kids that toy they'd like to have, right? Support them and feed them. We already talked about the multiplier effect. The more we can keep money on the reservation circulating, even though it's only one dollar folks, what we mean by the multiplier is that it increases the effect of it. It's paid to the employee, the employee then goes to the local gas station and buys gas. Well, that pays the employees and the rent there and for the gasoline. Someone then goes to the local grocery store. That's paying employees and profit for everyone. So as long as we can keep that dollar in Indian Country, that's the goal of every community in the United States, capture those dollars, make the multiplier effect continue.

So ONABEN, like I say, tribally run organization, our board was made up of tribal representatives appointed by the tribal councils and then a few of us were Willamette Valley representatives. So I was the Willamette Valley representative. It's not anti-Indian to own your own business and I've already hammered on that point I think. That's what my chapter two is about. We all ran our own businesses, didn't we, whether it was family or individual, we engaged in economic activity to support ourselves and we were proud of that. So I think that's an ethos that we need to reinforce that that's cultural. Being poor is not cultural. Do you know of any tribal community that wants to be poor? Do any of us have a culture that said we had to be poor? I'm unaware of one, so we need to ban that idea from our mind.

ONABEN says, ‘We all benefit from a quality of business ownership in Indian Country.' Now I'm not going to spend much time talking about the Harvard Project because we have those representatives here and you've heard that so these three points: Being involved in economics or tribal government thinking of developing an economy is not somehow anti-sovereign. Even if you're thinking about helping develop private businesses. Yes, that's a business the tribal government might not be in control of, but all of these decisions are based on sovereignty and help support sovereignty because if we have an economy in Indian Country, again, a more sustainable reservation, a place where our people can live if they choose to and it contributes to and helps strengthen tribal government. Our institutions matter. The court system you just heard about. Without the laws, without a fair court that will protect property rights, contractual rights, what entrepreneur is going to open a business in your tribal community?

I mention in my book...I already told you about some Natives here in this state that chose to open their business in Phoenix because there were things they were concerned about about being on the reservation. So if there are governing principles or if our own institutions are somehow slowing business down or injuring business or if we have a court system that's not fair, no entrepreneur is going to invest their human capital -- their time and expertise and experience -- or their physical capital -- their money, materials they own, tools they own, etc. They just will not operate in Indian Country if they're afraid that their rights that they've worked for will not be protected. So these are governance issues, and culture matters the Harvard Project has shown with study after study after study. A comment that I just made in Bozeman, we had a conference this past weekend of economists in Bozeman and I'm not an economist so I mostly sit there and listen, but...and now I totally forgot where I was going. Oh, the comment I made is, ‘You probably would not open a hog farm in Israel, would you?' I don't pretend to be an expert on Judaism, but I don't think pork is a big seller in Jewish communities. So there are reservations where certain jobs or industries won't be supported. So an intelligent investor is going to research that topic and going to go, ‘I can't open Business X on Reservation Y. It's crazy. It'd be like opening a hog farm in Israel.'

So let's see what's next and let's...this is what I've been talking about. Here again, I'm borrowing from Harvard and if I get the facts wrong, tell me, Steve. But I think their studies have proven that a tribe that separates the operation of a tribal business, if they separate it from political decisions and from the tribal council, if they get an experienced board of directors that knows business and operates that business, there's a 400 percent greater chance that that business can be profitable. Tribal governments can't afford to run businesses that aren't profitable. That's not sustainable and I'm talking about sustainability.

Also, the Harvard Project shows that a tribe that has a court system and a dispute resolution system that is deemed to be fair, that is not tainted by political influence, will have a five percent better employment rate on the reservation than another tribe without that. Steve gave that comment -- you won't remember this, but I do -- in 1994, at a conference in Utah, you made that statement and I came up to him afterwards and I go, ‘How can you prove that?' He slapped me around a little bit. So I've been nice to him ever since. We know what the obstacles are. I talk about them in the book. Maybe we can talk about them a bit, but I want to close with some of these points.

Does your tribal government -- and boy, I'd really like you to think about this -- are you as a policy engaging in buying from your own Indian entrepreneurs on your own reservation? Now I have heard the executive director of the National Indian Gaming Association and he says, ‘We know tribal casinos are not utilizing enough Native entrepreneurs.' That's a $27 billion-a-year industry. Where are the tribal casinos buying their laundry services, their janitorial services, their paper towels? Are we buying these from Phoenix and Tucson businesses? We're hurting ourselves then, aren't we? We're spending our own money outside our community. Well, that's not very -- how dare I say -- that's not the best strategy. So I want to advocate, I was glad also to hear the judge mention nepotism because this was discussed at this conference I was at at Bozeman. Nepotism is a bad word out in the American economy, but we do work with our bands and families and extended families and we are related to practically everyone. How can you not be related to everyone on a community of only a couple thousand people? At my tribe, practically everyone has my mom's maiden name. The last name 'Captain' is the primary name at my tribe. So I'm related to practically everyone. So you can't avoid nepotism in the Eastern Shawnee Tribe of Oklahoma, but I am so much advocating that we keep our money in our reservation.

Is the tribal government being a client of tribal entrepreneurial businesses? If you're not, you're spending your money on non-Indian owned businesses at some far distance from your own community and you are -- I don't know how strongly to say this -- but that's hurting our own communities, isn't it? So Buy Indian acts, I am advocating that tribes adopt a ‘Buy Indian' act, perhaps even designate a specific amount of the tribal budget to be spent on tribally owned -- not tribally owned -- individual Indian-owned businesses or even in tribally owned businesses. Let's keep the money in our communities. So let me show you the federal ‘Buy Indian' act. It's a joke. The current version was drafted in 1910, so please ignore that top one but this was the direction of Congress in 1910 that the Secretary of Interior in acquiring goods and labor for Indian Affairs that he or she try to buy Indian-owned goods and labor. But look, it's not mandatory. It's about as discretionary as it can get. It even has the word discretion. ‘As far as may be practical...in the discretion of the Secretary of the Interior.' So the Buy Indian Act has hardly been used. There are some federal lawsuits in which an individual Indian business owner has sued the Secretary saying, ‘I was fully capable of doing Job X, I applied for it, you didn't hire me.' The federal courts go, ‘You lose that case because the Secretary can do whatever they want.' So I'm advocating that tribes try to get Congress to make this law a little more powerful.

An example is in the Department of Defense budget. The Department of Defense is required to spend five percent on minority- and women-owned businesses and that five percent set-aside has led to several tribes creating -- I think Salish Kootenai is one of them -- making products for the military and has helped tribes enormously, a few tribes. So if we had some sort of requirement that the Secretary spend at least five percent, if tribal government said, ‘We will spend five percent of our budget on Indian-owned business,' what will Indian entrepreneurs do? What does an entrepreneur do? What is an entrepreneur? They see an opportunity, they think, ‘I can do that. I'll take the risk.' So if tribal governments were committed to spending money in Indian Country, I think entrepreneurs will see that and follow that."

Rae Nell Vaughn:

"I agree with your point. However, I've seen in the past where you have a tribal member who'll throw up a shingle and say, ‘I do this now,' and it turns into a pass-through. We try to at Choctaw and define Indian preference in regards to buying services, to say that you must have 51-percent ownership in your business; you must show years of business interactions. And so that's one of the challenges I know that across Indian Country some people face, because then all you're doing as a tribal member setting something up to get maybe $25,000 out of the $1.5 million furniture contract that was set aside for the building, and so that's one of the things I think we really need to focus in on what is true Indian entrepreneurialism and true Indian business."

Robert Miller:

"You're exactly right on that. Now did you say that your tribe has a statute on this or some kind of regulations?"

Rae Nell Vaughn:

"Regulations."

Robert Miller:

"I would love to see that. So you're Mississippi Choctaw or Oklahoma?"

Rae Nell Vaughn:

"Mississippi Choctaw."

Robert Miller:

"Okay, great."

Rae Nell Vaughn:

"My brother is Oklahoma Choctaw down the way there."

Robert Miller:

"They're close to us. Yes, sir."

Audience member:

"Thank you, Professor Miller. So I had a question. My question basically surrounds entrepreneurship. You sort of touched upon a definition of it. Social entrepreneurship, social enterprise, and I'm wondering what your thoughts are on that concept, on that model with respect to having put together any social enterprise on a reservation where one is working with both profit and non-profit ability hybrid model using some type of federal funding and building on a revenue component to that set up because that's something that I'm tinkering with along with some folks up in Navajo, that western part of Navajo. That's what we're looking at and I'm wondering what your thoughts are on that."

Robert Miller:

"Okay, well, that's almost a new idea to me. So you might have to explain it a little more, but an organization that has a social welfare...objective."

Audience member:

"Objective. A social objective, a social impact on one hand; on the other hand, have a revenue side so that you built it a hybrid model. So basically you're addressing two things at one time. So if that's quite successful, I know a lot of organizations are going in that direction, and one of the great examples is right there in Phoenix in Maricopa County with the school districts. That's something that they did and I'm wondering if that would be something that tribes can perhaps pursue."

Robert Miller:

"Well, I am absolutely for anything that brings any job to Indian Country practically and anything that can produce some income that perhaps might be spent on a reservation. So an organization like you're saying, sort of has a mixed agenda, right? They're engaged in social welfare activity. So I know there's an organization at Navajo I believe that's working on traditional foods, traditional crops. So in one sense I guess you could call that a social welfare idea -- let's bring some tradition back -- but if that's producing crops and jobs that then will be on the reservation, man, I applaud that. And we always like to bring federal dollars to the reservation, don't we? But then we've got to capture those dollars and we want to keep them there as long as possible."

Joan Timeche:

"If I can also add, on my reservation we've long had...it's called the Hopi Foundation. It started out as a 501(c)(3) and it was really designed by former tribal employees that were frustrated with the government because they were not able to...the government was not acting in a speedy process in terms of applying for grants and being able to meet social needs. So they first started out providing social services. They have spun off a number of non-profits and a number of for-profits and they're all in different areas. One of them deals with international victims and it's actually based here in Tucson. It's a non-profit, but it's a spinoff of this overall, this Hopi Foundation about helping...and then we have, out of it came a solar energy project because it was a social program, the first to introduce photovoltaics because we have a number of villages out on Hopi who by choice did not have electricity so they were trying to introduce alternative energy options to them. So it started out as a non-profit and then later on merged, spun off as a for-profit so that existed and out of it came our Education Endowment Fund, which then became a whole separate entity. So there are models out there that can work."

Robert Miller:

"Well, and let me just add to that, while you're moving the microphone. In my book, I advocate for a mix of businesses, for a diverse economy. I think the strongest economy is one that is diverse. So there's no, just because I'm talking about entrepreneurship or ONABEN's talking about entrepreneurship, I'm not somehow anti-tribal government business or then anti this social welfare arena. Economic development can come in many ways and she gave an example and so did you, sir, of what sort of a social welfare agenda, but can lead to jobs and money on the reservation. So I'm advocating for as diverse of an economy as we can get. We realize some tribes are in such rural areas that the economy they're going to be able to develop, the opportunities are very slim. We know American rural areas are the poorest parts of the United States just because of the lack of infrastructure, highways, internet, telephones, water, and we know that tribes in rural areas face those issues. But I am advocating for the development of as much of an economy, public, private, tribal, non-Indian investors, Indian investors, etc. Yes, ma'am."

Audience member:

"Well, to further touch on what he was talking about, where I work and where I live, I live in 'ag central,' I'm from Nebraska. I work at Little Priest Tribal College and right now I'm the USDA grant coordinator and what I do is I have obtained this money and what we are doing in my program, we're going through our last year's funding, but I have... we are a hybrid. I function off a grant that's for community sustainability through agricultural and economic development. We are taking our food sovereignty and we're taking our seed sovereignty and we are building on that. And I'm able to employ approximately 40 tribal members seasonally and we teach people how to can, and we have a Farmer's Market, and we're expanding on that and we're going to be able to operate the next couple of years off the monies that we've made via our federal monies that we were awarded. But food sovereignty is a really big movement in Indian Country right now. Seed sovereignty is a really big thing and I really encourage other tribes to expand on that. It's really important because it is a social problem because so many of our communities are fighting diabetes, thyroid problems, all these health issues and it's because of the genetically modified foods that we're eating. It's so important that we stick to our Indigenous diets. And I'm from the Omaha people, I'm also a Burns Paiute too, and we have an Indigenous diet that's really important. Back home we have ceremonial corn, but we have corn to eat every day too and it's really important to embrace that, grow it, teach your kids how to grow it. There are ceremonies that hold on to those things, do it and teach the people. And then if you can, you can build a hybrid on it. Right now we have an apple orchard. We have expanded on that apple orchard. It's been really awesome. It's really exciting. It's really a big thing for me. If you guys want to know anymore about it, I'd be more than happy to share information about it. But we have, we've developed a hybrid program. We're very successful. Like I said, we're going to be able to operate the next couple of years without federal dollars because of the revenue we've brought in because of our product. And organic food market is huge right now. They love Indian food."

Robert Miller:

"Did you say you work for the Department of Agriculture?"

Audience Member:

"Yes. Well, I'm a USDA grant coordinator and I'm working...I'm collaborating a lot with the USDA and I work with the Little Priest Tribal College."

Robert Miller:

"Well, you'll have to come on February 28th to our conference because the Undersecretary for the Department of Agriculture, Patrice Kunesh, is going to speak. She wants to advocate how much the Department of Agriculture has available for tribes. Tribes are just thinking of the BIA [Bureau of Indian Affairs], and the Department of Agriculture in the areas you're already talking about has so much more as far as money and funding than the BIA has. It's incredible. So she's coming to Phoenix to talk about that issue on February 28th. And for food sovereignty, it's interesting she should mention that because a Native woman who I think is the first dean of a law school in the United States, Stacy Leeds, is the dean. She's Cherokee and she's the dean at University of Arkansas and they just started a food sovereignty clinic. I think that's the right word or at least program. So she's coming to our conference to talk about food sovereignty, so exactly what you're talking about. And then what she said ties in with what your question was sir, that here's sort of a social welfare, I guess, developing our Native foods again and bringing them back. That doesn't necessarily sound so economic, does it, but what an economic and cultural benefit that it has. So this is a wonderful example of the synergy of mixing these ideas and goals and so economic development's not hurting culture, we can use it to support culture."

Stephen Cornell:

"We've got a question right here."

Arlene Templer:

"I'm happy to hear you say to support the Buy Indian acts. I'm Arlene Templer from Salish Kootenai Tribes and under my department I have a gas station, convenience store, grocery store, laundromat, and it costs me more to run an Indian-owned business. I can't compete with Town Pump, and so what I have to do is sell it to the tribe's membership that this gas station provides work experience placements, it also provides revenue to the transportation system throughout the reservation because I have to charge between almost 10 cents more a gallon for gas. I can't compete with Town Pump so we have to support each other until we can get there and the Buy American act can help with that."

Robert Miller:

"Excellent. Next time I'm at Flathead I'll come to your gas station. That's what we talk about you keeping Indian money in the Indian community. Let me expand that just one step further. Let's not think just about our reservation, but a perfect example in the State of Washington. The Cowlitz Tribe, a brand-new recognized tribe wants to do gaming. So instead of turning to some Vegas company, which as you know many, many, many tribes have partnered with Harrah's and those Vegas companies, but the Cowlitz Tribe in Oregon partnered with...in Washington, excuse me, partnered with the Mohegan Tribe from Connecticut. Gosh! So in one sense that's keeping our dollar within the Indian national community, isn't it? So I really enjoyed seeing some tribes working on things together. Another example from Oregon, the Grand Ronde Tribe and the Siletz Tribe are working together to develop lands that used to belong to the federal government and the Chemawa Indian School and they now have received those lands through various federal programs. So these two tribes, instead of then competing and fighting each other over who gets to develop it, they're working together. I see that again as keeping money in our Indian community."

Stephen Cornell:

"Mr. Henry?"

Audience member:

"I'm on the tribal council and it's hard for entrepreneurs sometimes to go through tribal council I think. Comes up with a great, great project and then after that the tribe kind of just shuts them down after that. But then, is there a way for the tribal member to go through, if they have BIA, if they have Section 17 from BIA to where it helps the tribal member and the tribal council sets or adjust the code for the development for a tribal member and then instead they don't have to go through the tribal council, but go through Section 17 with the federal government, which too allows the reservation development to where if those two can work together to where instead of the tribal member for entrepreneurship goes straight through...go to the tribal council, but instead just follows the Section 17 in corporation building? Have you ever come across something like that?"

Robert Miller:

"Yes. Incorporation is a big issue, folks, and this is part of the law building that the tribal court panel was talking about, but that I'm talking about that many tribal governments do not have an incorporation code. [Okay, we have two minutes. That's in total? You showed me two minutes, two minutes ago. Did you give me two more minutes? Oh, five okay. I didn't see it. So let's see, where was I going?] Incorporating, for a Native person to incorporate their corporation pursuant to their own tribe's governmental code, that's an exercise of inherent sovereignty. So there are three ways to form corporations in Indian Country. Under state law, which is probably the least beneficial, that exposes you to state regulations, state taxation. Section 17 that you mentioned, which to my knowledge is only available for tribal governments. My own government created a Section 17 about a decade ago. I think there's a fairly small number of Section 17 corporations because tribes haven't really seen that the way to go. But to incorporate under your own inherent law, and if you have the code that governs and taxes businesses, then people know what the landscape of the law is. So I advocate for tribes to have corporation codes and for tribal citizens to incorporate under the inherent authority of their own tribe. Now you are then subject, however to the tribal law. So that's where we get back to effective institutions. Is the tribal court fair, does the tribal court have experience in interpreting contract and business law; have we appointed judges with that kind of experience? Those are the issues that are the institution business that the Harvard Project has showed...studied and has shown is so important. So you raise a very good issue that needs to be worked out and I'm not sure how many tribes have enacted their own corporate codes. Probably not too many, but it certainly sounds like the way for tribal entrepreneurs to incorporate."

Stephen Cornell:

"Can I just add to that, Bob? In regard to your question, from the sound of what you said, you may be in a situation where starting a business then runs afoul of council interference or obstacles and this is exact...Bob is exactly right. This is where these institutional issues become critical -- that you've got in place a set of laws that facility instead of hindering economic development. All the things Bob talked about trying to build an economy, that can be brought to a halt by a set of governing institutions that burden the entrepreneur so much that they run to Phoenix or Flagstaff to set up their business. So if what you're encountering is, ‘Gee, we can't get a business going because we have to go through council and it's too involved and it takes too long and the politics get into it and all the rest of that,' you are a prime candidate for rethinking some of that governing structure so that you can begin to support entrepreneurship on your rez."

NNI Indigenous Leadership Fellow: John Petoskey (Part 2)

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Native Nations Institute
Year

In the second of two interviews conducted in conjunction with his tenure as NNI Indigenous Leadership Fellow, John Petoskey, citizen and long-time General Counsel of the Grand Traverse Band of Ottawa and Chippewa Indians (GTB), discusses the legal doctrine of tribal sovereign immunity and the future of the doctrine with respect to the Michigan v. Bay Mills Indian Community case pending before the U.S. Supreme Court. He also discusses how GTB has worked to systematically build its justice system, and stresses the need for Native nations to adequately fund their justice systems.

People
Resource Type
Citation

Petoskey, John. "NNI Indigenous Leadership Fellow: John Petoskey (Part 2)." Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. October 3, 2013. Interview.

Ryan Seelau:

"Welcome to Leading Native Nations. I'm your host Ryan Seelau. On today's program we have back with us John Petoskey, citizen and longtime general counsel of the Grand Traverse Band of Ottawa and Chippewa Indians. This week, he is serving as the Indigenous Leadership Fellow with the University of Arizona's Native Nations Institute for Leadership, Management and Policy. Good to have you with us, John."

John Petoskey:

"Thank you."

Ryan Seelau:

"We're here today to talk about a few other nation-building topics to build on the things you've talked about this week, and the first topic I would like to talk about is sovereign immunity. And the first question is hopefully sort of a simple one. Can you just tell us what in layman's terms the doctrine of sovereign immunity is and sort of why it exists and what the rationale behind it is?"

John Petoskey:

"The doctrine provides that a sovereign is not subject to suit unless there is a consent to that suit, unless the sovereign either waives sovereign immunity or -- in the case of Indian tribes -- if Congress statutorily enacts something that abrogates the immunity of the Indian tribe. So sovereign immunity for a state, for example, is recognizing the 11th Amendment of the U.S. Constitution and sovereign immunity of the United States, although not recognized in the U.S. Constitution, is part of the Law of Nations that was adopted in the early part of the constitutional history of the United States, that the United States could not be sued without its consent. So it's a doctrine that provides immunity for a sovereign, in this case the United States, a state or tribe from un-consented lawsuits."

Ryan Seelau:

"And what is sort of the rationale behind why it exists in the tribal context?"

John Petoskey:

"In the tribal context, it's to protect the tribal treasury, and it's also the same rationale that exists for state and federal that the governance process of the tribe should be immune from undue influence by private suits."

Ryan Seelau:

"And in your day-to-day work as general counsel, where does the doctrine of sovereign immunity come up?"

John Petoskey:

"Well, let me preface my response with my history with Grand Traverse Band. Grand Traverse Band was the first tribe to achieve federal recognition in 1980. That was two years after the Santa Clara [Pueblo v. Martinez] decision, which recognized sovereign immunity as a valid doctrine in the modern era of federal Indian law. And so in the early years of representing Grand Traverse Band, we would have a number of off-reservation creditors or off-reservation contract partners or tort people who would be suing in state court against the tribe and we would have to assert the immunity of the tribe, that it had not been waived nor had Congress abrogated that immunity and therefore the...it was generally in the context of a motion to dismiss that there was no basis for the lawsuit because of the immunity of the tribe. And in the early years, I probably did over 30 lawsuits of various litigants suing the tribe and the response from Grand Traverse Band generally evolved from those 30 suits to enacting statutory structures and resolutions that waived immunity and provided redress for people who were suing."

Ryan Seelau:

"Let's talk a little bit more about those statutes. Can you give an idea of some of the areas that immunity's been waived and what the thinking was behind that process and then, not going into specific codes, but what that looked like in practice?"

John Petoskey:

"Well, I know you said not going into specific codes, but I can only talk in terms of the specific codes. First of all, the constitution of Grand Traverse Band provides for a waiver of sovereign immunity for its tribal citizens to sue under rights that are similar to the Indian Civil Rights Act in the Bill of Rights of the United States Constitution and the constitution, the tribe's constitution, limits those remedies to prospective relief without any relief from the tribal treasury. The other two major statutes that the tribe passed was one on contracts and one on tort. The contracts we passed a general waiver of sovereign immunity for expectancy damages on the contract limiting the remedy to consequential damages and so our off-reservation vendors, when they do have a dispute with the tribe, do file a contract claim in the tribal court asserting expectancy damages and you just go through the regular contract analysis. With regard to torts, we have also waived immunity similar to the Federal Tort Claims Act in providing a limitation on remedies that are available for people who suffer, allegedly suffered a tort, and the big limitation that we have on that particular statute is that pain and suffering, which is the large area of tort case compensation, is limited to one-and-a-half times actual physical damages. And I might add that after we passed that statute our insurance premiums, the level of risk, actually declined because the insurance company could then therefore measure the level of risk and knew what the risk was less than not having a tribal waiver of immunity for tort actions."

Ryan Seelau:

"It's very interesting that the insurance premiums declined. Were there other benefits that you saw from the time before that those statutes were enacted to when the policy...when the constitution was passed and other policies came into play?"

John Petoskey:

"Yes. First, for tribal citizens it provides a method to dispute tribal council actions either in the executive or legislative capacity as being a breach of the Bill of Rights, if you will, that's... in our constitution it's Article X, which parallels the Indian Civil Rights Act. And so tribal citizens do bring causes of action against the tribal council or against the tribal councilors or against the executive departments alleging that the implementation of a particular tribal statute or particular tribal program is a violation of the Bill of Rights. The remedies that they seek are modification of the program, prospective relief in other words. With regard to the tort and contract issue, the tribe is involved with off-reservation vendors and also involved with off-reservation business invitees to its casinos and its hotels and we needed to provide a remedy for those people who come on to the reservation to engage in business with us and to have a determinate process of dispute resolution. When we did not have the waiver of sovereign immunity, we always had an indeterminate process of dispute resolution because the suit would be filed and in some cases given the merits of the suit the council would prospectively waive immunity for that particular suit to resolve that issue. In other cases, the council would not waive immunity and would just argue that we're immune from suit and not provide a remedy for the person who allegedly suffered harm. The statutes now provide a determinate response for all litigants on what they're going to do. And so when they enter into business with the tribe, they enter into business with the tribe knowing the risks and understanding that if there is a dispute, there is a remedy to resolve that dispute."

Ryan Seelau:

"I'm going to break my own rule and go into specifics a little bit, but procedurally in the contract instance or when the tribal council wants to waive immunity, is there a procedure or are those automatically in certain instances...?"

John Petoskey:

"No, there is a procedure. We have resolutions. The tribe does waive its immunity for transactional documents related to financing, for example, and we have chartered subordinate organizations and we have a Section 17 corporation under the Indian Reorganization Act that has a process for waiving immunity and that process has to go through the Economic Development Corporation through a resolution authorized by the corporation. That resolution then has to come back to the tribal council and the tribal council has to concur in the waiver prior to the waiver being effective. With regard to...there's one statute I didn't mention that I would like to mention very quickly and that is that the tribe has also enacted an arbitration provision, and primarily the reason we enacted an arbitration statute was because we have done substantial construction projects, multi-million [dollar] construction projects and we needed a methodology to resolve those construction disputes. The expertise of a tribal judge is not necessarily related to the complex problems related to construction activities and the American Arbitration Association has a wide variety of arbitrators that are specialists in different subject matter areas. You could have maritime...well, not maritime jurisdiction, but you could have commercial arbitration, you can have construction arbitration, and so this process that we enacted references the people who have the dispute, the off-reservation contractors and the tribe to go through the arbitration process with construction arbitrators, and it's a much quicker way to resolve disputes because the parties involved are speaking the same language in terms of construction activities. They're engineers, construction managers, they're architects and they generally have the same sort of two standard form of documents. There's two sets of documents, the AIA documents or the Engineer and Construction Management documents that really structure disputes between the owner, the construction vendor and the architect. And so we enacted that provision in arbitration to access that resource. Once the award is given in arbitration then it's enforced by the tribal court and if it's not enforced by the tribal court, which has never happened in our case, but the parties do have relief in federal court through the Federal Arbitration Enforcement Act. So that provides a lot of security for off-reservation contractors that come on to engage in business on the reservation."

Ryan Seelau:

"Has arbitration been used outside of the construction...is it available to other...?"

John Petoskey:

"It is available to other disputes. The arbitration procedure has been incorporated into our transaction documents for loans on the reservation. These are very large loans that we've negotiated with syndicated loan companies in which arbitration is used for the dispute resolution to determine whether there was a even of breach or interpreting the loan documents, which are extremely comprehensive."

Ryan Seelau:

"I want to turn back a little bit to sovereign immunity and talk a little bit about what role do you see sovereign immunity playing in negotiations with either state governments or local governments? Do you see it as having any impact in those...?"

John Petoskey:

"It does have an impact because sovereign immunity serves as a leverage value for the tribe to negotiate agreements with the State of Michigan in the context of what I'm familiar with. The Grand Traverse Band along with several other tribes in Michigan have negotiated a comprehensive tax agreement with the State of Michigan covering sales and use, income tax, utility tax and this agreement really resolves...it also covers tobacco and gasoline tax. The comprehensive tax agreement resolves a lot of disputes that the tribe could engage in or would have engaged in or other states and other tribes are currently engaging in, and that is the scope of the state's authority to tax for on-reservation transactions. What we've done in Michigan, it's called the...it's a tax agreement that is on the Michigan state website and it details what's called a tax agreement area in which the exemptions of the tribe will apply both for state income tax, sales and use tax, gasoline and cigarette tax, and also creates a situation where the sales tax is shared between the tribe and the state on a percentage basis that is subject to negotiation. Now a lot of those negotiations would not have gone forward if the tribe did not have sovereign immunity, because you have the Citizen Potawatomi decision of 1991 that directly relates to tobacco tax in which the Supreme Court held that the tribe was immune from the Oklahoma Tax Commission's collection efforts against the tribe for on-reservation sales of cigarettes that the tribe did not have to collect on behalf of the state, that there were other methods upstream that they could use to collect. And there have been well-publicized disputes between tribes and local taxing authorities, states in particular, in which things have degenerated into violence and road closures and burning tires and things like that. So that specter of civil unrest related to not having an agreement or enforcing an agreement through extra judicial means was one of the circumstances that both the tribes in Michigan and the state wanted to avoid. And incident to that was the immunity of the tribe, that the immunity of the tribe provided a negotiating leverage point as represented by the Citizen Potawatomi case for the tribe to argue with the state to say there's a different way of resolving this issue, we can do a mutual waiver of immunity, we can enter into this tax agreement and we can establish a regime in which the state and the tribes share the tax revenue and recognize the exemptions that are under federal law and this has been in existence since...we started negotiating in 1999 and very complex issues wasn't resolved until 2004. So it's been existence for about 10 years and it's been administered...the tribe -- both the tribe and the state are happy with the results and we are hopeful that will continue into the future."

Ryan Seelau:

"One of the interesting things about Grand Traverse Band's agreement with the State of Michigan in taxes to me is that if there's any disputes they first go to tribal court. My question for you is first of all, was that an important part of what Grand Traverse Band wanted to get out of the agreement and the other tribes? The second, you may or may not be able to answer this, but why do you think the State of Michigan was comfortable first going into the tribal court to deal with those types of disputes should they arise?"

John Petoskey:

"Well, first we wanted them to go to tribal court because our view of National Farmers and jurisdiction was exhausted in tribal court remedies, but also for some cases where it was on-reservation transactions involving tribal members. We felt that we had exclusive jurisdictions in some context and so we were very...not adamant, but we had very strong views that any initial dispute resolution should go to tribal court. The state has had ongoing relationships with the tribes and the Michigan Supreme Court and the tribal courts have had past reciprocity agreements, the Michigan court rule is at 2615 and that rule recognizes tribal court judgments and orders, subpoenas and other matters and so long as the tribe passes a reciprocal rule for the recognition of state court orders in its tribal court system. So that was the key, the existence of that rule and the history of mutual cross recognition without going through the full faith and credit analysis that had to be done previous to that, in which you had to petition the court and then establish on an itemized basis that the particular subject matter issue that you were involved in met the full faith and credit requirements of the host jurisdiction. All of that process is no longer done in Michigan because it's done via a court rule, Michigan Court Rule 2615 and Chapter X of the Grand Traverse Band court rules. And so it's become a matter of local practice for attorneys up there to understand that they can get their state court judgments enforced in tribal court and that the tribal court judgments conversely can be enforced in state court. So the existence of that rule gave comfort, if you will, to the state, and in addition we wrote statutes to reflect the agreement that we had negotiated, the substantive agreement that we negotiated, the state didn't have sign-off authority on them, but once they saw the scope of the statutes and our enforcement mechanisms that we established for the agreement then they didn't have an objection to having the agreements resolved in tribal court and we have done that. We have, in fact, enforced our tax agreement against our tribal members who have violated it in tribal court for the benefit of the State of Michigan because they are part of the revenue-sharing agreement of the taxes that are generated."

Ryan Seelau:

"Following up briefly on this Rule 2615, was that something that the tribes in Michigan fought to get to occur or do you know the history behind how that came about?"

John Petoskey:

"The history behind it was Justice Cavanaugh who was on the Michigan Supreme Court was interested in this reciprocity between tribal courts and a cousin of mine who's also a lawyer and a tribal judge, Mike Petoskey, and Justice Cavanaugh, started a committee years ago to have coordination between the courts. Justice Cavanaugh attended the Federal Indian Bar meeting in Albuquerque, New Mexico, sometime in the 1980s and that's when Mike and Justice Cavanaugh first met and developed a friendship and in part it was that friendship and the rule-making process in the court that they utilized to...in the Michigan Supreme Court that they utilized to resolve the questions of full faith and credit between tribal courts and state court systems."

Ryan Seelau:

"Are you aware of how many of the tribes have passed the necessary rules or statutes in order for this reciprocity to..."

John Petoskey:

"There are 12 tribes in Michigan and approximately, off the top of my head I don't know the precise number, but I would venture to say 9 or 10 have passed that rule and of the tax agreement, for example, again, it's the same thing, about 9 or 10 have signed onto the tax agreement. There are a couple tribes in Michigan that take a contrary view and that there shouldn't be the reciprocity agreements, there shouldn't be the tax agreements, and they have their own political views as to the source and scope and extent of the tribe's sovereign authority and how to implement that. And I'm not criticizing that. I'm just saying that people do take contrary views from the path that we have taken."

Ryan Seelau:

"I don't want to get too far into it, but in those contrary views to sovereign immunity, the mechanism by which the taxes are not being exchanged?"

John Petoskey:

"Yes. Yes. Yes, sovereign immunity is asserted as a basis for not...sovereign immunity is asserted as a basis for those tribes that continue to sell untaxed cigarettes, for example, or engage in transactions that they allege are not subject to the sales and use tax of the State of Michigan and that ties into a different question, which is, what is the scope of Indian Country based upon the exterior boundaries and the scope of the treaty provision areas?"

Ryan Seelau:

"I want to turn attention to something related and something that you've talked quite a bit about in your time as an [NNI] Indigenous Leadership Fellow and that's the Bay Mills Indian Community case and you gave a talk on the case yesterday so we don't need to go into all of the history and details, but I was wondering if you could just briefly give a quick synopsis of what that case is about and perhaps more importantly why that case has been in the news lately or what the concerns about that case going before the Supreme Court are."

John Petoskey:

"Okay. So the Bay Mills Indian Community alleges that under a statute called the Michigan Indian Land Claims Settlement Act, which implements an Indian Claims Commission judgment, that the terms of the statute created automatic restricted fee if they used resources from Michigan Indian Land Claims Settlement Act funds to buy property. They presented that theory to the National Indian Gaming Commission in a geographic specific amendment to their gaming ordinance, which the National Indian Gaming Commission informally rejected. They then revised their amendment of their gaming ordinance to basically parallel and parrot the provision of what Indian Country is in the Indian Gaming Regulatory Act. And based upon that provision of their gaming ordinance and the acquisition of an off-reservation casino located in Vanderbilt, Michigan, which is in basically the backyard of another tribe, the Little Traverse Bay Bands of Odawa Indians, they opened a casino alleging that the acquisition of the property created automatic restricted fee and that based upon the federal rules promulgated May 20, 2008 in regard to the Seneca Indian Land Claim Settlement Act, that restricted fee was not subject to Section XX of the Indian Gaming Regulatory Act. In other words that it was effectively a loophole, that they didn't have to go through the after acquired property analysis under Section XX and that restricted fee automatically became Indian Country, and if it was automatically Indian Country, they could engage in gaming and they opened a gaming facility. The State of Michigan along with Little Traverse Bay Bands sued for an injunction arguing that Michigan Indian Land Claim Settlement Act did not create restricted fee. They based their authority for the suit under a provision of the Indian Gaming Regulatory Act, which was 2710.D.7.A.ii which provides a five-part test for a state or tribe to sue in federal court to enjoin a gaming operation on Indian lands conducted in violation of a compact that is in effect. And so in that statement, there are about five elements that you have to meet for the cause of action. That provision both establishes federal jurisdiction, creates the cause of action, and waives by statutory abrogation, waives the immunity of the tribe that you're suing against. So Bay Mills argued that the complaint by the State of Michigan and Little Traverse Bay Bands was defective and did not meet all of the elements of 2710 because one of the counts alleged that the casino was not on Indian lands. Therefore if you're construing the complaint, if it's not on Indian lands and the conjunctive nature of 2710.D.7.A.ii of the five elements that the Little Traverse Bay Band had a defective complaint by alleging that the casino was not on Indian lands, if it's not on Indian lands there's no federal jurisdiction and there's no waiver of...there's no abrogation of immunity by the statute because the statutes in order to abrogate the immunity under case law have to be strictly construed and followed. That argument was not successful in the federal district court by Judge Maloney and he had an expansive reading of 2710 and relied on a 10th Circuit case that focused more on whether the gaming activity is a violation of the compact and ruled that there was also federal jurisdiction under two other related provisions, 1331 for the federal question of whether or not the Michigan Indian Land Claim Settlement Act created the restricted fee, and also that 1362, which provides authority for a tribe to sue in federal court, that that provided an additional basis for federal jurisdiction. He did modify both of those provisions when Bay Mills pointed out that the Sixth Circuit decision had already issued opinions contrary to that in 1331 and 1362, but he did reaffirm the proposition that an expansive reading of 2710 focusing on whether the tribe, Bay Mills, was violating the compact was a sufficient basis for the abrogation of their immunity under federal law and continued...and rejected their motion for reconsideration on the injunction. At that point, Bay Mills filed an interlocutory appeal to the Sixth Circuit and then briefing was completed and oral argument was held in May of 2012 and then opinion was issued by Judge Kethledge of the Sixth Circuit was the author and he essentially accepted Bay Mills' proposition that 2710.D.7.A.ii has five elements and all of the elements have to be met for there to be federal jurisdiction and for there to be a statutory abrogation and if you construe the complaints of the Michigan...the State of Michigan and the tribe, they are alleging that the casino is not on Indian land, therefore effectively they knocked themselves out of court because they are missing an essential element. So that is the case that's up on appeal. There are some ancillary issues in there that I don't want to go into that relate to the State of Michigan's argument under the Assimilated Crimes Act and also the scope of 1331. The issue that is up on appeal is whether 2710 waives the immunity in the expansive reading that Judge Maloney had in the federal district court or whether 2710 has to be read in a very restrictive manner...explicit manner such as Judge Kethledge said in the Sixth Circuit. So the state's argument, which was filed in August, argues that there's a statutory misinterpretation and that Judge Maloney is correct in his interpretation, but then they go on to an extreme position by saying, "˜And even if Judge Kethledge is right that sovereign immunity, in this particular case, should be modified by the court as part of the common law of the court, the state is urging the Supreme Court to essentially override its common law jurisprudence on sovereign immunity,' and that's where the big danger lays because the jurisprudence has established in the past through CNL in 2001 and Kiowa in 1998, there was a developing analysis of on-reservation, off-reservation, commercial versus governmental and the state is urging that the Supreme Court should adopt an analysis that off-reservation commercial activity is subject to a common law diminishment of sovereign immunity. They are urging the court to say any activities that are off the reservation of a commercial nature the tribe cannot assert sovereign immunity. So that's where the big danger is."

Ryan Seelau:

"I'd like to change topics a little bit now and talk about the sort of legal foundations of nation building. And what I want to talk to you about specifically is sort of the role of culture in legal institutions or in legal doctrine and things of that...and I was wondering how you, over your career, have seen the role of culture play out in legal systems because previously you talked about how, in the previous interview you talked about how you worked...in various parts of the country you worked with the Pueblos in New Mexico and you worked with Alaska native villages in Alaska and you've worked in various contexts and I was wondering how you see the same sort of goal, which is carrying out justice in Indian Country, how you're seeing that process change based on the culture that you were working within."

John Petoskey:

"The example that I used is actually quite dated and I don't think it's relevant to New Mexico anymore, but earlier in my career I worked at Indian Pueblo Legal Services and I worked for the eight northern pueblos and one of the pueblos I worked for was Taos Pueblo and at Taos there was an individual who was a tribal member that only spoke the Taos language and she was suffering from extreme alcoholism that impaired her judgment. At that time they called it 'organicity.' I'm not certain what that phrase means, but she would not leave the village and she was creating distress by her behavior in the village through her alcoholism. The pueblo had made numerous attempts to correct her behavior in their internal mechanisms that I'm not familiar with and then they came to the Legal Services and said, "˜Well, how do we deal with this particular situation?' And in the state law system at the time for somebody that was suffering from extreme alcoholism where they were doing harm to themselves you could petition under the New Mexico Health Code for an involuntary commitment in the district court of New Mexico to place the person in an institution against their will, an involuntary commitment petition is what it was called, but the problem in that case was that the person lived in Taos and would not leave the pueblo. So there was no subject matter civil jurisdiction for an internal relation that was taking place at Taos. So the court didn't have civil jurisdiction, the New Mexico Supreme Court did not have civil jurisdiction to initiate the process, nor would the individual come out of the pueblo. So given that set of circumstances and the language problems connected with her simply speaking the Indian language as her primary language, I met with the pueblo officials and with three caciques and explained that I thought what we should do is establish if you will a panel of caciques that would address this issue in the context of New Mexico law of the elements that you had to meet for an involuntary commitment under New Mexico law. And so they agreed with that and the panel of three caciques were convened with the person who was suffering from alcoholism and I went through the New Mexico Health Code on the elements that had to be met to prove that this person should be subject to an involuntary commitment and it was translated into the Taos language for the individual and explained what was going on and the caciques then agreed that she met all of those criteria and ordered that there would be this involuntary commitment. I then wrote up the order following the procedures that had just taken place and took that order to the New Mexico District Court and sought full faith and credit of what had occurred at Taos Pueblo and had to go through a hearing with a district judge in New Mexico arguing that the process that occurred at Taos Pueblo conformed with the procedural due process values of the New Mexico Health Code and the judge did order that the person was...could be involuntarily committed to a facility that was under New Mexico's control and that's what occurred. And so that was somewhat of a creative use of...I'm not saying that in a self-congratulatory sense. In response to your question that's what I'm saying. It was a use of using the cultural norms of the caciques having the authority that this person, the person suffering from alcoholism, respected and going through that process even though it was New Mexico substantive law, but explaining it to the pueblo officials and the pueblo officials opining that they agreed that this individual should be involuntarily committed because of her behavior."

Ryan Seelau:

"Another experience professionally that you have mentioned, which in some respects is very different from what happened with the pueblos, but on the other hand, also involved getting the sort of cultural norms into a concrete legal document was that of the Chickasaw Constitution being written."

John Petoskey:

"Oh, yes."

Ryan Seelau:

"I was wondering if you could talk a little bit about that story and what you observed and how the Chickasaw people...what the process they went through to sort of write and get their constitution done."

John Petoskey:

"So in 1908 the Curtis Act was passed and what the Curtis Act did was allegedly dissolve the Choctaw, Chickasaw and Cherokee legislature and created a system of appointment of governors for those...for the five civilized tribes in Oklahoma and that system existed from 1908 to the 1970s when the National Indian Youth Council, a place I worked at, in the late...in the early "˜80s, but in the, I think it was 1973 two attorneys, Tom Lubin and John Kelly filed a lawsuit on behalf of private plaintiffs called Harjo suing the Secretary of Interior and the case was entitled Harjo v. Kleppe arguing that the 1908 Curtis Act did not dissolve the Chickasaw legislature. So here you have a historical basis of the five civilized tribes having a history and a culture of constitutional government of checks and balances and having vibrant complex governments servicing the needs of Choctaws and Chickasaws in the...after their removal from the southeast to Oklahoma, they had a legislature, they had the Light Horsemen Cavalry, they had enforcement of their...they had a functioning democracy and a constitutional form of government. And then you had the United States basically destroying the government saying, "˜You can...we are going to destroy your constitutional government' and that's what the Curtis Act attempted to do. And the argument in Harjo v. Kleppe was that the Curtis Act did not, in fact, dissolve the Chickasaw government and the regime that the Secretary of the Interior had set up over the last 50 years of appointing the governor was clearly in violation of the constitutional cultural history of the Choctaws and Chickasaws and that the Curtis Act's implementation by the Secretary was incorrect. That argument and proposition ultimately prevailed in the federal district court and in the federal court of appeals and that was due to the litigation efforts of, as I said, Tom Lubin and John Kelly. And so when I came into the case in the 1980s, it was implementing that decision to reform the constitutional government and our clients, which were the, if you will, the dissidents against the governor of Chickasaw and the dissidents against the governor of Choctaws were leading a method that was...had to be administered by a federal supervision because of the level of animus that existed between the parties to re-establish a constitutional government and it was negotiations under federal supervision of a constitutional structure that was to be re-implemented at Choctaw and Chickasaw in a constitutionally supervised election of the constitution once it was completed. And that was basically bringing back the cultural tradition of a legislature in Choctaw and Chickasaw in the mid "˜80s and the constitution was approved and the tribe continues today."

Ryan Seelau:

"I'd like to talk a little bit now about Grand Traverse Band's justice system, ask you a few questions about that sort of along the same lines, but first I was wondering if you could just talk about maybe just a brief history of how the justice system, not how it started but when it started and what it looked like and then how it's grown into -- you've already mentioned the arbitration proceedings that are now available in the justice system, you mentioned in the previous interview about peacemaking -- and just sort of take us a little bit through the timeline of how that's grown over time."

John Petoskey:

"As I mentioned, the tribe was recognized in 1980. The tribe was engaged in litigation with the federal government over our constitutional provision on membership. At that time [President] Reagan and James Watt was the Secretary of the Interior and our membership was expansive in terms of the number of people that we said were eligible for enrollment in our tribe and then the Reagan administration and James Watt's position was essentially that the membership shouldn't grow because that's a bigger liability on the part of the federal government and therefore we're arguing for a more limited membership, and that took some time to resolve that issue because our argument was that the tribe determines its membership and not the federal government. The federal government actually alleged in letters that they would and essentially terminate the tribe again by taking away federal funding and taking away the recognition and the tribe's reaction was, "˜It takes an act of Congress to do that. You're going beyond the scope,' and so things...it took several years to resolve that membership issue. I only say that because, as a consequence, the constitution was not actually ratified until 1988. And so...but we were developing the tribal court even though we didn't have a constitutional basis for that tribal court because of this membership dispute. But in our constitution, we provide that the judiciary is a separate branch of government and is independent. So once the constitution was provided, we wanted to assure that independence of the judiciary. And one of the legislative acts that was done was to fund the judiciary on a percentage basis of our net income that did not...that could not be varied without essentially a super majority of the legislature changing that. And so that worked relatively well for the first couple of years, but then our enterprises became very successful, and as a consequence the percentage of funding for the tribal court went up dramatically given the fact that it was based upon a percentage of the net income of the tribe. And so there was the super majority to revise that allocation of funding to comport with the amount of money that the tribe was making at the time. And that's still a question that we have on how properly to fund the judiciary without using the power of the purse string to incapacitate the judiciary. The percentage method was one solution that we thought. It didn't work out because of a mechanical application of that percentage method and a rising income stream has a disproportionate impact on the amount of money that's available to the judiciary, and so I am really open to other avenues that people have on how they fund the judiciary on a basis that doesn't use the power of the purse string to limit the judiciary. That's what part of the independence question that frankly...a riddle that we have not solved. And I'm not certain how other tribes do it. I know there's that common problem in the federal government that has that. Justice Roberts is always complaining about the lack of funding that Congress is giving to the federal court systems. It's not a problem that has been solved in the greater federal system, but I think it's a problem that tribes should attempt to come up with a solution [for] if they want an independent judiciary. But having said all that on the funding, part of developing the culture of a strong judiciary is to recognize the power of the council and what it can do with an opinion that they don't like that the judiciary issues. It's easy to say that you shouldn't remove an individual or fire an individual for an opinion that has been issued and Grand Traverse Band does not do that. We have in our constitution the individual is appointed for a term of years, compensation cannot be reduced while the individual is in office and the only...but an individual -- and this is in our constitution -- individual can be removed for gross neglect, misconduct in office, and we incorporate by reference the American Bar Association Judicial Code of Conduct for a basis for removal. And Grand Traverse Band has undertaken removal proceedings against a judge on the basis of misconduct in office and that involves not a decision of the tribal council -- the tribal council is a litigant, a petitioner -- involves a decision of the appellate judiciary people at Grand Traverse Band judging a member of their own on whether or not the petition has merit for removal. So that's what I've always advised the tribal council. You can either appeal a decision you don't like, you can wait until the power of appointment is up and appoint that individual and you can use, and I know this...you can use political considerations in the appointment process. It's perfectly legitimate in my view when you're appointing a judge to say, "˜I don't want to reappoint you because you made XYZ decision that I disagree with.' That's an appropriate political exercise of the power of appointment. Or you can petition for removal under a decision that you don't like and those are the three methods that the council has used in its relationship with the judiciary. And conversely, the judiciary has removed members of the tribal council where the council members have committed self-dealing acts and the petitioner in that case is a other...majority of the council members vote to file a petition for removal against an individual councilor, the judicial panel hears the matter, an attorney is appointed for the councilor that is subject to removal and it's a litigated question on fact and law, on whether or not the particular alleged behavior amounted to misconduct in office by the tribal council. So the judiciary has opined in the past that the petition that the council filed by majority vote for removal was...had a meritorious basis and the councilor was removed from office by an opinion of the judiciary. So it goes both ways. Those are building strong institutions."

Ryan Seelau:

"We don't have a lot of time, but I want to ask at least one last question, which I think relates or is connected strongly to what you were just talking about and that's this week several times you've talked about how at least at Grand Traverse Band you've seen the sort of process...the justice system-building process as a goal of moving from an indeterminate process to a determinate one and I was wondering if you could tell us what you mean by that and explain why you think that's a good goal to have."

John Petoskey:

"Okay. This was in response to a -- which I have heard repeatedly here and also in other contexts -- that politics should be out of the judiciary, and it's using 'politics' as a negative word. My point was is that I don't think that is the appropriate description. Politics is, in some senses is a dirty word, but in my perspective it's not necessarily a dirty word because it's the process of governance of competing interests that constituents bring to the tribal council and they...this has happened on occasion that a tribal member will have an adverse decision from the judiciary and will call up a councilor and say, "˜This is a bad decision by the judge. You should do something about it.' And then people say, "˜Well, that's politics, that shouldn't happen.' My point is that that conversation between the constituent and the council member is hard to control because that's a council member listening to his or her constituent talking to them as a representative. It's a republican form of government and so the impact that the tribal citizen has is to complain to their elected official and that's what they do so I don't see that as necessarily bad. I do think it's inappropriate though if the elected official then attempts to intervene in the process and to change the end result and that's where I bring up the dichotomy of 'determinate' and 'indeterminate,' because when the elected official intervenes in the process, there are no rules that govern the elected official's behavior and the scope of his intervention and the standards that define what is permissible and impermissible. In other words, it's indeterminate. And the types of activities that should be allowed are only determinative activities where the standards of conduct and the rules of conduct and the appropriate actions are defined by past precedent in which people are arguing about standards that are already in place. Where we get in trouble is when we enter into relationships where there are not pre-existent determinate standards and that goes across the board. Everybody wants to know that what is happening is going to be resolved by a determinate process. They may not agree with the end result, but they do not disagree with the process and in the United States, Bush v. Gore is a perfect example of that. Both the partisans on the part of Bush and Gore disagreed with the end result that the Supreme Court had, but they didn't disagree with the process. Once the decision was made it wasn't...armies weren't called out to enforce it, there wasn't contrary protests of...it was over. Everybody agreed the process had worked and you continued to disagree with the opinion, but it was a determinate process that ended. And that should be the goal of judicial systems and legislative systems to act in a determinate manner and not an indeterminate manner because your constituents, your vendors, your business invitees, your tribal citizens will all appreciate that even if they disagree with the end result because they recognize that the process is determinate and legitimate. Indeterminacy makes illegitimacy."

Ryan Seelau:

"I think that's an excellent point and I'm glad that we were able to talk about it a little bit. John, thank you for sitting down with me and talking again. That's all the time we have in this program of Leading Native Nations. To learn more about Leading Native Nations, please visit the NNI's website at nni.arizona.edu. Thank you for joining us. Copyright 2013. Arizona Board of Regents."

Richard Luarkie: Leadership and Nation Building at Pueblo of Laguna

Producer
Native Nations Institute
Year

In this informative interview with NNI's Ian Record, Governor Richard Luarkie of the Pueblo of Laguna discusses Laguna's approach to nation building, the roles their core values and time-tested process for cultivating effective leaders has played in that effort, and how and why Laguna has worked to systematically build a diversified, sustainable economy.

Native Nations
Resource Type
Citation

Luarkie, Richard. "Leadership and Nation Building at Pueblo of Laguna." Leading Native Nations interview series. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. October 1, 2012. Interview.

Ian Record:

"Welcome to Leading Native Nations. I'm your host, Ian Record. On today's program, we are honored to have with us Richard Luarkie. Since January of 2011, Richard has served as Governor of his nation, the Pueblo of Laguna. He previously served as First Lieutenant Governor of Laguna and as a village officer for several terms. He also is a former small business owner. Governor, welcome and good to have you with us today."

Richard Luarkie:

"Thank you."

Ian Record:

"I've shared a few highlights about your impressive personal biography, but why don't we start out by having you tell us a little bit more about yourself. What did I leave out?"

Richard Luarkie:

"Well, again, thank you very much for allowing me to be here and interview with you today. As far as my background, my education, I did go to the tribal school systems there in Laguna, Laguna Elementary School through the high school and then went onto college, got a football scholarship, went on to play at a D-three [Division III] school in Ohio, eventually transferred back to New Mexico, graduated with my bachelor's in Economics from the University of New Mexico and then worked for our tribe, the tribal entity Laguna Industries at the time, and then the Pueblo itself, then returned to graduate school at New Mexico State University where I got my master's degree from New Mexico State. And my professional career, I've enjoyed opportunities working with private sector firms like AT&T Global Systems, American Management Systems, mainly IT, Indian Health Service, and I've had the privilege as you mentioned of owning my own firm. So that's just a little bit more about myself."

Ian Record:

"So we're here today to tap into your knowledge, your wisdom, your experience regarding a wide range of critical Native nation building and governance topics and let's start with nation building. How do you define nation building and what does it entail for the Pueblo Laguna?"

Richard Luarkie:

"It's a wonderful opportunity, I think, for many tribes to reinvent themselves. For the Pueblo of Laguna, nation building is about the embracing or re-embracing of core values and responsibility to those values, promotion of courage and capacity and exercising of resilience in a new way. And what I mean by that is resilience not in a survivor mode, but resilience of, ‘Now that we're in control, what are we going to do?' However, as a step towards that, in order for this to be relevant and practical for most a major effort must be put forth to change the mindset of our people that we are nations, not minority groups. We are nations not only in name but in responsibility. I had one of our former governors from one of the pueblos, pueblo nations there in New Mexico, he shared an experience with me that in the ‘60s he had the opportunity to meet Malcolm X. And Malcolm X, once he found out that the individual was Native American, he told the governor, the former governor, ‘I want what you have. You have the ability to make your own taxes, create your own laws, you have your own land base, you can determine your own membership, citizenship.' And for us as tribes, we have to take that...we have to embrace that responsibility, and I believe that with the United States recognizing us as tribes on the same level as they do states as domestic sovereigns, it's a tremendous opportunity to build and rebuild our nations. So nation building is critical for us in the fact that for not only as Laguna but as Native nations across the country, we have to embrace that responsibility for nation building."

Ian Record:

"The Native Nations Institute has worked with the Pueblo of Laguna for a number of years now, providing assistance in some respects, but more often than not just observing some of the amazing things that the government of the Pueblo of Laguna has been able to do. Can you...imagine you were in an elevator with someone and they asked you to describe in just the few minutes you had together what the Pueblo of Laguna government looks like and how it works, what would you tell them? I guess what would you highlight in terms of what makes that governance system unique and what makes it distinct?"

Richard Luarkie:

"Well, for me, my belief is that it's a government that is truly based on the desires of the people. The position that I currently serve in is not my position. The people, if they so chose, could have a meeting tomorrow and decide that, ‘Thank you for your services but you're going to go this far, we'll have someone finish the rest of the year.' It is truly in the control of the people. And to me, that definitely brings the responsibility for balance, for acknowledgement of our role, and so I think in a very short phrase we have a government that is truly based on the people and the authority of the people to place in positions and lead."

Ian Record:

"We were...before we sat down for this interview we had a chance to sit down with a group of folks from the Native Nations Institute and we got to talking about a wide array of governance topics, and one of the things that you touched on in describing your job is the challenges of your job, not just the professional challenges but the personal challenges and the amount of time that you have to dedicate in order to do your job well and to serve your people effectively. Can you talk about some of the challenges of being a leader of a Native nation and perhaps some of the more unique challenges of being a leader of a Native nation?"

Richard Luarkie:

"Sure. In most cases people that end up in these types of positions have ended up in these positions because they've pursued it, they campaigned, they declared candidacy, those kind of things, and in our tribe that's not our process. As I mentioned previously, it is the authority of the people to decide who will be nominated and ultimately who will be selected. But the responsibility that comes with this...mainstream society you hear Democrats and Republicans battling about who's right, who's wrong. They're focused on ideologies and egos and not the people. For us as Native nations leaders, in particular to Laguna, in our tribe the teaching is that the Governor also carries a traditional title which is Father, '[Laguna language].' And in that role, it is a tremendous responsibility. If you can liken...not only has the good Lord given the men the incredible privilege of using his name as Father, but he has placed upon the shoulders of fathers an incredible, incredible responsibility and that's the responsibility of caring for children. And in our teachings, the Governor is also the Father of our people, of our community. This is a humbling balance because the children, '[Laguna language],' I love them unconditionally and I respect them unconditionally, whether they agree with me or not and that is an incredible challenge. That aside from even my own children. I love them like my own children and when somebody challenges you and questions you, it is an incredible reach for strength to be able to not attack back but to say, ‘Thank you for your advice' whether I agreed with them or not to say, ‘Thank you' and move on. So it is those things that I think are uniquely challenging about a Native nation, because we're taught that our role is not about credibility, about visibility, about, ‘I'm better than anyone else', it's about humbly serving and doing the best for the wellbeing of our people."

Ian Record:

"So for a leader of Laguna to lead in the way that the core values of the people dictate, it's incumbent upon you and your fellow leaders to...you said love all of your people unconditionally. And doesn't that in practice in terms of the day-to-day operations of governance mean that you need to treat everyone the same and treat everyone equitably and fairly and essentially govern consistently so you're not playing favorites, you're not privileging one group over another group or one family over another family?"

Richard Luarkie:

"That’s absolutely the case, and I think that's the reason why you end up with challenge because some folks think that I'm not being...I'm not favoring them, so therefore I may have the perception that I'm not treating them the way I'm treating everybody else but that's not the case. I really...I think that in serving in these kind of roles, fairness is objective, it's...or not objective, subjective and I believe that I have to be consistent. I have to be...I have to be focused on the quality of my care, if you will, of our people. And so it is difficult to demonstrate love, to demonstrate respect when mud is thrown at you, but I think at the end of the day that's why prayer is so important, a reliance on the Higher Power is so important so that renewal can be given."

Ian Record:

"And doesn't part of that caring for your people unconditionally and caring for all of your people and treating them fairly across the board, doesn't that sometimes mean you have to say no for the betterment...you have to say 'no' to that one person for the betterment of all?"

Richard Luarkie:

"Absolutely, and that's why I used the analogy of a father. With our children, there are times that maybe they want to go to the movies, they want to go hang out with their friends, and you've got to say 'no' and they're going to be upset with you. It's no different in this environment. Sometimes our people may want a new facility, but we're going to have to say 'no' because we don't have the revenue to support it. It's not that we don't want it, it's that we need to make sure that we don't do things to just appease and gain favoritism. We have to do our actions with responsibility because when you take money from one source that means something else is impacted and you have to be aware of what the impact is going to be."

Ian Record:

"So you mentioned earlier that the way that Pueblo of Laguna does things, particularly with respect to how it chooses its leaders that you don't campaign and that the sort of...the common understanding of the people of community is that people who are openly seeking the office of leadership, that's going to be frowned upon. Can you...and you mentioned in previous discussions that the common phrase translated to English is, ‘You don't chase it.' Can you talk a little bit more about that and how that came to be and perhaps its roots in traditional Laguna governance?"

Richard Luarkie:

"Sure. We're taught from very early stages, from the men folk that attend village meetings, that attend public...that we have responsibilities, obligations in our community to do our part to contribute. And it's during these times that the older men that have been in these positions remind that we should not chase these positions, we should not boast. A term they use is '[Laguna language].' It literally means, ‘Don't pound your chest, don't show off.' That it's literally up to the people to decide who should be in these positions. With communication, with sincerity, with prayer it is believed that our Creator will put the thought in our minds as to who might be the best person to lead at this time and so those individuals that are of consideration, their names are put forth by the people, not themselves. We do not have in our policy, in our ordinances at Laguna...individuals are not allowed to declare candidacy nor are they allowed to campaign. If they do either, they're disqualified. It is truly up to the people to decide. And so boasting is not something that is looked on kindly, and I believe that when those things are done, our community reminds, ‘Here's why you shouldn't do it,' whether it's in the village meeting, whether it's officials reminding, they remind that boasting is not an acceptable approach, that it is the people's authority to determine who will sit in those positions."

Ian Record:

"So you...as I mentioned at the outset in the introduction, you've been Governor for going on two years now, but before that you served in other leadership positions within the Pueblo, and I'm sure that those previous positions that you held leading up to becoming Governor helped prepare you. And I think that's part of the process that Laguna has long had in place to sort of have people move up through the leadership system and ultimately assume the highest position there is, but looking back now are there certain things that you wish you knew...that you know now that you wish you knew back then before your first day as Governor or the things that kind of came as a surprise to you and said, ‘Wow, I didn't really expect this' or ‘If I had to do it over I'd maybe prepare a little bit more in this area'?"

Richard Luarkie:

"Well, in our Pueblo, in order to get into positions, there is a traditional process as you're referring to. The traditional process is that an individual normally will start out as a town crier. That's the individual that goes around and makes announcements to the village members that there's a meeting tonight, there's ditch work tomorrow, there's whatever the case may be. And so that role is not only for the messaging, but also to get to know the community for that individual. The second step up is the mayordomo, the village officer. That role the individual is responsible for land assignments, family disputes, those kind of things and that role obviously takes care of those functions but also is intended to...for the individual to learn a little more intimately the people. Then the next role up is the council role and that council role, because now you have these first two steps, you have a broader perspective, so now you're able to see a bigger picture. So maybe the people may consider you to go to the council. Then we have what we call a 'staff officer,' which is analogous to the mayor of the village and it's that staff that is I guess analogous to the cabinet of a Governor. And so...and at that point then, once you serve in that role then you have the opportunity if the people so see it may ask you to serve as Governor, secretary, treasurer, the broader positions. So that's the training ground and...I'm sorry I lost my train of thought on that."

Ian Record:

"That's good. I was talking about what do you wish you knew before you took office."

Richard Luarkie:

"And so those are the training steps to getting into these positions. Based on that, it gives you a great understanding and a great grounding for community. But one of the things I wish I knew more of before I got into office was the history, governmental history, policy and the implications of the impositions of federal policy and what has framed Public Law 93-638, what has framed the Indian Civil Rights Act, what has framed all these other elements that have come into play. It would have been much more I think enlightening to come into this office on day one having a better handle on those things, because you deal not only with local issues, but you're dealing with state and federal issues. And much of the state and federal issues are defined by federal policy, so it would have been great to have a better handle on that element."

Ian Record:

"And don't...following up on that, a colleague of mine once said that, ‘To be a leader you need to be as much an educator and a student as a decision maker.' How do you see that statement, that it's not just when you achieve that position of responsibility as governor, as chairman, as councilor, whatever it might be? That it's not just about making decisions at that point. It's about continuing to learn and continuing to teach the people in the community and learn from them and also learn these other things that you've alluded to, like the federal policies and what they mean for your nation in particular."

Richard Luarkie:

"I couldn't agree with that statement more. I believe it's absolutely critical to educate not only your community but your council. Your council needs to understand what they're deciding on so that they're able to articulate back to the community the whys of the decision. But also in those decisions that require community input, it's absolutely critical that your council's able to articulate to the community what they're needing and why. And so as that feeds back up to the ultimate decision, the Governor or leadership position needs to be able to frame that information in a manner that the council can understand, they can understand it to be able to articulate it, that the community can be able to take that articulation and make sense of it and make a recommendation back to the council, ultimately to the body that will make the decision. So it's absolutely important to be able to educate. But it's also important to be able to sit and take the time to ask the questions and that as a leader, ‘I don't understand. Can you explain to me a little bit more before I put it to my council? Is there some additional information that can be provided?' So in a leadership role, that's where I think the humbleness and humility come in to be able to make sure that I'm able to understand and I'm able to learn what the issues are so constant learning and constant educating are...they go hand-in-hand in this role."

Ian Record:

"And isn't it one of your core teachings, the core values of Laguna traditionally for their leaders to make sure that they don't make ill-informed, hasty decisions, that you actually take that time and you make sure you fully understand the issue before you decide upon it? And I would imagine that's more crucial than ever given the complexity of the governance challenges that Laguna faces in the 21st century."

Richard Luarkie:

"In our environment, in our council environment, you often hear the reminder '[Laguna language].' This means, ‘Do it properly, take your time, be diligent.' It doesn't mean sit there for six or eight months. It means be analytical, be objective in your decision making. Turn the stones that you need to turn but be...do it properly. And so I believe that for us, decision making and being able to frame decisions in a manner that is diligent is critical for us. So those are all very important elements for us in our decision making."

Ian Record:

"Isn't it difficult though for some leaders...I think there's a feeling among some leaders and perhaps some people in the community that if you happen to become a chairman of a tribe or a councilor of a nation that you're automatically supposed to have all the answers and so you shouldn't be asking questions, you should already know this stuff. Obviously, that's not the way things operate at Laguna, and from what you're saying it sounds like that there's not embarrassment with asking questions to get a better handle on, 'What's the issue we're facing and what's the best decision to choose?'"

Richard Luarkie:

"Yes. I very much agree that for Laguna that's why it's so important that those reminders go out, ‘Don't pound your chest, don't chase these things' because when you're of that type of a personality, arrogance, 'I know it all,' it's difficult for you to ask for help. But when you're humble and you serve with humility, then it's easier to say [Laguna language], ‘Help me. Guide me here, I need a little bit more information.' We also have a system that at Laguna where former leadership...it's not a situation where I go and try to undo everything the former governor did or previous governors. But instead I take what they've done and I continue building on it and I draw on them to help me keep moving it forward. So whoever comes behind me, I'm going to do the same to help them. So there's that perpetuation, that continuance of support from former leadership in moving our efforts forward."

Ian Record:

"In fact that's a good segue into one of my other questions about leadership and that is, what is Laguna's approach to mentoring the future leaders or people that are coming up that traditional leadership process pipeline, if you will? For mentoring them to be as prepared as possible for when they become governor one day or become lieutenant governor one day. What does Laguna do to mentor them, and then when there's that transition period, when one group of leaders is getting ready to give way to another group of leaders, is there a process for transferring of knowledge there?"

Richard Luarkie:

"Well, on the mentoring piece, one of the things that I think is really critical is that process I explained earlier with the town crier, the mayordomo, that's real important, because it gives you an understanding of community but also at those times when there's ditch work, when there's village work, the men are sharing information and that's one of the best times for young people, the young men in particular to get this information. But on a more formal side, one of the things we've been doing in particular to our administration has been...we've been including our young people in meetings, we've taken them on trips with us, not just for the fun of going on a trip but actually sitting in and engaging on presentations. As an example, we had some junior high students that went with us to Washington, D.C. and they presented to Congressman Udall, to Congressman Lujan on some very pertinent issues like housing, recreational facilities for our youth, suicide. So we're engaging them so they see the relevance of our work as well as the relevance of their education to the work. So it's very critical that we begin to expose our young people to the issues now as opposed to waiting to the point of time they're in office or whatever the case may be. And I think it's equally important that we grow these young people not to just be tribal leaders, but to be good people that are knowledgeable about their community and are respectful not only to their community but to themselves. So those are really critical elements. And so that is I think important on the mentoring side. On the transitioning of leadership, it's equally important to be able to sit with outgoing leadership, incoming leadership and to be able to develop that bond and that relationship that says, ‘As we go out of the way and you guys come in, we fill in the back to make sure we can continually help you.' So it's not a, ‘I got all the information from you now and I'm going to go lay on the beach.' That's not the case. It's, ‘Now I'm going to be able to help you from behind and I'll support you.' So it's a transition of support, and so that is very critical in how we develop our leadership, how we transition initiatives, continuity is critical for us."

Ian Record:

"And I'm assuming it does wonders for the government's institutional memory and the ability to sort of not only get things going, but sustain them as you mentioned where you're not...you're able to build upon the work of your predecessors because you're able to access their knowledge and their expertise in an ongoing way."

Richard Luarkie:

"Right. Right. We don't have a system that's made up of Republicans or Democrats or Independents or whatever. We have a system that's Laguna and we're Laguna and this is what we're supposed to do for our people. And so it's a system of continuity, a system of consistency, so it definitely helps in the continuation of initiatives."

Ian Record:

"And do you think that Laguna would have been able to develop the robust, diversified economy it has without that governance system in place?"

Richard Luarkie:

"I don't believe it would have been able to do that, because you need...you need not only the consistency in leadership, but you need to have trust from the government to the businesses and the economy that's being created and you can't get that with inconsistent leadership."

Ian Record:

"So you've touched on some of the keys of being an effective leader, of being a nation building leader if you will, things like not being afraid to ask questions, to make sure you make educated decisions, be an educator of your people so that they're onboard with what's going on. What are some other things from your experience that nation building leaders do, that effective leaders of nations do?"

Richard Luarkie:

"Well, one of the things that I think is so critical is back to that element of not being afraid to ask for help, whether it's from the Native Nations Institute, whether it's from tribal member Joe Blow, ‘Can you help me clean this ditch' to whoever, I think humbleness and humility is a major element in nation building. Education of self and community is critical. As I mentioned earlier, we're nations, we're not minority groups. We are nations and we need to understand the responsibility to being a nation and in order to do that, we have to know...we have to be educated. And I mean education, not just formal education with a degree, but education in identity, education in community, education in spirituality, education in language. Our language identifies who we are, it's so very critical that we have language. So all those elements combined together are pieces that lend to nation building and are pieces that we should continually ask for guidance in, that we should continually seek to strengthen, those are areas that as a nation builder we should have as cornerstones. But at the heart of it is our core values, the ability to respect, to love, to have discipline, to have obedience in how we conduct ourselves. Those are things that as nation builders we should not be afraid to ask our people to do. But the most important element of that is for us as leaders to demonstrate that desired behavior. So asking for help is one of the biggest things that I think we need to be able to do, then of course implement. Implementation is key, and I see many tribes...and Laguna we've done it as well, where we've done research, we've done analysis but when you don't implement, it's all for naught. We have to implement but with implementation comes responsibility. So it loops back around to who can help us best implement."

Ian Record:

"And with implementation you need capacity, don't you?"

Richard Luarkie:

"That's right."

Ian Record:

"And that means that...what a lot of Native nations struggle with is getting beyond this sort of legacy of colonialism if you will that the leaders are expected to do it all and so a lot of leaders have this mindset of, ‘If anything's going to get done in this nation, I've got to be involved in it' versus ‘I'm going to make sure as a leader that we build up our institutional capacity through qualified people with the skills and expertise that we need to get the job done.' Is that something that you wrestle with? It sounds like you guys deal with that relatively well, but is that still a challenge?"

Richard Luarkie:

"It definitely is a challenge and even for Laguna we've...since 1962 we've had a formal scholarship program, so many of our tribal members, we have had our bachelor's degrees paid for by the Pueblo because way back when our elders saw the importance of education and established a scholarship fund. So as a result of that, scholarships have been available. I'm a recipient of that. My bachelor's degree was paid for by our tribe and many others. And so capacity building was very, very important from an early stage and still is. But I think one of the things we're realizing now is that capacity building is not only important on the formal side and the technical aspects but on the community side. We have to not...we can't lose focus of who we are. We have to know who we are and if that means relearning pieces of who we are, we need to do that. So in...with the community education and formal education coupled together, that makes for a strong nation in our own capacity. And I think it also goes back to even those fundamental blessings that our Creator has bestowed on many of us as Native people and that's the blessing of competency. We have some smart people. We have intelligent people, but we have to get confident in our own competence. We have to be confident in each other. We have to respect each others' competencies and where there's weakness, let's help them get strong. And so that is a major element in nation building, being able to respect the competencies of one another and to draw on it. There's many instances that as opposed to going down the road and finding a consultant we may have it right here or if we don't, maybe the next tribe over does, but we don't seem to draw on one another and that's where I think it's going to be a major element as we go forward into the future for tribes to recognize that competency that we've been able to develop."

Ian Record:

"I want to draw together a couple of themes that you just alluded to. One is this confidence in competency, the competency of your own people and not just folks within...that are working within tribal government but people out in the community. And another thing you brought up was that you can't be afraid to ask your people for help and one of the things that we see a lot of tribes struggle with is...and this is really a legacy of the sort of dependency mentality that colonialism seeded in so many Native communities, where the government is expected to do everything and that in many instances they'll essentially subsume the role of what the community is supposed to be doing on its own. And so...what we've heard a growing number of tribal leaders advocate for is, 'We need to get back to an understanding of tribal civics,' if you will, 'that is rooted in the reality that the government is not the nation, the government of the nation is not the nation itself, but the government supports the nation as the nation acts as the nation, as it acts as a community.' I've heard you discuss, for instance, the dynamic of ditch work in your community, where citizens of your community are expected to contribute to the life of the nation and they're expected to play a valued role. Can you talk about how important that is and how empowering that is for you in your job?"

Richard Luarkie:

"Absolutely. Everybody needs to understand their role. Even I, serving currently as governor, when ditch work is called, the village officers, the mayordomos are in charge of ditch work. So when I go to ditch work, I'm under their authority. They tell me when to get out of the ditch, when to take a break along with everybody else. Just because I'm the governor doesn't give me the authority to jump out of the ditch whenever I want. I'm under their terms until they release us for the day. And so I think the understanding of role and where the authorities lie is absolutely critical, and I think that's empowering because we recognize and we understand how important community teaching comes back into play because you may have...in our community you might see a person at the local gas station that's pumping your gas and cleaning your windshield but in our community that may be a very high religious leader. So understanding and respecting role is critical, because you don't know who you're working with at times and you have to respect those that are in authority. And I think that brings empowerment to the community because it reminds about respect for leadership, it reminds respect for mother and father, for grandma and grandpa. So I think that it's definitely a key element to nation building because that's the part that gets forgotten. It's not about money, it's not about policy, it's not about law, it's about getting along. That's critical."

Ian Record:

"I wanted to touch on now a quote that I've heard you share a number of times -- watching you present to other tribal leaders and perhaps future leaders of Native nations -- and that is you say that when you were chosen to lead your nation that you were not given great power but you were given great responsibility. And that's a fundamental concept that I think a lot of not just leaders of Native nations but leaders of all nations struggle with is really conceiving in a proper way what it is that they were chosen to do, exercising responsibility versus exercising power. Can you explain what you meant by that comment and why it's critical for leaders of Native nations to approach their leadership authority with that mindset?"

Richard Luarkie:

"To me, when this world turns, when a deer runs, when a salmon swims, when we wake up in the morning, when our heart beats, all those things are powered by the same source, our Creator. To me, that's where the power lies. I am a human being. When the people put me in office, they didn't give me any power, but they gave me tremendous, incredible responsibility to take care of them, tremendous, incredible responsibility to protect them. That's my job. The power resides with our Creator and it resides with the people. The minute I start believing I have power, I've lost, I've gotten weak because that comes from selfish, ulterior motives and that is from...when you begin to lead and make decisions with selfish, ulterior motives, you leave your people behind, you leave your children behind and that is not the role of a leader."

Ian Record:

"So it sounds like from everything you've shared with us that the...through the existence and the practicing of Laguna core values, that there's pretty strong deterrents in place to prevent just that kind of behavior that you've talked about, those selfish, ulterior motives from influencing the decision making of a leader at Laguna. But if and when those issues do arise, when someone's leading in an unethical way for instance, how does Laguna deal with that? What's the process that's in place for sort of restoring that person to a place where they're acting in a good way or if necessary punishing them or removing them from office if that's the approach that you take? Can you talk a little bit about how Laguna deals with that issue?"

Richard Luarkie:

"Sure. Laguna is like any other Pueblo or any other tribe in this nation, we're not perfect. We have our challenges and we have those individuals that challenge. And for Laguna, one of the ways though that we deal with that type of a situation is that it is the responsibility of the leadership to remind of proper behavior, of proper conduct. In our community we have village meetings on Thursday evenings and at these village meetings the community also has the opportunity to remind, ‘Here's what we expect of you, here's what we don't expect of you in your behavior.' If the problem is serious enough, we have the ability to call what we call 'general meetings,' where we invite the whole community and we present the issue and it's the people then that have the authority to say, ‘Joe Blow, you've come this far, thank you for your service. We're going to relieve you at this point.' Or they can say, ‘Sit there and listen to us for the next several hours and we're going to remind you of why we put you there and what we expect of you.' And at Laguna, I don't think our system is a system of immediate penalty, ‘Let's throw the guy out, let's throw the gal out.' But instead, ‘Let's nurture them, let's correct them, let's remind them in hopes that they won't do it again.' And they include the community in those situations, so it's just not the officers and a couple people sitting there, it's the community. So not to...not meant to embarrass the individual, but so that the individual knows the community knows and the community helps them back to that teaching of, ‘It takes a village to raise a kid,' no different in this environment. When an official maybe has gotten out of line, it takes the community to remind them and get them back in line."

Ian Record:

"I want to switch gears now to the issue of strategic orientation which is one of the, what the NNI and Harvard Project on American Indian Economic Development Research has found is one of the five keys to effective nation building, this issue of having a long-term strategic vision of where you want to head as a nation and then governing towards that vision and not just governing from day to day. I had a chance in advance of this interview to sit down and go through the Pueblo of Laguna's website and I noticed that among other things that the Laguna tribal council is charged with advancing five strategic priorities aimed at enhancing the quality of life of the Laguna people and those included health, education, financial stability, infrastructure and workforce excellence. And I'm curious to learn from you, how did the tribal council arrive at those priorities and what role did the Laguna people play in determining those priorities?"

Richard Luarkie:

"In 2006, that was a transition year for us, the end of an administration. In 2007, we had a new administration come in and when that transition meeting happened, there was probably five, six pages of priorities and single spaced, 10-point font, and there was no way that we could accomplish or even make a dent in all those priorities. So what the Pueblo council did at the time is took a step back and said, ‘Okay, of these what are those common areas and how is it that we begin to group these elements so that it's more manageable?' And it's at that time that our tribal council had the first real interaction with the Native Nations Institute. The Native Nations Institute actually worked with us to frame, at a two-day retreat in Santa Ana Pueblo at the Tamaya, to frame what those priorities might look like and why we needed to prioritize. And so as a result of that we came up with our initial set of priorities which are the ones that you've just read off. And so that became our long-term target, and during that process to finalization we also had community meetings, one being a large meeting that was held at the Route 66 Casino, where we invited our tribal members and a large number of our people came and weighed in on these priorities, and as a result at the conclusion of the meeting, validated that these are the priorities and that they also indicated that these will be the priorities until there is a significant dent if you will made in the priority to where we can move it off and we can give emphasis to something else. It's been a great strategic process because...on a couple fronts because when we got to meet with our Congressional delegation, they don't see something brand new every time. We bring them the same thing but with an update. It's helped us in particular to infrastructure. Because we've put a big emphasis on infrastructure, we have a $70 million project under way right now, so as a result of that infrastructure has come off and now housing has been put on. So housing was a close tie with infrastructure in the initial go-around, but the logic came that, ‘Well, in order for us to have more homes, we need infrastructure. So if we put homes there first and we don't have the infrastructure to support it, it's a waste.' So now that we have these projects going in all six villages, it's huge for us. This is the first time our whole water and sewer system has not only been revamped, but it's been replaced, brand new piping and we're also running to two of our outlying villages that have never had natural gas. You would think in this day and age, 'Wow!' But...and as a tribe as progressive as Laguna, those two villages are just now getting natural gas. So infrastructure has had a significant impact. It's not that we're going to give it less attention, we're still going to give it attention, but this strategy of keeping focused on some core areas of development has definitely helped us."

Ian Record:

"And doesn't it make your job on one level easier, or more clear I should say, when you know you've got these strategic priorities in place, that these are points of emphasis above all others and that the community has signed off on this and they're clear on these as the most important things that we need to be doing, that when you deal with those day-to-day decisions and those fires, that it's a lens through which to say, ‘Is this going to get us closer to these five goals?'"

Richard Luarkie:

"Right. Absolutely and it not only helps us make significant impact and get community buy-in, but when new leadership comes in, new council members, new administrations, if they've been participating in the community, they know what the priorities are, so it lowers the learning curve for leadership coming in."

Ian Record:

"I want to switch gears and talk a little bit about economic development, which of course is related to strategic orientation but as you know, Laguna is well known throughout Indian Country for its methodical development of a diversified economy, and I'm wondering if you can give us a little bit of background on how...what compelled Laguna to pursue the building of a diversified economy?"

Richard Luarkie:

"Laguna's economy's interesting...for me, it's one of the areas that has intrigued me and as I look back on it, from the 1950s we had one of our first large tastes of economic development, although prior to that we tasted economic development with the coming of the railroad in 1885 when our tribal leaders negotiated right of ways in exchange for jobs for our tribal members. So that was our entrance into the wage-earning era in 1885, so we entered that very early. In the 1950s, we entered into mining with the Anaconda Uranium Mine. We had the largest open-pit mine in the world, and that generated significant revenue royalties to the Pueblo. And the challenge for the tribe is that over those years they didn't diversify their economy. We were for almost 30 years at near full employment and then in 1981, the uranium prices fell out so we went from nearly full employment to almost 72 percent unemployment. And the only thing we had at the Pueblo was a Chevron gas station and a local store, so there was no way that could absorb the employment requirements. So there was a period of time that was very difficult for our community and as a result of that, the tribal leadership at the time -- not out of strategy but out of reaction and trying to get people back to work -- created a bunch of community make work projects, building walls, and fixing windows and those kind of things. But in that process, they also began the effort to build Laguna Industries, Laguna Construction Company, federal 8A companies that eventually grew to multi-million dollar firms. But it was out of reaction so that our people could get back to work. And so as a result of that, that laid the foundation for Laguna to get into the position that we will not allow this to happen again. So the diversification happened in a manner that said, ‘We need to look at different industries but we also need to be able to allow those businesses to grow.' So as a result of that, our Pueblo government took the position that we will not be engaged in the day-to-day operation, but instead we will structure a Section 17 corporation. So as a result of structuring a Section 17 corporation that allowed for the establishment of boards, board of directors, who served as the interface with the entity. The board works for the shareholder which is the government and they're the ones that oversee the entities for us so the government does not get involved in the day to day activity and interfere with the decision making of the business. So that allowed for expedited, more strategic growth of our companies. And right now we're at a point in time where diversifying of our economy is so very critical, where now we've put an emphasis on entrepreneurship, because it shouldn't be just the tribe creating businesses, we need to allow our community members to build businesses. Many tribal members say, ‘Governor, why is it that our tribal budget keeps increasing?' And my answer is, ‘Well, that's because when our economy's not strong there's more reliance on the government. When our economy is strong, the reliance comes down and our costs go down.' So we're working to build this piece, and so right now the Pueblo is focused on developing our entrepreneur base, looking at ways we can partner with other entities to help diversify our economy and find new revenue streams, but also be able to stabilize that in a manner that doesn't get us back to those early-1980 days."

Ian Record:

"Isn't the Laguna...the lesson that you learned, isn't that instructive for other nations who...many of whom are putting all of their eggs in one basket with gaming and the very real prospect that at some point down the road gaming may no longer be an option for them?"

Richard Luarkie:

"Absolutely, and for Laguna that is something that we're so very aware of right now because...and sensitive to because of that 1980s experience, but we realize from the gaming reports for New Mexico, the gaming compacts, they've pretty much stabilized, so you don't see any significant growth in any of the gaming venues there in New Mexico, so that tells us there's been some stabilization and the market's pretty much saturated. But we also have to be able to figure out, 'How do we use gaming as a tool to develop and diversify our economies and not make it just one basket?' And so that's where it's so important that tribes and tribal gaming establishments need to focus on, 'How do you build the shareholder equity?' But it's just as important from the shareholder, the tribal government to recognize when the revenue share comes that we don't just blow it, that we figure out how do we grow it, how do we...we have to focus on our balance sheet, not on our income statement. We have to be balance-sheet focused and building that asset base."

Ian Record:

"You alluded to the creation of a Section 17 corporation and the sort of policies that Laguna has put in place to keep the politics and the government side out of the day-to-day operations of the businesses. Can you talk about some other ways that Laguna government...some other things that Laguna government has done to create that positive commercial environment at Laguna?"

Richard Luarkie:

"One of the things that Laguna has been working on quite diligently has been the...we hope nobody ever ends up in it but the dispute resolution arena, tribal courts so that we're able to work with companies that come from the outside, but also there's companies internally that have disputes, that they can come to a competent court and be able to address those issues. So to know that there's going to be fairness and objectivity in dealing with their cases. But I think also beginning to look at how is it that we support local entrepreneurs at a real basic level. When there's tribal events going on, we have what...we've implemented a policy that says, ‘We will go to our tribal member-owned businesses first.' You must go to a tribal-owned business first for catering or those kind of things. So it's that kind of policy that we're developing to help promote entrepreneurship. We're looking at ways of investing in our own companies like our Laguna Development Corporation. We're looking at ways of investing in housing. How is it that we can get a return on investment by investing in our own housing department to construct homes? And because right now many homes at Laguna...people that qualify for homes, it's all based on low income. But when you have an economy that's growing and getting stronger, you may not qualify because your income is above the threshold and so that leaves many of our people out. The other piece that we see is many tribal members are now buying trailer homes because they don't qualify for low income and they're keeping their trailer homes, so that tells you they're paying their bills, their credit's good so that's a good thing. And so it's really important that we're able to start reinvesting in our own entities and our own organizations to help build our economy, because if we don't have homes there, people leave. When people leave, so do their paychecks, which means there's not that money coming back into our local economy. So it's important that we build homes there."

Ian Record:

"So switching gears, I'd like to discuss tribal administration, tribal bureaucracies and I'm curious from your well-informed perspective, what do tribal bureaucracies need to be effective? What makes Laguna's governmental bureaucracy work well?"

Richard Luarkie:

"I think for Laguna it's...we have a system that's based on...sorry I lost my thought."

Ian Record:

"So what makes Laguna's governmental bureaucracy work well?"

Richard Luarkie:

"For Laguna, I believe what makes our system work well, our bureaucracy work well is the ability to authorize those that are in decision-making roles like directors and supervisors to make certain levels of decisions. That way everything is not coming to the governor's office, everything's not coming to the chief of operations. And so when you can begin to build quality staff, great systems, the system will take care of itself and you don't have to sign off on every little document. So having that type of environment in place is very critical and I think definitely helps with the bureaucracy. On the tribal side, same thing with the...on the tribal government side, same scenario where the tribal council has delegated to the governor's office and to our staff officer level certain signing authority so we don't have to take everything in to tribal council. As an example, we just had a request for filming. There's a movie that's going to be filmed at Laguna starring Jennifer Aniston and they wanted to come and film for two days. And it was two hours per day, so as opposed to taking that into council, that's something that the Governor's office can just sign off on. So it allows the council to focus on the big issues and not have to worry about, ‘Do we authorize somebody to come film for two hours' and we end up debating that for two hours. So it becomes critical when you can begin to delegate certain responsibilities out. So that helps in our bureaucracy."

Ian Record:

"And doesn't that free you up then as Governor to focus on the bigger-picture stuff like those five priorities we mentioned earlier and really focus like a laser on those and not be sort of distracted by those smaller sorts of decisions that ultimately need to be carried out by those that you've hired to carry out those kinds of decisions?"

Richard Luarkie:

"Absolutely. Absolutely, because on those larger priorities, many times funding is required, large amounts of funding, so it allows me to spend my time with those funding agencies, with those congressional people, with the folks that can help us identify and capture funding as opposed to sitting in the office and signing off on a stack of access permits or whatever the case may be. It allows us to get out and do what we need to do as tribal leadership."

Ian Record:

"We talked earlier about this issue of fairness. How does a Native nation, how does Laguna achieve fairness in the delivery of programs and services to its citizens which as you know is the centerpiece of any tribal bureaucracy?"

Richard Luarkie:

"As I mentioned earlier, fairness is subjective. To me, what I think is so absolutely critical is the consistency and the quality of delivery of those services. I believe that for us, we have to be able to make sure that our people have a process they understand, they follow that process and the services are delivered within the context of that process. If we can do that consistently, then I think we've not only impacted the bureaucracy, but we've affected in a positive way the quality of service. One of the things that we're working to overcome is the reliance on tribal government, in getting our people to do some of the work themselves. We've had instances where tribal employees have called the tribal department, public works as an example, to have public works do basic changing a light bulb for them. And for us it's really critical that we educate our people on, ‘Here are the things that you can do yourself, here is what we can do to help you as a tribe. We need to meet one another halfway.' And so I think education, consistency in process, education of that process are key elements to being able to provide fairness, if you will, to our community members."

Ian Record:

"So consistency -- it sounds from your perspective -- is based in rules, it's based in processes that are clear, they're consistent, they don't change, right?"

Richard Luarkie:

"Right."

Ian Record:

"So I'm assuming like you don't...you don't find yourself spending a large part of your day dealing with personnel grievances, right? There's a process for that."

Richard Luarkie:

"There's a process, yep."

Ian Record:

"So can you perhaps take a minute or so and describe how that works at Laguna cause I know this is something that a lot of other elected officials in Indian Country spend their time on is deciding personnel disputes that perhaps is not the best use of their time."

Richard Luarkie:

"Right. For Laguna we have a process where if an individual personnel has a personnel issue, an individual disagrees with the decision, they can appeal to their director of that department. If the director upholds that decision, the individual can then appeal to the chief of operations. If the chief of operations upholds that decision, the final step is that person can appeal to the governor's office and the governor and the first and second lieutenant are the appellate team, if you will. And so they have three steps before it even gets to the governor's office and so if it gets to the governor's office...and those are few and far between. In my...in these two years, I've seen maybe three grievances and when it comes to us, it's understood that our decision's final. It doesn't go anywhere from there. But we also have the opportunity to sit with the individual or individuals, hear their case out, but at the end of the day when we make our decision, it's final. And so that's our process at Laguna and for us, we really emphasize for those employees within the context of a process we put in place called 'Workforce Excellence' to really be able to work within the context of our core values with their supervisor, with their directors in addressing the issue. And so in turn the supervisors, directors are directed in the same way. ‘Work with your employees in the context of our core values and within policy of course and try to address the issue there before you elevate it to the next level'. And so we've been pretty successful with that approach and we've not had to deal with many grievances up to the Governor's office."

Ian Record:

"So one of the...as we mentioned earlier one of the strategic priorities of Laguna is health and I'm curious, what are your administration's goals, what is the Laguna government's goals for creating a healthy Laguna community and what steps is it taking to make those goals a reality?"

Richard Luarkie:

"Well, for Laguna one of the things...and we're not unique to other tribes. One of the major challenges we have is diabetes and obesity. It's just rampant and so for us being able to do community activities that promote healthy activity, that promote healthy eating has been a major emphasis for us. From a policy side looking at how is it that we can begin to partner with other groups that will allow for us to offer better, higher quality health services. Those have been some of the major initiatives that we've tried to move forward. We've partnered with our local or our sister Pueblo, Acoma Pueblo in...through an MOU [memorandum of understanding] to address our health care issues. So trying to draw those partners in at a larger level has been important for us. And so those are some of the steps that we've taken to address the health care issues in Laguna. The other piece of that is again back to the economics and looking at how is it that we're able to create more jobs, we're able to create a diversified economy so that our people don't have to travel long distances for work, that they can be there at home and hopefully that contributes to their health as well, not only their own physical health but the community health."

Ian Record:

"So what do you see for the future of Laguna? What do you hope that all of your hard work will lead to down the road? What will your nation look like 25, 50 years from now?"

Richard Luarkie:

"That's a neat question. A lot of times I've seen people say that's hard to answer but to me, in 25 years I envision a community of hearing our language, I envision a community of collaboration, I envision a community of family and in my mind, it's not pie in the sky but those are things that are very practical that we're already doing, we just need to do it better and we will do it better. And I think if leadership can reinforce core values as the reason why, we will be experiencing those things. I see a community with more children, I see a community where our elders are once again engaged, but I also see our children being mentored by our elders. We're at a point in time where we see this thought process of when the governor or staff officers, officials call a meeting of the community, younger people say, ‘Well, how come I have to go? Why do I have to be there?' And then you have individuals like former Governor Daly who's 94 years old saying, ‘Governor, tell me what I need to do and I'll do it.' I see this piece becoming strong again and us recognizing what our responsibility to our contribution is. I see that in 25 years."

Ian Record:

"Well, Governor Luarkie, we really appreciate you sharing your thoughts, wisdom and experience with us. It's been certainly an enlightening experience for me and hopefully it will be for our viewers and listeners as well. Thank you."

Richard Luarkie:

"Thank you."

Ian Record:

"That's all the time we have on today's episode of Leading Native Nations. To learn more about Leading Native Nations please visit NNI's new website, the Indigenous Governance Database, which can be found at IGovDatabase.com. Thank you for joining us."

Honoring Nations: Loren Bird Rattler, Ray Montoya and Jay St. Goddard: Siyeh Corporation

Producer
Harvard Project on American Indian Economic Development
Year

Representatives from the Siyeh Corporation present an overview of the corporation's establishment and growth to the Honoring Nations Board of Governors in conjunction with the 2005 Honoring Nations Awards.

Native Nations
Resource Type
Citation

Bird Rattler, Loren, Ray Montoya, and Jay St. Goddard. "Siyeh Corporation." Honoring Nations Awards event. Harvard Project on American Indian Economic Development, John F. Kennedy School of Government, Harvard University. Tulsa, Oklahoma. November 1, 2005. Presentation.

Loren Bird Rattler:

"Thank you, Amy. As she mentioned, my name is Loren Bird Rattler. I'm the Manager of the Blackfeet Heritage Center and Art Gallery, a business line of the parent company Siyeh Corporation. I would like to first thank the Harvard Project on American Indian Economic Development for allowing us a forum to certainly showcase our successes that we've had at Siyeh Corporation back in Blackfeet Country.

With that said, I'd like to begin with the question, 'Why was Siyeh Corporation created?' First, a legal enterprise was needed to develop and operate business opportunities for the Blackfeet Tribe. This enterprise needed to be a for-profit entity that would provide an alternative source of revenue for the Blackfeet Tribe as well as create a source of revenue...I'm sorry, a source of revenue for the Blackfeet Tribe as well as create additional jobs for the local economy. But more specifically, it was to create an enterprise whose day-to-day business decisions and practices were separate from tribal politics and decision making. This process happened in four phases: analysis and bench marketing, petitioning the Secretary of Interior, the approval of that petition, and finally ratification by the Blackfeet Tribe.

In 1997 the Blackfeet Planning Department began to script plans for a for-profit company that would be semi-autonomous from tribal political influence and decision-making. The Planning Department embraced a new paradigm of thinking that would change the dynamic of how the Blackfeet Tribe would and could create and sustain profitable businesses. The first task was an analysis on the approach to economic development on the Blackfeet Reservation. During this analysis, the Planning Department began to benchmark other tribes to find out what types of infrastructure they were using in tribal enterprises and businesses. From this analysis, a new comprehensive economic development strategy was put in place to create a for-profit corporation. Many of the principles were taken directly from the concepts of 'Reloading the Dice, Improving Economic Development on American Indian Reservations,' which was found in the publication American Indian Economic Development from the Harvard Project on American Indian Economic Development.

In early 1999 the Planning Department drafted the corporate charter for Siyeh Corporation under the framework of Section 17 of the Indian Reorganization Act of 1934. Upon completion of the draft, the Blackfeet Tribal Business Council passed resolution number 10899 and shortly thereafter petitioned the Secretary of Interior. Upon approval of the petition by the Deputy Commissioner of Indian Affairs on July 8th, 1999, the proposal was sent back to the Blackfeet Tribe for ratification. During this time, a new council had been elected and inaugurated and a referendum was passed changing the structure of terms for the council from two-year terms to staggered four-year terms. Of course this created a new problem for Siyeh. We had to re-lobby a new council, that some of them serving two years, some of them serving four years in 2000. After this lobbying effort was launched, we were able to convince the Chairman of the Blackfeet Tribal Business Council and therefore get the rest of the council on board. After that happened, of course the charter was ratified on January 3rd, 2001. Because of the language of Section 17 of the Indian Reorganization Act, once ratified by the tribe, it requires an act of Congress to dissolve, further limiting potential influence or potential political influence.

From the drafting of the charter to present day, Siyeh Corporation has and will continue to have struggles. In the beginning, it was very difficult getting local businessmen to serve on the board of directors simply because of the mistrust toward tribal enterprises following a number of failed business ventures. The tribal government and to a greater extent the Blackfeet Tribal Business Council's role is continually being defined and redefined with every incoming council. In the very beginning of course, there was problems with a lack of funding to get the corporation off the ground. The struggle with public perception and the old political philosophy that the Blackfeet Tribal Business Council should have the final say on all matters coupled with Siyeh Corporation's approach to problem solving presents a public relations challenge that Siyeh Corporation continues to address and remedy today.

Siyeh Corporation has five successful business lines. In 1999, the Blackfeet Tribe acquired Starling Cable Company, which was in jeopardy of losing programming. The company has increased subscriptions and offers a public access channel for community programming. In April 2000, under the threat of closure from the National Indian Gaming Commission, Siyeh inherited the Glacier Peaks Casino in Browning. Glacier Peaks Casino now operates seven days a week with exceptional revenue. Kimmie Water was created in late 2000 to deliver five-gallon water jugs to the community due to the poor quality of water with the present water system that exists on the reservation. And in 2002, Discovery Lodge Casino was created to tap into the eastern reservation gaming market. And finally, in mid-2002 with the acquisition of the inventory from the Northern Plains Arts Cooperative, Siyeh Corporation created the Blackfeet Heritage Center and Art Gallery. The center provides an outlet for local artists, artisans, and crafts people to market their work as well as advocate through programming Blackfeet cultural and traditional preservation.

Currently, there are four future projects that are being developed under Siyeh Corporation. A grocery store has surpassed its planning stage and now has a site as well as a distributor identified. The design for the store has been completed. An expansion to the Glacier Peaks Casino is underway. Construction began on a new 30,000-square-foot facility that will house 300-plus class two gaming machines, a 250-seat Bingo hall and a restaurant, lounge and gift shop. Plans have just got underway for a wireless internet business that will bring wireless internet service to rural residents of the Blackfeet Reservation. A feasibility study and business plan are now underway. Siyeh Corporation has completed an SBA 80 application that will aid in marketing Kimmie Water and integrated information technology services and solutions. It may also help with future federal contracting.

Siyeh Corporation has been instrumental in the development of the local economy. In 2004, Siyeh's five business lines paid out over one million dollars in payroll and disbursed $963,173 in dividends to corporate shareholders, the Blackfeet Tribe. Siyeh assets in the year 2000 were around $300,000 compared to nearly $800,000 today. These assets include real property, equipment, vehicles and inventory. Vicariously through its business lines, Siyeh Corporation aids in community development. By providing bottled water to community members, elders and diabetics, Kimmie Water provides a necessary resource that was lacking before. Starling Cable Television, through its community access channel number 37, provides local programming, including Blackfeet Tribal Business Council meetings, public forums, high school sports, and Blackfeet cultural and educational programming. Siyeh also helps with the cultural preservation by purchasing, marketing and exposing Blackfeet artists, artisans and crafts peoples' work. This practice in turn will allow the Blackfeet Heritage Center and Art Gallery to conduct educational workshops on traditional artistic practices. This venue, which includes Blackfeet culture and history teaches both non-Natives as well as our own youth about ourselves.

Siyeh Corporation was named after the Blackfeet warrior Siyeh or Mad Wolf. The spirit of Siyeh in the telling of tribal elders embodies independent thinking, shouldering responsibility for the work that has to be done, and taking bold action. Because of this inspiration, Siyeh Corporation will continue in its efforts to span strategically while protecting the environment, culture and tradition and will continue to be fearless, independent and true, as their motto states."

Alfreda Mitre:

"Congratulations. I had formulated three questions and during your presentation you answered all three of them, so I'll just take this time and say thank you for a wonderful presentation and I'll let the others if they have any questions to go ahead and do so."

Loren Bird Rattler:

"Thank you."

Elsie Meeks:

"So I would imagine that this was fairly controversial in incorporating a Section 17 corporation."

Loren Bird Rattler:

"Yes, it was."

Elsie Meeks:

"Well, that's an issue that I think a lot of tribes would struggle with. I guess if you could talk a little bit more about the reason that you decided to do that, because I know that that must have been a hard decision for you all to make but there must have been a good reason why you did it, and I'd just like you to expand on that a little bit because I think there's some good lessons here."

Loren Bird Rattler:

"Certainly and I'll defer that question to the economic development coordinator Ray Montoya."

Ray Montoya:

"Okay, I'll try to shed a little light on that question. One of the reasons we went with a federally chartered corporation was because in the past and up to that point in time most of the businesses were under the auspices of the Blackfeet Tribal Business Council directly under tribal government and unfortunately under that structure the Blackfeet Tribe hasn't had one successful business as a tribal-owned business directly under the tribal government. And so we saw this as a way of changing that lack of success and then allowing a business to grow as it should without the lack of governmental interference."

Brian C. McK. Henderson:

"I would like to ask a follow-up question. You've basically created what in effect is a tribal holding company with a variety of different businesses underneath this one structure and if you could project out into the future and given the challenges that the tribe actually has in economic development and getting businesses going. Do you see the structure on the...under the Section 17 format helping you in the future or do you see it at some point something that you may want to actually change?"

Jay St. Goddard:

"Speaking on behalf of the Blackfeet Tribal Business Council and the experience I've had as a previous board member on the Siyeh Corporation, it is a model and we expand on it and we want to keep it because it does help us for future businesses and that's one of the main reasons it was put into place. And from past experience and being a leader on the council and knowing what goes on in the political realm and views you get from your membership, I feel it's important it stays in place because it does help our economic future, because changeover in Indian Country as everyone knows happens so regularly and each time there's a change, although we're elected officials, some of them come in thinking they know every answer to economic development or there's that certain money savior out there that's going to come in and save the tribe but that doesn't happen. And with this charter being in place, I think it helps the corporation sustain its ability to prove to the community -- slowly in some ways but fast in other ways -- that this is what we needed in place for a long time, to help us be a successful tribe and business-minded people we have. We have a lot of management people under this corporation that are helping us move these projects along. But it will definitely be a future need and as a tribal leader I hope this would stay in place and it's not taken away, it stays out of the realm of politics. I'm one of the tribal leaders that fight for this corporation every day and help the other tribal leaders understand that this is needed, it's not to be tossed around every time it's brought up to vote it down again. I use that because it's...the charter under the government or wherever it's...however it was created was a great idea. It just makes it harder for a simple motion or resolution for a new council to come in and dissolve this company. That's what'll keep it successful."

Michael Taylor: The Practical Issues of Business Development - Some Things to Consider: When to Waive Sovereign Immunity (or Not)

Producer
Native Nations Institute
Year

Tulalip Tribes' Attorney Michael Taylor explains when tribes should and should not waive sovereign immunity and why. He also discusses some effective approaches to doing limited waivers of sovereign immunity, and stresses the importance of Native nations building a track record of fair and effective use of the sovereign immunity waiver as an important tool for exercising sovereignty.

Resource Type
Citation

Taylor, Michael. "The Practical Issues of Business Development - Some Things to Consider: When to Waive Sovereign Immunity (or Not)." Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, Udall Center for Studies in Public Policy, University of Arizona. Tucson, Arizona. March 29, 2007. Presentation.

Michael Taylor:

"I want to say my main experience all these years has been using tribal corporations like CTEC [Colville Tribal Enterprise Corporation], which is a special kind of tribal corporation. I call it a tribal governmental corporation. What's a governmental corporation? The post office is a governmental corporation, Amtrak, the Corporation for Public Broadcasting; those are governmental corporations and that's what CTEC is. And that's what Wright vs. CTEC is about, this tribal governmental corporation. But every tribe that I work with has a modern Section 17 corporation. Why? Why is this? Because, for example, over at Colville, they have this corporation. Occasionally I get calls from the rez attorney's office over there and they say, "˜Now, Mike why do we have this Section 17 corporation? We don't remember.' So I have to tell them, "˜Why do we have it?' When I went to Tulalip, they had a Section 17 corporation, it was an old one, 1930s vintage, the language was terrible. So we got another one. The original one had only one asset. It was a Superfund site, a polluted, a highly polluted Superfund site. So you don't want to put other stuff into that corporation. You need a new one because that corporation had enough stuff in it; that was the problem. Why do you need a new one? And I went to Ada Deer, I think [she] was the Assistant Secretary of Indian Affairs at the time, and I said, "˜I want another Section 17 corporation.' And she said, "˜You can't have one, you can only have one.' And I said, "˜Where's it say that?' So we got another one and it doesn't have anything in it either. Okay, why taxes? These forms of corporations are, it's, at this juncture, unclear as to whether the IRS considers the income of these tribal corporations as taxable. They made some moves on this some time ago and they decided that state corporations owned by tribes, whether they were wholly owned or not, the income is taxable. Corporate income tax is due on the earnings of these corporations. But they stopped and so we don't know what this, what the income of this entity is in terms of the views of the IRS. So the Section 17 Corporation sits out here as kind of a tax lifeboat. If our entity starts to sink in the troubled waters of the IRS, we move the assets to the Section 17. So don't start doing business and think you're okay without this Section 17. And if you have an old one, I think you should get a new one. It's easier to get a new one than to try to amend the old ones. That's my comment.

Sovereign immunity: when to waive it, when not to waive it. Well, how many people in here think that if you waive sovereign immunity it weakens your sovereignty? How many people think that? I would say, sometimes, at the risk of being charged with showing off, I sometimes do a push-up at this juncture right in front of the crowd. And the reason is to make the point that sovereignty is a power, sovereign immunity is a part of that power and whether you're waiving it or asserting it or writing it into an ordinance or a contract or whatever it is, you're exercising it, and indeed waiver strengthens it. It strengthens it, by actually showing that you have it and putting it out there in whatever form. So the waiver of sovereign immunity -- this is an issue with a lot of tribal people and a lot of tribal councils, they're very worried that waivers, however they're written, whether they're written sloppily, which they sometimes are, or whether they're written carefully, will somehow erode tribal sovereignty, and that's not true at all. It's an exercise of a power. Waiver is the same thing in technical legal terms as asserting it in a lawsuit or some other way. So it doesn't weaken tribal sovereign immunity...or tribal sovereignty to execute a waiver. Got it? Do I have to do the push-up? I can do it. When I go down, that's a metaphor for waiver. It strengthens me in the same fashion as when I come up. So that's my take on it. Is that right? I don't know. I made that up.

When do you waive it? When you're asked. If you're not asked don't do it. The Tulalip Tribes is a party to literally hundreds of contracts all the time. Uniform cleaners, rug cleaners, towing cars, building hotels, and when the other side comes in and says, "˜Well, here's the contract,' or asks us to write the contract, we write the contract. If the other side knows that they've got to get a waiver in order for the contract to be enforceable, then we start working on it. But if they don't, if they don't ask or they don't care, sometimes they just don't care, then we don't go up to them and say, "˜Hey, we're sovereign, you can't... if something happens under this contract to say that you have a claim against us, unless there's a waiver in here, you can't do anything about it unless we agree to it.' You have to be asked; B of A [Bank of America] always asks. They all say, "˜Oh, yeah.' I've never met a B of A guy that didn't ask. Right away, it's the first thing they ask."

Brian Spencer:

"It's a starting point. If you can't get beyond that, then we're not going anywhere. It's got to be there."

Michael Taylor:

"If it's part of the deal, then you work on it and you craft it carefully. You pay attention to what the issues are and you work on it. So the most common waivers that we have at Tulalip I'd say are major lending contracts, contracts for construction, the construction firms have now gotten savvy to this, and so they're immediately asking for a waiver. There are lots of other ways, other places where you should waive your immunity. Tribal civil rights act: you should have a tribal civil rights act. People can sue the tribe if the tribe damages them in some way and it should have a waiver in there. Tribal tort claims act: we have a tort claims act. All our cases go through tribal court. Tribal tort claims act: if you follow the process and you've been injured by the tribe, you're going to get paid something to make you whole. And as a hospitality entity, we've got to do that. If people fall off the curb at the casino parking lot and it's our fault and they injure themselves, it's quickly going to be known around the region that you shouldn't go to the Tulalip Casino because you can fall off the curb and hurt yourself, the tribe's going to raise sovereign immunity and you can't collect anything. So people are not going to come. We're in the hospitality business; we've got restaurants, we've got an amphitheater, we've got all this stuff. We need to make sure that tribal sovereign immunity is not an impediment to people getting reasonable compensation if they're injured by the tribe. Another piece of that is you've got make sure that you're insurer recognizes tribal sovereign immunity and sovereignty and writes into the contract that they can't raise it. When Joe [Kalt] comes to see the casino and falls off the curb and hurts his knee and so he makes a claim and we take the claim and give it to the, he follows the tribal tort claims act and we take the claim and give it to the insurer, we don't want the insurer saying, "˜Sorry, Joe, sovereign immunity, you don't get anything,' because then we'd be paying for insurance that's worthless. We pay a whole lot money for insurance to cover Joe when he falls off the curb, and if we don't get our insurer to say that they won't raise immunity, we've just paid for nothing because they stand in our shoes when Joe is injured and they can raise all the defenses that we have.

Tribal grievance procedures, tribal employee grievance procedures: set up this code to deal with tribal employee grievances. And now I work with a tribal chairman who's 80 years old. He can remember when the tribe didn't have any employees at all. Now we've got 3,000 or 4,000 or something like that. So they're always grumpy, aren't they? They're always after you for something and we've got a raft of codes and procedures to deal with grumpiness because that's part of life. And when they come into the tribal court where most of our grievance procedures end up, if you don't like what the administrators do and that sort of thing, and the tribe waltzes in and says, "˜Hey, wait a minute judge. Sovereign immunity -- can't do anything with regards to this,' you're not doing the right thing. All the stuff that you've done in personnel and HR [human resources] is worthless because the person can't get their grievance heard. Housing appeal, same kind of thing. Tribal self-insurance programs; we have several self-insurance programs. They're much cheaper than buying insurance, but they require us to waive our immunity so that the people who are relying on these insurance programs, if they don't agree with what they got, worker's comp [compensation] is a very common one, that they can go to tribal court and that requires a waiver of immunity. In my mind, there's a lot of reasons why you want to set up these numerous waivers. You get, I get, my office gets sometimes, we haven't had a lot of them, but you get claims of waiver of immunity where there was none. So you want to be able to show that the tribal council knows how to waive immunity and has done it numerous times so you can go into court, federal, state or tribal, and say, "˜Look, your honor, there isn't any waiver here and I can show you why because there are plenty of tribal waivers that have happened and here they all are.' They're resolutions and in ordinances and sections of contracts and that sort of thing. The tribal council knows that as the only entity that has the power to do that is the tribal council, in some cases delegated power to someone else but the tribal council and here's how they did it and there's no other way to do it and here's all the list of the waivers that have happened. So this claim that the tribe somehow inadvertently waived sovereign immunity isn't valid. So in corporate enabling acts, tribal court jurisdictional statutes, enrollment ordinances, you want to create a pattern. If you're a serious tribal governmental entity, you want to create a pattern and this is the way you do it.

We're building a hotel now. It's, I don't know, $160 million or $260 million or whatever it is. My mother advised me not to sign the loan documents. She said, "˜That's way too much money.' We sent out a request for proposals for contractors and the lowest bidder was this company, it's a big company, Canadian company, but they've got an American division. It's called PCL Construction; maybe you've run into them. They wanted a waiver of immunity and we said, "˜Fine.' And we worked and worked and worked on this waiver of immunity but at the end of this, not at the end, in the middle of this, they said, "˜We want state court.' We did an arbitration provision, which allowed disputes to be arbitrated by an appropriate arbitrator, but arbitration awards have to be enforced by a court. There has to be a court out there that will enforce the ruling of the arbitrator. The arbitrator doesn't have judicial authority. Arbitrators can, under the contract, act like a judge, make an award to one side or the other, but if one side or the other won't follow the directions of the arbitrator, the ruling of the arbitrator, you have to have a court at the end, federal, state or tribal. Federal court doesn't work in this circumstance. I won't tell you why because I've only got 50 seconds. PCL said to us, "˜We won't accept your tribal court.' You have to waive immunity in state court. So, we got another contractor. We just finally said, "˜We're not doing it. We put a lot of work into this tribal court.' Joe gave us an award recently. Our tribal court's good. We've got good judges, we've got a good court of appeals, we've got good ordinances, we even took the extraordinary step of having the chief trial judges in tribal court go over and sit down with the president of PCL and tell him, "˜Look, the tribe -- here's the ordinance -- the tribe has given me authority to enforce arbitration awards. I've got 40 years of experience both as a lawyer and as a court commissioner in King County, Seattle.' He's an Indian, he's a Colville Indian, but he said, "˜Look, now I'm not going to decide on your case when there isn't a case, but if there's an arbitration award I'll enforce it.'

We have built an institution, our tribal court as part of our sovereignty, and if they don't accept it, let's get somebody else. And they did. So that's when you don't waive. That's when you say, "˜It's affecting our sovereignty and we're not going to do it.'"

Joan Timeche: The Practical Issues of Business Development - Some Things to Consider: Governing Body

Producer
Native Nations Institute
Year

Native Nations Institute Executive Director Joan Timeche shares her experiences as a board member on two tribal economic development corporations, and identifies some key things that Native nations need to consider as they work to craft effective approaches to corporate governance.

People
Resource Type
Citation

Timeche, Joan. "The Practical Issues of Business Development - Some Things to Consider: Governing Body." Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, Udall Center for Studies in Public Policy, University of Arizona. Tucson, Arizona. March 29, 2007. Presentation.

"I serve on two tribal corporations. One of them is a Section 17. It's the Hopi Tribe's Economic Development Corporation and we were much like Joe [Kalt] described. We went out and we bought businesses and started businesses and then had them running. They were the council-run model and then they established a new corporation, which they transferred all of those businesses over to us. So it's been a very challenging task for us. And then the other board that I sit on is with the Tohono O'odham Nation, which is just adjacent, an hour to the west of Tucson here. And they were structured very much like the Ho-Chunk, Inc. model that we put on your CD where they are a separated model. They got a large dollar, $10 million to start up their corporation, but all of their control is at the local level in their districts, political districts. So despite the fact that they have millions of acres of land for development, it's very difficult and we have yet to secure any land at all for our corporation development. So we also have many of these challenges.

I'm going to talk about these governing bodies because they are a very important key to moving forward. Basically when you look in terms of governing bodies, what we're looking at is whatever is specified in your charter. And today we heard many models of those. They're in a board of directors, but that board of directors may be the tribal council as we heard. They could be the business committee. And all of their duties and powers are defined in those charters. And you'll see some examples on that CD of the several that we gathered. They range the whole gamut from where you have minimal kinds of powers to ones where you end up having to have thresholds where at certain levels -- maybe it's purchases, maybe it's land, or whether the case may be -- it has to go back to council. So that can be all specified in there. But their whole job, this governing body -- whether it's a separate board, whether it's the business committee of the council, whatever it may be -- are responsible for the overall management of these businesses and the activities of them.

So let's talk a little bit about this board and how it should be organized. And some of the things you have to take, and these are all no-brainer stuff, I'm just going to cover examples of them. The composition: how many directors do we have? And of course you know that everyone tells you, you need to have an odd number. Five, seven, nine -- those seem to be common numbers. I sit on one that's seven but I prefer a five-member board because when you get down to the real logistics of trying to get to meetings and quorums, there's real practicality in getting, it's much easier to get three members together rather than five for a quorum.

Length, terms -- these are again all specified. One of the things that we would encourage you to do is when you're setting up these corporate terms that they not coincide with council election terms, because then it's seen that all you're doing is it's a political appointment and political elections. So you want to make sure that they're off, the terms are different than council's terms whether they're two-, three-year or four-. And just as we found in council terms, our research has indicated that the longer the terms are the more consistent stability, consistency you have and there's a more stable environment there too so we encourage you consider moving towards a longer term.

Qualifications: you heard [Salt River Pima Maricopa Indian Community] President [Diane] Enos talk this morning about the composition of her boards and you heard that from some of our panelists this morning about having the expertise of the people. And President Enos, she indicated that they always have somebody from the industry that sits on these boards. And this is something that we're seeing is increasingly common with some of the corporations that we work with. Where it's not just tribal citizens that are composing the board. It is combinations where you have some citizens -- and they might constitute the majority of those members or they can constitute a minority of it -- but you have to have these qualifications. In both the Hopi and the Tohono O'odham corporation charters, they require that all, well, Hopi requires that all of its members have successful business experience; that's the minimum criteria for that position. In the Tohono O'odham [charter], it specifies a certain number of people that have to be from a business field, who have had business experience or either have a profession in that area. So you can set up those criteria to meet the needs that you might have.

And again, back to this, I started talking about this, about the independent members. On the Tohono O'odham Nation for example, they have a seven-member board. Five of those members have to be citizens of that nation and they have two that can be non-tribal citizen members. I happen to be in one of those seats that is a non-tribal member sitting on that board. And one of the things that I have been able to find, just from my own personal experience, has been that I can say a lot of things that perhaps they can't say because I'm looking at them from the outside in. Sometimes because they know each other politically, it's a little bit more difficult for them to be realistic and to say what they might be thinking, but I can say those kinds of things from the outside. So that's one of the benefits to it. Sometimes they don't always like me saying what I do say, but I try to say it in a way that benefits the corporation overall.

The other question that also gets raised all the time is, ‘Can employees be eligible for these board seats?' And I'm talking about tribal government employees. Should they be eligible or not? This is a decision that you will end up having to make. Can an elected official be on this board? Some tribes will define elected official very broadly so that, I even know of one tribe where even if you sit on the school board, the public school board where you've been elected to a seat, you're defined as a public official so you cannot be a member on that board. So those are all considerations you have to take into place.

Then comes the big question -- council members. Can a council member sit on the board or not? When you open up Ho-Chunk, Inc.'s charter, you're going to find that it states that two members of their board should be from the governing body, the tribal council. There's pros and cons to it. We can argue about this all day but basically, I believe, I think it was [Meadow Lake Tribal Council] Chief [Helen] Ben who mentioned earlier about the competing interest that you have. If the chief is sitting on the board, are they wearing their chief hat? Are they wearing their employee hat? Or are they wearing their citizen hat? Are they wearing another hat of some sort? And it gets... there's a real fine line there, so it gets really difficult. But basically we found that it's just really difficult to keep those political considerations out of any kind of enterprise decision.

The other considerations that you need to make sure you have are sections that define how individual board members can be removed. Is this something that, do they serve at the pleasure of the council? Does the chief executive, the chairman, the president, the chief have the authority to remove these individuals? What is the process for removing them? Because this becomes very, a big issue as well as you move forward. Resignations, how do you fill vacancies? Does it have to go back to the council? Can the board itself then be able to fill these slots in the interim until the next council, maybe perhaps until the term expires? These are all things that need to be spelled out in procedures to move forward here.

Vacancies: one of the things that can be done is sometimes vacancies can be that blessing in disguise because it allows the board to take a look at themselves and determine, ‘Okay, who's sitting on our board? What skills, what talents, what areas are represented? Maybe we need to have...' I'll just take Hopi's development corporation. We have two vacancies. One of our vacancies was a person who knew the hotel and restaurant industries. Well, we have two hotels and two restaurants to run. Now we're lacking that kind of knowledge base on our board, and for us it's critical to find someone in there. We have three huge ranches. We don't have anybody with a ranching background. So for us that kind of a person is critical for us to find to fill that kind of a seat because the rest of us may know business in general because three of us have MBAs, but we know business concepts in general but we don't know the industry specifically.

So those are things that you can take a look at and you'll see some of the ideas up there that have worked for other entities. They're all ones that you can take a look at. The following slide is just basically a matrix that you can utilize to do this analysis of what is your board [consist of]? Each individual member: now this is all...one of the things I always encourage people to do is each individual member of the board fill this out for themselves and how they view each other and then hopefully the relationships within the board is one where they can be open and frank and honest with each other and that they don't take any of these -- if there was a negative answer on there -- that they would not take it personally because it's all being done in a constructive manner to be able to improve the board.

In terms of who selects or appoints the board, the shareholder has generally all of those responsibilities. I've seen... I don't know of any right off the top of my head where it's delegated to another entity. And the shareholder in many cases is the governing body of the nation who is the tribal council in many options. And sometimes the shareholder may decide, 'Okay, we're going to start on this new enterprise and we're going to appoint you, you and you to be on this board.' It can be done and I've seen it done that way. Or they can say, 'We're going to go through a formal nomination process,' and they advertise, they put it out and so on. And there's processes to follow, which I'll cover in the next slide. Or there can be an application process where it's much like a job. Whatever the case may be, you're going to want to make sure that you do have the information that you need on each of these potential board members because you're entrusting them with major responsibilities and sometimes just like a council they are making multi-million dollar decisions, the kinds of decisions that end up having to have long-term impact on not just the nation but its future as a whole. So these are very important.

The next slide just gives you some examples, and some of the ones that are real common or what I call standard. Most people will advertise, they ask for a letter of interest and a resume. Sometimes they'll do a reference chart, sometimes they won't. Hopi, look at Hopi's example here. This is what's happening now, but when we got acquainted we were under that first one, the first initial board of directors, we were just asked to submit a letter of interest and nobody even interviewed us and it wasn't until quite some time afterward that we were required to undergo an extensive background check. I think that background checks are going to be very critical, because again financial institutions are going to look at the composition of the board, can these people make sound decisions, these people have been running businesses but they've bankrupted each time, these are all very important kinds of things to take a look at. The Tohono O'odham Nation probably has one of the most comprehensive processes for recruiting or filling these four vacancies and I included a sample of their last announcement on that CD. I had to go through three interviews, two of them at the legislative committee level, and I first saw my first background check. I couldn't believe how extensive it was. It was just totally unbelievable. I passed. I had to go to a formal interview for the council. It was very much like a job. I was basically applying for the job of being on this board. I was asked business questions. Do I know what a business plan consists of? It was very much like a job and they screened them very well and I thought that that was one of the things that has helped me contribute to make the board much more powerful and helping us to be on the same page as we move forward in making some of these decisions.

Just a couple of other slides -- that you're making sure that you have these people and sometimes you can get these people to join your board: the banker, maybe a professor, you think of marketing people, maybe a business person, somebody out in the community who has been working, has been a friend of the tribe for years, someone like that, those are all valuable assets for you. And just some last suggestions, that you want to make sure that your enterprise board has this clear definition of its role in relationship to the council. You heard that over and over again from all of these enterprises that spoke this morning. And that also needs to go down to the CEO level as well and does it schedule reports to council. You heard this over and over again, communication, communication, communication, not just with the shareholder but with the citizens of the nation, because they're the ones as we've heard that are going to have those questions about 'where is all of that money going that you guys are earning? You guys just go and travel and do whatever,' and they're the ones that need to know what's being done and it needs to be stated to them very simply. These are all...Hopi's coming up to their first shareholder meeting next...the fifth of April, so it's going to be an historic moment for us because it's the first time that the Hopi people have ever heard about all of its five enterprises that have been existence for years, so this is going to be very historic.

Have conflict of interest rules spelled out and one of the things that's very common is to have members, board members sign a code of ethics or a code of standard that they would agree as being on the board. Have clear compensation rules, again because this is another big area that often gets raised over and over and over again. And then of course making sure that the board's chair, because they're going to be the ones out being the front face for you, and your CEO is going to be insulated from the council by the board. You have to make sure you act as one as you move forward."

Joseph P. Kalt: The Practical Issues of Business Development - Some Things to Consider: Legal Structure

Producer
Native Nations Institute
Year

Harvard Project on American Indian Economic Development Co-Director Joseph P. Kalt discusses the types of corporations that Native nations can charter and what they should consider when deciding which type to choose.

Resource Type
Citation

Kalt, Joseph P. "The Practical Issues of Business Development - Some Things to Consider: Legal Structure." Building and Sustaining Tribal Enterprises seminar. Native Nations Institute for Leadership, Management, and Policy, Udall Center for Studies in Public Policy, University of Arizona. Tucson, Arizona. March 29, 2007. Presentation.

"They've asked me to just say a few words here to kick off this session and talk about the kinds of entities and structures that we're seeing used out there and that are working or not working in Indian Country. And I guess it's our gig at the Harvard Project and at NNI is to try to focus on what's working, but we often start with what's not working. And I want to describe two -- I won't even name the two tribes I'm about to say something about -- but it's sort of a lesson in what not to do. And here's the way they're going about economic development and development of tribal enterprises. They have an economic development committee. The economic development committee is just appointed, it's unpaid, appointed by the tribal council, has its roots in the old U.S. Department of Commerce Economic Development Administration grants. They ran out of the grant money, but they sort of kept the committee and the committee's job is to, number one, go out and find us some businesses to invest in. Number two, bring those investors to us, the tribal council, and sort of vet them and tell us whether we should invest in them. And this sort of strategy, and then the end result if they're successful, in one case one tribe actually has three enterprises, all of which are losing money rapidly and the tribe is trying to get out of [them]. If they're successful, this economic development committee, in finding a business, as if you're sort of, I don't know, looking for a four-leaf clover or something. If you're successful what happens is the tribal council basically buys a business, owns it, as if they were buying pencils for the office. It has no separate legal structure, it's just a tribal enterprise and the tribal council will appoint -- as if it were another grants program -- an enterprise manager. And again and again and again this, which is really, you can hear the way I'm telling the story, a holdover from the old grantsmanship days where getting an enterprise was just like landing a grant. You just sort of found one and then appointed someone to be the head of the grant or head of the enterprise. And time and again across Indian Country, this has been a recipe for failure.

You see at the other extreme -- and Diane Enos came in and did it, the other extreme -- which is to build the legal structures to protect yourselves, to put in place -- I thought she said it beautifully -- it's not that you're taking politics out of these enterprises, it's that you're structuring them within a rule of law. And that's critical here. There is a huge job to be performed in the management of tribal enterprises by the tribal politicians. Someone needs to sit there and filter and make those decisions. Is this the direction we want to go? Is this the strategic step we want to take with our nation's assets? But it's not the tribal council's job to go figure out who gets the contract for the pencils in the office and I've seen...it wasn't pencils in the office, it was the printing of envelopes, bring down a tribal chairman. The guy got himself impeached over the envelope contract. That is, the day-to-day meddling in the business end. The same goes for tribal administration. So there's a critical job to be played by the tribal politicians and that is to set in place the legal structures and to make the big strategic choices. Do we want -- you hear at Salt River in a beautiful way -- do we want the interior of this reservation developed or not? Or are we going to set up a nine-mile corridor out on the edge of Scottsdale? 'Oh, that makes more sense to us.' Those are the critical strategic decisions that you want your elected officials to make. We often get associated with this phrase 'get politics out of business.' Yes and no. Politics properly by the rules, setting the overall directions and it should properly stay out of the decision who gets the contracts to print the name 'Salt River Sand and Gravel' on the side of this pen. So what kind of structures are we seeing out there?

The first structure is what I mentioned, it's a failing structure, unfortunately -- many tribes are learning -- and that's just go buy a business and run it like it's a grant. The alternatives to that, there's three main families that I'll touch on briefly here. There are three main structures that we see tribes using. One is the federally chartered corporation, Section 17 typically. These are corporations chartered by the federal government and really chartered under essentially the laws of the United States Congress. These Section 17 corporations give the tribe a legal entity chartered by the federal government. There isn't an explicit waiver of sovereign immunity and indeed these entities can be subject to suit. But, you can't get at the core tribal assets of tribal land or other assets not being held outside of that entity. In fact you can hear Diane talking a little bit about this, they're not talking these so-called Section 17 federal corporations. In other words, if that corporation owns some pickup trucks, yeah, those could be taken from you in a lawsuit over these Section 17 federally chartered corporations. But the Section 17 corporation does not let that car dealer or whoever it might be get at core tribal assets away from and outside of this entity. Why do this? It's sort of weird in an era of sovereignty and either you follow the ones that Joan and others and I do, we keep saying, 'Look tribes, run it yourself, run it yourself, run it yourself.'

Why do a Section 17 federal? Well, I was sort of surprised. We had one very interesting case out there, the Blackfeet in Montana have a corporation called Siyeh Corporation, S-I-Y-E-H, it's like the name. And it's very interesting, you ask Blackfeet, 'Why'd you go have the feds set up your corporation?' And they said, 'Look, to us it was an act of sovereignty and a little bit of desperation.' Many of you have heard about some of the Blackfeet Enterprises, Blackfeet Writing Instruments, the pencils and so forth that we used to get in grade school and so forth, Blackfeet National Bank. It had trouble, it had trouble finding that balance between politics that sets direction versus politics that constitutes meddling in the daily affairs. And they said, as a community, 'Look, we're having problems with our political systems and we're a little bit unstable, but at least as a community we can agree we'd like to get these enterprises in a way that they're insulated in terms of day-to-day meddling.' And so it's very interesting. It shocked me cause I've been Mr. Pro-Sovereignty. This is a case in which a tribe said, 'As a sovereign, we're going to ask another sovereign to charter this corporation to try to give us some time to work on our own political system over here at the same time we're trying to get some enterprises going.' So it's an interesting strategy, and one that as I say it sort of shocked me because we've been so hard on this horse of charter them yourselves, set them up yourselves, etc. So there are some cases apparently where a sovereign nation, in this case the Blackfeet, might make a choice to go with a federally chartered corporation.

The next layer down, of course, are state-chartered corporations, and for many tribes this is the quick way to get a corporation chartered. The owner of the enterprise is the tribe, but you get a corporation chartered under the laws of either Delaware, where everyone does the national corporations, or perhaps your own state. Under these state-chartered corporations typically, and I'm not a lawyer so don't take me as legal advice, but typically these state-chartered corporations do not provide for sovereign immunity but they essentially build a shell around the assets of the enterprise so that what can be sued is the enterprise, not the entire tribe. More and more tribes are moving to now a new model, after the federally chartered, the state chartered, more and more tribes are moving to a new model, which is tribally chartered corporations. And to us I think this represents the wave of the present and the future indeed, to Mike Taylor who has been very instrumental actually in developing a lot of this and that's partly what Salt River is doing. Under tribally chartered corporations, they typically involve a five-step, at least a five-step process. First, the tribe will pass a law of corporations establishing the rules, procedures, etc., under which tribes as an entity, individual tribal citizens, and even non-citizens can charter new businesses within the jurisdiction of the tribe. So just like here in the State of Arizona, if I want to go open a McDonald's or something I'll probably charter a corporation under the State of Arizona. More and more tribes are adopting the equivalent of the State of Arizona's laws of incorporation and they become Colville Tribe's laws of incorporations or Eastern Cherokee Tribe's laws of incorporation, and so forth. And that's critical because it sets down the framework, you've got to establish enterprises, but it's basically laying down all those rules, how board of directors will be created, what will their responsibilities be, what will their liabilities be, all these kinds of things.

The second layer that actually has to happen at the same time...Typically the law gets passed if you will and almost at the same time if not before tribes work on building up their own tribal court's capacities to handle business law. And so you find cases where tribes are simultaneously creating laws of incorporation and some tribes, for example, have begun to create a business court. So many tribal courts are buried as are everybody's courts with the family law cases, the juvenile cases, the drug cases, assault and so on and so forth that tribal judges just like the judges of Pima County are so often unschooled in and not ready for that really handling business law. And so you'll find tribes beginning to do things like create a tribal business court. Often it doesn't mean a whole lot other than we designate you as our business judge and we'll send you to some training, but at least you're trying to start that process of saying, 'We will adjudicate our own laws and our own laws of incorporation.'

After that there's a set of, a third, a next layer, third layer of laws. Those laws often deal with the business environment, adopting some version of a commercial code. It doesn't have to be the uniform commercial code of all, actually I think about 47 states are uniform now, but some version of laws that provide for garnishment, for the rules under 'if I need to repossess your truck, how long do I have to give you to repay?' and all of the... what are the procedures for taking you to tribal court and so forth so some form of a commercial code. In addition, as tribes create enterprises, either tribally owned or tribal member-owned corporations under their own laws, tribes find they need to do what most other governments in the world do, things like registration.

There's a very interesting case going on right now. Crow, in fact they may have done it this week, about to or just did. Crow sits there and they're trying to get some businesses going, they're going through everything I've just described, all these stages, and they look around and think, 'We need to register these corporations so they can go to court, people will know whose corporations they are.' They don't have the computer capacity right now and the record-keeping capacity. They're signing a memorandum of understanding with the State of Montana, Secretary of the State, not giving up any sovereignty, basically on a contract basis hiring the record-keeping services of the State of Montana, so that you can punch a button and call up, probably type in the word Crow, here comes all the Crow corporations. No jurisdiction at all, it's just purely the computerized record-keeping, which Crow recognizes that they need.

So there's the basic laws of incorporation, there's the strengthening of the tribal court around business law, there's then the laying in place the legal environment for businesses, the uniform codes, the recordings, etcetera. Then you get to the point of actually creating real enterprises, and we're talking enterprises, and I won't go into it today, others will and I think Joan in particular, but often this begins with the creation of a board of directors and a great deal of paperwork. It was fascinating, Diane carrying that big thick notebook that she showed you. There's a lot of paperwork that goes into just laying down, 'okay, here's how we're going to select members of the board. Here's how many can be from non-citizens of the tribe, how many citizens,' all these rules. 'What are the terms of office, terms for removal?' all of those things critical to have in place.

And then lastly once you've got the corporations created, then you're ready to actually begin to make investments. I went through this in order like this because so often I see tribes desperate...elected officials desperate for the ribbon cutting. That is for, I've got to show that I'm doing something, we've got a new business and often the cart gets way out ahead of the horse and you see tribes, 'Well, we'll buy a business and then later will pass the laws and we'll create a board of directors,' and so forth and so on and again and again and again without those structures that Diane Enos had in that notebook. That's where you see problems arise because there's no way then by which to say, 'Wait a minute, you didn't tell me you were going to wait six months to create a board and you promised me I could be on the board.' All of those problems arise without that laid in place, that infrastructure, the legal infrastructure prior to going out and buying a business. And so this has been a quick run-through, but those are the three models that we see, the federally chartered corporations, the state and the tribal. But you can't just do that, you've got to put that other infrastructure, your courts, the laws and so forth in place. So that's what we're seeing out in Indian Country, what's working."

Jerry Smith: Building and Sustaining Nation-Owned Enterprises (2008)

Producer
Native Nations Institute
Year

Laguna Development Corporation President and CEO Jerry Smith discusses the evolution and growth of the Pueblo of Laguna's diversified economy, and the importance of building an infrastructure of laws and rules in ensuring the success of Laguna's nation-owned enterprises.

People
Native Nations
Resource Type
Citation

Smith, Jerry. "Building and Sustaining Nation-Owned Enterprises." Executive Education Seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Rapid City, South Dakota. September 18, 2008. Presentation.

“Morning everyone. I was afraid that when she was talking about the pig story, she was going to introduce me as the first pig on the panel. I appreciate being here today to speak to you on the experiences of and growth of Laguna Development Corporation, and in general the Pueblo Laguna. As some of you may know, Laguna Pueblo is located in Albuquerque, about forty miles west of Albuquerque on I-40. And what we have done over the years, my career, I’m very impressed with the academic capacities of the folks presenting to you in Native nations. Some of us on the other side are kind of educated in the school of hard knocks, in that we grew up in the tribal end of the entity at first. I worked, probably, about 20 years on the tribal side working as a tribal administrator for the tribe, and more specifically in the areas of trying to develop the economy of the tribe. And then later in the late '90s, I moved over and began to run one of the enterprises of the tribe. So I kind of have the understanding and experience of both sides of the equation.

My first slide basically gives you kind of a view of where our economy has been over the last number of years. Laguna economy pre-'50s is basically an agriculture-based economy, very entrepreneurial, small business (as I like to refer to them) -- individuals who ran farms, cattle, livestock, sheep. So, as we moved into the '50s, fortunately in our situation, uranium was discovered on our tribal lands. And so we went through a period of tremendous economic prosperity in that, we had at its peak production, the world’s largest open-pit uranium mine, and it provided substantial resources to the tribe as well as employment. We were able to live in a great environment. Unfortunately, that resource, as a result of the anti-nuclear type programs in the late '70s, mid-late '70s, we entered into the down crash of the uranium market. The mine ended up closing in the early '80s. So, from the '80s, as you can see, the tribe began to look at what to do. We had a situation of close to 80 percent unemployment. When I interviewed for the tribal administrator’s job in 1982, the question I recall, the most pressing question I recall being asked is, 'What are you going to do to find me a job?' Asked by one of the tribal council members. And just out of business school, I didn’t have a whole lot of answers, except, ‘I’ll do my best.’ And quite honestly, I was not really looking forward to being hired, because I really didn’t have the answers that I thought they were looking for. But surprisingly, I was hired by the tribal council as a tribal administrator to come in and begin work on these situations.

It’s key in that, for Laguna, it was very key in that, a lot of things we were able to do in the '80s were structure-related issues. We worked on a lot of infrastructure, and the reason we could work on infrastructure is we had the wealth of the uranium mine, which funded tribal government operations. So we had a period of time where we could focus on infrastructure development, which meant we had to change philosophically the way the tribe thought, the way they approach things, and began to take a look at how we could do things different in a way that we could grow tribal enterprises, which meant that we had to do a lot of education. And it was really strange for me, fresh out of business school, to be educating people that were very experienced in tribal operations. A lot of our leadership -- and it seems to be the same way today -- a lot of leadership comes from the federal sector. You know, leadership and tribes come out of the BIA [Bureau of Indian Affairs], IHS [Indian Health Service], HUD [Department of Housing and Urban Development] -- you know, those programs. And so when you begin to take a look at educating tribal leadership in this new mentality, you know, definitely training, educational training had to happen. So we began to develop our tribal enterprises.

Our first project was a project called Laguna Industries, where we stepped in and developed a manufacturing company. And at the time, at this time as you recall, the Defense Department was growing very significantly. So we targeted the Defense Department and developed a company that went after defense work. And the created company that, in its peak, employed close to 350 people and is still today, operating and defense contracting. They have, they’ve done not only manufacturing of electro-assembly products, but they also do a lot of on-site support training for the military. We have teams that go out to Korea, who have been out in Iraq, have been out in Germany, you know, supporting the troops in the systems that are built within the company. After learning this experience, then we were caught with the situation of claiming this open pit uranium mine. So, as we began to work with the company that operated that mine, we began to take a look at, 'How we can build a company, instead of using these dollars to go out and just contract a general contractor to come in and do the mining project?' We began to take a look at how we could do this ourselves.

So we created a second company called Laguna Construction Company. And Laguna Construction Company ultimately came on board, they performed the reclamation of the Jackpile mine and then began to develop the capacity in reclamation remediation and began to get defense contracts to begin to do work, not only within the United States, and did a lot of reclamation. This time as you see military base closures were coming online. So there were needs to go in and reclaim those military bases. So they received initially a lot of work doing that; and then they stepped into, then the Iraq situation came on. Right now they’re one of the subcontractors of Halliburton, doing a lot of the reconstruction of Iraq in terms of rebuilding buildings and doing a lot of the reclamation work over there. So it’s significant in terms of their growth and experience.

The third company we created was Laguna Development Corporation and that’s the company I run. In the creation of the first two companies I stayed on the governmental side, and the companies were set up and we brought in management in those arenas. This third company, I kind of wanted a career change, so I kind of moved to the company and we set up this company called the Laguna Development Corporation. Initially, the mission of Laguna Development Corporation was retail development. We ran retail operations. And if any of you have run C-stores, a grocery store, you know how tough that is because your margins are at the bottom line, hopefully, about 3 percent. So as we began to run those operations, it became very important for us to have the proper infrastructure in place in terms of the business itself. Later on we brought in the gaming operations. So our growth has been substantial. We were created in 1998 and our first year, full year of operation in 1999, we had out $6.5 million in sales. In closure of our books in 2007, we closed our books in excess of $250 million in sales, of which over 50 percent is non-gaming revenue. It’s a substantial effort in terms of trying to diversify our corporate portfolio. And one of the things that we learned coming out of the Jackpile Mine was that, as a tribe, you cannot put all your eggs in one basket. You have to take the opportunity and begin to diversify the economic base because if you lose a Jackpile Mine -- and if any of you and I’m sure a lot of you are experienced or have experienced 80 percent unemployment -- it is not pleasant. It creates a whole lot of social/economic issues for you as a tribe, and it’s very important to keep people productive and keep them working and keep their value system in place.

So as we stand here today, we lost close to about 600 jobs in the closure of the Jackpile Mine. Since then, with the enterprises, we’ve been able to create close to 1,600 jobs within the tribal environment. So as I speak here before you -- and I don’t have any statistics to support this -- but I would say Laguna, as a population base, we’re pretty close to full employment, which is saying that anybody that wants a job can get a job. So that’s been an experience. Now we’re working on the quality of the job. Now we’re working on moving people in their career development towards improving the quality of the job and improving their quality of life, improving their capacities.

Tribal government also benefits because I sat on tribal council in the mid-90s and as a tribal councilman, I began to take a look at where our mix of revenues were coming from. And at that point, 80 percent of our revenues were coming from federal sources, 20 percent of our revenues were coming from investment income off the Jackpile uranium operation. As I stand here before you today, 80 percent of our revenue comes from the enterprises, 20 percent of the revenue [of] the tribe comes from federal sources, federal/state sources. And when you look at that equation, you begin to see why these business development efforts are very important for the survival of the tribe, because I think the only way, one of the ways we can exercise our true sovereignty as tribal people is to be fiscally solvent, so that we don’t have to have our hand out to a governmental entity and take all the flow-down conditions that come with those contracts and grants that say, 'You got to do it this way, you got to do it this way, you got to do it this way.' It’s great for the tribe to have that discretionary money, that money that doesn’t come with any strings, to go out and do the things the tribe wants to do, without having to say, 'Mother, may I?' And if, coming from the tribal side, it’s very frustrating to me to always have to talk to a grant, a contract administrator on the federal side that basically gave me permission to do this or do that or do this other thing. And it really, in my opinion, stymied a lot of economic development in tribes, because federal people are not business people. They are not risk-takers. They are not people that have to go out and lead and be the entrepreneurs to go out and take the risk. They are very low-risk tolerant. So a lot of the projects fell on the wayside because I had to go before an administrator who had no experience telling me what I could and couldn’t do. So in that regard, this money that’s discretionary, this money that comes from enterprises that the tribe has full flexibility to decide what they need to do with -- it gives a tremendous opportunity to begin to take a look at getting outside that box.

One of the things we have to do from a tribal side, is teach our tribal leadership how to get outside that box, because these tribal leaders -- and this is no different than my tribe -- many of them grew up in the federal system. Many of them are contract administrators for the BIA. Many of them ran BIA/IHS programs and have since come back and are working for the tribe. So they’re trained. Their whole career is trained in this federal process and it says nothing’s wrong with them -- I’m not saying anything’s wrong with it -- but on this other side there’s this whole different dynamic that we have to work with and that is risk and learning how to manage risk. And fundamentally, in order for you to be successful in an enterprise, is to be able to understand that and take safe calculated risk; but you’ve got to take risk. So from a Laguna story standpoint, I’m learning as I’m going on, talking to people, a lot of tribes, especially gaming tribes, 90 percent plus of their money now come from their enterprises. So we are no longer federally dependent. We are independent from a fiscal management standpoint, but we’ve got to get out of old habits. We’ve got to get out of habits of letting public policy from somebody in Washington (D.C.) tell us how to run our communities and begin to take responsibility for being creative to develop those communities that fit our situation, which leads me to the next slide, and that is understanding the difference between the governmental model and the business model.

What was very difficult for me, in the early '80s, was to educate my tribal leadership that governments are important. Tribal governments are important. Governments have to exist and have to exist and be effective, but you don’t run a business to a governmental model. Governmental models are there to provide governance to the tribe, to the organization. They are not profit motivated. Ask a tribal budget manager as to what their profitability is for this year and they don’t know. They can’t answer the question. Business models work within the governance of the tribe and that’s a very important point. People think you have to choose one or the other; it’s not that way. The governmental infrastructure has to be in place and the governmental rules have to be in place and stable so that the business can flourish within that environment. So they have to work together. So what you have to do is build the governmental infrastructure in place so that the business can survive because business as a fundamental, any start-up business -- what is the statistic? Sixty-five percent fail in their first year of operation. So you’re already dealing with a very dynamic situation in running a business with a high propensity to fail. So if you move the tribal environment on top of it, you create a higher percentage risk of failure if you don’t have the infrastructure in place to support that.

So in that regard, governance is very important, but it also has to be, it has to provide the energies for businesses to succeed. The other thing is that business model is profit motivated. And that’s one thing our tribal leadership have a hard time with because many of us have to be sometimes in position where we have to say, ‘I am not meeting my EBIDA [earnings before interest, depreciation, and amortization] goals.’ And a tribal leader will look at you and say, ‘What? What is that? What is EBIDA?’ You know, that is a measure of business performance. And as you begin to take a look at the language, it’s kind of like, in some cases, speaking French and English because the terminology is not the same. Even the way that you’re audited is different. Governments are audited to what’s called GASB and I think probably a lot of you know what GASB is. Businesses are operated on a FASB process. And so you have to understand that even the formula and even how things work, are different. So when you go to a tribal leader and say I’ve had tremendous EBIDA performance you have to take the time to take them through what EBIDA means, because they do not have the experience and understanding of what EBIDA means.

And so those kind of things are, there are differences in terms of the name of the game and how the game is played. So what we did over our evolution at Laguna was we tried different business models. We tried different business structures. We initially set ourselves up under tribal enterprises. Now one of the benefits, and we talked about lessons learned at Laguna, was prior to trying to put the structures in place, we killed a lot of good businesses. We killed a lot of good businesses because we just could not keep people in their roles. And one of the strongest influences in this environment is political influence. And what you ended up having was you ended up having political leaders making business decisions. And the business decisions normally were not of quality because they were not being made for the necessary reasons, or the proper reasons why that decision should be made. One of the biggest challenges, for example, one of your biggest expenses in the business is labor. And your revenues fluctuate as you operate during the year, and especially if you’re running a seasonal business. So as a business leader, you have to manage labor and you just can’t have people sitting in an office, twiddling their thumbs waiting for the season to pick up. So you have to deal with the issue. You may have to lay people off or you have to lay them off seasonally. So if you don’t make that decision, then you’re going to be impacting your EBIDA line. And EBIDA is Earnings Before Interest, Taxes, Depreciation and Amortization, and that is how businesses are measured. They are not measured on net income. They are not measured performance from an operational standpoint on what your profit is. It’s basically what your EBIDA is, because your EBIDA is what really tells you whether or not you’re operating efficiently or effectively. So the two things you watch for in a business is EBIDA and cash flow. And if you are not functioning in those areas then you better do something.

So in that regard, we started in tribal enterprises. Tribal enterprise worked, but unfortunately we got into the mix of IRS. And I give IRS a lot of credit for this because we would not have gone through the evolution we went through without IRS intervention, because IRS intervention or interest was to tax our profits. And at that time they did not recognize tribal enterprises as an acceptable structure for them and they basically determined at that time, and this is again in the '80s, that our income was taxable. So we went then and went to a state chartered corporation. So we chartered one of these entities under the State of New Mexico and we were able to get away with that for a little while until IRS came down again and told us state charter corporations are taxable. And so then we went to the structure we are now and all three of the entities I showed you on the board are structured under this is a Section 17 federal corporation.

Now one of the things that this did (and you can go to the next slide), one of the things that it did is it helped educate the government to the point where they understood why we need to separate business from government and why they had to release day-to-day control of the business. And it has to do with something called liability. Because when you’re running a business, the fundamental nature of the business is risk and you have to take risk. Why do private people with money, with wealth, set up corporations? It’s because they’re protecting their personal assets. So they set up these corporations where if something happens from a risk decision in that corporation, their nest egg is protected. Fortunately, at Laguna, we had a nest egg that came from the uranium mine. We had a substantial nest egg. So we were able to approach the tribal council to say, ‘Before you go out and start taking risk propositions you need to protect your nest egg. And we need to build this wall between government and the enterprises so that if something happens within the enterprise, your assets are protected. They can sue the corporation only to the extent of the assets of the corporation. They cannot touch tribal assets.' So with the protection mechanism in place it was very, it helped us tremendously in selling the concept. Now we were a tribe without assets and it’s the same fundamental thing. How many of us own private corporations because how many of us have something to risk and lose? So we don’t really think that way. But when you’re a person of wealth, you think that way. It’s a difference in thinking. So if we were to try to do that today, with what’s going on today, we would probably have a very difficult time. For the reason that tribal, and it’s still happening in all governments, the tribal political factors want to get into day-to-day operations. They want to get into day-to-day control of the enterprises. So how did we define this so that we can protect the enterprises from that situation, and how can we protect the tribal council from assets being touched? It’s called penetrating the corporate veil.

If a tribal leader comes down into the corporations and starts hiring and firing employees, that tribal leader has penetrated the corporate veil. So what happens is they put a hole in the corporate veil and if they’re sued back, whoever is filing the claim can go right back through that hole and get the tribal assets. So as you can see, there’s a lot of education that needs to go on. And a lot of these principles aren’t necessarily understood at the beginning, but as you keep educating, educating, you begin to finally hit home with some of these things. One thing that was very important to us was to formalize these relationships, not just gentlemen’s agreement, not just from one council to the next, because councils turn over quite a bit. So the institutional knowledge of the government isn’t always there. So when you go back to this say, ‘You remember ten years ago we talked about it?’ And you look at the people in the room and they’re all different. No one remembers what you talked about ten years ago. So it’s very important to formalize anything that you enter into in terms of relationship with the government. And you’ve got to treat it like a state government, like a federal government. Tribal government, even though they’re your owners, you have to also understand that they’re governments. And so nobody has a problem writing a grant proposal and signing a grant agreement with the state government, with the federal government. That’s a formulation of what the conditions are and what are the terms and what happens in this situation. It’s very important that we be at Laguna, that we begin to formalize this relationship so that we can retain the institutional knowledge of what was agreed to. So we have charters. We have corporate charters. You can go online, because we’re a federal corporation, you can go pull up our charter. You can see what our charter looks like. Bylaws of the corporation; bylaws are what the board of directors manages the corporation by. It’s their internal rules of the corporation. We have very sophisticated reporting relationships. We provide financial statements to the tribe on a monthly basis. We provide them quarterly financial statements. We go before the council twice a year in terms, semi-annual shareholder’s meetings.

Our tribal councilmen wear two hats. They are councilmen from the government side, but they are our shareholder’s representatives and they have to learn how to operate in two different environments. As shareholder’s representatives they are not councilmen, they are not governmental representatives, they represent the shareholders. And they fall within corporate law duties of shareholders and they have to fill their duties to shareholders. And what is their primary duty? Their primary duty is the appointment of the board of directors. I report to a five-member board of directors and that board of directors is delegated authority to run the corporation. And so the major power of the tribe is to make sure they have good, competent people on the board of directors, and experienced people on the board of directors.

We also have a very sophisticated agreement with the tribe on how cash moves from the corporation to the tribe. I’ve worked and I’ve consulted to a number of tribes and it amazes me when I go in to sit down with them and I ask, ‘How does cash transfer?’ And they say, ‘Well, the tribe comes in and gets it every month.’ So then I say to them, ‘Well, how do you take care of capital maintenance, capital development reserves?’ And you can begin to see real quickly in the enterprise why they haven’t replaced, in the gaming property, slot machines; why they haven’t replaced carpet; why they haven’t done, you know from a maintenance standpoint; they haven’t developed a new venture. It’s because the tribe comes in and takes it all out. And so the enterprises really don’t retain the cash because it’s sucked out to the government on a monthly basis.

In our situation, we’ve negotiated a relationship with the tribe where money transfers, but it transfers at year-end after all the audits are done. And so we do transfer like pre-payments monthly, but it’s all reconciled at year-end. And it’s based on a formula so that, like anything else, as the audit kicks in and it’s produced then formulas run. So there’s no dispute. And if they want to come in and look at the books and understand why they got this in their check, it’s all auditable, it’s all transparent. So even those relationships are formalized so that we don’t get into disputes. Many times we get accused of holding all the money in the enterprise, but in reality, we can answer that claim any time; just come in and audit us and we’ll show you exactly where things are.

And so, as it relates to that, we probably at this point within our enterprise, the two things that usually are stress points are the financial end of it and human resources end of it. So from the financial end of it, we’ve been able to take 50 percent of the equation in terms of disputes away. We still fight over human resource issues on a day-to-day basis. But at the same time, we set up a system where I’m the final say on human resource issues. Nothing goes to my board of directors, nothing goes to the tribal council. And so as we deal with day-to-day operations, we’re able to handle those things and I’m able to handle issues that some tribes…and I’ve had people tell me how...tribal councils have come in and you’ve disciplined a brother or nephew or niece and they’ve come in and damaged the organization. We’ve had to deal with those kind of things up front and it’s very, it’s worked effectively today.

We also have had to take investment and tried to help the government infrastructure develop. One of the things that happened at Laguna with the quick growth of the enterprises is what we call the brain drain syndrome. The capacity that used to sit on the tribe transferred to the enterprises for a number of reasons. One was pay; we could pay more on the business side than what they were getting as a tribal employee. So what ended up happening is that we ended up wakening capacity of human resources at the tribe. So we’ve been going back in and helping them develop their capacities: how to read a financial statement; how to read a business financial statement versus a GASB financial statement; and what it is you look for in terms of managing the enterprise. Most of us know, especially those of us who run gaming enterprise, your three big numbers are revenue, marketing expenses, and labor. That’s probably 60-70 percent of the equation. So you can make comment about ‘how come so and so’ or ‘how come somebody got a company car?’ But that’s so minute compared to those big numbers.

So as you begin to educate tribal government, then you begin to help in building this bridge between government and enterprises. One of the things we went into was help develop, for a tribe, a budgeting ordinance where we set up the infrastructure where they come and ask us for forecasts, five-year forecasts for revenue. How many tribes have five-year forecasts in terms of their operational standards? Businesses have to do it all the time. So we took that into that environment and said, ‘You guys need to do a five-year forecast. This is how you get the information from us so that you can begin to start planning your growth; because the money’s going to be coming over and the growth and the revenue of the tribe are substantial, are going to be substantial for the next five years.’ Unless they know that, how can they begin to plan? How can they begin to put their governmental infrastructure in place to be able to do the things that they need to do? What normally happens is they do it on a year-by-year basis.

So we’re involved in developing that capacity on the tribal side by teaching them some of these disciplines and hopefully over the years -- we’re not there yet -- we use Joan’s program a lot to come in and do the same kind of training that’s going on here with tribal leadership. But still yet it’s on a hit-and-miss basis. We hope to, and it’s very difficult, we got to do it with a lot of humility, because we don’t want to be; I mean, we’ve been accused of being the Pueblo of LDC and that’s not what we’re about. But we definitely need to do what we can as a child in this household to be better children and help dad and mom develop their infrastructure.

So we work with the administration, you know, a lot of us, you know, depend on tribal water, so we have to help with the water department. We have to help with all those areas where we draw resources out of the tribe so we can deal with them within a business context. We also have to help in the legal arena; because a lot of the areas, for example, in human resources individuals do have a tribal resolution if they do not agree with my decision, and that decision is in the structure is to take me to tribal court not to tribal council. So if they have a problem with wrongful termination and they believed that as the chief executive officer of the tribe, I mean, the enterprise, that I made a wrong decision then, in Laguna, they have the ability to take me to tribal court. So then we go into an environment where we can deal with things on a very consistent basis. In a tribal council environment, for example, there’s this thing called 'freedom of information,' and unless I get release from that individual to release their personnel file, I’m going to walk into that tribal council with my hands behind my back and they’re going to slap me all over the place and I cannot tell them the true story unless I have that sheet of paper that says I can. And employees who take you to that venue, I have not yet found one that’s willing to sign that piece of paper. So you will always lose in that environment because they have the bullets and the gun. You have the bullets, but you don't have the gun. And so we were able to set up legal environments where now it doesn’t go to tribal council -- council has the ability to raise policy issues/policy questions with us -- but in terms of individual cases, the legal infrastructure of the tribe takes care of those issues for us.

Again, emphasize the appointment of board members. It’s very important that you get the best competency on your board of directors if you want them to be managing a $250 million business; and so board development is also very important and the continued development of board of directors, especially for tribal members who want to get active in this area is very important. So we do the same kind of programs in trying to develop our board of directors. The last thing is, one of the other things that government has to do effectively is properly capitalize the business. A lot of tribes, especially in the gaming industry, don’t capitalize their business adequately. At the Pueblo Laguna, from a $250 million business, the initial investment into us was $250,000. That’s all we got from the tribe. So we had to go out and get the capitalization needs from outside sources; where it has an effect on the tribe, is now we have to pay interest, expense, cost of money that could be going to the tribe. So those are the things you have to deal with in this environment and this is kind of the issues we’re working with. Capitalizing the business effectively, especially in your low-margin businesses, it’s very important; because a lot of these businesses can’t afford the cost of money that we sometimes have to pay, especially in today’s market. Now as Laguna Development Corporation, it’s interesting that if you read the paper right now, the down economy and people always thought gaming was recession proof. Across the country, the gaming industry is beginning to experience their first effect of a down economy and its impact on gaming. Gaming is down 10-20 percent across the country. And why is it that I’m here telling you to look at these things? It’s because at Laguna Development Corporation, Albuquerque in New Mexico is tagged as one of the most competitive Indian gaming markets in the country because we have five significant properties around a little over half a million people population base; very competitive. And in a down economy, you definitely have to take that planning into consideration. Our infrastructure has helped us. It’s helped us retain executive competency. In the gaming industry, turnover is almost annual. General managers are released almost annually. In New Mexico, 1.5 years is the average life of a general manager. My executive team has been with me since they came on board because they understand stability. One of their first questions to me, because a lot of these individuals have come out of Indian gaming, have said not, ‘How’s the business running?’ but ‘How does this thing work between the tribe and the business?’ And so I have not had anyone refuse or pull their application as a result of understanding this structure, and it helps me go after better people. It opens the door for me to go recruit better people [because] they know that their head’s not going to be taken off by tribal government. My head may be taken off, but their heads are going to be protected because of the infrastructure, and it’s helped me tremendously.

The last thing is a discipline issue, is, the other thing is you can have all the rules in place, but if you don’t adhere to the rules they’re not worth the paper they’re written on. So discipline, in terms of teaching people their roles, and ensuring from business side that we operate to our boundaries, on the other side, the governmental side they’re operating in their boundaries, has been very successful for us in that arena.

(Next slide.)

What’s the business’s responsibility? The business’s responsibility is to hire the best executive team it can find. I always remember my 201-business course and I was told, ‘Your key to success is to hire the best you can afford.’ And I’ve taken that principle and I’ve applied very consistently within our operation. So I go hire the best I can afford. Some I can’t even, I can’t afford now but I cannot not afford them. So I go after the best. So I have a senior team that is very -- and I guess I would be bold enough to say -- I’ll put them up against any senior team in the country in terms of their depth, their experience, their knowledge and the industries that we run. We provide and evolve our business systems constantly, our operating systems, our financial systems, our human resource systems. We under our, probably our fifth revision of our HR [human resources] manual because the dynamics of what happens within this industry, you can’t just take a book and adopt the rules and just let it sit. You’ve got to evolve them and you got to keep current.

And so we’re constantly looking at those fundamental processes that we have in place and updating them constantly. We provide adequate reporting to the board and to tribal council. That’s one of the big things that has to happen is that the board needs to fully understand full disclosure, what’s going on. The tribal council needs to understand in full disclosure what’s going on. And so in that regard, the board, you know, we have very confident board members so it’s not difficult for them to come back and say, ‘Okay, what happened here? What happened there? How come you…?’ You know, on the tribal council side we’re still evolving there. How do you read a financial statement? You know. How do you read…? How does an income statement differ from a balance sheet? And how does a balance sheet different from a statement of cash flow? You know, most tribes when tribal leaders look at a financial statement, they stop at the income statement, you know. That’s probably the least effective document in the statement. It’s your balance sheet and statement of cash flow that really tells you what’s going on, you know. And so teaching tribal leadership how to evaluate that balance sheet and really see where their net worth is now. You know, we in this down economy, this 20 percent decline in Las Vegas, 18 percent decline in revenue in Las Vegas; in 2008, we grew our revenue by 26 percent. We’re only two companies in the JP Morgan --which just bought out Lehman Brothers -- we’re one of two companies in the JP Morgan portfolio that had a growth in revenue in this down economy in the gaming industry. And a 26 percent growth in revenue while others, the big boys, MGM -- those big boys are losing 18 percent. So to me, it’s fundamentals, fundamentals, fundamentals.

(Inaudible question from the audience).

Indian gaming. You know, this phenomenon is going on in Indian gaming as well, but in the JP Morgan portfolio, JP Morgan is big investor and they’re where we get our money to do our projects. They basically have a portfolio of all the people they loan money to in their portfolio, they just bought Lehman Brothers, that’s this transaction you read about in the papers, so they’re one of the biggest companies in the, finance companies in the United States. We’re one of two of their gaming companies in their portfolio that had growth in their portfolio, in their revenues. So, and again the other company didn’t have the substantial growth we had at 26 percent. Even in this down economy, where everybody else is losing 10-18 percent of their revenue, and we’re doing it in Albuquerque which only has a half-million population base. So, as I can say, it’s focusing on basics.

(Inaudible question from the audience).

They’re the things I’m talking about here: put an infrastructure in place, put in the relationships, tying them together, teaching people their roles, and education is very critical component to this thing. One of the other thing is we focus on growing and developing the business, we don’t focus on politics. We have tribal elections this year. We have no strategic agenda to be involved in tribal elections. They happen on the election side. We’re here to grow the business. And we don’t make decisions on day-to-day objectives, investment objectives as to who’s going to be the governor and what kind of council we’re going to have next year. We focus on the business and we stay focused on the business and run the business, because at the end of the day, you’re not going to be evaluated based on whether or not you did the right political thing, you’re going to get nailed if you don’t get the EBIDA, you don’t get the revenue over to the tribe, because that’s really what they’re all about, what they need.

(Next: Lessons Learned).

This is my, I think, final slide and it’s what have I learned through all this? I’ve got pretty close to 30-some years in doing this. I’m an old man. Maintaining separation of government and business is a very delicate balance. Like I said, if I was to try to do this at Laguna today, I probably would not be able to succeed, because the tribe was not as desperate today as they were twenty years ago.

I’ve been asked to come into some tribes and help move this model into their operation. I had a situation recently where the tribe came and adopted our structure, almost identical. Tribal leadership changed. The tribal leadership came in and had a socialistic agenda and they wanted to build community projects that had no ROI [Return on Investment]. And they said, ‘I don’t care, we want the money.’ 'Well, I have a project over here that’s going to give you 15 percent return on investment.' ‘I don’t care, we want to build this community program.’ And they just said, ‘I’m sorry. What you have to give us is we don’t need it this time. I need this more importantly.’ So we just said, ‘Okay, that’s fine. You don’t need us then. We can do something else. We don’t need to do this.’ One of the criteria my board of directors have on me, before I can do any projects, I have to show my 15% ROI. And that goes all the way down to entertainment. We have an entertainment venue, and if I’m going to bring in Carlos Mencia, I have to show the board that I can get a 15 percent return on that investment. So that’s what I mean in terms of decision-making. It’s not that…there’s some people that say, ‘How come you don’t bring in country [music]?’ It’s because I can’t get an ROI on country. I have lots of people that like country, but I cannot financially make it work; because it’s not about the entertainer, it’s about its impact on the gaming floor and how much more money I can make that night if I do that. So those are the kind of things we have to work on.

But maintain this separation from tribal government. Probably about 80 percent of my job is in two areas: one is human resources dealing with people; the other one is managing tribal government, constantly being available to tribal government, constantly working with tribal government to try to help them understand so that I can protect my management team. My management teams needs to be able to have the flexibility to do their job and they cannot do it with tribal interference. So the buck stops here both ways. And it’s building that trust through example that your management team develops that trust in you, that you’re able to do that. Doing proper due diligence on the management groups that you bring in especially when it’s staff.

One of the things I see in the gaming industry is that industry grew so fast that the development of executive capacity in the industry did not develop as quick as the industry grew. So a lot of Indian gaming facilities were hiring executives that had no experience. They were an assistant table game manager and they gave them the role of GM [general manager]. And you see that a lot. It’s amazing how much you see that. The guy puts on a suit, looks nice, talks well and they’re sold. But they don’t have the experience because nobody did the due diligence on this person to found out whether they really had the capacity. And that’s why you see this turnover in management because after a year, the person shows he doesn’t know what he’s doing, so then the tribe has to fire him because he just lost money for them or did something that he wasn’t supposed to do. So due diligence on the executive team is very critical.

Setting up the infrastructure’s very critical. I can’t stop reinforcing that area. Government has to be there. The business entity has to be there. The infrastructure for the two -- it’s very important to develop those things. Business needs to hire the best capacity that it can afford. I hired, we opened up 150-room hotel just recently. I hired an individual that ran a thousand-room property, because I wanted his experience that was beyond what I was doing because not only did I want to open that facility with zero problems, but I wanted somebody there that could take me to a thousand-room property. So I hired for five years from now, not just for today. My chief of gaming operations; right now we have 2,100 machines; he ran a facility that had over 5000 machines. So again, it’s to take me to where he’s been. I don’t want to go that path for the first time myself. I want people that have been there, that have been down that trail that know what the pitfalls are. And so every position I have, from food and beverage to retail to the gaming operations and all my administrative staff are people that have been there before. And I’ve made sure from a due diligence standpoint, I verify they’ve been there before, because I definitely don’t want to go where no man has gone before. I want to go with someone that’s gone there before.

The next thing is tribes need to adequately capitalize their business and the last thing is tribes need to look at diversification of economy. Even within our business, we’re on diversification strategies. What happens if gaming goes away, heaven forbid? What happens if it goes away? We know that, because we thought uranium was going to last forever. So again, the strategies are: what are we going to do? What are we going to do to diversify? And we’re looking at those strategies now, right now within our portfolio and that’s within our five-year planning cycle. And so these are the things that I can offer you today. I hope that I, I hope I fit the bill in terms of what you wanted me to do today. But again, these are real experiences and things that I experienced at Laguna. And again, ours is just one story and there’s plenty more stories, successes out there that can help you in your decision-making."

What is Section 17?

Author
Year

It’s been over a year since Tribal Council passed a resolution (No. 182 — 2014) authorizing a draft to be crafted for a Section 17 corporate charter for the Eastern Band of Cherokee Indians. The main goal, per Res. No. 182, “is seeking economic diversification” that will benefit the Tribe into the future...

Resource Type
Citation

McKie, Scott. "What is Section 17?" Cherokee One Feather. May 20th, 2015. Article. (https://theonefeather.com/2015/05/what-is-section-17/, accessed June 19, 2015)

Tribal Economic Development: Nuts & Bolts

Year

Tribal economic development is a product of the need for Indian tribes to generate revenue in order to pay for the provision of governmental services. Unlike the federal government or states, Indian tribes – in general – have no viable tax base from which to generate revenues sufficient to provide for tribal constituents...

Resource Type
Citation

Fletcher, Matthew L.M. "Tribal Economic Development: Nuts & Bolts." Indigenous Law & Policy Center Working Paper Series. Michigan State University College of Law. October 25, 2006. Paper. (http://www.law.msu.edu/indigenous/papers/2006-03.pdf, accessed August 26, 2013)