[Senate Hearing 112-619]
[From the U.S. Government Publishing Office]
S. Hrg. 112-619
STATE AND FEDERAL TAX POLICY: BUILDING NEW MARKETS IN INDIAN COUNTRY
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
DECEMBER 8, 2011
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COMMITTEE ON INDIAN AFFAIRS
DANIEL K. AKAKA, Hawaii, Chairman
JOHN BARRASSO, Wyoming, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN HOEVEN, North Dakota
MARIA CANTWELL, Washington MIKE CRAPO, Idaho
JON TESTER, Montana MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
AL FRANKEN, Minnesota
Loretta A. Tuell, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
Hearing held on December 8, 2011................................. 1
Statement of Senator Akaka....................................... 1
Statement of Senator Barrasso.................................... 3
Statement of Senator Franken..................................... 1
Statement of Senator Tester...................................... 3
Statement of Senator Udall....................................... 3
Gunn, Steven J., Attorney/Professor of Law (Adjunct), Washington
University in St. Louis........................................ 14
Prepared statement........................................... 15
Leecy, Hon. Kevin W., Chairman, Bois Forte Band of Chippewa
Prepared statement........................................... 6
Ortego, Peter, General Counsel, Ute Mountain Ute Tribe........... 7
Prepared statement........................................... 8
Black Eagle, Hon. Cedric, Chairman, Crow Tribe, prepared
STATE AND FEDERAL TAX POLICY: BUILDING NEW MARKETS IN INDIAN COUNTRY
THURSDAY, DECEMBER 8, 2011
Committee on Indian Affairs,
The Committee met, pursuant to notice, at 3:40 p.m. in room
628, Dirksen Senate Office Building, Hon. Daniel K. Akaka,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. DANIEL K. AKAKA,
U.S. SENATOR FROM HAWAII
The Chairman. I call this meeting of the Committee on
Indian Affairs to order.
Welcome to this oversight hearing on State and Federal Tax
Policy: Building New Markets in Indian Country.
Before I proceed with my statement, I would like to ask
Senator Franken for any comments.
STATEMENT OF HON. AL FRANKEN,
U.S. SENATOR FROM MINNESOTA
Senator Franken. Thank you. I appreciate that, Mr.
Chairman, first of all that you are holding this hearing, and I
thank the Co-Chairman, and I thank you for allowing me to make
a brief opening statement, because we have a great chairman
here, Kevin Leecy of Bois Forte. I just want to be able to say
a few words about this topic and about their Band and about the
As we continue to look for ways to support economic
development in Indian Country, it is critical that we examine
the role of State and Federal policy. When designed well, tax
incentives can work to bring new businesses and jobs to low
income communities, including to Indian Country. But
overlapping, conflicting and unclear tax policies can stifle
economic development. In short, bad tax policy can handcuff a
Tribal government's ability to provide even the most basic
services to their communities.
It is easy to become discouraged when talking about the
many obstacles to economic development in Indian Country. That
is why I think it is also important to look at the success
stories. I want to thank Mr. Chairman for inviting Chairman
Leecy from Bois Forte to testify today. As I mentioned during
last week's hearing, I have visited Bois Forte and seen first-
hand how economic development can transform a community.
In 1997, the Bois Forte Reservation Tribal Council assumed
full responsibility for the delivery of all government programs
and services to its 3,000 members. The Tribal Council has
worked tirelessly to strengthen the region's economy and
increase job opportunities for Band members, all while
preserving a strong sense of community and respect for
Since first being elected chairman in 2004, Kevin Leecy has
worked to diversify the Band's resources. In addition to the
Fortune Bay Resort Casino and the Bois Forte Wild Rice Company,
the Band now owns and operates a golf course, a radio station,
convenience store, and a manufacturing company. The Band has
also made numerous investments in education, housing, health
care and infrastructure to serve the needs of the community.
Chairman Leecy, thank you for your leadership and for
coming today. Unfortunately, as I told you before the business
meeting, I am unable to stay for the hearing. But I want to
thank both witnesses for being here, and I also will submit
questions in writing for the record. And I really thank the
Chairman for allowing me to make these opening remarks. Thank
The Chairman. Thank you very much, Senator Al Franken.
In these difficult economic times, there has been a lot of
discussion about how to improve our Federal and State tax
policies. Some tax policy has the potential not only to sustain
local economies, but to help them grow into vibrant job
creators. This is especially true for Tribal communities who
have disproportionately found themselves suffering the worst in
the American economy. For tribes, double digit unemployment has
been the norm for generations, not the exception.
Today we will examine important Federal tax policies
designed to promote economic development and drive job growth
in Tribal communities. We will hear from Tribal witnesses today
who have taken advantage of these Federal tax incentives and we
will hear about tribes that use them to support their local
economies. Some of those tax policies will expire at the end of
this year if Congress does not act to extend them.
We also will hear today about the role of the State
taxation on Tribal economic development. Many tribes find it
difficult to attract capital, sell goods and grow other
enterprises when States attempt to tax their economic activity.
Our witnesses will highlight some of these challenges, but also
identify solutions in working with States to ensure vibrant
Tribal economies that support their own members as well as
enrich the economies of their neighboring communities.
I look forward to hearing about the impact these policy
issues have on our Tribal communities, as well as identifying
promising practices in working with our State and Federal
partners to remove barriers to Tribal economic development.
Senator Barrasso, any statement that you may have, you may
proceed at this time.
STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Thank you very much, Mr. Chairman. I
think you said it so very well, in the summary that you have
just given, that I will keep my opening statement very brief so
we can hear from our witnesses.
This Committee has been hearing from Indian Country for a
long time about the effects of taxation on Indian reservations.
The tax issues came up last Congress, when Senator Dorgan
introduced his energy bill. And several tribes raised the
issues again this year, Mr. Chairman, when you and I worked
together on S. 1684, the energy bill that I introduced and you
were gracious enough to co-sponsor.
So it is clearly an important economic development topic
for the tribes, and it is one that we should look at very
carefully. This oversight hearing will give Tribal
representatives a formal stage to share their concerns with the
Committee, and I thank you, Mr. Chairman, for making this all
possible. Thank you.
The Chairman. Thank you very much. Are there any other
Senators with opening statements? Senator Tester.
STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator Tester. Thank you, Mr. Chairman.
We just passed the SAVE Native American Women Act out of
this Committee. That is dealing with violence on one level.
Dealing with violence on another level is dealing with it
economically. The fact is, when you have poverty and you have
cycles of poverty, the prevalence of violence is much, much
So what I would ask the witnesses for is what really works.
We are at a time where we have to save some dough, but at the
same time, we have to spend some money, too. So how do we spend
it, and how do we spend it smartly to get the most bang for the
buck in Indian Country? I can tell you, there are a lot of
challenges out there. With challenges come opportunity and
there is an incredible amount of opportunity, and there may be
some things that we can do outside this bill, outside the tax
code, that will also help. And we would appreciate those
suggestions, too, at least from that perspective.
Thank you both for being here. I appreciate your time, and
appreciate your willingness to come to Washington, D.C. I look
forward to your testimony.
The Chairman. Thank you very much, Senator Tester.
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you, Chairman Akaka, and once again,
thank you for holding this hearing and focusing on this issue,
which I think is important to all of the Native community.
As my colleagues have said, this is an important issue for
all of us. I am pleased we are here today to raise awareness
about the need for improving tax policy affecting Indian
Country. This year, taxes have been a popular subject to talk
about, and we have all heard about possible tax code reform.
Like you, I want to make sure in any piece of legislation that
moves forward, it addresses the needs of Indian Country. It is
not an area we can afford to ignore, and it deserves a place in
In New Mexico, we are the most familiar with the New
Markets Tax Credit Program. It has been a real success, and has
in recent years made strides in reaching Native communities.
I would like to take a moment to highlight some of the
recent awards that have gone to Tribal entities, like Isleta
Pueblo Housing Authority, the Laguna Housing Development and
Management Enterprise, and the San Juan Tribal Council. This
program is making a real difference in the lives of Native
Americans in New Mexico.
Please be assured that I will work with the Committee to do
everything I can to make sure that we are including the tax
provisions important to Indian Country, especially the NMTC, in
any tax legislation.
With that, Chairman Akaka, I would yield back and look
forward to hearing from the witnesses.
The Chairman. Thank you very much, Senator Udall.
With that, I welcome our witnesses. I appreciate that you
have all traveled to be with us today and look forward to
hearing your testimony on this very important matter.
I ask that you limit your oral testimony to five minutes.
Your full written testimony will be included in the record.
Also, the record for this hearing will remain open for two
weeks from today, so we welcome written comments from any
interested parties. So thank you all for considering that.
I would like now to welcome our first panel, the Honorable
Kevin Leecy, Chairman, Bois Forte Band of Chippewa Indians; and
Mr. Peter Ortego, General Counsel of the Ute Mountain Ute
Tribe. Chairman Leecy, please proceed with your remarks.
STATEMENT HON. KEVIN W. LEECY, CHAIRMAN, BOIS FORTE BAND OF
Mr. Leecy. Aloha. Good afternoon. I am Kevin Leecy, I am
the Tribal Chairman of the Bois Forte Band of Chippewa in
Northern Minnesota. I am pleased to provide testimony today on
important issues that impact the ability of Indian tribes to
finance development within their reservations.
It is my understanding that the Committee is interested in
hearing from Indian Country about Tribal experience with New
Market Tax Credits and the tax incentives associated with
accelerated depreciation and employment tax credits.
Bois Forte was able to access the New Market Tax Credits
program at a time when it was absolutely necessary to find a
source of affordable financing. In the summer of 2009, our
Tribal government building was burned to the ground by arson.
It was a total loss and there was no place for Tribal
government to work. Because we needed to continue to provide
the services to our Tribal citizens, we immediately began to
search for ways to finance the new Tribal government building.
We decided that the New Market Tax Credit program promised
to be a vital part of that financing. We used a loan from
another Tribe, grants and our own resources to put the New
Market Tax Credit program in place. As a result, we were able
to plan, design and construct the new building in one year. We
moved into our new Tribal government and community services
center in August of 2010.
Some observations of the New Market Tax Credit program,
number one, is we could not have financed the projected without
it. Two, although it is a complex process, both in financial
structure and in terms of ongoing compliance, the fees were
less than 2 percent of the overall project, and it was an
affordable way to finance the project.
Number three, the program reduced the cost of borrowing for
a project that some lenders have usually considered to be too
high of a risk and short on collateral, because it was located
on Tribal trust land within the reservation.
I urge Congress to reauthorize the New Markets Tax Credit
program so that it remains accessible to Indian tribes
throughout the Country. My reasons for supporting an extension
include: New Market Tax is a program that has worked in Indian
Country. For many tribes, they are just now learning about it.
For example, Bois Forte hosted a delegation from the Red Lake
Nation this summer and made a presentation on how it worked for
us. In addition, the Fond du Lac Band of Lake Superior Chippewa
followed our example of New Market success to finance a natural
I foresee great opportunities in Indian Country if this
program continues to be available.
The New Market Tax program does not need to be reformed to
continue to be successful in Indian Country. It will succeed
because tribes are now in a better position to use this
This Committee can help make the New Markets program even
more successful if it encourages Executive Branch agencies to
use this program to make their dollars go further. I believe
that some agencies have the legal authority to re-lend into New
Market structure, but have been reluctant to do so, simply
because it is new to them. But if there is no statute or
regulation that prevents participation by an agency, I hope
they will embrace the possibilities presented by New Markets
The New Markets program is vital in Indian Country because
more traditional lenders shy away from loans on trust land.
When a lender knows that it cannot foreclose and sell the
property in the event of default, the risk goes up and so do
interest rates. Our experience was that the New Markets program
provided the flexibility investors needed to make the project
possible on trust land.
Finally, I believe that the accelerated depreciation and
employment tax credits should also be extended by Congress.
Although we have not had specific instances at Bois Forte in
which employers have taken advantage of those programs,
entities that consider locating on reservations always ask for
a list of advantages of doing business on the reservation. The
existence of those programs may just make the difference for a
new or expanding business and tip the scale in our favor.
In short, we need to make every effort to develop
reservation economies and those tools should include to
continue to be available. So again, we support and wish to see
Thank you very much.
[The prepared statement of Mr. Leecy follows:]
Prepared Statement of Hon. Kevin W. Leecy, Chairman, Bois Forte Band of
Good afternoon. I am pleased to provide testimony today on
important issues that impact the ability of Indian tribes to finance
development within their Reservations. It is my understanding that the
Committee is interested in hearing from Indian country about tribal
experience with New Markets Tax Credits and the tax incentives
associated with accelerated deprecation and employment tax credits.
Bois Forte was able to access the New Markets Tax Credit program at
a time when it was absolutely necessary to find a source of affordable
financing. In the summer of 2009 our tribal government building was
destroyed in a fire set by an arsonist. It was a total loss and there
was no place for tribal government to work. Because we needed to
continue to provide services, we immediately began to search for ways
to finance a new tribal government facility. We decided that the New
Markets Tax Credit program promised to be a vital part of the
We used a loan from another Tribe, grants, and our own resources to
put the New Markets Program in place. As a result, we were able to
plan, design and construct the new building in about a year. We moved
into our new Tribal Government and Community Services Center in August
Some observations of the New Markets Tax Credit program:
1. We could not have financed the project without it.
2. Although it is a complex process both in financial
structure and in terms of on-going compliance, the fees were
less than 2 percent of the overall project and it was an
affordable way to finance the project.
3. The program reduced the cost of borrowing for a project
that some lenders have usually considered to be high on risk
and short on collateral because it was located on tribal trust
land within the Reservation.
I urge the Congress to re-authorize the New Markets Tax Credit
program so that it remains accessible to Indian tribes throughout the
country. My reasons for supporting an extension include:
New Markets is a program that has proven to work in Indian
country, but many tribes are just now learning about it. For
example, Bois Forte hosted a delegation from the Red Lake
Nation this summer and made a presentation on how it worked for
us. In addition, the Fond duLac Band followed our example of
New Markets success to finance a natural resources building. I
foresee great opportunities in Indian country if the program is
The New Markets program does not need to be reformed to
continue to be successful in Indian country. It will succeed
because Tribes are now in a better position to use the program.
This Committee can help make the New Markets program even
more successful if it encourages Executive Branch agencies to
use this program to make their dollars go further. I believe
that some agencies have the legal authority tore-lend into the
New Markets structure but have been reluctant to do so simply
because it is new to them. But if there is no statute or
regulation that prevents participation by an agency, I hope
they will embrace the possibilities presented by New Markets.
The New Markets program is vital in Indian country because
more traditional lenders shy away from loans on trust land.
When a lender knows that it cannot foreclose and sell the
property in the event of default, risk goes up and so do
interest rates. Our experience was that the New Markets program
provided the flexibility investors needed to make the project
possible on trust land.
Finally, I believe that the accelerated depreciation and employment
tax credits should also be extended by Congress. Although we have not
had specific instances on our Reservation in which employers have taken
advantage of those programs, entities that consider locating on
reservations always ask for a list of advantages of doing business on
the reservation. The existence of those programs may just make the
difference for a new or expanding business and tip the scale in our
favor. In short, we need to make every effort to develop reservation
economies and those tools should continue to be available.
The Chairman. Thank you very much, Mr. Leecy.
Mr. Ortego, will you please proceed with your remarks?
STATEMENT OF PETER ORTEGO, GENERAL COUNSEL, UTE MOUNTAIN UTE
Mr. Ortego. Thank you, Mr. Chairman, Committee members. It
is an honor to be invited to speak here today. Thank you.
This topic is very important to the Ute Mountain Ute Tribe.
I am here primarily today to talk about the effect of State
taxation on the Ute Mountain Ute Tribe. Ute Mountain Ute Tribe
is located in Colorado, New Mexico and in Utah. It is over
500,000 acres of land. We have 2,000 Tribal members. We are the
largest employer in Montezuma County.
And what we have seen is that as the Tribe benefits and the
Tribe seeks access to resources and seeks economic development,
so does the community around us see that benefit. And so when
there is a burden on us, and we cannot operate as effectively
as we would like, that is a burden that ends up affecting our
entire community, not just the Indian community, but the non-
Indian community as well.
In New Mexico, our lands are not occupied by a person who
lives there, but we do have oil and gas operations in New
Mexico. The Tribe itself has a severance tax that it applies to
oil and gas being severed from the lands. So does the State of
New Mexico. So the Tribe in 1992, confronted with this dual
taxation, passed a resolution stating that if the Tribe could
eliminate the State severance taxes, then the Tribe's severance
tax would be increased by a proportionate amount. What amount
that would be would be determined at the time, but we reserved
the right to increase it to the full extent of the State
In 2009, the Ute Mountain Ute Tribe sued the State of New
Mexico in Federal court, and we were seeking relief from those
taxes. The trial court agreed with the Tribe. The trial court
stated that the taxes, that the benefit that the Tribe received
was de minimis from State activities, that the off-reservation
services that the State provides to the oil and gas operators,
the non-Indian oil and gas operators, is significant; however,
it does not justify the taxation.
We also argued with that court that the regulatory
structure for oil and gas on the reservation is comprehensive.
Between the Bureau of Land Management, the Bureau of Indian
Affairs, and the Tribe's regulations, there is no need for the
State to regulate oil and gas on the reservation. And the court
The State of New Mexico appealed that to the Tenth Circuit
of Appeals, and the Tenth Circuit Court of Appeals reversed.
They found that the services were not de minimis, that the off-
reservation services that the State provides lend value to our
resource. And in fact, the court went so far basically as to
state that the only way a Tribe really can avoid State taxation
is if it does all of it itself, if we did not use any off-
And that simply is not tenable to the Tribe, it is not
tenable to the operators who work with us. What we would rather
see is that the State and the tribes work together. We know
that what we do on the reservation impacts the States, and we
know that what the States do off our reservation impacts us on
So rather than us being forced to have a disadvantage
because our operators both have to pay our tax and the State
tax, something which they don't have to do off the reservation,
we need to work with the States to come up with solutions as to
how to resolve these issues, not to force us to have to have
taxation on the reservation.
The Tribe paid, in State taxes, three quarters of a million
dollars. And that is what the Tribe paid, that is in payroll
and cigarette taxes. We also have some fee lands where we pay
property taxes. So we give a benefit to the State and we feel
like we don't receive enough benefit back. And we can't tax
operations that happen on the State, and we don't think they
should be able to tax operations that happen on the
reservation. And by working together, I think we can continue
to see this benefit.
About a year and a half ago, two years ago, the Tribe had a
meeting with the local governments in Montezuma County. It was
the first time we had ever had that meeting. Out of that came
an economic development association, which is working with the
Tribe and the communities off the reservation. And we are
seeing some benefit now. We are starting to see that the area
is becoming more attractive and that we can work together to
bring economic development to the Indians and the non-Indians.
So thank you for this opportunity today. These topics you
are addressing are very important and I appreciate the hard
work that you do. Thank you.
[The prepared statement of Mr. Ortego follows:]
Prepared Statement of Peter Ortego, General Counsel, Ute Mountain Ute
Mr. Chairman and Committee members, thank you for the opportunity
to testify in regards to state and federal taxation in Indian country
and its effects on tribal economic development. My name is Peter Ortego
and I am the General Counsel for the Ute Mountain Ute Tribe. I reside
in Lewis, Colorado, about thirty miles North of Towaoc, Colorado, the
governmental seat for the Tribe. My testimony today is limited to the
facts and circumstances as they relate to the Ute Mountain Ute Tribe,
as this is where my experience lies, but I believe there are sufficient
similarities between tribes so that these comments could apply to
The Ute Mountain Ute Reservation consists of over 500,000 acres
located in Colorado, Utah, and New Mexico. The Tribe has just over
2,000 members, most of whom reside on the Reservation either in Towaoc,
Colorado, or White Mesa, Utah. No person resides within the New Mexico
portion of the Reservation.
According to the United States Census for 2000, the average annual
income of an adult living on the Reservation was $8,159. By comparison,
income for residents of San Juan County, New Mexico, where the New
Mexico portion of the Reservation is located was $14,282 and $17,261
for residents of the State of New Mexico. Income for residents of
Montezuma County, Colorado, where Towaoc is located, was $17,003 and
$24,049 for residents of the State of Colorado.
The Tribe distributes $2,000 per year to each Tribal member
(slightly more for elders). The distributions are made out of funds
generated from oil and gas royalty and tax revenues. Additional
financial benefits are paid to Tribal members under the general welfare
doctrine. No gaming revenues are distributed to Tribal members on a per
capita basis and all funds derived from economic development activities
are used for governmental purposes and to defray the costs of
The Tribe has obtained funds from the settlement of water claims
and uses these funds for economic development and resource enhancement.
One fund is specifically restricted to economic development and the
other is restricted to resource enhancement. The Tribe currently uses
interest earned from the economic development fund for its economic
development projects and has never spent any portion of the principal,
to the best of my knowledge.
The Tribe is engaged in numerous economic activities. The Tribe has
a casino and hotel, a construction company, a farm and ranch
enterprise, a pottery store, a guided tour service, and two travel
centers. The Tribe also earns significant revenue from oil and gas
operations in both Colorado and New Mexico. The Tribe is venturing into
renewable energy and has several commercial scale projects under
review, including a closed loop pump back storage project that is
currently pursuing a FERC permit.
The Tribe is the largest employer in Montezuma County and owns
several ranches in the State of Colorado. The Tribe asserts Indian
preference in employment, provides free employment training to its
members, and provides financial literacy education to employees and
The Tribe does not impose very many taxes; there is a severance tax
and possessory interest tax imposed on oil and gas extraction, and
there is a hotel tax that is charged to patrons of the hotel. The Tribe
imposes fees for some services provided to its members, and charges
non-members for access permits, rights-of-way, and leases over trust
and non-trust properties.
The Tribe pays numerous state and federal taxes, as well. The Tribe
pays state fuel, excise, cigarette, property, and employment taxes and
federal excise and employment taxes. The Tribe also pays for
unemployment insurance and workman's compensation insurance.
In fiscal year 2011, the Tribe's travel centers paid $561,570 in
federal fuel-related taxes and $588,626 in state fuel-related taxes
(Utah and Colorado). The Tribe's travel centers and casino paid $67,895
in state cigarette taxes.
I believe one of the best ways to understand and appreciate the
impact of state taxes on Tribal economic development is to review the
lawsuit that the Tribe filed in federal court in 2009 against the
Treasurer for the State of New Mexico alleging that the state has no
authority to collect taxes and impose regulations on oil and gas
activities that occur within the boundaries of the Reservation. The
basis of the Tribe's claim is that the taxes impose a significant
economic burden on the Tribe, and, in light of the fact that the Tribe
and its members receive no direct services from the state of New Mexico
on the Reservation, the state has no justification to impose the taxes.
The Tribe was successful in the District Court and received a
judgment in its favor. (See Ute Mountain Ute Tribe v. Homans, 775
F.Supp.2d 1259 (D.N.M. 2009).) The District Court made specific
findings that were uncontested by the state and concluded that the
services provided by the state to the Tribe and its members are de
minimus and that the imposition of the taxes creates an economic burden
to the Tribe. The Court found that in 2007, the total revenue earned by
the Tribe was $16,052,092 with $4,426,741 being distributed to Tribal
members on a per capita basis generated from oil and gas taxes and
royalties, primarily from the New Mexico portion of the Reservation.
Notably, in the same year, according to the Court's estimates, the
state received approximately more than $1,300,000 in revenues from
taxes imposed on onReservation oil and gas activities.
In 1992, the Ute Mountain Ute Tribal Council passed a resolution
stating that if state taxes imposed on oil and gas activities within
the Reservation were reduced or eliminated, then the Tribal taxes
imposed on the same activities would be increased by the amount that
the state taxes were reduced. In 2007, this would have resulted in an
increase in Tribal oil and gas revenues of approximately $1,300,000.
This would mean that $650 could be distributed per capita to each
Tribal member, increasing the average income of Tribal members by 8
percent using 2000 Census income levels. The District Court found that
if the state taxes were reduced or eliminated, the Tribe could exercise
one of several alternatives, including amending the 1992 resolution to
impose a lesser tax or no tax at all, and the result would be that oil
and gas production on the Reservation would be more attractive to
potential operators than it is with the burden of the state taxes.
The State of New Mexico appealed the decision of the District Court
to the Tenth Circuit Court of Appeals. Unfortunately for the Tribe, the
Tenth Circuit did not agree with the findings of the District Court and
reversed the ruling. (See Ute Mountain Ute Tribe v. Rodriguez, 660 F.3d
1177 (N.M. 2011 ).) The Tenth Circuit found that the District Court was
wrong to find that the taxes created an economic burden to the Tribe
because the Tribe did not subsume the cost of the taxes by reimbursing
the operators for the tax. Also, the Tenth Circuit found that off-
reservation services provided by the state--such as roads and
processing facilities--were sufficient to justify the on-Reservation
taxes, even though the state already imposes separate taxes on oil and
gas operators for those off-reservation services. Finally, and the most
problematic for the Tribe, is that, under the Tenth Circuit holdings,
the only way for the Tribe to conduct oil and gas activities on its
Reservation without the burden of state taxes being imposed on its non-
Indian operators is for the Tribe to provide all services related to
the production, regulation, and processing of oil and gas extracted
from the Reservation. Although the Tribe may someday be able to provide
such extensive services, it cannot do so now and the continued
imposition of the state taxes hinder the Tribe's ability to do so in
Another significant issue for the Tribe is that we do not see a
benefit from the taxes that are collected by the states. In Colorado,
for instance, revenues acquired by the state from taxation of on-
Reservation oil and gas activities are deposited into various funds,
some of which are specifically designated for use in Montezuma County.
None of the revenues serve the Tribe directly and we see no benefit
from the taxes collected.
Similarly, the Tribe pays state property taxes for some of its
ranches in Colorado which are held in fee and restricted fee, and yet
we have a very difficult time obtaining services for these ranches that
would be available to any other tax payer, such as law enforcement.
Taxation also carries with it an implied right to regulate through
audits and other regulatory functions. Tribes are experiencing a high
number of audits from the Internal Revenue Service based upon the
tribes' obligations to pay certain federal employment taxes. The states
of Colorado and Utah assert the right to inspect the Tribe's
underground fuel storage tanks and to impose sanctions if the tanks are
not properly maintained.
Finally, everything the Tribal government does is for the purpose
of helping its members and its employees. State and federal taxation
hinders the Tribe's ability to act in promotion of these interests. If
the Tribe desires to impose a tax or a fee in order to defray its costs
and the activity is already taxed by the state or the United States,
then the contactors paying the taxes are exposed to higher taxation
then they would experience off the Reservation, thus making
onReservation work much less attractive. When Tribal activities are
unencumbered by state and federal taxation, then the Tribe can best
determine how to receive compensation for the services it provides. In
order to remain competitive and secure contracts for economic
development activities, the Tribe may wish to levy fees and taxes, or
it may not, but at least the Tribe gets to make the determination based
upon what it feels is necessary for its people.
The Ute Mountain Ute Tribe strives for independence. The Tribe is
proud of its heritage and the Ute people have demonstrated strength in
stamina, perseverance, and foresight. There will be a day when the
Tribe can survive on its own, as it did for centuries before European
settlers arrived. The Ute people will not always be dependent upon the
states and the Federal Government for assistance. A day will come when
the Ute Mountain Ute Tribe can stand with its neighbors as an equal,
able to assert its sovereignty for the betterment of all people, but
this day will not come soon enough if the Tribe continues to have to
accommodate the taxation regimes that are imposed on its activities
without its consent.
Thank you, again, for this opportunity. If there is any other
assistance I can provide as you take on this very important work,
please do not hesitate to ask.
The Chairman. Thank you very much, Mr. Ortego, for your
Chairman Leecy, you mentioned that lenders often ask you
for a list of advantages to doing business on the reservation.
Without the accelerated depreciation and employment tax credit,
do you think you would be at a competitive disadvantage?
Mr. Leecy. I think we would be at a disadvantage without
those opportunities and the New Market Tax Credits. I just want
to say that right now we are looking at a biofuels plant, for
instance, on the Bois Forte Reservation, to not only assist our
economy but assist the declining logging industry in northern
Minnesota. We are looking at the possibility of tax cuts for
that. That is an advantage that we could use in designing a
demonstration plant on the Bois Forte Reservation to employ a
lot of people.
So we feel that that is a good advantage for us.
The Chairman. Chairman Leecy, how can Congress improve
existing Federal incentive programs, such as accelerated
depreciation and Indian employment tax credit?
Mr. Leecy. I think right now there is a need to spur
investment in the United States. I think we need to provide
both the corporate and government and have them work together.
One of the ways we can do that, for instance, I am going to use
an example, because it was just discussed the other day with
our planning department, with our Tribal council, is health
care is one, and health care is a matter in the United States,
it is also a matter in Indian Country. We are looking at a new
clinic in the health services building.
We looked at the New Market Tax Credits and we also looked
at the USDA Rural Loan program. We cannot use one and use the
other. If we use the tax credit program, we cannot use the USDA
loan program. I think by putting them together and having them
work together, I think you are going to have more, spur more
development, not only in Indian Country but across the Country,
if government and corporations work hand in hand to make these
The Chairman. Thank you.
Mr. Ortego, you discuss how taxation of Tribal activities
can impact the Tribe's ability to be self-sufficient. How can
we improve the tax scheme to make your Tribe more self-
Mr. Ortego. I think that if we were not encumbered by the
State taxes that are imposed upon us for operations on the
reservation, I think that would free us up a great deal. As
Chairman Leecy has mentioned, there is a benefit to doing work
on the reservation. That resolution I mentioned in 1992 would
allow the Tribe to increase its taxes by the same amount as the
State taxes, but frankly, we don't feel that that would be
appropriate. Because that would still put us at a competitive
disadvantage. It is up to the tribes to figure out what those
taxes should be.
So to be blunt, Mr. Chairman, if the tribes are not under
the regime of State taxation, then I think that would free us
up a great deal in economic development and the ability to
attract people to come onto the reservation and work with us
would be greatly enhanced. Much of what we do is in
coordination and in cooperation with either other tribes or
non-Tribal entities. And those entities need an incentive to
come onto the reservation as these tax credits do. But the
State taxation pushes them away and makes them decide to do
their work off the reservation.
So I think literally eliminating the ability of a State to
tax a Tribe would be an incredible gift to the tribes. And it
would free us up to truly exercise our sovereignty and do it in
a way that we feel is best for our people and our community and
the surrounding area.
The Chairman. Mr. Ortego, please describe some of the
issues created by IRS's interpretation of essential government
function. What can be done to remedy this situation?
Mr. Ortego. The Internal Revenue Service is essentially
going, in my opinion, the Tribal casinos are a target. It
appears as if casinos under these IRS regulations and other
large, successful Tribal operations are going to lose their
immunity from suit, for activities that they do on the
reservation, they are going to come under the jurisdiction of
courts that are not under the Tribe's consent.
If Tribal enterprises are parts of the Tribal government,
as ours are, they serve a governmental purpose. Every dollar
that is made at our casino goes to help the people. It doesn't
go into any individual's pocket to make them wealthy. We wish
we could make all the Tribal members wealthy, but we can't. But
we use that money to pay for the administration and we use that
money to help the Tribe run the Tribal government.
If the IRS continues to treat our casinos as if they don't
share that purpose, they aren't part of that, then they are
going to be subject to State laws, they are going to be subject
to a whole realm of jurisdictions that are beyond the Tribe.
Every other enterprise that we have on the reservation shares
in the government's sovereign immunity. And it is a part of the
Tribal government. The IRS is pulling that away, and it is now
making it so that our casino has to operate just as if it was
off the reservation. It no longer gets the benefit of being a
Tribal operation. It is now simply a corporation within the
I think that is where we are headed with these IRS
regulations. We are not in favor of that at all. We think that
is a real, its impact on the Tribe is such that we cannot
provide services to our members and to the community the way we
would like to. The end result is that our casino is going to be
a corporation like any other, off the reservation or on the
reservation, and the protections that we can give it will no
The Chairman. Thank you very much.
Senator Udall, your questions.
Senator Udall. Thank you, Chairman Akaka. I think that the
testimony has been very good in answer to the Chairman's
One of the things, Mr. Ortego, you mentioned, is this whole
issue of dual taxation, which we know is a problem. Because you
have business entities and others that want to go on the
reservation and when they see double taxation, they see that
there isn't the incentive to locate there. I think you have hit
on one of the things that New Mexico has tried to do, maybe not
well enough, but to coordinate and cooperate and work with the
Tribe and try to, in particular areas, alleviate that double
taxation. I think you have made some good suggestions.
Aside from the double taxation issue, what type of tax
credit would you create to spur job creation in Indian Country,
and are there industries that we aren't reaching, with the
programs mentioned today, that you believe we should be
Mr. Ortego. I feel a little uninformed about the tax
credits, so if you don't mind, the example I can use is one
entity we have right now who is taking advantage of renewable
energy tax credits. And that has been extremely helpful. The
problem with that situation, however, is that we cannot take an
ownership interest in the project. It has to be owned by the
entity that can take advantage of the tax. Tribes are not able
to take advantage of that tax credit, because we don't pay
So if there can be a way for tribes to have ownership
interest in the projects and also the entities that work with
the tribes, if they can also take advantage of the credit, even
though they may not be a full or even a 50 percent owner in the
project, that would be very helpful.
Senator Udall. That area I think is one we ought to take a
look at. I think that is a very good suggestion.
Chairman Leecy, on the New Market Tax Credit, you heard the
question I asked him, do you think there are other areas we
should be targeting where we are not hitting particular
businesses that could come in and do business in Indian
Mr. Leecy. Thank you, Mr. Udall. I agree totally with Mr.
Ortego, and that would have been my response, is renewable
energy and the ability to utilize New Market Tax Credits in
that area for the benefit of the Tribe itself. That has been a
struggle. I think not only renewable energy resources but
emerging markets, such as that and this biofuels, this bio-oil,
renewable, I think those are all new markets that Indian
Country would be favorable. Because most of them, where they
are located, they do have resources. But there is really no
funding to extract some of the natural resources. So that would
be my answer to assist in that area.
Senator Udall. Those are, I think, good areas for us to
look into. Chairman Leecy, you mentioned that, as I said in my
opening statement, that the New Markets Tax Credit was working
in New Mexico. You mentioned examples of it working that you
knew of. Could you give us a concrete example of how that has
worked and what type of business or enterprise was fostered as
a result of that?
Mr. Leecy. We have done a number of tax credit, one is 60-
unit housing, number one. Number two is an additional 60-unit
housing. We have built a government center with New Market Tax
Credit, which we couldn't have done, which houses the Tribe's
government programs and services. It is essential. It has
worked for us, and I have been to Montana to participate in the
Montana economic development and explain the advantages of the
New Market Tax Credit that we have.
We have also invited other tribes into Bois Forte to show
exactly how the New Market Tax Credit has worked for us.
Everyone we have spoken to has utilized that and built
something for themselves. But it is kind of financially, it is
financially easy to do and there are some hurdles to go
through, but it is well worth it.
Senator Udall. Thank you. Thank you both for your testimony
today. I really appreciate it.
The Chairman. Thank you very much, Senator Udall, for your
I want to thank Chairman Leecy and Mr. Ortego for your
participation in our hearing and providing us with what you
have done with your Tribe to improve the situation there. Our
big hope, of course, is that other tribes in other places will
be able to use and even take advantage of some of these that
are already in place and hearing it from other tribes may help
So I thank you very much and I hope you continue to be with
us in terms of keeping us apprised of how things are going. And
if you find a better way of doing what you are doing in helping
the tribes, we should also help other tribes as well. So I
thank you very much for your participating here. Thank you.
And now I would like to call on the second panel, Professor
Steven Gunn, Adjunct Professor of Law at the Washington
University School of Law. Professor Gunn, it is good to have
you. Thank you very much for being here. Will you please
proceed with your testimony?
STATEMENT OF STEVEN J. GUNN, ATTORNEY/PROFESSOR OF LAW
(ADJUNCT), WASHINGTON UNIVERSITY IN ST. LOUIS
Mr. Gunn. Mr. Chairman, thank you for the opportunity to
comment on the important issue of overlapping and conflicting
Tribal and State tax jurisdiction claims in Indian Country.
American Indian tribes are self-governing political
communities, with attributes of sovereignty over both their
members and their territories. The power to tax is an essential
attribute of Indian sovereignty. It enables tribes to raise
revenue to build strong institutions of Tribal government and
to operate essential programs and services.
Strong Tribal governments and programs fuel economic
development by providing the institutional and legal framework,
physical infrastructure and human capital necessary for Tribal
economic development. Indian tribes have a government to
government relationship with the United States. But they are
not subordinate to or dependent on the States. In the area of
taxation, the Supreme Court has adopted a categorical rule.
States may not tax Indian tribes or their members, absent
The rationale behind that rule is simple and centuries old.
As Chief Justice Marshall reminded us in McCulloch v. Maryland,
the power to tax involves the power to destroy. If permitted,
States taxation of Indian tribes and their members would
essentially destroy tribes by depriving them of their revenue
and their tax base. And the courts have been vigilant in
striking down State taxes directly imposed on tribes and Tribal
State taxation of non-members in Indian Country is another
matter. Such taxation is not categorically barred; instead, it
is preempted if it interferes with or is incompatible with
Federal and Tribal interests. The preemption analysis is
flexible and requires a case by case balancing of Federal,
Tribal and State interests. Applying this analysis, courts have
struck down some State taxes on non-members, while upholding
The lack of a bright line rule creates uncertainty and this
has caused some non-Indian investors to avoid participating in
When State taxation of non-members is permitted, it imposes
significant burdens on tribes. First, it infringes on the
Tribal tax base. Under existing Federal law, tribes can tax
non-members and non-member businesses that engage in commercial
dealings and whose activities take place on trust lands. A
Tribe's ability to tax non-members in these circumstances is
essential. Yet that ability is impaired when States and even
local governments assert overlapping claims to tax the same
The resulting double or triple taxation is often more than
Tribal markets can bear and tribes may be forced to lower their
tax rates or eschew Tribal taxation altogether. This has the
potential to deprive tribes of millions of dollars in tax
Second, State taxation of non-member businesses raises the
cost of goods and services available to tribes and their
members. Although the legal incidence of such taxes falls on
the non-Indian business, the economic burden is passed on to
Tribal consumers, and for tribes, this can raise the cost of
economic development projects involving non-member contractors
Finally, State taxation of sales to non-member consumers
has the effect of raising the price of goods and services they
buy on-reservation. This creates a competitive disadvantage for
Tribal businesses who market their goods and services to non-
members. Such non-members are likely to go off-reservation
instead of paying double or triple taxes on the reservation.
Some Indian tribes and States have responded to these
problems by reaching cooperative agreements regarding the
collection of various taxes. In fact, over 200 tribes have
entered into tax collection compacts with States. A common
approach involves joint collection of Tribal and State taxes
with revenue sharing between the governments.
These agreements provide predictability and steady revenue
streams for tribes and States. However, the process is not
without its limitations. From the Tribal perspective, revenue
sharing of any kind deprives tribes of tax dollars generated by
on-reservation activity. Preemption of State taxation of non-
member activity would better preserve Tribal tax bases.
The Federal Government can address these issues in a number
of ways, two of which I will mention here. First, Congress can
reaffirm the inherent authority of Indian tribes to tax all
transactions in Indian Country, including non-member
transactions. Such authority is essential to defray the cost of
providing Tribal services to those who pass through their
Second, Congress can provide clarity on the scope of
permissible State tax authority over non-members. Specifically,
Congress can establish bright line rules preempting State
taxation in areas where that taxation would undermine Tribal
economic development. Definitive guidance from Congress would
remove uncertainty, and to the extent State taxes were
preempted, it would preserve the Tribal tax base from State
I thank you again for the opportunity to appear before you
and to comment on these important issues.
[The prepared statement of Mr. Gunn follows:]
Prepared Statement of Steven J. Gunn, Attorney/Professor of Law
(Adjunct), Washington University in St. Louis
Mr. Chairman, Mr. Vice Chairman, and distinguished Members of the
Committee, thank you for the opportunity to appear before you today and
to comment on the important issue of tribal and state taxation in
Indian country. I will divide my comments into four areas: first, I
will address the important role tribal taxation plays in promoting
economic development in Indian country; second, I will examine the
burden state and local taxation places on Indian tribes and their
efforts to develop their reservation economies, and the jurisdictional
conflicts such taxation engenders; third, I will share insights about
the cooperative approaches some tribes and states have taken to work
coordinate their respective taxes in Indian country; and finally, I
will suggest some ways in which the Federal Government can help shape a
tax policy for Indian country that will maximize tribal self-government
and economic development.
1. Tribal Taxation Plays an Essential Role in Promoting Tribal Self-
Government and Economic Development in Indian Country
American Indian tribes are ``self-governing political communities
that were formed long before Europeans first settled in North
America.'' \1\ Although they accepted the protection of the United
States through treaties, \2\ Indian tribes retain the sovereign status
of ``domestic dependent nations,'' \3\ and continue to ```possess
attributes of sovereignty over both their members and their
\1\ Nat'l Farmers Union Ins. Co. v. Crow Tribe of Indians, 471 U.S.
845, 851 (1985).
\2\ See, e.g., Treaty with the Teton, 1815, Art. 3 (7 Stat. 125).
\3\ Oklahoma Tax Comm'n v. Potawatomi, 498 U.S. 505, 509 (1991).
Accord, Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831).
\4\ Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 140 (1982),
quoting United States v. Mazurie, 419 U.S. 544, 557 (1975). Accord,
Worcester v. Georgia, 31 U.S. (6 Pet.) 515, 557 (1832).
The power to tax has long been recognized as an ``essential
attribute of Indian sovereignty.'' \5\ All three branches of the
Federal Government recognize that this power is ``an essential
instrument of [tribal] self-government and territorial management.''
\6\ The power to tax ``enables a tribal government to raise revenues
for its essential services.'' \7\ The power derives from ``the tribe's
general authority, as sovereign, to control economic activity within
its jurisdiction, and to defray the cost of providing governmental
services by requiring contributions from persons or enterprises engaged
in economic activities within that jurisdiction.'' \8\
\5\ Merrion, 455 U.S. at 139.
\6\ Id. (citing Washington v. Confederated Tribes of Colville
Reservation, 447 U.S. 134, 153 (1980)).
\7\ Id. at 137.
Indian tribes have primary responsibility for meeting the basic
needs of their tribal members and other individuals who reside on or
who do business on their reservations. Meeting these needs requires
strong, well-funded tribal governments and strong, well-funded tribal
programs and services. Tribal taxation provides an essential source of
revenue for the operation of tribal governments and tribal programs.
Strong tribal governments and tribal programs, in turn, fuel
economic development in Indian country. Among other things, tribal
legislatures, agencies, and courts provide the governmental and legal
framework necessary for economic development. Tribal programs pay for
the construction and maintenance of reservation roads, bridges,
utilities, and other facilities that provide the physical
infrastructure necessary for economic growth. Tribal education and job
training programs build human capital, and tribally owned economic
enterprises create jobs and revenue streams for Indian tribes. Without
tribal tax revenue, these government institutions and programs could
2. State and Local Taxation in Indian Country Undermines Tribal Self-
Government and Economic Development
Indian tribes have a government-to-government relationship with the
United States, \9\ but they are in no way ``dependent on'' or
``subordinate to'' the states. \10\ As a general rule, reservation
Indians are subject only to federal and tribal law, not state law. \11\
This is especially true in the area of taxation:
\9\ See, e.g., 25 U.S.C. 3601(1), 3701(1); Executive Order
13175, 65 F.R. 67249 (Nov. 9, 2000); Executive Memorandum, 59 Fed. Reg.
22951 (April 29, 1994).
\10\ Colville, 447 U.S. at 154.
\11\T3AWilliams v. Lee, 358 U.S. 217 (1959).
The Constitution vests the Federal Government with exclusive
authority over relations with Indian tribes . . . and in
recognition of the sovereignty retained by Indian tribes even
after the formation of the United States, Indian tribes and
individuals generally are exempt from state taxation within
their own territories. \12\
\12\ Montana v. Blackfeet Tribe, 471 U.S. 761, 764 (1985)
In McCulloch v. Maryland, Chief Justice John Marshall reminded us
that, ``the power to tax involves the power to destroy.'' \13\ The
Supreme Court has long recognized that, if permitted, state taxation of
Indian tribes and their members would ``essentially destroy'' tribes
by depriving them of their tax base. \14\ Thus, ```[i]n the special
area of state taxation of Indian tribes and tribal members,''' the
Supreme Court has adopted ```a per se rule:''' \15\ ```such taxation is
not permissible absent congressional consent.''' \16\
\13\ 17 U.S. (4 Wheat.) 316, 431 (1819).
\14\ Bryan v. Itasca County, 426 U.S. 373, 388-89, n.14 (1976).
\15\ County of Yakima v. Confederated Tribes and Bands of Yakima
Nation, 502 U.S. 251, 267 (1992) (quoting California v. Cabazon Band of
Mission Indians, 480 U.S. 202, 215 n.17 (1987)).
\16\ Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148 (1973)
(quoting McClanahan v. Arizona Tax Comm'n, 411 U.S. 164, 171 (1973).
''Taking this categorical approach, [the Supreme Court has] held
unenforceable a number of state taxes whose legal incidence rested on a
tribe or on tribal members inside Indian country,'' \17\ including:
income taxes, \18\ real property taxes, \19\ personal property taxes,
\20\ sales taxes, \21\ transaction taxes, \22\ vendor taxes, \23\ use
taxes, \24\ mineral royalty taxes, \25\ and hunting and fishing license
\17\ Oklahoma Tax Comm'n v. Chickasaw Nation, 515 U.S. 450, 458
\18\ McClanahan, 411 U.S. at 165-81; Oklahoma Tax Comm'n v. Sac and
Fox Nation, 508 U.S. 114, 123-126 (1993).
\19\ United States v. Rickert, 188 U.S. 432 (1903); The New York
Indians, 72 U.S. (5 Wall.) 761 (1866); The Kansas Indians, 72 U.S. (5
Wall.) 737 (1866).
\20\ See, e.g., Bryan, 426 U.S. at 375; Moe v. Confederated Salish
and Kootenai Tribes of Flathead Reservation, 425 U.S. 463, 480-81
(1976) (motor vehicle tax); Colville, 447 U.S. at 163 (same); Sac and
Fox, 508 U.S. at 127-28 (same).
\21\ Moe, 425 U.S. at 475-481, Potawatomi, 498 U.S. at 507; Dep't
of Taxation and Finance of New York v. Attea & Bros., 512 U.S. 61, 64
\22\ County of Yakima, 502 U.S. at 268.
\23\ Chickasaw Nation, 515 U.S. at 459-62; Moe, 425 U.S. at 480-81.
\24\ Mescalero Apache Tribe, 411 U.S. at 158.
\25\ Montana v. Blackfeet Tribe, 471 U.S. at 764-66.
\26\ Menominee Tribe v. United States, 391 U.S. 404 (1968); Tulee
v. Washington, 315 U.S. 681 (1942).
State taxation of nonmembers in Indian country is not categorically
barred. Instead, the courts apply a ``flexible preemption analysis
sensitive to the particular facts and legislation involved.'' \27\
According to the Court, such taxation is prohibited if it infringes on
tribal selfgovernment or if it is preempted by federal law. \28\ State
taxation of nonmembers is preempted if it interferes with or is
incompatible with federal and tribal interests, as reflected in federal
law, unless there are sufficient countervailing state interests to
justify the assertion of state authority.
\27\ Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 176
\28\ Mescalero Apache Tribe, 411 U.S. at 148.
The preemption analysis requires a particularized balancing of
federal, tribal, and state interests and, thus, is inherently less
predictable than the per se rule barring all state taxation of tribes
and tribal members. Applying the balancing test, the courts have struck
down certain state taxes on nonmembers in Indian country and upheld
others. For example, in Ramah Navajo School Board, Inc. v. Bureau of
the Supreme Court found that the state could not tax the gross
receipts that a non-Indian construction company received from a
tribal school board for construction of a school on the
reservation. The Court found the federal regulation of
construction and financing of Indian schools to be . . .
comprehensive . . . Federal statutes also reflected an
``express federal policy of encouraging tribal
selfsufficiency'' in education. In terms of the tribal
interests, the tribal school board absorbed the economic impact
of the tax, which could affect its ability to provide education
for Indian children. And the state provided no services to
either the Indian school children or the non-Indian taxpayer
for its activity on the reservation. \29\
\29\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.03 (2005)
(discussing Ramah Navajo School Board, Inc. v. Bureau of Revenue, 458
U.S. 832 (1982)) (internal citations omitted).
The courts have struck down other state taxes on nonmembers in
Indian country, including state taxes on nonmember retailers' sales to
tribes and tribal members. \30\ However, the courts have upheld state
taxes on cigarette sales to nonmembers, \31\ state severance taxes on
oil and gas produced by nonmembers in Indian country, \32\ and a number
of other ``state taxes on non-Indians doing business in Indian
\30\ Warren Trading Post v. Ariz. State Tax Comm'n, 380 U.S. 685
(1965); Central Machinery Co. v. Ariz. State Tax Comm'n, 448 U.S. 160
(1980). See also, COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.03
\31\ See, Colville, 447 U.S. at 156-157.
\32\ Cotton Petroleum, 490 U.S. at 187.
\33\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.03 (collecting
lower court cases).
The Court's case-by-case approach has created uncertainty for
tribes, states, and nonmembers seeking to do business in Indian
country. It is difficult to determine ex ante whether a state will have
jurisdiction to tax a given nonmember transaction in Indian country.
This uncertainty makes it difficult for nonmembers to evaluate the
total cost of doing business in Indian country, and it may cause some
nonmembers to avoid investing in Indian country altogether.
State and local taxation of nonmembers in Indian country imposes
significant economic burdens on Indian tribes, and it has the potential
to undermine tribal self-government and tribal economic development.
This is true for several reasons:
First and foremost, state and local taxation of nonmembers in
Indian country infringes on the tribal tax base. Under existing federal
law, an Indian tribe can tax nonmembers who engage in commercial
dealings with the tribe or its members. \34\ (This includes nonmember
businesses that provide goods and services to the tribe or its members,
and nonmember consumers who purchase goods and services from tribal
businesses.) A tribe's ability to tax nonmember transactions, however,
is severely impaired when state and local governments assert
concurrent, or overlapping, jurisdiction to tax the same transactions.
The resulting double or triple taxation is often more than tribal
markets can bear, and tribes may be forced to lower their tax rates or
to eschew collection of their taxes altogether on nonmember
transactions. This has tremendous consequences for tribes, depriving
them of millions of dollars in tax revenue on activities occurring
within their jurisdictions.
\34\ See, Montana v. United States, 450 U.S. 544, 565-566 (1981).
Second, state and local taxation of nonmember businesses in Indian
country raises the cost of the goods and services those businesses
provide to Indian tribes and their members. Whenever possible,
nonmember businesses, like all others, pass the financial burden of the
state and local taxes on to their tribal customers in the form of
higher prices. This burdens tribal members by raising the cost of the
ordinary, day-to-day good and services they purchase from on-
reservation, nonmember businesses. It also burdens the economic
development initiatives of tribal governments and tribally owned
businesses by raising the cost of construction, management, and other
essential services they purchase from nonmember contractors and
businesses. The impacts can be significant, especially on multi-million
dollar tribal economic development projects, where the imposition of
state and local taxes can add tens or hundreds of thousands of dollars
to the cost of the project.
Third, if market conditions prevent nonmember businesses from
passing the financial burden of state and local taxes on to their
customers, the businesses may be forced to relocate off-reservation. In
this way, double or triple taxation of nonmember businesses in Indian
country creates a disincentive to investment in Indian country and
reduces the supply of goods and services available to Indian tribes and
Fourth, state and local taxation of nonmember consumers in Indian
country has the effect of raising the price of goods and services sold
to those consumers by tribal businesses. Imposing these taxes in
addition to tribal taxes creates a competitive disadvantage for on-
reservation tribal businesses in relation to their off-reservation
counterparts. Nonmember consumers will have an incentive to purchase
goods and services off-reservation, to avoid paying double or triple
Finally, allowing states and local governments to tax on-
reservation nonmember consumers eliminates the ability of Indian tribes
to attract nonmember business by marketing tribal tax rates that are
lower than corresponding state and local rates. State and local
governments have the power to adjust their tax rates to gain
competitive advantages in relation to neighboring jurisdictions, and
there appears to be no principled reason why tribes should not share in
that power, especially when the value of the goods and services they
offer is generated on the reservation, or when the goods and services
will be consumed on the reservation.
In sum, overlapping claims of tribal, state, and local tax
authority over nonmembers in Indian country hinders tribal self-
government and economic development in a number of ways. It allows
states and local governments to infringe on the tribal tax base; it
raises the cost of goods and services sold by nonmembers to tribes and
their members; it discourages nonmember investment in Indian country;
it creates tax disadvantages for tribal businesses that sell goods and
services to nonmembers; and it eliminates the ability of tribes to
attract nonmember business by marketing lower tax rates.
3. Many Tribes and States Have Entered Cooperative Agreements to
Address the Problems Created by Multiple Taxation in Indian
Indian tribes and states have incentives to reach cooperative
agreements regarding the collection of tribal, state, and local taxes
in Indian country. As has been shown, there is uncertainty in existing
federal law over the precise extent of state and local taxing authority
over nonmembers in Indian country. This creates the potential for
expensive and protracted litigation. Further, when state and local
taxation of nonmembers is permitted, it creates the potential for
double or triple taxation, which imposes hardships on nonmembers and
tribes. Some have suggested that, ``it is in the economic interests of
states and tribes to determine the maximum tax burden that a taxpayer
will bear before abandoning the taxable activity entirely.'' \35\
Finally, ``[t]he fact that states can tax non-Indians and nonmembers in
Indian country under certain circumstances, but cannot tax tribal
members, also presents states and tribes with challenging record-
keeping problems.'' \36\
\35\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.05 (2005).
To address these problems, tribes and states have entered
cooperative agreements and enacted laws to allocate tax authority and
coordinate tax collection in Indian country:
In the face of potentially overlapping or conflicting
jurisdictional claims, tribal-state cooperative agreements
offer both sets of governments the opportunity to coordinate
the exercise of authority, share resources, reduce
administrative costs, deliver services in more efficient and
culturally appropriate ways, address future contingencies, and
save costs of litigation. They also enable governments to craft
legal arrangements reflecting the particular circumstances of
individual Indian nations, rather than relying on uniform
national rules. Insofar as cooperative agreements create a
stable legal environment conducive to economic development,
they may appeal to the common interests of tribes and states.
\37\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 6.05. See also,
David H. Getches, Negotiated Sovereignty: Intergovernmental Agreements
with American Indian Tribes as Models for Expanding First Nations Self-
Government, 1 REV. CONST. STUD. 120, 121 (1993).
It has been reported that over 200 tribes have entered into
compacts with states. \38\ These compacts and related laws employ a
variety of approaches, including: ``exempting sales by Indian tribes or
tribal merchants from state taxes, adjusting the state tax rate when a
tribal tax exists so that the total tax does not exceed the state tax
rate, excluding the tribal tax from the definition of sales or gross
receipts taxable by the state, extending credits to taxpayers liable
for state and tribal taxes, and authorizing agreements or compacts for
tribal refunds from state tax revenues.'' \39\
\38\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.05 (citing Tax
Fairness and Tax Base Protection: Hearings on H.R. 1168 Before the
United States House of Representatives Committee on Resources, 105th
Cong. (1998) (Testimony of W. Ron Allen, President, National Congress
of American Indians); Arizona Legislative Council, STARTED: State
Tribal Approaches Regarding Taxation & Economic Development, 81-105
(1995)). See also, Richard J. Ansson, Jr., State Taxation of Non-
Indians Whom Do Business With Indian Tribes: Why Several Recent Ninth
Circuit Holdings Reemphasize the Need for Indian Tribes to Enter Into
Taxation Compacts with Their Respective State, 78 Or. L. Rev. 501, 546
\39\ COHEN'S HANDBOOK OF FEDERAL INDIAN LAW 8.05 (summarizing
various approaches and authorities).
The tax collection agreements in South Dakota provide one example
of cooperative tax collection in Indian country. These agreements
encompass many, but not all, of the state taxes that are imposed in
Indian country, including sales taxes, cigarette taxes, motor vehicle
taxes, and contractor's taxes. Under the agreements, tribes agree to
impose tribal taxes that are uniform with the state taxes. The state
collects all taxes included in the agreements and remits a percentage
to the tribes. The percentage remitted to the tribes is based on the
percentage of their reservation populations that are Indian. (This
percentage is a proxy for the percentage of on-reservation transactions
that would be taxable by the tribes, under existing law.) In most
cases, the great majority of taxes collected are remitted to the
tribes. State collection of uniform tribal and state taxes provides
predictability for taxpayers, eases the ability of the state to collect
the tax, and provides competitive equality for on- and off-reservation
Intergovernmental cooperative agreements, like those employed in
South Dakota, have distinct advantages, including certainty and
predictability in the imposition and collection of taxes in Indian
country. While many agreements require tribes to share tax revenue with
the states, they provide predictable revenue for the tribes and
certainty as to collectability and enforcement of tribal taxes on
These agreements are not without their limitations. From the tribal
perspective, revenue sharing deprives tribes of tax dollars generated
by on-reservation economic activity, including the on-reservation
activity of nonmembers. Preemption of state and local taxation over
nonmember activity would preserve tribal tax bases in a way that many
cooperative agreements do not. Further, to the extent the cooperative
agreements require tribes to impose tax rates equal to the state rates,
they eliminate the ability of tribes to attract nonmember business by
marketing lower tax rates. Finally, tax agreements are not an option
for tribes in states that are unwilling to enter into such agreements.
4. The Federal Government Can Promote Economic Development in Indian
Country by Reaffirming Inherent Tribal Taxing Authority and
Preempting State and Local Taxing Authority
The Federal Government plays a critical role in shaping tribal and
state tax policy in Indian country. The Government is dedicated to
promoting tribal self-government and economic development in Indian
country, and its tax policies for Indian country can help fulfill those
First, Congress can reaffirm the inherent authority of Indian
tribes to tax all transactions in Indian country. As it stands, Indian
tribes have the power to tax their own members, but their authority to
tax nonmembers who reside or do business in Indian country has been
diminished by the Supreme Court. Under existing case law, Indian tribes
have the power to tax nonmembers who engage in commercial dealings with
the tribes or their members, \40\ or whose activities occur on tribal
trust lands, \41\ but they have little inherent power to tax nonmembers
outside these contexts. In Atkinson Trading Co. v. Shirley, the Supreme
Court held that the Navajo Nation could not tax nonmember patrons of an
on-reservation hotel to defray the cost of providing tribal
governmental services available to those patrons, including tribal
police and fire protection and tribal emergency medical services. \42\
This is contrary to principle previously articulated by the Court in
Merrion, that Indian tribes, like other governments, have the inherent
power ``to defray the cost of providing governmental services by
requiring contributions from persons or enterprises engaged in economic
activities within that jurisdiction.'' \43\ Congress can assist tribes
by reaffirming their inherent power to tax all transactions in Indian
country in order to defray the cost of providing government services
throughout Indian country.
\40\ Montana, 450 U.S. at 565-566.
\41\ Merrion, 455 U.S. at 137-140.
\42\ 532 U.S. 645, 654-655 (2001).
\43\ Merrion, 455 U.S. at 137.
Second, the Federal Government--in particular, the Justice
Department--can work with Indian tribes to challenge direct state and
local taxation of tribes and tribal members. Despite the Supreme
Court's clear, categorical bar against such taxation, tribes still face
challenges from states and local governments that seek to impose their
taxes on the property and activities of tribal members in Indian
country. The Federal Government has intervened on behalf of tribes and
their members in the past to challenge such taxes, and to seek
restitution of taxes unlawfully collected, \44\ and it should continue
to do so. (Federal intervention is necessary to overcome state
sovereign immunity and to seek restitution of past taxes.)
\44\ See, e.g., South Dakota v. U.S. ex rel. Cheyenne River Sioux
Tribe, 105 F.3d 1552 (8th Cir.), cert. denied, 522 U.S. 981 (1997), on
remand, 102 F.Supp.2d 1166 (D.S.D. 2000) (striking down state motor
vehicle tax as applied to Sioux tribal members residing on their
Third, it would be most helpful if Congress could provide, by Joint
Resolution or otherwise, clarity on the scope of permissible state and
local taxing authority in Indian country. In particular, Congress could
reaffirm the categorical bar against state and local taxation of tribes
and tribal members. In addition, Congress could establish bright line
rules preempting state and local taxation of nonmembers in areas in
which such taxation would undermine well-settled federal and tribal
interests in promoting tribal self-determination and economic
development in Indian country. Such guidance from Congress would remove
uncertainty for tribes, states, and cities-and for nonmembers seeking
to invest in Indian country. Preemption of state and local taxation
would also preserve the tribal tax base from state and local
interference. As discussed above, the existing federal preemption
doctrine employs a costly, case-by-case approach and is prone to
uncertainty and inconsistent results. It is based on the federal common
law and is susceptible to clarification by Congress. \45\
\45\ United States v. Lara, 541 U.S. 193 (2004).
Finally, Congress could pass legislation to alleviate the burdens
of multiple taxation in Indian country, in cases where state and local
taxes are not preempted. For example, Congress could provide a federal
tax credits for individuals forced to pay overlapping state and tribal
taxes, or it could provide federal incentives for tribes and states to
enter cooperative agreements. In these and other ways, the Federal
Government can help shape a tax policy for Indian country that will
maximize tribal self-government and economic development.
I thank you again for the opportunity to appear before you and to
comment on these important issues.
The Chairman. Thank you very much, Professor Gunn.
In your testimony, Professor, you discuss the importance of
tribes being able to develop their own tax structures to
support the communities, similar to State and local
governments. How does dual taxation of the same goods and
services on Tribal lands prevent this?
Mr. Gunn. States, under existing law, have some authority
to tax the same transactions that tribes can tax. For example,
tribes have authority to tax non-members who engage in
consensual relationships with the Tribe or its members, and in
some cases, Federal law allows dual taxation by the States.
This dual taxation, if permitted, can have deleterious
effect. First, tribes may not be able to impose their taxes to
the full extent, because their reservation markets won't
support double taxation. Non-member businesses can't afford to
pay double; non-member consumers won't pay double. They will
And in these ways, it depresses economic development,
discouraging investment and driving non-member consumers off-
Additionally, any time a State taxes a transaction that is
within the Tribal authority, it deprives the Tribe of that tax
revenue. And in that way, potentially takes hundreds of
thousands or, depending on the amount of revenue, millions of
dollars away from Tribal governments.
The Chairman. Professor, in a recent hearing, the Committee
examined the impacts that potential internet gaming legislation
may have on tribes. One area of particular concern deals with
the taxation of Tribal governments who choose to participate in
internet gaming. In your view, would that type of taxation be
consistent with treatment of tribes in Federal Indian tax
Mr. Gunn. No, it would not. The United States has a treaty-
based government to government relationship with Indian tribes.
The Federal Government historically has not taxed the income of
Tribal governments or tribally-owned corporations or Tribal
gaming enterprises in existing land-based Class 1, 2, and 3
There is no reason to depart from this longstanding Federal
policy in the case of tribally-owned internet gaming
facilities. Under the Indian Gaming Regulatory Act, Tribal
gaming revenues are dedicated to Tribal government programs and
services, Tribal economic development initiatives, among other
uses. The Tribal perspective, as I understand it, is that
Tribal revenue generated by internet gaming facilities, should
remain within the Tribal governments, subject to the same uses.
It should stay in Indian Country. The revenue is generated
there, and it should benefit the Indian people who live there.
Retention of this revenue would further Tribal self-
government and economic development, and those are goals that
the Federal Government has endorsed for decades. These goals
are critical for tribes seeking to improve their economic
condition, including the Sioux Tribes I have represented for
over a decade, many of which are located on the poorest
counties in America.
The Chairman. Thank you. Professor, as someone who has
negotiated many State-Tribal taxation agreements, let me ask,
what do you think are the keys to their successes? Are these
agreements a model for other parts of the Country?
Mr. Gunn. The agreements that I am most familiar with and
have been involved with have been in the State of South Dakota.
And there, by statute, the State is authorized to enter
agreements with tribes to collect certain taxes within Indian
Country. Those agreements are effective in that the State and
the tribes impose corresponding taxes on the same transaction
at the same tax rate. All taxes are collected by the State with
a percentage remitted to the Tribe. The percentage is based on
the population on-reservation of Indians to non-Indians. So in
many cases, the vast majority of revenue collected by the State
is remitted to the tribes, well over three-quarters.
This provides a steady source of revenue for Tribal
governments. It also takes advantage of the efficient State
administrative mechanism for collecting taxes and State
As I said in my testimony, it is not without flaws. Federal
preemption of State taxation of non-Indian activity in Indian
Country would be a bright line fix and would provide the same
kind of clarity and predictability that tax collection
agreements can. It would have the effect of preserving nearly
100 percent of the Tribal tax base for tribes. However, in the
absence of a Federal fix, these agreements are an effective way
for States and tribes to avoid costly litigation, acrimony and
to efficiently collect the maximum amount of Tribal and State
The Chairman. Well, I want to thank you very much for your
views on tax policy that affects the indigenous people, tribes
especially, of our Country. We are looking for ways of trying
to help the tribes across the Country by making good use of
what is available and not being used. So we value your
responses and look forward to continuing to work with you for
future advice as well, when we work on these.
But as we do this, we want to, if need be, to get as far as
legislatively trying to help or administratively trying to help
them. But we want to take advantage of what is there now for
the Indian tribes of our Country and I thank you for adding to
this and look forward to continuing to work with you on this.
I want to thank you very much, and thank you to all of our
witnesses today. It has been very helpful for us to hear from
all of you about the ways that our Federal and State tax
policies can promote or inhibit strong Tribal economic
development. We have heard about several important tax
incentives offered through Federal law that have been used to
attract capital, grow jobs and build economies in Tribal
communities. And we have also heard about some of the
challenges for tribes when States attempt to tax Tribal lands
or enterprises. It is important that we identify tax policy
tools that promote and not harm Tribal economic development.
Again, I want to say thank you for all those who
participated today and I want to remind you that the Committee
record will remain open for two weeks for any other
contributions to the record. It will remain open for two weeks
So again, I thank you very much, and thank you very much,
This hearing is adjourned.
[Whereupon, at 4:33 p.m., the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Cedric Black Eagle, Chairman, Crow Tribe
Thank you for the opportunity to share the views and concerns of
the Crow Nation on Federal tax policy. Given that the Crow Nation's
resources are primarily energy-based, our comments today focus on
Indian energy development.
The Crow Nation's energy resources are abundant- an estimated 3
percent of US coal reserves along with significant oil, natural gas and
wind reserves--and the financial stability of our Tribe is wholly
dependent upon them. As such, the Crow Nation is uniquely positioned to
contribute to the energy independence of our country.
We applaud this Committee's leadership in reviewing ways that tax
policy can help level the playing field for energy, development in
Indian Country and help realize the economic value of such resources
not only to the Tribes that own them, but to the nation as a whole.
Providing tax incentives to create energy jobs in Indian Country
will help overcome other obstacles to energy project development, and
will build additional national capacity to create even more jobs in the
national economy. This is an opportunity that cannot be missed.
Energy Opportunities and Obstacles
There is an estimated (some believe conservatively so) 9 billion
tons of coal held by the Crow Nation. The Absaloka mine outside of
Hardin, Montana produces 6 million tons of Crow coal annually; over 175
millions of tons since 1974. The mine annually pays taxes and royalties
to the Crow Nation totaling $19 million, which is 60 percent of our
non-Federal budget. The mine provides skilled jobs that pay $16
million; again critical in our economy which struggles with nearly 50
percent unemployment. As a source of jobs, critical financial support,
and U.S. produced energy, it is absolutely critical that it remain open
A recent outage at Absaloka's largest coal customer's power plant
will hurt jobs and revenues in 2012, and emphasizes the need for
multiple energy projects to diversify our revenue sources.
To that end, we have been developing Many Stars, a planned Coal to
Liquid mine and production facility. The original plans are for a state
of the art clean coal facility that will be capable of producing up to
50,000 barrels or more of liquid products per day ultimately_ultra-
clean liquid fuel capable of replacing oil for jet and diesel fuel,
which translates to a significant reduction in the need for importing
foreign oil, which in turn contributes to national security. It was
anticipated that Many Stars, as designed, would create many jobs--up to
2,000 construction jobs and a range of 250 to 900 production jobs
dependent on through-put. And with full carbon capture and
sequestration, Many Stars seems to be the best way to monetize the
Tribe's vast coal resources in the long run while not contributing to
the climate change problem.
But uncertainty about national energy policy has made it difficult
to attract investment for this cutting edge project. Regulatory
uncertainty combined with expiring tax provisions make future planning
quite difficult. Fortunately, technology improvements have made a
smaller scale facility possible. We are cutTently working to bring in a
new developer and starting on a smaller scale (8,000 barrels per day),
which is now more feasible due to technology improvements.
In addition to Absaloka and Many Stars, there is a potential for
additional development of very low-sulfur coal on the Reservation that
is dependent on rail access to the west coast. This option is
complicated by some cost disadvantage and additional BIA regulatory
hurdles, as compared to nearby Federal coal.
Oil and Gas
Recent oil and gas exploration has found reserves worth developing,
but activity has been hampered by the markets and the Bureau of Land
Management's Application for Permit to Drill (APD) fees of which the
Committee is aware.
Several years-worth of wind data indicates a steady and reliable
Class 5/6 wind resource in several areas of the Reservation located in
direct proximity to existing transmission lines. Because the wind
resource areas encompass lands held in a variety of ownership patterns,
including tribal trust, individual tribal member allotments (many of
which are highly fractionated), and non-Indian fee lands, developing
this resource will be a challenge.
The recent Crow Water Rights Settlement Act of 2010 grants the
Nation exclusive rights to develop and market hydropower from the
Yellowtail Afterbay Dam. Preliminary planning and feasibility studies
are underway. To date, the plan is to build a small, low-head
hydropower facility with an estimated capacity of 10-15 Megawatts to
supply the local rural cooperatives that provide electric power to the
Leveling the Playing Field for Indian Energy Projects
The lease approval process is needlessly burdensome, excessively
slow, and inaccurate. BIA requirements for surface access approvals to
conduct exploration, along with slow environmental assessments, create
delays significant enough to make our projects non-competitive. These
types of burdens and other limitations in the federal Indian law tend
to discourage investments in, and ultimately development of our
Incomplete land records, inadequate staffing, and surface land
fractionation add more burdens to energy projects on Reservation lands,
in the form of extensive land title work, mineral rights research, and
surface landowner consents.
Effective Federal tax incentives are essential to help offset some
of these extra burdens.
Federal Tax Incentives
While the existing federal tax incentives work to encourage
investment and development on Indian energy projects, their usefulness
is limited by the length of their applicability.
For example, the tax incentives that have worked to keep the
Absaloka mine open and competitive since 2006 are due to expire next
year, and thus do not help encourage new long-lead-time projects and
investments that will take 5-10 years to begin producing.
We strongly recommend that the Indian Coal Production Tax Credit
and the accelerated depreciation provision be made permanent, along
with some additional modifications. We also recommend that the Indian
Wage Tax Credit be refashioned to minor the very successful Work
Opportunity Tax Credit, which will be a much more effective tool to
encourage employment on reservations.
Extension of Wind Energy Production Tax Credit is also essential to
development of Tribal wind resources--and ability for the Tribe to make
direct use of the credit will provide options for ownership and
Many Stars Needs Government Support
Grant the Department of Defense and other federal agencies the
ability to enter into long-term, guaranteed fixed-price contracts that
will underpin the commercial framework needed to base-load these types
of long-term CTL projects.
Extend the expiration date of the current 50-cents per gallon
alternative fuel excise tax credit for a period of 10 years following
start-up for those projects starting construction prior to 2015.
Support a twenty percent investment tax credit for each CTL plant
placed in service before the same future date, and/or allow 100 percent
expensing of investments in the year of capital outlay for any CTL
plant in operation by the same future date.
Support DOE and DOD alternative fuel development programs as part
of a comprehensive energy policy that supports the full spectrum of
energy technologies and provides a level playing field for developing
new innovation in clean coal technology to meet national environmental
Enact longer-term tax incentives for clean-coal projects will help
remove the general uncertainty in energy policy and will provide
investors confidence to support new innovation and major investment in
the clean coal sector. Our observation is that policy uncertainty--
including lack of long-term tax incentives--with respect to clean coal
technology, equates to paralysis in trying to move the Many Stars CTL
Project forward with new investors.
Given our vast mineral resources, the Crow Nation can, and should,
be self-sufficient. We seek to develop our mineral resources in an
economically sound, environmentally responsible and safe manner that is
consistent with Crow culture and beliefs.
The Crow people are tired of saying that we are resource rich and
cash poor. We respectfully request your assistance in setting the
foundation to make our vision a reality.
We have been working to develop our energy resources and to remove
obstacles to successful development. We hope to build a near-term
future when our own resources, in our own hands, provide for the
health, hopes and future of our people.
It is critical that Congress act to protect Indian nations'
sovereignty over their natural resources and secure Indian nations as
the primary governing entity over their own homelands. This will have
numerous benefits for the local communities as well as the Federal
The Crow Nation has been an ally of the United States all through
its history. Today, the Crow Nation desires to develop its vast natural
resources not only for itself, but to once again help the United States
with a new goal--achieving energy independence, securing a domestic
supply of valuable energy, and reducing its dependence on foreign oil.
However, our vision can only become a reality with Congress'
assistance. Mr. Chairman and Committee members, thank you again for the
opportunity to provide testimony on how federal tax policy and
incentives can help level the playing field for Indian Energy