Mr. Chairman and Members of the Committee, good morning and thank you for inviting the Justice Department to testify on the important subject of tribal sovereign immunity. I am Thomas L. LeClaire, Director of the Office of Tribal Justice, Department of Justice.

Congress and the Executive Branch acknowledge the importance of working with Indian tribes within a framework of government-to-government relations when tribal self-government, tribal land and natural resources, or treaty rights are at issue.⁽¹⁾ In our work within that framework, the Justice Department is guided by fundamental principles that have governed the relations between the United States and Indian tribes for over two hundred years.

Since the formation of the Union, the United States has recognized Indian tribes as "domestic dependent nations" that exercise governmental authority over their members and their territory.⁽²⁾ In numerous treaties and agreements, our Nation has guaranteed the right of Indian tribes to self-government⁽³⁾ and pledged to protect Indian tribes.⁽⁴⁾ The Administration and the Attorney General honor the United States' commitments to Indian tribes.

Congress has recognized that "the United States has a trust responsibility to [Indian tribes] that includes the protection of the sovereignty of each tribal government."⁽⁵⁾ Under the Federal trust responsibility to Indian tribes, the United States should exercise the highest standard of care in matters of tribal self- government.

Continued recognition of tribal sovereign immunity is an important part of the Federal Government's protection of tribal self-government, which furthers the United States' longstanding policy of encouraging Indian self-determination and economic development.

THE DOCTRINE OF SOVEREIGN IMMUNITY

Sovereign immunity is a fundamental aspect of sovereignty, which protects a government from suit to avoid undue intrusion on governmental functions or depletion of the government's treasury without legislative consent.

Under federal law, the doctrine of sovereign immunity is well settled, and fundamental maxims guide the federal courts in cases that touch on the United States' sovereign immunity:

The United States is immune from suit in the absence of an affirmative waiver of immunity;

Only Congress may waive the sovereign immunity of the United States;

A waiver of the sovereign immunity of the United States must be unequivocally expressed; and

Waivers of the sovereign immunity of the United States are strictly construed in favor of the sovereign.⁽⁶⁾

Congress carefully considers any waiver of federal sovereign immunity, mindful of potential impacts on federal governmental functions and our treasury. Waivers of the sovereign immunity of the United States are usually limited to the federal courts. Where the United States has not waived its sovereign immunity, the Federal Government regularly relies on its immunity to bar suits.⁽⁷⁾

In regard to the states, the Eleventh Amendment of the Constitution of the United States embodies the principle of sovereign immunity and protects the dignity and respect afforded to the states in our federalist system.⁽⁸⁾ Absent state consent or congressional abrogation pursuant to a valid exercise of power, sovereign immunity bars suits by foreign nations, Indian tribes and private individuals against the states in federal court.⁽⁹⁾ It likewise bars suits by foreign nations, Indian tribes, and private individuals against states in their own courts absent state consent or an Act of Congress.⁽¹⁰⁾ States regularly rely on their sovereign immunity to bar suits to which they do not consent.⁽¹¹⁾ States have relied on the Eleventh Amendment to bar suits by Indian tribes before the United States Supreme Court in three cases within the past ten years.⁽¹²⁾

When states waive their sovereign immunity, they guard state governmental functions and state treasuries and often limit their waivers of immunity to actions before the state courts. In state statutory waivers of immunity for tort actions, states reserve sovereign immunity to protect discretionary government functions from suit.⁽¹³⁾ States also frequently limit government liability for monetary damages and bar recovery for exemplary or punitive damages.⁽¹⁴⁾

THE SOVEREIGN IMMUNITY OF TRIBAL GOVERNMENTS

"Indian tribes are sovereigns" which predate the formation of the United States.⁽¹⁵⁾ Accordingly, absent tribal government waiver or congressional abrogation, Indian tribes retain sovereign immunity as an aspect of inherent tribal sovereignty. Under the federal-tribal governmental relationship, it is well settled that only Congress or the governing body of an Indian tribe may waive a tribe's sovereign immunity from suit.⁽¹⁶⁾

Congress has acted to protect tribal sovereign immunity and has provided appropriate venues for dispute resolution which do not jeopardize tribal government functions or financial solvency. The Indian Self-Determination and Education Assistance Act (the "ISDEAA"), for example, authorizes Indian tribes to contract with the Secretaries of the Interior and Health and Human Services to perform governmental functions that their departments otherwise would perform in Indian country.⁽¹⁷⁾ The ISDEAA provides that the Secretary of the Interior should assist Indian tribes in obtaining insurance and prohibits the insurers from raising tribal sovereign immunity as a defense to a covered claim. The ISDEAA extends Federal Tort Claims Act coverage to claims against an Indian tribe directly "resulting from the performance of functions under . . . [an ISDEAA] contract."⁽¹⁸⁾ The ISDEAA preserves tribal soverign immunity while providing mechanisms for compensating injured parties.⁽¹⁹⁾

A. Contract Claims

In our view, the longstanding federal recognition of tribal sovereign immunity does not raise significant policy concerns in the area of contract claims. The doctrine of tribal sovereign immunity is well known and an Indian tribe's immunity from suit does not leave a potential commercial partner unable to protect its interests.⁽²⁰⁾ For example, a retailer may request advance payment from a tribal government. A prospective business partner may choose to contract with subordinate tribal corporations or entities that have waivers of sovereign immunity in their organizational documents. A joint venturer may request that the tribe consent to suit in the contract that establishes the joint venture with the tribe. Or, a prospective commercial partner may negotiate transaction specific waivers of sovereign immunity or security arrangements such as escrow accounts, bonds, or letters-of-credit to ensure against financial loss from non-performance of the contract by the tribal government. These mechanisms are available under existing law and simply require sound business planning to implement them.

B. Tort Claims

The Department of the Interior informs us that many Indian tribes have obtained automobile, property owners', and general liability insurance to insure against tort claims by individuals and the ISDEAA extension of Federal Tort Claims Act coverage for certain claims against Indian tribes arising out of performance of ISDEAA contract programs by tribal governments. Insurance and the ISDEAA extension of FTCA coverage preserve sovereign immunity while also providing for coverage of tort claims against tribes. The Committee may wish to consider whether it is advisable to improve access for Indian tribes to affordable insurance for tribal commercial activities. For example, the United States might charter an intertribal insurance corporation to provide insurance for tribal commercial activities, with insured Indian tribes as shareholders. The Indian tribes would pay insurance premiums to the intertribal insurance corporation and obtain insurance. Covered tort claims could be made against the corporation directly, rather than against the Indian tribes. The insurance corporation could be barred from raising sovereign immunity as a defense to a covered claim (as under the ISDEAA) and recovery against the insurance corporation could be limited to the relevant policy limits. Punitive damages could be barred. Such an arrangement would build on the existing models in the ISDEAA, without impairing tribal sovereign immunity, and could provide needed institutional infrastructure for Indian country.

C. State Taxation in Indian Country

Indian tribes and reservation Indians are subject to tribal law and accordingly, are generally exempt from state taxation and regulation in Indian country. As the Supreme Court explains:

The Constitution vests the Federal Government with exclusive authority over relations with Indian tribes. Art. I, § 8, cl. 3. . . . As a corollary to this authority, 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 territory.⁽²¹⁾

When Indian tribes or individual Indians generate value through economic activities within their reservations, federal law may also preempt state taxation of non-Indians engaged in commerce with them.⁽²²⁾

In contrast, under prevailing Supreme Court rulings, where Indian tribes or individual tribal retailers market prepackaged goods to non-Indians, without adding reservation value, the non-Indian consumers may be liable to pay non-discriminatory state taxes on the transactions.⁽²³⁾ In such circumstances, the Indian tribes also have authority to tax the non-Indian consumers, but the states are not required to provide credit for tribal taxes on the same transactions, so a dual tribal-state tax burden on reservation commerce with non-Indians is possible. Many tribes remain reluctant to "stack" tribal taxes and state taxes.

The Supreme Court has recognized that states and Indian tribes may enter "mutually satisfactory" tax agreements,⁽²⁴⁾ and to avoid undue burdens on commerce and facilitate tax collection, seventeen states have entered into such tax agreements with Indian tribes. These agreements vary. Some state-tribal tax agreements provide that the state will forgo its taxes, and the Indian tribe may retain all tribal taxes from sales to non-Indians, provided that the tribal taxes approximate the amount of state taxes that would otherwise be imposed. Other agreements call for a division of the taxes on sales to non-Indians between the state and the tribe to avoid dual taxation while others are simply collection agreements.

In our view, agreements are the best mechanisms for mutually satisfactory resolution of tax collection issues between states and tribes. If states and tribes are unable to reach agreement, however, states may impose their taxes at the wholesale level to collect states taxes on prepackaged goods that are destined for sale to non-Indians before they are imported to Indian country.⁽²⁵⁾ Thus, we concur with the Interior Department, legislative waiver of tribal sovereign immunity in this area is unwarranted.

TRIBAL SELF-GOVERNMENT AND TRIBAL COURTS

The Interior Department informs us that Indian tribes frequently enact their own waivers of sovereign immunity. We would expect that, just as the United States regularly limits federal waivers of sovereign immunity to the federal courts and states regularly limit their waivers of sovereign immunity to state courts, Indian tribes regularly would limit their waivers of sovereign immunity to tribal courts.⁽²⁶⁾ Accordingly, in considering tribal sovereign immunity, it is important to bear in mind the full significance of tribal court authority to tribal self-government.

Tribal courts are central institutions of self-government because they are "important forums for ensuring public health and safety" and for adjudicating "disputes affecting personal and property rights" in Indian country. Tribal courts give life to traditions and values embodied in tribal law and are essential to the political integrity, culture, and identity of tribes.⁽²⁷⁾

Recognizing the importance of tribal courts as institutions of justice, the Justice Department has been working cooperatively with the Interior Department to assist tribal courts. Tribal leaders have often requested support for tribal courts, and, in response, the Justice Department's Office of Policy Development established a Tribal Courts Project to assist them by developing innovative training, providing information, and encouraging cooperation between the federal, state, and tribal court systems. To complement these efforts, the Department's Bureau of Justice Assistance has funded grants to improve cooperation between federal, state, and tribal courts and funded training for tribal judges at the Federal Judicial Center and the National Judicial College. The Office of Justice Programs is working with tribal courts through our Drug Courts Program and Violence Against Women Programs, among others. For FY '99, the Justice Department will seek increased funding to assist tribal courts. Our goal in undertaking these efforts is to help ensure that tribal courts may take their place as partners with state and federal courts in the nationwide administration of justice.

CONCLUSION

The Justice Department respectfully submits that, to the greatest extent practicable, legislation dealing with tribal sovereign immunity should be developed based on consultation and consensus with Indian tribes. In our view, legislation in this area should preserve tribal governmental solvency, authority, and functions, including tribal court authority and tribal sovereign immunity.

Thank you for inviting the Justice Department to present its views on this important matter today.

1. See e.g., 25 U.S.C. §§ 3601, 3701; Executive Memo. on Government-to-Government Relations with Native American Tribal Governments, 59 Fed. Reg. 22951 (1994); Proclamation of American Indian Heritage Month, 57 Fed. Reg. 56801 (1992); U.S. Dept. of Justice Policy on Indian Sovereignty and Government-to-Government Relations with Indian Tribes, 61 Fed. Reg. 29424 (1996).

2. In Oklahoma Tax Comm'n v. Citizens Band Potawatomi Indian Tribe, 498 U.S. 505, 509 (1991), the Supreme Court explained that "Indian tribes are 'domestic dependent nations' that exercise inherent sovereignty over their members and their territory." Id. (quoting) Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831).

3. In Ex Parte Crow Dog, 109 U.S. 556, 568-69 (1883), for example, the Supreme Court explained that under the Treaty of 1868 with the Sioux, "among the arts of civilized life, which it was the very purpose of all these arrangements to introduce and naturalize among [the Indians], was the highest and best of all, that of self-government." Earlier, in the seminal case Worcester v. Georgia, 31 U.S. (6 Pet.) 515 (1832), the Court had ruled that the Treaty of Holston "recogniz[ed] the national character of the Cherokees, and their right of self-government."

4. For example, the 1786 Treaty between the United States and the Shawnee Nation proclaims, "The United States do grant peace to the Shawanoe nation, and do receive them into their friendship and protection. . . ." 7 Stat. 26. The 1785 Treaty with the Cherokee Nation extends federal protection and recites that "the Indians may have full confidence in the justice of the United States." 7 Stat. 18. These treaties are exemplary of Indian treaties of that period. The United States also pledged that Indian reservations would be preserved as the "permanent homes" of the Indian peoples. See Treaty with the Sioux, 1868, 15 Stat. 635. Consistent with these treaty pledges, the Supreme Court has held that Indian tribes retain essential rights "necessary to make their reservations livable." Montana v. United States, 450 U.S. 544, 566 n. 15 (1980).

5. 25 U.S.C. § 3601(2); see also 25 U.S.C. §§ 450, 1451, 1601, 2501-2502, 3701, and 4101.

6. See generally Lane v. Pena, 518 U.S. 187 (1996); United States v. Nordic Village, 503 U.S. 30 (1992).

7. See e.g., Smith v. United States, 507 U.S. 197 (1993) (widow of employee of government contractor was barred by sovereign immunity from asserting wrongful death claim for accidental death occurring in Antarctica); Lane v. Pena, supra (merchant marine's claim for money damages arising out of wrongful termination barred by sovereign immunity).

8. Idaho v. Coeur d'Alene Tribe, 117 S.Ct. 2028, 2033 (1997).

9. Monaco v. Mississippi, 292 U.S. 313 (1934) (Eleventh Amendment bars suit by foreign nation against a state in federal court); Blatchford v. Native Village of Noatak, 501 U.S. 775 (1991) (Eleventh Amendment bars suit by Indian tribe against a state in federal court); Hans v. Louisiana, 134 U.S. 1 (1890) (Eleventh Amendment bars suit by private citizen against a state in federal court).

10. See e.g., Ashland Equities Co. v. Clerk of New York County, 493 N.Y.S.2d 133 (N.Y.App.Div. 1985).

11. For example, under the related doctrine of legislative immunity, the Supreme Court held on March 3, 1998 that local legislators enjoy absolute legislative immunity for their actions as legislators. Bogan v. Scott-Harris, ___ S.Ct. ___ (1998).

12. Idaho v. Coeur d'Alene Tribe, supra; Seminole Tribe v. Florida, 116 S.Ct. 1114 (1996); Blatchford v. Native Village of Noatak, supra.

13. Everett v. Willard, 468 So.2d 936 (Fla. 1985) (sheriff's decision to permit intoxicated motorist to drive on after stop involved an exercise of a discretionary function shielded by state sovereign immunity, and sheriff's department was immune from a tort action brought by an innocent third party after a subsequent collision with the intoxicated driver).

14. For example, the State of Nevada limits its monetary liability in tort actions to $50,000 and bars recovery for exemplary and punitive damages. N.R.S. § 41.025. The State of Colorado generally limits the monetary liability of public entities in tort actions to $150,000 for an injury to one person arising out of a single incident. For injuries to two or more persons arising out of a single incident, the monetary liability of public entities is generally limited to $600,000, and punitive damages are generally barred. C.R.S.A. § 24-10-114. The State of Texas has granted permission to sue the state for certain claims, but "permission to sue does not waive to any extent [the state's] immunity from liability," so a subsequent legislative appropriation may be necessary to satisfy resulting judgements. V.T.C.A. § 107.002; cf. Federal Sign v. Texas Southern University, 951 S.W.2d 29 (Tex. 1997) (contractor barred from suing state university for money damages without consent).

15. Blatchford v. Native Village of Noatak, 501 U.S. at 779; see Worcester v. Georgia, 31 U.S. at 558-561.

16. Oklahoma Tax Comm'n v. Citizens Band Potawatomi, supra; Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978); Puyallup Tribe v. Department of Game, 433 U.S. 165 (1977); United States v. U.S. Fidelity & Guaranty Co., 309 U.S. 506 (1940).

17. 25 U.S.C. §§ 450 et seq.

18. 25 U.S.C. § 450f.

19. 25 U.S.C. § 450n.

20. For example, in a publication entitled, "A Guide to Mortgage Lending in Indian Country" (1997), the Comptroller of the Currency explains:

Sovereign immunity is a governmental immunity that prevents a court from entering orders against the government in the absence of a clear waiver. As governments, Indian tribes enjoy sovereign immunity from suit under federal common law. Tribal sovereign immunity is similar to the sovereign immunity of the United States or of individual states. Although tribal sovereign immunity does not cover individual Indians, it does extend to tribal government agencies, such as Indian housing authorities.

Id. at 9; see also Office of the Comptroller of the Currency, Department of Treasury, "Providing Financial Services to Native Americans in Indian Country," (1997) at 6 (successful "banks have established good working relationships with the tribes to address the issues of sovereign immunity. . ."). Similarly, one of the leading commentators on federal civil court practice explains: "Native American tribes are sovereigns. . . . [T]he Supreme Court has held that Native American tribes have immunity from suit by states." D. Coquillette, et al., Moore's Federal Practice § 123.10[6] (1997). Thus, the business and financial community have reasonable notice that Indian tribes possess sovereign immunity.

21. Montana v. Blackfeet Tribe, 471 U.S. 759, 764 (1985).

22. In New Mexico v. Mescalero Apache Tribe, 462 U.S. 324 (1983), for example, the Supreme Court held that non-Indian hunters using a tribal hunting enterprise on reservation lands were exempt from state hunting regulations. The Court explained the basis for its decision as follows:

The Tribe has engaged in a concerted and sustained undertaking to develop and manage the reservation's wildlife and land resources specifically for the benefit of its members. The project generates funds for essential tribal services and provides employment for members who reside on the reservation. . . . The Tribal enterprise . . . clearly involves "value generated on the reservations by activities involving the Tribe."

Id. at 340. Accordingly, the State had no authority to impose license requirements and fees on non-Indians using the valuable hunting resources generated by the Tribe on its reservation. See White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980) (non-Indian engaged in reservation timber production with Indian tribe was exempt from state motor fuel taxation).

23. Washington v. Colville, 447 U.S. 134 (1980) (prepackaged cigarettes).

24. Oklahoma Tax Comm'n v. Citizens Band Potawatomi, 498 U.S. at 514 applying 25 U.S.C. § 476; see Department of Taxation and Finance v. Milhelm Attea & Bros., Inc., 512 U.S. 61, 72 (1994).

25. Oklahoma Tax Comm'n v. Citizens Band Potawatomi, supra.

26. The Menominee Tribe has enacted a statute "waiving immunity in tribal court." R. Clinton, N. Newton & M. Price, American Indian Law: Cases and Materials (1991) at 342; see also Williams v. Lee, 358 U.S. 217 (1959) (absent a contrary statute, tribal court jurisdiction in civil cases against Indians in Indian country is exclusive of state court jurisdiction); Kennerly v. District Court, 400 U.S. 423 (382) (same); Fisher v. District Court, 424 U.S. 382 (1976) (same). We note that state government are at times hostile to tribal self-government, see Cherokee Nation, supra (despite treaty recognizing tribal self-government, state legislature purported to outlaw tribal self-government), so Indian tribes would not view state courts as "neutral" forums.

27. 25 U.S.C. § 3601.