Article explores Indian country marijuana
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1 Indian Nations Law Focus February 2015, Volume 10, Issue 2 Article explores Indian country marijuana Brian L. Pierson bpierson@gklaw.com The Godfrey & Kahn Indian Nations Law Practice Group provides a full range of legal services to Indian nations, tribal housing authorities, tribal corporations and other Indian country entities, with a focus on business and economic development, energy and environmental protection, and housing development. Last fall, the U.S. Department of Justice issued a Policy Statement Regarding Marijuana Issues in Indian Country intended to guide federal prosecutors in connection with enforcement of federal anti-drug laws relating to marijuana. The policy statement has triggered a flurry of speculation regarding the opportunities that it may afford tribes wishing to establish commercial marijuana enterprises as a means of raising revenue to fund governmental operations. Godfrey & Kahn s Indian Nations Team Leader Brian Pierson s Exploring Indian country marijuana examines the policy statement and the complex legal issues relating to the establishment of commercial marijuana enterprises in Indian country. See:- id=1444 Godfrey & Kahn, Nottawaseppi Huron Band of Potawatomi to present on Renewable Energy Financing at NIGA conference Godfrey & Kahn s Renewable Energy Strategies team leader John Clancy and Indian Nations law team leader Brian Pierson will join with Tony Day of the Nottawaseppi Huron Band of Potawatomi (NHBP) Indians to present a workshop at the National Indian Gaming Association annual convention and trade show March 31 - April 2, 2015 at the San Diego Convention Center. The presentation, entitled Casino Energy Consumption and the Seven Generations Ethic: The Economic, Environmental and Cultural Benefits of Replacing Carbon-based Energy with Renewable Energy, will focus on strategies to reduce the cost of converting casinos and other tribal buildings to cost-effective solar, wind, biomass and other renewable energy sources by partnering with investors and developers to take advantage of federal renewable energy tax credits, depreciation and other state and federal renewable energy incentives. The presentation will include a primer on the economics of renewable energy (e.g., rates, geographical factors, net-metering issues, state regulatory factors, etc.), a detailed explanation of the investment tax credit strategy and descriptions of actual Indian country projects, including the solar photovoltaic and thermal renewable energy initiatives of the Nottawaseppi Huron Band of Potawatomi Indians. Questions and ongoing interaction with the audience will be encouraged. For more information, see Content/778.htm Indian Nations Law Focus February 2015 Page 1
2 Selected court cases In Brooks v. Roy, 2015 WL (8th Cir. 2015), Brooks, a member of the Shakopee Mdewakanton Sioux Community, was convicted of first-degree driving while intoxicated and assaulting an officer. Once admitted into the Minnesota Department of Corrections (MDOC) system, Brooks was placed into a 12 step program for chemical dependency. Brooks sued prison officials under the Civil Rights Act of 1871, 42 U.S.C. 1983; the Religious Land Use and Institutionalized Persons Act (RLUIPA); the American Indian Religious Freedom Act (AIRFA); and the Minnesota Constitution, asserting that the program conflicted with his Native American faith by forcing him to profess beliefs he does not hold. The district court granted judgment to the defendants, and the Eighth Circuit affirmed on the ground that the complaint failed to properly state the basis for Brooks claim: Brooks asserts only that the chemical-dependency program available at MCF Faribault conflicts with his Native American religious faith and that MCF Faribault currently provides no chemical dependency treatment that is consistent with the Native American faith. Yet he never specifies his Native American faith (of which there are many), his beliefs consistent with that faith, or how the available program at his prison conflicts with his Native American beliefs, whatever they may be. Without that information, the prison officials were left without notice of the basis for Brooks s allegations that he was denied the right to exercise freely his religion and without enough information to respond adequately to the allegations in the complaint. In Redding Rancheria v. Jewell, 2015 WL (9th Cir. 2015), the Redding Rancheria (Tribe) had been recognized by the federal government and obtained a 30-acre reservation in The Tribe was terminated under the California Rancheria Act of 1958 but re-recognized in 1984 as part of the settlement of the Tillie Hardwick case. Following its 1984 recognition, the Tribe acquired a total of 8.2 acres of trust land and commenced gaming on a 2.3-acre parcel held by the United States in trust for individual tribal members pursuant to a compact with the State of California. In 2003, the Tribe requested that the government acquire an additional 232 acres for a second casino under the Indian Gaming Regulatory Act (IGRA) restored lands exception to the general prohibition against gaming on land acquired after IGRA s enactment in When the Department of Interior (DOI) indicated that it would deny the application because the Tribe already operated a casino, the Tribe informed DOI that it would close its existing casino once the new casino was built. The Secretary of the DOI denied the fee-to-trust application anyway, citing its 2008 gaming regulations, 25 C.F.R , which bars a tribe from taking advantage of the restored land exception if it is gaming on other lands. The Tribe sued under the Administrative Procedure Act. The district court upheld the DOI s decision, but the Ninth Circuit reversed in part, holding that (1) the Part 292 regulations were valid, (2) the Court would not apply the Indian canon of construction in the tribe s favor since other Tribes might be adversely impacted and DOI cannot favor one tribe over another, (3) the Secretary acted arbitrarily and capriciously because it did not address the Tribe s willingness to close its current casino in order to move its gaming operations to one on newly restored lands, and (4) the case would be remanded to the DOI to consider the Tribe s proposal. In Hayes v. Delbert Services Corp., 2015 WL (E.D. Va. 2015), Hayes and other plaintiffs, residents of Virginia, borrowed money at high interest over the internet from Western Sky, a company wholly owned by Webb, a member of the Cheyenne River Sioux Tribe (CRST), and operating exclusively on the CRST Reservation in South Dakota. The loan agreement provided for dispute resolution in the courts of the Tribe. After underwriting the loans, Western Sky originated them through its wholly owned affiliate WS Funding, LLC, which then transferred them to Consumer Loan Trust, which provides servicing and collection services. When Delbert sent the plaintiffs dunning letters to collect outstanding balances, they sued, claiming the letters violated the Fair Debt Collection Practices Act (FDCPA) by (1) failing to name the actual creditor of the debt, (2) misrepresenting that Consumer Loan Trust was the actual creditor,(3) failing to disclose that the communication was from a debt collector, and (4) misrepresenting the character and legal status of the debt. Plaintiffs also asserted claims under the Telephone Consumer Protection Act (TCPA). The court dismissed, holding that (1) Delbert Indian Nations Law Focus February 2015 Page 2
3 was not the lender and could not enforce the tribal court forum selections provisions in the loan agreement, (2) the plaintiffs were not required to exhaust tribal court remedies because Delbert was not a tribal- or Indian-owned business, the collection activity that gave rise to the FDCPA and TCPA violations did not occur on the CRST reservation and the dispute did not threaten or directly affect the integrity, security, or welfare of the CRST for purposes of the Montana Exceptions, but (3) Delbert could enforce the provision in the loan agreement that any controversy or claim between you and... the holder or servicer of the Note must be resolved by arbitration, and (4) Delbert could also enforce the agreement s class action and class arbitration waivers. Because the suit focused only on Delbert s collection activities, the court would not address the validity of the loan agreement. In Shortman v. Roubideaux, 2015 WL , Not Reported in F.Supp.3d (D. Ariz. 2015), Shortman, a member of the Hopi Nation, sued officials of the United States Department of Health and Human Services and Indian Health Service (IHS) under the Federal Tort Claims Act, seeking to recover damages resulting from the IHS delay in approving lifesustaining medications to which she was entitled. The district court denied the government s motion to dismiss: On the present limited record, the Court cannot conclude that the Arizona tort of negligent delay would be inapplicable to Defendants conduct if undertaken by a private person or entity in Arizona. Defendants emphasize that IHS medical services are not an entitlement, and that the availability of such services depends on the amount of money appropriated by Congress each year. Defendants also emphasize that IHS does not compensate individuals for health care costs, especially when approval is not received in advance and where individuals self-refer themselves to other medical providers. Plaintiff claims, however, that her condition is life-threatening and a priority that would have been covered by IHS even with its limited funding, that she sought advance approval for payment of the costs of her medication, and that she and her advisors received inaccurate information from IHS that interfered with their ability to procure IHS coverage for Plaintiff s medications. In Blackfeet Housing v. United States Department of Housing and Urban Development, 2015 WL (D. Colo. 2015), 10 tribes alleged that HUD had recaptured Indian Housing Block Grant (IHBG) funds authorized by the Native American Housing Assistance and Self-Determination Act (NAHASDA) to offset alleged errors in the tribes formula current assisted stock (FCAS) relating to failure to convey rent-to-own homes. The court held that HUD failed to accord the plaintiffs due process, including notice and hearing, before recapturing funds. In the instant decision, the court issued a judgment requiring HUD to restore recaptured funds in specified amounts and enjoining HUD from seeking to recapture additional alleged overpayments for the fiscal years 1998 through 2008 without first complying with the requirements of Section 401(a) of the NAHASDA before its amendment in In Miranda v. Jewell, 2015 WL , Not Reported in F.Supp.3d (C.D. Cal. 2015), plaintiffs, descendants of Rosie Pace, allegedly a full-blood Santa Ynez Band of Chumash Indians (Tribe) listed as such on a 1940 Bureau of Indian Affairs census roll, sued under the Administrative Procedure Act (APA). The Tribe denied their application for membership and the Bureau of Indian Affairs (BIA) determined that the Tribe s decision was correct and refused to order their enrollment. The district court granted the government s motion for summary judgment: The BIA did not act arbitrarily or capriciously when it rejected Plaintiffs appeals from SYB s denials of their membership applications, because the [Tribe s] Articles do not limit (to the 1940 Census) the evidence the Tribe or BIA may permissibly consider when making membership decisions. In Choctaw Nation of Oklahoma v. Occidental Fire and Casualty, 2015 WL (E.D. Okla. 2015), the Choctaw Nation of Oklahoma (Nation) had purchased an automobile liability insurance policy from Occidental Fire and Casualty Company of North Carolina (Occidental) with limits of $5,000,000 per accident and an excess automobile liability insurance policy issued by General Star Indemnity Company (General Star) with limits of $5,000,000. After a bus carrying passengers to the Nation s Choctaw Casino & Resort was involved in an accident, causing several deaths and numerous injuries, victims and their survivors sued the Indian Nations Law Focus February 2015 Page 3
4 Nation. When the Nation agreed through mediation not to assert its sovereign immunity if the plaintiffs agreed not to seek damages beyond the Nation s insurance limits, General Star advised the Nation that if it waived immunity to the level of the insurance coverage, General Star might deny coverage altogether under the failure to cooperate provision of the policy. The Nation sued in state court seeking a declaratory judgment under the authority of Okla. Stat. tit that the insurers could not assert the Nation s sovereign immunity without the Nation s consent, that only the Nation could waive immunity to policy limits and that such waiver would not violate the insurance policy. The Tribe also alleged the tort of bad faith and sought money damages. Occidental removed to federal court, arguing that [t]he basic issue raised by the Choctaw Nation s lawsuit is, who can assert the tribes sovereign immunity, raising a federal question sufficient to support federal jurisdiction. The court disagreed and remanded to state court: On the face of the Petition, the Nation seeks declaratory relief upon the parties obligations and rights under the insurance contracts as well as a judgment for bad faith-both purely state law claims. The insertion of sovereign immunity into the case arises because that is the assertion of immunity represents the right which is claimed under the contract and because the Nation anticipates the insurers defense to the claims. The anticipation of a defense within a well-plead [sic] complaint cannot convert a state law claim into one arising from a federal question. Housing Authority of Te-Moak Tribe of Western Shoshone Indians, 2015 WL (D. Nev. 2015) is the latest in a long line of cases addressing efforts of HUD to recapture Indian Housing Block Grant funds under the Native American Housing Assistance and Self-Determination Act, 25 U.S.C et seq. (NAHASDA), on the ground that a tribe overstated its formula current assisted stock (FCAS) by not conveying rentto-own mutual help units to tribal members as provided under Mutual Help and Occupancy Agreements (MHOA). The Court held that (1) the pre-nahasda 2008 amendment version of the federal regulations requiring adjustment of FCAS based on MH units conveyed was a valid interpretation of NAHASDA, (2) HUD s pre-2008 NAHASDA amendment that units must be automatically conveyed, and removed from FCAS, at the end of the MHOA-prescribed rentto-own period failed to take into account legitimate reasons that would prevent conveyance and was, therefore, arbitrary and capricious and (3) the court was bound by the holding of Fort Belknap Housing Department v. Office of Public and Indian Housing, 726 F.3d 1099 (9th Cir.2013) that HUD was not required to observe NAHASDA notice and hearing requirements set forth at 25 U.S.C and 4165 in order to recapture overpayments. In Scherr v. Western Sky Financial, LLC, 2015 WL 94122, Not Reported in F.Supp.3d (N.D. Ill. 2015), Martin Webb, a member of Cheyenne River Sioux Tribe owned Western Sky Financial, LLC (WSF) and several other South Dakota limited liability companies based on the Tribe s reservation that made high-interest payday loans over the internet. CashCall, Inc. a California corporation, serviced certain of the loans originated by WSF. Scherr sued WSF, CashCall and other Webb-related entities (collectively Webb ) in the circuit court for Cook County, alleging that the defendants had loaned him money at interest rates that violated Illinois law. Webb removed to federal court based on diversity jurisdiction and moved to dismiss. The court denied the motion. First, the court rejected Webb s argument that the Dormant Commerce Clause barred the application of Illinois law to a transaction occurring wholly outside the state. Notwithstanding language in the loan agreements that the plaintiff had executed the loan agreement as if you were physically present within the exterior boundaries of the Reservation, the plaintiff was actually physically present in Illinois when he accepted the loan offer and received the funds. Citing Seventh Circuit precedent, the court held that when an offer occurs in one state and acceptance occurs in another, both states law may apply. Second, the court rejected Webb s invocation of the fiduciary shield doctrine, which prevents courts from asserting jurisdiction over persons acting on behalf of an employer, noting that the complaint alleged that Webb is the employer, that he made all the decisions, including the decision to charge the usurious interest rates, knowing those rates violated Illinois law. Finally, citing the Seventh Circuit s recent decision in Jackson v. Payday Financial, the court rejected Webb s argument that the tribal exhaustion doctrine and the forum selection clauses in loan agreements, which provided Indian Nations Law Focus February 2015 Page 4
5 for tribal jurisdiction, compelled dismissal. In McLean v. U.S. Dept. of Interior Bureau of Indian Affairs, 2014 WL , Not Reported in F.Supp.3d. (D. Mont. 2014), McLean sued the United States and Brian Chestnut and his law firm, Ziontz, Chestnut, Varnell, Berley, and Slonim, alleging claims arising out of her arrest and certain proceedings in the Northern Cheyenne Tribal Court. The district court dismissed, holding that (1) McLean failed to state a false arrest claim against BIA officers under the Federal Tort Claims Act because they had no role in the issuance of the warrant for McLean s arrest, (2) the probable cause determination by the tribal court preempted any claim that the officers lacked probable cause, and (3) Chestnut, whom the Tribe had appointed to act as special prosecutor, was acting in an official capacity and was, therefore, protected by the Tribe s sovereign immunity from suit. Indian Nations Team Members Mike Apfeld, Litigation mapfeld@gklaw.com Marvin Bynum, Real Estate mbynum@gklaw.com John Clancy, Energy & Environmental jclancy@gklaw.com Todd Cleary, Employee Benefits tcleary@gklaw.com Shane Delsman, Intellectual Property sdelsman@gklaw.com Jessica Franklin, Environmental jfranklin@gklaw.com Rufino Gaytán, Employment rgaytan@gklaw.com Arthur Harrington, Energy & Environmental aharrington@gklaw.com Brett Koeller, Business & Corporate bkoeller@gklaw.com Michael Lokensgard, Real Estate mlokensgard@gklaw.com Carol Muratore, Real Estate cmuratore@gklaw.com Andrew S. Oettinger, Litigation aoettinger@gklaw.com Brian Pierson, Federal Indian & Tribal Indian Nations Team Leader, Lead Contact bpierson@gklaw.com Marlene Prahl, Paralegal mprahl@gklaw.com Jed Roher, Tax jroher@gklaw.com Mike Wittenwyler, Government Relations mwittenwyler@gklaw.com OFFICES IN MILWAUKEE, MADISON, WAUKESHA, GREEN BAY AND APPLETON, WISCONSIN AND WASHINGTON, D.C. WWW GKLAW.COM TEL
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