Case Nos & IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

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1 Case: Document: Date Filed: 06/04/2008 Page: 1 Case Nos & IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT STEVEN DOBBS and NAOMI DOBBS, v. ANTHEM BLUE CROSS AND BLUE SHIELD, Plaintiffs-Appellants, Cross-Appellees Defendant-Appellee, Cross Appellant ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv LTB BRIEF OF AMICUS CURIAE SOUTHERN UTE INDIAN TRIBE IN SUPPORT OF DEFENDANT-APPELLEE AND AFFIRMANCE Attorneys for Southern Ute Indian Tribe Thomas H. Shipps Monte Mills Patricia A. Hall Legal Department, Southern Maynes, Bradford, Shipps Ute Indian Tribe & Sheftel, LLP P.O. Box 737 P.O. Box 2717 Ignacio, CO Durango, Colorado (970) x 2140 (970) (continued)

2 Case: Document: Date Filed: 06/04/2008 Page: 2 Nancy Williams Bonnett Pietzsch, Bonnett & Womack, P.A North Third St, Suite 3000 Phoenix, AZ (602) SCANNED PDF FORMAT ATTACHMENTS ARE INCLUDED WITH DIGITAL SUBMISSION SENT VIA

3 Case: Document: Date Filed: 06/04/2008 Page: 3 TABLE OF CONTENTS I. Identity, Interest and Filing Authority...1 II. Summary of Argument...2 III. Argument...9 A. Background Regarding the Tribe s Reservation, Organization and Activities...9 B. Purposes of ERISA...14 C. The Tribe s Historical Treatment of Employee Benefit Plans...16 D. Application of ERISA and Other General Laws to Tribes...20 E. The Pension Plan Reform Act Prospective Effect Change v. Clarification Commercial Activities...25 F. Application of Tribal Law and Remedies to ERISA Related Claims...28 IV. Conclusion...30 i

4 Case: Document: Date Filed: 06/04/2008 Page: 4 Cases TABLE OF AUTHORITIES Cent. Laborers Pension Fund v. Heinz, 541 U.S. 739 (2004)...15 DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442 (3 rd Cir. 2003)...15 Dobbs v. Anthem Blue Cross and Blue Shield, Action No. 04-cv LTB (D. Colo., Aug. 23, 2007)...7, 26 Donovan v. Coeur d Alene Tribal Farm, 751 F.2d 1113 (9 th Cir. 1985), cert. denied, 449 U.S. 111 (1981)...21 Donovan v. Navajo Forest Prod. Ind., 692 F.2d 709 (10 th Cir. 1982)...21 Fed. Power Comm n v. Tuscarora Indian Nation, 362 U.S. 99 (1960)...21 Fernandez-Vargas v. Gonzales, 548 U.S. 30 (2006)...23 Iowa Mutual Ins. Co. v. La Plante, 480 U.S. 9 (1987)...29 Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751 (1998)...11 Landgraf v. USI Film Prod., 511 U.S. 244 (1994)...23, 24 Lindh v. Murphy, 521 U.S. 320 (1997)...23 MacDonald v. Ellison, No. SC-CV (Navajo 1999)...30 Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359 (1980)...15 N.L.R.B. v. Pueblo of San Juan, 276 F.3d 1186 (10 th Cir. 2002)...20, 21 Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978)...11 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)...14 Smart v. State Farm Ins. Co., 868 F. 2d 929 (7 th Cir. 1989)...22 ii

5 Case: Document: Date Filed: 06/04/2008 Page: 5 Southern Ute Indian Tribe v. Amoco Prod. Co., 151 F.3d 1251 (10 th Cir. 1998), rev g 874 F.Supp (D. Colo. 1995), rev d 526 U.S. 865 (1999)...9 United States v. Wheeler, 435 U.S. 313 (1978)...21 Woodworker s Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985 (10 th Cir. 1999)...8, 28, 29, 30 Worcester v. Georgia, 31 U.S. (6 Pet.) 515 (1832)...20 Statutes 25 U.S.C g (Indian Mineral Leasing Act of 1938) U.S.C (Indian Reorganization Act)... passim 25 U.S.C U.S.C U.S.C , U.S.C U.S.C (Indian Mineral Development Act of 1982) U.S.C. 2710(b)(2)(B)(i)-(v) U.S.C. 401(a) (Internal Revenue Code) U.S.C. 401(k)...4, U.S.C. 401(k)(4)(B) U.S.C. 403(b) U.S.C. 403(b)(1)(A) U.S.C (Indian Tribal Government Tax Status Act)...18 iii

6 Case: Document: Date Filed: 06/04/2008 Page: 6 26 U.S.C. 7871(a)(1)(A) U.S.C (Employee Benefit Income Security Act of 1974)... passim 29 U.S.C. 1001(a)...14, U.S.C. 1001(b) U.S.C. 1002(32)...6, 25, U.S.C. 1003(a) U.S.C. 1003(b)...4, 11, U.S.C. 1132(a)(1)(B) U.S.C. 1132(e)...8, U.S.C. 1132(e)(1) U.S.C , U.S.C. 1144(a)...8, 28 Legislative Materials Indian Tribal Government Tax Status Act, Pub. L. No , Title II, 202(a), 96 Stat (1983)...18 Pub. L. No , 98 Stat. 201 (1984)...2 Small Business Jobs Protection Act, Pub. L. No , 110 Stat (1996)... passim Pub. L. No , Pub. L. No , 1450 (1996)...19 iv

7 Case: Document: Date Filed: 06/04/2008 Page: 7 Pension Protection Act, Pub. L. No , 906(a)(2)(A), 120 Stat passim Pub. L. No (c)...24 Joint Comm. on Taxation, General Explanation of Tax Legislation Enacted in the 104 th Congress, 104 th Cong (1996)...18 Treaty with the Utahs, 9 Stat. 984 (1849)...9 Treaty with the Ute Indians, 15 Stat. 619 (1868)...2 Federal Rules Fed. R. App. P. 29(a)...1 Other Materials Constitution and Bylaws of the Southern Ute Tribe of the Southern Ute Indian Reservation, Colorado (Nov. 4, 1936)...10 Constitution of the Southern Ute Indian Tribe of the Southern Ute Indian Reservation (Oct. 1, 1975)...2, 11 Corporate Charter of the Southern Ute Tribe, Colorado (ratified Nov. 1, 1938)...10 Felix Cohen, Handbook of Federal Indian Law 232 (1982)...20 I.R.S. Notice , , I.R.B Rev. Rul , C.B Rev. Rul , C.B v

8 Case: Document: Date Filed: 06/04/2008 Page: 8 I. IDENTITY, INTEREST AND FILING AUTHORITY The Southern Ute Indian Tribe ( Tribe ) employs Plaintiff-Appellant Steven Dobbs. Mr. Dobbs and his spouse, Plaintiff-Appellant Naomi Dobbs (collectively, the Dobbses ), are beneficiaries of a group health insurance plan purchased from Defendant-Appellee Anthem Blue Cross and Blue Shield ( Anthem ) by the Tribe on behalf of its employees. The Tribe has several interests in this dispute. First, this case turns largely on how the Tribe s health insurance plan is characterized under the Employee Retirement Income Security Act of 1974 ( ERISA ), 29 U.S.C Whether ERISA applies to the Tribe s employee benefit plans directly affects ERISA compliance issues for the Tribe and also implicates the rights, remedies and potential liabilities of all of its employees. Second, the parties have advanced legal positions regarding the potential preemptive effect of ERISA and the Tribe s status as a sovereign. The Tribe s sovereignty and the preemptive effect of federal laws of general application have always been subjects of monumental importance to the Tribe. Counsel for the Dobbses and counsel for Anthem have consented to the filing of an amicus curiae brief by the Tribe. Fed. R. App. P. 29(a). 1

9 Case: Document: Date Filed: 06/04/2008 Page: 9 II. SUMMARY OF ARGUMENT The Tribe is a federally recognized Indian tribe, organized under the Indian Reorganization Act of 1934, 25 U.S.C ( IRA ). The Tribe operates as a government under a written constitution approved by the authorized representative of the Secretary of the Interior pursuant to Section 16 of the IRA, 25 U.S.C Constitution of the Southern Ute Indian Tribe of the Southern Ute Indian Reservation (Oct. 1, 1975) (Attachment No. 1). In exercise of the Tribe s governmental powers, the Tribe s governing body, the Southern Ute Indian Tribal Council ( Tribal Council ), enacts laws designed to promote the health, safety, and general welfare of its members and the general public. The Southern Ute Indian Reservation ( Reservation ) is located in southwestern Colorado. In 1984, Congress confirmed the exterior boundaries of the Reservation. Pub. L. No , 98 Stat. 201 (1984). The Reservation is a remnant of the original treaty lands recognized by the United States in Treaty with the Ute Indians, 15 Stat. 619 (1868). A substantial aspect of the Tribe s governmental activities involves the prudent management and development of the land and natural resources of the Tribe, 2

10 Case: Document: Date Filed: 06/04/2008 Page: 10 which are held beneficially and communally by the Tribe under the trust supervision of the United States. Revenues derived by the Tribe from its natural resource development activities and the diversified investment of those revenues provide the monies needed by the tribal government to fund extensive tribal programs related to education, health improvement, elder care, law enforcement, a judicial system, environmental protection, and social services, among others, and to make cash distributions to its members. Those revenues also allow the Tribe an opportunity to meet its ultimate governmental duty, the preservation of the Tribe s land base and culture in perpetuity. Particularly given the communal ownership of its key, land-based assets, distinctions between governmental and proprietary functions of the Tribe are at best blurred, if not artificially contrived. All of the Tribe s functions are essentially and ultimately governmental, even if commercial activities are required to perform them. The Tribe consists of approximately 1440 enrolled members, many of whom are employed by the Tribe. In order to carry out its activities, the Tribe must also employ non-members, like Mr. Dobbs, and must compete with other employers with regard to wages and benefits in order to attract 3

11 Case: Document: Date Filed: 06/04/2008 Page: 11 and maintain a reliable work force. Among benefits offered by the Tribe to its employees are retirement and health plans. Particularly in the context of retirement plan administration, Indian tribes have known for more than a decade that their employee benefit plans could subject to ERISA and would not be considered exempt from ERISA like those of other governments. Following passage of ERISA and uncertain as to its intended scope relative to tribes, many tribes purchased what they thought were tax sheltered annuities ( TSAs ) marketed by the insurance industry as tribal employee retirement plan products. Under the Internal Revenue Code ( Code ), however, TSAs were available only for tax exempt entities recognized under Section 501(c)(3) of the Code and for public school teachers. 26 U.S.C. 403(b). In 1996, after determining that tribes had improperly attempted to establish TSAs, Congress afforded tribes that had purchased such annuities an opportunity to convert those annuities to retirement plans under 26 U.S.C. 401(k), thereby preserving favorable income tax treatment for employees who might otherwise have been penalized. Significantly, the favorable income tax treatment of 401(k) retirement plans was statutorily tied to ERISA compliance. State and federal governmental entities, exempt from from ERISA compliance under 29 U.S.C. 1003(b), were not eligible to 4

12 Case: Document: Date Filed: 06/04/2008 Page: 12 have 401(k) plans. The Tribe took the steps needed to convert its employee retirement plans to comply with ERISA. In light of Congress express treatment in the context of retirement plans, the Tribe, under the direction of reputable, independent auditors, has since administered its employee health and retirement plans as non-governmental, ERISA compliant plans. More recently, certain ERISA advisors suggested to various tribes that they were eligible to institute governmental employee benefit plans for their employees based on the inherent sovereign nature of tribes. Asserting that Indian tribes are no less governments than states or cities, the advisors convinced some Indian tribes to establish plans designed to meet the exemptions from ERISA expressly available only to state and federal governmental entities. Because the language of ERISA exempting governmental plans spoke only to federal and state governments and their political subdivisions, and not to tribes, the IRS ceased issuing determination letters on the positive tax qualification status of the tribal governmental plans. Facing disqualification of their employee retirement plans, some Indian tribes who had followed this governmental approach petitioned Congress to confirm that Indian tribes, as governments, should be afforded the same ERISA-exempt treatment as states. In fact, some advocates went 5

13 Case: Document: Date Filed: 06/04/2008 Page: 13 so far as to suggest that Indian tribes could provide employee benefits only as governments. Yet for those Indian tribes, like the Tribe, who had followed the directives of Congress and taken advantage of the congressional treatment afforded to tribal retirement plans, the debates raised extremely sensitive issues. To suggest that Indian tribes were not governments was heresy. Yet, the positions being advocated appeared to fly in the face of Congress treatment of tribal retirement plans and the advice of auditors and lawyers who specialized in these matters. The product of these debates is reflected in Section 906(a)(2)(A) of the Pension Protection Act of 2006 ( PPA ), which amends the definition of governmental plan to include employee benefit plans of Indian tribes, provided that the tribal employees covered by such plans are principally performing essential governmental functions and not commercial activities (whether or not an essential governmental function). Pub. L. No , 906(a)(2)(A), 120 Stat. 780 (codified as amended at 29 U.S.C. 1002(32)). Unfortunately, the language employed by Congress adds nothing to acknowledge that, due to the communal nature of tribal asset ownership, essential tribal governmental functions require commercial activity. In fact, many of the Tribe s employees and plan participants perform commercial activities, which include without limitation: gaming operations, active oil 6

14 Case: Document: Date Filed: 06/04/2008 Page: 14 and gas exploration and development activities, direct private equity investment, and off-reservation investment diversification. The Dobbses have argued that the PPA amendment is merely a clarification by which Congress confirmed that ERISA was intended to exclude tribes like other governments from its mandatory provisions. The Tribe does not agree with the Dobbses on this issue. First, as found by the trial court, Section 906(c) of the PPA explicitly applies the PPA s amendments prospectively from the date of enactment and not retroactively. Order at 6, Dobbs v. Anthem Blue Cross and Blue Shield, Civ. Action No. 04-cv LTB (D. Colo., Aug. 23, 2007). Second, regardless of whether Indian tribes should have been treated like other governments for ERISA purposes, they were not, as confirmed by Congress treatment of tribes for retirement plan purposes. Indeed, while the Tribe fully appreciates this Court s unwillingness to apply federal laws of general application to Indian tribes in the absence of Congress affirmative intent to do so, Congress treatment of tribal retirement plans provides compelling evidence that, at least by the mid-1990s, Congress intended ERISA to apply to Indian tribes as employers. Because many of the Tribe s employees perform commercial activities, the Tribe s plans fall outside of the new definition of 7

15 Case: Document: Date Filed: 06/04/2008 Page: 15 governmental plan regardless of whether the PPA amendment is prospective or retrospective in application. Accordingly, the express provisions of ERISA that preempt application of state law to the Tribe s ERISA employee benefit plans bar the Dobbses state-law claims in this case. 29 U.S.C. 1144(a). Significantly, the express preemptive language of ERISA bars application of state laws relative to ERISA plans, but is silent as to application of tribal laws. 29 U.S.C Had Congress intended to preempt application of tribal laws to ERISA plans, it could have done so expressly, as it did with states. Additionally, in conferring jurisdiction on federal and state courts to adjudicate certain matters related to ERISA plans, Congress has remained silent as to the role of tribal courts. 29 U.S.C. 1132(e). Certain of the Dobbses claims relate to misrepresentations allegedly made by Anthem prior to the Dobbses enrollment in the Tribe s health plan and not to operation of the plan itself. Appellants Corrected Appeal Brief at 4, (March 17, 2008) ( Dobbses Opening Br. ); See, e.g., Woodworker s Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985 (10 th Cir. 1999). Arguably, the Dobbses may have tribal law causes of action because ERISA does not expressly bar application of tribal law. Additionally, to the extent that the Dobbses may have claims under state law 8

16 Case: Document: Date Filed: 06/04/2008 Page: 16 that are not preempted by ERISA, similar claims may be available in the Tribe s court. III. ARGUMENT A. Background Regarding the Tribe s Reservation, Organization and Activities. For almost two centuries, the United States has formally recognized the Utes and has negotiated with different Ute bands or tribes on a government-to-government basis. See, e.g., Treaty with the Utahs, 9 Stat. 984 (1849). The Utes aboriginal domain included eastern Utah, Colorado, northern New Mexico and southern Wyoming. As a result of treaties and legislative agreements between the Utes and the United States, as well as unilateral federal enactments, Ute aboriginal lands have been reduced to three separate reservations occupied respectively by three sister tribes: the Uintah and Ouray Reservation in Utah; the Ute Mountain Ute Reservation in Colorado, New Mexico and Utah; and the Tribe s Reservation in Colorado. This Court has previously reviewed the complicated history of the Reservation and the complexities of real property ownership within it. See Southern Ute Indian Tribe v. Amoco Prod. Co., 151 F.3d 1251, (10 th Cir. 1998) (en banc) (Tacha, J. dissenting), rev g 874 F.Supp (D.Colo. 1995), rev d, 526 U.S. 865 (1999) (determining ownership of 9

17 Case: Document: Date Filed: 06/04/2008 Page: 17 coalbed methane on Reservation lands patented under 1909 and 1910 Coal Lands Acts). In 1934, Congress abandoned its prior policies of allotment and public entry through passage of the IRA. The IRA was critical to the Tribe not only because it authorized the restoration of surplus Reservation lands to tribal ownership (25 U.S.C. 463, 465), but also because it established a mechanism for the reorganization of the Tribe s government. Following an election of the Tribe s adult members in 1936, the Secretary of the Interior approved the Tribe s original constitution under Section 16 of the IRA, 25 U.S.C Constitution and Bylaws of the Southern Ute Tribe of the Southern Ute Reservation, Colorado (Nov. 4, 1936). Shortly after approving the Tribe s original constitution, the authorized representative of the Secretary of the Interior also approved a federal corporate charter for the Tribe under Section 17 of the IRA, 25 U.S.C. 477; however, the Tribe has used its corporate charter on only one occasion in the last thirty years. 1 Corporate Charter of Southern Ute Tribe, Colorado (ratified Nov. 1, 1938). In 1975, the registered voters of the Tribe adopted a wholly revised and restated constitution, which was approved by the authorized 1 For international tax reasons, with the approval of the Assistant Secretary of Indian Affairs, the tribal corporation was an investor in a Canadian oil and gas company. The corporation s investment was liquidated in

18 Case: Document: Date Filed: 06/04/2008 Page: 18 representative of the Secretary of the Interior. Constitution of the Southern Ute Indian Tribe of the Southern Ute Indian Reservation (Oct. 1, 1975). The revised constitution provides the authority for all of the Tribe s activities, under the direction of the elected Tribal Council and subject to ultimate oversight by Congress. In their opening brief, the Dobbses rely heavily on the issuance of the federal corporate charter in 1938 to support their argument that the Tribe is a federal instrumentality and, therefore, its plans are exempt from ERISA as governmental plans. Dobbses Opening Br. at 27-31; 29 U.S.C. 1003(b). The Tribe, however, does not act as a corporate entity under its corporate charter, but rather as a tribal government under its constitution. Rather than suggesting that the Tribe is a federal instrumentality, the Tribe s constitution expressly states that its adoption is intended to facilitate the exercise of our inherent rights of self-government. Constitution of the Southern Ute Indian Tribe of the Southern Ute Indian Reservation, Preamble (Oct. 1, 1975). One obvious reason for acting governmentally rather than corporately is the sovereign immunity from suit enjoyed by tribal governments. See, e.g., Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 753 (1998); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978). The tribal 11

19 Case: Document: Date Filed: 06/04/2008 Page: 19 government s sovereign immunity derives from the Tribe s inherent status and not because the Tribe is an instrumentality of the United States. In contrast to the constitution, Section 5(i) of the corporate charter authorizes the tribal corporation to sue and be sued. In order to avoid confusion, the Tribe attempts to differentiate between the corporate entity Southern Ute Tribe (as named in the corporate charter) and the government Southern Ute Indian Tribe (as named in the constitution) and has obtained different employer identification numbers for each. The corporation has no employees. The Reservation includes vast natural gas resources, the development of which is economically vital to the Tribe. Pursuant to federal law, the Tribe has issued more than one hundred oil and gas leases on its mineral lands, from which it derives substantial royalty and severance tax revenue. See Indian Mineral Leasing Act of 1938 (codified at 25 U.S.C. 396a 396g); Indian Mineral Development Act of 1982 (codified at 25 U.S.C ). Additionally, in 1994, the Tribe established its own oil and gas operating company (the Tribe doing business as Red Willow Production Company), which conducts natural gas drilling and development activities on thousands of acres of tribal and fee lands within the Reservation. In his valued employment with the Tribe, Mr. Dobbs works as a geologist for Red 12

20 Case: Document: Date Filed: 06/04/2008 Page: 20 Willow Production Company. The Tribe is also the majority owner of Red Cedar Gathering Company, which collects, treats and compresses natural gas from wells throughout the Reservation for delivery into interstate pipelines. All of these activities constitute an integrated and comprehensive system for development of the natural resources on the Reservation and provide revenues the Tribe needs to fund its government and to benefit its tribal members. The revenues supplied by natural gas development have also been supplemented by a small, on-reservation casino. Recognizing that the Tribe s on-reservation natural gas resources are finite and depleting, in 2000, the Tribal Council authorized the Tribe to expand its activities off the Reservation. Through wholly owned subsidiaries of the Tribe, typically special purpose limited liability companies formed under state law in which the Tribe, acting through its Tribal Council, is the sole member, commercial activities have expanded into at least eight states. Those activities include without limitation: oil and gas exploration; midstream gas gathering, collection and processing; commercial real estate acquisition and development; mineral aggregate industries; biomedical research and development; and computer software development. 13

21 Case: Document: Date Filed: 06/04/2008 Page: 21 With few exceptions, the workforce required to sustain all of these activities is employed directly by the Tribe. With more than 1,200 employees, consisting of tribal members, other Indians and non-indians, the number of employees is almost as large as the total number of enrolled members of the Tribe. The Tribe is the largest employer in the Four Corners Region, and the compensation and benefits provided by the Tribe impact many families and businesses on and near the Reservation. In order to maintain this workforce, the Tribe must compete in local, regional and national job markets and must offer its employees meaningful benefit programs, including retirement and health benefits. B. Purposes of ERISA. On Labor Day, 1974, 2 Congress signed ERISA into law to promote the interests of employees and their beneficiaries in employee benefit plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). The statute s declaration of policy reflects the purpose for ERISA s enactment: to establish minimum standards... assuring the equitable character of [employee benefit] plans and their financial soundness. 29 U.S.C. 1001(a). 2 Statement of President Gerald R. Ford upon signing the Employment Retirement Income Security Act of 1974 at 14

22 Case: Document: Date Filed: 06/04/2008 Page: 22 Congress concern for the financial soundness of employee benefit plans stemmed from several instances in which plans were terminated before requisite funds ha[d] been accumulated, which resulted in beneficiaries being deprived of expected benefits. 29 U.S.C. 1001(a). For example, when the Studebaker company shut down in 1963, 4500 employees lost 85% of their benefits. Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 374 n.22 (1980). Congress saw a need to create protections for employees where none existed before. Accordingly, ERISA s stated purpose is to: [P]rotect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts. 29 U.S.C. 1001(b). Therefore, ERISA contained a raft of provisions designed to protect plan participants against negligent or malfeasant plan managers. DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 454 (3rd Cir. 2003) (Becker, J., concurring). As a means for protecting employee benefits, ERISA amended the Code to condition preferential tax treatment for benefit plans upon compliance with ERISA. Cent. Laborers Pension Fund v. Heinz, 541 U.S. 15

23 Case: Document: Date Filed: 06/04/2008 Page: , 746 (2004) ( Title II of ERISA amended the Internal Revenue Code to condition the eligibility of pension plans for preferential tax treatment on compliance with many of the Title I requirements. ). Because Indian tribes are not generally subject to federal income taxes, congressional enactments following ERISA s initial passage were needed to define how tribes were to participate under ERISA. C. The Tribe s Historical Treatment of Employee Benefit Plans. Since 1995, the Tribe has offered employee benefit plans intended to be in compliance with ERISA. The Tribe s plans include retirement and health insurance benefits. A brief history of the Tribe s plans may be helpful to the Court in its consideration of this case. From a review of the Tribe s historical records it appears that, for a significant period of time following passage of ERISA, the Tribe was uncertain as to how ERISA might apply to it. From 1979 through 1994, the Tribe utilized a simplified employee pension plan ( SEP ) that involved employer contributions and annuity products to provide retirement benefits to its employees. Effective January 1, 1995, the Tribe established a money purchase retirement plan under 26 U.S.C. 401(a). The assets from the SEP remained segregated, but no new contributions were made into SEP accounts. In 1997, the Tribe established an additional plan under 26 U.S.C. 16

24 Case: Document: Date Filed: 06/04/2008 Page: (a) that included a 26 U.S.C. 401(k) component so that employees could contribute portions of their employment earnings toward retirement. In 2000, the Tribe amended and restated its plans by merging the two 401(a) plans into a single 401(a) plan with a 401(k) component. The Tribe has maintained the amended and restated plan since that time. In further development of its ERISA employee benefits plans, effective February 1, 2000, the Tribe established a Group Health Care Program through a Master Plan Contract with Blue Cross and Blue Shield of Colorado. This health plan meets the definition of an employee welfare benefit plan under ERISA. The evolution of the Tribe s plans reflects the general confusion that existed throughout Indian country regarding the intended scope of ERISA. Some of that confusion derives from the status of Indian tribes with respect to federal income tax. Indian tribes have long been recognized as exempt from federal income tax, not by virtue of any express exemption in the Code, but rather by virtue of their sovereign status and their unique relationship with the United States government. See, e.g., Rev. Rul at 2, C.B. 19 ( [A]n Indian tribe is not a taxable entity.... ); Rev. Rul at 2, C.B. 55 ( Income tax statutes do not tax Indian tribes. The tribe is not a taxable entity. ) 17

25 Case: Document: Date Filed: 06/04/2008 Page: 25 While the exempt nature of Indian tribes from federal income tax laws has been recognized for decades, how that exempt status affected taxpaying individuals in their dealings with Indian tribes was not clear. In 1983, Congress enacted the Indian Tribal Government Tax Status Act of 1982, 26 U.S.C. 7871, which expressly directed that tribes be treated as if they were states for a variety of specific federal income tax purposes. Pub. L. No , Title II, 202(a), 96 Stat (1983). For example, the Indian Tribal Government Tax Status Act authorized individual taxpayers to make charitable contributions to tribes and receive deductions from income tax obligations for those contributions. 26 U.S.C. 7871(a)(1)(A). Notwithstanding passage of the Indian Tribal Government Tax Status Act, uncertainty persisted regarding the proper way for tribes to establish qualified, tax-deferred employee retirement plans. In fact, passage of that act may have contributed to some of the confusion. As reported by a joint congressional committee in 1996: Following enactment of the Indian Tribe Government Tax Status Act of 1982, several insurance companies and financial advisors marketed 403(b) plans to tribes representing that the plans could be adopted on a tribal-wide basis to cover all employees. As a result, many tribes adopted 403(b) plans for their employees that were not in compliance with the law. Joint Comm. on Taxation, General Explanation of Tax Legislation Enacted in the 104 th Congress, 104 th Cong (1996). 18

26 Case: Document: Date Filed: 06/04/2008 Page: 26 Among the retirement products referenced in the congressional committee report were TSAs expressly available under Section 403(b) of the Internal Revenue Code only for employees of public schools and entities exempt from tax under Section 501(c)(3) of the Code. 26 U.S.C. 403(b)(1)(A). In part to provide explicit ERISA-related guidance to tribes, Congress passed the Small Business Jobs Protection Act of 1996 ( SBJPA ). Pub. L. No , 110 Stat (1996). The SBJPA contained two provisions of particular significance to tribes. First, the SBJPA amended the law to allow Indian tribal governments to maintain Section 401(k) Plans. Pub. L. No , Section 401(k) plans, which were added to the Code by ERISA, allow participants to defer a portion of their otherwise taxable compensation into a plan to save for retirement on a pre-tax basis. This provision distinguished tribal governments from state and local governments, which Congress expressly prohibited from sponsoring such plans both before and after passage of the SBJPA. See 26 U.S.C. 401(k)(4)(B). Second, in order to avoid the adverse income tax consequences that would otherwise result to tribal employees, Congress provided that TSAs mistakenly entered into by Indian tribes prior to January 1, 1995 would be grandfathered and could be rolled over to Section 401(k) plans. Pub. L. No , 1450 (1996). 19

27 Case: Document: Date Filed: 06/04/2008 Page: 27 By specifically providing that tribes were eligible to sponsor 401(k) plans, Congress distinguished tribes from state and local governments, which were ineligible to create 401(k) plans. Further, at least for tribes electing to establish 401(k) plans, ERISA was clearly applicable. D. Application of ERISA and Other General Laws to Tribes. On its face and with limited exceptions, ERISA casts a broad net over virtually all employee benefit plans established or maintained by any employer engaged in commerce or in any industry or activity affecting commerce. 29 U.S.C (a), (b). This Court, however, has consistently been reluctant to apply federal laws of general applicability to Indian tribes, when inconsistent with tribal sovereignty, without clear direction from Congress that it should do so. N.L.R.B. v. Pueblo of San Juan, 276 F. 3d 1186 (10 th Cir. 2002) (en banc). As this Court explained in Pueblo of San Juan, Indian tribes are 'distinct, independent political communities' qualified to exercise powers of self-government, not by virtue of any delegation of powers, but rather by reason of their original tribal sovereignty. Id. at 1192 (quoting Felix Cohen, Handbook of Federal Indian Law 232 (1982)) (citing Worcester v. Georgia, 31 U.S. (6 Pet.) 515, 559 (1832)). Although, as this Court has also noted, Congress, in the exercise of its plenary power over Indian affairs, may 20

28 Case: Document: Date Filed: 06/04/2008 Page: 28 divest Indian tribes of their inherent sovereign authority, it is very clear that until Congress acts, the tribes retain their existing sovereign powers. Pueblo of San Juan, 276 F. 3d at (citing United States v. Wheeler, 435 U.S. 313, 323 (1978) (emphasis added)). Moreover, erosion of tribal sovereignty is not to be found by implication; rather, this Court requires a clear indication of Congressional intent to abrogate Indian sovereignty rights (as manifested, e.g., by the legislative history, or the existence of a comprehensive statutory plan).... Id. at This principle is particularly applicable when a law of general application would interfere with a tribal right vested by treaty. See, e.g., Donovan v. Navajo Forest Prod. Indus., 692 F. 2d 709 (10 th Cir. 1982), (distinguishing Fed. Power Comm n v. Tuscarora Indian Nation, 362 U.S. 99 (1960) and disclaiming applicability of Occupational Safety and Health Act ( OSHA ) to Navajo Nation)); but see Donovan v. Coeur d'alene Tribal Farm, 751 F. 2d 1113 (9th Cir. 1985), cert. denied, 449 U.S. 111 (1981) (applying OSHA in absence of treaty rights). With regard to ERISA, Congress initially omitted any specific reference to Indian tribes. Had Congress remained silent, there would have been continuing uncertainty as to ERISA s application to tribal employee benefit plans. See, e.g., Pueblo of San Juan, 276 F. 3d at 1186 (requiring 21

29 Case: Document: Date Filed: 06/04/2008 Page: 29 affirmative evidence of congressional intent); but see Smart v. State Farm Ins. Co., 868 F. 2d 929 (7 th Cir. 1989) (relying on broad definition of employer in upholding application of ERISA to Indian tribe). The answer to the question regarding ERISA s applicability to Indian tribes, however, does not turn upon analytical distinctions among the federal circuit courts in ascertaining Congress implied intent regarding Indian tribes. Through passage of the SBJPA in 1996, Congress explicitly subjected tribes that chose to establish 401(k) plans to ERISA. The Tribe made that choice. E. The Pension Plan Reform Act. The Tribe maintains that ERISA currently applies to the Tribe s employee benefit plans and has applied to the Tribe s plan, at least since 1997, when the Tribe established a 401(k) plan in accordance with the SBJPA. Because the Tribe is not a federal or state governmental entity, the Tribe s plans did not qualify for the governmental plan exemption before Congress signed the PPA into law. Because many of the Tribe s plan participants engage in commercial activities, the Tribe s plans do not qualify now. However, even if this Court determines that the Tribe s plans fall within the governmental plan exemption under the PPA, such that ERISA does not apply, the Court should affirm the district court s decision because the Tribe was not exempt from ERISA prior to the PPA and the PPA does 22

30 Case: Document: Date Filed: 06/04/2008 Page: 30 not apply retroactively. ERISA therefore applied to the Tribe s plan at the time the Dobbses claims arose. 1. Prospective Effect. The district court correctly held that the PPA should not be applied retroactively. The presumption against retroactivity weighs in favor of the district court s position on this issue. See Landgraf v. USI Film Prod., 511 U.S. 244, 265 (1994). Application of the analysis set forth in Fernandez- Vargas v. Gonzales, 548 U.S. 30, (2006), yields the same result. In that case, the Court explained: We first look to whether Congress has expressly prescribed the statute s proper reach, and in the absence of language as helpful as that we try to draw a comparably firm conclusion about the temporal reach specifically intended by applying our normal rules of construction. If that effort fails, we ask whether applying the statute to the person objecting would have a retroactive consequence in the disfavored sense of affecting substantive rights, liabilities, or duties [on the basis of] conduct arising before [its] enactment. If the answer is yes, we then apply the presumption against retroactivity.... Id. at (citing Landgraf, 511 U.S. at 278, 280 and Lindh v. Murphy, 521 U.S. 320, 326 (1997)) (internal citations omitted) (alteration in original). In section 906(c) of the PPA, Congress expressly prescribed that the PPA applies only prospectively by stating that [t]he amendments made by this section shall apply to any year beginning on or after the date of the 23

31 Case: Document: Date Filed: 06/04/2008 Page: 31 enactment of this Act. Pub. L. No , 906(c). Indeed, this Court could stop its analysis here, as Landgraf instructs that there is no need to address judicial default rules where Congress has explicitly addressed the statute s temporal reach. Landgraf, 511 U.S. at 280. However, assuming, arguendo, that Congress had not explicitly given the PPA a prospective application, the judicial default rules require a finding that the PPA should not be applied retroactively. As explained in Landgraf, a statute will have impermissible retroactive effect if it would impair rights a party possessed when he acted, increase a party s liability for past conduct, or impose new duties with respect to transactions already completed. Id. [T]he court must ask whether the new provision attaches new legal consequences to events completed before its enactment. Id. at Importantly, if the PPA were applied retroactively, the Tribe s participants might well be exposed to potential tax liabilities resulting from the Tribe s sponsorship of 401(k) plans that it was ineligible to offer as a government. The PPA cannot be applied retrospectively because of this impermissible retroactive effect. 2. Change v. Clarification. Appellants argue that the PPA was a clarification. However, by making the governmental plan exemption applicable to Indian tribes, the 24

32 Case: Document: Date Filed: 06/04/2008 Page: 32 PPA acted to change, rather than to clarify, ERISA. Prior to the PPA, 29 U.S.C. 1002(32) defined the term governmental plan to mean, in relevant part: A plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. The PPA amended the definition by adding: The term governmental plan includes a plan which is established and maintained by an Indian tribal government..., a subdivision of an Indian tribal government..., or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential government functions but not in the performance of commercial activities (whether or not an essential government function.) Pub. L. No , 906(a)(2)(A). The Tribe is a sovereign nation and is clearly not a subdivision of a state or an agency or instrumentality of the United States. Prior to the PPA, governmental treatment under ERISA was expressly available only to state and federal entities. The district court correctly determined that, prior to the PPA amendments, the governmental plan exemption did not apply to tribes. 3. Commercial Activities. Under the current tribal governmental plan exemption contained in the PPA, the Tribe s plans are still subject to ERISA because many of its 25

33 Case: Document: Date Filed: 06/04/2008 Page: 33 participants engage in commercial activities. Pub. L. No , 906(a)(2)(A), 120 Stat. 780 (codified as amended at 29 U.S.C. 1002(32)). For purposes of ruling on Anthem s motion to dismiss, the trial court properly accepted Mr. Dobbs factual assertion that his employment activities contributed to maintaining the financial security of the Tribe s treasury. Order at 4, Dobbs v. Anthem Blue Cross and Blue Shield, Civ. Action No. 04-cv (D. Colo., Aug. 23, 2007). Based upon Mr. Dobbs factual assertions and the general description of the Tribe s Plan, the district court further determined for purposes of the motion to dismiss that the Tribe s Plan meets the new definition of governmental plan under the PPA. Id. at 5. The PPA amendment, however, requires a consideration of more than the activities of Mr. Dobbs alone. Qualification for exemption of a tribal plan as a governmental plan requires that none of a plan s participants may engage substantially in commercial activities. As reflected in previous descriptions of the Tribe s businesses and enterprises, many of its plan participants engage in commercial activities, even though the Tribe maintains that all of its employees are engaged in governmental functions. In fashioning the PPA amendments, Congress standards for governmental exemption of tribal plans and state plans are different, and the disparity is unfair to tribes. A 26

34 Case: Document: Date Filed: 06/04/2008 Page: 34 state plan may be exempt without regard to the nature of the activities undertaken by its participants. In fact, a state plan may include employees engaged in a state lottery yet remain governmental. For tribes who engage in gaming operations, however, governmental plan status is not available. I.R.S. Notice , I.R.B This unfairness cannot be cured in this proceeding, but it is also one that should not remain unmentioned. The requirements applicable to a tribal governmental plan nullify the positive effects that governmental status might provide to tribal employee plans. First, the PPA establishes an almost impossible threshold of eligibility based on the absence of employees who engage in commercial activities. Second, if a tribe could successfully differentiate between employees who do and do not engage in commercial activities, creation of a government plan would mandate that a tribe also maintain a second plan for those employees who do engage in commercial activities. Congress denial of governmental plan status to tribal plans whose participants conduct commercial activities is inexplicable. Even in the context of regulating tribal gaming, Congress has recognized that such commercial activities are a legitimate way for tribes to fund their governments and promote their general welfare. 25 U.S.C. 2710(b)(2)(B)(i)-(v). Although the Tribe believes that Mr. Dobbs and all of 27

35 Case: Document: Date Filed: 06/04/2008 Page: 35 the Tribe s employees support governmental functions, given the restrictive language employed by Congress in extending the governmental plan exemption to tribal plans, the PPA does not exempt the Tribe s plans from ERISA compliance. F. Application of Tribal Law and Remedies to the Dobbses Claims. To be sure, this case does not involve the application of tribal law or the jurisdiction of tribal courts to hear disputes related to ERISA retirement plans. Nonetheless, the Court and the parties should be aware that certain limitations related to application of state law or access to state courts do not necessarily extend to tribal law and tribal courts. With few express exceptions, Congress directed that ERISA s provisions would supersede any and all State laws insofar as they may now or hereafter relate to any non-exempt employee retirement benefit plan. 29 U.S.C. 1144(a). In considering 29 U.S.C. 1144(a), this Court has determined that, while the scope of ERISA preemption may be broad, it is certainly not boundless. Woodworker s Supply, 170 F.3d at 990. Indeed, with respect to application of tribal law, ERISA s preemption provisions are totally silent. Yet as reflected in previous portions of this brief, Congress has expressly addressed tribes and their plans in a number of instances and could 28

36 Case: Document: Date Filed: 06/04/2008 Page: 36 have included tribal law within the scope of ERISA s preemption language had it so chosen. The absence of express congressional intent is significant when considered alongside the fundamental concept that Indian tribes retain those attributes of sovereignty that have not been withdrawn by federal statute or treaty or by virtue of their dependent status. Iowa Mutual Ins. Co. v. La Plante, 480 U.S. 9, 14 (1987). Indeed, congressional silence on a matter may be interpreted as evidence that a tribal sovereign power remains intact. Id. On its face, ERISA does not address claims related to employee benefit plans arising from operation of tribal law. Even if Congress has impliedly limited tribal law to the same extent it has expressly limited state law, under Woodworker s Supply, tribal law could still apply to some ERISA matters without running afoul of federal preemption. In addressing adjudication of ERISA claims, Congress has provided that the district courts of the United States shall have exclusive jurisdiction of civil actions under this title, except for civil actions brought by plan participants or beneficiaries to interpret, enforce, or recover amounts due under a plan (referred to herein as non-exclusive claims ). 29 U.S.C. 1132(a)(1)(B), (e). With regard to non-exclusive claims, Congress has provided that state courts of competent jurisdiction and federal districts 29

37 Case: Document: Date Filed: 06/04/2008 Page: 37 courts shall have concurrent jurisdiction. 29 U.S.C. 1132(e)(1). The language related to the concurrent jurisdiction of state and federal courts makes no mention of tribal courts, either by way of limitation or grant of jurisdiction. At the very least, tribal courts would appear to be proper forums for adjudication of claims that fall outside the bounds of ERISA s preemptive effect as described in Woodworker s Supply, and may be proper courts for adjudication of non-exclusive claims. See, e.g., MacDonald v. Ellison, No. SC-CV (Navajo 1999) (dispute between claimants as to proceeds under ERISA). IV. CONCLUSION For the foregoing reasons, the Tribe urges this Court to affirm the decision of the district court dismissing the Dobbses claims. Dated: June 4, 2008 Respectfully submitted, /s/ Thomas H. Shipps Thomas H. Shipps Patricia A. Hall Maynes, Bradford, Shipps & Sheftel, LLP P.O. Box 2717 Durango, Colorado (970) /s/ Patricia A. Hall 30

38 Case: Document: Date Filed: 06/04/2008 Page: 38 Monte Mills Legal Department, Southern Ute Indian Tribe P.O. Box 737 Ignacio, CO (970) x 2140 Nancy Williams Bonnett Pietzsch, Bonnett & Womack, P.A North Third St, Suite 3000 Phoenix, AZ (602) ATTORNEYS FOR THE SOUTHERN UTE INDIAN TRIBE 31

39 Case: Document: Date Filed: 06/04/2008 Page: 39 Section 1. Word count CERTIFICATE OF COMPLIANCE As required by Fed. R. App. P. 32(a)(7)(c), I certify that this brief is proportionally spaced and contains 6,265 words. Complete one of the following: X 2000 I relied on my word processor to obtain the count and it is Microsoft Word I counted five characters per word, counting all characters including citations and numerals. I certify that the information on this form is true and correct to the best of my knowledge and belief formed after a reasonable inquiry. by: Suzanne P. Singley Legal Assistant by: /s/ Suzanne P. Singley Legal Assistant

40 Case: Document: Date Filed: 06/04/2008 Page: 40 CERTIFICATE OF DIGITAL SUBMISSION I hereby certify that a copy of the foregoing BRIEF OF AMICUS CURIAE SOUTHERN UTE INDIAN TRIBE IN SUPPORT OF DEFENDANT-APPELLEE AND AFFIRMANCE, as submitted in Digital Form is an exact copy of the written document filed with the Clerk and has been scanned for viruses with the Symnantec AntiVirus Corporate Edition version , Virus Definition File Dated: 6/3/2008 rev. 4, and, according to the program, is free of viruses. by: Suzanne P. Singley Legal Assistant by: /s/ Suzanne P. Singley Legal Assistant (Digital)

41 Case: Document: Date Filed: 06/04/2008 Page: 41 CERTIFICATE OF SERVICE I hereby certify that on the 4 th day of June, 2008, a copy of the BRIEF OF AMICUS CURIAE SOUTHERN UTE INDIAN TRIBE IN SUPPORT OF DEFENDANT-APPELLEE AND AFFIRMANCE digital submission in electronic form was ed to: jmann@kcfpc.com and shawnmitch@aol.com. Additionally, I hereby certify that a copy of the foregoing BRIEF OF AMICUS CURIAE SOUTHERN UTE INDIAN TRIBE IN SUPPORT OF DEFENDANT-APPELLEE AND AFFIRMANCE was furnished by U.S. Mail to the following on the 5 th day of June, 2008: John Mann Kennedy, Childs & Fogg Independence Plaza 1050 Seventeenth Street, Suite 2500 Denver CO Shawn Mitchell Law Office of Shawn Mitchell Newton Street Broomfield CO by: Suzanne P. Singley Legal Assistant by: /s/ Suzanne P. Singley Legal Assistant (Digital)

42 Case: Document: Date Filed: 06/04/2008 Page: 42 ATTACHMENT NO. 1 CONSTITUTION OF THE SOUTHERN UTE INDIAN TRIBE OF THE SOUTHERN UTE INDIAN RESERVATION (OCT. 1, 1975)

43 Case: Document: Date Filed: 06/04/2008 Page: 43 CONSTITUTION OF THE SOUTHERN UTE INDIAN TRIBE OF THE SOUTHERN UTE INDIAN RESERVATION COLORADO

44 Case: Document: Date Filed: 06/04/2008 Page: 44 TABLE OF CONTENTS Preamble 1 Article I -- Jurisdiction 1 Article II -- Membership 1 Article If] -- Governing Body., 2 Article IV -- Nominations and Elections 2 Article V -- Vacancies, Removal and RecalL 3 Article VI -- Referendum 4 Article VIl -- Powers ofthe Council.4 Article VIII -- Land, 6 Article IX -- Meeting of the Tribal Council 6 Article X -- Duties ofofficers 7 Article XI -- Restriction on Voting ofcouncilmen 8 Article XlI -- Constitutional Amendments 8 Article XIII -- Saving Clause 8 Article XIV -- Gender 8 Article XV -- Adoption ofconstitution 8 Approval 9 Amendment to the Constitution I 0 Cel1ificate ofapproval 10 Certificate of Results of Election 11

45 Case: Document: Date Filed: 06/04/2008 Page: 45 CONSTITUTION OF THE SOUTHERN UTE INDIAN TRIBE ofthe Southern Ute Indian Reservation, Colorado PREAMBLE We, the members ofthe Southern Ute Indian Tribe ofthe Southem Ute Indian Reservation in Colorado, in order to exercise our inherent rights ofselfgovernment as confim1ed by the constitution and bylaws approved November 4, 1936 to administer our tribal affairs, to preserve and increase our tribal resources, do ordain and establish this constitution. ARTICLE I -- JURISDICTION The jurisdiction ofthe Southern Ute Indian Tribe through its general council, its tribal council and courts, shall extend to all the territory within the exterior boundaries ofthe reservation, and to such other lands as may be added thereto by purchase, gift, Act ofcongress or otherwise. ARTICLE II -- MEMBERSHIP Section 1. The membership of the Southern Ute Indian Tribe shall consist ofthe following: (a) All persons duly emolled on the 1970 tribal census roll dated August 31, 1971, approved by the Albuquerque Area Director on February I, (b) All children ofenrolled members bom subsequent to July 14, 1965, and prior to the effective date ofthis revision, ifsuch children possess at least one-fourth (1/4) degree of Southern Ute Indian blood; and have not been enrolled as a member ofany other Indian tribe. (c) All children ofenrolled members born subsequent to the effective date ofthis revision, ifsuch children shall be one-fourth (1/4) or more degree ofsouthem Ute Indian blood and PROVIDED that such person shall not be included on the membership roll ofany other Indian tribe and is approved for adoption by the tribal council. Section 2. The tribal council shall have the power to enact ordinances consistent with this constitution, to govern future membership, loss ofmembership and the adoption ofpersons into the Southern Ute Tribe. Such ordinances shall be subject to approval by the Secretary of the Interior or his authorized representative. Section 3. The tribal council shall have the power to prescribe rules governing the compilation, maintenance and correction ofa tribal membership roll. Such rules, insofar as the correction of blood degree is concerned, shall be subject to approval by the Secretary ofinterior or his authorized representative. Section 4. The tribal council shall have the sole authority and original jurisdiction to determine eligibility for emollment. No decree ofany non-tribal court purporting to determine membership in the tribe, paternity, or degree ofindian blood, shall be recognized for membership purposes.

46 Case: Document: Date Filed: 06/04/2008 Page: 46 ARTICLE III -- GOVERNING BODY Section 1. Name. The governing body ofthe Southem Ute Indian Tribe ofthe Southem Ute Indian Reservation shall be known as the Southern Ute Indian Tribal Council. Section 2. Composition of the Council. The council shall be composed ofseven (7) members (chairman and six (6) councilmen), all ofwhom shall be elected on an at-large basis for three (3) year staggered terms or until their successors are duly elected and installed. The chainnan shall be elected from among candidates who specifically file for that office. Following his installation, the chairman shall appoint from within the council membership a vice-chainnan to serve in that capacity at the pleasure ofthe chairman provided such appointment shall not extend the vice-chairman's normal three (3) year term on the council. Section 3. The tribal council and tribal officials incumbent on the effective date ofthis constitution shall remain in office and shall be entitled to exercise all powers granted by this constitution to the tribal council and tribal officials until such time as their successors are duly elected and installed pursuant to the provisions ofthis goveming document. ARTICLE IV -- NOMINATIONS AND ELECTIONS Section 1. The First Election. The first election under this constitution shail be held on the first Friday in November (November 7, 1975) and shall be supervised and conducted in accordance with an election ordinance enacted by the council then in ofj:ice pursuant to Section 7 ofthis article. The position oftribal council chairman and the two (2) vacancies on the council which would occur in November, 1975 under the original constitution, shail be fiiled for three (3) year terms at the November 7, 1975 election. Those incumbents in the two (2) above mentioned council positions shail continue to serve until December 2, 1975 unless earlier removed from office, or until their successors are duly elected and installed. Successful candidates for the three (3) vacant council positions (chairman and two (2) council members) and the person appointed by the chairman to serve as vice-chairman, shall be installed in office on the first Tuesday ofdecember (December 2, 1975). Thereafter there shail be annual elections on the first Friday in November to fiil for three (3) year terms, the two (2) vacancies occurring each year so as to continuc thc system ofstaggered terms ofoffice. Every third year there shail also be elected a tribal council chairman for a three (3) year term. No person shail hold the office oftribal Council Chairman consecutively for more than three tenns. Section 2. Terms ofoffice. The terms ofoffice ofthe tribal council chainnan and the members ofthe tribal council shall be three (3) years, PROVIDED, that upon adoption and approval ofthis constitution the unexpired temls ofthe council members elected under the previous constitution shall continue until their terms expire at the end ofthree (3) years from the date oftheir instailation or until their successors are duly elected and instailed. Section 3. Assumption ofoffice. Newly-elected members ofthe tribal council shail be instailed in office on the first Tuesday ofdecember after their election. Persons who are elected or appointed to fill any unexpired teml on the council shall take office immediately following cettification oftheir election or appointment. Section 4. Voter Qnalifications. Any enrolled member ofthe Southern Ute Indian Tribe, male or female, eighteen (18) years ofage or over, shall be entitled to vote at any tribal election PROVIDED snch person is duly registered. 2

47 Case: Document: Date Filed: 06/04/2008 Page: 47 Section 5. Qualification of Candidates. Candidates for membership on the tribal council shall be at least twenty-five (25) years ofage at the time ofelection or appointment, and shall have physically resided within the present exterior boundaries ofthe Southel11 Ute Indian Reservation for at least ninety (90) days immediately preceding their appointment or the election at which they are candidates tor tribal office. No person who has been convicted ofa felony shall qualify as a candidate or hold membership on the tribal council. Section 6. Election Board. An election board, appointed by the tribal council, shall maintain a register ofqualified voters, rule on the eligibility ofthe candidates for tribal office, settle all election disputes and supervise and administer all tribal elections in accordance with established tribal ordinances and in conformity with this constitution PROVIDED, that no member of the election board shall be at the same time a member ofthe tribal council or a candidate for tribal office. Persons appointed to the election board may be removed by the tribal council chairman with the concurrence ofthe tribal council. The election board shall choose its own chairman, vice-chairman and secretary from within its membership. Section 7. Election Ordinance. Rules and procedures goveming the elections under this constitution shall be prescribed by ordinance ofthe tribal council. Such ordinance shall include provisions for notice ofelection, secret ballots, absentee voting, registration ofvoters, special elections and a procedure for settling election disputes. Further, it shall contain provisions to govern the filling ofunexpired terms ofoffice pursuant to Section 5 (b) ofarticle V and the conduct ofreferendum elections as set forth in Section 3 ofarticle VI. ARTICLE V -- VACANCIES, REMOVAL AND RECALL Section 1. Removal. Any member ofthe tribal councilor other elected official ofthe Southern Ute Indian Tribe who, during his ternl ofoffice, is convicted ofa felony in any court, shall thereupon forfeit his telid ofoffice. Any member ofthe tribal councilor elected official of the tribe may be removed from office by the affirmative vote ofnot less than four (4) members ofthe tribal council for gross neglect ofduty, misfeasance in office or for misconduct reflecting on the dignity and integrity ofthe Southern Ute Indian Tribe, PROVIDED, that first, the accused person shall be given a written statement ofthe charges made against him at least ten (10) days before the meeting ofthe tribal council at which he is to appear, and he shall be given an oppol1lmity to answer such charges. The decision ofthe tribal council shall be final. Section 2. Recall. Any member ofthe tribal council or other elected official of the Southern Ute Indian Tribe shall be subject to recall from office at a special election to be called and held at the direction ofthe tribal council within thirty (30) days following receipt ofa petition signed by at least thiliy percent (30%) ofthe registered voters ofthe Southern Ute Indian Tribe, PROVIDED, that a majority of the registered voters ofthe Southern Ute Indian Tribe shall vote in such election. Once a recall attempt has been concluded for any given member, it shall not be considered again until twelve (12) months have passed. No recall shall be initiated until the official has completed at least six (6) months ofhis tel111. Section 3. Procedures. Procedures and regulations governing the conduct ofrecall elections and removal proceedings shall be established by ordinance of the trihal council. Section 4. Resignation. The chairman of the Southern Ute Indian Tribe or any member of the tribal council may, at any time, resign from the office to which he was elected by submitting a writtcn rcsignation to the tribal council. 3

48 Case: Document: Date Filed: 06/04/2008 Page: 48 Section 5. Filling vacancies. Any vacancy in the membership of the tribal council, resulting from any cause, shall be filled: (a) By a tribal member who meets the qualifications for that office, appointed by the chairman ofthe Southern Ute Indian Tribe and confirmed by a vote ofnot less than four (4) council members ifthe ternl ofthe vacant office is due to expire within six (6) months tollowing the date upon which it becomes vacant; or (b) At a special election to be called and held at the direction ofthe tribal council within sixty (60) days following the date upon which it becomes vacant ifthe term ofthe vacant office has longer than six (6) months to run. Procedures and regulations to govern such special election shall be embodied in the election ordinance. ARTICLE VI -- REFERENDUM Section 1. Upon the receipt ofa petition signed by at least twenty percent (20%) ofthe registered voters ofthe Southern Ute Indian Tribe, or upon the adoption ofa resolution ofthc tribal council supportcd by no less than four (4) members thereof, the tribal council shall direct the election board to call and hold a special election at which the registered voters ofthe Southern Ute Indian Tribe may vote upon any enacted or proposed ordinance or resolution ofthe tribal council. Such election shall be held within thirty (30) days following receipt ofsaid petition or adoption ofthe foregoing resolution by the tribal council. The decision ofthe tribal electorate shall be tinal, PROVIDED, that not less than fifty percent (50%) ofthe registered voters of the Southern Ute Indian Tribe vote in such referendum. Section 2. Limits of Referendum. No referendum shall serve to abrogate, modify or amend any properly approved contract or agreement to which the tribal council is a party. Once a referendum has been voted upon and fails, that issue shall not be considered again until twelve (12) months have passed. Section 3. Procedures. Special elections for referendum purposes shall be held in confornlity with procedures established in the election ordinance ofthe Southern Ute Indian Tribe. ARTICLE VII -- POWERS OF THE COUNCIL Sectiun 1. The inherent powers ofthe Southern Ute Indian Tribe, including those set f011h in Section 16 ofthe Act ofjune 18, 1934 (48 Stat. 984), as amended, shall be exercised by the Southern Ute Indian Tribal Council, subject only to limitations imposed by the Constitution and Statutes ofthe United States, by the regulations ofthe Department ofthe Interior and by this constitution. The tribal council shall be empowered to: (a) Regulate its own procedures by appropriate ordinance. In addition, the council may appoint subordinate boards, commissions, committees, tribal officials and employees not otherwise provided for in this constitution, and may prescribe their salaries, tenure and duties. (b) Authorize and regulate tribal associations, corporations and subordinate organizations for economic and other purposes, with the approval of the Secretary ofthe Interior or his authorized representative whenever required by law, and may transfer tribal assets thereto for management and control; (c) Any encumbrance, sale, lease, permit, assignment, or management ofany portion ofthe reservation, or the grant ofany rights to use of lands or other assets, or the grant or 4

49 Case: Document: Date Filed: 06/04/2008 Page: 49 relinquishment ofany water or mineral rights or other natural or fiscal assetsofthe Southern Ute Indian Tribe, are hereby reserved to the tribal council. (d) Advise the Secretary ofthe Interior and heads ofother Federal Agencies with regard to all appropriation estimates or Federal projects for the benefit ofthe Southern Ute Indians ofthe Southern Ute Indian Reservation. (e) Subject to approval by the Secretary ofthe Interior, or his authorized representative, the tribal council may enact ordinances and codes to protect the peace, safety, propelty, health and general welfare ofthe members ofthe Southern Ute Indian Tribe and to govern the administration ofjustice through the tribal courts, prescribe the powers, rules and procedures ofthe tribal COUltS in the adjudication ofcases involving criminal offenses, domestic relations, civil actions and the inheritance and probate oftrust, real and personal property of tribal members within the reservation. (f) Provide by ordinances for the appointment ofguardians for minors and mental incompetents. (g) Provide by ordinance, subject to the approval ofthe Secretary ofthe Interior, or his authorized representative, for the removal or cxclusion from the reservation ofany nonmembers whose presence may be found by the tribal council to be injurious to members of the tribe. (h) The tribal council shall manage all funds within the control ofthe tribe, and may appropriate available tribal money for public, business, governmental or investment purposes with approval ofthe Secretary ofthe Interior, or his authorized representative, whenever required by Federal law. I. All appropriations oftribal funds shall be expended in conformity with annual budgets subject to approval by the Secretary ofthe Interior, or his authorized representative; 2. Provisions shall be made for adequate accounting ofall tribal financial transactions, including a comprehensive annual audit. An annual summary audit report showing income and expenses for the fiscal year ended, reflecting the financial condition ofthe tribe, shall be available to tribal members upon request. All tribal officials and employees who are directly responsible for the receipt, disbursement and custody oftribal funds shall be adequately bonded. The cost ofsuch bond shall be paid from tribal funds. (i) The tribal council may authorize the deposit ofany tribal funds undcr its control, to the credit ofthe Southern Ute Indian Tribe, without limitations on the amount carried in any account, in any bank whose deposits are insured by any agency ofthe Federal Government. Ol The tribal council shall have the power to borrow money for business and economic development purposes from the Federal Government or other lending agencies. (k) The ttibal council may levy and collect taxes and fees on tribal members, and may enact ordinances, subject to approval by the Secretary ofthe Interior, or his authorized representative, to impose taxes and fees on nonmembers ofthe tribe doing business on the reservation. (I) The tribal council may administer charity. (m) The tribal council may adopt ordinances to authorize the loan oftribal funds to tribal members or tribal organizations. (n) To protect and preserve the property, wildlife and natural resources ofthe tribe, and to regulate the conduct oftrade and the use and disposition oftribal propelty upon the reservation. 5