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FEC ruling separates tribes from their businesses
Monday, March 14, 2005

Politically-active tribes who make contributions to federal campaigns can do so while performing contracting work for the government, a split Federal Election Commission ruled on Friday.

Rejecting a recommendation of the FEC's general counsel, the FEC voted 4-2 to adopt an opinion that separates a tribe's political activities from its business operation. The decision ensures that tribes can participate in the political process without being subject to rules that would otherwise limit donations by federal contractors.

The case affects the Mississippi Band of Choctaw Indians, a politically-active tribe whose donations rival those of small corporations. Flush with proceeds from its successful gaming and business enterprises, the tribe gave more than $220,000 to Republican and Democratic interests in the 2004 election cycle. In 2002, the tribe's donations topped $536,000.

Other tribes, however, could end up benefiting from the FEC's ruling. Any tribe with a federal contract can continue to make contributions so long as proceeds from the work aren't used to fund political activities.

The decision is an extension of the FEC's long-standing policy towards tribal sovereigns. The agency has previously determined the tribal governments aren't subject to certain limitations placed on political contributions by individuals.

The FEC also has held that "the general relationships between tribal governments and their commercial ventures are unique" and should be treated differently. Normally, donations from a tribe that does work for the government wouldn't be allowed because federal law bars contractors from "directly or indirectly" contributing to political campaigns or political action committees during the term of the contract.

But in cases involving tribes, the FEC looks to the facts to determine whether the contributions are legal. In a 2000 case involving the Tohono O'odham Nation, the agency said the tribe could make donations even though its utility was a federal contractor because the tribe and the utility maintained separate structures and bank accounts.

This ruling superseded a FEC opinion from 1983 that determined the Mississippi Band of Choctaw Indians, as a tribe, was a federal contractor subject to the prohibition on donations.

In the current case, the FEC's general counsel had in fact prepared, and endorsed, a draft opinion that would have treated the Mississippi Band as a contractor. The draft noted that the tribe provided all the funds to create a construction company that intended to become a federal contractor, controlled nearly every aspect of the company and would be held liable if the company faulted on a performance bound.

"While some aspects of the circumstances might indicate that IKBI has an identity distinct from the tribe, such as its separate corporate structure, many more substantial factors support the conclusion that the tribe and IKBI are inextricably linked," the opinion stated. IKBI is the name of the tribe's construction firm.

The majority of the FEC, however, accepted a second draft opinion concluding that IKBI maintains a "distinct and separate identity" from the tribe itself. "Accordingly, when IKBI qualifies as a federal contractor, its status as federal contractor does not confer federal contractor status on the tribe and therefore will not affect the tribe's political activities," the document stated.

The two drafts were presented to the tribe on March 3 and were considered at a public meeting last Thursday. The FEC's vote was made public on Friday.

Last year, the Mississippi Band came under scrutiny during a Senate investigation into the activities of two Washington lobbyists accused of bilking tribes out of more than $80 million. Choctaw Chief Phillip Martin initially balked at the probe but later agreed to cooperate. Further hearings before the Senate Indian Affairs Committee are planned.

Mississippi Band of Choctaw Indians Political Donations:

Year	Amount	Democrats	Republicans
2004	$223,623	48%	52%
2002	$578,938	64%	36%
2000	$202,750	15%	85%

Source: The Center for Responsive Politics

Relevant Documents:
Advisory Opinion Draft A and Draft B | Tribe's Request for Advisory Opinion

Earlier FEC Rulings:
Mississippi Band of Choctaw Indians (September 17, 1993) | Oneida Nation (May 15, 2000) | Tohono O'odham Nation (January 28, 2000)

Relevant Links:
Mississippi Band of Choctaw Indians - http://www.choctaw.org