In Morton v. Mancari, 417 U.S. 535 (1974), the U.S. Supreme Court had upheld Section 12 of the Indian Reorganization Act, 25 U.S.C. § 472, which directed the DOI to give preference in employment to qualified Indians. The U.S. Supreme Court concluded the Indian Preference was neither race nor national origin discrimination but, rather, a distinction based on the unique political relationship between the United States and tribes.

The EEOC had ignored the obvious political nature of the relationship between tribes and their citizens and the compelling policy arguments supporting tribes’ preference for their own members. Seizing on the supposed ambiguity in Title VII’s reference to “Indian(s),” EEOC insisted that Peabody could not comply with the tribal preference obligation in its lease with the Navajo Nation without committing “national origin discrimination” against members of other tribes and non-Indians.

The consequences of the EEOC’s interpretation of Title VII, had it prevailed, were potentially disastrous. Tribes engage in economic development for two equally important reasons: to provide employment for tribal members and to generate revenue to fund tribal government. Similarly, tribes give their own members preference in bidding on tribal contracts in order to encourage entrepreneurship and the development of a private sector reservation economy. (Congress does the same thing with “Buy American” requirements for federal contracting.) Requiring contractors and lessees working on the reservation to adopt tribal employment and contracting preferences advances the same legitimate goals. Moreover, these goals are in complete accord with the policy of the federal government to encourage tribes’ economic development as a means of reducing dependence on the federal government and promoting tribal self-determination.