Randy Phelan, the vice chairman of the Mandan, Hidatsa and Arikara Nation, addresses Deputy Secretary of the Interior David Bernahrdt, at podium, during the 74th annual convention of the National Congress of American Indians in Milwaukee, Wisconsin, on October 19, 2017. Photo by Indianz.Com (CC BY-NC-SA 4.0)

Top Trump administration official casts doubt on tribal economic development rule

A top Trump administration official cast doubt on the fate of a major economic development proposal in his first appearance before tribal leaders last week.

Speaking to the National Congress of American Indians last Thursday, the second-in-command at the Department of the Interior would not commit to following through with an update to the so-called Indian Traders rule even though the initiative has widespread support and has already been through the public notice and consultation process.

"I'm not convinced that we are moving forward with those," Deputy Secretary David Bernhardt said at NCAI's 74th annual convention in Milwaukee, Wisconsin.

He quickly added: "I'm not convinced that we won't."

Bernhardt's waffling came after Randy Phelan, the vice chairman of the Mandan, Hidatsa and Arikara Nation, explained the need for a new rule. Like many of his fellow leaders, Phelan believes an update will put an end to unfair systems of dual taxation on reservations across the country.

A slide prepared by the National Congress of American Indians explains the background of the Indian Trader Regulations, which govern economic activity on reservations. Photo by Indianz.Com (CC BY-NC-SA 4.0)

The tribe's energy resources -- which are considered trust assets by the federal government -- are taxed by the state of North Dakota. That has resulted in more money flowing to the state than to the Fort Berthold Reservation over much of the last decade.

"The state of North Dakota is draining our taxes," Phelan, who unsuccessfully ran for vice president of NCAI, said at the meeting.

The figures are staggering. Since 2009, the state has collected more than $1.2 billion from energy development on the reservation. The tribe has seen less than $1 billion during that same time, according to figures from the state's tax department.

"Where does this money go?" another tribal official said. "It doesn't come back to the reservation."

Bernhardt, who took pains at the beginning of his speech to emphasize his ties to Leonard Burch, the late former chairman of the Southern Ute Tribe, acknowledged the need to "learn a little more" about dual taxation. Yet he isn't the first top official at Interior to cast doubt on the Indian Traders initiative.

Back in June, Associate Deputy Secretary Jim Cason said he wasn't sure dual taxation would end up in the final rule after a key Republican in Congress warned the Trump administration not to start a fight between tribes and states and local governments. The implication was that states would win.

A slide presentation by Gavin Clarkson, the Deputy Assistant Secretary for Policy and Economic Development at the Bureau of Indian Affairs, explains the messages tribal leaders gave about the Indian Trader Regulations. Source: Gavin Clarkson / BIA

Despite the lack of commitment from Washington, D.C., the Bureau of Indian Affairs continued to hold listening sessions and consultations with tribes on the new rule. The meetings -- one of which took place in Milwaukee last Monday -- have given hope to tribes that they will eventually prevail.

"I think you need to move on this thing as fast as possible," Ron Allen, the longtime chairman of the Jamestown S'Klallam Tribe said at the session as he called on the BIA to be "unequivocally clear" about the inherent ability of tribes to act as the sole taxing authority on their lands.

"I think we need to move forward, move quickly," said Allen, who won election as NCAI's treasurer by acclamation during the convention last week.

Addressing dual taxation will spur economic opportunities and create jobs on reservations, said Aaron Payment, the chairperson of the Sault Ste. Marie Tribe of Chippewa Indians. That helps President Donald Trump advance his pro-business and pro-development agenda, he asserted.

"The current administration is going to get a victory out of this," said Payment, who won re-election as NCAI's vice president last week.

Through a Dear Tribal Leader letter, the BIA specifically asked tribes to submit information about economic opportunities they have missed out on due to uncertainty in taxation systems in their communities. Final comments are due October 30.

"We're hoping everybody can help respond ... and give them more economic data about why tribes need their own authority to collect taxes," said John Dossett, an attorney who works as NCAI's general counsel.

Although the top tier at Interior seem less than excited about the initiative, the BIA official who is in charge of the regulations has wholeheartedly embraced the task. Gavin Clarkson, a citizen of the Choctaw Nation who serves as the Deputy Assistant Secretary for Policy and Economic Development for the BIA, told the Mandan, Hidatsa and Arikara Nation that he wanted to help them resolve dual taxation.

“Together, we’re going to prove that it is in everybody’s best interest for taxes collected at MHA to stay at MHA and be collected by MHA and by nobody else,” Clarkson said at the tribe's energy symposium in June, The Bismarck Tribune reported at the time.

Clarkson, who has extensive experience in finance and economic issues in Indian Country, isn't alone in warming to the message. In a speech last month, the second-in-command at the Department of Energy described dual taxation as a barrier to successful development.

Deputy Secretary Dan Brouillette told the Indian Country Energy and Infrastructure Working Group that "once joint ventures are formed, state dual taxation is incurred, preventing many projects from ever happening."

"Therefore, the administration is committed to working through the Department of Interior ... to implement the reforms necessary to liberate Indian energy development from stifling taxes and regulations," Brouillette said, according to a copy of remarks from the September 21 meeting.

Federal Register Notices:
Traders With Indians (February 8, 2017)
Traders With Indians (December 9, 2016)

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