Despite being introduced in identical ways, tribal enterprises and Alaska Native Corporations have achieved vastly different outcomes in their government contracting operations. However, the Supreme Court’s recent decision in McGirt v. Oklahoma may change this, handing down a potential beacon of hope to the underperforming tribal enterprises. This Note outlines how the award disparities between ANCs and tribal enterprises that began decades ago continue to this day, despite Congressional intervention. This Note then posits that the expanded Indian Country via the recent ruling in McGirt v. Oklahoma would allow for tribal enterprises to get a leg up through competitive jurisdiction, regulation, and taxation.
On a remote Alaskan island lies a small village containing the approximately two hundred shareholders of the Chenega Corporation, with almost six billion dollars in government contract awards. In the first month of 2022, this small village secured seven new government contracts. Meanwhile, the Oneida Nation Reservation is being cooled by the winds of Lake Michigan, located on the outskirts of Green Bay, Wisconsin, with a population of over twenty thousand. With more than one hundred times the population, close proximity to a major city, and a near identical length of time spent engaging in government contracting, one may expect the Oneida Nation (Oneida) to be generating similar if not larger profits via their contracting program than Chenega. However, the Oneida barely make a fifth of what the rural Alaskan village pulls in each year.
These disparities are not a mistake. Rather, they occur as a result of deliberate government contracting programs. Both Alaska Native Corporations (ANCs) and tribal enterprises are able to enroll in the Small Business Administration (SBA)’s 8(a) business development program, but ANCs have dominated the field. This control is partly due to the unique benefits ANCs are awarded by the program that are not available to tribal enterprises. Such benefits once included exemptions from the bans on sole-source awards, which led to noncompetitive awards of hundreds of millions of dollars to ANCs. While this disparity is known to Congress, all attempts at reining in ANC exclusive benefits have fallen flat.
A recent radical change in jurisprudence could close this tribal enterprise performance gap. The 2020 United States Supreme Court ruling in McGirt v. Oklahoma presents new opportunities to struggling tribal enterprises. McGirt adjusted the previous test used to determine the area of tribal influence known as “Indian Country.” This revision allows for tribal governments to implement unique and exciting policies that could greatly benefit tribal enterprises, including innovative tax structures, entrepreneurial regulations, and a compassionate civil judicial system. These benefits would only be available to tribal enterprises, not to ANCs, as Alaska Native Villages do not exist in Indian Country. Thus, under such benefits, the disadvantaged tribal enterprises may be eligible for unique gains that are unobtainable by the currently dominant ANCs. The SBA could rebalance the performance of ANCs and tribal enterprises by not interfering with the expansion of Indian Country and subsequent availability of unique benefits to tribal enterprises that may occur via the ruling in McGirt.
This Note addresses a variety of policies that tribes could employ under their expanded McGirt influence to provide their enterprises with competitive advantages over ANCs, with the goal being equitable performance in government contracting between the groups. Following the introduction here in Part I, Part II will provide a brief overview of the three-hundred-year history of American Indian and Alaska Native regulations, and their similarities and differences. Next, Part III will discuss the history of the SBA 8(a) program and the disparate performances of ANCs and tribal enterprises. Part IV will then analyze the ruling in McGirt v. Oklahoma, its impact, and its likely future. Finally, Part V will lay out four policies tribal governments could employ to benefit tribal enterprises that the ruling in McGirt has made possible or more impactful. In Part V, subpart A will discuss the option of discriminatory tax structures. Subpart B will focus on the ability of tribal governments to slash regulations. Subpart C examines the implications of expanded tribal jurisdiction on government contracting. Finally, subpart D analyzes the wider array of resources that are made available to tribal enterprises via an expanded Indian Country.
Since its inception, the American legal system has struggled to determine the proper relationship between the government and the many tribes native to the contiguous United States. The tension between tribes being treated as either sovereign nations or dependent wards of the state has endured for centuries, since the first vestiges of federal Indian law were laid out in the so-called “Marshall Trilogy.” The judicial system has fluctuated in its position through decades of forced removal to reservations, the allotment of these reservation lands under the Dawes Act, and even the involuntary termination and dissolution of some tribes. What has remained constant through all these decades has been the federal government’s duty to protect the tribes’ interests in some way, and the tribes’ ability to remain sovereign in some capacity. The geographic range of this dynamic is encapsulated in a concept known as “Indian Country.”
Indian Country is a simple, yet easily misunderstood term, due to its inconsistent usage by Congress. Indian Country is the geographic area in which both local tribal laws and federal laws governing Indians apply. The concept dates back to the first Travel and Intercourse Act of 1790 and has evolved over the centuries. The most frequently used modern definition of Indian Country can be found in the Major Crimes Act. It defines Indian Country as including reservations, dependent Indian communities, Indian allotments, and both fee patented lands and rights of ways in reservations. These areas are considered Indian Country until diminished or extinguished by Congress.
The laws governing the Natives of the lower forty-eight states are very different compared to those in Alaska and Hawaii. The territory that would become Alaska, purchased by the United States in 1867, is geographically removed from the contiguous states. The rush for land in Alaska did not happen immediately, which seemingly caused less early friction between the settlers and the Alaskan Natives than with other Native American tribes.
However, by the time Alaska officially became a state in 1959, a universal agreement with the Natives was needed as Alaska’s natural resources had come into more demand. Congress’s solution was the Alaska Native Claims Settlement Act (ANCSA). This Act dissolved any aboriginal rights the Natives could exercise, including hunting and fishing rights, trespass claims, full tribal sovereignty, and the designation of their land as “Indian Country.” Instead, almost all Natives were enrolled in one of thirteen regional corporations as shareholders. These “Alaska Native Corporations” were meant to establish sustainable business practices with the goal of having the profits from these projects benefit the Native shareholders in perpetuity. Later, these same ANCs were given special opportunities in government contracting to help them grow.
Special opportunities for ANCs and tribal enterprises began to materialize a half a century ago. In 1953, Congress passed the Small Business Act to “protect, insofar as it is possible, the interests of small-business” by ensuring that a “fair proportion” of government contracts be awarded to small businesses. Part of this Act included the 8(a) Business Development Program (hereinafter referred to as “8(a)”), which provides the small businesses enrolled in its program technical assistance and access to set-aside and sole-source government contracts. For fiscal year 2022, the federal government has a goal of five percent of all prime contracts to go to small disadvantaged businesses, with the bulk of these going through the 8(a) program.
In 1978, an amendment limited these 8(a) contract awards to only small businesses owned by those that were “socially and economically disadvantaged.” These standards were made to include tribal-owned enterprises and Alaskan Native Corporations (ANCs) in 1986. This transition occurred via the massive Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), resulting in silence in the Congressional Record on the reasons behind these additions. The relevant section of the bill treats ANCs as substitutable for tribal-owned enterprises, which, when interpreted with the canon of noscitur a sociis, seemingly indicates an intent for equal treatment between ANCs and tribal enterprises. Yet, while these groups were added to the program under identical circumstances, the former has vastly outpaced the latter in acquiring large contracts.
Alaska Native Corporations have benefited greatly from the SBA’s 8(a) program, often to the detriment of other contenders. In fiscal year 2010, ANCs made up less than four percent of 8(a) program participants, but were awarded greater than twenty-five percent of all allocated 8(a) funds. This disparity was due in no small part to the structural advantages these firms had over other 8(a) competitors. These advantages at one point included the assumption of economic disadvantage, the ability to be managed by non-natives, and their exclusion from sole source award competitive thresholds.
This structure came to a head about a decade ago, with loud criticism from both the public and Congress of the practices of ANCs like Chenega Corp., Cape Fox Corp., and Goldbelt, Inc. In response, SBA updated some of its 8(a) policies to force greater benefit to ANC shareholders and extend the single source competitive threshold exemptions to other 8(a) participants, such as tribal enterprises. Notably, despite these policy changes, SBA still presumes ANCs to be economically disadvantaged. These rule changes, while well-intentioned, have not yet meaningfully altered ANCs’ dominance of the 8(a) program.
Perhaps nothing represents this policy failure better than the massive successes of the previously mentioned Chenega Corporation. An ANC serving the Prince William Sound region, Chenega began making serious headway in 2001, receiving a massive two billion dollar contract with the National Geospatial Intelligence Services despite the fact that this venture only had around thirty employees. Subsequently, the contract was largely subcontracted to organizations like Lockheed Martin and General Dynamics. The majority of Chenega’s contracting comes from defense work, via either the Department of Defense or the Department of Homeland Security. These contracts cover a wide array of fields, with the largest being security and staffing solutions. Despite being created for the betterment of Alaskan villages, almost all of their business is conducted in the contiguous United States. Additionally, Chenega has a record of underpaying their Alaska Native shareholders. Chenega is recorded as having forty-nine subsidiaries participating in government contracting over the years. They remain competitive to this day, with one of these subsidiaries being awarded a more than a half billion dollar pair of contracts with the National Aeronautics and Space Administration (NASA) in late 2021.
Chenega’s success is just one example of these disproportionate performances. Near the peak of ANC-dominance of the 8(a) program, ANCs were compensated almost seven times as many dollars as tribal-owned enterprises, despite having nearly the same number of firms in the field. Even after their attempted regulation, over the past five fiscal years ANCs have received in excess of one hundred and fifty percent more dollars than tribal enterprises, despite making up less of the field. So why do these disparities persist?
Tribal Enterprises are tribal-owned businesses that compete for government contracts. To qualify as a tribal enterprise for the SBA’s 8(a) program, the business must be small (pursuant to SBA size standards) and at least fifty-one percent owned by the tribe. The business need not be located within any plot of tribal land but must primarily operate in the United States. Additionally, unlike ANCs, the tribes with interests in tribal enterprises must prove economic disadvantage to be admitted to the program. While each tribal enterprise can be in the 8(a) program only for one nine-year term, the sponsoring tribes have no such limit and can sponsor as many tribal enterprises as they like.
Oneida Nation’s tribal-owned enterprises are a telltale example of the experience of other large tribes’ government contracting programs. Oneida Nation, located in Wisconsin, has thirteen recorded subsidiaries. Most of their contracting remains within Wisconsin, with most of their awards coming from Indian-focused agencies such as the Bureau of Indian Affairs and Indian Health Services. Oneida Nation’s main fields of focus are construction and hazardous waste disposal. They have had relatively steady profits over the years, with the exceptions of the pandemic years of 2020 and 2021. All of this has happened while Oneida Nation has been involved in an ongoing series of lawsuits in an attempt to regain control of what they view as their illegally diminished territory.
While ANCs have benefited immensely from the 8(a) business development program, tribal-owned enterprises, such as Oneida Nation’s government contracting program, have not experienced the same amount of success. When ANC domination was near its least regulated in fiscal year 2010, tribal-owned enterprises received only $690 million despite having roughly identical amounts of 8(a) enrolled businesses as ANCs (which received $4.7 billion). In the decade since ANCs have become more heavily regulated, this disparity has not meaningfully changed, with the exception of the success of the Cherokee Nation. This disparity is likely due to the high incumbency of awards to well-established contractors, which ANCs had dominated for years. Additionally, ANCs are structured as for-profit corporations, whereas tribal-owned enterprises and their profit are not the central focus of continental tribes. This structure allows ANCs to act more quickly and with profit more in mind than tribal-owned enterprises, which are subject to the decisions of bureaucratic tribal governments.
Tribal-owned enterprises could be on the brink of a massive expansion. When the McGirt v. Oklahoma opinion came down from the United States Supreme Court in 2020, it was met with a cacophony of public commentary seldom seen in Indian law rulings. This change was reflected in Justice Neil Gorsuch’s bold opening lines of the majority opinion: “On the far end of the Trail of Tears was a promise. Forced to leave their ancestral lands in Georgia and Alabama, the Creek [Muscogee] Nation received assurances that their new lands in the West would be secure forever.” The issue in McGirt was whether Oklahoma had criminal jurisdiction over a Native man on land originally ceded to the Muscogee Nation, if that land had not been treated as such in recent decades. In a 5–4 opinion, the Court ruled that, as the reservation land had never been diminished explicitly by Congress, it remained Indian Country under the Major Crimes Act.
This ruling was a significant divergence from the previous status quo of finding significant non-Indian settlers in an area as a sign of de facto diminishment of Indian Country. What McGirt clarified was that this de facto diminishment can only occur if Congress has been ambiguous in its statutory diminishment. If there is no ambiguity, this de facto diminishment cannot be considered. This ruling subsequently led to the possibility that large portions of land that had never in recent memory been considered Indian Country under the widely used Major Crimes Act definition could potentially now be considered Indian Country. Coincidentally, it is this newly modified definition that is used by the Small Business Act and many other federal laws that govern the administrative state.
Recently, some of the issues in McGirt came before the Court again. Oklahoma v. Castro-Huerta was brought to the Court by the state of Oklahoma, seeking to clarify its criminal jurisdiction over crimes committed by non-Indians against Indians in Indian Country. In a 5–4 decision, the Court ruled that the federal government and the state of Oklahoma have concurrent jurisdiction over the matter. While the impact of this decision has been described as anywhere from unimportant to undermining the fundamental principles of Indian law, for the purposes of this Note, the majority still respected the expanded Indian Country of McGirt. Federal courts have already considered McGirt’s Indian Country expansion to apply to civil jurisdiction at least twice: for the purpose of the Indian Gaming Regulatory Act (IGRA) and local gathering ordinances. For the foreseeable future, the McGirt definition of Indian Country is here to stay.
Faced with this fundamental change in what can be considered Indian Country, the administrative state is left with two options: fight the ruling or embrace it. However, these two options do not have similar chances of success. Perhaps none has fought the McGirt ruling more than the state of Oklahoma and its governor Kevin Stitt, yet their dozens of petitions to the Supreme Court to redecide McGirt have been rejected. Alternatively, the U.S. Department of the Interior’s Office of Surface Mining Reclamation and Enforcement (OSMRE) has successfully asserted regulatory authority over multiple coal mines previously regulated by Oklahoma state agencies based on McGirt. President Biden’s “Memorandum on Tribal Consultation and Strengthening Nation-to-Nation Relationships,” which requires heads of executive agencies to reach out to tribal governments, expedited administrative agencies’ decision-making on McGirt’s application. The mass administrative recognition of McGirt is imminent. With this development could come a new age of tribal enterprise advantages.
The theory as to why McGirt could rebalance the advantages of Alaska Native Corporations and tribal enterprises is simple: McGirt expands Indian Country, which comes with multiple possible benefits for tribal enterprises. Tribal enterprises are run by tribes in the contiguous forty-eight states, which have the possibility of having their territorial influence expanded via alteration of the Indian Country definition. Alternatively, ANCs are owned by Alaskan Native Villages, whose dominion is not affected by Indian Country. Thus, by expanding Indian Country, it will provide potential benefits to the underperforming tribal enterprises but not the overperforming ANCs. This development can provide rebalancing effects without directly penalizing ANCs, which have an important role to play in empowering native economies in addition to tribal enterprises and Native Hawaiian Organizations.
Indian Country is quickly expanding via various lawsuits and legal defenses invoked by both individuals in diminished reservations and tribal governments. Most of the benefits to be reaped from this expansion come from transferring state-governed areas to be within tribal dominion. As long as the administrative state or the SBA do not intervene, the 8(a) program may fix itself—with the benefits that tribes receive narrowing the performance gap with ANCs. The problem is that the SBA has a history of not knowing when to consider individual businesses to be tribal enterprises or not. If the SBA fights these expanding tribal enterprises at every turn, the process will grind to an excruciating halt. If McGirt continues to be upheld, the SBA will eventually be forced to capitulate, but the time that it can take to rectify injustices towards the Native American community is often measured in centuries. If the SBA embraces McGirt and the expanding Indian Country that comes with it—a policy already implemented by other federal administrative agencies—the process will be expedited for tribal enterprises.
With Indian Country comes tribal regulatory authority, court jurisdiction, and sovereignty from state oversight. These changes can allow tribal governments to provide interesting new advantages to tribal enterprises, such as competitive tax rates, more streamlined regulations, a less punitive tribal court system, and access to previously out-of-reach resources.
Many of the benefits which tribal enterprises would receive with an expanding Indian Country involve gaining sovereignty over duties currently invested in the states. For example, expanding Indian Country via litigation allows for expanded tax bases for tribal governments. This would allow for tribes to tax in ways that could provide a competitive advantage to tribal enterprises. As tribal enterprises are based on ownership and not location, some tribal enterprises, located just off of reservations in metropolitan areas, may benefit.
Currently, government contractors are frequently subject to state and local taxes. When metropolitan areas are included in Indian Country, tribes can then tax the businesses and tribal enterprises in these cities. Tribes then have the option of either taxing the businesses to fund tribal enterprise ventures or lowering taxes on businesses to allow tribal enterprises to bid lower prices without sacrificing their profit margins. Tribes even have the opportunity to be more targeted in their taxation by discriminating between tribal member-owned businesses and those owned by non-members. Tribal governments are one of the only governing bodies capable of employing this type of blatant regulatory favoritism, due in part to tribal membership being a consistently upheld classification as a “special legal position.” This choice would allow a tribe to provide a protected environment for tribal businesses to have a leg up on non-member owned businesses within Indian Country. Any of these tax schemes could be employed with this newly expanded Indian Country to incubate strong small tribal enterprises, which could compete against ANCs on a more even ground for government contracts.
Expanding Indian Country also allows tribal governments to exercise their sovereign authority to regulate. This development would allow tribes to create alternative regulatory schemes that could provide tribal enterprises within this jurisdiction a competitive advantage over their in-state competitors in government contracting. Frequent hurdles for small business government contractors are the extensive regulations that govern their specific type of business. While most of the attention is focused on the often extensive list of Federal Acquisition Regulation (FAR) clauses and flow-down sections that any prime or subcontractor may face, state and local regulations play a significant role in complicating small business ventures. Tribal enterprises in Indian Country could face fewer of these burdensome regulations. Additionally, most tribal governments are heavily involved in the decision-making process of tribal enterprises. If the regulation drafters are also required to navigate through these regulations, far fewer points of confusion would likely arise.
Any argument for the benefits of alternative tribal regulations may be immediately suspicious of the actual protection that these regulations would provide. However, tribal administrations do not have a history of ineffective, flimsy regulation. The benefits that may be available to tribal enterprises under tribal government regulation would not be in the form of underregulation. Rather, tribal governments have fewer responsibilities and industries to regulate via their unique sovereign standing when compared to states. Thus, small businesses often have fewer regulations to sift through, allowing these businesses to thrive with a leaner legal department. This further cuts down overhead costs and allows for tribal enterprises to have a competitive edge over other government contractors who operate in less bureaucratically deft states.
With McGirt’s expansion of Indian Country also comes an expansion of the jurisdiction of tribal courts. Indian Country is, by definition, the geographic area in which tribal law applies. As such, it is used as the demarcation line for the outer edges of tribal court jurisdiction. With this expansion, tribal enterprises that had previously existed in a state’s jurisdiction would now have cases brought before them in tribal courts. This change benefits the tribal enterprises in a number of ways: first, these hearings would now be held often in much more geographically accessible locations, reducing burdensome travel times. Second, tribal governments are likely more willing to work individually with tribal enterprises than states in whose jurisdiction they currently reside. Perhaps most impactful would be the sentences handed down by tribal courts that would be less punitive than the economically burdensome sentences currently employed by most states.
The compounding issue here is that the actual civil jurisdiction of tribal courts is far from a settled issue. As the Supreme Court wrote in Montana v. United States, “A tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.” But since this ruling, the Court has seemingly partially eroded this jurisdiction in ways that are not at all clear. Regardless of the Montana ruling, it appears that a major part in determining the civil jurisdiction of tribal courts is the presence of an enterprise in Indian Country.
It will likely be argued that tribal nonmembers now living or working in McGirt-expanded Indian Country never engaged in a “consensual relationship” required to establish civil jurisdiction under the Montana test. “What,” one may ask, “is less consensual than having a semi-sovereign government gain jurisdiction over one’s land without one even being a party to the case?” Others may see this argument and think that Indian Country was never really expanded, just realized to have a larger expanse than it previously had. No expansion has ever occurred; rather, an illegal diminishment has been reversed.
With the inclusion of more metropolitan areas in Indian Country comes improved tribal access to utilities necessary for running a successful business. Tribes have toiled with lack of infrastructure spending for decades, with some tribes still struggling to have access to clean water, highways, and airports. These amenities are almost always nonexistent problems in metropolitan areas, sometimes located just outside of reservation land. The expansion of Indian Country may provide tribal enterprises access to these building blocks of successful industry and help them thrive, simply by covering a greater geographical area. Additionally, some expansions of Indian Country would allow for greater rights to timber and mineral resources, providing new enterprise opportunities for tribes. This point in particular would help level the playing field between tribal enterprises and ANCs, as Alaska Natives have often benefited far more from the resources of the vast Alaskan wilderness than their at times crowded, often Dust Bowl-located reservation foils.
The Small Business Administration’s 8(a) Business Development Program is, and has been, wildly discriminatory in its opportunities for native contractors. By systemic design, and then by failed course correction, ANCs continue to dominate the field while tribal enterprises are left behind. It is possible that the benefits that come with expanded Indian Country will give some tribal enterprises a fighting chance against ANCs via innovative regulations, tax systems, and civil courts. However, the goal should not be the complete destruction of ANC profits. These corporations were established with good intentions and an important purpose—to provide consistent benefits and opportunities to Alaska Natives. While their efficacy in this noble venture can be questioned, the ANC experiment should not be scrapped outright. Similarly, for many tribes, government contracting opportunities provide some of the best job opportunities in areas that have been serially underemployed. The benefit that McGirt may lend them is asymmetrical compared to the benefits that ANCs receive but is quite possibly the best shot at rebalancing tribal enterprises performances.
