California Indian Law and Native American Business
Emily Zushi
Michelle LaPena | LaPena Law Corporation
Posted Wednesday, February 8, 2012

Hi, Michelle. Thanks for meeting with me today. Before we begin, would you tell me a little about your background? How did you become interested in Indian Law? Was it something you always knew you wanted to do?

My story is kind of unusual because I was born into a family of Natives. My grandmother and grandfather met at Sherman Indian Boarding School. My grandfather was from Indio, California and his tribe, the Cabazon Band of Mission Indians, was the first to have gaming in the country. My mom and my uncle were a part of that, and so I’ve been around gaming since I was 11 years old. At that time, it was run by organized crime and there was no regulation because neither counties nor states had jurisdiction over Indian lands. My uncle was the Vice Chairman of the tribe and he started seeing a lot of illegal activities going on. Not long afterward, he and two of his friends were murdered in 1981. It got a lot of media attention, so when I started practicing Indian law people would often give me tidbits of information. One night I ended up having a chance meeting with a former senator who had information that there was a warrant out for the arrest of the man who was suspected of the murder but the problem was that he was living in Honduras. Well, it just so happened that I had been given information that he was in California. They actually ended up catching him and now he’s facing trial for my uncle’s murder. I don’t know if it wouldn’t have happened if I hadn’t become a lawyer and all of those pieces hadn’t fallen together. So it really feels like I was destined to do this work.

Wow, that’s an amazing story. Thank you for sharing that with me. So what type of Indian legal matters do you specialize in?

What I love the most is anything related to the land. Often a tribe is still culturally tied to land that it no longer has any jurisdiction over. So a big part of our work is protecting those burial grounds and ceremonial sites. We also help tribes acquire lands or establish conservation easements. That’s my heartfelt specialty, but because of my gaming history I’ve developed a lot of casinos in the state and do a lot of contracts and commercial law in addition to real estate.

I’d like to move on the topic of the intersection of federal Indian law and business. In that regard, Indian gaming is probably the first thing that comes to mind to most of us. Would you briefly explain what the Indian Regulatory Gaming Act is and how and why tribes are subject to it?

The Indian Regulatory Gaming Act, or IGRA, was established when the City of Indio brought a lawsuit against the Cabazon Band of Mission Indians for breaching an ordinance that prohibited the tribe’s bingo parlor and card room. The tribe had sovereign immunity, but the case went between state courts before ending up in federal court. This is because California is a Public 280 state.

In the past and in some other states, tribes deal exclusively with the federal government. Public Law 280, which we have in California, stripped some of the rights of tribes because it transferred some of the federal government’s civil and criminal jurisdiction to the states. So the City of Indio’s lawsuit went to the Supreme Court and it held that the bright line rule for determining whether a state has jurisdiction over Indian matters is whether the matter is criminal/prohibitory or civil/regulatory. If a matter is criminal prohibitory, the state has jurisdiction; if it’s civil regulatory, the federal government and/or the tribe has jurisdiction.

Because the Supreme Court found that gaming was regulated by the state and not prohibited, it fell under the civil/regulatory regime and was subject to federal and tribal jurisdiction. The states were concerned about the proliferation of unregulated Indian gaming, because there were a lot of classic mafia figures jumping in to the open market. Congress was lobbied by the states to pass a law that would allow for regulation of Indian gaming, and that law was IGRA.

What IGRA mandates is that Class III gaming (Nevada style, cards, slots, roulette, dice, etc.) require a compact with the state so the technology and number of machines would be limited. Electronic gaming devices that mimic the process of bingo can be considered Class II and wouldn’t be subject to that compact. Because IGRA requires a compact, it put the state and tribes into conflict because by the time it was passed, there were casinos already operating. Pete Wilson was a conservative Republican governor and his administration did not want to compact with the tribes, and if they did, they should only be gaming devices based on bingo. But IGRA requires that the state compact with the tribes, otherwise the tribes can sue the states for bad faith. Tribes across the state got together when Gray Davis got elected and placed an initiative (Proposition 5) on the election ballot, which would allow tribes to operate Class III machines and house banked games. There was suddenly a lot of news about Indians and gaming and people began to associate Indians with gaming. Back then, in ‘98 and ‘99, there was a lot of sympathy towards tribes, so this overwhelmingly passed.

Nevada’s gaming interests and the labor unions who wanted to organize in these casinos and hotels challenged the initiative and got Prop 5 struck down. So we came back with another initiative, Proposition 1A, which was an amendment to the state constitution specifically providing that the governor can compact with tribes for slots and Nevada style games, except dice and roulette. So IGRA started all of that and without it, tribes would not be subject to state control at all. Whether this is good or bad depends on who is governor and what issues the tribes are facing.

What other type of Indian business do you know of that would be subject to federal law and which are just subject to state law just like any other business?

One thing that comes to mind is gas stations or anything that has an impact on the environment. Reservations and Rancherias are Indian lands where the fee title is owned by the US but they are held in trust for the benefit of that tribe. That trust relationship requires that the US makes sure there is no contamination to the property. So NEPA (National Environmental Policy Act) requires a tribe to do an environmental impact statement before, say, leasing their tribal land for such purposes.

Then there is the tax aspect to Indian businesses, which is regulated by (California Code of Regulations) 1616. Tribes are not entities for tax purposes, but the ability to tax is a key component to sovereignty for any tribe so that they can have revenue for their municipality, operation and infrastructure. Say I’m an Indian tribe and I own a gas station on my land. Indians don’t have to pay taxes on the Tribe’s gas sale but non-Indians do. Because taxes are prepaid when they fill the gas tank, my tribe applies for a refund for the sales. So we have to keep track of how many Indians and non-Indians are buying the gas.

Now, if a tribe wanted to open a gas station on non-trust land, they would be treated as any other entity except that they still maintain their sovereign immunity. Absent some kind of waiver of their immunity, they couldn’t necessarily be sued for torts or employment disputes. It gets complicated with franchises, because those businesses will want to follow their own policy, so most likely the tribe would have to waive their immunity.

So what is the difference between and individual Indian and a tribe?

As an Indian, I don’t benefit from being an Indian and owning a law firm. I live in Sacramento and pay my taxes and complain just like anybody else. But for example, when my children inherit trust land from their grandfather and want to build a business on the allotment, they’d be considered an Indian retailer and would fall under the same rules as tribes for tax purposes.

And finally, just for the record, all of these laws apply only to tribes that are federally recognized. Is that correct?

Yes. Unrecognized tribes are not considered Indian. Part of a recent amendment to (California Code of Regulations) 1616 to include the landless California tribes also included unrecognized tribes. The recognized tribes adamantly opposed that, because it’s hard to know who’s legitimate. Especially in Southern California because of the sad history of the mission system, it’s very hard to know if someone is truly a descendent. It’s not their fault, but it is difficult to trace Indian heritage after the mission system stripped them of their identities. There have been tribes that want to be recognized so they can build a casino closer to Los Angeles, and so southern tribes are very, very sensitive to it. But it was legally sound for those recognized tribes to exclude the unrecognized tribes from the 1616 amendment, because there is no basis in the tax laws to allow for an exemption for unrecognized tribes.

The Federal List Act requires the federal government to update the list of federally recognized tribes every two years. But because of the bureaucracy, sometimes we’ve really had to lobby to get the list published after a tribe’s status has been restored. So you are kind of in limbo, where the regional office knows you’ve been restored, but you’re not on the list. It’s like you’re Lindsay Lohan trying to get into the party and you’re not on the list! (Laughing)

And there are some unrecognized tribes that are in some ways more “Indian” than recognized ones, because they’ve been relatively isolated and preserved a lot of their language and culture. I represented one such tribe in a petition for federal recognition. So it’s not always a fair system, but for legal purposes only federally recognized tribes are considered legitimate in the eyes of the law.

Thank you so much for meeting with me.

You’re welcome. Feel free to follow up with me.

About the Interviewee

Michelle LaPena is a member of the Pit River Indian Tribe and practices Indian Law in Sacramento, California.

Telephone Interview with Michelle LaPena, member and legal practitioner, Pit River Indian Tribe, La Pena Law Corporation (November 17, 2011).