Indian Country historically has not been a hotbed
of economic development. Non-Indian entities frequently do not evaluate
opportunities for establishing viable business ventures within Indian
Country, except perhaps in the natural resource-extraction arena.
As a result, the economic development projects that do exist in
Indian Country generally reflect some type of revenue-generating
enterprise or activity established and operated directly or indirectly
by the tribal government. Reasons given by non-Indian developers
or investors for this lack of economic development within Indian
Country are routinely summed up with two words: "uncertainty" and
Indians, non-Indians address strategies
The Montana Regional Strategies Initiatives (MRSI) held several
meetings beginning in 1995 to explore issues contributing to low
levels of economic development in the state. Indian and non-Indian
participants met to address strategies to improve the business opportunities
in the economically depressed regions of Montana, including Indian
Country areas. Meeting participants identified several key factors
perceived as barriers to economic development in Indian Country.
One concern expressed repeatedly at these meetings was the lack
of tribal laws that would provide some legal certainty with regard
to commercial transactions.
Consequently, MRSI created the Tribal Business Code Development
Task Force to evaluate various alternatives for addressing this
concern. The task force ultimately recommended developing a model
commercial code for tribes. The group decided on this approach because
it believed it would likely have the broadest effect on economic
development prospects in Indian County in the shortest time.
In the spring of 1996, Professor Raymond Cross from the University
of Montana-Missoula's School of Law offered MRSI the services of
the Indian Law Clinic to develop a model secured transaction law.
Gerald Sherman, community development officer with First Interstate
BancSystem, Billings, Mont., sought funding from a variety of tribal
and nontribal entities to help defray the costs of this project.
Although several clinic students worked on the project, Morgan Damerow,
now an attorney in the Seattle area, drafted the majority of the
secured transaction law.
Drafting this model law was a multistep process similar to other
tribal code development projects the clinic has undertaken. The
clinic reviewed all existing tribal commercial laws and determined
the areas of commercial law that tribes considered important. During
the drafting process, the clinic incorporated as many of these provisions
as deemed to be relevant into the model law. Several provisions
were included as options for tribes to consider when drafting their
own tribal commercial codes. In addition, based on discussions with
various tribal entities or interests, the clinic considered current
tribal needs and included provisions for handling problems frequently
experienced in commercial dealing in Indian Country. The clinic
used the secured transaction article of the Uniform Commercial Code
as drafted by the National Conference of Commissioners on Uniform
State Laws for provisions to incorporate into the model tribal law.
Model code provides uniformity, certainty
The final product is intended to be a culturally responsive document
that recognizes the sovereign aspects of tribes and that can be
used in the development of individual tribal commercial codes. The
model law can be enacted independently or incorporated as part of
a more comprehensive commercial code. In addition, the model law
incorporates principles that are intended to reduceif not
eliminatethe perceived barriers to doing business in Indian
Country. Because this model secured transaction law is designed
to provide a degree of uniformity and certainty in commercial dealing,
it should minimize the perceived risks associated with doing business
in Indian Country. This may in turn encourage the business and lending
communities to invest in Indian Country and foster economic development.
The clinic continues to receive requests for this model secured
transaction law from tribal entities and organizations. Given the
expressed interest in this area of Indian law, the clinic would
consider creating additional model tribal laws focusing on other
commercial areas, provided funding can be located.
Maylinn E. Smith is director of the Indian Law Clinic of the
University of Montana's School of Law.
What is a Uniform Commercial Code?
The Uniform Commercial Code (UCC) is a set of
standardized laws drafted by the National Conference of Commissioners
on State Laws that govern most, if not all, aspects of commercial
transactions. The various laws, or articles, that comprise
the UCC cover substantive areas of commercial law which deal
separately with sale of goods, leases, negotiable instruments,
bank deposits and collections, funds transfers, letters of
credit, warehouse receipts and bills of lading, investment
securities and secured transactions. The UCC, which has been
adopted by all states except Louisiana, provides the primary
means by which risk will be allocated among parties in commercial
dealings. Because the various jurisdictions that have adopted
the UCC operate under substantially the same set of commercial
laws, financial institutions and commercial entities are able
to do business across jurisdictional boundaries with a large
degree of certainty as to the rules that apply and the way
risk will be allocated in the event something goes wrong.
In Indian Country, one hoped-for outcome of the model tribal
law discussed in this article is that economic development
will be promoted by providing a sound economic environment
in which businesses and banks can operate. The model tribal
law is modeled after Article Nine of the UCC, Secured Transactions;
Sales of Accounts and Chattel Paper (the shortened title for
which is "Uniform Commercial Code-Secured Transactions").