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Tribal update: Nation building in the Ninth District

More and more tribes in the Ninth Federal Reserve District are recognizing that by establishing governance structures and institutions, they can support the growth of their economies.

May 1, 2007


Tribal update: Nation building in the Ninth District

Every year, the Harvard Project on American Indian Economic Development (Harvard Project) announces the recipients of its Honoring Nations awards, which recognize American Indian tribes for their innovations in instituting effective governance.1/ A key theme emerging from the programs and efforts recognized over the last five years is a growing emphasis on implementing sound governmental and legal institutions—a process the Harvard Project calls “nation building.”

The premise of nation building in Indian Country is that sustainable economic success largely depends on first building a solid legal and governmental foundation. With sound laws and government structures in place, parties that want to do business within a tribe’s jurisdiction can have certainty with regard to the laws that apply in business deals. They can be sure that disputes arising under those laws will be resolved fairly and in a timely fashion. Businesses can use their available assets as collateral for loans and operate free of political interference. Lenders can feel confident that their interests will be protected.

The idea that good governance and legal institutions are important to support and sustain development has been widely accepted by academics and policymakers working in Indian Country and the international arena.2/ Their research suggests several components are essential for developing and sustaining healthy market economies. These include independent and well-functioning court systems; a governance structure that effectively separates business from politics; policies that are not hostile to business; and clear, workable commercial codes and other business-related laws.

As the following summaries of selected nation-building efforts in the Ninth Federal Reserve District demonstrate, more and more tribes are recognizing that by establishing governance structures and institutions, they can support the growth of their economies.

Separating politics and business

The Blackfeet Nation in Montana used to experience repeated poor performance and failures of its tribal enterprises. In 1999, the nation established the tribally chartered Siyeh Corporation to take over the management of its many tribal enterprises and ensure they would be insulated from tribal political influence. The establishment of the corporation has proven to be an effective governance strategy, as demonstrated by the improved performance of tribal enterprises in recent years and the creation of a number of new businesses. In acknowledgement of the Siyeh Corporation’s accomplishments, the Harvard Project bestowed an Honoring Nations award on the Blackfeet Nation in 2005.

Building a solid self-governance infrastructure

The Confederated Salish and Kootenai Tribes in Montana have long been building the infrastructure and expertise that has enabled them to achieve and effectively exercise actual self-governance. Beginning in the 1970s, the tribes set in motion a strategic plan to lay the necessary foundation for eventually assuming control of their trust resources. They established a tribal realty office, a tribal forest management enterprise, an earth resources program and a tribal water rights administration, to name a few. Subsequently, they established a tribal lands department to coordinate their various natural resource programs. Eventually, the tribes assumed management within their reservation boundaries of all the federal programs under the administration of the Bureau of Indian Affairs, Office of Trust Management and Indian Health Service. These programs included the local electric utility, community health programs, higher education and vocational training, social services and Temporary Assistance to Needy Families benefits.

The tribes’ success in achieving this high degree of self-governance was systematically accomplished by building their management capacity and human resource expertise and developing laws, policies and practices to strengthen their control of tribal resources. As a result, the Confederated Salish and Kootenai Tribes have seen strong economic growth, a homeownership rate that exceeds the national average and an increasing diversity of business enterprises in their community.

Instituting an independent business division and related policies

In the early 1980s, in an effort to take steps toward self-governance, the Mille Lacs Band of Ojibwe in central Minnesota reformed its constitution, adopting a “separation of powers” form of government with executive, judicial and legislative branches. As part of its continuing efforts to establish a progressive government structure, the band established a Corporate Commission (CC) under its executive branch. The CC is a tribal corporation charged with the development of the band’s economy. To ensure checks and balances are in place to insulate the CC’s management of the band’s businesses, the band’s chief executive appoints the CC’s director, but the appointment must be ratified by the legislative branch.

In addition to overseeing the band’s businesses, including a successful gaming operation, a key policy objective of the CC is to diversify the band’s economy beyond gaming. An important component of the diversification objective is to support and encourage private sector development. To accomplish this, the band created a Small Business Development Program, which is organized under the CC. Through the micro and macro loan funds, technical assistance and training it provides, the program has been instrumental in helping more than 30 entrepreneurs and businesses start up, in turn bringing needed economic diversity and employment opportunities to the band’s business community.

Implementing comprehensive commercial and business laws

The Crow Nation in Montana recently enacted the Model Tribal Secured Transactions Act, or MTA, which was developed by the National Conference of Commissioners on Uniform State Laws. The purpose of the MTA is to provide model legislation for tribes to build sound legal infrastructures that will facilitate transactions with outside lenders, businesses and other tribes.3/ The Crow Nation has also entered into a partnership with the Montana Secretary of State’s Office for Uniform Commercial Code filing services. These efforts followed closely on the heels of the tribe’s enactment of a mortgage code permitting land leasing, the pledging of leaseholds, and mortgage foreclosures and evictions.

Together, the MTA and the mortgage code establish a comprehensive creditors’ rights framework that will help eliminate the significant barriers to credit that businesses and consumers on the Crow Reservation face. But tribal leadership recognizes that these efforts alone are not sufficient for the tribe to grow its economy. Building on significant institutional efforts started several years ago, including constitutional reform that provided for a separation of powers among its executive, legislative and judicial branches, the Crow Nation is working on additional commercial and business law initiatives to continue its nation-building efforts in support of economic development.

A movement toward prosperity

The efforts summarized above are but a few of many tribal institutional development initiatives, both in the Ninth District and across the country, to build the critical foundations upon which vibrant, sustainable market economies are based. Collectively, these efforts by tribes demonstrate a growing awareness and understanding that capable governing and legal institutions are a prerequisite to sustainable development. In other words, nation building has grown from a concept into a movement. As more tribes join in, it appears that economic prosperity in Indian Country could grow from a dream into a reality.

1/ The Harvard Project is housed within the Malcolm Weiner Center for Social Policy at the John F. Kennedy School of Government at Harvard University. It focuses on better understanding the conditions under which self-determined social and economic development is achieved by American Indian tribes.

2/ These researchers, economists and organizations include Native Nations Institute for Leadership, Management and Policy; Kenneth W. Dam, author of The Law-Growth Nexus: The Rule of Law and Economic Development; Hernandez de Soto, author of The Mystery of Capital; and a number of international organizations working in developing and in-transition countries, such as the World Bank and the European Bank for Reconstruction and Development.

3/ For more on the MTA, see “A super model: New secured transaction code offers legal uniformity, economic promise for Indian Country” in Community Dividend Issue 1, 2006.