The Castro-Huerta Decision: A Clear and Present Danger to Tribal Economies Everywhere
COMMENTARY

January 18, 2023by Chris James, President & CEO, National Center for American Indian Enterprise Development
The <em>Castro-Huerta</em> Decision: A Clear and Present Danger to Tribal Economies Everywhere
The setting sun illuminates the Supreme Court building on Capitol Hill in Washington, Tuesday, Jan. 10, 2023. (AP Photo/Patrick Semansky)

In the six months since the U.S. Supreme Court’s decision in the Castro-Huerta case, the majority opinion has been universally condemned by leading Indian Country legal scholars. It has been described as an unconstitutionalact of conquest” that flips 200 years of federal Indian law on its head.

In response, tribal leaders and advocates across the country have urgently focused their efforts on neutralizing — through both Congressional and administrative actions — the decision’s corrosive effects on tribal governments’ inherent right to enforce tribal laws on tribal lands to ensure public safety.

They also are rightly casting a spotlight on the troubling signals Castro-Huerta sends concerning the court’s seeming desire to gut the Indian Child Welfare Act, thereby declaring open season on Native American children by the adoption industry.

A closer read of the court’s majority opinion reveals far-reaching and potentially disastrous implications for another critical area of tribal sovereignty: the right of tribal nations to create and grow vibrant economies of their own design.

Though the case involves a narrow question of Oklahoma tribes’ criminal jurisdiction governing crimes committed by non-Natives against Native people, it is nevertheless a transparent pretext to manufacture a new and all-encompassing legal framework. For example, Castro-Huerta majority opinion author Justice Brett Kavanaugh declares that “Indian country is part of the State, not separate from the state,” and while federal law may preempt state jurisdiction in “certain circumstances … otherwise, as a matter of state sovereignty, a state has jurisdiction over all of its territory, including Indian Country.”

Kavanaugh’s contorted legal reasoning should send chills down the spine of every tribal leader, economic developer, entrepreneur and citizen. It is a blanket invitation for the powerful forces opposed to tribal sovereignty to wage new attacks on tribal jurisdiction in all areas. These attacks, which were once dead on arrival in the nation’s high court, are now likely to be rewarded by a Supreme Court inclined to champion states’ rights over all others, including tribes and Congress.

If Castro-Huerta is in fact the court’s new “law” of the land, it threatens to undermine tribal economy building in fundamental ways, including:

Tribal taxing authority. States will be emboldened to more aggressively challenge tribal taxing authority so they can exercise state taxing authority over commerce occurring on tribal lands and businesses located on those lands, including those owned by tribal nations and individual citizens.

Tribal civil jurisdiction over non-Natives. Castro-Huerta potentially undercuts the ability of tribal governments to exercise civil jurisdiction over commercial activities or disputes involving non-Natives on tribal lands, whether they be consumers, business owners, tribal vendors, tribal investors or tribal joint venture partners.

Tribal regulation of tribal lands. The court’s anti-tribal turn could complicate the ability of tribal governments to enact and enforce tribal zoning and other ordinances key to fostering a robust system of local commerce and advancing tribal economic priorities.

Protection of tribal economic resources. Tribal nations could have a harder time protecting tribal mineral and other natural resources from development by corporate interests, regardless of tribal priorities or economic development strategies.

Supporting the stability, competitiveness, and growth of tribal enterprises and entrepreneurs. States will likely now be more aggressive in their attempts to regulate businesses owned by tribal nations or individual tribal citizens. For example, Castro-Huerta raises significant doubt about whether the court will continue to respect its long-established precedent prohibiting states from regulating Indian gaming unless Congress explicitly says otherwise.

Reduced federal funding for tribal law enforcement and justice systems: A future administration or Congress could advocate for significant decreases in federal dollars for tribal law enforcement and justice systems on the basis that states now exercise exclusive criminal jurisdiction over non-Natives on tribal lands, leaving tribal governments to make up the financial difference.

Some states are already following Kavanaugh’s roadmap to attack tribal authority.

Immediately following the release of Castro-Huerta, the state of Wisconsin used the opinion to bolster its bid before the Seventh Circuit Court of Appeals to levy property taxes on certain lands within Indian reservations in the state (the Seventh Circuit ruled against Wisconsin in August, but the state could still appeal the decision to the Supreme Court). Meanwhile, in Oklahoma, the Oklahoma Tax Commission recently used Castro-Huerta as grounds for its ruling that tribal citizens living on tribal lands in the state must pay state income taxes.

These and other emerging attacks argue strongly for comprehensive legislative and administrative fixes that nullify Castro-Huerta and reaffirm tribal sovereignty and jurisdiction across a host of areas, notably their economy-building endeavors. As Justice Neil Gorsuch, a learned student of federal Indian law who is also a staunch advocate for states’ rights, lamented in Castro-Huerta’s dissenting opinion, “Tribes are not private organizations within state boundaries. Their reservations are not glorified private campgrounds. Tribes are sovereign.”

Fortunately, both the Biden administration and many in Congress agree the confusion and uncertainty created by Castro-Huerta is untenable. The Subcommittee for Indigenous Peoples of the United States held a hearing in September to discuss the impacts of the decision on Indian Country. The Department of the Interior and Assistant Secretary for Indian Affairs Bryan Newland hosted listening sessions shortly after the hearing. Congressional and administration leaders are right to solicit feedback from those most affected by Castro-Huerta, but they shouldn’t use listening as a substitute for action.

Absent comprehensive fixes, Castro-Huerta will erode tribal economies, with Native and non-Native people left to pay the price. Studies show that self-determined, robust tribal economic activity produces significant benefits not just for tribal nations and their citizens, but also non-Native workers employed by tribal enterprises, non-Native businesses that do business with tribal nations and Native entrepreneurs, and state and local governments that tax their income. In other words, it is in the entire country’s best economic interest to protect tribal nations’ inherent right to build tribal economies as they see fit.

The dangers of Castro-Huerta are clear. It’s now up to Congress and the Biden administration to prevent what could soon become an existential crisis for tribal sovereignty and economy building.


Chris James is the president and CEO of the National Center for American Indian Enterprise Development. He previously served in the Department of the Treasury and the Small Business Administration during the Obama administration. He is based in Mesa, Arizona. You can reach the NCAIED on Twitter, LinkedIn, or by email.

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