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Job Creators Paralyzed by Supreme Court’s Carcieri Decision

Bill Lomax
12/14/11

In the Carcieri v. Salazar decision, the Supreme Court stood 75 years of policy and practice on its head. The Indian Reorganization Act (IRA) of 1934 authorized the secretary of the Interior to take lands into trust for federally recognized tribes. But the court has placed all tribes into a web of uncertainty by ruling that the secretary did not have the authority to take land into trust for tribes that were not considered “under federal jurisdiction” when the IRA was enacted. Not only did the Supreme Court effectively create two unequal classes of tribes—those which can have land in trust and those which cannot, but it also failed to address the question of precisely what “under federal jurisdiction” means, as no one single common definition has been agreed upon and accepted by the courts.

The uncertainty created by the Carcieri decision paralyzes economic development because banks and other financing sources are hesitant to back tribal businesses; it is impossible to tell whether a tribe will be affected by the Carcieri ruling. Land is vital to tribal economic growth, and if the rights to tribal land are no longer protected, lenders will not invest, and tribal businesses will be unable to grow.

Uncertainty and risk are two formidable roadblocks to raising capital. Banks and other investors are hesitant to lend money where they perceive risk. The more risk associated with a loan, the higher the cost of borrowing. If the risk gets too high, banks simply stop lending and tribal development becomes untenable. The uncertainty created by the Carcieri decision has greatly hampered potential business owners from opening their doors or expanding to create new jobs.

When tribes succeed economically, it benefits not only their economy, but contributes greatly to creating jobs and boosting the economies of the local communities and states as well. So, when we invest in Indian country, we are making investments that impact all of us—investments that will help us navigate the road to American economic recovery.

At a time when the recession has exacerbated already pronounced economic struggles, allowing these additional economic burdens for tribes and surrounding communities to persist is unacceptable, especially when the solution is simple.

Of all of the obstacles to economic development and job creation in Indian country, the uncertainty caused by Carcieri should be the easiest and most straightforward obstacle that can be removed. Congress is facing many hurdles in this economy, many of which don’t have clear solutions. But Carcieri has a clear bipartisan and bicameral solution. It’s time to work together to make improvements where we can. Fixing Carcieri will provide hundreds of thousands of jobs and spur economic development. Best of all, it has a zero-dollar price tag.

If the Carcieri decision received a legislative fix, it is estimated that more than 140,000 jobs would be impacted within the next year through a variety of economic development projects; including the creation of schools, health facilities, infrastructure projects, and housing. Many of these new jobs would require specialized skills and would be available to many Americans.

The urgent need for job creation on Indian reservations and surrounding communities is obvious. For Native American communities, the national unemployment average is 50 percent. Rural communities surrounding reservations struggle due to the lack of job opportunities and their unemployment rates mirror that of their Native counterparts. These economically hard-hit communities are suffering across the board as these middle class families are struggling to pay their mortgages, provide a good education for their children and financially stay afloat. Yet these communities are being shut out of the competition for good jobs and the ability to sell goods and services, because Carcieri has halted so many tribal development opportunities.

Economic experts agree that it is small businesses, entrepreneurs, and investors who create new jobs, and the best contribution that Congress can make toward economic development is to create an environment where businesses can grow and thrive.

What other piece of legislation can Congress pass this holiday season that would provide so many jobs to American families in need and not cause a greater drain on our country’s financial resources or future generations?

Bill Lomax is the president of the Native American Finance Officers Association, a non-profit organization dedicated to growing tribal economies by bringing the capital and financial markets to Indian vountry, growing the next generation of leaders, and advocating for sound and effective economic policy.

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thechief's picture
"The uncertainty created by the Carcieri decision has greatly hampered potential business owners from opening their doors or expanding to create new jobs." What? I am a small business owner on the rez and the carceri decision hasn't meant squat. Lets be honest. This is all about gaming. I don't know why Dr. Lomax just doesn't say a bunch of new tribes want to put land into trust so they can put in casinos. If the casinos aren't built the tribe will have to pay their investors high interest rates.
thechief