Update of Selected Studies in Transportation Law, Volume 8, Section 3: Indian Transportation Law (2019)

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68 NCHRP LRD 76 2. Safe Drinking Water Act 794(eligible tribes may assume primary responsibility for all assumable programs); 3. Federal Water Pollution Control Act (Clean Water Act)795 (eligible tribes may establish water quality standards, and nonpoint source management plans, and issue National Pollutant Discharge Elimination System and Section 404 dredge/fill permits, allowing tribes to be treated as states); and 4. Comprehensive Environmental Response, Compen- sation, and Liability Act (CERCLA)796 (Section 9626 provides that tribes are to be treated as states for cer- tain purposes, including notification of release, con- sultation on remedial actions, access to information, and cooperation in establishing and maintaining na- tional registries). Note, however, that RCRA has not been amended to pro- vide for tribal primacy. The court in Washington Department of Ecology v. EPA797 interpreted RCRA as providing for federal EPA enforcement rather than state enforcement of the statute on tribal lands. The EPA directly implements RCRA in Indian country.798 L. CONSTRUCTION ACTIVITIES 1. Indian Employment Preferences and Contracting a. General Section 7(b) of ISDEAA provides authority for Indian pref- erence in awarding federal contracts and Indian employment preference in the administration of such contracts. Section 7(b) provides: (b) Preference requirements for wages and grants Any contract, subcontract, grant, or subgrant pursuant to this chapter, the Act of April 16, 1934 (48 Stat. 596), as amended [25 U.S.C. 5342 et seq.], or any other Act authorizing Federal contracts with or grants to Indian organizations or for the benefit of Indians, shall require that to the greatest extent feasible- (1) preferences and opportunities for training and employment in connection with the administration of such contracts or grants shall be given to Indians; and (2) preference in the award of subcontracts and subgrants in connec- tion with the administration of such contracts or grants shall be given to Indian organizations and to Indian-owned economic enterprises as defined in section 1452 of this title.799 794 Pub. L. No. 93-523, 88 Stat. 1660 (1974) (codified at 42 U.S.C. § 300f, -300j-27); See id. §§ 300j-11, 300h-1(e). 795 Pub. L. No. 92-500, 86 Stat. 816 (1972) (codified at 33 U.S.C. § 1251-1275); See id. § 1377(e). 796 Pub. L. No. 96-510, 94 Stat. 2767 (1980) (codified at 42 U.S.C. § 9601-9628). 797 752 F.2d 1465 (9th Cir. 1985) 798 EPA, Land Environmental Protection in Indian Country, https://www.epa.gov/tribal/land-environmental-protection-indian- country (accessed June 23, 2018). 799 25 U.S.C. § 5307(b). subject to this provision NAGPRA usually applied to museums and other institutions.789 d. Tribal Enforcement Authority of Federal Environmental Statutes Other than NEPA In State of Washington Department of Ecology v. United States Environmental Protection Agency,790 involving the RCRA, the Court of Appeals for the Ninth Circuit noted: The federal government has a policy of encouraging tribal self-gov- ernment in environmental matters. That policy has been reflected in several environmental statutes that give Indian tribes a measure of control over policy making or program administration or both…The policies and practices of EPA also reflect the federal commitment to tribal self-regulation in environmental matters.791 In that case, and in the earlier Ninth Circuit case Nance v. Environmental Protection Agency,792 which involved EPA del- egations to a tribe under the Clean Air Act, the court of appeals approved EPA’s development of regulations and procedures au- thorizing interactions with Indian tribes on a government-to- government basis and encouraging Indian self-government on environmental matters, even though none of the major federal environmental regulatory statutes at that time provided for del- egation to tribal governments. Subsequently, as these and other environmental statutes came before Congress for amendment or reauthorization, Con- gress expressly provided tribal governments various degrees of jurisdictional authority. Major environmental statutes granting tribe’s such authority, which may be involved in the develop- ment or maintenance of a highway project are as follows: 1. Clean Air Act 793 (eligible tribes may assume primary responsibility for all assumable programs); 789 FHWA Environmental Toolkit, Legal Requirements and Directives to Consult with Indian Tribes. https://www.environ- ment.fhwa.dot.gov/env_topics/tribal/tribal_consultation_guidelines. aspx (accessed July 7, 2018); See also Abenaki Nation of Mississquoi v. Hughes, 805 F. Supp. 234 (Filed Oct. 22, 1992). There the district court examined the meaning of “control” of federal land relative to the issuance of a permit by the COE for expansion of a hydroelectric project. In addressing the NAGPRA claim, the decision stated: Plaintiffs urge a broad construction of “control” to include the Corps’ regulatory powers under the CWA and its involve- ment in devising and supervising the mitigation plan. Such a broad reading is not consistent with the statute, which exhib- its no intent to apply the Act to situations where federal involvement is limited as it is here to the issuance of a permit. To adopt such a broad reading of the Act would invoke its provisions whenever the government issued permits or pro- vided federal funding pursuant to statutory obligations. Id. at 252. 790 752 F.2d 1465 (9th Cir. 1985). 791 Id. at 1471. 792 645 F.2d 701 (9th Cir. 1981). 793 Pub. L. No. 88-206, 77 Stat. 392 (1963) (codified at 42 U.S.C. § 7401-31, 7470-79, 7491-92); See id. § 7601.

NCHRP LRD 76 69 Indians or Indian-owned organizations are eligible recipients, but both support activities that will in fact principally benefit Indians. b. In the Federal Highway Program The ISDEAA 7(b) preference applies to all work performed under the Tribal Transportation Program.804 As stated at 25 C.F.R. § 170.911: (a) Federal law gives hiring and training preferences, to the greatest extent feasible, to Indians for all work performed under the TTP. (b) Under 25 U.S.C. 450e(b), 23 U.S.C. 140(d), 25 U.S.C. 47, and 23 U.S.C. 202(a)(3), Indian organizations and Indian-owned economic enterprises are entitled to a preference, to the greatest extent feasible, in the award of contracts, subcontracts and sub-grants for all work performed under the TTP. FHWA does not extend the 7(b) preference to the Feder- al-Aid Highway Program.805 For FHWA, the Indian employ- ment preference for Federal-Aid Highway Projects is permit- ted by 23 U.S.C. § 140(d) and 23 C.F.R. § 635.117(d).806 (1) Indian Employment and Contracting Preference, 23 U.S.C. § 140.— Section 122 of STURAA807 amended the antidiscrimi- nation provisions contained in Title 23, U.S.C. § 140, to make them consistent with certain provisions of Title VII of the Civil Rights Act of 1964. The Indian preference provisions are codi- 804 FHWA, Tribal Transportation Program Delivery Guide – 2018, at page 58, available at https://flh.fhwa.dot.gov/programs/ttp/ guide/documents/full-guide.pdf (accessed June 23, 2018). 805 Consider that public roads are open to all and FHWA has consistently refused to fund any roads through the IRR program that are not open to the general public. While there are some limited exceptions to this “open to the public” requirement such as certain tribal cultural events, weather, and other emergencies. However, in the one instance where a tribe wanted to close an IRR to the public in general, the road was removed from the IRR Inventory for any future public funding of any sort. 806 See 25 C.F.R. § 170.912: Does Indian employment preference apply to Federal-aid Highway Projects? (a) Tribal, State, and local governments may provide an Indian employment preference for Indians living on or near a reservation on projects and contracts that meet the definition of a Tribal transportation facility. (See 23 U.S.C. 101(a)(12) and 140(d), and 23 CFR 635.117(d).) (b) Tribes may target recruiting efforts toward Indians living on or near Indian reservations, Tribal lands, Alaska Native vil- lages, pueblos, and Indian communities. (c) Tribes and Tribal employment rights offices should work cooperatively with State and local governments to develop con- tract provisions promoting employment opportunities for Indi- ans on eligible federally funded transportation projects. Tribal, State, and local representatives should confer to establish Indian employment goals for these projects. See also, FHWA, Contract Administration Core Curriculum Manual 2014 at page 72-73, available at: https://www.fhwa.dot.gov/ programadmin/contracts/coretoc.cfm (accessed July 7, 2018). 807 Pub. L. No. 100-17, 101 Stat. 160 (1987). The provision was contained in the Senate Bill and in the Administration’s Bill; no pro- vision in the House Bill. The Conferees adopted the Senate amendment. The Section 7(b) preference applies to all federal grants or contracts made pursuant to statutes or implementing regula- tions that expressly identify Indian organizations as potential grant recipients or contractors.800 It also applies to federal con- tracts or grants made for the benefit of Indians even when the authorizing statute and regulations do not expressly identify Indian organizations as potential recipients. The BIA and the Indian Health Service are required to utilize the Section 7(b) preferences in administering their respective programs.801 Other federal agencies have interpreted the 7(b) requirements in vari- ous ways. In January 2001, the Department of Justice, Office of Legal Counsel, issued a memorandum to the General Counsel for the Department of Agriculture.802 The memorandum was in response to a request for an opinion concerning the applicability of Section 7(b) of the ISDEAA.803 Several statutory interpreta- tion issues were addressed as well. At the outset, the memoran- dum set forth the clear 7(b) parameters. First, Section 7(b) ap- plies to statutes that make Indians or Indian organizations the sole eligible recipient. Second, Section 7(b) applies where the statute expressly provides that Indians and Indian organizations are one of many eligible recipients. The more difficult issues ad- dressed and answered in the affirmative were that section 7(b) applies (1) where the statute does not expressly provide that Indian or Indian organizations are eligible recipients, but the implementing regulation expressly identifies Indian or Indian organizations as eligible recipients; and (2) where neither the statute nor the implementing regulations expressly provide that 800 See also, 48 C.F.R. § 1426.7003, which provides that the § 7(b) preference clause Be inserted “in solicitations issued and contracts awarded by: (1) The Bureau of Indian Affairs; (2) A contracting activity other than the Bureau of Indian Affairs when the contract is entered into pursuant to an act specifically authorizing contracts with Indian organizations; and, (3) A contracting activity other than the Bureau of Indian Affairs where the work to be performed is specifically for the benefit of Indians and is in addition to any incidental benefits which might otherwise accrue to the general public. (b) The CO shall insert the clause at 1452.226-71, Indian Preference Program—Department of the Interior, in all solicitations issued and contracts awarded by a con- tracting activity which may exceed $50,000, which contain the clause required by paragraph (a) of this section and where it is determined by the CO, prior to solicitation, that the work under the contract will be performed in whole or in part on or near an Indian reservation(s). The Indian Preference Program clause may also be included in solicitations issued and contracts awarded by a contracting activity which may not exceed $50,000, but which contain the clause required by paragraph (a) of this section and which, in the opinion of the CO, offer substantial opportunities for Indian employment, training or subcontracting.” 801 In a 1982 Ninth Circuit case, the applicability of Section 7(b) was expanded in a case that involved the construction of U.S. Department of Housing and Urban Development (HUD) Indian housing. Alaska Chapter, Associated Gen. Contractors of America v. Pierce, 694 F.2d 1162 (9th Cir. 1982). Similar to the Indian Health Service requiring proof of eligibility, it is clear that the housing in question required some sort of tribal (Alaska Native) affiliation. 802 Memorandum from Randolph Moss, Assistant Attorney General, to Charles Rawls, General Counsel, Department of Agri- culture (Jan. 17, 2001) (available at the Office of the General Counsel, USDA) (hereinafter Justice Memorandum). 803 25 U.S.C. § 450-458ddd-2 (transferred).

70 NCHRP LRD 76 reiterated in a 1994 Transportation Research Board paper.813 Note also that the Indian employment preference provisions in Title 23 do not allow a preference based on tribal affiliation or place of enrollment on Federal-aid projects.814 (2) FHWA Notice 4720.7 (1993), Indian Preference in Em- ployment on Federal-Aid Highway Projects on and Near Reser- vations815—In 1993, FHWA issued a Notice entitled, “Indian Preference in Employment on Federal-aid Highway Projects on and near Indian Reservations.” Its purpose was to consolidate all previous guidance for FHWA field officials, State highway agen- cies, and their subrecipients and contractors regarding Indian employment preference on Federal-aid projects on and near Indian reservations. This Notice, implementing regulations,816 and subsequent legal guidance have all been consistent in the approach that the 23 U.S.C. § 140(d) Indian employment prefer- ence provision is permissive, not mandatory. However, despite the “permissive,” not mandatory, interpretation, FHWA’s policy has been to encourage, but not require, states to implement In- dian employment preference in applicable contracts. The Notice’s recitation on Indian employment preference and the use of the words “near” and “reasonable commuting dis- tance” are taken directly from the statute, as well as the Office of Federal Contract Compliance Program regulations that further define “work on or near reservations.” 817 The Notice provides the following guidance: (1) Applicability - eligible projects for Indian preference consid- eration are those projects which are on IRRs, (i.e., roads within or providing access to an Indian reservation or other Indian lands as defined under the term “Indian reservation roads” in Section 101 of Title 23, U.S.C., and regulations issued pursuant thereto), or are not on IRRs, but are near the boundaries of reservations and other Indian lands. BIA maps showing Indian Land Areas can be obtained from BIA Area Offices listed in the attachment. Roads “near” an Indian reservation are those within a reasonable commuting distance from the reservation. (2) Eligible Employees - All Indians are eligible for employment pref- erence. However, recruiting efforts may be targeted toward those liv- ing on or near a reservation or Indian lands (as defined above). Indian employment preference is to be applied without regard to tribal affili- ation or place of enrollment. (3) Indian Preference Goal (a) During project development, State and Tribal representatives are to confer to make determinations regarding Indian employment goals for the contractor’s work force who are other than core crew members; and, if necessary, consider the impact of other work in the 813 Richard Jones, Legal Issues Relating To The Acquisition Of Right Of Way And The Construction And Operation Of Highways Over Indian Lands, LRD 30 , NCHRP, Transportation Research Board Washington, D.C.,1994, pt. C, at 11, (Exhibit 5). 814 23 C.F.R. § 635.117(d). 815 Available at: https://www.fhwa.dot.gov/legsregs/directives/ notices/n4720-7.cfm (accessed June 23, 2018). 816 23 C.F.R. § 635.117(d) is the implementing regulation on Indian employment preference. 817 41 C.F.R. § 60-1.5(a)(7). And 25 C.F.R. § 20.100 defines “near reservation” as those areas or communities designated by the Assis- tant Secretary that are adjacent or contiguous to reservations where financial assistance and social service programs are provided.” fied at 23 U.S.C. § 140(d). The 1987 amendment expressly per- mits (but does not require) an employment preference for In- dians living on or near a reservation on projects and contracts on Indian reservation roads.808 The legislative history of that provision specifically notes the goal of more Indian labor when building on or near reservations.809 The Indian hiring preference set forth in 23 U.S.C. § 140(d) and 23 C.F.R. 635 §§ 117(d) and (e) refers to the employment of individual Indians, rather than contractor or subcontractors. Title 23, U.S.C. § 140(d), was further amended in 1991. Section 1026(c) of ISTEA added a new sentence to § 140(d): “States may implement a preference for employment of In- dians on projects carried out under this title near Indian reservations.” Again, the legislative history of that provision specifically notes the goal of more Indian labor when build- ing on or near reservations.810 Hence, the 1987 amendment was directed at Indians living on or near reservations; the 1991 amendment was directed at projects near reservations. After the enactment of STURAA, the then FHWA Adminis- trator issued a memorandum dated May 8, 1987, on Indian preference. A clarifying memorandum on this subject, dated October 6, 1987, was distributed shortly thereafter. The latter memorandum contained language that the singular intent of the STURAA amendment was to permit and encourage In- dian preference in employment on Indian reservation roads and that the only contracting preference that could be recog- nized in a Federal-aid highway contract was that authorized by the DBE statutory provisions. The memorandum contin- ued this view by stating, “The availability of certified Indian owned businesses should be considered in setting contract DBE goals.”811 These FHWA memoranda reference the Fed- eral-Aid Highway Program where, as stated previously, the only contracting preference allowed is that authorized by highway legislation and in regulations such as 23 C.F.R. § 635.107, which affirmatively encourages DBE participation in the highway construction program.812 This position was 808 Surface Transportation and Uniform Relocation Assistance Act of 1987 (STURRA), Pub. L. No. 100-17, 101 Stat, 132 §122 (Apr. 2, 1987). 809 “[T]his bill extends Indian employment preferences so that more Indian labor will be used when building on or near reserva- tions.” 137 CONG. REC. E-3566 (Oct. 28, 1991). 810 Id. 811 FHWA Memorandum, Section 122, Surface Transporta- tion and Uniform Relocation Assistance Act of 1987-Indian Employment Preference available at https://www.fhwa.dot.gov/ construction/contracts/880218.cfm (accessed June 23, 2018). 812 The Disadvantaged Enterprise Program was first authorized in § 105(f) of the Surface Transportation Assistance Act of 1982 (STAA). Pub. L. No. 97-424, 96 Stat. 2097 (1983), and has been in every highway reauthorization thereafter. The DBE regulations are found at 49 C.F.R. pt. 26. See 49 C.F.R. §§ 26.5 and 26.67, where “Native Americans” are presumed disadvantaged.

NCHRP LRD 76 71 connects Indian workers with entities doing business within the tribe’s jurisdiction. TERO began in the early 1970s following the failure of con- struction contractors to live up to Indian hiring commitments that had been made to the Navajo Nation in connection with the Salt River generating plant. The EEOC became involved and conducted a study that concluded that tribes had the sovereign right to enforce employment requirements on employers con- ducting business on the reservation.819 Although the federal Indian preference provisions are silent on TERO, the legislative history of STURAA is helpful because it formed the basis for FHWA’s guidance on TERO. It provides in part: Many tribes have a tax of one-half to one percent on contracts per- formed on the reservation to provide job referral, counseling, liaison, and other services to contractors. Because the tax is used for specific services that directly benefit a highway project, Congress approves of the Secretary’s current practice of reimbursing such costs incurred…. The Secretary is instructed to cooperate with tribal governments and States to ensure that contractors know in advance of such tribal re- quirements. For the purpose of Federal-aid highway contracts, the TERO tax shall be the same as imposed on other contractors and shall not exceed one percent. In order to develop workable and acceptable employment agreements covering affected projects, highway agencies are encouraged to meet with TEROs and contractors prior to bid let- ting on a project to set employment goals.820 FHWA’s current position on TERO taxes is contained in its FHWA Notice 4720.7 (1993), Indian Preference in Employ- ment on Federal-Aid Highway Projects on and Near Reser- vations821 which in relevant part states: TERO Tax - many tribes have established a tax which is applied to contracts for projects performed on the reservation. Tribes may im- pose this tax on reservations, but they have no tax authority off res- ervations. In off reservation situations, TERO’s can bill contractors at an agreed upon rate for services rendered, i.e., recruitment, employee referral and related supportive services. The proceeds are used by the tribes to develop and maintain skills banks, to fund job referral, counseling, liaison, and other services and activities related to the em- ployment and training of Indians. It has been FHWA’s longstanding policy to participate in State and local taxes which do not discrimi- nate against or otherwise single out Federal-aid highway construc- tion contracts for special or different tax treatment. Therefore, if the TERO tax rate on highway construction contracts is the same as that which is imposed on other contracts on the reservation, such costs are eligible for Federal-aid reimbursement. Note that this statement actually discusses two separate TERO fees, a TERO fee (tax) for on-reservation projects and a negotiated fee for services for off-reservation projects. In October 2002, the State of South Dakota filed suit against the Secretary of Transportation in federal district court seek- ing declaratory relief that the language in FHWA’s Notice was 819 For a thorough discussion, see Richard Jones, Legal Issues Relating To The Acquisition Of Right Of Way And The Con- struction And Operation Of Highways Over Indian Lands (NCHRP 1994). 820 Senate Committee on Environment and Public Works, S. REP. NO. 100-4 (1987). 821 March 15, 1993 notice available at: https://www.fhwa.dot.gov/ legsregs/directives/notices/n4720-7.cfm (accessed June 23, 2018). area on the available work force. A contractor’s core crew is com- posed of full time employed individuals necessary to satisfy his/her reasonable needs for supervisory or specially experienced personnel to assure an efficient execution of the contract work. Any Indian al- ready employed by a contractor shall be included in the core crew, regardless of job function, to avoid the unintended results of having a contractor lay-off or terminate an Indian employee to hire another under this provision. (b) In setting reasonable Indian employment goals, consideration should be given to the availability of skilled and unskilled Indian workers, the type of work to be performed, the contractor’s employ- ment requirements, and, with regard to projects near reservations, unemployment rates prevailing among non-Indians. Also to be con- sidered are the employment goals for minorities and women estab- lished for the area by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs pursuant to Chapter 41, Code of Federal Regulations, Part 60.4. (c) Once established, the goals should only be changed by the State after consultation with the Indian Tribal government representative or TERO and the contractor; and, after consideration of the good faith efforts of the contractor together with the ability of the Tribal government or TERO to refer workers in numbers and in time for the contractor to meet the goal and perform the work. (d) Within 1 week of the placement of a job order by the contractor, if the responsible Indian employee referral agency is unable to provide sufficient qualified or qualifiable applicants to meet the employment goal, the contractor, ensuring nondiscrimination and providing equal employment opportunity, may employ persons living off the reserva- tion. The contractor shall give full consideration to all qualified job applicants referred by the TERO, Tribal Employment and Contract- ing Rights Office (TECRO), or designated tribal council representa- tive. The contractor is not required to employ any applicant who, in the contractor’s opinion, is not qualified to perform the classification of work required. (e) When an Indian employment goal has been inserted in a con- tract, the State will follow normal contract compliance, or contract administration oversight procedures to effect compliance. The States may elect to invite TERO, TECRO, or designated tribal council rep- resentatives to assist their monitoring efforts in all or any part of its compliance process. The State should review the contractor’s employ- ment practices and take appropriate enforcement actions when the goal is not reached after consideration of good faith efforts. Sanctions for failure to meet the goal should be determined in advance and be made a part of the contract to facilitate enforcement.818 2. Tribal Employment Rights Ordinances a. Background TERO stands for Tribal Employment Rights Ordinance or Tribal Employment Rights Office. A Tribal Employment Rights Ordinance is a law passed by a tribe, which may include both an Indian hiring preference and a tax on entities doing work with- in the tribe’s jurisdiction. The tax is often used to fund a Tribal Employment Rights Office which is often a part of the tribal government that monitors and enforces the tribe’s employment ordinance, provides employment support for individuals, and 818 See also, FHWA, Contract Administration Core Curricu- lum Manual 2014 at page 72-73, available at: https://www.fhwa.dot. gov/programadmin/contracts/coretoc.cfm (accessed July 7, 2018).

72 NCHRP LRD 76 Take for example, the states of Alaska and California. In Alaska, the state’s Attorney General’s Office issued a memo- randum826 addressing two questions from the Department of Transportation, “1. May the Metlakatla Indian Community enforce its TERO against a non-Indian state contractor within a 25 U.S.C. § 323 right-of-way located in the Annette Island Re- serve? 2. May DOT&PF lawfully require a state contractor to give hiring preferences to Alaska Natives?” The conclusion was as follows: Under the specific terms of the ferry terminal easement, we conclude that the land within the easement is “Indian land” within which the tribe may enforce its TERO tax and hiring preferences. State action requiring a state contractor to pay the tribal tax would be constitu- tional. However, if DOT&PF were to require a state contractor to comply with the TERO Native hiring preference, there is a significant risk that the preference would be declared unconstitutional as a viola- tion of the Equal Protection Clause of the Alaska Constitution. In the absence of evidence demonstrating a pattern of past discrimination against Alaska Natives in their individual employment on state con- struction projects, a state enforced Native hiring preference may also violate the Equal Protection Clause of the U.S. Constitution. There- fore, the state may lawfully require a state contractor to pay the TERO tax (and may lawfully reimburse the contractor for payment of the tax), but the state may not require a state contractor to comply with the TERO Native hiring preferences.827 In 1996, the State of California passed Proposition 209, which added to the state’s constitution828 language prohibiting preferential treatment in public employment, public educa- tion, or public contracting. In March of 2010, the California Attorney General’s Office issued an opinion addressing the intersection of the new language in the constitution with In- dian employment preferences for the state’s Department of Transportation. The opinion specifically addressing these four questions: 1. Does article I, section 31, of the California Constitution bar the Department of Transportation from including hir- ing preferences, established by Tribal Employment Rights Ordinances and permitted by federal law, as part of its contracts for highway construction and maintenance work performed on Indian tribal lands? 826 Prior to this memorandum the Alaska Supreme Court, in Malabed v. North Slope Borough, 70 P.3d 416 (Alaska 2003), held “that the borough’s hiring preference [which granted a preference to members of federally recognized Indian tribes] violates the Alaska Constitution’s guarantee of equal protection because the borough lacks a legitimate governmental interest to enact a hiring preference favoring one class of citizens at the expense of others and because the preference enacted is not closely tailored to meet its goals.” Id. at 427-28. But see also, Morton v. Mancari 417 U.S. 535, 553 n. 24, 94 S. Ct. 2474, 2484, 41 L. Ed. 2d 290, 303 (1974); Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 480, 96 S. Ct. 1634, 1644-45, 48 L. Ed. 2d 96, 110 (1976); United States v. Antelope, 430 U.S. 641, 645, 97 S. Ct. 1395, 1398, 51 L. Ed. 2d 701, 706-07 (1977); Greene v. Comm’r of the Minn. Dep’t of Human Servs., 733 N.W.2d 490 (Filed June 19, 2007). 827 State of Alaska, Department of Law, Metlakatla Ferry Terminal TERO, July 23, 2003, available at: http://law.alaska.gov/pdf/ opinions/opinions_2003/03-013_665020113.pdf (accessed June 23, 2003). 828 Cal. Const. art. I, § 31. without legal authority on state-owned rights-of-way.822 The language at issue was as follows: “[T]ribes may impose this tax on reservations, but they have no tax authority off reservations.” An issuance by FHWA’s Office of Civil Rights concerning a dis- crimination complaint prompted the state to file the lawsuit.823 The South Dakota lawsuit was later dismissed by the Federal District Court on the grounds that the Department of Trans- portation had not taken any final agency action against the state and thus South Dakota’s lawsuit was not ripe for adjudication. Importantly, the court did not address the merits of South Da- kota’s claim that FHWA cannot require the state (or the state’s contractors) to pay TERO fees. The court ruled that this issue was not ripe “at this time.” Moreover, without litigation, the New Mexico State Highway and Transportation Department is- sued a policy in December 2002 that took a similar position re- garding state highway rights-of-way and TERO fees,824 namely, that non-Indian-owned contractors would not be reimbursed for any tribal government taxes for contract activities on state highway rights-of-way. Following the South Dakota case, FHWA examined the lan- guage at issue in the 1993 Notice. The agency determined that it will continue to participate in nondiscriminatory TERO fees as an allowable cost but will not get involved in the jurisdictional aspects of TERO, i.e., whether or not a tribe has authority to as- sess the TERO on a particular right-of-way, which is a judicial determination. However, FHWA continues to encourage both tribes and states to confer and address both TERO issues and Indian employment preference on Federal-aid projects on and near reservations825 and encourages states to utilize Tribal Em- ployment Rights Office (TERO or TECRO) representatives to set Indian employment goals. b. Jurisdictional Complexities and TERO As discussed in section C of this digest, jurisdiction in In- dian country is a complex matter. States, tribes, and contractors may interpret the law differently and have different ideas about the extent of a government entity’s jurisdiction. There may also be instances where a tribal law requires an Indian employment preference, but a state questions whether applying the tribal law would violate other laws applicable to the state. Tribal TERO laws are one instance where this plays out. 822 South Dakota v. Mineta, 278 F. Supp. 2d 1025 (D.S.D. filed Aug. 21, 2003). 823 The Rosebud Sioux Tribe filed a discrimination complaint against the State because of the State’s refusal to negotiate with the tribe over its TECRO tax on a Federal-aid project on the reservation. After investigating the complaint, the FHWA Office of Civil Rights found the State to be in noncompliance with FHWA policy reflected in the Notice. The Civil Rights letter of findings was withdrawn before the State initiated the lawsuit. After further review, in Decem- ber 2003, an official determination of nondiscrimination by the State was made by FHWA’s Office of Civil Rights. 824 Letter from Arthur Waskey, General Counsel, New Mexico State Highway and Transportation Department to former Chief Counsel Jim Rowland (Jan. 16, 2003) (available at the Office of the Chief Counsel of FHWA). 825 Mineta, 278 F. Supp. 2d at 1029.

NCHRP LRD 76 73 TERO, FMC objected to the ordinance’s application to its plant. However, after negotiations with the tribe, FMC entered into an employment agreement, based on a 1981 TERO, that resulted in a large increase in the number of Indian employees at FMC. In late 1986, the tribes became dissatisfied with FMC’s compli- ance and filed a civil case in tribal court. FMC immediately chal- lenged the tribal court’s jurisdiction in federal district court and got an injunction halting enforcement of any order against FMC until the tribal court had an opportunity to rule on the tribe’s ju- risdiction over FMC. The tribal court found that the tribes had jurisdiction over FMC and held that the company had violated the TERO. The Tribal Appellate Court affirmed those rulings and entered a compliance plan that required 75 percent of all new hires and 100 percent of all promotions to be awarded to qualified Indians, mandated that one-third of all internal train- ing opportunities must be awarded to local Indians, and levied an annual TERO fee of approximately $100,000 on FMC. The federal district court preliminarily enjoined enforcement of the compliance order, and, in April 1988, it reversed the Tribal Ap- pellate Court. The case then went to the Ninth Circuit Court of Appeals. In its review of tribal jurisdiction831, the court of appeals relied on Montana noting the two exceptions in which tribes have jurisdiction over non-Indians on their reservations, even on non-Indian fee lands: [1] A tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter into consensual relationships with the tribe or its members, through commercial dealing, contracts, leases or other arrangements. [2] A tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.832 The court of appeals found that FMC had entered into “con- sensual relationships” with the tribe or its members and thus that Montana’s first exception was applicable. The court noted: FMC has certainly entered into consensual relationships with the Tribes in several instances. Most notable are the wide ranging mining leases and contracts FMC has for the supply of phosphate shale to its plant. FMC also explicitly recognized the Tribes’ taxing power in one of its mining agreements. FMC agreed to royalty payments and had entered into an agreement with the Tribes relating specifically to the TERO’s goal of increased Indian employment and training. There is also the underlying fact that its plant is within reservation bound- aries, although, significantly, on fee and not on tribal land. In sum, FMC’s presence on the reservation is substantial, both physically and in terms of the money involved…. FMC actively engaged in com- merce with the Tribes and so has subjected itself to the civil jurisdic- tion of the Tribes. See, e.g., Babbitt Ford, Inc. v. Navajo Indian Tribe, 710 F.2d 587 (9th Cir. 1983).833 The court of appeals disagreed with the district court and FMC that these connections between the company and the 831 See section C.4 in this digest for additional information on tribal jurisdiction in Indian country. 832 Shoshone-Bannock Tribes, 905 F.2d at 1314 (9th Cir. 1990), citing Montana v. United States, 450 U.S. 544, 565–66, 101 S. Ct. 1245,1258 67 L. Ed. 2d 493, 510 (1981). 833 Id. 2. If the Department of Transportation is not constitutionally prohibited from including such hiring preferences as part of its contracts, does it have existing statutory authority to do so? 3. Is the Department of Transportation subject to, and autho- rized to pay, tribal taxes established by Tribal Employment Rights Ordinances for highway work performed within De- partment rights of way on tribal lands? 4. Where such highway work within Department rights of way is conducted by private contractors and subcontrac- tors of the Department of Transportation, rather than by Department employees, are such contractors and subcon- tractors subject to taxes established by Tribal Employment Rights Ordinances? The opinion provided the following conclusions in response to each of the four questions: 1. Article I, section 31, of the California Constitution does not prohibit the Department of Transportation from including Indian hiring preferences, established by Tribal Employ- ment Rights Ordinances and permitted by federal law, as part of its contracts for highway construction and mainte- nance work performed on Indian tribal lands, as a matter of government-to-government agreement. 2. Under its existing statutory authority, the Department of Transportation may include such hiring preferences as part of its contracts for highway construction and maintenance work performed on or near tribal lands. 3. The Department of Transportation is not required to pay taxes established by Tribal Employment Rights Ordinances for highway work performed on roads located within De- partment rights of way on tribal lands, but neither is the Department prohibited by law from voluntarily paying Tribal Employment Rights Ordinances fees or taxes if the Department, in its reasonable exercise of discretion, con- cludes that such payments further its authorized purposes. 4. Where such highway work within Department rights of way on tribal land is performed by private contractors and subcontractors of the Department of Transportation rather than by Department employees, the tribes lack ju- risdiction to require the state’s contractors and subcontrac- tors to pay taxes established by Tribal Employment Rights Ordinances.829 Complex jurisdictional questions related to TERO ordinanc- es also played out in the courts in the following cases: • FMC v. Shoshone-Bannock Tribes 830: This case addressed the tribe’s jurisdiction to enforce an Indian employment prefer- ence in a TERO Ordinance on FMC, which operated a plant manufacturing elemental phosphorous on fee land within res- ervation boundaries. Upon notification of the passage of the 829 93 Ops.Cal.Atty.Gen. 19. available at: https://oag.ca.gov/system/ files/opinions/pdfs/07-304.pdf (accessed June 23, 2018). 830 905 F.2d 1311 (9th Cir. 1990).