Freedom Measures
The Reservation Economic Freedom Index (REFI) uses eleven measures of economic freedom in three categories: tribal organization, ease of doing business, and tribal codes. Below is a short explanation of each component.
Tribal Organization
1. Tribal Governmental Structure
The REFI documents how tribal constitutions define governmental structures and gives a higher score to tribes that have separation of powers. Most tribes have an executive branch, judicial branch, and tribal council, with varying degrees of checks and balances between these branches. However, tribes that historically use a general council system (in which all members vote on tribal matters) may find it more difficult to have a successful separation of powers.
2. Independent Judiciary
Tribal constitutions that have an explicit provision for an independent judiciary formally establish a judicial branch as separate from the tribal council. This contributes to the separation of powers, discussed above.
3. Tribal Corporation
When assessing tribal structures, the separation of business and politics is especially important. Because most tribes cannot fund their governments entirely through tax revenue, there is an incentive for tribal governments to start businesses under full tribal council control, with the intent to use business revenue in place of tax revenue. These businesses often fail due to political interference. Tribal corporations offer a unique solution. Though they are tribe-owned corporations and allow for some tribal council involvement, tribal corporations function under a defined set of checks and balances that limit political influence in business decisions. The REFI considers whether tribal constitutions explicitly define a tribal corporation or other economic development arm separate from the tribal council.
Ease of Doing Business
4. Amount of Tribal Trust vs. Fee-Simple Land on Reservation
The percentages of tribal trust and fee-simple land are measured to better understand the property rights associated with each tribe’s land. Fee-simple land is held under complete control of the owner, whether an individual person or a tribe. Because the owners hold title to the land, they can sell, lease, or develop the land however they see fit. Tribal trust land is held in trust by the federal government and the US government, not the individual person or tribe, holds the title.
5. Business Immunity Rights
Business immunity rights are inherently tied to the enforcement of Public Law 280, which transferred jurisdiction from the federal government to certain states. In those states where Public Law 280 is enforced, tribes have the ability to waive their sovereign immunity in business dealings and become subject to state law for contract disputes. This waiver can provide assurance to off-reservation businesses who want to engage with tribes. Business immunity rights are positively related to economic growth on Indian reservations.
Tribal Codes
6. Land-Use Codes
Reservations with explicit land-use codes are able to regulate whether land is specified for housing, farming, hunting, or other uses. Land-use codes also allow tribes to control the use of tribal government land through regulations on the establishment, content, violation and termination of use rights.
7. Environmental, Hunting and Fishing Codes
Tribes with environmental hunting and fishing codes can regulate how inhabitants are able to use natural resources, including the use of ground water or mines. It also gives tribes control over litter, sewers, and dump sites. With these codes, tribes can define historical sites and may regulate hunting and fishing fees on tribal land.
8. Traffic Code
Tribes may set forth their own traffic codes, which assist in solving jurisdictional problems between tribal, state, and federal entities—especially when a crime is involved. Typically, these codes are taken from state law.
9. Gaming Code
Reservations that have explicit gaming codes allow tribes to govern the operations of casinos on tribal land, which are typically contracted out and run by large outside corporations. Governing casino operations might include determining when casinos can operate, what games are authorized, and even how casino profits are distributed. Profits may be distributed in a number of ways, including investment in infrastructure, student scholarships, or lump-sum payments to tribal members.
10. Uniform Commercial Code
Uniform commercial codes provide a model for tribes to follow in establishing consistent legal practices for commercial transactions across state lines. Reservations that have not adopted their own uniform commercial code as part of their tribal code must defer to state laws, which fill the void but without as much certainty or clarity. Because uniform commercial codes make business transactions clearer and easier, tribes that have adopted them have seen increased economic opportunity.
11. Taxation Code
Taxation codes set forth a clear standard of taxation for tribal governments. Though they possess the power to tax the income of tribe members, few tribal governments exercise that power. Because tribal governments are not able to levy property taxes, tribes typically rely on excise taxes on the sale of alcohol, tobacco, fuel, or other products, and severance taxes on natural resource development.