Federal Reserve Bank of San Francisco

Community Development

Uniform Commercial Codes: Bringing Business to Indian Country

Thursday, February 21, 2013
National Indian Programs Training Center
1011 Indian School Road NW Suite 254
Albuquerque, NM 87104

Contact

Craig Nolte
Federal Reserve Bank of San Francisco
(206) 396-2192

The legal infrastructure for many aspects of commerce is a given in most places. The code provides uniformity among state laws, enabling efficient cross-border business to take place. Because all states have adopted Article 9, lenders and borrowers usually feel confident the law will protect their interests—even if the two parties are located in different states.

On the reservations and other tribal lands collectively known as Indian Country, it’s often a different story. As sovereign nations, American Indian tribes are not subject to state law and are free to adopt their own commercial codes. As a result, tribal commercial laws—to the extent they have been adopted at all—vary in depth and breadth. Laws governing secured transactions are absent or weak on many reservations, which can make outside parties reluctant to lend to tribal entities, entrepreneurs and consumers. The uncertain legal environment introduces an element of risk. Many lenders respond to the risk in one of two ways: avoiding it altogether by not offering loans, or offsetting it by shortening loan terms and charging high interest. The situation limits access to affordable credit, which is a fundamental component of any sustainable business venture. That, in turn, hinders economic development in Indian Country.

This workshop will provide information on the benefits of adopting a secured transaction code, and available resources for tribes including a model code and Implementation Guide developed by the National Conference of Commissioners on Uniform State Laws (NCCUSL). The Implementation Guide features plain-language commentary on each provision of the code. It also discusses UCC filing system options for tribes, incorporates a model filing system regulation and raises important policy issues for tribal legislatures to consider.