Tribes is the Magic Word
Summary:
The U.S. Supreme Court held that the Bankruptcy Code (“Code”) abrogates sovereign immunity for all “government unit[s],” including federally recognized Tribes (“Tribes”). Thus, Tribes must comply with an automatic stay issued under the Code. However, the Supreme Court failed to utilize federal Indian law to articulate its rule in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin and thus lacked the context necessary to understand why Congress distinguishes Tribes from other governmental units. In addition, the Supreme Court found that the Code protects government functions and offered examples that did not reflect an understanding of Tribal government limitations. The Supreme Court’s opinion defied precedent and reduced tribal sovereignty. Congress or bankruptcy courts, though, can restore tribal sovereign immunity using one of three solutions.
The United States is home to fifty States and 574 federally-recognized Indian Tribes (“Tribes”).[1] Each Tribe exercises sovereignty and is a “distinct, independent political communit[y]”[2] with a unique citizenship,[3] language and customs,[4] and constitution.[5] They generate revenue via natural resources, government-to-government grants, and enterprises,[6] such as lending companies.[7]
In bankruptcy petitions, debtors may name Tribal enterprises alongside other creditors.[8] Tribal entities, like other creditors, must comply with the automatic stay triggered by a bankruptcy filing because they are “governmental units” under the Bankruptcy Code, 11 U.S.C. § 101 et seq. (“Code”).[9]
At least two Code sections specifically address governmental units. First, § 507 prioritizes certain debts by requiring their repayment before other unsecured claims.[10] Specific unsecured debts owed to governmental units are eighth in line, while debts owed to private creditors (e.g., lenders) are addressed equally after all priority debts.[11] Second, § 523 lists various non-dischargeable debts, including certain taxes and penalties owed to governmental units.[12]
This Comment explores Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin (“Coughlin”), the case defining Tribes as governmental units under the Code,[13] thus setting forth new challenges for Tribes to recover debts. This Comment offers an Indigenous perspective that explains why the Coughlin majority’s understanding of the rule to abrogate tribal sovereign immunity under the Code is misguided.[14] This Comment also analyzes treatment of Tribes under the Code’s provisions for non-dischargeable and priority debts to explain how these provisions create disparity between Tribes and governmental units. Finally, this Comment offers solutions that restore Tribal sovereignty to its pre-Coughlin status.
The Lac du Flambeau Band of Lake Superior Chippewa Indians (“Chippewa”) and Brian Coughlin (“Coughlin”) disputed whether Lendgreen, a payday loan company owned by the Chippewa, was subject to the Bankruptcy Code.[15] Coughlin took a “high-interest, short-term loan” from Lendgreen.[16] Prior to repayment of that loan, he filed for Chapter 13 bankruptcy.[17]
Coughlin’s action “triggered an automatic stay against further collection efforts,” and Lendgreen ignored the stay by contacting Coughlin for repayment.[18] Coughlin moved to enforce the stay against Lendgreen and sought damages and attorney’s fees.[19] Lendgreen moved to dismiss, claiming the Bankruptcy Court lacked subject matter jurisdiction due to their tribal sovereign immunity.[20] The Bankruptcy Court found that Congress did not clearly express its intent to abrogate tribal sovereign immunity under the Code and thus dismissed.[21]
Coughlin appealed to the Court of Appeals to answer whether tribal sovereign immunity is abrogated under the Code.[22] The appellate court found Congress explicitly abrogated sovereign immunity for all governments, including Tribes, and reversed the Bankruptcy Court.[23] The Chippewa then petitioned for a writ of certiorari, which the Supreme Court granted.[24]
Tribal sovereign immunity is settled law, and it extends to their government and commercial activities on and off a reservation.[25] Only Congress and Tribes may abrogate tribal sovereign immunity.[26] Congressional abrogation requires an “unequivocal[] express[ion] [of] that purpose,” while a tribal waiver requires a “clear” statement.[27]
For its part, the Code recognizes that government creditors need to safeguard public financial interests, so it prioritizes debts owed to governments.[28] For example, certain debts to governmental units are eighth in payment priority, meaning those debts are paid before general unsecured creditors.[29] Often, these priority debts to governments include various taxes, customs duties, and penalties related to those taxes and duties.[30]
Another safeguard is the list of twenty non-dischargeable debts in § 523.[31] Generally, unsecured debts (e.g., credit cards or medical bills) are discharged upon completion of the bankruptcy.[32] However, debtors are not relieved from non-dischargeable debts despite the bankruptcy.[33] Here, the two most relevant § 523 exceptions are § 523(a)(7), excepting fines and penalties benefiting a governmental unit, and § 523(a)(11), excepting federal or state judgements arising from a fiduciary’s fraudulent act.[34]
The Court determined that Congress “unequivocally abrogate[ed] the sovereign immunity of any and every government that possesses the power to assert such immunity” when it included the catchall phrase “other foreign or domestic government[s]” in the Bankruptcy Code’s definition of governmental unit.[35] The majority found that the rule for abrogating tribal sovereign immunity does not carry “a magic-words requirement” and that Tribes are governmental units.[36] Thus, the majority held “that the Bankruptcy Code unambiguously abrogates tribal sovereign immunity.”[37]
The majority’s analysis began by establishing that § 106(a) prohibits governmental units from asserting sovereign immunity and used § 101(27) to define governmental units.[38] The term includes the United States, individual States, and “other foreign or domestic government[s].”[39] The majority’s stated issue was whether § 106(a) and § 101(27), when read together, unambiguously abrogated tribal sovereign immunity.[40] To answer in the affirmative, the majority looked primarily to the Bankruptcy Code and cases outside of federal Indian law (“non-tribal cases”).[41]
Applying the sovereign immunity standard used for States, the majority found Congress is not required to use magic words to trigger abrogation of tribal sovereign immunity; it needs only to speak unequivocally.[42] They acknowledged, but were unpersuaded by, Congress’s historical practice of explicitly mentioning Tribes where it intends to abrogate tribal sovereign immunity and found that Congress is free to break its history and tradition, and did so here.[43]
Next, the majority examined the Code and found its purpose and structure reinforced their holding because of its repetitive, purposeful use of broad terms (e.g., “all” and “any”) and limitations.[44] Specifically, the majority highlighted § 523(a)(7) (i.e., government fines and penalties are non-dischargeable) as an example of how the Code’s limitations ensure that government functions are unimpeded despite the debtor’s bankruptcy.[45] They explained that Tribes tax and regulate, which are some governmental functions the Code accommodates.[46] Thus, the majority rationalized that, because Tribes tax and regulate and the Code does not impede those functions, Tribes must be included in the definition of governmental unit.[47]
Finally, the majority found preservation of tribal sovereign immunity impossible under the Code because no other plausible interpretation of the catchall phrase existed.[48] They acknowledged that Tribes are neither foreign nor domestic but explained that “or,” as a rule of construction, “is not exclusive.”[49] The majority doubted that Congress intended to exclude Tribes from the abrogation clause because such interpretation required “laser focus” on “or.”[50] They deduced that Congress would not immunize only Tribes because Tribes share the same nature as those listed in § 101(27) and, additionally, Congress did not intend categorical exclusion, especially “in such an anomalous manner.”[51] The majority explained that the Code prevented distinction between types of governments and, further, its legislative history revealed that “governmental units” was intended to be broadly defined.[52] Thus, the majority held that Tribes are governmental units and the Code severed sovereign immunity for “all governments.”[53]
Using a compendium of federal Indian law cases, the sole dissenter, Justice Gorsuch, countered each of the majority’s points.[54] He reiterated that Congress has never abrogated tribal sovereign immunity without explicitly naming Tribes.[55] He then gave an alternative, plausible reading of the catchall phrase.[56] Justice Gorsuch also provided the historical context behind tribal sovereign immunity rules before defining Tribes as Constitutionally unique, hybrid governments.[57]
Looking at the Code’s purpose and structure, Justice Gorsuch admitted to sharing the majority’s question about why Congress would exclude Tribes.[58] Rather than concluding that Congress would not exclude Tribes, he found that questioning Congress’s rationale is not the standard; the standard is merely whether Congress unequivocally stated its intention to abrogate.[59]
Justice Gorsuch propounded that Congress could clearly communicate its intention by (1) identifying Tribes using any of the “unmistakable ways” it has in the past (e.g., Indigenous Peoples or Indians), (2) describing Tribes as it previously has, or (3) using the words the majority interpreted the catchall phrase to mean.[60] Additionally, he would have held tribal sovereign immunity intact because Congress used vague language and not an unequivocal statement of abrogation.[61]
Coughlin has three primary flaws in its interpretation of federal Indian law. First, utilizing non-tribal cases skews the analysis.[62] Second, Coughlin misstates the abrogation standard.[63] Finally, the majority undervalues precedent and legislative history.[64]
Using non-tribal cases deliberately avoids the historical and political context needed to understand why Tribes are distinct from the governments listed in § 101(27).[65] That is, Tribes are “distinct, independent political communities” with inherent sovereignty pre-dating the Constitution.[66] Avoiding this context consequently allows the majority to deny that Tribes are hybrid governments akin to Territories, which in turn permits their rejection of the logic that Congress would explicitly include Tribes in § 101(27) — just as it did Territories — if it intended to abrogate tribal sovereign immunity.[67]
Moreover, the majority disregards Congress’s authority to distinguish Tribes without explanation, instead demanding that either another Justice or the Tribes themselves justify the exclusion, thereby imposing a higher standard.[68] Pre-Coughlin, parties needed to show only whether Congress unequivocally stated an intention to abrogate tribal sovereign immunity.[69] Now, parties must explain why Congress would exclude Tribes from a statute.[70] Ironically, the context and explanation the majority allegedly seek are found in the very laws they eschew: federal Indian laws, including the United States Constitution[71] and the federal trust responsibility.[72]
Justice Gorsuch also questions Congress’s exclusion of Tribes but, informed by federal Indian caselaw, articulates the correct pre-Coughlin standard for abrogating tribal sovereign immunity and finds that Congress has always used magic words (e.g., Tribes) when stating its intent to abrogate.[73] While the majority and Justice Gorsuch disagree on a magic words requirement, both agree that Congress fails to make an unequivocal statement where another plausible reading of the statute exists.[74] Unfortunately, the majority stonewalls Justice Gorsuch’s articulation of a plausible alternative.[75]
Lastly, although all the Justices wonder why Congress would exclude Tribes from the Code, none ask why Congress chose the Code as the sole outlier in its history of explicitly mentioning Tribes when abrogating tribal sovereign immunity.[76] Granted, Congress’s custom does not preclude the use of a new approach, but why would it adopt such an anomalous abrogation approach the same year it twice protected Tribes — once with the Indian Child Welfare Act, and again with the American Indian Religious Freedom Act?[77] To be persuaded, one must accept sly resurrection of the United States’ Termination policy, with Congress enacting protections for Tribes in one hand while subtly erasing their sovereignty with the other.[78]
The majority’s analysis of the Code’s protections for Tribes is flawed, even if binding.[79] They scrutinize some of the Code’s individual provisions and aspects to find a scintilla of evidence of abrogation and call it an unequivocal statement.[80] Thus, scrutiny of their analysis of those individual provisions, and others, is warranted.
First, because the majority finds that the Code does not impede government function, a reasonable expectation is that it should clearly “avoid impeding” Tribes, too.[81] Yet, as this Section will show, this does not always hold true. One example the majority points to is § 523(a)(7), which prohibits discharge of a “fine, penalty, or forfeiture” debt to governmental units.[82] They imply that § 523(a)(7) is proof that the Code allows Tribes to operate efficiently even when acting as creditors.[83] This assertion is unconvincing, though, because it omits that discharge is prohibited only if debts do not arise from the government’s “actual pecuniary loss.”[84] Thus, Coughlin’s debts to Lendgreen would likely be dischargeable because the Chippewa lost $1,100 upon nonpayment of the loan.[85]
In fact, many debts to Tribes are likely dischargeable because § 523, which governs non-dischargeable debts, either does not address the limits of Tribal government functions or explicitly excludes Tribes.[86] For example, § 523(a)(11) ensures that debt judgements issued in federal or State court are non-dischargeable.[87] Yet, Tribes have fraud[88] and settlement agreement laws,[89] own banks[90] and credit unions,[91] and adjudicate.[92] At worst, § 523(a)(11) discriminates against tribal courts and, at best, ignores their authority. Regardless of the majority’s assertion, the Code distinguishes between governmental units by protecting the functions of only some sovereigns.[93]
One counterargument is that § 523 includes Tribes elsewhere by allowing recovery of, inter alia, taxes and certain governmental loans—debts that its § 507 counterpart prioritizes.[94] However, only education and pension loans are non-dischargeable; personal loans are not included.[95] Additionally, Tribes and their arms (e.g., Lendgreen) are subject to complex tax treatment due to their unique political status.[96]
While some Tribes tax specific activities (e.g., fishing[97] or commercial activity[98]), none are known to assess income taxes, and only the Tulalip Tribe is known to assess property taxes.[99] But, the Tulalip property tax is limited; they assess a one percent tax on the sale of real property, not an annual property tax.[100] Thus, of the twenty non-dischargeable debts, only § 523(a)(1), which prohibits discharge of certain taxes (e.g., the fish tax), and § 523(a)(7) (i.e., fines and fees) scantily cover the functions inherent in Tribal governance, while none likely cover the Chippewa here.[101]
In another example, Tribes should expect § 507(a)(8), the only provision prioritizing debts to governmental units, to prioritize them too.[102] Unfortunately, § 507(a)(8) prioritizes only taxes, certain customs duties, and penalties related to those taxes and customs duties.[103] Specifically, the provision prioritizes income, property, employment, and excise taxes, as well as “a tax required to be collected or withheld and for which the debtor is liable in whatever capacity.”[104]
Again, § 507 scantily covers Tribal government functions because Tribes lack the broader taxing authority of the federal or state government (i.e., income and property taxing).[105] Further, bankruptcy courts could find the aforementioned fish tax is not “required to be collected,” thus making § 507 nearly irrelevant to Tribes, considering none of its other provisions categorically benefit governmental units.[106]
Finally, although it found that Tribal “police and regulatory power[s]” are protected by § 362(b)(4), the majority sidesteps the jurisdictional checkerboard plaguing Tribes — one it created and that the other § 101(27) governments do not face.[107] Whereas States and municipalities exercise tag jurisdiction regardless of race or political status, Tribal authority turns on the parties’ Indian status and whether the matter occurred on tribal land in Indian Country.[108] This framework already narrows Tribal regulatory reach. By excluding Tribal court orders under § 523(a)(11), the Code further erodes the jurisdiction Tribes retain.[109] The Code harms, not protects, Tribal powers.
Three solutions are offered: (1) Congress amends the Code to exclude Tribes from the definition of governmental unit; (2) Congress amends the Code to explicitly prioritize unsecured debts to Tribes under § 507, ensure unsecured debts to Tribes are non-dischargeable under § 523, and include Tribal courts under § 523(a)(11); and (3) bankruptcy courts classify Tribal loans as tax debts under § 507(a)(8)(C) or penalties under § 523(a)(7).[110] Each proposition is addressed in turn.
First, Congress could amend the Code to expressly exclude Tribes from the definition of governmental unit to clarify its intent to use “magic words”[111] (e.g., Tribes or a description) when abrogating tribal sovereign immunity.[112] This fix also restores tribal sovereignty because it closes the Code’s gaps that reduce or overlook Tribal regulatory authority.[113] However, this solution likely requires bipartisanship, and detractors could argue an amendment is unnecessary because Coughlin was correctly decided.[114] Considering the majority’s use of non-tribal cases, though, Coughlin acts as a “canary in the coal mine” to Congress about the Supreme Court’s ability to find abrogation of state or federal sovereign immunity, too, through any plausible interpretation of a statute while ignoring alternative, plausible readings.[115]
Second, amending §§ 507 and 523 yields the same result as option one: clarifying intent while restoring and reaffirming tribal sovereignty.[116] This solution also minimizes friction between the political branches by agreeing with Coughlin’s holding, although supporters face the same oppositional stance as above.
Finally, bankruptcy courts may classify Tribal loans as tax debts under § 507(a)(8)(C) or penalties under § 523(a)(7). Under § 507(a)(8)(C), “a tax required to be collected or withheld and for which the debtor is liable in whatever capacity” is prioritized.[117] The Code does not define “tax,” but common law defines taxes as operational, revenue raising financial burdens individuals must pay to defray public expenses.[118] Thus, one argument is that Tribes lend public funds for the purpose of raising revenue necessary for infrastructure maintenance (e.g., health and safety) and debtors offset the Tribe’s public expenses with interest payments.[119]
However, this argument likely fails because taxes are also involuntary assessments against the debtor.[120] Overcoming the “involuntariness” factor is insurmountable because debtors voluntarily accept the loans.[121] Additionally, the Sixth Circuit tests whether the tax is universally applied and whether private creditors with similar claims are treated equally.[122] Thus, a bankruptcy court likely would not consider debts to Lendgreen, for example, to be tax debts because they are not universally imposed, nor do private lenders receive priority.
Alternatively, bankruptcy courts could classify Tribal loan repayments as penalties under § 523(a)(7). Like taxes, “penalties” are not defined in the Code and are understood to be defined by their nature but, unlike taxes, are punishments for unlawful conduct.[123]
Specifically, a debt may be a penalty if its purpose is punitive and “not compensation for actual pecuniary loss.”[124] Therefore, an argument is that debts to Tribal lenders transform into non-dischargeable penalties once the debtor files for bankruptcy because non-payment is a breach of contract. However, this argument likely fails because loans naturally arise from the creditor’s actual pecuniary loss.[125] Despite its failing arguments, this option hopes to encourage tribal attorneys to use creative interpretations of the Code’s vague or undefined terms.
Coughlin is flawed because the issue is misstated and the analysis disregards federal Indian law, thereby reaching a conclusion inconsistent with precedent. Further, the Code does not safeguard Tribal government functions because it excludes their court orders from § 523(a)(11), overlooks limitations to Tribal taxation powers under § 507, and allows most debts to them to be dischargeable under § 523. The Coughlin effect (i.e., deciding an issue using inappropriate law[126] to detrimental effect) causes Tribes to lose more than a sovereign immunity defense. Congress or bankruptcy courts should restore tribal sovereignty to its pre-Coughlin status.
Until then, Coughlin stands; and 574 Tribes must contend with its fallout.
[1]Profiles: United States, U.S. Census Bureau, https://data.census.gov/profile (last visited Apr. 12, 2025); Mainon A. Schwartz, Cong. Rsch. Serv., R47414, The 574 Federally Recognized Indian Tribes in the United States 1 (2024).
[2]Worcester v. Georgia, 31 U.S. 515, 559 (1832); see also Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509 (1991) (citing Cherokee Nation v. Georgia, 30 U.S. 1 (1831)).
[3]E.g., Tribal Enrollment, Winnebago Tribe of Neb., https://winnebagotribe.com/tribal-enrollment/ [https://perma.cc/33E9-UHDW] (last visited Apr. 12, 2025) (describing its citizenship criteria); see also Tribal Enrollment, Modoc Nation, https://modocnation.com/tribal-enrollment/ [https://perma.cc/RK4P-Z6LZ] (last visited Apr. 12, 2025) (describing its citizenship criteria).
[4]E.g., Oral Traditions, Hoh Tribe, https://hohtribe-nsn.org/oral-traditions/ [https://perma.cc/387Q-62QW] (last visited Apr. 12, 2025); see also About Us, Quinault Indian Nation, https://www.quinaultindiannation.com/171/About-Us [https://perma.cc/CA3B-QK8M] (last visited Apr. 12, 2025).
[5]E.g., Tribal Constitution and Ordinances, Coquille Indian Tribe, https://www.coquilletribe.org/2-19-constitution-and-ordinances/ [https://perma.cc/6ZTU-L9SS] (last visited Apr. 12, 2025); see also Prairie Band Potawatomi Constitution, Prairie Band Potawatomi Nation, https://www.pbpindiantribe.com/government/our-constitution/ [https://perma.cc/24F3-KXBW] (last visited Apr. 12, 2025).
[6]This list is non-exhaustive. Camila Fonseca-Sarmiento, Isabel Marsh, Raihana Zeerak, , Jerry Zhao, Native Nations Funding Sources 1, 7 (2023).
[7]E.g., Castle Payday, Big Picture Loans, https://www.bigpictureloans.com/castlepaydayredirectlanding [https://perma.cc/AG5C-CPX7] (last visited Apr. 12, 2025); see also Three Sticks Lending, https://threestickslending.com/ [https://perma.cc/B6RB-6E54] (last visited Apr. 12, 2025).
[8]See, e.g., Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 143 S. Ct. 1689, 1694 (2023) (noting that petitioner named a tribal loan company as a creditor in his Chapter 13 bankruptcy petition).
[9]Id. at 1696; 11 U.S.C. § 362(a) (outlining the automatic stay). When the term “governmental unit” is utilized in this Comment, it refers to the definition specified in 11 U.S.C. § 101(27). See infra note 38.
[10]11 U.S.C. § 507.
[11]§ 507(a)(8) (describing which unsecured debts to governmental units receive priority); IRS v. Juntoff (In re Juntoff), 76 F.4th 480, 482 (6th Cir. 2023).
[12]§ 523.
[13]Coughlin, 143 S. Ct. at 1694.
[14]The author is a citizen of the Prairie Band Potawatomi Nation (“PBPN”), where she was born and raised. She continues to reside near the PBPN reservation in Kansas.
[15]Coughlin, 143 S. Ct. at 1694–95.
[16]Id. at 1694.
[17]Id.
[18]Id. (citing § 362(a)).
[19]Id.
[20]Id.
[21]Id.
[22]Coughlin v. Lac du Flambeau Band of Lake Superior Chippewa Indians Band (In re Coughlin), 33 F.4th 600, 603–04 (1st Cir. 2022).
[23]Id. at 612.
[24]Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 143 S. Ct. 645 (2023).
[25]See Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978) (citations omitted) (stating the U.S. has long recognized Tribal sovereign immunity); Kiowa Tribe v. Mfg. Techs., 523 U.S. 751, 760 (1998); Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 785 (2014).
[26]Kiowa, 523 U.S. at 754.
[27]C & L Enters. v. Citizen Band Potawatomi Indian Tribe of Okla., 532 U.S. 411, 418 (2001) (citing Martinez, 436 U.S. at 58 and Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509 (1976), respectively).
[28]11 U.S.C. § 507(a)(8).
[29]Id.
[30]§ 507(a)(8)(G).
[31]§ 523(a)(1)–(20).
[32]§ 1328 (outlining discharge of debts repaid under Chapter 13 plans).
[33]§ 523.
[34]§ 523(a)(7), (11).
[35]Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 143 S. Ct. 1689, 1696 (2023).
[36]Id. at 1695. The term “magic words” as used throughout this Comment refers to its use in Coughlin.
[37]Id. at 1702.
[38]Id. at 1695.
The term ‘governmental unit’ means United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.
11 U.S.C. § 101(27).
[39]Coughlin, 143 S. Ct. at 1695.
[40]Id.
[41]Of the fourteen cases the majority cites, three involved tribes: Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978), Michigan v. Bay Mills, 572 U.S. 782 (2014), and Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (2008). These cases are primarily used only to establish that Tribes are governments. See Coughlin, 143 S. Ct. at 1695–99.
[42]Coughlin, 143 S. Ct. at 1699 (applying FAA v. Cooper, 566 U.S. 284 (2012) to Tribes despite Cooper lacking a tribal party).
[43]Id. at 1699–1700.
[44]Id. at 1696–98.
[45]Id. at 1697.
[46]Id. at 1698.
[47]See id. at 1697–98 (refusing the Chippewa’s argument that the Code carves out an exception for Tribes).
[48]Id. at 1700–01.
[49]Id. at 1700.
[50]Id.
[51]Id. at 1698 (comparing Coughlin facts with Law v. Siegel, 571 U.S. 415, 424 (2014) (refusing to interpret the Code to have an exception that Congress did not include)); § 101(27) (e.g., “State” or “municipality”).
[52]Coughlin, 143 S. Ct. at 1701–02 (explaining that bankruptcy courts distinguished between governments prior to the Bankruptcy Code’s enactment).
[53]Id. at 1702.
[54]Id. at 1704–05 (Gorsuch, J., dissenting) (citing e.g., C & L Enters v Citizen Band Potawatomi Tribe of Okla., 532 U.S. 411, Kiowa Tribe v. Mfg. Techs., 523 U.S. 751 (1998), and Santa Clara Pueblo v. Martinez, 436 U.S. 49 1978)).
[55]Id. at 1704.
[56]Id. (offering the interpretation “every ‘other foreign . . . government’; every ‘other . . . domestic government’”).
[57]Id. at 1704–05, 1708–09.
[58]Id. at 1712.
[59]Id.
[60]Id. at 1712–13 (explaining Congress could use either “any other government that operates, in whole or in part, within the territorial bounds of the United States,” or “any and every government.”).
[61]Id.
[62]See supra Section III(A).
[63]See Coughlin, 143 S. Ct. at 1695.
[64]Id. at 1703.
[65]Id. (providing a historical overview); see also § 101(27) (e.g. “States” and “municipalities”). This Comment does not assert that Tribes are not governments; it merely argues that Tribes are not included in the Bankruptcy Code’s definition of governmental unit.
[66]Worcester v. Georgia, 31 U.S. 515, 559 (1832) (Tribes are “distinct, independent political communities”); Cherokee Nation v. Georgia, 30 U.S. 1, 33–34 (1831) (Tribal sovereignty is “inherent” and “pre and self existing”).
[67]See Coughlin, 143 S. Ct. at 1698, 1700–01, 1711–12.
[68]Id. at 1700–01. The standard for abrogating tribal sovereign immunity is whether Congress made an unequivocal statement abrogating tribal sovereign immunity. C & L Enters v. Citizen Band Potawatomi Indian Tribe of Okla., 532 U.S. 411, 418 (2001) (citing Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978).
[69]C & L Enters., 532 U.S. at 418 (citing Martinez, 436 U.S. 49 and Okla. Tax Comm’n, 498 U.S. 505, respectively).
[70]See Coughlin, 143 S. Ct. at 1695.
[71]Congress uses a different Constitution article when abrogating State sovereign immunity than it does when abrogating tribal sovereign immunity. Compare U.S. Const. art. I, § 8, cl. 3, with U.S. Const. amend. XIV, § 5. The Indian Commerce Clause (“ICC”) gives Congress broad regulatory authority over tribal commercial activity and allows Congress to treat Indians special. Artl.S8.C3.9.1 Scope of Commerce Clause Authority and Indian Tribes, Const. Annotated: Congress.gov, https://constitution.congress.gov/browse/essay/artI-S8-C3-9-1/ALDE_00012976/ (last visited Apr. 13, 2025) (annotating U.S. Const. art. 1, § 8, cl. 3). Federal legislation enacted under the ICC must be constitutional and requires “a more searching review” to ensure Congress upholds its trust obligations. Id.; see Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 788–89 (2014) (Congress’s plenary powers authorize them to abrogate tribal sovereign immunity); see also Haaland v. Brackeen, 143 S. Ct. 1609, 1627–29 (2023) (Congress’s plenary powers are tied to Article I); Seminole Tribe v. Florida, 517 U.S. 44, 59, 72 (1996) (reaffirming that Congressional power to abrogate State sovereign immunity is found through the Fourteenth Amendment).
[72]Morton v. Mancari, 417 U.S. 535, 552 (1974) (explaining that Congress gives “special treatment” to Indians because of their historical relationship and to maintain the validity of 25 U.S.C. in its entirety); Matthew L.M. Fletcher, The Dark Matter of Federal Indian Law: The Duty of Protection, 75 Me. L. Rev. 305, 317–20 (2023) (explaining that a default rule when interpreting statutes affecting Indians is to construe the statue to the benefit of Indians because the U.S. has a duty to protect Tribes—including Acts affecting Indian commerce.); Restatement of the L. of Am. Indians § 8 cmt. a (Am. L. Inst. 2021) (explaining that the trust relationship between Congress and Tribes means federal acts are interpreted to benefit Tribes when those acts impact Tribes).
[73]Coughlin, 143 S. Ct. at 1704–05 (Gorsuch, J., dissenting) (citing C & L Enters, 532 U.S. 411; Kiowa Tribe v. Mfg. Techs., 523 U.S. 751 (1998); and Martinez, 436 U.S. 49).
[74]See id. at 1699–1700, 1704–05 (agreeing that abrogation of tribal sovereign immunity requires a clear statement from Congress and pontificating on a magic words requirement).
[75]Id. at 1695, 1700–01, 1704 (the majority rejecting “every ‘other foreign . . . government’; every ‘other . . . domestic government’” as a plausible interpretation).
[76]Id. Congress had a judicial directive six months prior to the Code’s enactment to indicate clearly where it intends to abrogate tribal sovereign immunity. Martinez, 436 U.S. at 49, 58–60; see generally Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92 Stat. 3096 (codified at 11 U.S.C.).
[77]Coughlin, 143 S. Ct. at 1698, 1699–1700, 1704–05. In 1978, Congress passed the Bankruptcy Reform Act, the Indian Child Welfare Act (“ICWA”) and the American Indian Religious Freedom Act (“AIRFA”). See generally Bankruptcy Reform Act of 1978; Indian Child Welfare Act of 1978, Pub. L. No. 95-608, 92 Stat. 3096 (codified at 25 U.S.C. §§ 1901–1963); American Indian Religious Freedom Act of 1978, Pub. L. No. 95-341, 92 Stat. 469 (codified at 42 U.S.C. § 1996). ICWA’s purpose is “to protect the best interests of Indian Children and to promote the stability and security of Indian tribes and families.” 25 U.S.C. § 1902. AIRFA’s purpose is to “protect and preserve for [] Indians their inherent right . . . [to] exercise the[ir] traditional religions.” 42 U.S.C. § 1996. While legislative history is typically confined to the specific Act (e.g., Bankruptcy Code), examining the broader legislative session can provide additional context necessary for understanding Congressional goals. See Richard J. McKinney & Ellen A. Sweet, Federal Legislative History Research: A Practitioner’s Guide to Compiling the Documents and Sifting for Legislative Intent, L. Librs.’ Soc’y of Washington, D.C., https://www.llsdc.org/federal-legislative-history-guide#Narrative [https://perma.cc/E73H-2MAT] (last visited Apr. 13, 2025) (describing various methods for conducting legislative research).
[78]In 1975, three years prior to ICWA, AIRFA, and the Code, Congress passed the Indian Self-Determination Act (“ISDA”) to articulate the “special legal relationship” between Tribes and the federal government. See Indian Self-Determination and Education Assistance Act, Pub. L. No. 93-638, 88 Stat. 2203 (1975) (codified as amended at 25 U.S.C § 5301). ISDEA altered the relationship by repudiating the prior federal policy of terminating Indians. 1975: Indian Self-Determination Becomes the Law of the Land, Nat’l Libr. of Med., https://www.nlm.nih.gov/nativevoices/timeline/539.html [https://perma.cc/8754-5HZH] (last visited Apr. 13, 2025). Termination was official U.S. policy aimed at eliminating Indians. Bureau of Indian Affairs Records: Termination, Nat’l Archives, https://www.archives.gov/research/native-americans/bia/termination#:~:text=Officially%20announced%20on%20August%201,to%20state%20authorities%20as%20well [https://perma.cc/LP8X-PFTC] (last visited Apr. 13, 2025). Congress weaponized federal policies to terminate Indians. 1953: Congress Seeks To Abolish Tribes, Relocate American Indians, Nat’l Libr. of Med. https://www.nlm.nih.gov/nativevoices/timeline/488.html [https://perma.cc/FDA9-89YK] (last visited Apr. 13, 2025).
[79]See infra Section IV(B); see also The Court and Constitutional Interpretation, Sup. Ct. of the U.S., https://www.supremecourt.gov/about/constitutional.aspx [https://perma.cc/B7D3-VJTQ] (last visited Apr. 13, 2025) (the Supreme Court is “the final arbiter of the law.”).
[80]See Coughlin, 143 S. Ct. at 1697–98.
[81]Id. at 1697.
[82]Id.; 11 U.S.C. § 523(a)(7).
[83]Coughlin, 143 S. Ct. at 1697–98.
[84]§ 523(a)(7); Coughlin, 143 S. Ct. at 1697 (providing partial description of § 523(a)(7)).
[85]See Coughlin, 143 S. Ct. at 1694.
[86]For example, Tribes have limited sentencing authority. Tribal Law and Order Act of 2010, Pub. L. No. 111-211, 124 Stat. 2258. The federal government holds Tribal and Tribal citizens’ land in trust, compromising the Tribe’s ability to regulate and utilize natural resources because Tribes must seek approval from the federal trustee. See What is the federal Indian trust responsibility?, U.S. Dept. of the Interior: Indian Affairs (Nov. 8, 2017, 10:13 PM), https://www.bia.gov/faqs/what-federal-indian-trust-responsibility [https://perma.cc/5YGE-F38R]; § 523.
[87]§ 523(a)(11).
[88]E.g., The Pokagon Band of Potawatomi Indians Code of Offenses §§ 1(L), 8(M)–(N), 14(B) (2022).
[89]E.g., Potawatomi Law and Order Code § 5-5-1 (court may direct settlement); Navajo Nation Code Ann. tit. 12, § 360 (2001).
[90]E.g., About Us, Bay Bank, https://www.baybankgb.com/About-Us [https://perma.cc/AM64-BZEW] (last visited Apr. 13, 2025); Sovereign Bank, https://banksovereign.com/about [https://perma.cc/6XNP-FB8W] (last visited Apr. 13, 2025).
[91]E.g., Seneca Nation of Indians Fed. Credit Union, https://www.snifcu.org/aboutUs.php#newsletters [https://perma.cc/VTA4-RUKS] (last visited Apr. 13, 2025); Sisseton-Wahpeton Fed. Credit Union, https://sisseton-wahpetonfcu.com/ [https://perma.cc/DLU6-AQH9] (last visited Apr. 13, 2025).
[92]E.g., Delorme v. Stearns Bank, 2002 Turtle Mt. App. LEXIS 2 (2002) (deciding a non-Indian Bank repossession issue); Port Gamble S’Klallam Tribe v. Lexington Ins. Co., 2021 Port Gamble S’Klallam App. LEXIS 1 (2021) (deciding an insurance contract issue).
[93]Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 143 S. Ct. 1689, 1701–02 (2023) (explaining that Congress stopped differentiating between governments in 1978); see supra Section IV(B).
[94]§§ 523; 507.
[95]§§ 523(a)(8), (18).
[96]See Joint Committee on Taxation, JCX-8-20, Overview Of Fed. Tax Provisions And Analysis Of Selected Issues Relating To Native Am. Tribes And Their Members 7–10 (2020).
[97]See Nooksack Fishing. Ordinance 30.03.030 (1990).
[98]See Navajo Nation Code Ann. tit. 24 (2010).
[99]Email from Nat’l Indian L. Libr., to Nis Wilbur (Aug. 28, 2024) (on file with the author); Email from Adam Crepelle, Assistant Professor at Loyola Sch. of L., to Nis Wilbur (Aug. 26, 2024) (on file with the author); Tulalip Tribal Codes, Ch. 12.20 (1987).
[100]Tulalip Tribal Codes, Ch. 12.20.060 (1997).
[101]§ 523(a)(1), (7); see Moulton v. U.S. Dep’t of Treasury-IRS, 146 B.R. 495, 498 (Bankr. M.D. Fla. 1992) (discharging a debt after the Internal Revenue Service violated the injunction because allowing the government to avoid consequence undermines the Code).
[102]§ 507(a)(8).
[103]Id.
[104]Id.
[105]See Montana v. United States, 450 U.S. 544, 565 (1981) (explaining that Tribes have taxing authority over non-Indians on the reservation only when the non-Indian consents).
[106]§ 507(a)(8); see, e.g., Cote v. Emp. Dev. Dep’t, No. 17-CV-01991-LHK, 2018 U.S. Dist. LEXIS 246709, at *11–12 (N.D. Cal. Feb. 27, 2018) (finding that § 507(a)(8)(C) does not apply to taxes that agencies must collect on behalf of their government).
[107]Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 143 S. Ct. 1698, 1697 (2023); Fractionation, U.S. Dep’t of the Interior, https://www.doi.gov/buybackprogram/fractionation [https://perma.cc/BW25-7JPX] (last visited Apr. 13, 2025).
[108]Pennoyer v. Neff, 95 U.S. 714, 730–31 (1877); Burnham v. Superior Ct. of California, 495 U.S. 604, 619–622 (1990); see, e.g., Montana, 450 U.S. at 566–67 (holding Tribes lack jurisdiction over non-Indians on non-Indian fee land within the Tribe’s territorial boundaries but retain jurisdiction over Indian lands); 677. Indian Country Defined, U.S. Dep’t of Just.: Crim. Res. Manual, https://www.justice.gov/archives/jm/criminal-resource-manual-677-indian-country-defined [https://perma.cc/L76P-XHGW] (defining Indian Country).
[109]§ 523(a)(11) (making no mention of Tribal courts).
[110]§ 101(27) (including Tribes via Coughlin, 143 S. Ct. at 1701–02); see supra Section IV(B).
[111]But see Coughlin, 143 S. Ct. at 1699 (finding that the clear statement rule does not require magic words).
[112]Id. at 1712 (Gorsuch, J., dissenting). Alternatively, Congress could include Tribes in 11 U.S.C.S. § 101(27) to clarify it will explicitly mention Tribes when abrogating their sovereign immunity. This Comment does not explore that option because that solution does not address the gaps in the Code that impede Tribal government functions.
[113]See § 523(a)(11) (failing to observe Tribal court orders); see supra Section IV(B).
[114]See The Legislative Process, U.S. House of Representatives, https://www.house.gov/the-house-explained/the-legislative-process [https://perma.cc/3GQL-2367] (last visited Sept. 5, 2024) (explaining the legislative process); see, e.g., Justin Desjardins, Tribal Sovereignty & Sovereign Immunity in Bankruptcy, 101 Wash. U. L. Rev. 1735; 1756 (2024) (agreeing with the Coughlin majority); Erin Weightman, Indians – Sovereign Immunity: The U.S. Supreme Court’s Interpretation of the Bankruptcy Code, 99 N.D. L. Rev. 195, 208–09 (2024) (agreeing with the Coughlin majority).
[115]Leah Litman & Kate Shaw, The Battle for Native Rights & Comstock: The Zombie Law From Hell, Strict Scrutiny (Sept. 16, 2024) (downloaded using Spotify) (interviewing Rebecca Nagle, who explains that principles of federal Indian law are a “canary in a coal mine” for the rights of other marginalized populations); Coughlin, 143 S. Ct. at 1699 (Congressional statement need not be the most direct approach); see supra Section IV(A).
[116]See supra Section IV(C).
[117]§ 507(a)(8)(C).
[118]§ 101; IRS v. Juntoff (In re Juntoff), 76 F.4th 480, 483 (6th Cir. 2023); New Jersey v. Anderson, 203 U.S. 483, 492 (1906).
[119]Compare Fonseca-Sarmiento, supra note 6, at i, 17, with State Budget Basics, Ctr. on Budget & Pol’y Priorities (May 24, 2022), https://www.cbpp.org/research/policy-basics-the-abcs-of-state-budgets [https://perma.cc/7JHT-PE47].
[120]Sacred Heart Hosp. v. Dep’t of Labor & Indus. (In re Sacred Heart Hosp.), 209 B.R. 650, 655 (E.D. Pa. 1997).
[121]Id. (citing City of New York v. Feiring, 313 U.S. 283, 285 (1941)); see, e.g., Frequently Asked Questions, Big Picture Loans, https://www.bigpictureloans.com/faq [https://perma.cc/H9D5-3PMU] (last visited Apr. 13, 2025) (explaining that loans require a signed application, thus a request by the debtor for funds from the lender).
[122]In re Sacred Heart Hosp., 209 B.R. at 654 (citing In re Suburban Motor Freight, Inc., 36 F.3d 484 (6th Cir. 1994)).
[123]§ 101; Hobbs v. Arizona (In re Hobbs), No. AZ-15-1397-LJuF, 4:13-bk-06690-BMW, 2016 Bankr. LEXIS 3714, at *12–13 (B.A.P. 9th Cir. Oct. 13, 2016); IRS v. Juntoff (In re Juntoff), 76 F.4th 480, 483 (6th Cir. 2023); Steffy v. Arkansas ex rel. McDaniel (In re Steffy), 494 B.R. 574, 580 (N.D. Ga. 2012).
[124]In re Steffy, 494 B.R. at 580; § 523(a)(7).
[125]See supra note 85 (explaining the Chippewa lost $1,100).
[126]Not only does the majority not use federal Indian law, it also compares its finding that the Code lacks indication of a Congressional intent “to categorically exclude certain governments” with the Law v. Siegel, 571 U.S. 415, 424 (2014), Court’s “declining to read into the Code an exception Congress did not include.” Coughlin, 143 S. Ct. at 1698. However, the term “exceptions” in Siegel refers to exceptions to Code exemptions. Siegel, 571 U.S. at 424. The Siegel Court declined to interpret the Code broadly because the Code is precise. See id. Thus, Siegel stands for the proposition that courts should not find words (e.g., Tribes) in the Code where Congress did not include them. See Neil Gordon & Jonathan H. Azoff, Trustee Talk: Law v. Siegel Dicta Leads Lower Courts Astray, 34 Am. Bankr. Inst. J. 34, 76–77 (2015) (explaining that bankruptcy courts lack authority to contravene specific, express Code provisions); see also Jack Parker, Case Commentary: Bankruptcy, 16 Transactions: Tenn. J. of Bus. L. 139, 139 (2014) (stating courts may not assess fees that the Code does not include).