Update on Tribal Loans to State Residents By Richard P. Eckman, Catherine M. Brennan, H. Blake Sims, and Justin B. Hosie* INTRODUCTION Native American tribes increasingly are engaging in consumer lending over the internet. 1 These “tribal loans” present unique legal questions and issues, includ- ing whether tribal sovereign immunity shields tribes and their service providers from state usury restrictions. This survey includes a brief introduction to the “tribal sovereign immunity” doctrine followed by an overview of recent actions brought by state officials, private class action litigation, and federal agency activ- ities addressing tribal sovereign immunity as it relates to tribal lending. TRIBAL SOVEREIGN IMMUNITY The United States Constitution grants Congress the power to regulate com- merce with the tribes. 2 Early United States Supreme Court decisions explained that only Congress can grant states authority over tribes, and Congress must do so expressly. 3 Sovereign immunity generally prevents suits against tribes in state or federal court by state residents, state agencies, or federal agencies, unless the tribe waives such immunity or unless Congress authorizes such suit. 4 The leading U.S. Supreme Court case with respect to the commercial activity of tribal entities and sovereign immunity is Kiowa Tribe v. Manufacturing Technol- ogies, Inc. 5 In that case, the tribe defaulted on a promissory note, and the plaintiff * Richard P. Eckman is a Partner at Pepper Hamilton, LLP. Catherine M. Brennan, H. Blake Sims, and Justin B. Hosie are Partners at Hudson Cook, LLP. Catherine M. Brennan is co-chair of the Truth in Lending Subcommittee of the Consumer Financial Services Committee of the American Bar Asso- ciation Section of Business Law. Justin Hosie currently serves as vice chair of the Pro Bono Subcom- mittee and the Young Lawyers Subcommittee of the Committee. The authors thank W. David Hicks, an associate at Hudson Cook, LLP, for his assistance. 1. See, e.g., Jessica Silver-Greenberg, Payday Lenders Join with Indian Tribes,WALL ST. J., Feb. 10, 2011, at C1, available at http://online.wsj.com/article/SB10001424052748703716904576134304 155106320.html. 2. U.S. CONST. art. I, § 8, cl. 3. 3. See, e.g., Worcester v. Georgia, 31 U.S. 515 (1832); Cherokee Nation v. Georgia, 30 U.S. 1 (1831); Johnson v. McIntosh, 21 U.S. 543 (1823). 4. See 42 C.J.S. Indians § 19 (2007) (citing Walton v. Tesuque Pueblo, 443 F.3d 1274 (10th Cir.), cert. denied, 549 U.S. 103 (2006)). The complete history of tribal sovereign immunity is beyond the scope of this survey. For more information on these issues, see STEPHEN L. PEVAR,THE RIGHTS OF INDIANS AND TRIBES (4th ed. 2012). 5. 523 U.S. 751 (1998). 677