UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


YUKON KUSKOKWIM CORP

v.

NLRB


99-1440a

D.C. Cir. 2000


*	*	*


Ginsburg, Circuit Judge: The Yukon-Kuskokwim Health  Corporation
(Yukon), a non-profit organization controlled by  Alaska Native
tribes, challenges the National Labor Relations  Board's assertion of
jurisdiction over a hospital that Yukon  operates. The Board properly
rejected the employer's claim  to be exempt pursuant to s 2(2) of the
National Labor  Relations Act (NLRA) on the ground that it is an
Indian tribe  acting in a governmental capacity. The Board failed,
howev- er, to consider the employer's argument that it is entitled to 
exemption under s 2(2) because the Indian Self- Determination Act
(ISDA) authorizes it to act as an arm of,  and thus to share in the
exemption of, the United States.  Accordingly, we remand this matter
to the Board for further  proceedings.


I. Background


A group of Alaska Native tribes formed Yukon in 1969 to  provide health
services, primarily to Alaska Natives, in South- western Alaska. Yukon
is controlled by a board of directors  elected by the tribal councils
of the 58 tribes in the region.


In 1975 the Congress enacted the ISDA, 25 U.S.C. ss 450  et seq., to
bring about "an orderly transition from the Federal  domination of
programs for, and services to, Indians to  effective and meaningful
participation by Indian people in the  planning, conduct, and
administration of those programs and  services." 25 U.S.C. s 450a(b).
The federal government  recognized Yukon as an "Indian tribe" for
purposes of the  ISDA and, pursuant to that statute, Yukon began to
assume  responsibility from the Indian Health Service, an agency 
within the U.S. Department of Health and Human Services,  for the
operation of clinics in native villages throughout  Southwestern


In 1991 Yukon took over a hospital previously operated by  the IHS in
Bethel, Alaska, the largest town in the region.  Most of the federal
employees at the hospital, including 40  nurses, remained on staff. In
1996 the Board received an  election petition from a union seeking to
represent the nurs- es. Yukon opposed the petition on the basis of s
2(2) of the  NLRA, which excludes from the definition of "employer"
"the  United States or any wholly owned Government corporation  ... or
any State or political subdivision thereof." 29 U.S.C.  s 152(2).
Yukon argued that it qualified for exemption under  s 2(2) both as a
political subdivision (because it is an Indian  tribe acting in a
governmental capacity) and as an arm of the  United States (because it
operates a federal hospital pursuant  to the ISDA).


The Board overruled Yukon's objection on the ground that  the Board had
never applied the exemption in s 2(2) to the  activities of an Indian
tribe not conducted on an Indian  reservation. The Board certified the
union and Yukon took a  refusal to bargain charge so that it could get
judicial review  of the Board's order under ss 10(e) and (f) of the
NLRA. 29  U.S. ss 160(e) and (f).


II. Analysis


Yukon advances two arguments for the proposition that its  hospital is
not subject to the NLRA. First, Yukon argues  that it qualifies under
s 2(2) as a "State or political subdivi- sion" because it is an Indian
tribe acting in a governmental  capacity. Second, Yukon argues that it
shares in the exemp- tion that s 2(2) grants to the federal government
because the  ISDA authorizes it to operate a federal hospital pursuant
to a  government-to-government compact with the United States.


A. Governmental Capacity


Yukon argues that the Board acted arbitrarily in limiting  the
exemption afforded to Indian tribes under s 2(2) to  activities
conducted on a reservation, rather than limiting the  exemption to
"governmental activities" of Indian tribes, wher- ever conducted. In
our review of the Board's decision, we  "must accept the Board's
position unless it conflicts with the 


'unambiguously expressed intent' of the Congress or is [oth- erwise]
not 'a permissible construction of the statute.' " Hor- mel v. NLRB,
962 F.2d 1061, 1065 (D.C. Cir. 1992) (quoting  Chevron v. NRDC, 467
U.S. 837, 843 (1984)).


In the past, the Board has interpreted the exemption under  s 2(2) for
"any State or political subdivision thereof," to  include "entities
that are either (1) created directly by the  State, so as to
constitute departments or administrative arms  of the government, or
(2) administered by individuals who are  responsible to public
officials or to the general electorate."  NLRB v. Natural Gas Utility
District of Hawkins County,  Tennessee, 402 U.S. 600, 604-605 (1971).
In Fort Apache  Timber Co. v. NLRB, 1976-77 NLRB Dec. (CCH) p 17,475 
(Oct. 19, 1976), the Board applied this test to conclude that  because
"the Fort Apache Timber Company is an entity  administered by
individuals directly responsible to the Tribal  Council ... [it is]
exempt as a governmental entity recog- nized by the United States, to
whose employees the Act was  never intended to apply." Id. at 28,876


More recently, in Southern Indian Health Council v.  NLRB, 1988-89 NLRB
Dec. (CCH) p 15,052 (July 29, 1998),  the Board applied the "direct
responsibility" test to a hospital  located on a reservation and
operated by a consortium of  seven tribes. The Board concluded that
the hospital was  exempt from the NLRA pursuant to the "State or
political  subdivision" exemption because "the directors of the
Employ- er are directly appointed by, and subject to removal by, the 
governing bodies of the member tribes." Id. at 28,226.


Later, in Sac & Fox Industries v. NLRB, 1992-93 NLRB  Dec. (CCH) p
17,250 (Apr. 24, 1992), the Board modified its  test for application
of the "State or political subdivision"  exemption to Indian tribes.
In that case the tribe had  secured a $30 million supply contract with
the Department of  Defense, for which it had built or acquired four
factories not  on its reservation. Many of the workers employed at the
 acquired factories previously had been represented by a  union, but
the tribe argued that its substitution as the em- ployer made the
operation exempt from the NLRA and, 


hence, from the obligation to bargain with the union. The  Board
rejected this claim, explaining that "[a]lthough the  Board's decision
in Fort Apache [ ] contains statements to the  contrary ... we read
that decision as limited to situations in  which the tribal enterprise
is located on the reservation." Id.  at 32,416.


Yukon argues that the Board should read Sac & Fox as  having denied
exemption to the off-reservation factories in  material part because
of their commercial nature, not simply  because of their location off
the reservation. The Board,  however, has never drawn a distinction
based upon the nature  of the Indian enterprise. The Board first said
somewhat  tentatively in Sac & Fox that the "exemption in Section 2(2)
 for a 'political subdivision' of a 'State' does not clearly include 
an off-reservation tribal enterprise." Id. Now, the Board  has firmly
concluded that an Indian tribe does not qualify as a  "State or
political subdivision" for purposes of s 2(2) when it  conducts
activities off its reservation. We can hardly say that  position is


An Indian tribe, like any other governmental unit, typically  operates
in its governmental capacity only within its geo- graphical
jurisdiction. There are, to be sure, exceptions to  that general rule,
as recognized, for example, in the Foreign  Sovereign Immunities Act
(FSIA), 28 U.S.C. s 1605(a)(2).  The distinction between commercial
and governmental activi- ties, however, is often elusive, see Princz
v. Federal Republic  of Germany, 26 F.3d 1166, 1172 (D.C. Cir. 1994)
(noting that  FSIA, rather than attempting to define "commercial" and 
"governmental" activity, leaves to courts the task of distin- guishing
between the two), and the Board has long and  reasonably preferred
bright line rules in order to avoid  disputes over its jurisdiction.
See, e.g., Siemons Mailing  Service, 122 N.L.R.B. 81, 85 (1958)
(setting dollar threshold  for the "effect on commerce" sufficient to
support Board  jurisdiction). Accordingly, we defer to the Board's
interpre- tation and reject Yukon's argument to the contrary.


B. The ISDA


Yukon also argues that it is exempt from the NLRA  pursuant to s 2(2)
because that provision exempts "the Unit-


ed States" and here Yukon "stepped into the shoes of" and  "acts
exactly for, and as, the United States" because it  operates a federal
hospital pursuant to a government-to- government compact authorized
under the ISDA.* Addition- ally, Yukon argues that for the Board to
assert jurisdiction  over it would undermine the purpose of the ISDA,
namely, to  increase tribal self-governance.


In the decision under review the Board mentioned but  dismissed the
ISDA in a single sentence:


We further reject the Employer's contention that it is  exempt from
coverage because in light of the govern- ment-to-government Compact
delegating Federal func- tions to the tribes on Federal property
reserved and  intended for that purpose, the Employer functions as an 
arm to [sic] the United States, and is, thus, an 'integral  part of
the government of the United States as a whole.'


328 NLRB No. 101 at 4. The Board then repeated its  conclusion that it
has limited tribes' exemption under s 2(2)  "to situations in which
the tribal enterprise is located on the  reservation." Id. (emphasis
in original). The Board appears  simply to have misunderstood the
tribe's argument here,  which is that its exemption derives not from
its own sover- eignty as an entity akin to a "State or political
subdivision"  but, rather, from the exemption granted to "the United 
States." For the Board to limit to the confines of an Indian 




__________

n * Judge Randolph, in his dissent, states that his "colleagues think 
that perhaps Yukon also wanted to be considered the United States  for
the purpose of s 2(2)." Lest we be thought utterly mad, he 
acknowledges a "hint here and there" in its briefs to this court that 
Yukon "might have had this in mind," but says that this was not  "the
thrust of its presentation," either before the Board or here.  We
think that it was a thrust. The heading of Part IV of Yukon's  brief
to the Board asserted that "The 58 Tribes are Exempt as an  Integral
Part of the United States [Government]," and the ensuing  five pages
(28-33) were devoted to arguing the point. Yukon  renewed the argument
before this court in the section of its brief  headed "Tribes
operating pursuant to the [ISDA] are treated as the  equivalent of
federal agencies under the [NLRA]."


reservation the exemption granted to the United States  makes no sense.
Additionally, the Board wholly failed to  address Yukon's argument
that asserting jurisdiction over the  hospital would "directly
contraven[e] the ISDA's goal" of  increasing tribal self-governance.


As this court explained in New York Shipping v. Federal  Maritime
Commission, 854 F.2d 1338, 1370 (1988):


[A]n agency, faced with alternative methods of effectuat- ing the
policies of the statute it administers, (1) must  engage in a careful
analysis of the possible effects those  alternative courses of action
may have on the functioning  and policies of other statutory regimes,
with which a  conflict is claimed; and (2) must explain why the action
 taken minimizes, to the extent possible, its intrusion into  policies
that are more properly the province of another  agency or statutory
regime.


The ISDA is undoubtedly intended to remove tribal programs  from
federal oversight. See Oklahoma Tax Comm'n v. Citi- zen Band
Potawatomi Indian Tribe, 498 U.S. 505, 510 (1991)  (noting that ISDA
"reflect[s] Congress'[s] desire to promote  the goal of Indian
self-government"). Indeed, in the amend- ments to the ISDA enacted
while this case was on review, the  Congress renewed its commitment to
Indian self- determination. See Tribal Self-Governance Amendments of 
2000, P.L. 106-260, 114 Stat. 711 s 2(3) (Aug. 18, 2000).


The Board's one-sentence rejection of Yukon's arguments  from the ISDA
both relies upon what, in this context, is an  irrelevant distinction
and ignores the Board's obligation to  address and to minimize
conflict with another statutory re- gime with which a disparity is
claimed. Although the General  Counsel of the Board, in her argument
before this court,  addressed in somewhat greater detail the Board's
possible  reasons for rejecting Yukon's arguments from the ISDA,  "
'courts may not accept appellate counsel's post hoc rationali- zations
for agency action.' " NLRB v. Metropolitan Life.  Ins., 380 U.S. 438,
444 (1965) (quoting Burlington Truck  Lines v. United States, 371 U.S.
156, 168 (1962)).


The Board's inadequate attention to the ISDA requires  that we remand
this matter to the agency for further consid- eration. See, e.g., Iowa
v. FCC, 218 F.3d 756 (D.C. Cir. 2000)  (remanding for agency to
address potentially dispositive argu- ment). On remand, the agency
must determine whether  Yukon qualifies as "the United States" for
purposes of s 2(2);  in reaching its conclusion, the Board will need
to consider  what allowance, if any, the NLRA must make in order to 
accommodate federal Indian law, as reflected in the ISDA.  As we noted
in New York Shipping, our review of such a  determination "remains a
matter of checking the [Board]  against the terms of the [labor] laws.
This is precisely the  type of appellate exercise governed by Chevron;
our review  must be correlatively deferential." 854 F.2d at 1364. It
is  for the agency, therefore, to consider the petitioner's argu- ment
in the first instance.


III. Conclusion


For the reason set out in Part II B above, we deny  enforcement of the
order issued by the Board and remand  this case to the agency for
further consideration of the  petitioner's argument from the ISDA.


So ordered.


Randolph, Circuit Judge, dissenting in part: I agree with  the court's
opinion except for part II.B., which remands the  case to the Board
for "further consideration of the petitioner's  argument from the"
Indian Self-Determination Act. Maj. op.  at 8.


No principle of administrative law compels an agency to  respond to
gibberish. It is therefore understandable that the  Board never
responded to an argument that the Indian Self- Determination Act
removed Yukon from the Board's jurisdic- tion. Maj. op. at 6. The
Board did not respond because  Yukon never made any coherent argument
to this effect.  And it barely managed to make one in this court.
About all  Yukon did before the Board and before us is slap the Self-
Determination Act down on the table in the hope that some- one will
figure out why it should matter.


Here are the few assertions Yukon presented to the Board  regarding the
statute. The Self-Determination Act "autho- rizes and encourages
tribal governments to assume operation  of federal Indian programs."
Employer's Brief on Review of  Jurisdictional Determination at 5.
Indeed it does. "Through  the Act, Congress intended to shift programs
from the feder- al government to tribal governments, thereby reducing
feder- al domination of Indian programs." Id. That appears cor- rect.
"Nothing in the federal government's authorization  requires that the
tribes' ... activities [conducted pursuant to  the Self-Determination
Act] occur 'on reservation.' " Id. at 8.  This is obvious; Yukon's
hospital is not on a reservation. (No  one--the Board included--has
required Yukon or any Indian  tribe to conduct such activities on
reservations.) What then  is Yukon's point? All of its statements
about the Self- Determination Act are contained in the section of its
brief  claiming an exemption as a state or federal government under  s
2(2). The section's heading is entitled "THE HOSPITAL  IS OPERATED BY
FEDERALLY RECOGNIZED SOV- EREIGN TRIBES ENTITLED TO THE GOVERNMEN- TAL
EXEMPTION." Id. at 4. The "governmental exemp- tion" is s 2(2) of the
National Labor Relations Act, 29 U.S.C.  s 152(2), the provision
granting an exemption to the federal 


government and state and local governments. The Board  rejected this
argument, correctly we all agree at least to the  extent Yukon wanted
to be considered a state. So what was  left of Yukon's reliance on the
Self-Determination Act in its  case before the Board? There are two
possibilities--nothing  or nothing comprehensible. In either event,
the Board had  no duty to respond.


My colleagues think that perhaps Yukon also wanted to be  considered
the United States for the purpose of s 2(2). (The  section provides in
relevant part that the term employer  "shall not include the United
States or any wholly owned  Government corporation." 29 U.S.C. s
152(2).) Yukon's  briefs in this court hint here and there that it
might have had  this in mind, although the thrust of its presentation
to this  court and the Board was the rather inconsistent assertion 
that it--Yukon--was a separate, independent sovereign. See,  e.g.,
Brief of Petitioner at 36 (characterizing relationship  under
Self-Determination Act as "inter-governmental delega- tion,
transferring responsibility from one sovereign to anoth- er");
Employer's Brief on Review of Jurisdictional Determi- nation (No.
19-RC-13271) at 5 ("[a]ccess to the benefits of the  Act is only
available to sovereigns"); id. ("by definition under  the Act, only
sovereigns may compact as an exercise of their  sovereignty").


At all events, the Board said enough on this subject, given  the
incoherence of Yukon's position. The Board wrote: "Sig- nificantly,
the Employer was not brought into existence by a  special legislative
Act. Rather, it is a regional nonprofit  corporation formed ... under
applicable Alaska laws. Under  these circumstances, we find that the
Employer is not exempt  under Section 2(2) 'as an integral part of the
government of  the United States as a whole.' " Decision and Order,
Yukon  Kuskokwim Health Corp., 329 N.L.R.B. No. 101 at 4 (June  18,
1999). In other words, whatever the Self-Determination  Act means, or
whatever Yukon thinks it means, Yukon re- mains an independent Alaska
corporation, not a part of the  government of the United States. If
Yukon believes the Act  provides otherwise, it has yet to explain