Federal recognition is important to Indian tribes for several reasons.
First, when they are extended federal recognition, they can establish tribal governments that possess a measure of sovereignty. Non-recognized tribes can form tribal organizations but lack sovereign powers. Second, federally recognized tribes can have their reservation lands placed in trust. This means that their land is protected by the federal government from being purchased or taken by non-Indians. If a tribe is not federally recognized, it can own land as a corporate entity, but the federal government will not put these lands into trust for the tribe. Thus, federally recognized tribes also have what is a called a trust relationship with the government. This means that the federal authorities will protect their sovereign status, their lands and tribal property, and their rights as members of domestic dependent nations.
While tribes that are not federally recognized do not enjoy sovereign powers or a trust relationship with the government, many still possess tribal structures and maintain tribal traditions. The Brothertown Indians of Wisconsin gave up their status as a federally recognized tribe in 1839, but this has not prevented them from maintaining a sense of tribal identity. Today, they still do not have federal recognition, but they do maintain a tribal council and tribal membership roll and are attempting to regain their federal recognition. Some tribes that have lost federal recognition have managed to get it back. The Menominees are probably the best example: in the 1950s, the federal government wanted to end federal recognition of all Indian tribes in the United States in a program called termination. The Menominee were selected as one of the first tribes to be terminated, and in 1961 they lost their federal recognition. Through termination, they lost their sovereign powers as a domestic dependent nation and their trust relationship with the federal government as well. The termination program resulted in so many negative consequences for the Menominee that no other Indian tribe in the United States was willing to be terminated, and the program was ended. One of the things that frightened many Menominee was that with their trust relationship had ended, non-Indians could buy their reservation lands. When this began to happen, many Menominee agitated to regain their federal recognition and trust status. They succeeded in 1973 when the United States Congress re-extended federal recognition to the Menominee and restored their status as federally recognized tribe.
Federal acknowledgement or recognition means that the United States government recognizes the right of an Indian tribe to exist as a sovereign entity. There are several terms and concepts that must be understood to fully understand the importance and meaning of federal recognition. The first is sovereignty, which means the right of a group to be self-governing. Nations that possess absolute sovereignty are completely independent of any other political power; examples of this are the United States, Mexico, Japan, and Germany. The federal government possesses absolute sovereignty in the United States, but it shares some of this power with the states, which in turn share some of their power with counties, towns, villages, and cities. Power shared in this type of arrangement is called divided sovereignty.
When Europeans first encountered American Indian tribes, they usually (but not always) treated them as political entities possessing absolute sovereignty. In the United States' early history, the federal government also recognized Indian tribes as fully independent and sovereign powers. However, as Americans pushed west, the federal government sought to limit tribes' sovereign powers. In particular, the United States wanted to prevent tribes from making diplomatic alliances with foreign nations such as Spain and Great Britain. This was especially true following the War of 1812, during which many tribes sided with Great Britain.
This practice became embedded in federal law in 1832 when United States Supreme Court Chief Justice John Marshall issued his famous decision in the case of Worcester v. Georgia. This decision defined Indian tribes as "domestic dependent nations." In other words, they were no longer independent nations possessing absolute sovereignty. By this decision, the federal government reserved the right to control the external and diplomatic relations of tribes. In effect, they could only make alliances with the United States and not other nations. However, this still left tribes with a large measure of sovereignty by allowing tribal governments to exist and letting them regulate their own internal affairs.
Indian tribes today are still considered domestic dependent nations. Federally recognized tribes are those Indian groups that the United States acknowledges to be domestic dependent nations that have a right to tribal self-government in regard to their internal affairs. It is something like the divided sovereignty that the states possess in relation to the federal government, although there are many differences. Federal recognition of Indian tribes is also similar to the diplomatic recognition that the United States extends to foreign nations. When a tribe is federally recognized, it has the right to establish a tribal government and enter into agreements with the federal government in much the same way that the federal government makes agreements with Canada and Mexico. However, because they are defined as domestic dependent nations, Indian tribes may not make treaties or agreements with any other country except the United States.