LITIGATION
CONCERNING TRIBAL TAXES
IN INDIAN COUNTRY
by
Thomas P. Schlosser
Morisset,
Schlosser, & Jozwiak
1115
Norton Building
801
Second Avenue
Seattle,
WA 98104‑1509
(206) 386‑5200
THOMAS P. SCHLOSSER.
Mr. Schlosser represents Tribes in
fisheries, timber, water, energy, cultural resources, contracting, tax and
federal breach of trust. He is a director of Morisset, Schlosser, & Jozwiak,
where he specializes in federal litigation, natural resources, and Indian
tribal property issues. He is also
frequently involved in tribal economic development and environmental
regulation. In 1970s, Tom represented
tribes in the Stevens’ Treaty Puget Sound fishing rights proceedings. Tom has a B.A. from the University
of Washington and a J.D. from
the University of Virginia Law School. Tom is a founding member of the Indian
Law Section of the Washington State Bar Association and also served on the WSBA
Bar Examiners Committee. Tom is a frequent CLE
speaker and moderates an American Indian Law discussion group for lawyers at http://forums.delphiforums.com/IndianLaw/messages.
September
2008
Case synopses are
reprinted or derived from Westlaw with permission of Thomson‑West. For purposes of this paper, the
presenter has revised the synopses.
A.
TRIBAL TAXING AUTHORITY BEFORE 1978.
In the first 200 years of the
United States of America, judicial decisions on the nature of Indian tribal
powers adhered to three fundamental principles: (1) an Indian tribe possesses, in the
first instance, all the powers of any sovereign state; (2) conquest
renders the tribe subject to the legislative power of the United States,
terminating the external power of the tribe but not affecting the internal
sovereignty of the tribe; and (3) except where expressly qualified, full
powers of internal sovereignty are vested in Indian tribes and their duly
constituted organs of government. F.
Cohen, Handbook of Federal Indian Law 230-35 (R. Strickland ed. 1982).
From the earliest days, Indian
tribes were recognized as “distinct, independent, political communities.” Worcester v. Georgia, 6 Pet. (31 U.S.) 515, 559 (1832). Indian tribes had powers of self‑government,
not by virtue of any delegation of powers from the federal government but by
reason of their original tribal sovereignty. Tribes’ sovereignty predated the Constitution,
and this is acknowledged in the Commerce Clause’s grouping of the “Indian
Tribes” with “foreign Nations” and “the several States.” Thus treaties and statutes were looked to by
the courts as limitations upon original tribal powers or, in some cases,
recognition of particular powers. In Worcester
v. Georgia, Chief Justice Marshall adopted principles of European law
holding that weak States, in order to provide for their safety, may place
themselves under the protection of one more powerful, without stripping
themselves of the right of government and ceasing to be States.
The establishment of permanent
reservations for most surviving Indian tribes in the mid‑1800s produced several
rulings on the civil jurisdiction of tribal governments over nonmembers, in
particular, taxing power.
In Maxey v. Wright,
54 S.W. 807 (Ind. Terr.
Ct. App.), aff’d, 105
Fed. 1003 (8th Cir. 1900), the right of a tribe to levy a tax upon
nonmembers of the tribe, attorneys practicing in federal court and residing on
the reservation, was held to be an essential attribute of tribal sovereignty. The Court said: “[I]n the absence of express contradictory
provisions by treaty, or by statute of the United States, the Nation (and not a
citizen) is to declare who shall come within the boundaries of its occupancy,
and under what conditions.” 54 S.W. at
809.
Morris v. Hitchcock, 194 U.S. 384 (1904), arose within the Chickasaw
Reservation in Oklahoma. The Interior
Department sought to remove livestock pastured within the reservation without a
tribal permit or license and to close businesses conducted without permits. The Curtis Act, 30 Stat. 495, June 28, 1898, stated that tribal law would apply upon executive
approval: “[N]o act . . .
of . . . the Choctaw or Chickasaw tribes . . .
shall be of any validity until approved by the President of the United States. . . . Said acts . . .
when so approved, shall be published in at least two
newspapers . . . .”
The Court concluded that the
Curtis Act was intended “to permit the continued exercise, by the legislative
body of the tribe, of such a power as is here complained of, subject to a veto
power in the President over such legislation as a preventive of arbitrary and
injudicious action.” The Court thus
upheld the permit tax on livestock within the Chickasaw Reservation whether or
not the livestock owners lawfully possessed parcels of land in towns and cities
in the Reservation.
The Attorney General had issued a
similar opinion, 23 Ops. Atty. Gen. 528 (1900); see also
7 Ops. Atty. Gen. 174, 177-78 (1855), with respect to the right of the
Cherokee Nation to impose an export tax on hay grown within the limits of the
reservation. The opinion of the Attorney
General suggested that tribal authority to impose such a tax would remain “even
if the shipper was the absolute owner of the land on which the hay was raised.”
This was approved by the Supreme Court
in Morris v. Hitchcock, 194 U.S. at 392.
The Creek Nation won a similar
case, Buster v. Wright, 135 Fed. 947, app. dismissed,
203 U.S. 599 (1906). In that
case non‑tribal members contended that the sale of lots to them and the
incorporation of cities and towns within Creek territory, as authorized by
Congress, segregated the town sites and lots from the territory of the Creek
Nation and deprived the Creeks of governmental jurisdiction to impose a permit
tax on the privilege of trading within the Creek Nation. The Court said:
But the
jurisdiction to govern the inhabitants of a country is not conditioned or
limited by the title of the land which they occupy in it, or by the existence
of municipalities therein endowed with power to collect taxes for city purposes,
and to enact and enforce municipal ordinances. Neither the United States, nor a state, nor any other sovereignty loses the power to
govern the people within its borders by the existence of towns and cities
therein enclosed with the usual powers of municipalities, nor by the ownership
nor occupancy of the land within its territorial jurisdiction by its citizens
or foreigners.
135 Fed. at 952.(
In 1934, Congress authorized
tribes to exercise authorities in addition to the “powers vested in any Indian
tribe or tribal council by existing law.” 25 U.S.C. ‘sec. 476. That section of the Indian Reorganization Act
led to an Interior Department Solicitor, opinion on what powers were vested in
tribes by then‑existing law. Margold’s
seminal opinion, 55 I.D. 14, 1 Ops. Sol. Int. 445
(Oct. 25, 1934), notes that the powers of Indian tribes can only be
answered generally because individual tribes’ authority is affected by special
treaties and acts of Congress. Margold
found that:
[O]ver all
the lands of the reservation, whether owned by the tribe, by members thereof,
or by outsiders, the tribe has the sovereign power of determining the
conditions upon which persons shall be permitted to enter its domain, to reside
therein, and to do business.
Id. at 50.
While much of Margold’s opinion
addresses the authority of tribes over their own members, its discussion of
taxes, licensing, and the power to exclude remains important to analysis of
tribal civil jurisdiction over nonmembers. See also F. Cohen, Handbook of
Federal Indian Law 122, 323 (1945).
Williams v. Lee, 358 U.S. 217 (1959), also made clear that
tribes retained jurisdiction over nonmembers. This case remains a 20th Century landmark
ruling on tribal civil jurisdiction over nonmembers. There, an action by a non‑Indian against
reservation Indians was held to fall within the exclusive jurisdiction of the
Navajo tribal courts. The Court noted
that the transaction occurred on the reservation and said: “The cases in this Court have consistently
guarded the authority of Indian governments over their reservations,” 358 U.S. at 223.
In 1973, however, the Supreme
Court signaled its departure from the doctrine that reserved tribal authority
stemming from inherent sovereignty was plenary, alterable only by express
statute or treaty provision. In McClanahan
v. Arizona State Tax Comm’n, 411 U.S. 164 (1973), the Supreme
Court ruled that Arizona had no jurisdiction to impose a tax on the income of
Navajo families residing on the reservation whose income was wholly derived
from reservation sources. The Court
cited Worcester and other cases for the proposition that tribes are
distinct political communities having territorial boundaries within which their
authority is exclusive. However Justice
Marshall warned that inherent tribal sovereignty had been diminished:
This is not
to say that the Indian sovereignty doctrine, with its concomitant
jurisdictional limit on the reach of state law, has remained static during the
141 years since Worcester was decided. Not surprisingly,
the doctrine has undergone considerable evolution in response to changed
circumstances. . . .
This line of
cases was summarized in this Court’s landmark decision in Williams v. Lee,
358 U.S. 217 (1959): “Over the
years this Court has modified [the Worcester principle] in cases where essential tribal relations were
not involved and where the rights of Indians would not be
jeopardized . . .” Id., at 219-220 . . .
The modern
cases thus tend to avoid reliance on platonic notions of Indian sovereignty and
to look instead to the applicable treaties and statutes which define the limits
of state power . . . The Indian sovereignty doctrine is
relevant, then, not because it provides a definitive resolution of the issues
in this suit, but because it provides a backdrop against which the applicable
treaties and federal statutes must be read . . . [Indian nations
Indian tribes] “were, and always have been, regarded as having a semi‑independent
position when they preserve their tribal relations; not as States, not as
nations, not as possessed of the full attributes of sovereignty, but as a
separate people, with the power of regulating their internal and social
relations, and thus far not brought under the laws of the Union or of the State
within whose limits they resided.” United States v. Kagama, 118 U.S. at 381-82.
Id. at 173.
B.
POST-1978 LIMITATIONS ON TRIBAL AUTHORITY
Federal law on tribal jurisdiction
changed radically in 1978. In Oliphant
v. Suquamish Indian Tribe, 435 U.S. 191 (1978), the Supreme Court
stated: ”[A]n examination of our earlier precedents satisfies us
that, even ignoring treaty provisions and congressional policy, Indians do not
have criminal jurisdiction over non-Indians absent affirmative delegation
of such power by Congress.” Id. at 208 (emphasis added). The Court went on to declare that tribes
retain elements of “quasi-sovereign” authority, but the retained powers are
limited by more than the specific restrictions in treaties and congressional
enactments. “Indian tribes are
prohibited from exercising both those powers of autonomous states that are
expressly terminated by Congress and those powers inconsistent with
their status.” In the years since Oliphant
the federal courts have embarked on a wide ranging search for powers believed
to be “inconsistent with the tribes’ dependent status.” Many such limitations have been found.
In Oliphant, 435 U.S. 191
(1978), the Suquamish Tribe claimed authority to try non‑Indians not on
the basis of a “congressional statute or treaty provision but by reason of
[its] retained national sovereignty.” Id. at 196. The case
involved defendants charged with assaulting a police officer and resisting
arrest or with recklessly endangering another person as a result of a high
speed chase and collision with a tribal police vehicle. The Court noted that the exercise of criminal
jurisdiction over non-Indians by tribal courts was a relatively new phenomenon.
Even though some tribes had formal
criminal systems during the 19th century, the Oliphant Court stated that treaties with the tribes assumed that the
tribes did not have criminal jurisdiction over non‑Indians “absent a
congressional statute or treaty provision to that effect.” Id. at 197.
The Court noted a treaty provision
in which the tribe agreed “not to shelter or conceal offenders against the laws
of the United
States, but
to deliver them up to the authorities for trial.” Id. at 208. The Court
concluded that by submitting to the overriding sovereignty of the United States, treaty tribes necessarily gave up their power to try non‑Indian
citizens of the United
States “except
in a manner acceptable to Congress.” Id. at 210. The Court
found that modern tribal courts resemble their state counterparts and that the
applicability of the Indian Civil Rights Act of 1968 and the prevalence of
non-Indian crime on reservations “are considerations for Congress to weigh in
deciding whether Indian tribes should finally be authorized to try non‑Indians.”
Id. at 211‑12.
The stunning decision in Oliphant
immediately led to arguments that tribes lacked civil jurisdiction as well as
criminal jurisdiction over nonmembers within their reservations. Thus far, the United States Supreme Court has refused
to fully embrace that approach. However,
the Court’s new analysis based on implicit divestiture of tribal authority has
been reiterated many times.
Washington v. Confederated
Tribes of the Colville Indian Reservation,
447 U.S. 134 (1980), rejected the State of Washington’s contention that inherent tribal authority to tax the
activities or property of non‑Indians is inconsistent with the overriding
interests of the national government. The Court said:
[A]uthority
to tax the activities or property of non-Indians taking place or situated on
Indian lands, in cases where the tribe has a significant interest in the
subject matter, was very probably one of the tribal powers under “existing
law” confirmed by ‘ 16 of the Indian Reorganization Act of 1934,
48 Stat. 987, 25 U.S.C. ‘ 476.
447 U.S. 134, 153 (emphasis added).
The Colville
court acknowledged the implicit divestiture analysis of Oliphant and Wheeler
but noted that such divestiture had only been found when tribes seek to engage
in foreign relations, alienate their lands to non‑Indians without federal
consent, or prosecute non‑Indians in tribal courts. Also, while the Court found that the IRA “confirmed”
the tribal power to tax events on Indian land, it did not find that Congress
had also preempted state taxing power over nonmember transactions. Thus, in Colville,
the Court upheld the tribe’s authority to impose cigarette taxes on nonmember
purchasers on reservations on the basis of inherent authority and the IRA’s
ratification of that authority, and it also upheld the state’s authority to tax
the same transactions.
Colville illustrates that the analysis of statutes concerning
tribal authority is a two‑step process. The Court first examined statutes fostering
tribal self-government and found that they confirmed tribal power to act. Second, the Court found none of the statutes
was intended to give tribal enterprises a competitive advantage over all other
businesses, nor to comprehensively regulate all sales by Indians to nonmembers
of the tribe. The Court noted that
Congress could create that power:
[A]lthough
the Tribes themselves could perhaps pre-empt state taxation through the
exercise of properly delegated federal power to do so, cf. Fisher v.
District Court, 424 U.S. 382, 390 (1976) (per curiam); United
States v. Mazurie, 419 U.S. 544 (1975), we do not infer from the
mere fact of federal approval of the Indian taxing ordinances, or from the fact
that the Tribes exercise congressionally sanctioned powers of self‑government,
that Congress has delegated the far‑reaching authority to pre‑empt
valid state sales and cigarette taxes otherwise collectible from nonmembers of
the Tribe.
447 U.S. at 156.
In contrast, the lower court in Colville
believed that the tribal tax preempted the state tax. It reasoned that because Congress can validly
delegate legislative authority to a tribe, when a tribe exercises such
delegated authority and the result is a tribal ordinance that conflicts with an
otherwise valid state statute, the state statute is preempted. The Supreme Court rejected that reasoning.
The first major restriction of
tribal civil jurisdiction over nonmembers came in 1981 with the decision
in Montana v. United States, 450 U.S. 544 (1981). In Montana, non‑Indian fee land owners challenged the power of
the Crow Tribe to restrict their hunting and fishing on and near the Big Horn River. The tribe sought
to rely on its ownership of the bed of the Big Horn River. In a six‑to‑three
decision, the Supreme Court held that the riverbed passed to the State upon its
admission into the Union and that the authority of the Crow Tribe recognized in the
Fort Laramie Treaty to control hunting and fishing could only extend to land on
which the tribe exercised absolute and undisturbed use and occupation. Montana established that, in general, tribes lack plenary regulatory
authority over activities of nonmembers on lands alienated to non‑Indians
as a result of the General Allotment Act. The Court applied the implicit divestiture of
sovereignty notion from Oliphant and established as a “general
proposition” that the inherent sovereign powers of an Indian tribe do not
extend to the activities of nonmembers of the tribe, subject to several
exceptions. Id. at 564-66.
Montana v. United States, 450 U.S. 544 (1981), establishes the benchmark: tribal
jurisdiction over nonmembers exists if one of three tests is met: (1) “express congressional delegation,”
(2) “taxation, licensing, or other means [regulating] the activities of
nonmembers who enter consensual relationships with the tribe or its members,
through commercial dealing, contracts, leases or other arrangements,” or
(3) “conduct of non‑Indians on fee lands within [the] reservation
when that conduct threatens or has some direct effect on the political
integrity, the economic security, or the health or welfare of the tribe.” Id. at 564-66.
By 1989, Montana v. United
States began to be viewed as the Rehnquist Court’s seminal opinion on tribal civil jurisdiction over
nonmembers. In particular, two of the
exceptions to Montana’s general rule, the
consensual relationship exception and the threatening conduct exception, have
come to be known as Montana Exceptions 1 and 2. It is important to recognize that reliance on
these exceptions oversimplifies both the Montana decision itself and current federal common law on tribal civil
jurisdiction over nonmembers.
While Montana addressed tribal regulation of nonmembers on lands
alienated to non‑Indians, its general rule and its exceptions are being
seen by some courts now as applicable to activities on tribal land.
In Merrion v. Jicarilla Apache
Tribe, 455 U.S. 130 (1982), the Court upheld a tribal severance
tax on oil and gas production on tribal reservation land, concluding that the
taxing power is an inherent attribute of tribal sovereignty that has not been
divested by any treaty or act of Congress. In a six‑to‑three decision the
Court found the tribe’s taxing power in its general authority, as a sovereign,
to control economic activities within its jurisdiction and to defray the cost
of providing governmental services.
The Court majority and minority
divided over the question whether the tribe’s power to tax was derived solely
from its power to exclude non‑Indians from the reservation. Petitioners
operated under approved long-term leases with the tribe. The Court held that although the tribe had
agreed to sell the right to use the land, it had not abandoned its sovereign
powers simply by failing to expressly reserve them in a contract. The majority did not rely upon consensual
jurisdiction and never cited Montana v. United States. Instead the Court relied upon Washington v.
Confederated Tribes of the Colville Indian Reservation, supra. The majority also explained Morris v.
Hitchock, Buster v. Wright, and Maxey v. Wright, discussed supra,
saying:
These cases
demonstrate that a tribe has the power to tax nonmembers only to the extent the
nonmember enjoys the privilege of trade or other activity on the reservation to
which the tribe can attach a tax. This
limitation on tribal taxing authority exists not because the tribe has the
power to exclude nonmembers, but because the limited authority that a tribe may
exercise over nonmembers does not arise until the nonmember enters the tribal
jurisdiction. We do not question that
there is a significant territorial component to tribal power: a tribe has no authority over a nonmember
until the nonmember enters tribal lands or conducts business with the tribe.
Id.
at 141‑42. In Kerr-McGee Corp.
v. Navajo Tribe, 471 U.S. 195 (1985), the Court also upheld the
Navajo Nation’s authority to impose a possessory interest tax on lands leased
to a nonmember mining company doing business on the reservation, although the
Nation’s ordinance was not approved by the Secretary of the Interior.
City of Timber Lake v. Cheyenne River Sioux,
10 F.3d 554 (8th Cir. 1993), cert. denied, 114 S. Ct. 2741
(1994), shows the important result that flows from statutorily conferred power.
There, the court relied on ' 1161,
as construed in Rice v. Rehner, 463 U.S. 713 (1983), to find
authority for tribal regulation of liquor throughout the reservation with no
exemption for non‑Indian communities. Thus, while the reference to non‑Indian
communities at issue in Mazurie would affect federal criminal
prosecutions, it would not limit the tribal civil jurisdiction over nonmembers
authorized by ' 1161.
This ruling provides strong support for tribal liquor taxes, applicable
throughout the reservation, where they are part of a federally-approved liquor
ordinance.
In Big Horn
Electric v. Adams, 219 F.3d 944 (9th Cir. 2000),
affirming 53 F. Supp. 2d 1047 (D. Mont. 1999), the
Crow Tribe imposed an ad valorem tax on utility property located on power company
rights‑of‑way on the Crow Reservation. The electric company sued officials of the
Crow Tribe, seeking injunctive and declaratory relief against the tribal tax on
the company’s property on a right‑of‑way across tribal lands. The district court determined that the right‑of‑way
was equivalent to fee land owned by nonmembers for purposes of deciding
nonmember governance. The court
determined that the ad valorem tax on the property exceeded the Tribe’s inherent
sovereignty because it was not imposed on the activity which formed the
consensual relationship, the sale of power.
The court stated that Strate and Wilson v.
Marchington had impliedly overruled Blackfeet. Accordingly, the Tribe lacked authority to
impose an ad
valorem tax on rights‑of‑way deemed to be the
equivalent of fee land owned by nonmembers. However, the court also ruled that
the sale of power to customers, about half of whom are tribal members, was
taxable by the Tribe and supported by a consensual relationship within the
meaning of Montana
Exception 1.
Atkinson Trading Co., Inc. v.
Shirley, 532 U.S. 645 (2001),
rejected the Navajo Nation’s claim that inherent sovereignty supported
imposition of a hotel occupancy tax upon nonmembers on non-Indian fee land
within its reservation. The Court
analyzed the first and second Montana exceptions and held them inapplicable. The Court rejected broad language in Merrion
and earlier cases and found the analysis of Brendale to be inapplicable
because the effects of the trading post did not endanger the Navajo Nation’s
political integrity.
In Atkinson Trading, a non‑Indian
hotel proprietor sued members of the Navajo Tax Commission seeking a
declaratory judgment that the Navajo Nation had no jurisdiction to impose a
hotel occupancy tax on the proprietor’s guests. The New Mexico District Court entered summary
judgment in favor of the Commission members. Atkinson Trading appealed. The Court of Appeals held that: (1) district courts in reviewing tribal
court decisions on jurisdictional issues should review findings of fact for
clear error and conclusions of law de novo; (2) the District Court did not
abuse its discretion in finding that Navajo tribal courts were not
fundamentally unfair or biased, and that clear error discretion thus should be
given to the tribal courts’ findings of fact; (3) the fact that the hotel
was situated on fee land did not compel a finding that the Nation lacked
jurisdiction over the proprietor’s nonmember guests; (4) the District
Court applied the appropriate test for determining whether the proprietor
entered into a consensual relationship with the Navajo Nation; and (5) a
consensual relationship existed between Nation and guests, such that Nation had
inherent jurisdiction to tax. Circuit Judge Briscoe dissented. 210 F.3d 1247 (10th Cir. 2000).
On petitions for rehearing, the Court of
Appeals split evenly so rehearing was denied.
The Supreme Court’s unanimous
opinion rejected the Tenth Circuit’s finding of consensual relationships
between the Navajo Nation and the hotel guests or the trading post. The Court stressed that the case involved no
claim of statutorily conferred power. Slip
op. at 8, n.5. The Court noted that
neither the Indian Trader’s Statute, 25 U.S.C. § 261, nor the
regulations adopted under that statute, authorized the hotel occupancy tax at
issue. Slip op. at 10 and n.10.
Tribal utility taxes were again
at issue in a Washington Utilities and Transportation Commission case, Brannan
v. Qwest Corporation, (Feb. 2002). The
Commission upheld Qwest’s pass‑through of the Lummi Nation’s and
Swinomish Tribe’s utility taxes to nonmember customers living within
reservation boundaries. The Commission
distinguished the tribal utility taxes from those in Atkinson on the
basis of the Tribes’ relationship with the utilities. In Willman
v. Washington Utilities and Transp. Comm’n, 154 Wn.2d 801 (2005), the
Washington Supreme Court reached the same result regarding power and other
utility taxes where Yakama Nation taxes were passed through to member and
nonmember utility bills. These decisions
highlight the importance of thinking “outside of the box,” and like here, working
with utilities to impose tribal taxes on nonmembers.
We jump ahead now to more recent court opinions affecting
this topic, first from the Supreme Court:
C.
UNITED STATES SUPREME COURT
1.
United States v.
Lara, 541 U.S.
193 (2004). Following denial of his
motion to dismiss on basis of prior tribal court conviction, defendant, an
Indian nonmember of the tribe, pleaded guilty in district court to assault on a
federal officer occurring in Indian Country.
Defendant appealed. A panel of
the Eighth Circuit affirmed, 294 F.3d 1004.
On rehearing en banc, the appellate court reversed and remanded with
instructions. Certiorari was
granted. The Supreme Court held
that: (1) source of tribe’s power
to prosecute and punish defendant for violence to a policeman was inherent
tribal sovereignty rather than delegated federal authority; (2) Congress
possessed constitutional power to lift or relax restrictions on Indian tribes’
criminal jurisdiction over nonmember Indians that political branches of
government had previously imposed; and (3) the Double Jeopardy Clause
could not bar federal prosecution of defendant for assaulting a federal officer
after Indian tribe’s prosecution and punishment of him for violence to a
policeman, absent any showing that the source of the tribal prosecution was
federal power. Reversed. This case
illustrates the broad power of Congress to delegate or clarify tribal
authority.
2.
City of Sherrill, New
York v. Oneida
Indian Nation of N.Y., No. 03-855, 544 U.S. 197
(U.S. Mar. 29, 2005). A 1794 treaty recognized that the Oneida
Reservation included lands in Sherrill and Madison
Counties. During the 1880’s, much of the Reservation
was sold to non‑members but recently the Tribe and tribal members have
begun repurchasing parcels. The Tribe
sued the City after Sherrill began eviction proceedings because taxes went
unpaid on certain tribal properties. The
district court held the City could not tax the Tribe. The Second Circuit Court of Appeals affirmed,
concluding that property owned by the Tribe is Indian Country. The Supreme Court reversed. The damages remedy upheld in Oneida II does
not support declaratory and injunctive relief recognizing sovereign
status. The doctrine of laches, which
focuses on one side’s inaction and the other’s legitimate reliance, applies
here to bar the reestablishment of Indian sovereign control after two centuries
since the Oneidas last exercised regulatory control. Justice Stevens dissented. This case illustrates the continuing
importance of trust land.
3.
Wagnon v. Prairie Band Potawatomi Nation, No. 04-631, 126 S. Ct. 676
(U.S. Dec. 6, 2005). Indian tribe brought suit for declaratory and
injunctive relief, challenging imposition of Kansas
motor fuel excise tax on non-Indian distributor for fuel supplied to gas
station operated by tribe on reservation property. The district court, 241 F.Supp.2d 1295,
granted summary judgment dismissing action.
Tribe appealed. The appellate
court, 379 F.3d 979, reversed.
State petitioned for certiorari which was granted. The Supreme Court, Justice Thomas, held that: (1) Chickasaw categorical bar on
imposition of legal incidence of state excise tax on a tribe or on tribal
members for sales made inside Indian Country without congressional
authorization was not applicable; (2) Bracker interest-balancing test for
preemption of state taxation of activity on an Indian reservation, which
applies when a state asserts taxing authority over the conduct of non-Indians
engaging in activity on a reservation, was not applicable; (3) tax was not
invalid on theory that it was impermissibly discriminatory because the state
exempted from taxation fuel sold or delivered to all other sovereigns; and
(4) tax was valid and posed no affront to tribe’s sovereignty. Reversed.
This case illustrates the continuing importance of the Bracker balance
test within Indian Country.
4.
Plains Commerce Bank v. Long Family Land and
Cattle Company, Inc., et al., Docket No. 07‑411 (June 25, 2008). Issue: Do Indian tribal courts have subject matter
jurisdiction to award relief with respect to a sale of fee land as “other means”
of regulating conduct of nonmember bank, owning fee land on reservation, that
entered into private commercial agreement with member‑owned corporation? The lower court ruled in Plains Commerce Bank v. Long Family Land and Cattle Co. Inc., 491
F.3d 878, that the tribal court had jurisdiction over claim by tribal members
that defendant bank, South Dakota corporation with its principal place of
business outside tribe’s reservation, discriminated against them, based on
either their Indian ancestry or tribal affiliation, in terms of loan that bank
made to their family-owned corporation. That court held that the Longs’ claim
satisfied requirements for the first category of permissible tribal
jurisdiction over nonmembers recognized in Montana
v. United States, 450 U.S. 544 (1980), in that (i) bank had
formed consensual relationship with tribal members, by virtue of loans to their
corporation whose overwhelming tribal character clearly benefited bank (through
loan guarantees by Bureau of Indian Affairs that greatly reduced bank’s risk)
and bank’s related commercial relationships with corporation’s individual
owners, and (ii) tribal tort law invoked by tribal members is appropriate “other
means” of regulating activities of nonmember that have some nexus to consensual
relationship, given that discrimination claim arose directly from pre‑existing
commercial relationship between tribal members and bank and sought to hold
nonmembers, such as bank, to minimum standard of fairness when they
voluntarily deal with tribal members.
The Supreme Court reversed the
lower court, ruling that the tribal court could not set aside the bank’s sale
of fee lands. The Court did not reach the question of the tribal court’s
authority over contract breach claims and instead issued a very narrow decision
concerning one form of relief granted by the tribal court.
D.
LOWER COURTS
5.
Reservation Telephone Cooperative v. Henry,
Nos. A4-02-121, A4-02-126, 278 F. Supp. 2d 1015 (D.N.D.
Aug. 26, 2003). The Plaintiffs
commenced an action against the Three Affiliated Tribes and the Tax Director
for injunctive and declaratory relief alleging that a possessory interest tax
imposed by the Three Affiliated Tribes cannot be assessed against rights‑of‑way
and telephone lines granted and used by the Cooperatives throughout the Fort
Berthold Indian Reservation. The
district court granted plaintiff’s motions for summary judgment.
6.
State of South Dakota v. Mineta, No.
CIV. 02-3034, 278 F. Supp. 2d 1025 (D.S.D. Aug. 21, 2003). State brought action against Secretary of
Transportation, seeking declaration that the Secretary, who assertedly had
taken final action to require the state to require highway contractors to pay,
and charge to the state, occupational taxes levied by Indian tribes in
connection with construction projects on state highways which traverse Indian
reservations, had no such authority, and that the Secretary could not withhold
federal highway funds because of state action to not honor and reimburse
highway contractors for such tribal occupational taxes. On the Secretary’s motion to dismiss, the
district court held that there was no final agency action and the state had
suffered no injury, and thus, the action was not ripe for review. Motion granted.
7.
Warbelow’s Air Ventures, Inc. v. Commissioner
of Internal Revenue, No. 02‑73328, 2003 WL 22417080 (9th Cir. Oct. 22,
2003). Not selected for publication in
the Federal Reporter. Taxpayer
petitioned for redetermination of deficiencies arising from denial of Indian
employment credit (“IEC”). The Tax Court, 2002 WL 1396736, decided in favor of IRS.
Taxpayer appealed. The appellate court held that in statute permitting tax
credit for wages paid to Indian tribal members, phrase “within an Indian
reservation” referred to land on the village or regional corporation
lands. Affirmed.
8.
Winnebago Tribe of Nebraska v. Kline,
No. 02-4070-JTM, 297 F. Supp. 2d 1291, 2004 WL 73284 (D. Kan.
Jan. 15, 2004). Indian tribes
challenged state’s right to collect motor vehicle fuel taxes from
tribally-operated businesses. State moved to dismiss. The district court held that: (1) tribe was not “person” who
could sue under § 1983; (2) Eleventh Amendment did not bar suit;
(3) Tax Injunction Act did not bar tribes’ suit, but did bar claims
by individual tribal members; (4) principles of comity did not
warrant dismissal of suit; (5) abstention was not warranted;
(6) complaint stated sovereign immunity claim; and (7) suit was not
barred by Hayden‑Cartwright Act.
Motion granted in part and denied in part.
9.
Bercier v. Kiga, No. 31052-0-II, 127 Wn. App. 809, 103 P.3d 232 (Wash. Ct. App.
2004). Bercier appealed the trial court’s
dismissal of his declaratory judgment action.
He argued he should be exempt from all Washington excise taxes and
regulations because, as a member of the Fort Peck Indian Tribe who resides
and sells tobacco products on the Puyallup Indian reservation, he is an Indian
doing business on Indian trust land, entitled to exemptions under RCW 82.24.260,
82.24 .900, and 82.26.040. Holding that
Bercier is not entitled to a tax exemption because he is not enrolled in the
Puyallup Tribe on whose land he is doing business, the appellate court
affirmed.
10.
Coeur d’Alene
Tribe of Idaho v. Hammond,
No. 02-35965, 384 F.3d 674 (9th Cir. 2004). Idaho officials appealed order enjoining them
from collecting the motor fuels tax on fuel delivered by non-tribal
distributors to tribally-owned gas stations for sale on Indian
reservations. After the Supreme Court of
Idaho ruled in 2001 that the incidence of the tax fell impermissibly on Indian
tribes, Idaho legislature amended the tax law to state that the incidence of
the tax falls on non-tribal distributors.
However, because the relevant operative provisions of the fuel tax that
the state Supreme Court analyzed have not changed, the incidence of the motor
fuel tax still falls on the tribes.
Furthermore, the Hayden‑Cartwright Act does not provide
Congressional authorization for imposing the tax. Affirmed.
11.
Mann v. ND
Tax Commissioner , Dkt. No. 20040174, 2005 ND 36,
692 N.W. 2d 490 (N.D. 2005).
Native Americans brought action against Tax Commissioner and Treasurer
for declaratory and injunctive relief against imposition of motor fuels taxes
on them on their reservations. The
Northwest Judicial District Court issued permanent injunction against
collection, dismissed all plaintiffs except one, and denied motions for
reconsideration. Appeal and cross‑appeal
were taken. The Supreme Court held
that: (1) denial of state’s motion
for reconsideration was not appealable without certification as final;
(2) dismissal of all but one plaintiff without prejudice was not
appealable without certification as final order; and (3) decision not to
exercise supervisory authority was warranted.
Appeals dismissed.
12.
Willman v. Wash.
Util. and Transp. Comm’n., No. 75821-1 (Wash.
Sup. Ct. Aug. 11, 2005). In August
2002, the Yakama Tribal Council adopted a franchise ordinance whose preamble
states in part: Utilities operating on
the Reservation have placed Utility facilities on lands owned or controlled by
the Yakama Nation without authorization or for which authorization has
expired and the Tribal Council finds that it is in the public interest to
require Utilities operating on the Reservation to obtain permission for such
facilities by entering into agreements with the Yakama Nation. The ordinance requires any utility operating
within the reservation to obtain a franchise from the Nation and provides for a
fine of $1,000 per day for operating without a franchise. In addition, any utility operating within the
reservation (regardless of whether it has obtained a franchise) is required to
pay a franchise fee of three percent of its gross operating revenue. Affirmed
13.
Squaxin Island
Tribe v. Stephens, No. C033951Z, 2006 WL 278559 (W.D. Wash.
Feb. 3, 2006). Defendant Fred
Stephens, represented by the state of Washington
(“State”), moved for reconsideration of the court’s November 22, 2005, entry of judgment and
permanent injunction barring the state from collecting the Washington
State motor vehicle excise tax from
tribal retailers. The court entered an
order granting the Tribes’ motion for summary judgment as to the legal
incidence of the Washington State motor vehicle fuel tax, ruling that the legal
incidence of the tax impermissibly fell on the Tribes’ retail fuel stations,
relying on the multifactor analysis described in Oklahoma Tax Commission v. Chickasaw Nation, 515 U.S. 450
(1995), and Coeur d’Alene Tribe of Idaho
v. Hammond, 384 F.3d 674 (9th Cir. 2004).
Because the court ruled in favor of the Tribes as to their legal
incidence claim, the Tribes’ preemption and tribal sovereignty claims were
rendered moot. On December 6, 2005, the
United States Supreme Court issued its decision in Wagnon v. Prairie Band Potawatomi Nation, __ U.S. __,
126 S. Ct. 676 (2005).
The Tribes filed their proposed judgment and permanent injunction and
the state filed its response and objections to the proposed judgment requesting
that the court direct the parties to file additional briefing on the impact of
the Potawatomi decision on the
case. The state moved for
reconsideration of the judgment and injunction and requested a stay of the
judgment and injunction pending the resolution of the motion for
reconsideration. The court found that
the state provided no basis for altering the judgment or reconsidering the
November 22 Order granting summary judgment in favor of the Tribes, that the
state continued in its failure to identify which entity in the supply chain
bears the legal incidence of the tax, and that the state had apparently
abandoned any argument that the consumer bears the legal incidence of the
Washington State motor vehicle tax and would now place it on suppliers,
distributors, or both. The court found
that none of the state’s arguments, including those based on the Prairie Band decision, supported that
conclusion under the factors articulated and applied in Chickasaw Nation and Hammond. The state’s Motion for Reconsideration and
Stay of the Judgment was denied as untimely and meritless.
14.
Winnebago Tribe of Nebraska v.
Kline, No. 94,781, 283 Kan. 64, 150 P.3d 892 (Kan.
Feb. 2, 2007). Indian tribes brought action seeking
injunctive relief and a determination that the motor-fuel tax law does not
authorize assessment of tax on motor fuel delivered and sold by a Nebraska
tribal corporation to tribes in Kansas
for on-reservation retail sale. The
district court certified question of law.
The Supreme Court held that:
(1) distributor of first receipt is liable for payment of the motor
fuel tax; (2) importers are not included within the meaning of “distributors”;
and (3) tribal corporation did not “receive” fuel within state and, thus,
did not fall within definition of “distributor” and was not liable for motor
fuel tax. Certified question answered.
15.
Osage Nation v. State of Oklahoma Ex Rel.
Oklahoma Tax Commission, No. 03-5162, 2007 WL 4553668 (10th Cir.
Dec. 26, 2007). Not selected for publication in the Federal
Reporter. The district court
permitted the Osage Nation (Nation) to sue the state of Oklahoma,
the Oklahoma Tax Commission, and individual members of the Tax Commission in
their official capacities in federal court to enjoin the state’s assessment of
income tax on tribal members who are employed by the Nation and reside in Osage
County, Oklahoma. The court found that the Nation sought to
assert sovereign rights in direct opposition to the historically exercised
sovereign authority of the state of Oklahoma. The appellate court reversed the district
court decision to allow the Nation’s suit to proceed against the state of Oklahoma
and the Oklahoma Tax Commission and remanded for dismissal of those
defendants. As to the individual
defendants, the decision of the district court was affirmed.
16.
Village of Pender v.
Parker, No. 4:07CV3101, 2007 WL 2914871 (D. Neb.
Oct. 4, 2007). This case raised the question of whether or
not the Village of Pender,
and the other plaintiffs’ businesses, are physically within the Omaha Indian
Reservation such that the Omaha Tribe may regulate and tax liquor sales in
Pender. Before the court was a motion to
amend seeking to add the Village of Pender
as a plaintiff. Also pending was a
motion to dismiss the case because plaintiffs failed to exhaust their tribal
court remedies. The court: (1) granted the motion to amend the
complaint; (2) denied the motion to dismiss; (3) stayed the case to
allow the plaintiffs to exhaust their remedies in the Omaha Tribal Courts; and
(4) kept a temporary restraining order in place with the defendants bound
by its terms during the pendency of the stay
17.
Barona Band of Mission Indians v. Yee,
No. 06-55918, __ F.3d __, 2008 WL 2440528 (9th Cir. June 18,
2008). Indian tribe
brought action against California State Board of Equalization (SBE), seeking
declaratory relief from imposition of state sales tax on construction materials
purchased by non‑Indian electrical subcontractor
from non‑Indian vendor and delivered to Indian land pursuant to contract for $75 million casino
expansion. The district court granted tribe’s motion for summary judgment, and the SBE appealed. The appellate court held that: (1) legal incidence of sales tax fell
upon subcontractor and thus tax was not per se invalid as a tax on tribe or its members; (2) sales tax was valid under Bracker
preemption analysis; and (3) Indian Gaming Regulation
Act (IGRA) did not preempt sales tax.
Reversed and remanded.
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