LEECH LAKE BAND v CASS COUNTY, MN
___________
No. 95-4263
___________
Leech Lake Band of Chippewa *
Indians, *
*
Plaintiff/Appellant, *
*
v. *
*
Cass County, Minnesota; Sharon *
K. Anderson, in her official *
capacity as Cass County Auditor; *
Marge L. Daniels, in her *
official capacity as Cass County *
Treasurer; Steve Kuha, in his *
official capacity as Cass County *
Assessor; James Demgen, in his *
official capacity as Cass County *
Commissioner; John Stranne, in * Appeal from the United States
his official capacity as Cass * District Court for the
County Commissioner; Glen * District of Minnesota
Witham, in his official capacity *
as Cass County Commissioner; *
Erwin Ostlund, in his official *
capacity as Cass County *
Commissioner; Virgil Foster, in *
his official capacity as Cass *
County Commissioner, *
*
Defendants/Appellees. *
*
_______________________ *
*
*
United States of America, *
*
Amicus Curiae. *
*
White Earth Band of Chippewa *
Indians, *
*
Amicus Curiae. *
*
Fond Du Lac Band of Chippewa *
Indians, *
*
Amicus Curiae. *
___________
Submitted: October 23, 1996
Filed: March 6, 1997
___________
Before MAGILL, BRIGHT, and MURPHY, Circuit Judges.
___________
MURPHY, Circuit Judge.
This case involves the tax status of land within an Indian
reservation which was once alienated from Indian ownership and
subsequently reacquired by the tribe in fee simple. In 1993 Cass
County, Minnesota levied an ad valorem tax on such fee land owned
by the Leech Lake Band of Chippewa Indians. The Band paid the
taxes under protest and sought a declaratory judgment that the land
is immune from state taxation, an injunction ending the taxation,
and an order refunding the taxes already paid. Based on its
interpretation of County of Yakima v. Confederated Tribes and Bands
of the Yakima Indian Nation,
502 U.S. 251
(1992), the district
court granted summary judgment for Cass County. The Band appeals.
We affirm in part and reverse in part.
I.
The Leech Lake Band of Chippewa Indians is a federally
recognized Indian tribe, whose reservation is located in northern
Minnesota. The reservation was created by a series of treaties
with the United States government, beginning in 1855 and ending
with an executive order in 1874. See, e.g., Treaty with the
Chippewas, Feb. 22, 1855, 10 Stat. 1165 (1855); Leech Lake Band of
Chippewa Indians v. Herbst, 334 F. Supp. 1001, 1002 (D. Minn.
1971). Although the pattern of land ownership within the
reservation has varied over the years, the reservation has never
been disestablished or diminished. See Herbst, 334 F. Supp. at
1002 (D. Minn. 1971) (involving hunting and fishing rights); State
v. Forge, 262 N.W.2d 341, 343-44 (Minn. 1977) (same).
The Band's original reservation was impacted by changes in
federal Indian policy. During the latter part of the nineteenth
century, the United States adopted an allotment policy in order to
break up reservations previously established by treaty. This
policy granted allotments of land to individual tribal members and
sold the often sizable remainder of reservation land to non-
Indians. See Felix S. Cohen, Handbook of Federal Indian Law 127-38
(1982). The purpose of the policy was to open land to non-Indians
and to assimilate the Indian people into the broader American
society. Id. at 128. The overall effect was drastically to reduce
the amount of land under Indian control. Id. at 138.
The legislative centerpiece of the allotment policy was the
General Allotment Act (GAA), ch. 119, 24 Stat. 338 (1887),
(codified as amended in scattered sections of 25 U.S.C.) (sometimes
referred to as the Dawes Act). Under the GAA, parcels of land to
be granted to individual Indians were initially held in trust by
the United States. Section 5 of the GAA provided that after a
twenty-five year trust period, the United States would convey the
land in fee simple to the individual allottee.(1) During the trust
period the allottees were not permitted to convey the land.
Section 6 of the GAA provided that the allottees would be subject
to state civil and criminal law.
In 1906 Congress amended the GAA by the Burke Act, ch. 2348,
34 Stat. 182 (1906). The Burke Act amended SS 6 of the GAA to make
clear that allottees would be subject to state law only after the
expiration of the trust period and issuance of a patent in fee
simple.(2) Yakima,
502 U.S. at 264
. The Burke Act contained a
proviso which enabled the Secretary of the Interior to issue a fee
simple patent before the expiration of the twenty-five year trust
period to "competent and capable" allottees. Burke Act, ch. 2348,
34 Stat. 182 (1906). The proviso stated that land allotted under
the GAA would be free from restrictions on "sale, incumbrance, or
taxation" when a patent was issued in fee. Id.; see Yakima,
502
U.S. 264
n.4.
For the Leech Lake Band and other Minnesota Chippewa tribes,
the allotment policy was carried out through the Nelson Act of
1889, ch. 24, 25 Stat. 642 (1889), which partially incorporated the
GAA. The Nelson Act created a commission to negotiate with the
Band for the "cession and relinquishment" of its reservation land.
Id. The Leech Lake Band agreed in 1889 to have land disbursed
under the Nelson Act and the agreement went into effect in 1890.
The details of the negotiations with the Leech Lake Band are
unclear, but there is some evidence that representatives of the
United States told other Minnesota Chippewa tribes that the land
allotted to the individual tribal members would not be taxed.
During the negotiations a member of the White Earth Band of
Chippewa Indians asked the United States' lead negotiator, Harry M.
Rice, this question: "I should like to ask whether, when the Dawes
bill(3) refers to the civil and criminal laws, those provisions apply
so as to make our people here subject to the taxation of the white
man?" Mr. Rice responded: "I think you will come within the same
rule as officers at the United States forts; their property is not
taxed." The Chippewa Indians in Minnesota, H.R. Ex. Doc. No. 247,
at 93 (1890). Individuals from other tribes were present during
this colloquy. Id. Cases involving other bands and other
legislation have suggested that the land might only be free from
taxation during the original trust period, however. Mahnomen
County, Minn. v. United States,
319 U.S. 474, 480
(1943) (Murphy,
J., dissenting) (land allotted to Mahnomen County Band of Chippewa
Indians under Clapp Act exempt from taxation for twenty-five
years); United States v. Spaeth, 24 F. Supp. 465, 469 (D. Minn.
1938) (land allotted to a White Earth Chippewa Indian under Clapp
Act exempt from taxation for twenty-five years).
The Nelson Act disposed of reservation land in three ways.
The allotment of land to individual Indians under SS 3 of the
Nelson Act was done in conformity with the GAA, and Leech Lake
tribal members were allotted land either within the Leech Lake
reservation or within the reservation of the White Earth Band of
Chippewa Indians, which is also in northern Minnesota. The rest of
the land was made available to the general public. Some was sold
under SSSS 4 and 5, the pine lands provisions, and the rest was
sold under SS 6 pursuant to the Homestead Act, ch. 75, 12 Stat. 392
(1862).
Federal Indian policy changed substantially once again in 1934
with the passage of the Indian Reorganization Act (IRA), ch. 576,
48 Stat. 984 (1934) (codified as amended at 25 U.S.C. SSSS 461-479
(1996)). The IRA reestablished federal recognition of Indian
tribes, and while it did not repeal allotment statutes such as the
Nelson Act, it ended the allotment policy and sought to reverse the
erosion of the tribal land base by extending indefinitely the trust
period for all land held by the United States in trust for Indian
tribes. 25 U.S.C. SSSS 461-462. The Band is governed in part by
a constitution adopted by the Minnesota Chippewa Tribes pursuant to
the IRA. See SS 476.
The Leech Lake Band managed to preserve its tribal identity
despite the federal allotment policy and has maintained a
continuing presence on its reservation land. During the allotment
period over three quarters of the tribal members who were allotted
land remained within the Leech Lake reservation boundaries. 4
Folwell, History of Minnesota 235 (1930). Nonetheless, by 1977 the
Band and individual tribal members owned only 27,000 acres, or less
than five percent of the reservation land. See Forge, 262 N.W.2d
at 343 & n.1 (Minn. 1977). In an effort to rebuild what was lost
through the allotment policy, the Band began slowly to recover its
land base.
The land in question in this case consists of twenty-one
parcels within the boundaries of the reservation. The legal
description of each parcel is found in paragraph ten of the Band's
complaint. This land was once held in trust for the Band by the
United States according to terms of their treaties, but was later
alienated from tribal control under provisions of the Nelson Act.
Thirteen of the parcels were allotted to individual Indians under
SS 3 of the Act; seven parcels were sold as pine lands under SSSS
4 and 5 for commercial timber harvest by non-Indians; and one
parcel was distributed under SS 6 as a homestead plot to a non-
Indian. Subsequently, all parcels came to be held by non-Indians,
but the Band reacquired each parcel in fee between 1980 and 1992.
Cass County did not impose its ad valorem tax on these parcels
until 1993, one year after the Supreme Court issued its Yakima
decision. The Court had held in Yakima that Indian lands
originally allotted under the GAA were subject to certain types of
state taxation.
502 U.S. at 270
. It found that the language of SS
6 of the GAA supported an ad valorem tax on such land, but not an
excise tax on its sale. Id. at 266-70. The Band initially
declined to pay the taxes levied by Cass County, but eventually
paid under protest in order to avoid foreclosure. By July 1, 1995
it had paid a total of over $64,000 in taxes.
In June 1995, the Band filed suit in federal court seeking a
declaratory judgment that the lands are not taxable by the County.
The district court granted summary judgment in favor of Cass
County, holding that all land alienated from tribal control under
the Nelson Act was taxable. Leech Lake Band of Chippewa Indians v.
Cass County, 908 F. Supp. 689 (D. Minn. 1995). The court
interpreted Yakima to mean that land held by Indian tribes is
taxable by the state if it is freely alienable and dismissed the
Band's case.(4)
II.
On appeal the Band contends that Yakima can be distinguished
from the present case both factually and legally. The Band asserts
that Yakima was concerned primarily with fee land owned by
individual tribal members rather than the tribe itself. The
principle of tribal sovereignty can defeat state taxation here it
says.
Yakima cannot be so easily distinguished, however. The land
involved in that case was held both by individual Indians and the
tribe itself.
502 U.S. at 256
, 270. Although tribal sovereignty
can be an impediment to the exercise of state jurisdiction over
Indians and their property, see, e.g., Montana v. United States,
450 U.S. 544, 565-66
(1981), considerations of inherent sovereignty
may not prevent certain forms of taxation. Yakima,
502 U.S. at
257
-58 (noting that "platonic notions of Indian sovereignty . . .
have, over time, lost their independent sway. (citations
omitted)(internal quotations omitted)).
In Yakima, the county had imposed an ad valorem tax on all
real property and an excise tax on the sale of such property.(5) It
believed that these taxes applied to all land within the county,
even land patented in fee under the GAA and owned by the Yakima
Indian Nation or individual tribal members within the reservation
boundaries. When the county threatened to foreclose on certain
parcels for which taxes had not been paid, the tribe brought suit
for declaratory and injunctive relief. The Supreme Court held that
the GAA authorized the ad valorem tax levied by Yakima County, but
not the excise tax.
502 U.S. at 270
. The ad valorem tax was
acceptable because the Burke Act proviso permitted the "taxation of
. . . land," and this was sufficient to overcome the Court's per se
rule against state taxation of Indians or their land. Id. at 267-
68. The language of the proviso was not sufficient to indicate
Congress had authorized an excise tax on the sale of such land,
however. Id. at 268-69.
The meaning of Yakima as precedent is crucial to the outcome
of the case before this court. The Band argues that Yakima is
consistent with many other cases requiring an "unmistakably clear
congressional intent to allow any form of state taxation.
According to the Band, the Court found unmistakably clear
congressional intent for the ad valorem tax by examining the text
and effect of both SS 5 and SS 6 of the GAA.(6) Section 5 made the
land to be transferred alienable, a necessary precondition to state
taxation of Indian lands. It was SS 6, however, as amended by the
Burke Act proviso, that provided the unmistakably clear intent to
allow such taxes. The Band points out that this is the reading of
Yakima adopted in Southern Ute Indian Tribe v. Board of County
Comm'rs, 855 F. Supp. 1194 (D. Colo. 1994), vacated, 61 F.3d 916
(10th Cir. 1995) (on ripeness grounds). Southern Ute read Yakima
to mean that the alienability established in SS 5 "was not an
independent justification for taxation," but rather an implication
of taxability, while the specific language of SS 6, as amended by
the Burke Act proviso provided the "unmistakably clear
congressional intent to allow such taxation. Southern Ute, 855
F.Supp. at 1200.
Cass County, on the other hand, argues that Yakima stands for
the proposition that if Indian lands are made alienable in any way,
they are taxable by the state. Section 5 of the GAA, making
allotments alienable, is seen as the key to the validity of the ad
valorem tax in Yakima. The County finds support in two cases which
have interpreted Yakima to mean "alienability equals taxability."
Lummi Indian Tribe v. Whatcom County, Wash., 5 F.3d 1355 (9th Cir.
1993), cert. denied, 114 S.Ct. 2727 (1993); Saginaw Chippewa Tribe
v. Michigan, 882 F. Supp. 659 (E.D. Mich. 1995), rev'd, Nos. 95-
1574, 95-1575, 1997 WL 20402 (6th Cir. Jan. 22, 1997). Both Lummi
and the district court in Saginaw seized on the relatively brief
discussion of SS 5 in Yakima as evidence that an act of Congress
can subject Indian lands to state taxation by doing nothing more
than making them alienable. Lummi, 5 F.3d at 1357-58; Saginaw, 882
F. Supp. at 672.
Subsequent to oral argument in this case the Sixth Circuit
reversed the Saginaw district court. Saginaw Chippewa Tribe v.
Michigan, Nos. 95-1574, 95-1575, 1997 WL 20402 (6th Cir. Jan. 22,
1997). The Sixth Circuit concluded that Yakima was consistent with
the general rule requiring unmistakable congressional intent to
permit taxation of Indian land and that making land alienable does
not in itself show the requisite intent. It stated the Court's
holding as follows:
In Yakima, the Supreme Court held that "by specifically
mentioning immunity from land taxation as one of the
restrictions that would be removed upon conveyance in
fee, Congress in the Burke Act proviso manifested a clear
intention to permit the state to tax such Indian lands."
Saginaw, 1997 WL 20402, at *4, citing Yakima,
502 U.S. at 259
.
Despite the Sixth Circuit's thorough discussion of Yakima and
earlier precedent on which the dissent relies in this case, the
dissent mentions this decision only in passing.
The County's theory that alienability always equals taxability
is unsatisfactory because it fails to consider the language and
context of the entire Yakima opinion. First, as the County
concedes, its reading conflicts with the Yakima opinion itself and
with Supreme Court precedent requiring Congress to provide
unmistakably clear intent before allowing state taxation of Indians
or their property. See Yakima,
502 U.S. at 258
(citing Montana v.
Blackfeet Tribe,
471 U.S. 759, 765
(1985); California v. Cabazon
Band of Mission Indians,
480 U.S. 202, 215
n.17 (1986)).
Second, in order to support its argument, the County must read
Yakima as resting its conclusion solely on the effect of the
alienability section of the GAA. This reading disregards the
significance given by the Court to the language of SS 6 of the GAA.
It repeatedly pointed to the Burke Act proviso in SS 6 as the
primary source of clear congressional intent to allow the ad
valorem tax levied by Yakima County.
502 U.S. at 258
-59.
Third, the County's reading of Yakima also disregards the
language and analysis in section III of the opinion. In section
III, the Court separately analyzed each type of tax at issue and
concluded that the SS 6 Burke Act proviso authorized the ad valorem
tax, but not the excise tax levied by Yakima County.
502 U.S. at
268
. As the Sixth Circuit noted in Saginaw,
Rather than finding that alienable Indian lands are
subject to excise taxes on the general policy grounds
advocated by the defendants, the [Yakima] Court carefully
parsed the language of the General Allotment Act to
determine whether or not Congress expressed an
unmistakably clear intention to subject the land to such
taxes.
Saginaw, 1997 WL 20402, at *5. If alienability always equals
taxability, it should be the nature of the property right, not the
nature of the tax, that matters. If that were the rule, the Court
should have upheld both the ad valorem and the excise taxes levied
by the County since the land was made alienable by the GAA.
Instead, the Court refused to uphold the excise tax because it
found that the language of the Burke Act proviso could not justify
the imposition of such a tax. Id. at 268-70. Under the County's
reading of Yakima, section III of the opinion would be superfluous
and the Court would have reached a different result.
Finally, if alienability were equivalent to taxability, it is
difficult to explain the terms of the remand in Yakima. That
remand left open the question of whether land allotted under a
different act might be taxed or not.(7) If alienability equaled
taxability it should not have mattered under which act the land was
made alienable -- the mere fact of alienability should have been
enough to allow state taxation.
To determine if a state may tax Indians or their property, the
Supreme Court has consistently asked whether Congress has made its
intent to allow state taxation unmistakably clear. The Court in
Yakima stated the rule strongly:
[S]tate jurisdiction over the relations between
reservation Indians and non-Indians may be permitted
unless the application of state laws "would interfere
with reservation self-government or impair a right
granted or reserved by federal law." (citation omitted)
In the area of state taxation, however, Chief Justice
Marshall's observation that "the power to tax involves
the power to destroy," McCulloch v. Maryland, 17 U.S. (4
Wheat.) 316, 431, 4 L. Ed. 579 (1819), has counseled a
more categorical approach: "[A]bsent cession of
jurisdiction or other federal statutes permitting it," we
have held, a State is without power to tax reservation
lands and reservation Indians. Mescalero Apache Tribe v.
Jones,
411 U.S. 145, 148
, 93 S. Ct. 1267, 1270, 36 L. Ed.
2d 114 (1973). And our cases reveal a consistent
practice of declining to find that Congress has
authorized state taxation unless it has "made its
intention to do so unmistakably clear." Montana v.
Blackfeet Tribe,
471 U.S. 759, 765
, 105 S. Ct. 2399,
2403, 85 L. Ed. 2d 753 (1985); see also, California v.
Cabazon Band of Mission Indians,
480 U.S. 202, 215
, n.
17, 107 S. Ct. 1083, 1091, n.17, 94 L. Ed. 2d 244 (1987).
502 U.S. at 258
. Both sides in the case also framed the proper
inquiry as whether the GAA evinced an unmistakably clear
congressional intent to permit state taxation. Id. at 258-60.
Yakima inquired whether Congress had made its intent to allow state
taxation unmistakably clear and found that Congress had for the ad
valorem tax, but not for the excise tax. Id.(8)
The Burke Act amendment to SS 6 of the GAA was identified
after inquiry as the main source of the unmistakably clear
congressional intent to allow the state ad valorem tax. For
example, in the third paragraph of section II, the Court states:
Yakima County persuaded the Court of Appeals, and urges
upon us, that express authority for taxation of fee-
patented land is found in SS 6 of the General Allotment
Act, as amended [by the Burke Act proviso] (emphasis
added) (footnote omitted). We have little doubt about
the accuracy of that threshold assessment. . . . And we
agree with the Court of Appeals that by specifically
mentioning immunity from land taxation "as one of the
restrictions that would be removed upon conveyance in
fee," Congress in the Burke Act proviso "manifest[ed] a
clear intention to permit the state to tax" such Indian
lands. (emphasis added) (citation omitted).
502 U.S. at 259
.
The Burke Act proviso was also seen as the main source of
statutory ambiguity where the state excise tax levied by Yakima
County was concerned. "While the Burke Act proviso does not
purport to describe the entire range of in rem jurisdiction States
may exercise with respect to fee-patented reservation land, we
think it does describe the entire range of jurisdiction to tax.
Id. at 268 (emphasis added). The Court concluded that the language
of the proviso did not clearly permit a state excise tax, noting
that "the short of the matter is that the General Allotment Act
explicitly authorizes only 'taxation of . . . land,' not 'taxation
with respect to land,' 'taxation of transactions involving land,'
or 'taxation based on the value of land.' Id. at 269. "It is
quite reasonable to say, in other words, that though the object of
the sale here is land, that does not make land the object of the
tax, and hence does not invoke the Burke Act proviso [which only
authorizes the taxation of . . . land']. Id. at 268-69.
The County counters by pointing to one particular sentence for
the strongest evidence that Yakima should be read to mean
alienability equals taxability. The dissent also describes this
sentence as the specific holding of Yakima. The sentence states:
"Thus, when SS 5 rendered the allotted lands alienable and
encumberable, it also rendered them subject to assessment and
forced sale for taxes. Id. at 263-64. As the Sixth Circuit
points out, however:
When read out of context, this statement seems to support
the defendants' claim that any congressional act making
Indian land alienable is sufficient to show a clear
intention to make the land subject to property tax.
Within the context of the Yakima opinion, however, this
statement was merely part of an explanation of the
structure of the General Allotment Act.
Saginaw, 1997 WL 20402, at *2 (citations omitted) (internal
quotation omitted) (emphasis added).
In the very next sentence to the one relied on by the County,
the Court noted that "the Burke Act proviso, enacted in 1906, made
this implication of SS 5 explicit, and its nature more clear. Id.
at 264. The import of this latter sentence is that SS 5 only
implied taxability. This reading is confirmed four sentences later
when the Court states that the Burke Act proviso "reaffirmed for
such prematurely' patented lands what SS 5 of the General
Allottment Act implied with respect to patented land generally:
subjection to state real estate taxes. Id.
The Yakima Court thus understood SS 5 to be only an
implication of taxability, and SS 6, as amended by the Burke Act
proviso, was needed to show the necessary clear intent to tax. No
court has taken the position that an implication alone is
sufficient to provide unmistakably clear congressional intent to
allow state taxation, and Yakima found an unmistakably clear
congressional intent to allow state taxation on land by relying on
both the language and effect of SSSS 5 and 6, as amended, of the
GAA. Without
alienability there would be no taxability, but it does not follow
that alienability alone is sufficient to provide the requisite
unmistakable intent. Something like the language of the Burke Act
proviso in SS 6 is needed to find unmistakably clear intent to
allow state taxation. Id. at 259.
The history of the Burke Act also demonstrates that SS 6, as
amended, is the source of the necessary clear intent to allow state
taxation of land (but not its sale). The proviso was passed in
reaction to the Supreme Court's decision in In re Heff,
197 U.S.
488
(1905), which held that SS 6 of the GAA subjected an Indian
allottee to the personal jurisdiction of the state the moment the
allotment in trust was made. Yakima,
502 U.S. at 264
. Since the
land was still being held in trust by the United States, it was
presumably not taxable by a state even though personal jurisdiction
existed over the titular owner of the land.(9) Heff,
197 U.S. at 509
(distinguishing personal jurisdiction from jurisdiction over the
land). In re Heff thus created a situation where the state could
have jurisdiction over the Indian allottee, but not over his or her
land.
The purpose of the Burke Act legislation was, at least in
part, to clarify the post-Heff reach of state jurisdiction over
Indians receiving allotments. Yakima,
502 U.S. at 264
. The Burke
Act amendment accomplished two things. First, it changed the point
at which state law would apply to an allottee Indian from the time
when a trust patent was first issued to the time when a patent was
issued in fee. Id. Second, it made clear that an allottee could
be subject to taxation upon issuance of a fee patent. Id. at 259.
The Burke Act proviso to SS 6 of the GAA is thus the primary source
of the requisite clear congressional intent to allow state ad
valorem taxes on Indian lands.
The Yakima Court discussed SS 5 and alienability in a single
paragraph of section II of its opinion. That paragraph addressed
the relevance of Goudy v. Meath,
203 U.S. 146
(1906), to the
arguments of the Yakima Nation and the United States as amicus.(10)
Goudy had held that an Indian allottee could be personally liable
for delinquent real estate taxes on fee land allotted under the
GAA. The Goudy Court found liability for two reasons. First, the
Court noted that it would be strange for Congress to remove
restrictions on alienation of the land and not subject it to
taxation. Id. at 149. Second, the Court found that the language
of SS 6 extended the laws of the state or territory to the Indian
allottee, including the state tax laws. Id. at 149-50.
Yakima characterized the Goudy decision as one in which
alienation was of central significance to the finding of liability.
502 U.S. at 263
. The Court never suggested that Goudy relied
exclusively on the alienability of the land. Instead, the Goudy
decision premised liability on both the alienability of the land
and the specific language of SS 6 of the GAA. Goudy,
203 U.S. at
149
-50. Goudy is therefore analogous to Yakima where the Court
relied on both the express language of SS 6, as amended by the
Burke Act proviso,(11) and the SS 5 alienability of the land, which
created the necessary conditions for taxation.
In sum, the County's reading of Yakima conflicts with other
language in the opinion itself, and with strong Supreme Court
precedent espousing an unmistakably clear congressional intent
rule. While the Court considered alienability as one factor
contributing to the taxability of the land, alienability alone was
not sufficient to allow state taxation. The express language of
the Burke Act proviso in SS 6 of the GAA was needed to make
sufficiently clear the intent of Congress to allow state ad valorem
taxes.
III.
The parcels of land involved in this case were alienated from
tribal control by the Nelson Act and subsequently reacquired by the
Band in fee. State taxation of Indian land is not authorized
unless Congress "has made its intention to do so unmistakably
clear." Yakima, at 258, quoting Montana v. Blackfeet Tribe,
471
U.S. at 765
. The question in this case is whether the Nelson Act
evinces an "unmistakably clear congressional intent to allow an ad
valorem tax on these parcels.
Eight of the 21 lots were sold as pine lands or distributed as
homestead lands under SS 4, SS 5, or SS 6 of the Nelson Act. These
sections of the Act, unlike SS 3, did not incorporate the GAA or
include any mention of an intent to tax lands distributed under
them which might become reacquired by the Band in fee. These
parcels are therefore not subject to state taxation.
Section 3 of the Nelson Act allotted certain lands on the
Leech Lake reservation by incorporating the mechanisms of the GAA.
The Band argues that the GAA itself does not evince an unmistakably
clear intent to allow ad valorem taxes on tribally held land
because SSSS 5 and 6 of the GAA only address the allotment of land
to individual Indians, but that argument cannot be reconciled with
the holding of the Supreme Court in Yakima. Yakima held(12) that
after the addition of the Burke Act proviso, lands allotted under
the GAA are subject to state ad valorem taxes when they are
patented in fee.
502 U.S. 266
-70. This is true for both lands
allotted to individual Indians and lands subsequently reacquired by
a tribe. See id. at 256, 270. For these reasons the land which
passed under SS 3 of the Nelson Act is taxable if it was patented
after the passage of the Burke Act proviso in 1906, but not if it
were patented before then.(13)
In sum, the judgment in favor of the County is vacated. The
district court is affirmed in its determination that the County may
apply its ad valorem tax to land allotted under SS 3 of the Nelson
Act, unless any parcel is shown to have been patented in fee before
the passage of the Burke Act. The judgment is reversed as to the
parcels which passed under the pine lands or homestead sections of
the Act and the case is remanded for consideration of that portion
of the Band's claim for refunds which is still relevant and for any
necessary proceedings consistent with this opinion.
MAGILL, Circuit Judge, concurring in part and dissenting in part.
I concur in section III of the majority opinion to the extent
that it affirms the district court's conclusion that the allotted
lands in this case were properly taxed by Cass County. I
respectfully dissent from the remainder of the majority's decision.
In 1993 Cass County, Minnesota, (County) began imposing ad
valorem taxation on lands held in fee simple by the Leech Lake Band
of Chippewa (Band), a federally recognized Indian tribe, on the
Leech Lake Reservation.(14) The Band brought this action in the
district court seeking injunctive relief from future taxation by
the County and a judgment for the $64,000 in taxes which it has
paid, under protest, to the County. Relying on County of Yakima v.
Yakima Indian Nation,
502 U.S. 251
(1992), the district court held
that the taxation had been proper, and granted summary judgment to
the County. I would affirm.
In Goudy v. Meath,
203 U.S. 146
(1906), the United States
Supreme Court held that alienable lands held by a member of the
Puyallup Tribe were subject to state taxation. The Court reasoned:
That Congress may grant the power of voluntary sale,
while withholding the land from taxation or forced
alienation, may be conceded. . . . But while Congress may
make such provision, its intent to do so should be
clearly manifested, for the purpose of the restriction
upon voluntary alienation is protection of the Indian
from the cunning and rapacity of his white neighbors, and
it would seem strange to withdraw the protection [of the
restriction on alienation] and permit the Indian to
dispose of his lands as he please, while at the same time
releasing it from taxation. . . . Among the laws to which
the plaintiff as a citizen became subject were those in
respect to taxation. His property, unless exempt, became
subject to taxation in the same manner as property
belonging to other citizens, and the rule of exemption
for him must be the same as for other citizens--that is,
that no exemption exists by implication but must be
clearly manifested.
Id. at 149. Relying on this reasoning, the United States Supreme
Court in Yakima County held that lands originally allotted to
Yakima Indians pursuant to the General Allotment Act of 1887, also
known as the Dawes Act, ch. 119, 24 Stat. 388, codified in part as
amended at 25 U.S.C. SS 331, and which were subsequently held by
individual Indians and the tribe in fee simple were subject to
county ad valorem taxation. The Yakima County Court specifically
held that
when SS 5 [of the General Allotment Act] rendered the
allotted lands alienable and encumberable, it also
rendered them subject to assessment and forced sale for
taxes.
507 U.S. at 263
-64.
In Lummi Indian Tribe v. Whatcom County, Wash., 5 F.3d 1355
(9th Cir. 1993), cert. denied, 114 S. Ct. 2727 (1994), the Ninth
Circuit accepted this clear pronouncement by the Supreme Court that
alienability of land allowed taxation of the land, and held that:
The logic propounded by the Goudy Court and approved by
Yakima Nation requires an Indian, even though he receives
his property by treaty, to accept the burden as well as
the benefits of land ownership. This proposition may be
hard to square with the requirement, recently approved by
the Yakima Nation Court, that Congress' intent to
authorize state taxation of Indians must be unmistakably
clear. The strength of the language in Yakima Nation,
however, makes virtually inescapable the conclusion that
the Lummi land is taxable if it is alienable.
Id. at 1358 (allowing county taxation of alienable land held by
tribe). But see United States on Behalf of Saginaw Chippewa Tribe
v. Michigan, 1997 FED App. 0026P (6th Cir. Jan. 22, 1997)
(rejecting Lummi court's interpretation of Yakima County and
holding that alienability does not necessarily allow taxation).
Rather than accept the clear rule propounded by the Yakima
County Court that alienability allows taxation, the majority
declares that the homestead lands and pine lands in this case are
exempt from taxation, and engages in a strained analysis of the
Yakima County decision that eviscerates its holding. For example,
because the Yakima County Court supported its conclusion that the
land in question was taxable by noting that "[t]he Burke Act
proviso, enacted in 1906, made this implication of SS 5 explicit,
and its nature more clear,"
507 U.S. at 264
, the majority concludes
that the Burke Act analysis was necessary to the Yakima County
Court's conclusion.(15) See Maj. Op. at 12-13. The majority insists
that SS 5's grant of alienability did not allow taxation, asserting
that "[n]o court has taken the position that an implication alone
is sufficient to provide unmistakably clear congressional intent to
allow state taxation . . . ." Id. at 13. This statement simply
disregards the Yakima County Court's treatment of SS 5, and is
strongly reminiscent of the Yakima County dissent:
The majority concedes that SS 5 only "implied" this
conclusion. In my view, a "mere implication" falls far
short of the "unmistakably clear" intent standard.
507 U.S. at 273
(Blackmun, J., dissenting) (citations omitted).(16)
While I can understand the majority's disinclination to accept
Yakima County's holding, it is nevertheless binding precedent, and
should have been followed in this case. Under the clear language
of Yakima County, alienability of land allows taxation of land.
Because all of the lands in this case are fully alienable by the
Band,(17) the district court properly followed the Supreme Court's
clear holding in Yakima County and held that the lands are subject
to taxation by the County.
I agree with the majority's conclusion in section III of its
opinion that the lands originally allotted to Indians are taxable
by the County. I disagree, however, with its conclusion that the
pine lands and homestead parcel are not. Accordingly, I would
affirm the district court's judgment in its entirety.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
**FOOTNOTES**
(1)
Section 5 of the GAA provides the actual authorization for
issuing fee patents to individual Indian allottees. Section 5 of
the GAA states, in part:
[A]t the expiration of said [trust] period the United
States will convey [the allotted lands] by patent to said
Indian . . . in fee, discharged of said trust and free of
all charge or incumbrance whatsoever. . . . And if any
conveyance shall be made of the lands set apart and
allotted as herein provided, or any contract made
touching the same, before the expiration of the time
above mentioned, such conveyance or contract shall be
absolutely null and void. . . .
25 U.S.C. SS 348 (1996).
(2)
After the Burke Act amendments, SS 6 provides in pertinent
part:
At the expiration of the trust period and when the lands
have been conveyed to the Indians by patent in fee, . .
. then each and every allottee shall have the benefit of
and be subject to the laws, both civil and criminal, of
the State or Territory in which they may reside. . . .
Provided, That [sic] the Secretary of the Interior may,
in his discretion, and he is authorized, whenever he
shall be satisfied that any Indian allottee is competent
and capable of managing his or her affairs at any time to
cause to be issued to such allottee a patent in fee
simple, and thereafter all restrictions as to sale,
incumbrance, or taxation of said land shall be removed.
25 U.S.C. SS 349 (1996).
(3)
Section 3 of the Nelson Act incorporated the Dawes Act.
Nelson Act, ch. 24, 25 Stat. 642, 643 (1889)
(4)
Although judgment was entered in favor of the County, the
court also provided an "alternative holding" under which the pine
land and homestead parcels would be found not taxable since only SS
3 of the Nelson Act incorporated the GAA. 908 F. Supp. at 697.
The district court indicated that this would be its conclusion if
Yakima should be read as reaffirming the long-standing principle
that Congress must provide unmistakably clear intent to permit
state taxation of Indian lands.
(5)
In contrast, Cass County has only imposed an ad valorem tax.
(6)
As discussed above, SS 5 of the GAA provides that after a 25
year period during which the United States would hold allotments in
trust for individual Indians, fee patents would be issued to the
allottees. Section 6 of the GAA provides that the individual
Indian allottee with a fee patent would be considered a citizen
subject to the laws of the state or territory in which he or she
resided.
(7)
The scope of the Yakima remand was as follows:
The Yakima Nation contends it is not clear whether the
parcels at issue in these cases were patented under the
General Allotment Act, rather than under some other
statutes in force prior to the Indian Reorganization Act
(citations omitted). We leave for resolution on remand
that factual point, and the prior legal question whether
it makes any difference.
502 U.S. at 270
.
(8)
The Band argues that even if alienability were always to
equal taxability, the lands in this case would not be taxable
because they are not alienable under the Non-Intercourse Act, 25
U.S.C. SS 177 (1996). Since this case turns on whether an
unmistakably clear congressional intent has been expressed to allow
state taxation of the parcels, it is not necessary to consider any
issue related to the Non-intercourse Act.
(9)
In the debates preceding the enactment of the Burke Act, Rep.
Curtis stated:
The main advantage of [the Burke Act] is that under [its
decision in In re Heff] the Supreme Court has held that
after a patent has issued [in trust], notwithstanding the
Indian does not secure a title in fee for twenty-five
years, he becomes a citizen of the United States, and
that State courts have full jurisdiction over him, but
not over his property. . . . Now, this bill, if enacted,
will leave him under the control of the [federal]
Government until he secures a patent conveying the fee .
. . .
40 Cong. Rec. 3599 (1906).
(10)
The Court discussed alienability and Goudy to distinguish
Moe v. Confederated Salish and Kootenai Tribes,
425 U.S. 462
(1976)
, from the case of Yakima Nation. Moe had held that SS 6 of
the GAA did not give a state general personal jurisdiction over
Indians within a reservation.
425 U.S. at 478
. In Yakima the
tribe and the United States argued that Moe meant a state could not
impose an ad valorem tax on Indian land,
502 U.S. at 262
, but the
Court felt that this interpretation of Moe amounted to an implied
repeal of SS 6 and it was not willing to read Moe that broadly.
Id. Instead the Court concluded that, as in Goudy, a contributing
factor to the taxability of the land was that it had been made
alienable under SS 5. The Yakima Court raised Goudy and
alienability, not to depart from its precedent requiring an
unmistakably clear congressional intent to allow state taxation,
but in order to distinguish Moe and to demonstrate that SS 6
remained a viable source of unmistakable intent for in rem taxing
jurisdiction.
(11)
The district court suggested that the Burke Act amendment
reaffirmed the Supreme Court decision in Goudy. That amendment
actually predated the Goudy decision, however. The Burke Act was
passed on May 8, 1906, and Goudy was decided on November 19, 1906.
Although the Goudy opinion does not specifically mention the
language of the Burke Act proviso, that language was presumably
available for the consideration of the Court.
(12)
The Court specifically stated:
We hold that the General Allotment Act permits Yakima
County to impose an ad valorem tax on reservation land
patented in fee pursuant to the Act, but does not allow
the county to enforce its excise tax on the sale of such
land.
502 U.S. at 270
. This explicit statement of the holding follows
the Court's discussion in section III describing how the language
of the Burke Act proviso provides the unmistakably clear
congressional intent to allow the state ad valorem tax, but not the
excise tax. The dissent locates what it views as the holding
elsewhere in a paragraph discussing the Court's previous decision
in Goudy. We follow the explicit holding as stated by the Supreme
Court.
(13)
In theory, every parcel in dispute here should have been
patented in fee after 1906. The Nelson Act was passed in 1890.
Given a twenty-five year trust period, the earliest a fee patent
should have issued was 1915. The administration of the allotment
policy was not always smooth or consistent, however. See Felix S.
Cohen, Handbook of Federal Indian Law 132-34 (1982) (describing
"piecemeal process" of amending and developing the allotment
program after the passage of the GAA). The record does not reveal
when these parcels were patented in fee, and it is possible, if not
likely, that some were patented before 1906. See, e.g., United
States v. Thurston County, Neb., 143 F. 287, 288 (8th Cir. 1906)
(noting 1902 amendment to the GAA allowed Indian devisee to sell or
convey inherited allotment before expiration of trust period);
Nat'l Bank of Commerce v. Anderson, 147 F. 87, 90 (9th Cir. 1906)
(same); see also LeAnn Larson LaFave, South Dakota's Forced Fee
Indian Land Claims: Will Landowners be Liable for Government's
Wrongdoing?, 30 S. D. Law Rev. 59, 65 & n.42 (1984) (noting
congressional practice of issuing premature fees through special
legislation before 1906); Delos Sacket Otis, The Dawes Act and the
Allotment of Indian Lands 150-51 (F. Prucha ed., University of
Oklahoma Press 1973) (same).
(14)
This case involves twenty-one parcels of land which were
originally held in common by the Band under aboriginal title and
which were subsequently held in trust by the United States. In
1889 Congress enacted the Nelson Act, ch. 24, 25 Stat. 642, which
allotted land held in common by the Band to individual Indians.
Thirteen of the parcels in this case were so allotted and
eventually became alienable. The Nelson Act also disposed of
surplus lands, including lumbering lands (pine lands) and
homesteads, to non-Indians. Seven of the parcels were originally
sold as pine lands, and the remaining parcel was originally sold as
a homestead. The twenty-one parcels were reacquired by the Band
after 1980. Some of the land is undeveloped, while there are
tribal facilities on other parcels. Although the Band successfully
converted other reacquired lands--including a casino--to trust
status, see Summ. J. Tr. at 9; see also 25 U.S.C. SS 465 (statutory
procedure for placing lands in trust with the United States), the
title to the twenty-one parcels at issue in this case are held by
the Band in fee simple.
(15)
It is clear that the Yakima County Court's analysis of the
Burke Act was nothing more than additional support for its holding
that alienability resulted in taxability. As the Court stated:
[T]he [Burke Act] proviso reaffirmed for such
"prematurely" patented land what SS 5 of the General
Allotment Act implied with respect to patented land
generally: subjection to state real estate taxes.
Yakima County,
507 U.S. at 264
(emphasis added). I note that, as
a matter of plain logic, a "reaffirmation" supports, rather than
controls, a conclusion. In addition, rather than being limited by
the Burke Act's provision for the taxation of only prematurely
patented land, the Yakima County Court allowed taxation over all
land allotted under the General Allotment Act. See id. at 270.
(16)
In reaching its decision to disregard Yakima County's clear
holding, the majority also relies on the Yakima County Court's
remand for a factual determination of "whether the parcels at issue
in these cases were patented under the General Allotment Act,
rather than under some other statutes in force prior to the Indian
Reorganization Act," and the legal determination of "whether it
makes any difference."
507 U.S. at 270
. I suggest that this
remand was either an effort to avoid creating needless dicta, or a
reference to the unusual situation noted in Goudy, where Congress
could explicitly exempt land from taxation, despite making it
alienable. See Goudy,
203 U.S. at 149
. In any event, I do not
believe that the remand, particularly considering the phrasing of
"whether it makes any difference," can override the clear statement
that a statute making land alienable also makes it taxable.
(17)
Before both the district court and this appellate panel, the
Band argued that the Nonintercourse Act, 25 U.S.C. SS 177, limited
the alienability of all lands held by an Indian tribe, including
recently acquired lands held in fee simple. The district court
rejected this argument, see Order at 14, as have most courts which
have considered it. See, e.g., Lummi Indian Tribe v. Whatcom
County, Wash., 5 F.3d 1355, 1359 (9th Cir. 1993) ("No court has
held that Indian land approved for alienation by the federal
government and then reacquired by a tribe again becomes
inalienable. To the contrary, courts have said that once Congress
removes restraints on alienation of land, the protections of the
Nonintercourse Act no longer apply. Moreover, the statutory
authorization for the sale of Indian land following proper
government approval makes no mention of reimposing restrictions
should a tribe reacquire the land. Rather, the broad statutory
language suggests that, once sold, the land becomes forever
alienable." (citations omitted)), cert. denied, 114 S. Ct. 2727
(1994). The majority has declined to consider this issue. See
Maj. Op. at 12 n.8.