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  • October 03, 2022

    Reservation Parcels Owned by Tribe Not Subject to State Tax, Despite Prior Alienation

    The U.S. Court of Appeals for the Seventh Circuit has ruled that parcels of reservation land owned by American Indians are not subject to state taxation, even though they were subject to state taxation when previously owned by non-Indians.

    Jeff M. Brown

    A Document Titled Property Tax Appeal And A Gavel, Along With A Law Book And A Pair Of Reading Glasses, On A  Desk

    Oct. 3, 2022 – The U.S. Court of Appeals for the Seventh Circuit has ruled that parcels of reservation land owned by American Indians are not subject to state taxation, even though they were subject to state taxation when previously owned by non-Indians.

    In Lac Court Oreilles Band of Lake Superior Chippewa Indians of Wisconsin v. Evers, No. 21-1817 (August 15, 2022) the Seventh Circuit Court of Appeals held that because the parcels were made alienable by a treaty rather than a congressional act, the original tax immunity conferred by the treaty applied to the tribal members who currently own the parcels.  

    Land Rights Under Treaty

    Four Ojibwe tribal members sued in federal court to challenge the State of Wisconsin’s assessment of property taxes against parcels of reservation land they owned. Each parcel is subject to the 1854 Treaty of La Pointe.

    Jeff M. Brown Jeff M. Brown is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6126.

    The Treaty of La Pointe created four Ojibwe reservations in northern Wisconsin. The treaty specified that the reservations would constitute permanent homes for the tribes. The treaty also authorized the U.S. president to allot 80-acre tracts of reservation land to individual tribal members.

    Under the terms of the treaty, a member seeking to sell his or her allotment was required to obtain the consent of the president. Once the president gave consent and an allotment was sold, it became freely alienable.

    Each of the four parcels in the case had been allotted with the consent of the president and become freely alienable. Each parcel was eventually sold to a non-tribal member before being purchased by a tribal member.

    Congressional Intent?

    Before the U.S. District Court for the Western District of Wisconsin, the state argued that Congress had authorized it to collect property taxes on the four parcels by enacting the General Allotment Act in 1887.

    Under that law, the president was authorized to allot parcels of reservation land to individual tribal members. Each parcel would be held in trust for 25 years, then become freely alienable.

    The tribal members argued that Congress had not authorized the four parcels to be taxed, because the parcels weren’t subject to the General Allotment Act. But the state argued that because the parcels in question were alienated after that act was enacted in 1887, Congress intended that they would be subject to state taxation.

    The district court ruled that nothing in the General Allotment Act extinguished the tax immunity granted to Wisconsin Ojibwe tribes under the Treaty of La Pointe.

    However, the district court concluded that under the holding of a 1998 U.S. Supreme Court case, the sale of the parcels to non-Indians severed the link between the land and the Treaty of La Pointe, and the parcels were subject to property tax.

    The district court granted the state’s motion for summary judgment. The tribal members appealed.

    Treaty, Not Congress, Alienated Parcels

    In his opinion for a three-judge panel, Judge Michael Scudder noted that no other federal circuit court of appeals had considered the question raised by the appeal.

    Scudder explained that under U.S. Supreme Court precedent, it was clear that when Congress acts to make reservation land freely alienable, it intends that state and local governments can tax that land.

    “But here everyone agrees that Congress never acted to make the Ojibwe lands in question freely alienable,” Judge Scudder wrote. “Rather, the land became alienable through the process established in the 1854 Treaty.”

    The relevant precedent, Scudder explained, made clear that state taxation of Indian land is allowed only where 1) expressly authorized by Congress or 2) the tribe has ceded jurisdiction over the lands.

    Judge Scudder pointed out that the state conceded that neither condition was met.

    However, he wrote, the district court interpreted a different U.S. Supreme Court decision to mean that “once the land became taxable in the hands of that first non-Indian owner … the parcel could not return to tax-exempt status upon its reacquisition by an Ojibwe tribal member.”

    But the lands at issue had been made alienable by an act of Congress, under the U.S. Supreme Court decision relied upon by the district court.

    That act, Judge Scudder wrote, “permanently extinguished the land’s tax immunity the moment the President signed the statute into law – regardless of who actually owned the land thereafter.”

    The four parcels in the instant case had never been alienated by Congress, Scudder pointed out. Rather, he explained, they were alienated under the terms of the 1854 treaty.

    “In the final analysis,” Judge Scudder wrote, “that distinction makes all the difference.”

    Question of Exclusive Use

    The state also argued that two U.S. Supreme Court decisions regarding tribal jurisdiction over non-Indians living on reservation lands supported their argument.

    Those decisions hold that when reservation land passes into unrestricted fee ownership, it’s no longer set aside for exclusive Indian use. The state argued that the alienation of the four parcels was such a removal from exclusive Indian use, and therefore there was no barrier to the state taxing the parcels.

    Those two decisions, Judge Scudder pointed out, involved lands that were alienated by Congress under the terms of the General Allotment Act.

    “But the case before us is not about tribal regulation of non-Indians,” Judge Scudder wrote. “Nor, as we have underscored, does the General Allotment Act apply to the Ojibwe lands in question—a conclusion the State does not challenge on appeal.”

    Furthermore, Scudder explained, U.S Supreme Court precedent mandates that the question courts must ask is “‘who bears the legal incidence of a tax.’”

    “What that formulation makes clear is that the relevant inquiry occurs in the present tense: who bears the legal incidence of the tax today,” Judge Scudder wrote. “In our case, all the relevant parcels of tribal land are presently held by Ojibwe members.

    “Each of the cases [relied upon by the state], however, involved reservation lands owned at the time by non-Indians. The cases thus say nothing about what would happen to the lands were they to be reacquired by the tribes.”

    Even if those cases were to be extended to the four Ojibwe parcels, Scudder wrote, “the unbroken promise of the 1854 Treaty would supersede that common-law holding.

    “Put simply, all of the lands on the Ojibwe reservations in this case remain their ‘home’ despite their temporary alienation to non-Indians,” Judge Scudder wrote.

    “Nothing in the record reflects anything close to the sort of out-and-out abandonment of a reservation that might lead us to conclude otherwise.”




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    WisBar Court Review, published by the State Bar of Wisconsin, includes summaries and analysis of decisions from the Wisconsin Supreme Court, the Wisconsin Court of Appeals, and the U.S. Court of Appeals for the Seventh Circuit, as well as other court developments. To contribute to this blog, contact Joe Forward.

    Disclaimer: Views presented in blog posts are those of the blog post authors, not necessarily those of the Section or the State Bar of Wisconsin. Due to the rapidly changing nature of law and our reliance on information provided by outside sources, the State Bar of Wisconsin makes no warranty or guarantee concerning the accuracy or completeness of this content.

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