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White Earth Band of Chippewa v. County of Mahnomen: INDIAN | TAX | CIVIL PROCEDURE - abstention, 11th Amendment questions; WELSA-acquired casino property not subject to property taxation

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
The White Earth Band of
Chippewa Indians, on its own
behalf and its wholly‐owned
enterprise, the Shooting Star Casino,
Plaintiffs, MEMORANDUM OPINION
AND ORDER
v. Civ. No. 07‐3962 (MJD/RLE)
County of Mahnomen, Minnesota et al.,
Defendants.
___________________________________________________________________
James T. Hamilton and Kevin C. Quigley, Hamilton Quigley & Twait PLC,
for and on behalf of Plaintiffs.
Scott G. Knudson and Daniel J. Supalla, Briggs and Morgan, P.A., for and
on behalf of Defendants.
____________________________________________________________________
INTRODUCTION
This is an action for declaratory and injunctive relief and for money
damages in response to the Defendants alleged unlawful actions to assess and
collect property taxes under state authority upon tribally owned lands located
within the exterior boundaries of the White Earth Band Reservation. Am. Comp.,
1.
1In response to the Bands motion for summary judgment [Doc. No. 52], which sought
judgment only as to counts II, III and IV, the County filed its opposition and cross motion for
summary judgment [Doc. No. 85]. In its cross motion, the County seeks summary judgment as
to all counts asserted in the Complaint. As the cross motion was filed on December 1, 2008, and
addressed counts not covered in the Bands motion for summary judgment, the Band did not
have enough time to respond to the Countys motion prior to the hearing date on December 18,
2
Plaintiffs, The White Earth Band of Chippewa Indians (hereinafter the
Band) purchased certain parcels of land in 1991 upon which the Band operates
gaming operations at the Shooting Star Casino (the Casino Property). Id. 1,
8. It is the Bands position that the Casino Property was purchased through
funds made available in the White Earth Lands Settlement Act (WELSA), Pub.
L. 100‐153, Act of Nov. 5, 1987, 101 Stat. 886 (1986). As such, the Casino Property
is not subject to state taxation. The Band seeks the refund of such real property
taxes assessed and collected on the Casino Property for the tax years 1992
through 2005. Id. 1. The Defendants are Mahnomen County and its Treasurer,
Auditor, Assessor and Commissioners (collectively the County).
The matter is before the Court on cross motions of the parties. The County
moves to dismiss on Eleventh Amendment or abstention grounds. The Band
moves for summary judgment as to their claims for declaratory and injunctive
relief, and the County has cross moved for summary judgment as to those
claims.1
2008. Accordingly, the Court will not address the Countys motion with respect to the IGRA
and refund claims ‐ counts I and V.
3
BACKGROUND
The White Earth Reservation (Reservation) was established in 1867
pursuant to the Treaty with the Chippewa of the Mississippi, Mar. 19, 1867, 16
Stats. 719, Ratified Apr. 8, 1867, Proclaimed Apr. 18, 1867. (Quigley Aff., Ex. Nos.
1 and 2.) When established, lands within the Reservation were not subject to
state property taxation. Shortly thereafter, however, the lands were made subject
to the terms of the Indian General Allotment Act of 1887 (IGAA), 24 Stat. 388,
25 U.S.C. 331, by passage of the Nelson Act of January 14, 1889 and the Clapp
Amendments of 1904 and 1906.
The IGAA established the national policy of breaking up Indian
reservations by allotting parcels of the reservation to individual Indians.
Manypenny v. United States, 948 F.2d 1057, 1060 (8th Cir. 1991). The Nelson Act
applied the allotting policy to the Reservation providing each full or mixed‐blood
allottee a trust patent under which the United States would hold the allotted land
for twenty‐five years before conveying title to the allottee in fee. Id. Over the
next twenty years, the United States issued over 8,000 allotments. Pursuant to
4
the Indian Reorganization Act of 1934, 48 Stat. 984 (1934) (codified at 25 U.S.C.
462 (1988)), all trust periods then in existence were extended indefinitely. Id. The
Clapp Amendment, enacted in 1906, purported to remove all restrictions on the
sale of land allotted to adult mixed‐blood Indians. Id. Conflicts over the proper
interpretation of the Clapp Amendments led to many disputed land transactions.
Id. Thereafter, Reservation land holdings plummeted from approximately
830,000 to 57,000 acres. Id.
In State of Minnesota v. Zay Zah, 259 N.W.2d 580 (Minn. 1977), the
Minnesota Supreme Court was asked to review a quiet title action with respect to
real estate located within the Reservation. The court ultimately determined that
based upon applicable federal Indian law, land held in trust by a member of the
tribe was not subject to state property taxation, unless the patent owner applies
for, and receives from the United States, a fee patent. Id. at 589. As a result, a
non‐Indian who had obtained such lands within the Reservation through
forfeiture proceedings lost title to such lands.
Following the Zay Zah decision, the Band asserts near panic occurred
among non‐Indian land owners on the White Earth Reservation, causing
significant tension between Indians and non‐Indians. See generally, 131 Cong.
5
Rec. S17480‐01 (Quigley Aff., Ex. No. 13); see also, Manypenny, 948 F.2d at 1059‐
62. To restore order following the Zay Zah decision and the uncertainties that
arose due to the applicable federal laws, Congress enacted WELSA to settle
unresolved claims relating to certain allotted Indian lands on the White Earth
Indian Reservation, to remove clouds from the titles to certain lands and for other
purposes. WELSA, Pub. Law 99‐264, 100 Stat. 61 (1986); Manypenny, at 1061.
WELSA was meant to address claims on behalf of Indian allottees or heirs and
the White Earth Band involving substantial amounts of land within the White
Earth Reservation in Minnesota [that] are the subject of existing and potential
lawsuits involving many and diverse interests in Minnesota, and are creating
great hardship and uncertainty for government, Indian communities and non‐
Indian communities. WELSA 2 (1).
For example, through WELSA, titles were settled by retroactively
ratifying land transactions, extinguishing claims, and authorizing compensation
to original allottees or their heirs from whom title was taken or transferred.
Manypenny, at 1061, WELSA 6, 8. In addition, WELSA provided for the
establishment of a ,600,000 grant to the Band referred to as The White Earth
Economic Development and Tribal Government Fund and required the State of
6
Minnesota to donate 10,000 acres of land to the United States to be held in trust
for the Band. WELSA 12(b), 10.
WELSA further provides that any lands within the exterior boundaries of
the reservation acquired through this fund shall be held in trust by the United
States. Such lands shall be deemed to have been reserved from the date of the
establishment of said reservation and to be part of the trust land of the White
Earth Band for all purposes. WELSA 18.
The Band alleges that after it acquired the Casino Property with WELSA
funds, the Band negotiated gaming compacts with the State of Minnesota
pursuant to the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. 2701 et
seq. (Compacts). The Compacts did not provide for the payment of any taxes
on any gaming activity consistent with IGRA. Id. Thereafter, in 1995, the Band
applied to the federal government to put the Casino Property into trust. At that
time, the Band asserts it also underwent significant crises within its tribal
government, which resulted in governmental dysfunction and turmoil from 1996
through 2001. Am. Comp. 12. As a result of this dysfunction, the trust
application was not vigorously pursued. Id.
7
After the Band purchased the property in 1991, the County treated the
Casino Property as unrestricted fee land, and assessed property taxes thereto.
After construction of the Shooting Star Casino on the Casino Property, the
assessed property taxes significantly increased due to the corresponding increase
in the property values. Id. 13.
In 2002, the Band again pursued its trust application. The Bureau of Indian
Affairs (BIA) eventually determined that the White Earth Band used White
Earth Land Settlement Act funds, and/or earnings of the funds, for the purchase
of the fee parcels for the Shooting Star Casino in Mahnomen County, Minnesota.
Plaintiffs Ex. 1 (Bates No. 000199). A Notice of Intent to take the Casino Property
into trust as a mandatory acquisition was forwarded to the affected governments.
Id. 15.
The State of Minnesota properly appealed this decision to the Interior
Board of Indian Affairs (IBIA). The County, however, did not file a timely
appeal.
By Order dated July 3, 2008, the IBIA affirmed the decision of the BIA. The
IBIA specifically found that the record supported the Regional Directors
decision, which included the Office of Indian Gaming Managements (OIGM)
2There is another action pending before this Court, Mahnomen County v. Bureau of
Indian Affairs, et al., Civil No. 08‐5180, in which the County challenges the BIAs decision to put
the Casino Property into trust. By Memorandum Opinion issued contemporaneously with this
Memorandum Opinion, the Court has affirmed the decision of the BIA and dismissed the
Countys Complaint.
8
analysis of the financial documents, together with supporting documents. State
of Minnesota v. Acting Midwest Regional Director, 47 IBIA 122, 127 (2008)
(Quigley Aff., Ex. No. 5.)2
The Band asserts that the payments of property taxes since 1992 have been
a significant and severe hardship. Am. Comp. 17. In 2006, after receiving the
BIAs decision, the Band withheld further payment of property taxes, placing
those amounts in escrow. Id. The Band commenced a federal mediation process
with the County, but no settlement has been reached. Id. 18.
On February 2, 2007, the Minnesota State District Court for the Ninth
District issued a Notice of Delinquent Taxes. The Notice provided that the listed
property is subject to forfeiture because of delinquent taxes. Id. 20. The Band
responded pursuant to Minn. Stat. 278.01. Venue was transferred to the
Minnesota Tax Court (Tax Court Action). The judge in the Tax Court Action
agreed to determine the sufficiency of the BIAs decision that: 1) WELSA funds
were used to purchase the Casino Property; 2) if such funds were used, the status
9
of lands under mandatory acquisition ‐ that is whether such acquisition creates a
restriction on land that preempts state taxation; and 3) whether IGRA preempts
the imposition of property taxes on tribal lands used for gaming purposes. Id.
21. Because the Band believed the issues identified by the Tax Court for
resolution are exclusively federal, and because it believed it to be in the best
interests of the parties, the Band dismissed the Tax Court Action and thereafter
filed this action. Id. 22. The tax delinquency proceeding initiated by the
County in state district court was not affected by the Band withdrawing its
petition in the Tax Court Action. (Larson Aff., Exs. E and F.)
In the Amended Complaint, the Band seeks declaratory relief, injunctive
relief and money damages in the form of disgorgement and replevin of all real
estate property taxes wrongly assessed and collected by Defendants on the
Casino Property since 1991, plus statutory interest, costs, fees and other such
relief as the Court determines. Am. Comp. 42.
I. Countys Motion to Dismiss on Eleventh Amendment or
Abstention Grounds
A. Eleventh Amendment
The Eleventh Amendment provides, [t]he Judicial power of
the United States shall not be construed to extend to any suit in
10
law or equity, commenced or prosecuted against one of the
United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State. The United States Supreme Court
has held that, absent waiver by the State or valid congressional
override, the Eleventh Amendment bars a damages action against
a State in federal court. Kentucky v. Graham, 473 U.S. 159, 169
(1985). The Eleventh Amendment applies to suits by Indian tribes against a
State. In re State of New York, 256 U.S. 490, 500 (1921). It also applies to bar a
suit in which the State is not named as a defendant, but where the judgment will
necessarily be paid out of the state treasury. Edelman v. Jordan, 415 U.S. 651, 663
(1974).
1. Money Damages ‐ Effect on State Treasury
The County argues that although it is not a state agency, the Eleventh
Amendment applies to bar the Bands refund claim because a portion of the
money damages sought, the refund of all property taxes paid, will come from the
state treasury given the design and operation of Minnesotas property tax laws.
Minnesota law provides what property is taxed, how taxes are assessed,
how much can be collected, how taxes are collected from property owners and
how the taxes are allocated and distributed. See Minn. Stat. 271.01, subd. 5
11
(defining tax laws). The County argues that pursuant to Minnesota law, any
refund the Band seeks would be charged to the state and other taxing districts in
proportion to the amount of their respective taxes included in the levy. Minn.
Stat. 278.12. Only where the levy by a particular authority is illegal would that
taxing authority be solely liable. Id. In this case, however, the Band is
challenging the assessment of any and all property taxes on the Casino Property,
therefore no taxing authority could retain the tax. It therefore follows that if the
Band were to succeed in its claims, the state treasury would be affected because
beginning in 2002, the State of Minnesota imposed a general levy on commercialindustrial
property. Since this levy was imposed, the State has received
approximately one‐third of all property tax payments that the County Auditor
and County Treasurer have collected from the Band. As a result, the Band has
paid ,150,455 to the State in the form of property taxes through 2005. Since any
judgment in the Bands favor will be satisfied in part by the State, the County
argues this suit is barred by the Eleventh Amendment.
The Band responds that the Eleventh Amendment does not bar its claim
for money damages because the State of Minnesota has not been named as a
defendant, and that no claim has been made for a refund of taxes paid to the
12
State. The specific levy charged each year by the County on the Casino Property
is listed on each years tax statement, so the amount of refund from the County
would be easily ascertainable. In addition, the Band asserts it is not seeking a
refund under Minn. Stat. 278. Rather, the Band is seeking unjust enrichment
damages from the County on the theory that the property taxes assessed and
levied against the Casino Property violated federal law. It is the Bands position
that the federal courts have jurisdiction to craft such relief as may be appropriate
under the circumstances.
Despite its characterizations to the contrary, it is clear that the Band is
seeking a tax refund. In the Amended Complaint, the Band clearly asserts that it
seeks the refund of such real property taxes wrongfully assessed and collected
on the Casino Property for the tax years 1992 through 2005. Am. Comp. 1. In
Count V, the Band has asserted that it is entitled to disgorgement and replevin
of all real property taxes wrongly assessed and collected by Defendants on the
Casino Property since 1991, plus statutory interest, costs, fees and other such
relief as the Court determines. Am. Comp. 42 (emphasis added.) Because it is
clear that the Band is seeking a refund of property taxes assessed and collected
with respect to the Casino Property, the question becomes whether Minnesota tax
13
laws provide the exclusive remedy for the Bands claims for money damages.
Minn. Stat. 278.01 provides that any person who believes a property tax
levied against certain lands is illegal or that property is exempt from a tax so
levied may have the validity of the claim, defense, or objection determined by
the district court of the county in which the tax is levied or by the Tax Court.
The Minnesota Supreme Court has held that when a claim falls within the
categories listed in Section 278.01, such statute provides the exclusive remedy to
seek a tax refund. Programmed Land, Inc. v. OConnor, 633 N.W.2d 517, 520
(Minn. 2001). See also Peoples State Bank Truman v. Triplett, 633 N.W.2d 533,
539 (Minn. Ct. App. 2001) (holding that the tax‐refund statute is the exclusive
remedy to recover for unconstitutionally discriminatory excise taxes, and the
statutes time limitation cannot be avoided by an action for unjust enrichment).
As noted above, it is clear that the Band is seeking a refund of property
taxes on the grounds that such taxes were levied against land that is exempt from
state taxation pursuant to federal law. As such, the Bands claim falls within
Minn. Stat. 278.01. Furthermore, the Band has put forth no authority which
would allow the Band to seek a selective refund of property taxes paid.
Minnesota law provides that where it is determined that a refund is required, the
14
refund claim shall be charged to the state and other taxing districts in
proportion to the amount of their respective taxes included in the levy. Minn.
Stat. 278.12. Finally, the Band has put forth no authority in support of the
assertion that this Court has jurisdiction to fashion appropriate relief as the taxes
were assessed and collected in violation of federal law.
The Band does cite to Board of County Commrs of Creek County v. Seber,
319 U.S. 50 (1943), which decision affirmed a judgment granting a property tax
refund to an individual Indian. The Court finds, however, that Seber does not
support federal jurisdiction over the Bands refund claim. First, the issue of
Eleventh Amendment immunity was not raised in Seber, and it is unclear
whether the state treasury would have been affected by the refund claim asserted
in Seber, as is claimed in this case. Second, in the lower court decision that was
affirmed by the Supreme Court in Seber, the Tenth Circuit Court of Appeals held
that although federal law exempted the lands at issue from state taxation,
there is nothing in the acts here involved indicating an intention or
purpose to disrupt the orderly procedure by which the State of Oklahoma
pursues its statutory scheme of taxation, so long as such procedure does
not circumvent or proscribe the declared purpose of the national
enactment. We see no reason here to depart from the orderly procedure as
outlined by the state law in the determination of the period in which the
respective exempting acts have application to the lands embraced within
15
the compass of the Acts. The right to be vindicated is a Federal right, but
state laws have a distinct relevancy and they are entitled to a respectful
consideration. Their observance here will result in a synchronization of
state and Federal law and give vitality to both, while to ignore them would
result in doubt and confusion.
Board of County Commrs of Creek County v. Seber, 130 F.2d 663, 670 (10th Cir.
1942). Applying state law, the Tenth Circuit determined in which years refunds
were appropriate. Id. 670‐671.
Similarly, there is nothing in WELSA which indicates an intention or
purpose to disrupt the comprehensive procedures by which to claim tax refunds
set forth in Minnesota law. While federal law clearly dictates whether the Casino
Property is subject to taxation, the same cannot be said for the applicable
procedures by which to seek a refund of property taxes wrongly paid.
Accordingly, the procedures set forth in Minn. Stat. 278 apply to the Bands
claim for property tax refunds. As such, if the Band succeeds in its refund claim,
the State, as well as the County and other taxing districts, will be required to
reimburse the Band for property taxes wrongfully collected. Accordingly, the
Court finds that the Bands claim for money damages will impact the States
treasury.
2. No Waiver of Immunity
16
The County further argues that neither the State nor the County has
expressly or impliedly waived immunity from suit concerning tax refunds. The
Band does not respond to this argument. Based on its review of state law, the
Court finds that the State has not waived immunity from suit concerning refund
claims.
3. Congress Has not Abrogated Eleventh Amendment
Immunity
Finally, the County argues that Congress has not abrogated the States
Eleventh Amendment immunity. The United States Supreme Court has ruled
that for Congress to abrogate Eleventh Amendment immunity, it must do so by
unequivocally expressing its intent to abrogate the immunity and that
Congress must act pursuant to a valid exercise of power. Seminole Tribe of
Florida v. Florida, 517 U.S. 44, 55, 58 (1995). In Seminole Tribe, the Court held
that although Congress has the exclusive power to regulate Indian affairs
pursuant to the Indian Commerce Clause, such clause does not grant Congress
the power to abrogate a states Eleventh Amendment immunity. Id. at 72. The
Court thus held that the Seminole Tribes claim against the State of Florida,
pursuant to IGRA, was barred by the Eleventh Amendment.
17
The Eighth Circuit has determined that WELSA did not abrogate the
States Eleventh Amendment immunity. See Manypenny, 948 F.2d at 1066
(holding that Minnesota did not waive its Eleventh Amendment immunity by
participating in the settlement of the White Earth Reservation land title disputes
that led to the enactment of WELSA).
Finally, the County asserts that by enacting 28 U.S.C. 1362, Congress did
not abrogate the States immunity from suit. Blatchford v. Native Village of
Noatak, 501 U.S. 775 (1991) (affirming dismissal of Alaska Natives suit against
Alaska official seeking money allegedly owed them under a state revenue
sharing statute). The Band does not appear to dispute the Countys assertions
that Congress did not abrogate the States Eleventh Amendment immunity
pursuant to IGRA or WELSA with respect to its claim for money damages. The
Band does seek to clarify, however, that 28 U.S.C. 1362 precludes Eleventh
Amendment immunity protection in cases brought by Indian tribes to obtain
injunctive and declaratory relief. See Moe v. Confederated Salish & Kootenai
Tribes, 425 U.S. 463 (1976); Sac & Fox Nation of Missouri v. Pearce, 213 F.3d 566
(10th Cir. 2000).
18
Title 28 U.S.C. Section 1362 provides:
The district court shall have original jurisdiction of all civil actions, brought
by any Indian tribe or band with a governing body duly recognized by the
Secretary of the Interior, wherein the matter in controversy arises under the
Constitution, laws, or treaties of the United States.
In Moe, an Indian tribe and some of its members brought actions
challenging Montanas cigarette sales taxes and property taxes as applied to
reservation Indians, seeking declaratory and injunctive relief. 425 U.S. at 467‐469.
The Court addressed the issue of whether the district court had jurisdiction to
entertain such a suit, in light of the Tax Injunction Act, which provides that:
[t]he district courts shall not enjoin, suspend or restrain the assessment,
levy or collection of any tax under State law where a plain, speedy and
efficient remedy may be had in the courts of such State.
Id. at 470 (quoting 28 U.S.C. 1341). The Court noted that the suit was brought
pursuant to 28 U.S.C. 1362. Id. at 472. Because 1341 and 1362 do not
reference the other, the Court looked to the legislative history of 1362 and
determined that such history indicated a congressional purpose to open federal
courts to the kind of claims that could have been brought by the United States as
trustee. Id.
While [the legislative history] is hardly an unequivocal statement of intent
to allow such litigation to proceed irrespective of other explicit
19
jurisdictional limitations, such as 1341, it would appear that Congress
contemplated that a tribes access to federal court to litigate a matter
arising under the Constitution, laws or treaties would be at least in some
respects as broad as that of the United States suing as the tribes trustee.
Id. at 473. The Court then determined that the United States could have brought
this claim on behalf of the Indian tribe. Id. Since the United States is not barred
by 1341 from seeking to enjoin the enforcement of a state tax law . . . we hold
that the Tribe is not barred from doing so here. Id. at 474‐475.
While in Blatchford, the Court found that 1362 did not operate as a
general waiver of a states sovereign immunity, Blatchford did recognize the Moe
decision, and distinguished Moe as specifically seeking injunctive relief from
state taxation. Blatchford, 501 U.S. at 784. Moe did not purport to be saying that
1362 equated tribal access with the United States access generally, but only at
least in some respects . . . or in certain respects. Id.; see also Sac & Fox Nation,
213 F.3d at 572 (finding federal jurisdiction to address Tribes challenge of a states
motor fuel distribution tax, following Moe).
This Court similarly finds that it has jurisdiction to decide the merits of the
Bands claims for declaratory and injunctive relief. The County argues that the
Bands claims for prospective relief drop out of this case given the BIAs decision
20
that the Casino Property was purchased with WELSA funds and thus taken into
trust. This is a curious position, however, given the fact that the County is
challenging the BIAs decision in a separate action. (See Mahnomen County v.
The Bureau of Indian Affairs, et al., Civil No. 08‐5180 (MJD/RLE).) In addition,
despite the BIAs decision that was issued in 2006, the County initiated a tax
delinquency proceeding after the Band ceased paying the assessed property taxes
in 2006, and this proceeding remains pending. Finally, as discussed later in this
Memorandum Opinion, the parties contest the proper interpretation of WELSA
18. It thus appears that the Bands claims for prospective relief remain at issue.
Based on the above, the Court finds that the Bands claim for money
damages only is barred by the Eleventh Amendment. See Yakama Indian Nation
v. Locke, 176 F.3d 467 (9th Cir. 1999) (Indian tribes claim for damages against
State dismissed as barred by the Eleventh Amendment).
B. Younger Abstention
In Younger v. Harris, 401 U.S. 37 (1971), the Supreme Court directed lower
courts to abstain from hearing cases before it when there is an ongoing state
judicial proceeding that implicates important state interests and when that
proceeding affords an adequate opportunity to raise the federal questions
21
presented.
The County argues that Younger applies here because there is an ongoing
state proceeding ‐ the Countys tax delinquency proceedings. (Larson Aff., Exs. E
and F.) The County further asserts that important state interests are at stake here.
Minnesota has enacted a tax structure that regulates and manages all aspects of
property tax assessment and collection. This litigation also implicates the States
interest in collecting the state general levy from all counties. Thus, the State faces
financial exposure if the Band prevails. Finally, the County argues that there is an
adequate opportunity to raise all issues in the Minnesota Tax Court proceeding.
Minnesota state courts routinely interpret and apply applicable federal law.
The Band responds that Younger abstention should not apply here because
the central and threshold issues in this case are those of federal Indian law.
Specifically, whether property taxes may be assessed on the Casino Property,
pursuant to WELSA and IGRA. As such, neither the State or the County has a
decision‐making interest in issues of federal Indian law. Rather, it has an interest
in the outcome of a federal decision on federal Indian law issues. See Winnebago
Tribe of Nebraska v. Stoval, 341 F.3d 1202 (10th Cir. 2003).
In Winnebago, the Tenth Circuit Court of Appeals upheld the district
22
courts determination not to abstain pursuant to Younger on the basis that the
second Younger factor, an important state interest, had not been met. Id. 341 F.3d
at 1205. In Winnebago, there was an ongoing state court proceeding involving
seizure of tribal property and criminal proceedings because the tribe failed to pay
a tax. The court determined that abstention was not an appropriate bar to federal
consideration of claims asserted because:
[t]he central and threshold issues in this case are federal Indian law issues,
i.e. whether federal law bars the state from imposing the tax, whether
federal law preempts the state tax scheme as applied to plaintiff Indian
tribes, and whether the states enforcement violates tribal sovereign
immunity, issues which must be resolved before the state criminal
proceedings can go forward. The state prosecutions are based on
allegations that assume the state can apply its law to these parties.
Id. at 1205.
This Court agrees that Younger abstention is not appropriate in this case.
Without question, whether the Casino Property can and should be assessed
property taxes is solely a matter of federal Indian law. In particular, this
determination will depend on an interpretation of federal law. See
Seneca‐Cayuga Tribe of Oklahoma v. State of Okl. ex rel. Thompson, 874 F.2d 709
(10th Cir. 1989) (finding that where the central issue is not one of state law, the
importance of the States interest in the state litigation is minimal). In addition,
23
matters of state taxation of Indian tribes have traditionally been addressed by
federal courts. See e.g., Cass County v. Leech Lake Band of Chippewa Indians,
524 U.S. 103 (1998); County of Yakima v. Yakima Indian Nation, 502 U.S. 251
(1992); Goudy v. Meath, 203 U.S. 146 (1906).
C. Colorado River Abstention
Abstention under Colorado River Water Conservation v. United States, 424
U.S. 800 (1976) is intended to avoid piecemeal litigation. Generally, courts apply
six factors to determine whether abstention under this doctrine is appropriate:
(1) whether there is a res over which one court has established jurisdiction,
(2) the inconvenience of the federal forum; (3) whether maintaining separate
actions may result in piecemeal litigation, unless the relevant law would
require piecemeal litigation and the federal court issue is easily severed; (4)
which case has priority ‐ not necessarily which case was filed first but
greater emphasis on the relative progress made in the cases; (5) whether
state or federal law controls, especially favoring the exercise of jurisdiction
where federal law controls; and (6) the adequacy of the state forum to
protect the federal plaintiffs rights.
Mountain Pure, LLC v. Turner Holdings, LLC, 439 F.3d 920, 926 (8th Cir. 2006).
The Court finds that abstention under Colorado River is not warranted in
this case because federal Indian law controls the central issues in this litigation,
specifically whether the Casino Property is subject to property taxation. The
Court is further concerned that the states forum may not be adequate here, given
24
the long and contentious history between the White Earth Band and non‐Indian
governments. While the ongoing state proceedings may result in piecemeal
litigation, the Court finds that the balance of the factors weighs against abstention.
Accordingly, the Court declines to dismiss this action pursuant to Colorado River.
II. Plaintiffs Motion for Summary Judgment as to Counts II, III and IV
In Counts II and III of the Amended Complaint, the Band seeks the
following declaratory relief: that the Casino Property is not subject to ad valoreum
property taxation by the State of Minnesota or its political subdivisions since the
date the Casino Property was purchased with WELSA funds; and that the Casino
Property is not subject to state judicial process that would result in seizure of the
Casino Property. In Count IV, the Band seeks an order enjoining the County from
any action assessing, collecting or enforcing ad valoreum property taxes on the
Casino Property, including prosecution of the foreclosure action noticed by the
County pursuant to Minnesota Statutes 279.
It is the Bands position that application of Section 18 of WELSA precludes
state property taxation of the Casino Property.
A. Standard for Summary Judgment
Summary judgment is appropriate if, viewing all facts in the light most
25
favorable to the non‐moving party, there is no genuine issue as to any material
fact, and the moving party is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322‐23 (1986). The party seeking
summary judgment bears the burden of showing that there is no disputed issue of
material fact. Celotex, 477 U.S. at 323. This burden can be met by showing ‐
that is, pointing out to the district court ‐ that there is an absence of evidence to
support the nonmoving partys case. Id. at 325. The party opposing summary
judgment may not rest upon mere allegations or denials, but must set forth
specific facts showing that there is a genuine issue for trial. Krenik v. County of
Le Sueur, 47 F.3d 953, 957 (8th Cir.1995).
B. Canons of Construction
In matters involving federal Indian law, the Court must apply a discrete set
of canons of construction. These canons require that treaties, agreements, statutes
and executive orders be liberally construed in favor of the Indians. Yakima, 502
U.S. at 269 (citing Montana v. Blackfeet Tribe, 471 U.S. 759, 766 (1985)). In
addition, to the extent that federal Indian law is ambiguous, any ambiguity is
construed liberally in favor of the Indians. Id. The Court will apply these canons
in addressing the parties various arguments.
26
C. Does Application of Section 18 Preclude Property Taxation?
Section 18 of WELSA provides:
SEC. 18. Any lands acquired by the White Earth Band within the exterior
boundaries of the White Earth Reservation with funds referred to in section
12, or by the Secretary pursuant to section 17, shall be held in trust by the
United States. Such lands shall be deemed to have been reserved from the
date of the establishment of said reservation and to be part of the trust land
of the White Earth Band for all purposes.
As Congress has plenary and exclusive authority over Indian affairs, it is
within Congress power to declare that certain lands are reserved in trust for the
benefit of an Indian tribe, and shall remain reserved despite objection to the
contrary by an executive agency or state. United States v. Lara, 541 U.S. 193, 200
(2004). The Band argues that through WELSA, Congress has exercised this power
by providing that any lands purchased with WELSA funds shall be held in trust
by the United States and shall be deemed reserved for the benefit of the Band.
As the language of Section 18 is clear and unambiguous, the Band further argues
that Congress has indicated its intent that Section 18 of WELSA be automatic,
immediate and mandatory.
The County responds that the proper interpretation of Section 18 starts with
the presumption of taxability. Relying on Goudy, 203 U.S. 146, County of Yakima,
3The Court would note that the Countys interpretation of such lands as referring only
to lands held in trust by the United States, which in turn refers to certain lands disestablished
by the Nelson Act, is nonsensical.
27
502 U.S. 251 and Cass County, 524 U.S. 103, the County argues it is well‐settled
that once Congress has manifested its intention to permit taxation of tribal‐owned
lands, Congress would have to clearly manifest such a contrary purpose in
order to counteract the consequence of taxability that ordinarily flows from
alienability. Cass County, 524 U.S. at 112 (citing Goudy, 203 U.S. at 149.) It is the
Countys position that WELSA does not clearly manifest an intent to preclude the
County from assessing and collecting property taxes from the Band with respect
to the Casino Property. The Court disagrees.
The language of Section 18 is clear and unambiguous. It clearly provides
that lands located within the exterior boundaries of the White Earth Reservation
and purchased with WELSA funds shall be held in trust by the United States.
Lands held in trust by the United States for the benefit of the Band are not subject
to taxation. Section 18 further provides that such lands ‐ that is lands located
within the exterior boundaries of the reservation and purchased with WELSA
funds 3 ‐ shall be deemed to have been reserved from the date of the
establishment of said reservation and to be part of the trust land of the White
28
Earth Band for all purposes. There appears to be no dispute that when the
Reservation was created in 1867, the Reservation lands were not subject to
taxation. Thus, even though WELSA does not include the specific language that
lands acquired pursuant to Section 18 are non‐taxable, Congress nonetheless
clearly manifested its intent to preclude ad valoreum taxation on lands located
within the exterior boundaries of the Reservation and purchased with WELSA
funds by deeming such land to have been reserved from the date of the
establishment of said reservation and to be part of the trust land . . . for all
purposes.
In Seber, the United States Supreme Court addressed a similar statute
which provided that certain Indian lands would be immune from state taxes if
two requirements were met: that the title to the lands be held by an Indian subject
to restrictions against alienation or encumbrance or approval of the Secretary of
the Interior; and the lands were purchased out of trust or restricted funds. 318
U.S. at 709. As these requirements were met, the Court found that the land at
issue was immune from state taxation. Id.
The County further argues that the Bands interpretation of Section 18 as
self‐executing or automatic should be rejected as there is no language in
29
Section 18 which supports such an interpretation, and that applicable federal
regulations require that certain prerequisites must be met before land can be
accepted into trust.
First, as the Band points out, this case does not involve land acquisition
pursuant to the Indian Reorganization Act (IRA), 25 U.S.C. 465. Rather,
WELSA is a unique statute which, on its face, provides that certain land
acquisitions shall be held in trust and shall be deemed reserved from the date of
the establishment of the Reservation and to be part of the trust land of the Band
for all purposes. Thus, while there is a process contemplated for mandatory
acquisitions in the implementing regulations of 465, and such procedures were
correctly followed by the Secretary in response to the Bands trust application in
this case, Section 18 of WELSA is, by its terms, self‐executing or automatic.
It is important to note that the mandatory fee‐to‐trust procedures set forth
in 25 C.F.R. Part 151 are different from the procedures required for discretionary
acquisitions. These regulations set forth the procedures governing the
acquisition of land by the United States in trust status for individual Indians and
tribes. 25 C.F.R. 151.1. These regulations further provide that land may not be
acquired in trust status for a tribe unless authorized by Congress. 25 C.F.R.
30
151.3. When a Band seeks to acquire land in trust status, the Band shall file a
written request for approval of such acquisition with the Secretary. The request
need not be in any special form but shall set out the identity of the parties, a
description of the land to be acquired, and other information which would show
that the acquisition comes within the terms of this part. 25 C.F.R. 151.9. When
a request to have lands taken into trust is received by the Secretary, the Secretary
is to notify the state and local governments unless the acquisition is mandated by
legislation. 25 C.F.R. 151.10.
When an acquisition is left within the discretion of the Secretary, the
regulations dictate that notice be sent to the state or local government affected to
allow written comments as to the acquisitions potential impacts on regulatory
jurisdiction, real property taxes and special assessments. 25 C.F.R. 151.10. If the
state or local government responds, a copy of said comments shall be given to the
applicant. Thereafter, the Secretary is to consider a number of factors in
evaluating the requests for acquisition of land, such as the existence of statutory
authority for the acquisition, the need of the individual Indian or Tribe, and the
purposes for which the land will be used. Id. The County argues that the Band
did not follow these procedures, and that such procedures must be met before the
31
Casino Property can be placed into trust. As noted above, however, these
procedures apply only to discretionary acquisitions.
The issue here, however, is whether lands acquired pursuant to Section 18
are discretionary acquisitions or mandatory acquisitions. Section 18 directs that
lands located within the exterior boundary of the Reservation, and purchased
with WELSA funds shall be held in trust. As shall is a mandatory term, its
use in Section 18 indicates a lack of discretion on the part of the Secretary.
Accordingly, with regard to Section 18 acquisitions, it is unnecessary to follow the
procedures set forth in 151.10. See Confederated Salish & Kootenai Tribes v.
United States ex. rel. Norton, 343 F.3d 1193, 1194‐95 (9th Cir. 2003) (stating that
Section 151.10 requires the Secretary to provide notice to state and local
governments before approving discretionary land acquisitions); Nevada v. United
States, 221 F. Supp.2d 1241, 1246‐47 (D. Nev. 2002) (finding that statute which
provided that lands purchased with certain funds shall be taken into trust was
mandatory, and that the BIA is not required to follow the procedures set forth in
25 C.F.R. 151.10 for discretionary acquisitions); Churchill County v. United
States, 199 F. Supp.2d 1031, 1033 (D. Nev. 2001)(same); Sault Ste. Marie Tribe of
Lake Superior v. United States, 78 F. Supp.2d 699, 703 (W.D. Mich. 1999)(same).
32
In 2002, the Band formally requested the BIA to take the Casino Property
into trust as a mandatory acquisition under Section 18 of WELSA. (See Complaint
14.) In response to the request, the Office of the Solicitor, for the Department of
the Interior, took the position that a process should be followed prior to placing
the Casino Property into trust status. (Larson Aff., Ex. 14, p. 3 (The second issue
which should be finally resolved before the trust process proceeds is a
determination that the property was purchased with funds from the [WELSA]
which was created by Section 12 of WELSA.).) Thereafter, the BIA took the
necessary steps to determine whether WELSA funds were used to purchase the
Casino Property. Once it was satisfied that WELSA funds were, in fact, used, the
Secretary made the determination that WELSA mandated that the Casino
Property be placed in trust status. State of Minnesota, 47 IBIA at 127 (Quigley
Aff., Ex. No. 5) (finding that mandatory acquisitions are not subject to the
discretionary criteria of 25 C.F.R. Part 151). As noted previously, this Court has
affirmed the Secretarys decision. (See Mahnomen Count v. The Bureau of Indian
Affairs, Civil No. 08‐5180 (MJD/RLE).)
As there are no genuine issues of material fact, and the law clearly provides
that the Band is entitled to the relief sought, the Court will grant the Bands
33
motion as to Counts II, III and IV.
CONCLUSION
Although it has been seventeen years since the Band purchased the Casino
Property, during which time the nature and use of said property drastically
changed, the Court must nonetheless keep in mind that WELSA was enacted to
settle land claims of Indians and non‐Indians alike. And because one of the
purposes of WELSA was to compensate for Indian lands wrongly alienated by
federal law, WELSA must be construed liberally in favor of the Band. Given the
clear and unambiguous language contained in Section 18 of WELSA, lands
acquired pursuant to this section are not subject to ad valoreum state taxation.
IT IS HEREBY ORDERED THAT:
1. The Defendants Motion to Dismiss [Doc. No. 25] is GRANTED in
part and DENIED in part. The Motion is GRANTED as to Plaintiffs
claim for money damages, Count V, and such claim is DISMISSED
WITHOUT PREJUDICE. The Motion is DENIED with respect to
Counts I‐IV.
2. The Plaintiffs Motion for Summary Judgment as to Counts II, III and
IV [Doc. No. 52] is GRANTED.
3. The Defendants Cross Motion for Summary Judgment [Doc. No. 85]
is DENIED as to Counts II, III and IV, and DISMISSED as untimely as
to Counts I and V.
34
4. It is Declared that the Casino Property is not now, and has not been,
subject to ad valoreum property taxation by the State of Minnesota or
its political subdivisions since the date in 1991 the lands were
acquired with WELSA funds by the Plaintiffs.
5. Defendants are permanently enjoined from taking any action
assessing, collecting or enforcing ad valoreum property taxes on the
Casino Property, including prosecution of any foreclosure action
noticed by Defendants pursuant to Minnesota Statutes Chapter 279.
Date: March 24, 2009
s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court
 

 
 
 

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