This case, decided by Judge Quist, out of the Western District of Michigan is the latest in a long string of Indian tax cases arising out of the Keweenaw Bay Indian Community’s reservation in the past few years, including Chippewa Trading v. Cox (CA6) and KBIC v. Rising (CA6). Here are the very lengthy materials in this case:
DCT Order Granting Michigan’s Motion for Summary Judgment – KBIC v. Kleine
Angelique Eagelwoman (soon to be at Idaho Law) has posted “The Philosophy of Colonization Underlying Taxation Imposed Upon Tribal Nations within the United States” on SSRN. Here is the abstract:
Tribal Nations are inherently sovereign by internal definition as well as by classic European political science theory. Voluntary wealth distribution was the basis for the functioning of tribal government rather than externally imposed demands for pro rata shares of individual tribal member income. Through treaty-making with Tribal Nations, the United States expanded and asserted its ability to govern the influx of European immigrants and captive Africans by recognizing tribal territorial boundaries and seeking peaceful relations. Within the United States Constitution, Tribal Nations are mentioned in terms of not being taxed and as engaged with Congress in terms of commerce. Despite this history, U.S. relations shifted on one of military dominance over Tribal Nations skewing the sovereign-to-sovereign relationship set forth in treaty agreements.
The New York Appellate Division (3rd Dept.) held in this case that the county did not have standing to sue to force the New York finance department to collect taxes in Indian Country.
Ben Fenner of Fredericks Peebles & Morgan, LLP has published “Indian Country in Cyber Space: Bella Hess and Commerce Clause Constraints on Interstate, Mail Order Transactions” in the Albany Law Review.
From the introduction:
When political processes fail, the rule of law prevails or people rise to power. When the political process fails between tribes and the United States, defined as it is by federal statutes and case law, there is no rule of law and, therefore, leaders emerge. So it is that the panoply of tribal leaders is vast and ranges from ordinary men and women in seemingly mundane circumstances to warriors and negotiators who are household names.
***
The ability of the government to justify the annihilation of whole cultures was, and is today, driven by a perceived lack of resources (a euphemism for greed). And no resource is as scarce today, it seems, as money; few areas of federal Indian law are as contentious as states’ ability to tax and regulate tribal activity. While tribal immunity from state taxation is well-settled, what of state ability to tax Internet transactions originating on reservations? Part II of this Article is an overview of preemption in federal Indian law. Part III looks specifically to taxation and regulation of mail-order transactions. Part IV concludes that tribes may structure online transactions fulfilled on-reservation to preclude state taxation.
The non-federally recognized Indian tribe Western Mohegan tribe sought to avoid county taxes on its land, and a resulting foreclosure for failure to pay.
Here are the materials:
From the Battle Creek Enquirer:
ATHENS TOWNSHIP — The Nottawaseppi Huron Band of Potawatomi is awaiting a Michigan Tax Tribunal decision on whether the tribe is liable for township taxes on its Pine Creek Reservation.
The Osage Nation sued the State of Oklahoma and Oklahoma Tax Commission officials seeking an injunction against the collection of state income taxes against Osage members in Osage Indian Country. The district court denied the state’s Eleventh Amendment motion to dismiss. The CA10 reversed as to the State, but very grudgingly affirmed as to the officials, relying on Ex parte Young.
We previously offered links to Congressional Research Service reports related to Indian law here.
Since then, we’ve located a few more:
Federal Taxation of Tribes and Indians (2007)
American Indian Education Programs (2007)
The Supreme Court denied cert in a case captioned Montana v. Crow Tribe of Indians, 484 U.S. 1039 (1988) (No. 87-343). The case involved the State’s attempt to impose severance and gross proceeds on a non-Indian mining company.
The cert pool memo (from a Rehnquist clerk no less) ripped the State’s argument:
[Montana]’s contention that its taxes should not be preempted because they fall on Westmoreland, rather than on the Crow Tribe itself, is ludicrous. The state severance and gross proceeds taxes have restricted the amount of taxation [Crow] can levy on its lessees. The CA9 found that the marketability of [Crow]’s coal was significantly diminished by [Montana]’s taxes, resulting in a corresponding decrease in the amount of money accruing to[Crow]’s coffers.
Cert Pool Memo at 7.
How times have changed. After Cotton Petroleum and Wagnon, states can strategically tax for the specific purpose of limiting on-reservation activities and all but eliminate tribal tax base.
Most cases now reach the Supreme Court because of circuit splits or splits in authority between federal courts of appeal and state supreme courts, but federal Indian law is an exception. In my study of the digital archive of Justice Blackmun’s cert pool memos from docket years 1986-1993, perhaps a quarter of cases that attracted the Court’s attention (reaching the so-called “discuss list” at conference) did so because there was a split.
One reason for the lack of circuit splits in federal Indian law is geography — well over 80 percent of cert petitions arise out of the Eighth, Ninth, and Tenth Circuits (and the states located within those circuits).
Moreover, because the cert petition subject matters are based on treaties or statutes that apply only within a state or a region, there is little likelihood of there ever being a split where the federal circuit and the state supreme court agree. Two examples from my forthcoming paper, “Factbound and Splitless”:
In South Dakota v. Spotted Horse, the Justice Blackmun’s clerk wrote a supplemental memo to the cert pool memo in which she wrote, “As the poolwriter noted, there will never be a split on the question of South Dakota’s jurisdiction over these tribal highways because both CA8 and the S.D. SCt agree that the State is without jurisdiction.” In Tarbell v. United States, a criminal case involving the application of a federal statute that applied to New York Indians, the cert pool memowriter (Mark Snyderman, an O’Connor clerk) noted, “Of course, NY state is probably the only other jurisdiction that would have an opportunity to rule on the issue.”
In one famous instance, the Court granted cert in a case thinking there was a circuit split when there really wasn’t (or more accurately, the split dissolved when the Court decided the case). The cases were Anderson v. Wisconsin Dept. of Revenue and Oklahoma Tax Commission v. Sac and Fox Nation. In Anderson, the WI Supreme Court ruled that Indians living off the rez but working on the rez have to pay state income taxes. In Sac and Fox, the CA10 ruled that Indians living on trust land and working for the tribe on trust land don’t have to pay tax. That’s the split, but the split disappeared when the Court decided that trust land is the same as “Indian Country” — making the factual predicate for the split (the residence of the tribal member: one was off, one was on) disappear.
I go into greater depth in the paper, but the story basically is this. The OTC’s petition in Sac and Fox reached the Court first, but neglected to mention the Wisconsin case. The Wisconsin case reached the cert pool next, alleging the split in authority. The cert pool writer thought the Sac and Fox case was factually messier (because of the trust land question) so recommended the Court grant cert in Anderson. Also, the cert pool memowriter argued that the OTC was a bad litigant for not noting the split in the first place, so recommended that the Court go for the Wisconsin case instead. But Anderson filed indigent, and he shouldn’t have, so the Court had to order him to comply with SCT rules before his appeal would proceed. In the meantime, the Court decided to hear Sac and Fox instead. The Anderson pool memo is here and the Sac and Fox memo is here.
And it’s good thing too. Bill Rice’s mastery of oral argument before the Supreme Court can be heard here (with a little help from Edwin Kneedler).
Had the Court decided Anderson instead, it seems clear to me that it would have ruled against Anderson, who was living off the rez and refusing to pay state income taxes. Who know what would have happened to Sac and Fox Nation?
Turtle Talk 
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