Albrecht v. County of Riverside Cert Petition [Leasing Regs + Taxation Preemption]

Here:

Lower court materials here.

Questions presented:

  1. Do the federal regulations governing the leasing of Indian lands preempt state and local governments
    from taxing the leasehold interest conveyed by the regulated leases?
  2. Does the express preemption provision of the Indian Reorganization Act of 1934—which prohibits
    state taxes on “any interest in lands” that the government “acquire[s] pursuant to this Act … in trust
    for [an] Indian tribe or individual Indian”—apply when the government acquires extended trust rights
    pursuant to the Act?

Ninth Circuit Affirms Dismissal of Challenge to Tribal Leasing Regs

Here is the opinion in Desert Water Agency v. Dept. of the Interior.

An excerpt from the court’s summary:

The panel affirmed the district court’s dismissal for lack of standing and ripeness of a complaint brought by the Desert Water Agency (“DWA”), a political subdivision of the State of California, against the United States Department of the Interior and its Bureau of Indian Affairs, challenging a federal regulation that DWA believed might preempt certain taxes and fees DWA assessed against non-Indians who leased lands within an Indian reservation.

New federal regulation 25 C.F.R. § 162.017 concerns taxes applied to leases approved on Indian lands to third parties. DWA provides water supplies and water services to businesses and residences in Riverside County, California, and charges fees and taxes to non-Indians who lease land from the Agua Caliente Band of Cahuilla Indians within the Agua Caliente Indian Reservation.

The panel held that § 162.017 did not purport to change existing law, and therefore, did not itself operate to preempt DWA’s charges, and did not command DWA to modify its behavior by doing or refraining from doing anything. The panel concluded that DWA lacked standing because it had not suffered a cognizable injury at the hands of the Department of the Interior.

Briefs:

Opening Brief

Federal Brief

Reply Brief

Lower court materials here.

Live CLE Webinar: Update on State Taxation of Tribal Leased Lands: The New Leasing Regulations | February 25

This webinar explore the effect of the new Interior regulations excluding state taxes on business leases in Indian Country. The panel will describe recent changes to the regulations and chart the course of the litigation ongoing in several states over the new regulations. The panel will also discuss strategies being considered to resolve this longstanding state-tribal conflict outside of the ongoing litigation.

Featured Speakers

Wendy S. Pearson, Pearson Law Offices PS, Seattle, WA

Bruce Zimmerman, Confederated Tribes of the Umatilla Indian Reservation, Pendleton, OR

Joseph C. Lennihan, Attorney At Law, Santa Fe, NM

Shana Barehand, Tribal Liaison, Washington Department of Revenue, Olympia, WA

For more information and to register click here.

PLEASE NOTE: To receive CLE credit you must be logged into the webinar interface for the ENTIRE program (including the Q&A). Partial credit is not available for this program. Please see the CLE Informaton page for more details

Recent Decision Applying BIA Leasing Regulations Signals a Shift in Indian Tax Law

By: Del Laverdure and Bryan Newland

Last week’s decision out of the U.S. District Court in Southern Florida in Seminole Tribe of Florida v. Florida could signal a potential shift in Indian tax law.

For many tribal leaders and Indian law practitioners, tax law in Indian country is an intimidating jurisdictional maze – often times allowing state and local taxes to apply in Indian country in spite of tribal territorial sovereignty. The outcome of an Indian tax case depends upon a combination of the type of tax or government fee imposed, the government doing the taxing, the individual or entity being taxed, and the location of the activity, individual, or property being taxed.

Many states have levied taxes on non-Indians and non-Indian businesses working in Indian country; and, in recent years, these efforts have been upheld under the Supreme Court’s decision in White Mountain Apache Tribe v. Bracker. Under that case, a reviewing court must balance the interest of the tribe, the state, and the federal government when deciding whether state taxes in Indian country are preempted by federal law. In many losing cases, tribal litigants have tried to invalidate state taxation without a clear statement of the federal government’s interest.

In the Seminole case, the State of Florida was attempting to impose two different taxes on tribal lands: a “rental tax” on businesses leasing property from the Tribe; and, a “utility tax” on electricity delivered to the Tribe’s lands. The Court held that Florida’s rental tax was preempted by federal laws governing leasing on Indian lands (it also invalidated the utility tax because the legal incidence of the tax fell on the Tribe).

Continue reading

Federal Court Dismisses Challenge to BIA Leasing Regulations

Here is the opinion in Desert Water Agency v. Dept. of Interior (C.D. Cal.):

028 Order Granting US Motion to Dismiss

Briefs are here. Complaint here.

Update in Desert Water Agency v. Bureau of Indian Affairs — Suit over BIA Leasing Regulations

Here are the new materials:

12-3 Mot Dismiss – Proposed Order 6-7-2013

12-1 Mot Dismiss – Memo ISO Mot Dismiss 6-7-2013

12-2 Mot Dismiss – Decl Elizabeth Appel ISO Mot Dismiss 6-7-2013

DESERT WATER AGENCY_ FOIA Response fm US Dept. of the Interior

TM10_-_Kenny_Wilson_REDACTED

Agua_Caliente

— EO 13175

— 318 DM 5

Prior post here.

Department of the Interior Sued Over Tax Provision in New Indian Leasing Regulations

Update: Here is the complaint:

Complaint

The Desert Water Agency, based in southern California, has sued the Department of the Interior over the tax provisions in its new Indian leasing regulations.

The Department of the Interior published revised surface leasing regulations in November 2012, after a year-long public notice and comment rulemaking process.  Those regulations govern surface leasing of Indian lands, and include a new provision clarifying the tax status of property and activities under a lease:

§ 162.017 What taxes apply to leases approved under this part?

(a) Subject only to applicable Federal law, permanent improvements on the leased land, without regard to ownership of those improvements, are not subject to any fee, tax, assessment, levy, or other charge imposed by any State or political subdivision of a State. Improvements may be subject to taxation by the Indian tribe with jurisdiction.

(b) Subject only to applicable Federal law, activities under a lease conducted on the leased premises are not subject to any fee, tax, assessment, levy, or other charge (e.g., business use, privilege, public utility, excise, gross revenue taxes) imposed by any State or political subdivision of a State. Activities may be subject to taxation by the Indian tribe with jurisdiction.

(c) Subject only to applicable Federal law, the leasehold or possessory interest is not subject to any fee, tax, assessment, levy, or other charge imposed by any State or political subdivision of a State. Leasehold or possessory interests may be subject to taxation by the Indian tribe with jurisdiction.

In its complaint, the Desert Water Agency is challenging the application of this provision to the fees it assesses to water users/lessees on tribal lands (particularly the Agua Caliente Reservation) in southern California.  It asserts that its taxes are not preempted by federal law, and that the new regulation either does not apply or is arbitrary and capricious.

As part of its claim, the Desert Water Agency asserts that Congress has expressly permitted state and local government to levy such taxes on Executive Order reservations (like Agua Caliente’s) through 25 U.S.C. Section 398c. (It also asserts that its taxes are permitted under the traditional Bracker balancing test).

The Desert Water Agency’s reliance on 398c is curious, because that provision was included in 1927 legislation that Congress enacted to address Indian mineral leasing.

As most Indian law practitioners know, the federal Indian surface estate and the Indian mineral estate are governed under separate legal regimes.  The Department of the Interior’s leasing regulations expressly apply to surface leasing under 25 U.S.C. Section 415 and related statutes.  They are inapplicable to mineral leases on Indian lands (in fact, 398c is not even listed as authority for the regulations).

Either the Desert Water Agency’s attorneys are unaware of this key distinction in Indian law, or they are deliberately misrepresenting 25 U.S.C. 398c.  Given the history of Indian law, either is possible – though I’m not sure that either is a good position to be in.

The Desert Water Agency has also claimed that it was unaware of the rule change until it had already gone into effect on January 2013.  I  find these types of claims particularly weak, given the fact that Indian leasing reform was a signature initiative of the Department of the Interior in President Obama’s first term.  The President himself announced the proposed change at the 2011 Tribal Nations Conference, and it was published in the Federal Register through the traditional public notice and comment rulemaking process with a version of the tax provision included.  The BIA even hosted a tribal consultation session in January 2012 at the publicly-owned Palm Springs Convention Center in the Desert Water Agency’s backyard.

Challenges to the tax provisions of the new leasing regulations were inevitable, especially considering the stakes involved.  The fact that it has only taken several months for this type of suit to arise speaks to those stakes.  It will be interesting to watch this case unfold.

The Second Time Around: Looking Ahead to President Obama’s Second Term

Two weeks ago, we took a look back at some of the significant federal Indian policy developments during President Obama’s first term.  President Obama’s historic inauguration last week marked the beginning of his second term, which will bring a new set of challenges and opportunities for the Administration’s Indian policy agenda. 

The ongoing stalemate in Congress regarding the federal budget, a Republican House of Representatives, and the fact that the 2016 Presidential campaign will kick off immediately after the 2014 mid-term elections, will make it difficult to push significant Indian policy reforms through Congress.  Nevertheless, Indian country leaders will continue to press for reforms in a number of important areas. 

Look for the following issues to receive attention in the next four years: 

  • Violence Against Women Act (VAWA): Congress failed to reauthorize VAWA at the conclusion of the last term.  In light of recent elections, there is growing pressure on Congress (especially the Republican Party) to pass this reauthorization.  The question is whether a final bill will include provisions designed to enhance protections for Indian women (it can’t be repeated often enough that 1 in 3 American Indian women will be raped in their lifetimes) by restoring tribal criminal jurisdiction over domestic violence on Indian lands.  The Obama Administration has worked to ensure that Indian Country language is included in this legislation.
  • Carcieri Fix: As with VAWA, Congress has failed to enact legislation to address the 2009 Carcieri decision.  The politics of a Carcieri Fix are more complex than VAWA reauthorization.  President Obama expressed support for a Carcieri fix as recently as December, and tribal advocates continue to press for this legislation.
  • Climate Change, Environmental Protection, and Sacred Sites:  In his second inaugural address, President Obama stated, “We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.”  Tribal communities, especially those located in Alaska and on the coasts, are at the forefront of feeling the impact of climate change.  The Administration has pledged to address the issue, and it must include tribes in that effort. 

The Department of the Interior has been criticized by tribal leaders for not taking adequate steps to protect sacred sites in its push to permit renewable energy projects on public lands during the first term. But, at the 2012 White House Tribal Nations Conference, the Administration announced an interagency Memorandum of Understanding intended to help agencies – including the Department of the Interior – work with tribes to protect sacred sites.  The U.S. Department of Agriculture prepared a report to Secretary Vilsack on tribal sacred sites in December 2012.  

The #IdleNoMore movement in the United States is coalescing around environmental and sacred sites issues, and will put significant pressure on the Administration to respond to Indian Country on these issues.

  • Energy Development:  The Department of the Interior’s new leasing regulations will make it easier for developers to establish renewable energy projects on tribal lands, but federal tax policies still make it difficult for tribes to partner with those developers (beyond simply serving as a landlord, and receiving rent).  Addressing these tax inequities, and revising the Department of the Interior’s Right of Way regulations, are the next steps in unlocking Indian Country’s renewable energy potential.

With respect to conventional energy, the oil & gas boom in places like the Fort Berthold Reservation and the U&O Reservation have posed significant challenges on the BIA to keep pace with development.  Shrinking budgets, due to the stalemate in Congress, will make it even more difficult for the BIA to work with tribes to ensure that they can capitalize on their energy resources.

  • Federal Recognition:  In 2012, the Department of the Interior presented testimony to the Senate Committee on Indian Affairs and suggested that some groundwork had been laid to address problems in the federal recognition process (Disclosure: I served as the witness for the Department of the Interior in that hearing).  The rulemaking process is long and arduous, and it takes several years to publish rules – even where there is a consensus in support of that effort.  The recognition process has strayed far from its roots in international law to a faux “scientific” review.  DOI will be under pressure to complete this reform before the conclusion of President Obama’s second term. 
  • Gaming: The Department of the Interior made significant progress in lifting the effective moratorium on reviewing tribal gaming applications, rescinding the infamous “Commutability Memo” in the process.  During President Obama’s first term, DOI set out a process whereby it would complete a review of applications based upon its own regulations.  DOI also issued three “Two-Part” Determinations, and articulated the factors that would be used to issue those decisions (with particular focus given to local support and tribal historical connections to proposed gaming sites).  The Department will be under pressure, from tribes, local governments, states, and Congress, to consistently apply these standards and issue decisions in a timely manner.
  • Playing Defense:  Finally, the Obama Administration will likely be put in the position of defending (in courts of law and public opinion) its advances in Indian policy.  Presently, there are ongoing lawsuits challenging the way in which the Administration has interpreted the Indian Reorganization Act in light of the Carcieri decision.  We may also see a pushback against DOI’s efforts to acquire land in trust on behalf of tribes.  The tax provisions of the BIA’s new leasing regulations, which clarify the federal government’s interest in promoting economic development on Indian lands, may also serve as a flashpoint.

There are a number of other issues that we can expect to arise during the next four years as well, including the selection of a new Secretary of the Interior to replace Ken Salazar, appointing an Indian judge to the federal bench, protecting tribes from the PACT Act, implementing the Cobell settlement, and putting meat on the bones of the President’s decision to endorse the United Nations Declaration on the Rights of Indigenous People. 

There is also a likelihood that other events will transpire that could affect Indian Country’s and the President’s agenda (such as a Supreme Court decision in its upcoming ICWA case or other unforeseen events).  No matter what, the next four years will present enough policy and legal issues to keep Indian Country leaders and advocates burning the midnight oil.