CASS COUNTY, MN v. LEECH LAKE BAND OF CHIPPEWA INDIANS
In 1993, Cass County, Minnesota began assessing ad valorem taxes on 21 parcels of reservation land that had been alienated from tribal control under the Nelson Act and later reacquired by the Leech Lake Band of Chippewa, a federally recognized Indian tribe. In 1995, the Band filed suit, seeking a declaratory judgment that Cass County could not tax the 21 parcels. The District Court held that all of the land that had been alienated from tribal ownership under the Nelson Act was taxable. Affirming in part, the Court of Appeals held that 13 parcels that had been allotted to individual Indians could be taxed so long as they had been patented after passage of the Burke Act proviso, because the explicit mention of "taxation" in the proviso expressed "unmistakably clear" intent. Reversing in part, the court held that the eight parcels sold as pine lands or homestead land could not be taxed because those sections did not incorporate the General Allotment Act or include any mention of an intent to tax lands distributed under them which might become reacquired by the Band.
May state and local governments tax reservation land that was made alienable by Congress and sold to non-Indians by the Federal Government but was later repurchased by a tribe?
Legal provision: 25 Stat. 642
Yes. In a unanimous opinion delivered by Justice Clarence Thomas, the Court held that ad valorem taxes may be imposed upon such land. "When Congress makes Indian reservation land freely alienable, it manifests an unmistakably clear intent to render such land subject to state and local taxation," wrote Justice Thomas. Repurchasing the land by an Indian tribe does not return the land to tax-exempt status. Justice Thomas concluded that "[t]he eight parcels at issue here were therefore taxable unless and until they were restored to federal trust protection."
Argument of Earl Edwin Maus
Chief Justice Rehnquist: We'll hear argument next in Number 97-174, Cass County, Minnesota v. Leech Lake Band of Chippewa Indians.
Mr. Maus, you may proceed whenever you're ready.
Mr. Maus: Thank you.
Mr. Chief Justice, and may it please the Court--
It's Cass County's position in this case that the alienable land patented in fee by the Federal Government and subsequently reacquired in fee by the Indian tribe is subject to State and local taxation absent treaty or statutory exceptions to the contrary.
In 1889, Congress passed the Nelson Act, which provided for the complete cession and relinquishments of lands to the Federal Government.
The Federal Government in turn, pursuant to section 3 of the Nelson Act and in conformity with section 5 of the General Allotment Act, issued individual allotments to Indians in conformity with the section 5.
Pursuant to sections 4 and 5 of the Nelson Act, they sold pinelands, which were basically timberlands, on the open market to individuals.
Pursuant to section 6, they issued homestead patents, or gave patents in fee under the Homestead Act to various individuals, again on the open market.
In 1993, Cass County began taxing all of the above lands and that was following the 1992 Yakima decision which was set forth by this case... 1992, Yakima County v. Yakima Indian Nation.
At that time, there were 21 parcels, 13 of those parcels involved a lot of land, and that issue has already been resolved in the Eighth Circuit, and it was a petition for further review of that, and that was denied on cross petition for that.
So at issue here today are the pinelands parcels, seven of those, and one homestead parcel.
These various parcels, I'd point out to the court, are now... the ones that are left, they're all in trust at the present time, have been placed in trust and I believe it's a matter of public record since about 1995.
Why we're here today, there's still the issue of back taxes that were sued for.
In addition, obviously, both sides want to know how to deal with lands--
Unknown Speaker: Are these parcels within the boundaries of the tribal reservation here?
Mr. Maus: --For purposes of this lawsuit we have stipulated that the lands are within the reservation boundaries.
Whether or not they're within accepted reservation boundaries based on some of the Court's recent cases or not--
Unknown Speaker: But--
Mr. Maus: --is a matter for another day.
Unknown Speaker: --Right.
They're within the reservation boundaries and held in trust for the benefit of the tribe, by virtue of the reacquisition by the tribe?
Mr. Maus: That's correct.
They've subsequently been put in the trust, and in... obviously the period that we were taxing them was while they were being held in fee, up and until they were put in the trust, and once they're put into the trust there's no dispute that we cannot tax them.
Unknown Speaker: And if they had never been sold off as pinelands and homesteads, you concede that no county tax would have been possible?
Mr. Maus: That's correct.
If they hadn't been placed on the open market, and it's our contention that the Nelson Act did that and, indeed, they have been taxed since their inception or their sale on the open market back in the early 1900's----
Unknown Speaker: And there were additional parcels that were reacquired pursuant to the lands covered by the Dawes Act as amended by the Burke Act, but they're not at issue here?
Mr. Maus: --They're no longer at issue, that's correct.
Unknown Speaker: And as to those parcels the tax is being levied and the Burke Act expressly says that taxation is possible, I take it?
Mr. Maus: Well, the Burke Act says that but we believe that the Court went a step farther than that in the Yakima case in finding that the Burke Act made it more clear, but that section 5 of the General Allotment Act made it clear and made those lands taxable as they were alienable following the logic, basically, of Goudy v. Meath, which was decided in 1906, and decided also by this Court.
Unknown Speaker: May I be sure I understood something you said?
When the land was reacquired by the tribe, did you tell me that you seek to tax it while it was owned by the tribe, but you say you cannot tax it after the tribe had it put back in trust?
Mr. Maus: That's correct.
Unknown Speaker: And who's the trustee?
Is the United States the trustee?
Mr. Maus: Yes, they are.
Under the trust process, pursuant to the Reorganization Act, which was passed in 1934, there's a trust process where the band can acquire lands, apply to put them into trust, and the Department of Interior makes a decision based on whether or not they're to be put in trust, and one of the criteria for that decision is basically the effect on local units of government.
Unknown Speaker: I don't quite understand why it should make a difference whether the land is owned outright by the tribe or held for the tribe in trust by the United States.
I don't understand why that should make a difference.
Mr. Maus: You know, basically that's... the difference being this, is that's what Congress decided to do, and they did a balancing test, obviously, when they did the... passed the Indian Reorganization Act, and wanted to look at land as--
Unknown Speaker: The answer in other words is, that's required by the 1934 statute.
Mr. Maus: --That's correct, and there is specific language that says, once it's put into trust, that it's not taxable.
Unknown Speaker: I see.
Is it also not alienable if it's in trust?
Mr. Maus: That's correct.
It could not be sold.
It would have to go back through... the Department of Interior would have to approve any sale.
Unknown Speaker: And so--
--And that's the second 465 procedure that you said, if they want to get tax exempt... it doesn't happen automatically.
I think when Justice O'Connor asked you when the tribe reacquires it, does it then gain exemption, and I think your answer is no, not unit there is this 465 procedure to put it back in trust, at which point it's neither alienable nor taxable.
Mr. Maus: That's correct.
Unknown Speaker: So how many years are we talking about that it was in this state where it was reacquired by the tribe but not yet put in trust?
Mr. Maus: Okay.
All of the parcels in issue, all 21 of them, have been purchased... were purchased since 1980.
That was the earliest of those.
14 out of those original 21 had been purchased in 1993.
We began taxing them in 1993.
I guess there was some confusion in the... within the State, you know, can this land be taxed or not, you know, prior to being put into trust, and after the Yakima decision came out, at least at the county level we received one of the State memos basically saying that it appears that this land is taxable and we put it on the tax roll.
Unknown Speaker: So we're talking about 2 years.
Mr. Maus: We're talking about... well, basically if we... if it went on the tax rolls in 1993 it would have been taxes payable in 1994, and the lawsuit was commenced in '95, and towards the latter part of '95 all of these parcels, or at least the remaining parcels were put into trust, so we're talking about a year and a half, basically, I guess of actual, payable taxes for most of the parcels, maybe more or less for some of them.
Unknown Speaker: Does the provision of the law which enables these parcels to be put in trust, does that say that when they go into trust they are no longer taxable?
Mr. Maus: Yes.
Section 465 specifically says that once lands are in trust they are not taxable.
Unknown Speaker: That probably wouldn't be necessary if they're not taxable anyway so long as the tribe acquires them.
Mr. Maus: That's correct.
It's our belief that the legislature could have, had they wanted to with the Indian Reorganization Act clearly made all lands that were acquired by the tribe not taxable, or reacquired, but they didn't do that.
They stopped short of that, in effect set forth that process to give us some input.
Unknown Speaker: But your point is that there's a distinction because if it's not put into trust the tribe can sell it and do whatever it wants to with it, but if they put it in a trust they have to get the consent of the United States to do something with it.
Mr. Maus: --That's correct.
Unknown Speaker: Yes.
Mr. Maus: And I... you know, I point out to the Court that I know that the tribe in this particular case and United States is taking an opposite position saying, well, we just can't sell the land, and I would submit to this Court that that... I don't believe that that's the case, and that's not our position.
Unknown Speaker: You're talking about the Indian Nonintercourse Act--
Mr. Maus: Correct.
Unknown Speaker: --argument?
Mr. Maus: It--
Unknown Speaker: Well, that... what is your answer to the Indian Nonintercourse Act?
I mean if you read it, it does say that, doesn't it?
Mr. Maus: --But it's real simple.
It... one of the parts that it says early on... you know, it's passed in 1834, okay, and--
Unknown Speaker: I thought it was earlier than that.
Is that when it started?
I thought it was--
Mr. Maus: --Yes.
It was actually before then, but the latest version, I guess--
Unknown Speaker: --Oh--
Mr. Maus: --that Congress had addressed was 1834, and it provided that lands couldn't be sold without the permission of Congress.
In other words, Congress was to sell lands.
In other words, States couldn't take lands and start ceding them to individuals.
Well, the simple answer to that, the real short one is, along comes the Nelson Act.
There's Congress' authority.
In fact, they take the land, they cede it and relinquish any title of it and give it to the Federal Government, who then puts it on the open market, so is there authority to get around the Nonintercourse Act?
In addition to that--
Unknown Speaker: --Well, there was at the time of the... there was at the time of the allotment and the other distributions, but the question is, doesn't the term... don't the terms of the act cover it now that it is back in Indian or tribal ownership?
Mr. Maus: --Two basic answers to that, I guess.
There's one... you know, if you look at the logic of reacquired lands, if you're looking at that pure logic, you have the Indian Reorganization Act, which deals with the reacquisition of lands and a determination of whether or not they should be taxable or not, whether or not they should be put into trust or not, and second of all--
Unknown Speaker: The point that there would have been no point in making that, the taxability a consideration when it went into trust if... unless it were taxable before it goes into trust.
Mr. Maus: --Correct.
Unknown Speaker: Right, okay.
Mr. Maus: And second of all, with respect to that, you know, the Court couldn't have decided the Yakima case the way it did had that been the case, because in Yakima I believe that there were some parcels of land that were due to go tax forfeited and that was at issue also, because there was some government lands and some individual.
Unknown Speaker: That may imply that alienability simply is not the sole criterion.
Mr. Maus: Correct.
Unknown Speaker: Why... what... is this... it seems to me if we're talking about these particular parcels, they're the same as any other parcels that have been out there, occupied and owned by people who are not Indians in fee simple.
There could be many such parcels, and it could have ended up in the hands of non Indians for many such... many reasons.
And so one day a tribe comes along and buys a parcel of land that previously didn't belong to the tribe, on the reservation, and isn't the issue whether, once the tribe acquires that, whether it ever... whatever it is, it's in the reservation.
They bought it.
Now, is it taxable or not?
And if the principle is, well, it's not taxable only because it's in the tribe's hands, however it got there, unless Congress clearly says so, where did Congress clearly say so?
Mr. Maus: We believe that Congress clearly said that the land was taxable first, I guess, looking at the Nelson Act itself.
I mean, it gave absolute fee title to everyone.
Unknown Speaker: Yes, but that has nothing to do with the issue.
The issue... that's an issue of what happens when the tribe owns the land and gets rid of it.
Mr. Maus: Okay.
Unknown Speaker: Now, that's not our issue.
Our issue is, there's some land out there that doesn't belong to the tribe.
We don't care how or why it doesn't belong to the tribe.
Now, the tribe acquires it.
Mr. Maus: Okay.
Unknown Speaker: All right, once it's acquired, is it now no longer taxable, and if the principle is, it's no... not taxable once it's in the hands of the tribe, however it got there, unless Congress clearly says so--
Mr. Maus: Mm hmm.
Unknown Speaker: --where did Congress clearly say so?
Mr. Maus: We believe that Congress clearly said so by making it alienable, and again I don't want to pound on the Nelson Act, but that's what... what made alienable, and then looking at the logic of Goudy v. Meath and the Yakima case, which basically are allowing for the taxability of the land because it's alienable, the tax is on the land itself, and I think that Congress has specifically acted in the area of lands and addressed that, you know, both in the Nelson Act and then later, of course, in the Indian Reorganization Act.
And if you look at the intent of Congress... and clearly we have to put up unmistakably clear intent, and that's a burden we accept, and we do think that's the correct burden of proof here.
We think that is all met when you add up, you know, the way it's put into fee, okay, the logic of the alienability of the Yakima and Goudy decisions... Congress clearly made it taxable... and if you look at, you know, the allotted lands, you know, they made them taxable after 25 years as opposed to immediately.
You know, that was part of the General Allotment Act.
So clearly, you know, you could look at that and say, well, in the case we have here, would it make sense to tax people that reacquired lands that were originally allotted to them and not tax lands that were put open in the general market?
I mean, that kind of logic doesn't make much sense.
Unknown Speaker: And of course, then they have the trust thing you were talking about.
So, why do they need the trust thing if they're not taxable in... I mean, you know, if it isn't nontaxable once they reacquire it.
Mr. Maus: That's correct, and obviously it... well, there's been a history of abuse of getting it into trust, and so one could look at it and say, well, you could always apply for trust.
Well, what are you going to do to stop that?
Well, we don't know what will happen in the future.
More recently the Department of Interior has changed some rules which now allow for 30 days after they decide to put land into trust for counties or local units the Government to appeal under the Administrative Procedures Act if we feel that the decision was not appropriate, so we do have that ability now.
Unknown Speaker: Mr. Maus... I'm not sure we have to reach it, but maybe we do.
I'm really troubled by the Indian Nonintercourse Act.
Suppose the tribe... suppose this is land that was never tribal land?
It was never allotted.
It was never opened to homesteading or anything.
It was just never Indian land.
And the tribe, as a tribe, buys this parcel of land that used to be owned by the Duke of Albemarle.
Mr. Maus: Okay.
Unknown Speaker: It was never tribal land.
Why isn't that land covered by the Indian Nonintercourse Act, so that once the tribe has it, the tribe cannot again resell it without a treaty or authority from Congress?
Mr. Maus: So in your scenario you'd be talking about land that was acquired for the first time outside the reservation?
Unknown Speaker: Yes.
Mr. Maus: Okay.
I think the Reorganization Act deals with land acquisitions by the tribe in general, either reacquired or acquired, and I think that those same provisions would apply, and it could certainly be argued that--
Unknown Speaker: What provisions, the provisions that--
Mr. Maus: --The trust provisions under 465.
Unknown Speaker: --And which imply, according to you, that if they are not put into trust they are taxable, right?
Mr. Maus: Correct.
Unknown Speaker: And then you would reason, and since they are taxable, you'd sort of go backwards from your reasoning for the purposes of this case, you're saying.
Mr. Maus: --Sure.
Unknown Speaker: Since they're taxable, they must be alienable, just as for this case--
Mr. Maus: Sure.
Unknown Speaker: --you'd say if they're alienable they must be taxable.
That's how you get there?
Mr. Maus: Well, I--
Unknown Speaker: That's ingenious.
Mr. Maus: --Well, I don't know about that, but the alienability results in taxability absent treaty or statutory exceptions.
Now, there may be some treaties that make land that might be alienable.
Maybe you can sell it, but it's not necessarily taxable because it specifically says it's not taxable.
And also, in addition to that, you know, the tribe also has the ability to apply for State exemptions without even going through the trust process, maybe to keep their land alienable, and maybe it's exempt for some... if it's for some governmental type purpose that's viewed by the States as being exempt.
For example, maybe a highway maintenance garage, or similar, like, you know, local units of government are exempt from taxation, just like cities are exempt from county taxation unless they have investment type properties.
Those would probably be found taxable.
So there is a difference there.
I would submit to the Court that deciding this decision to say alienability results in taxability absent treaty or statutory exceptions to the contrary would establish a bright line rule that could be applied.
It doesn't go too far, in that if there are individual treaties out there, or individual statutes with some of the various tribes or States that prohibit this, that they couldn't be taxed, and I think that would be fair for all.
I think that this would certainly allow the... both units of government input in the decision making process which it appears clear that Congress has given through the trust process, to allow the local units of government at least to have their say.
Second, you know that as a... or another point, as I also indicated, they have the ability to apply for State exemptions.
I mean, that's part of the overall rule too, and if they're appropriate they can do that.
An adverse ruling in this case to the county and other local units of government could have an adverse ruling, or an adverse effect on local units of government in particular by shrinking what has been heretofore a tax base that encompassed these lands by taking, you know, these off in a large fashion or in a regular fashion, which--
Unknown Speaker: But you told us that's in fact what happened.
It's only a year and a half we're talking about because the Government did put this land back in trust, and... which made it exempt, so the argument that the counties are losing all this revenue, it wouldn't have had the opportunity to get any if the Government had moved fast enough on the 465, right?
Mr. Maus: --Well, I would submit to the Court that if we're looking at the future, you know, the trust process has changed, and will the tribes be able to get land into trust in the future the way they have in the past?
Basically, throughout the history of the county we've opposed them all and never been successful, but now there's a new appeal process and we haven't... we haven't tried that yet, and that may result in the slowing down of lands put into trust, or at least give us some input, or more input into that process.
You know, is it going to hurt the tax base, for example?
For example, putting... one of these parcels involved a casino.
You know, is taking a casino and putting it into trust going to hurt the county's tax... taxing authority, or will it hurt the county?
Because you know, obviously when you have larger parcels, or larger investments, you're certainly talking about more Government services that are needed for those parcels.
Unknown Speaker: How close is Cass County to the Twin Cities?
Mr. Maus: Cass County is about 200 miles north.
It's actually in the north central part of the State of Minnesota.
It's a large county, as counties go.
It's probably close to the size of Rhode Island, out here, and the portion where the reservation is located certainly in there is a large lake.
That's probably 20 miles by 20 miles, with a lot of bays.
It's kind of shaped like a maple leaf.
Unknown Speaker: Is that Leech Lake?
Mr. Maus: Yes, and then there's some other large lakes around it, and the economy up there, just so you've got a picture of that, is basically one of tourism.
That's the number 1 business up there, and there are a lot of parcels of land up there, obviously, that are owned by nonresidents that come up there and they have seasonal cabins up there, and reside there for the summer, and so the increase of services is obviously, I suppose, almost three or fourfold in the summer than it is during the regular part of the year.
Unknown Speaker: Can I ask you if... you've called our attention to section 465, about the land going into trust.
Did the courts below give any attention to that section, or has it been briefed at all?
Or did it just come out of the blue this morning?
Mr. Maus: Well, we certainly raised it all along, and I would say in the Eighth Circuit court that the decision basically gave us the... you know, the allotted lands similar to what was in Yakima... didn't... the holding was there basically didn't find for the pinelands and the homestead lands, saying that they believed that this Court relied on the Burke Act.
Unknown Speaker: The proviso--
Mr. Maus: --to find that language, and it's our position that court, you know, looked at Goudy v. Meath and in fact didn't find the Burke Act necessary but did say that it made it more clear.
I guess if something's clear they make it more clear, so it had to have been clear all along, so--
Unknown Speaker: --Do you wish to reserve the balance of your time?
Mr. Maus: --Yes.
Unknown Speaker: Very well.
Mr. Schoessler, we'll hear from you.
Argument of James M. Schoessler
Mr. Schoessler: Mr. Chief Justice, and may it please the Court--
As a preliminary matter I'd like to address a question that was raised about the Indian Reorganization Act and 25 U.S.C. section 465, which is the section that allows the United States Government to take land into trust for Indian tribes.
I think there was an implication made to the Court that that section somehow granted taxing jurisdiction to States and counties over land by negative implication.
Unknown Speaker: Well, what it says, the negative... it does expressly say that if the Secretary does acquire the land in trust for the Indians, the land shall therefore be tax exempt, which one assumes that before it was acquired it was not tax exempt.
That's the argument, as I understand it.
Mr. Schoessler: Yes.
Unknown Speaker: Yes.
Mr. Schoessler: It's basically a negative implication, to which I think two responses are required.
The first one probably is that that kind of a negative implication would be completely antithetical to the philosophy that was behind the adoption of the Indian Reorganization Act and the promotion of tribal independence and self sufficiency that forms the basis of the act and the rebuilding of the reservation land base that, at least partially, that act was all about.
The second thing I would point out is that, in fact, this Court has addressed the negative implication question in the past in a decision that was issued in 1973, Mescalero Apache Tribe v. Jones.
The Court had an opportunity to look at the legislative history and the wording of the trust provisions of the Indian Reorganization Act and the Court there specifically said that there was nothing in that act or its history which indicated an intent on the part of Congress to remove the traditional tax exemptions that tribes had within reservations.
Unknown Speaker: Well, but that leaves open the question, doesn't it, because the question here is whether this particular tax exemption in fact would... is of the traditional variety, or whether, because of the history traced in Yakima, it's in a different position.
Mr. Schoessler: Yes, Your Honor--
Unknown Speaker: So I think what the Court said really leaves the question right where we find it.
Mr. Schoessler: --The point that I was simply making is that there is no authority within the Indian Reorganization Act and section 465 to find a grant of jurisdiction, even by negative implication to counties or States to tax tribal lands.
Unknown Speaker: That may be.
I think... I thought the point was simply that it confirms a conclusion that we might reach on other ground.
Mr. Schoessler: It does bring up, I think, what the basic point of this case is anyway, and the basic rule of law that should govern this case.
It's a rule of law that even the county agrees with.
It's not disputed.
It was cited as authoritative by the county, and it's well known to this Court.
It's the unmistakably clear intent rule, what's called the per se rule, against taxation of Indians and tribes in Indian country.
Unknown Speaker: The trouble is we say that on the one hand and we also have language very similar to that.
That is, that it's almost irrefutable implication that where there is alienability there is taxability.
You've also said something along those lines, and these two absolutes seem to be clashing head on in the present case.
Mr. Schoessler: Your Honor, I would suggest that the unmistakably clear intent rule, or the per se rule, if you will, has a long and honorable history in this country's jurisprudence.
It's about 150 years old.
It has been--
Unknown Speaker: Well, but Goudy v. Meath also has a long and, I suspect, equally honorable... and it seems to me if Goudy v. Meath controls in this case, you lose.
Maybe you can see a way to distinguish it.
Mr. Schoessler: --Give me an opportunity to do that now, Your Honor.
Unknown Speaker: By all means, yes.
Mr. Schoessler: I would like to talk about Goudy v. Meath--
Unknown Speaker: Yes.
Mr. Schoessler: --because, after all, it is probably the foundation of the county's argument here.
It's the case which the county asserts set forth an alienability equals taxability rule, and I'd like to make a few observations about that case.
Number 1, the unmistakably clear intent rule was even at that time a fairly longstanding principle in the law going back to the Kansas Indians and probably Russo v. Georgia for that matter, so the Goudy court was well aware of that principle.
The Goudy opinion, it seems to us just on the face of it, is a somewhat odd decision on which to base a fairly major shift from that per se rule against taxation.
The opinion itself was only two pages long.
There was a one page statement of facts and a less than one page opinion by Justice Brewer.
The opinion does not examine in detail prior Indian law precedent relating to jurisdictional matters.
The opinion does not seem to indicate that new Indian law ground is being plowed, or is intended to be plowed in that short opinion, and there's no indication, it seems to us, that the Court is clearly establishing a new generic rule of law that says alienability equals taxability.
Unknown Speaker: Was the Indian Nonintercourse Act in effect, or its predecessor, at the time of Goudy?
Mr. Schoessler: Yes, it was, Your Honor.
Unknown Speaker: And what are we to make of that nonintercourse act as part and parcel of--
Mr. Schoessler: I think the Court in Goudy did not address or consider the Indian Nonintercourse Act and I think it was for this reason, and it's probably I think the most critical factor in Goudy and perhaps one of the more misunderstood factors in Goudy, and that is the fact that the Goudy court treated the plaintiff in that case, James Goudy, not as an Indian but as a non Indian citizen.
It was stipulated to in that case that Goudy was to be treated as a non Indian citizen.
That was referred to by the Court and I think it was terribly important to the decision in that case.
It was terribly important because it reversed presumptions.
As a non Indian citizen Goudy was presumed already to be subject to State law unless he could show an express Federal exemption from that law.
If he were treated as an Indian, he would have been presumed protected from State jurisdiction unless the county could have shown an unmistakably clear delegation of authority over him.
What the Goudy court did is rule on the exemption question.
It ruled that James Goudy could not demonstrate an unmistakably clear exemption from the taxation that was presumed valid over him as a non Indian citizen.
The court did not decide and declare that the alienability of his land provided the jurisdiction over him.
That jurisdiction already existed because he was a non Indian citizen within the boundaries of the State.
Unknown Speaker: --If we did distinguish Goudy along the lines you suggest, or said it doesn't really apply any more, what would prevent an Indian tribe from buying 5 acres of downtown Minneapolis and setting up some hotels, restaurants, and various other things and saying, all right, yes, they're casinos, and saying we're immune from taxation?
Mr. Schoessler: Then I think, Your Honor, you have the on reservation off reservation--
Unknown Speaker: Yes, but I mean, you've now... where did that come from?
I mean, why suddenly is it so inherently absolutely clear that Congress wanted to permit Minneapolis to tax the casino owned by the tribe but not indisputably absolutely clear that Congress wanted Cass County to tax the five alienable acres owned by the tribe on the reservation?
Mr. Schoessler: --Your Honor, to answer that I think you have to go back basically to the foundations of the country and the beginning of the per se rule against taxation of Indians--
Unknown Speaker: --I see where you're--
Mr. Schoessler: --Indian reservations.
Unknown Speaker: --I see where you're going, so let me then, ask you, is it, although in this case quite clear what's on a reservation and what isn't on a reservation, it seems to me we've had quite a few cases where that's not at all clear, and how will we manage that kind of distinction, which is another one you tried to draw, where we have Indian tribes in Alaska or other places where there is a lot of dispute as to what the boundaries of the reservation are?
Mr. Schoessler: That kind of a distinction goes far beyond the taxation questions in this case, and frankly it's always going to be with us in the context of the--
Unknown Speaker: It's not going to be with us if the rule is alienability means taxability.
Mr. Schoessler: --If the rule turns out to be alienability equals taxability, what has been said essentially is that the only land or property on reservations that is exempt from State jurisdiction is trust property, property actually owned by the United States in trust for individual Indians or tribes.
That... excuse me.
Unknown Speaker: You don't rely on the Indian Nonintercourse Act?
I mean, the argument... I thought that both you and the United States made the argument that that in fact renders everything held by the tribe not freely alienable.
Mr. Schoessler: Your Honor, we certainly do argue that, but our most serious concern is the alienability equals taxability rule.
Certainly the nonintercourse act we believe would prevent the lands from being taxed if there was such a rule in this country's jurisprudence, so we seriously argue about the validity of the rule itself, and that's our primary concern.
Unknown Speaker: But the broad statement you just made that if we adopted that rule all Indian land would be taxable except trust land is not true if we accept your INA argument, right?
Mr. Schoessler: Yes, that's correct.
The other point that I would make about that is by adopting such a rule you have essentially de facto disestablished reservations, because the rule of Indian country generally is, as you well know, is that State jurisdiction is limited in Indian country.
It's limited over both Indians and tribes within Indian country.
Unknown Speaker: Let me go back a minute, Mr. Schoessler, to your comment about the Indian Nonintercourse Act.
It seems to me if we held that to mean what you and the Government say it should mean here that a tribe today or tomorrow seeking to convey land in a business transaction is up against a very real burden.
How would a tribe that wished to convey some land that it owned today go about it if the Indian Intercourse Act means what you say it means?
Mr. Schoessler: Mr. Chief Justice, you're correct, it does, in fact, impose a burden on the potential transfer of lands that are purchased in fee by Indian tribes.
We understand that, and we would hope that if not now, in the future, rules for allowing such transfer under perhaps more flexible circumstances than exist now for allowing transfers of trust lands would be developed and the tribes could obtain that permission.
Unknown Speaker: So that would--
Mr. Schoessler: We understand it's a two edged sword.
Unknown Speaker: --And that would take an amendment by Congress, I take it--
Mr. Schoessler: Yes, it would.
Unknown Speaker: --of the Indian Intercourse Act.
Mr. Schoessler: Yes, Your Honor.
Unknown Speaker: Gee, I don't think it's a... I mean, it's a sword on the one side and a pen knife on the other.
I think it's a good deal for the tribes.
They just ought to buy up all land in sight and they have a great economic advantage over all other landholders.
Maybe they don't have to pay taxes and what they ought to do is acquire vast, you know, acreage and then lease it out to other people, which can be done very profitably because the scheme just exempts the real estate from taxes.
It's really a wonderful opportunity for the tribes.
Mr. Schoessler: Your Honor, two points on that.
Number 1, we still have to maintain the distinction between on reservation and off reservation.
It certainly would not allow the tribes to go off reservation, purchase land--
Unknown Speaker: Why not?
Mr. Schoessler: --and then essentially say they're not taxable.
Unknown Speaker: Why not?
There's nothing in the statute that suggests there's any distinction between reservation or nonreservation lands.
Mr. Schoessler: Your Honor, I would suggest that the nonintercourse act would prevent conveyance of lands that were purchased off reservation but not necessarily the taxability of those lands.
Unknown Speaker: Well, why is that?
Mr. Schoessler: I would base it actually on the plain wording of the act.
The wording of the act does not talk about taxation.
The wording of the act talks about conveyance, and I think there is nothing that is necessarily mutually exclusive or improper about a piece of land being purchased off reservation that the United States would not allow to be conveyed without its approval as differentiated from land being purchased off the reservation that might be taxable.
Unknown Speaker: But if you're right about the intercourse act, it isn't just a question of the Secretary of Interior approving a conveyance.
It's a... it has to be done either pursuant to treaty or convention, so that some administrative approval in the Interior Department isn't going to help you.
Mr. Schoessler: Your Honor, unless Congress passed a procedure which allowed that to happen.
Unknown Speaker: Right.
Mr. Schoessler: Which is what we presume would occur in that kind of instance.
Unknown Speaker: Mr.--
--a couple of hundred years?
I mean, it's been around since 1790.
Isn't that when the thing first came up?
I don't know why they're going to suddenly pass a statute.
Mr. Schoessler: It is... Your Honor, it's only been very recently that tribes have been in any sort of position to attempt to rebuild their tribal land bases on their own reservations.
Unknown Speaker: Mr.--
--Why wouldn't that act apply to the Indian allottees, because one of the curiosities about the Eighth Circuit decision is the land that was allotted to homesteads then reverts to the tribe and becomes nontaxable, but the land that was allotted to Indians doesn't acquire that status when it goes back to the tribe, so what would a rational legislature be thinking about saying if the land went to a non Indian then it immediately reacquires its tax exempt status, but if it went to an Indian, then it stays subject to tax?
Mr. Schoessler: Your Honor, you're referring to the Indian Nonintercourse Act implications?
Unknown Speaker: Yes.
Why doesn't that cover the... why wouldn't that take care of the whole case, not just the parcels that went to homesteaders?
Mr. Schoessler: If my recollection is correct and it... I believe it is, the original versions of the Indian Nonintercourse Act included language relating to individual Indians, the last version did not, so the nonintercourse act as it reads now only applies to tribes, to tribal lands, not individual lands.
Unknown Speaker: But you know, ironically, if you read it literally I think it would have foreclosed a transfer from the tribe to the United States in trust for the tribe.
Mr. Schoessler: Your Honor, except for the proposition that Congress established a procedure to allow that to happen.
Unknown Speaker: But it hadn't.
I mean, nothing in the statute authorized that, as I read it.
Maybe I'm missing something.
Nothing in the nonintercourse act authorizes conveyances by Indian tribes to the United States in trust for the tribe.
Mr. Schoessler: That is correct, Your Honor.
That was authorized later by act of Congress when it passed the Indian Non... or the Indian Reorganization Act and provided for repurchases of tribal land base--
Unknown Speaker: Not from the tribes necessarily.
It provided that the United States could acquire land in trust for the tribes, but they could acquire it from private... and indeed, I think that's mainly what was envisioned, acquiring it from private sources so it wouldn't collide with the nonintercourse act at all.
Mr. Schoessler: --You're correct, Your Honor, in terms of... in terms of the purchases of land, as opposed to the conveyancing away of land.
Unknown Speaker: Right.
Mr. Schoessler: The purchase of land has really only become an issue probably in the last couple of decades as tribal governments have built themselves up enough to actually consider being able to rebuild some of their tribal land bases.
Those land bases were devastated during the allotment era.
The Leech Lake Reservation is an example of that, where over 90 percent of the land, 95 percent of the land was lost to Indians and the tribe during the allotment era.
The whole thrust of current... of the current attempts are for the tribes to attempt to rebuild some of their reservations that were taken away during the allotment era and it makes a great deal of difference to them and it's very important to the tribes for several reasons, not only for economic development and self sufficiency, but--
Unknown Speaker: Well, they weren't taken away, they were conveyed away, weren't they?
Mr. Schoessler: --They were removed from tribal ownership, I--
Unknown Speaker: Yes.
Mr. Schoessler: --suppose that's a more correct--
Unknown Speaker: By voluntary transaction.
Mr. Schoessler: --Or by act of Congress.
But the last point that I was going to make is that it's also important for the tribes to rebuild these land bases because it is becoming increasingly apparent that much of the jurisdiction that tribes have as semisovereigns is being related to the land ownership that they have within their reservations.
So it makes a great deal of difference, both economically and in terms of self government and in terms of the sovereign jurisdiction that they can exert, that lands within the reservations be rebuilt and that they be reacquired by the tribes, and that's actually one of the reasons we're here, is because the tribes are starting to do that and the counties and States are objecting to that.
Unknown Speaker: If I understand it, there is an out, which you wouldn't like, but it prevents downtown Minneapolis from becoming inalienable, and that is that the Indian Nonintercourse Act only applies to lands that have not been sold in fee simple and thereby become alienable, but if the tribe reacquires land like that, well, it remains alienable, and that kind of interpretation applies on reservation and off reservation, et cetera.
If you accept that, you don't get into this problem of downtown Minneapolis, but of course, then, if you also accept taxation follows alienability, it means that this land would be taxable.
That's a long question.
Mr. Schoessler: Your Honor, I would simply suggest that if that kind of thing is read into the Indian Nonintercourse Act, one could just as easily read into the act that it applies only to Indian country and reservation lands, and if we're reading words into the act that would be a more acceptable way of doing it.
Unknown Speaker: Thank you, Mr. Schoessler.
Ms. McDowell, we'll hear from you.
Argument of Barbara B. McDowell
Mr. McDowell: Mr. Chief Justice, and may it please the Court--
Unknown Speaker: Ms. McDowell--
Mr. McDowell: --Yes.
Unknown Speaker: --may I ask you, not necessarily now, but at some point during your argument, to comment on the argument that Mr. Maus made, and I understood it to go basically like this.
He accepts the unmistakability doctrine.
He then says, look what you've done so far, look what you've held so far.
You've held that allotment lands that ultimately are reconveyed, or ultimately end up at the present time in the hands of an Indian or of a tribe are taxable.
If those lands are taxable, how could you possibly attribute to Congress an intent not to provide the like treatment to lands that come back... that come to the tribe or the Indian after having been through the pinelands conveyance process, or the process in... pursuant to the Homestead Act?
It's an a fortiori kind of argument, and at some point will you comment on that?
Mr. McDowell: Yes.
We would initially take the position that there's been no statement here or clear expression of congressional intent to tax--
Unknown Speaker: Well, he... but I think we accept, and I mean I think the premise of his argument was, the statement does not have to have an express reference to the particular land or category of land.
It's simply got to be unmistakably clear.
And if it's unmistakably clear for allotment lands, it's got to be... you've got to have the same rule for nonallotment lands that would convey out.
I mean, it would just be bizarre otherwise, and that's where the unmistakability comes from, as I understand it.
Mr. McDowell: --We do not believe it's unmistakably clear that Congress intended to tax even the allotment lands in the hands of the tribe.
There's only a reference in the General Allotment Act to taxation of lands in the hands of individual Indians.
We would submit, given the governmental status of a tribe, that Congress would have needed to make a clearer statement of an intent to--
Unknown Speaker: Didn't we say that in Yakima?
Didn't we equate land in the hands of the tribes and of the Indians?
Mr. McDowell: --The Court didn't draw the distinction in Yakima.
However, the distinction is not based--
Unknown Speaker: But it did expressly refer... it expressly referred to both, didn't it?
Mr. McDowell: --It expressly referred to the fact that there were tribally owned lands there, as well.
Unknown Speaker: Yes, which were an issue, as I understand it.
Mr. McDowell: --Yes, that's correct.
Unknown Speaker: All right.
If you take that as your starting place, that allotment lands which by whatever process end up back in the hands of the tribe, or end up in the hands of the tribe are going to be taxable, isn't it a pretty strong argument that lands that went out by way of the pinelands or the Homestead Act kind of conveyances have got to be in the same position, or you're attributing a certain sort of bizarreness to Congress.
Mr. McDowell: This Court's rule is that there must be some sort of unmistakably clear expression of what Congress intended, and it's impossible to tell here what Congress would have intended about land that came back into the possession of the tribe.
Unknown Speaker: But once the Court has determined that it is clear with respect to land that was allotted to individual Indians, once the Court has made that determination that that is clear, then why isn't it, as Justice Souter says, equally clear that no rational Congress could have envisioned a different treatment for the land that went out not under allotments to individual Indians?
What rational Congress would say, yeah, we meant that if it was allotted to Indians, it's reacquired by the tribe tax free, but if it went out under the Homestead Act, then the tribe has its exemption?
Mr. McDowell: Congress obviously would have understood at the time that there were many different tax statuses that might have occurred with respect to the homestead lands and the pinelands, depending on whether and how they were actually acquired.
The lands, after all, were ceded by the tribe to the United States.
It was possible that the lands would never be sold by the United States and thus would never become taxable at all.
Unknown Speaker: Yes, but we're talking about land that was sold by the United States.
That's what we've got here and, as I understand, the object of those two categories of conveyances were either settlement or exploitation of natural resources, and certainly those are two paradigm examples of land uses that Congress would have assumed would be taxable in the normal course and that, if anything, makes the a fortiori argument all the stronger.
Mr. McDowell: Well, Congress doubtless would have assumed that they would be taxable in the hands of an ordinary non Indian individual or business taxpayer, but we cannot conclude what Congress would have intended had the lands been reacquired by a tribe within the boundaries of an existing reservation.
Congress was legislating in 189... 89 at the time of the Nelson Act and subsequently, in light of this Court's decision, for example, in the New York Indians, which squarely held that tribally owned fee lands were not taxable to the tribe, so there was the background there that suggests that we cannot conclude what Congress would have intended back then with the--
Unknown Speaker: Is it part of your submission that we overlooked the significance of tribal ownership in the Yakima case?
Mr. McDowell: --Yes, Your Honor.
It wasn't raised by the parties, by the United States, or focused on by the Court.
There are a couple of reasons why I think that might have been the case.
One is that there was a--
Unknown Speaker: Why did we take the trouble to comment that there were both tribal and nontribal lands, then?
Mr. McDowell: --Oh, that was certainly part of the factual background of the case, Your Honor.
Then you would--
Unknown Speaker: Oh, but if it was an irrelevant portion, we shouldn't have mentioned it.
I mean, we've just created a lot of difficulty by mentioning that.
You don't have to mention stuff that has nothing to do with your decision.
Mr. McDowell: --The distinction was not drawn perhaps because the focus of the tribe was on the parcels that was owned by individuals.
Those were the only parcels on which the county had been attempting to foreclose in Yakima.
Also, there was a special statute in Yakima that applied to at least some of the tribally owned lands that provided that they would not be entitled to any special tax status by virtue of their ownership by the tribe that suggested that in the Yakima situation the only protection that the tribe might have would be the same status, same protections as would be available to individual Indians.
Unknown Speaker: Could you possibly just quickly say what your view is on the question of, if you followed Goudy and followed the rule, taxability follows alienability, you'd have to get to the question, is this alienable, and then we'd get to the nonintercourse act, et cetera?
What's your view?
Mr. McDowell: These lands are not alienable.
Unknown Speaker: Is downtown Minneapolis alienable?
Mr. McDowell: --We would take the position that the nonintercourse act was intended to apply only within Indian country.
Downtown Minneapolis is not Indian country.
This is consistent with the legislative history of the 1834 act.
The question arose about section 465 and its meaning.
It's not a clear statement, obviously, of congressional intent with respect to the taxable status of tribally owned reservation lands.
It should be emphasized that 465 was designed to allow the United States to take in trust both lands on the reservation and lands off the reservation, lands that clearly would have been taxable prior to their being taken into trust.
Unknown Speaker: Why is this a big problem?
I mean, the United States, who argues here on behalf of the Indians, can obviously achieve what it wants to achieve simply by taking these lands into trust, can't it?
Mr. McDowell: That's correct, but there are many tribes that have held lands for over a century now that have not... never been taken into trust and have always been recognized to be exempt from tax.
Unknown Speaker: Taken into trust?
But they're protected by... those lands aren't... they're protected by the rule, aren't they, of alienability equals taxability?
Mr. McDowell: Well, traditionally those lands have been understood to be protected by the fact of Indian tax immunity, the absence of a clear statement, and the fact that those lands were within an existing reservation, the New York Indians being an example of that case.
Certainly it's hard to attribute to Congress an unexpressed intent to overrule the New York Indians and other cases of that kind when it passed section 465.
Unknown Speaker: Was 465 the source of the authority exercised in this case to acquire the... these lands in trust by the United States to hold in trust for the Indians, for the tribes?
Mr. McDowell: That's my understanding, yes.
Unknown Speaker: You say in your brief that Yakima... it's evident that it rested primarily on section 6.
I guess Justice Scalia can... is best equipped to respond to that, but I read his decision to say when section 5 rendered the lands alienable it also rendered them assessable.
Mr. McDowell: But the decision then goes on to say that it took section 6 and the Burke Act proviso to make that implication clear.
Unknown Speaker: To make it more clear.
It said, reaffirmed, made it more clear, reaffirmed, but reaffirmed sounds to me like it was confirming what was already--
Mr. McDowell: I think it's important to look at section 3 of the Court's opinion in Yakima, where the Court actually starts applying the clear statement rule to the actual two taxes at issue in that case and there, when the Court decides that the ad valorem tax in Yakima is permissible, it is because it constitutes, quote, taxation of property within the meaning of section 6 of the General Allotment Act and the Burke Act proviso.
Unknown Speaker: --But if everything rides on the Burke Act, then why didn't that protect only the parcels where there was premature patenting?
Mr. McDowell: May I answer, Your Honor?
Unknown Speaker: Yes, you may.
Mr. McDowell: The Court looked back at section 5 of the Burke Act, of the General Allotment Act, rather, to determine that Congress' intent, as clearly expressed in section 6, also referred back to section 5.
Unknown Speaker: Thank you, Ms. McDowell.
Mr. Maus, do you have rebuttal?
Rebuttal of Earl Edwin Maus
Mr. Maus: Real briefly, Your Honor.
Unknown Speaker: Good.
Mr. Maus: A couple of things, I guess, one just on the Burke Act, just to comment on that.
The Burke Act needed to say that the land given and early fee patented was taxable, because if it hadn't said that, I submit to the Court, there was still that provision out there that had the 25-year trust period, and that would have meant that the land would have become alienable, not taxable to the... at the end of that 25 years, so the Court had to... I mean, the proviso needed to say that for the early fee patenting.
I think that clears that one up, and... hopefully.
Also, she... you know, the U.S. referred briefly to section 3 of the Yakima decision.
Well, that dealt with the excise tax, and we're not here about that today.
We're here on land, and I think the rest of the Court's decision dealt solely with land, and those taxes are certainly distinguishable from this.
And one final thing, the New York case that was cited several times here, that involved the nonintercourse act, but in that New York case there was never any act of Congress to sell those lands.
Those lands were aboriginal lands that were just merely put on the tax roll, and so--
Unknown Speaker: Weren't those lands that had never been alienated before?
Mr. Maus: --That's correct.
Unknown Speaker: They'd been Indian territory from the beginning.
Mr. Maus: That's correct, and it would be our position that the nonintercourse act applies to lands that have never been alienable.
In other words, Congress has never made them alienable and they've kept them just as they were.
I have nothing further, unless there's further questions.
Chief Justice Rehnquist: Thank you, Mr. Maus.
The case is submitted.