Negative Ninth Circuit Indian Property Tax Precedent in the Making

Last Thursday a Southern California federal court handed down an Indian property tax ruling that is of potentially significant negative implication for tribes in the Ninth Circuit.

U.S. District Court Judge Dolly Gee issued a summary judgment decision in favor of Riverside County and against the Agua Caliente Band of Cahuilla Indians, affirming state possessory interest taxes (“PIT”) assessed by the County and imposed on non-Indian lessees who use and occupy Indian trust land within the Agua Caliente Indian Reservation.  

A couple things of note:

First, the Court ruled that Section 465's preemption applied only to "lands or rights that were placed in the United States’ name in trust for the Indian’s benefit under the IRA or the Act of July 28, 1955—neither of which are at issue." This is a significant clarification, given that the best, if not only, way to win Indian tax preemption cases these days is under a federal statute or regulation.

Second, the United States, as amicus curiae in the case, contended "that the comprehensiveness of the federal and regulatory scheme governing the leasing of Indian land, coupled with the federal interest in tribal sovereignty, 'weigh heavily against state and local taxation.'” But although finding those federal interests "strong" under Bracker, the Court found that they "must nonetheless yield to . . . state interests." United States intervention--whether as a party or friend of the court--had previously been seen as tipping Bracker balancing in favor of tribes.

Expect that if the decision stands on appeal to the Ninth Circuit Court of Appeals, state revenue agents will have a field day enhancing use taxes like PIT, to circumvent property tax preemption. 

Gabriel S. Galanda is the managing lawyer of Galanda Broadman, PLLC, in Seattle. Gabe is a descendant of the Nomlaki and Concow Tribes, belonging to the Round Valley Indian Tribes of Northern California. 

 

 

One To Watch: State Court Class Action Over Wapato Point Excise Taxation & BIA Leasing Regulations

A Wapato Point sublessee has filed a class action lawsuit in Grant County, Washington, against the Chelan County Treasurer to obtain a refund of Washington State real estate excise taxes on "transactions involving the assignment of subleases of real property and improvements thereon situated on Indian land."

Wapato Point is a famed Colville Indian allotment along the shores of Lake Chelan, Washington, a major tourist destination.

Plaintiff sued on behalf of all persons "who have been subjected to the imposition of Washington real estate excise tax on transactions involving transfers or assignments of leasehold interests on Indian property situated in the state of Washington."  Presumably at least the Plaintiff, if not the entire putative class of persons, is non-Indian. The size of that class and scope of any tax refunds from those transfers or assignments---use privileges---remains to be seen.

Plaintiff was allowed to sue the Chelan County Treasurer in Grant County Superior Court under a Washington state statute that allows county defendants to be sued in an adjoining county, in order to eliminate any home-court advantage for county government.  The Grant County Superior Court likely has minimal experience with Indian legal or jurisdictional issues. 

The lynchpin to the Plaintiff's lawsuit are the BIA's following leasing regulations, which took effect in January 2013 and which are rooted in federal statute, specifically 25 U.S.C. 465:

Plaintiff's case finds support in the Eleventh Circuit Court of Appeals' decision last year in Seminole Tribe of Florida v. Stranburg, most notably this passage

§ 465 precludes state taxation of that “bundle of privileges that make up property or ownership of property.” See id. at 158, 93 S.Ct. at 1275. The ability to lease property is a fundamental privilege of property ownership. By taxing the “privilege” of “engag[ing] in the business of renting, leasing, letting, or granting a license for the use of any real property,” the State of Florida is taxing a privilege of ownership just as New Mexico's tax in Mescalero taxed the privilege of use. . . . In conclusion, we hold that Florida's Rental Tax is expressly precluded by 25 U.S.C. § 465, and, in the alternative, is preempted by the comprehensive federal regulation of Indian land leasing. 

The real estate excise taxes at issue certainly seem to implicate the privilege of "leasing, letting, or granting a license for the use" of the Wapato Point lands at issue in the Grant County suit.

Presumably, in addition to arguing federal statutory exemption, Plaintiff will also argue Bracker preemption.  Bracker, the Supreme Court test that generally governs the taxation of non-Indians in Indian Country, is among the "federal law" referenced in the quoted BIA leasing regulations.  

As with all Indian tax cases, the Grant County suit will prove to be a fierce battle against state taxing forces, especially given the venue in deeply red (GOP) rural America; the financial implications of the proposed class action for both Chelan County and the state; and Washington State Department of Revenue (DOR)'s general aversion to the BIA's leasing regulations.  DOR can be expected to somehow back the Chelan County Treasurer in defense of the suit.

Complicating things further, the balancing of tribal (Colville) and federal interests may occur without a tribal party to the suit. Historically speaking, both of those interests needed to be aggressively developed by Indian parties for Bracker interest-balancing to be meaningful. Today, however, federal laws like § 465 coupled with the BIA leasing regulations may suffice to balance those two interests.

In all, the case is one to watch, closely.

Gabriel S. Galanda is the managing lawyer of Galanda Broadman, PLLC, in Seattle. Gabe is a descendant of the Nomlaki and Concow Tribes, belonging to the Round Valley Indian Tribes of Northern California. He thanks Leslie Cushman for brainstorming the implications of this new lawsuit with him.

Five Galanda Broadman Tribal Lawyers Receive Professional Accolades

Super Lawyers magazine has named Gabe Galanda (Round Valley) a Super Lawyer, and honored Anthony Broadman, Ryan Dreveskracht, Joe Sexton and Amber Penn-Roco (Chehalis) as Rising Stars, all in the field of Native American Law.  Each lawyer was evaluated on twelve indicators of peer recognition and professional achievement. 

Chambers USA 2017 also recently named Gabe as one of the best lawyers in the country in the field of Native American Law.  Chambers, headquartered in London, identifies and ranks the world's best lawyers and law firms based on in-depth, objective research.

Galanda Broadman, “An Indian Country Law Firm,” is dedicated to advancing tribal legal rights and Indian business interests.  With offices in Seattle and Yakima, Washington and Bend, Oregon, the firm represents tribal governments, businesses and citizens in critical litigation, business and regulatory matters, especially in matters of Indian Treaty rights, tribal sovereignty, and civil rights.

IHS Issues Guidance Re: Nooksack Disenrollment, Health Care, Drinking Water

On Friday, the federal Indian Health Service (IHS) issued a set of Frequently Asked Questions (FAQs) regarding the disenrollment-fueled annihilation at Nooksack, after holding two listening sessions in Bellingham last month.  

The federal guidance is unprecedented, especially as to disenrollment, a subject that the federal government typically does not touch. A few excerpts:

Q: Is IHS taking our funding because of the Nooksack 306 members?

A: No; the IHS cannot engage in an ISDEAA contract with the Nooksack Indian Tribe until the Department of Interior determines the Tribe is acting in accordance with the Tribe's Constitution and Bylaws. The holdover council does not have standing to represent the Nooksack Indian Tribe in a government-to-government relationship with the Indian Health Service, as well as other federal agencies.

Q: Is the IHS determining who represents the Nooksack Indian Tribe?
A: No, the Department of the Interior is the lead for the federal government in issues involving tribal governance.

Q: Is our tribal clinic closing?

A: The IHS cannot say whether the tribal clinic will remain open; that is a decision only the Tribe can make. However, after June 13, 2017, the IHS will not have any relationship with the tribal clinic and the tribal clinic will no longer have access to the cost-savings and tort coverage it receives as an ISDEAA contractor.

Q: What actions are being taken by the Environmental Protection Agency (EPA) to ensure safe drinking water for the Nooksack Tribal Community?

A: According to the March 27, 2017, letter from the EPA the Tribe failed to meet drinking water regulations. The EPA has issued Unilateral Administrative Orders that took effect on April 10, 2017.

Q: What has IHS done to help the Nooksack Tribal community have safe drinking water?

A: IHS engineers and utility consultants have provided the Tribe with technical assistance to help meet the EPA regulatory requirements.

Q: Can IHS do more to provide additional support to ensure Nooksack Tribal community has safe drinking water?

A: IHS utility consultants maintain communication with members from the tribal water utility and will continue technical assistance. However, IHS cannot assist with constructing improvements to the community water systems until the Tribal Council governance issues are resolved.

Galanda Broadman, PLLC, represents over 330 Nooksack Tribal members, including but not limited to at least 50 members who are not proposed for disenrollment but simply want a Tribal Council election to be conducted.

 

Casino ATM Provider Claiming Federal Indian Tax Preemption, Dissed by Wash. State Superior Court

By Anthony Broadman

An appeal of a Washington state trial court order will test the reach of IGRA and Bracker preemption of taxes on non-Indians providing services to Tribal casinos in the state. 

Everi Payments provides ATM services to Tribal casinos in Washington.  The Washington Department of Revenue (DOR) has assessed Everi over $1.4 million in “B&O taxes,” our state’s gross receipts tax.

Everi sued DOR in Thurston County Superior Court, which granted summary judgment to DOR, holding that federal law does not preempt B&O taxes on ATM services provided to Tribal casinos.

Everi Payments has appealed that decision to Division Two of the Washington State Court of Appeals.  Given the likelihood the case will eventually ascend to the Washington State Supreme Court, remains one to watch.

Anthony Broadman is a partner at Galanda Broadman PLLC. He can be reached at 206.321.2672, anthony@galandabroadman.com, or via www.galandabroadman.com.

Washington DOR Issues Tax Guidance on Tribal Firework Sales

DOR's memo, issued on Monday, is here.  An excerpt:

Sales of fireworks delivered to the tribe’s citizens are exempt from sales tax; however, when sales are made to non-Indians from the tribal fireworks vendor, those sales are subject to sales tax.

The memo signals that the state intends to give greater attention to the taxation of fireworks sales to non-Indians this summer.

Trump’s Ineffective End to the “War on Coal”

By Amber Penn-Roco

On March 28, 2017, President Trump issued an Executive Order, “Promoting Energy Independence and Economic Growth,” designed to roll back President Obama’s climate change policies and to revive the coal industry.  Upon signing the Executive Order, President Trump remarked that he was “putting an end to the war on coal,” telling coal miners: “You’re going back to work.”  The next day, the Trump Administration formally lifted a coal-leasing moratorium on federal lands. 

Critics immediately expressed doubt as to whether President Trump’s Executive Order would be able to stop the coal industry’s decline, pointing out that the coal industry’s biggest problem is not regulation, but the rise of natural gas. 

A recent report from the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs casts further doubt on effectiveness of the Executive Order, asking: “Can Coal Make a Comeback?”  The report examines the cause of coal industry’s collapse and the “prospects for a recovery of US coal production and employment by modeling the impact of President Trump’s executive order and assessing the global coal market outlook.”

The report supported critics’ assertions that natural gas, rather than regulation, was the primary reason for the decline in the coal market.  The report finds: “Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic US coal consumption. Lower-than-expected demand is responsible for 26 percent, and the growth in renewable energy is responsible for 18 percent.”  Further, the report finds that “environmental regulations have played a role in the switch from coal to natural gas and renewables in US electricity supply by accelerating coal plant retirements, but were a significantly smaller factor than recent natural gas and renewable energy cost reductions.” 

The report also indicates that international factors further contributed to the decline in coal, finding: “Changes in the global coal market have played a far greater role in the collapse of the US coal industry than is generally understood . . . More than half of the decline in US coal company revenue between 2011 and 2015 was due to international factors.”

The report scrutinizes the effectiveness of the Executive Order, finding that “[i]mplementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in US coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, US coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations.” 

Ultimately, the report concludes, “President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities.”  The report states that considering the “domestic and international market outlook, we believe it is highly unlikely US coal mining employment will return to pre-2015 levels, let alone the industry’s historical highs."

Coal is a contentious issue in Indian Country.  On one hand, many tribes own land that has large coal reserves.  Coal can provide an economically depressed tribe a source of income.  Accordingly, many tribes support the development of natural resources on their lands.  However, many tribes are also resistant to coal mining, as it can result in the destruction and desecration of the natural environment and tribal sacred places. 

In particular, many tribes, and individual tribal members, oppose the resulting environmental impact of coal burning, which increases the emission of greenhouse gases, negatively impacting climate change.  Climate change has, historically, had a disparate impact on indigenous peoples.  As recognized by the United Nations, “Indigenous peoples are among the first to face the direct consequences of climate change, owing to their dependence upon, and close relationship with the environment and its resources.”  Indeed, “Climate change exacerbates the difficulties already faced by vulnerable indigenous communities, including political and economic marginalization, loss of land and resources, human rights violations, discrimination and unemployment.”

Accordingly, President Trump’s ineffective Executive Order will have a mixed impact on tribes.  Tribes that allow coal mining may suffer economically.  Though, no more than they would’ve suffered already under the declining coal market.  However, from an environmental perspective, the decline of the coal industry is a favorable result, as it will decrease emissions.  In all, as the President’s pro-coal Executive Order demonstrates, the issue is more nuanced that it might first appear, with Tribes having interests on both sides.

Amber V. Penn-Roco is an associate attorney at Galanda Broadman, PLLC.  Amber is a member of the Confederated Tribes of the Chehalis Reservation.  Amber’s practice focuses on tribal sovereignty issues, including complex land and environmental issues, and economic development matters.  Amber can be reached at (206) 713-0040 and amber@galandabroadman.com.

New Book Includes Gabe Galanda's "The American Indian Middle Class"

A new book, "The American Middle Class: An Economic  Encyclopedia of Progress and Poverty," includes a chapter authored by Gabriel Galanda, titled "The American Indian Middle Class."

Gabe discusses the Dawes Act of 1887, the Urban Indian Relocation Program of the 1950s, federal Indian self-determination laws and policy since the 1970s, President Reagan's Commission on Indian Reservation Economies of the 1980s, and of course Indian gaming since 1988 primarily.  He concludes: "As Indian self-determination has firmly taken hold, so too has a tribal middle class."

An excerpt:

Then of course there was, and is, Indian gaming.  What began with high-stakes bingo on various reservations in the 1970s has since the passage of the federal Indian Gaming Regulatory Act in 1988[1], blossomed into a now steady $28-billion industry.[2]  Although Indian gaming has most certainly catapulted thousands of reservation Indian families out of poverty and into much higher income brackets, the new money of Indian gaming per capita distributions has created a unique, unemployed segment of the tribal middle class.  Ho-Chunk, Inc., CEO Lance Morgan has indicted those distributions as a “new form of welfare [that] is just the latest in a cycle of dependency that Indian Country has been trying to break out of for the last 100 years.”[3]  

That new money has also catalyzed the ejection of tribal members en masse through what is called tribal disenrollment, a process of terminating members’ citizenship with their tribal government. As the Ninth Circuit Court of Appeals recently took occasion to remark about what is in essence tribal self-termination: “membership disputes have been proliferating in recent years, largely driven by the advent of Indian gaming, the revenues from which are distributed among tribal members.”[4]  In what has been described as a disenrollment epidemic, thousands of Indians—in 17 states and from over 60 tribes—have been jettisoned in recent years, relegating some of them into the lower class, if not abject poverty, and otherwise leaving them “culturally homeless.”[5]  Disenrollment has, thus, uniquely caused socio-economic stratification within tribes.[6] 

Meanwhile, those Indians who remain tribal members and still receive gaming per capita monies may not have made the definitional “sacrifices to create a better life for themselves,”[7] but they nonetheless comprise part of the tribal middle class.

The chapter was written in 2014, before undergoing an elaborate editorial and publication process. Disenrollment has increased in the interim.  As of today, nearly 80 tribes in 18 states have engaged in disenrollment, with an estimated 9,000-10,000 Indians having been terminated.

Gabriel S. Galanda is the managing lawyer of Galanda Broadman, PLLC, in Seattle. Gabe is a descendant of the Nomlaki and Concow Tribes, belonging to the Round Valley Indian Tribes of Northern California.

[1] 25 U.S.C. 2701 et seq.

[2] Press Release, National Indian Gaming Commission, 2013 Indian Gaming Revenues Increased 0.5%  (Jul. 21, 2014), available at http://www.nigc.gov/Media/Press_Releases/2014_Press_Releases/PR-226_07-2014.aspx.

[3] Stephan Cornell et al., Per Capita Distributions of American Indian Tribal Revenues: A Preliminary Discussion of Policy Considerations 1 (Native Nations Institute for Leadership, Management, and Policy & The Harvard Project on American Indian Economic Development, Occasional Paper No. 2008-02, 2007).   

[4] Alto v. Black, 738 F.3d 1111, 1116 n.2 (2013).

[5] David E. Wilkins, Two Possible Paths Forward for Native Disenrollees and the Federal Government?, Indian County Today Media Network, June 4, 2014; Cedric Sunray, Tribes Abandon Traditional Aspects of Inclusion, Indianz.com, Oct. 20, 2014, available at http://www.indianz.com/News/2014/015388.asp; Gozia Wosniacka, Disenrollment Leaves Natives ‘Culturally Homeless,’” Associated Press, Jan. 20, 2014, available at http://bigstory.ap.org/article/disenrollment-leaves-natives-culturally-homeless.

[6] Gabriel S. Galanda, Disenrollment Causes Tribal Classism, Income Inequality, Native News Network, June 29, 2015, available at http://nativenewsonline.net/opinion/disenrollment-causes-tribal-classism-income-inequality/.

[7] John Parker, Burgeoning Bourgeoisie, The Economist, Feb. 12, 2009, available at http://www.economist.com/node/13063298.

Gabe Galanda Featured in "Tribal Councils Increasingly Expel Members"

CQ Researcher has published an in-depth look at Indian Country today, including a profile on disenrollment titled, "Tribal Councils Increasingly Expel Members," in which Gabe Galanda is featured.

Gabriel S. Galanda, a Native American attorney who is fighting the disenrollment of more than 300 members of the Nooksack Indian Tribe in northwest Washington state, attributes the trend to “power and greed” sparked by increasing economic capitalism on native lands. 
Galanda says disenrollment is a non-native concept that stems from federal policies that required tribes to determine who belonged.

Gabriel S. Galanda is the managing lawyer of Galanda Broadman, PLLC, in Seattle. Gabe is a descendant of the Nomlaki and Concow Tribes, belonging to the Round Valley Indian Tribes of Northern California.

Tribal Tide Turning Against Disenrollment in 2017

For the second time in as many months, a Northern California tribal community has reversed course and reinstated tribal members who had been disenrolled.

Late last week, the Elem Indian Colony announced that the purported disenrollment of as many as 132 tribal members, who comprise 100% of the Colony's population, was reversed.   

In February, the Robinson Rancheria reversed the 2008 disenrollment of some 60 tribal members.

Robinson was the first tribe of nearly 80 tribes that have engaged in disenrollment, to voluntarily bring everyone who was disenrolled back onto the rolls.  

The two tribes' actions, coupled with modern decisions by other tribes to constitutionally prohibit disenrollment, suggest a reversal in the deadly trend of disenrollment that has overcome Indian Country in this era of Indian gaming and economic revitalization.  

With California "the epicenter of the disenrollment crisis" over the last decade, Elem and Robinson's decisions to reverse course seem especially pivotal.

Meanwhile, in Tucson last month a first-of-its-kind conference convened, bringing together tribal leaders, academics and advocates to discuss the disenrollment epidemic and its potential cures.  

As chronicled by Indian Country Today Media Network, several Tribal Chairs openly participated in the "two-day forum discussing tribal kinship, Native Nation citizenship, and tribal disenrollment by exploring questions that relate to citizenship and community-belonging in Indian country."

That discussion by tribal leaders was historic because as Ramona Band of Cahuilla Tribal Chairman Jospeh Hamilton bravely explained in 2015:

[N]obody in tribal leader circles is willing to talk about [disenrollment]. Not at NCAI, not at NIGA, not among Southern California tribal leaders, not anywhere.

As that tribal taboo ebbs, the tide turns against disenrollment.

Gabriel S. Galanda is the managing lawyer of Galanda Broadman, PLLC, in Seattle. Gabe is a descendant of the Nomlaki and Concow Tribes, belonging to the Round Valley Indian Tribes of Northern California.