Mashantucket Pequot Tribe v. Town of Ledyard (2d Cir.), handed down last month, has confirmed what we all know about Bracker balancing: when applied, Tribes usually lose. In fact it seems every time courts apply the Bracker balancing test, it becomes erroneously less possible to pass. See Ute Mountain Ute Tribe v. Rodriguez, 660 F.3d 1177 (10th Cir. 2011); Barona Band of Mission Indians v. Yee, 528 F.3d 1184 (9th Cir. 2008). By way of background, Bracker essentially preempts taxes on non-Indians in Indian Country where the interests of the state are outweighed by the interests of the Tribe and the federal government, with the latter usually being borne out through federal regulation. White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980).
In Ledyard, the Mashantucket Pequot Tribe sued a neighboring town to bar Connecticut’s personal property tax upon vendors leasing slot machines to the Tribe for use at Foxwoods Casino. In applying Bracker, the court recognized and weighed the following interests:
- tribal economic development as expressed through IGRA
- tribes being primary beneficiaries in gaming
- economic development
- sovereignty over reservation
- interest in preventing litigation by other Indians related to personal property
- the hassle of a particularized inquiry into use of leased property when applying Bracker
- generalized off reservation infrastructure
- uniform application of tax code
Given the nebulous context of balancing tests, it’s very rarely possible to say a Bracker case was fundamentally incorrect. But it’s possible in Ledyard. The profound federal and tribal interests receive a gloss, but the court gives weight to incredible state and local issues that don’t make sense internally. First, the court reasoned that states have an appreciable interest in preventing litigation by those who have been illegally taxed. How can a state have a legitimate interest in preventing litigation to enforce valid legal rights? Wow, we have a major problem. Second, the court reasoned that states have an interest in avoiding complicated, particularized inquiries into who and what is being taxed. But Bracker itself requires a "particularized inquiry" into taxed value to determine whether state taxes are preempted—we have an even more major problem. Third, if generalized off-reservation services can be taken into account, we have a major, major problem. Add to the legally incorrect analysis the flip voice of this panel—“ nothing in Connecticut’s tax makes it likely that Michael Corleone will arrive to take over the Tribe’s operations” —and, in sum, we have a major, major, major problem.
When Bracker fails even in the clearly preemptive IGRA context, caution must be used in using it at all. While Bracker may still be viable in the administrative context, and in securing clear rulings from non-tribal taxing agencies, in courts, its demise may not have been exaggerated—until a court reads the 1980-decision correctly.
Anthony Broadman is a partner with Galanda Broadman PLLC. He can be reached at email@example.com. His practice focuses on company-critical litigation and representing tribal governments in public affairs, taxation, and economic development matters. He provides businesses and tribal governments advice regarding taxation, risk management, and legislative strategy. Anthony was named a Rising Star by Washington Law & Politics magazine for 2013 and is immediate past Chair of the WSBA Administrative Law Section and Editor of the Indian Law Newsletter, published by the WSBA Indian Law Section.