724 F.3d 1153 (9th Cir. 2013), 10-35642, Confederated Tribes of Chehalis Reservation v. Thurston County Bd. of Equalization
|Citation:||724 F.3d 1153|
|Opinion Judge:||IKUTA, Circuit Judge.|
|Party Name:||CONFEDERATED TRIBES OF THE CHEHALIS RESERVATION, a federally recognized Indian tribe on its own behalf and as parens patriae for its members; CTGW, LLC, a limited liability company organized under Delaware law, Plaintiffs-Appellants, v. THURSTON COUNTY BOARD OF EQUALIZATION, a political subdivision of the State of Washington; JOHN MORRISON, Thursto|
|Attorney:||Gabriel S. Galanda and Anthony S. Broadman, Galanda Broadman, PLLC, Seattle, Washington; Kevin M. Fong (argued) and Blaine I. Green, Pillsbury Winthrop Shaw Pittman, LLP, San Francisco, California, for Plaintiffs-Appellants. Jon Tunheim, Prosecuting Attorney, Jane Futterman and Scott C. Cushing (...|
|Judge Panel:||Before: Arthur L. Alarc|
|Case Date:||July 30, 2013|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted June 5, 2013, Seattle, Washington
Appeal from the United States District Court for the Western District of Washington. D.C. No. 3:08-cv-05562-BHS. Benjamin H. Settle, District Judge, Presiding.
Indian Tribes / Taxation
Reversing the district court's summary judgment, the panel held that state and local governments lack the power to tax permanent improvements built on non-reservation land owned by the United States and held in trust for an Indian tribe pursuant to 25 U.S.C. § 465.
The panel held that pursuant to Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973), the exemption of trust lands from state and local taxation under § 465 extends to permanent improvements on such lands. The panel concluded that the fact that the improvements were owned by a limited liability company, rather than by the tribe itself, was irrelevant, as was the question whether the improvements constituted personal property under state law.
At issue in this case is whether state and local governments have the power to tax permanent improvements built on non-reservation land owned by the United States and held in trust for an Indian tribe. Pursuant to 25 U.S.C. § 465, and Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973), we hold that they do not.
The Confederated Tribes of the Chehalis Reservation is a federally recognized Indian tribe in Southwest Washington.1 In 2002, the Tribe purchased approximately forty-three acres of land known as the " Grand Mound Property," which was located off the Tribe's reservation in Thurston County, Washington. Two years later, the Tribe asked the Department of the Interior to buy the Grand Mound Property and hold it in trust for the use and benefit of the Tribe pursuant to the Department's authority under 25 U.S.C. § 465.2 Section 465 authorizes the Secretary of the Interior to acquire " any interest in lands, water rights, or surface rights to lands, within or without existing reservations," and to hold title to such lands and rights " in the name of the United States in trust for the Indian tribe or individual Indian for which the land is acquired." The statute also provides that " such lands or rights shall be exempt from State and local taxation." Id.3
In 2005, while the Tribe's request was still pending before the Department, the Tribe and Great Wolf Resorts, Inc. entered into an agreement to form CTGW, LLC, a Delaware limited liability company, for the purpose of building a resort, conference center, and water park (collectively, the Great Wolf Lodge) on the Grand Mound Property. Under the agreement, the Tribe owned an undivided 51 percent interest in CTGW. In 2006, the Department agreed to purchase the Grand Mound Property pursuant to § 465 and to hold the land in trust for the Tribe.
The Tribe and CTGW subsequently entered into a lease agreement that gave CTGW the right to use the Grand Mound Property " for a hotel, indoor water park and convention center and related economic development or for any other lawful purpose" for twenty-five years. Article 11 of that lease provides:
All buildings and improvements on the Premises shall be owned in fee by [CTGW] during the term of this Lease provided that such buildings and improvements (excluding removable personal property and trade fixtures) shall remain on the Premises after the termination of this Lease and shall thereupon become the property of the [Tribe].
In short, under Article 11, CTGW would own the Great Wolf Lodge's physical structures for twenty-five years, at which time the Tribe would become the owner. The Bureau of Indian Affairs approved the lease on July 9, 2007, and it remained in effect at all times relevant to this suit. The Lodge opened the following year.
In 2007, Thurston County began assessing property taxes on the Great Wolf Lodge. The County recognized that § 465 exempted the Grand Mound Property from state and local taxation. It concluded, however, that the structures on the land were not tax exempt, because under the terms of the lease they were owned by CTGW and not the Tribe.
The Tribe and CTGW believed that federal law barred the County from imposing these property taxes, and brought suit against the County and related defendants on September 18, 2008, seeking declaratory and injunctive relief.4 The district court awarded summary judgment to the County, holding that state and local governments are not necessarily prohibited from taxing permanent improvements, like...
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