Ho-Chunk Nation v. Wi. Dept. of Revenue

• Decision Date: 16 June 2009
• Docket Number: No. 2007AP1985.,2007AP1985.
• Citation: 766 N.W.2d 738,2009 WI 48
• Parties: HO-CHUNK NATION, Petitioner-Appellant-Petitioner, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent-Respondent.
• Court: Wisconsin Supreme Court

766 N.W.2d 738

2009 WI 48

HO-CHUNK NATION, Petitioner-Appellant-Petitioner, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent-Respondent.

No. 2007AP1985.

Supreme Court of Wisconsin.

Argued February 5, 2009.

Decided June 16, 2009.

For the petitioner-appellant-petitioner there were briefs by Thomas M. Pyper, Michael P. Murphy, Cynthia L. Buchko, and Whyte Hirschboeck Dudek, S.C., Milwaukee, and oral argument by Michael P. Murphy.

For the respondent-respondent there was a brief and oral argument by F. Thomas Creeron III, assistant attorney general, with whom on the brief was J.B. Van Hollen, attorney general.

¶ 1 N. PATRICK CROOKS, J

This review of a published court of appeals decision¹ involves the Ho-Chunk Nation's appeal of a denied claim for a tax refund under Wis. Stat. § 139.323(3) (2005-06).² The statute authorizes partial refunds for cigarette taxes provided the tax was collected on sales made on land that "was designated a reservation or trust land on or before January 1, 1983." At issue is whether the land on which the relevant sales took place satisfies that portion of the statute. The land was approved for purchase in August 1982 and formally accepted by the United States government on January 31, 1983. The question on which this case turns is at what point a particular parcel of land "was designated ... trust land" for purposes of Wis. Stat. § 139.323.

¶ 2 The court of appeals determined that land cannot be held in trust until formal acceptance occurs and that in order to satisfy the tax refund statute's requirements, land must be held in trust on or before January 1, 1983. Because formal acceptance of the property in question here did not occur until after that date, the court of appeals held that the claim for a refund was properly denied. This was the same result that had been reached by the Wisconsin Department of Revenue (DOR), the Wisconsin Tax Appeals Commission (the Commission), and the circuit court. The Ho-Chunk Nation sought review.

¶ 3 For the reasons set forth below, we affirm. "[R]eservations or trust lands" are also referred to in the sentence preceding the provision in question; a sensible reading of the statute (Wis.Stat. § 139.323) requires that the two references be read as identifying the same land. The grammatical construction of the sentence itself lends further support to our holding because "was designated" precedes both "a reservation" and "trust land" and means the same thing about each. Given that there is no basis in the federal regulations for recognizing a preliminary, unofficial status for reservations or trust lands, there is likewise no basis for reading this statute as intending to apply to land that has received only preliminary informal approval.

¶ 4 We therefore hold that in this context the phrase "was designated a reservation or trust land" is necessarily read as referring to the applicable formal process that must occur in order for land to be a reservation or trust land. Because the proper authorities had not completed the necessary steps for the property in question to be designated a reservation or trust land on or before January 1, 1983, and because that is required in order to qualify for the tax refund, the claim was properly denied.

I. BACKGROUND

¶ 5 The question on which this case turns is at what point a particular parcel of land "was designated ... trust land" for purposes of Wis. Stat. § 139.323, and because the parties differ as to when that happened, it is necessary to lay out, briefly, the process through which the land at issue came to be trust land.

¶ 6 In 1982 the Ho-Chunk Nation (the Nation), a federally recognized Indian tribe, received permission from the United States Department of the Interior, Bureau of Indian Affairs (BIA), to acquire a five-acre parcel of land known as the DeJope Property. A Washington, D.C., BIA official sent a memo dated August 20, 1982, to a Minneapolis BIA official, stating in relevant part, "You are, therefore, authorized to accept conveyance to the United States in trust upon consideration of appropriate title evidence in accordance with the requirements of 25 CFR 120a.12 [1982]." On October 29, 1982, the seller of the DeJope Property received payment from the Nation and conveyed the title by delivery of a warranty deed. On January 31, 1983, the Minneapolis BIA Area Director signed the deed, accepting the conveyance. The deed was recorded with the Dane County Register of Deeds on March 18, 1983.

¶ 7 When the Nation filed claims with the DOR requesting a refund of 70 percent of the taxes paid on cigarette sales at the DeJope Property for periods during 2003 and 2004, the claims were denied. The DOR denied the claims because "the [DOR] must accept the date of January 31, 1983[,] as the date the DeJope land was `designated' for the purposes of § 139.323, Wis. Stats." As a result, the DOR determined that the DeJope Property did not meet the statutory requirements in order to receive the requested refund.

¶ 8 The Nation filed an appeal of the decision with the Tax Appeals Commission. In a ruling and order issued on February 15, 2006, the Commission granted summary judgment in favor of the DOR.

¶ 9 The Nation petitioned the Dane County Circuit Court for review. The circuit court, the Honorable Sarah B. O'Brien presiding, affirmed.

¶ 10 The Nation then filed an appeal, and the court of appeals affirmed. Ho-Chunk Nation v. DOR, 2008 WI App 95, 312 Wis.2d 484, 754 N.W.2d 186. The court of appeals concluded that "the United States government does not hold the land in trust until formal acceptance under 25 C.F.R. § 151.14 (2007) occurs. Because this did not occur with respect to the DeJope property until after January 1, 1983, the Ho-Chunk Nation is not entitled to a refund." Id., ¶¶ 2, 36. The Nation petitioned for review, and this court granted the petition.

II. STANDARD OF REVIEW

¶ 11 This case requires statutory interpretation, and the standard of review for statutory interpretation is de novo. DOR v. Menasha Corp., 2008 WI 88, ¶ 44, 311 Wis.2d 579, 754 N.W.2d 95.

¶ 12 In a case that involves a ruling by the Commission, we review the Commission's decision rather than the decision of the circuit court. Id., ¶ 46. Like Menasha, this case involves review of an agency action so the question arises as to whether any deference is due, and if so, what level applies. In Menasha, this court said the agency to which deference is due is the Commission, and the level of deference as to the Commission's interpretation of statutes is one of three levels: great weight, due weight, or no deference. Id., ¶¶ 47-49.

¶ 13 In its written ruling, the Commission stated, "The specific issue before us is one of first impression." "No deference is given to the agency's statutory interpretation when the issue is one of first impression, the agency has no experience or expertise in deciding the legal issue presented, or the agency's position on the issue has been so inconsistent as to provide no real guidance." Menasha, at ¶ 50. We therefore review the ruling of the Commission in this case giving no deference to the agency's statutory interpretation.

III. DISCUSSION

¶ 14 Wisconsin Stat. § 139.323 authorizes refunds of cigarette taxes to Indian tribes "in respect to sales on reservations or trust lands" when certain conditions are met. The DOR denied the tax refund claim in this case on the grounds that the claim was for sales on land that did not meet the third condition: that "[t]he land on which the sale occurred was designated a reservation or trust land on or before January 1, 1983." As we noted previously, that denial was affirmed by the Commission.

¶ 15 There is no dispute that the DeJope Property is now trust land; the dispute is whether it was so designated prior to the January 1, 1983, deadline such that taxes of cigarette sales on that property meet the statute's conditions and may be refunded to the Nation. The Commission ruling stated, "Although the parties did not stipulate to the facts in this case, they do not dispute any material facts.... Furthermore, the Department does not dispute that the Tribe's refund Claim satisfies all of the requirements of Wis. Stat. § 139.323 except one, which is that the land on which the cigarette sales occurred must have been `designated a reservation or trust land on or before January 1, 1983.'"

¶ 16 The DOR, in urging us to affirm the decision of the Commission, argues that the language "was designated" refers to the official process described in the fee-to-trust regulations spelled out in the Code of Federal Regulations (C.F.R.). This process has several steps and is completed, according to the C.F.R., when the land is formally accepted into trust. The DOR argues that this occurred with respect to the land in question on January 31, 1983, and as a result, there is no entitlement to a refund under the statute. The DOR bases its argument on the applicable regulations, 25 C.F.R. §§ 151.12 and 151.13 (1982):

25 C.F.R. § 151.12 If the Secretary determines that he will approve a request for the acquisition of land from unrestricted fee status to trust status, he shall acquire, or require the applicant to furnish, title evidence.... After having the title evidence examined, the Secretary shall notify the applicant of any liens, encumbrances, or infirmities which may exist. The Secretary may require the elimination of any such liens, encumbrances or infirmities prior to taking final approval action on the acquisition and he shall require elimination prior to such approval if the liens, encumbrances, or infirmities make title to the land unmarketable.

25 C.F.R. § 151.13 Formal acceptance of land in trust status shall be accomplished by the issuance or approval of an instrument of conveyance by the Secretary as is appropriate in the circumstances.

¶ 17 The DOR further argues that if this court finds the statute ambiguous, we should resolve the question in its favor, applying the...