Lac Courte Oreilles Band of Lake Superior Chippewa Indians of Wis. v. Evers

• Decision Date: 15 August 2022
• Docket Number: 21-1817
• Citation: 46 F.4th 552
• Parties: LAC COURTE OREILLES BAND OF LAKE SUPERIOR CHIPPEWA INDIANS OF WISCONSIN, et al., Plaintiffs-Appellants, v. Tony EVERS, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

46 F.4th 552

LAC COURTE OREILLES BAND OF LAKE SUPERIOR CHIPPEWA INDIANS OF WISCONSIN, et al., Plaintiffs-Appellants,
v.
Tony EVERS, et al., Defendants-Appellees.

No. 21-1817

United States Court of Appeals, Seventh Circuit.

Argued November 8, 2021
Decided August 15, 2022

Vanya S. Hogen, Leah Jurss, Peter Rademacher, Attorneys, Hogen Adams PLLC, St. Paul, MN, for Plaintiffs-Appellants.

Thomas C. Bellavia, Attorney, Office of the Attorney General, Wisconsin Department of Justice, Madison, WI, for Defendant-Appellee Tony Evers.

Remzy D. Bitar, Samantha R. Schmid, Attorneys, Municipal Law & Litigation Group, S.C., Waukesha, WI, for Defendant-Appellee Town of Bass Lake, Wisconsin.

Gregory J. Harrold, Attorney, Harrold, Scrobell & Danner, Minocqua, WI, for Defendant-Appellee Town of Lac du Flambeau, Wisconsin.

John R. Carlson, Attorney, Spears, Carlson & Coleman, Washburn, WI, for Defendant-Appellee Town of Russell, Wisconsin.

Frederick J. Schellgell, Attorney, Schellgell Law Office, Mercer, WI, for Defendant-Appellee Town of Sherman, Wisconsin.

Before Scudder, Kirsch, and Jackson-Akiwumi, Circuit Judges.

Scudder, Circuit Judge.

46 F.4th 555

Before us is a challenging case involving the taxation of Indian land in Wisconsin. The State has assessed property taxes on lands within four Ojibwe Indian reservations, and the owners of those lands—members of the four Ojibwe Tribes that call those reservations home—would like not to pay them. These tribal landowners have a bargained-for tax immunity under an 1854 Treaty, still in effect today, that created the reservations on which they live. And they have a body of Supreme Court cases recognizing a categorical presumption against Wisconsin's ability to levy its taxes absent Congress's say-so—a requirement the State cannot meet in this case.

As a general matter, the combination of those factors means that Wisconsin is without power to tax Ojibwe lands owned by tribal members. This is true even though the parcels in question are fully alienable, meaning their current owners can sell them at will—an unusual fact that makes the issue in this appeal narrow and novel. This case concerns the subset of tribal lands which, though owned today by Ojibwe tribal members, were sold by past tribal owners to non-Indians before coming back into tribal ownership. The State urges that the one-time act of alienating reservation property to a non-Indian surrenders the parcel's tax immunity for all time. As a result, the State says, Ojibwe tribal members who own such reacquired parcels owe state property taxes, even as Ojibwe owners of parcels never owned by non-Indians remain tax immune.

We conclude otherwise. We therefore reverse the district court's judgment permitting the State to tax reacquired reservation lands.

I

On the practical side, the case is straightforward: the State of Wisconsin and its localities need to know which properties they may tax. The Tribes say the answer is simple: tax immunity extends to all tribal landowners living on tribal lands, so the State may tax only those parcels of reservation land presently owned by non-Indians. The State, for its part, agrees that it may tax reservation lands held by non-Indians, but asserts that it may also tax Ojibwe-owned parcels as long as, at some point in the chain of title, a non-Indian once owned the land in question.

Assessing which side is right requires us to lay a good deal of foundation—both legal and factual.

A. Legal Background

Indian tribes are "separate sovereigns pre-existing the Constitution," Santa Clara Pueblo v. Martinez , 436 U.S. 49, 56, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978), and as such they "exercise inherent sovereign authority over their members and territories." Okla. Tax Comm'n v. Citizen Band Potawatomi Indian Tribe , 498 U.S. 505, 509, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991). So, too, have the tribes "retained" that inherent sovereignty "even after formation of the United States." Montana v. Blackfeet Tribe of Indians , 471 U.S. 759, 764, 105 S.Ct. 2399, 85 L.Ed.2d 753 (1985) ; see also Denezpi v. United States , ––– U.S. ––––, 142 S. Ct. 1838, 1845, 213 L.Ed.2d 141 (2022) (reaffirming

46 F.4th 556

that Indian tribes remain separate sovereigns for purposes of the Double Jeopardy Clause); Michigan v. Bay Mills Indian Cmty. , 572 U.S. 782, 788, 134 S.Ct. 2024, 188 L.Ed.2d 1071 (2014) (recognizing that the tribes enjoy immunity from suit as "a necessary corollary to Indian sovereignty and self-governance") (citation omitted).

Still, there is no denying that our Nation's founding and rapid expansion west changed things for these ancient sovereigns. Lands once controlled exclusively by various Indian tribes are now shared with two other classes of sovereigns: the federal government, for one, and the fifty states, for another. The complex relationship between these three distinct entities is an important part of our history. And the equally complex body of law that resulted provides most of the framework for resolving this appeal.

1. The Tribes and the Federal Government

Start with the federal government. Seeking to craft a coherent nationwide Indian policy, "[t]he Constitution vests the Federal Government with exclusive authority over relations with Indian tribes." Blackfeet Tribe , 471 U.S. at 764, 105 S.Ct. 2399 (citing U.S. Const. art. I, § 8, cl. 1). In the early days of the republic, the federal government's posture toward the tribes reflected some measure of respect for tribal sovereignty—tribal relations were mostly a matter for the President's Article II treatymaking powers. See U.S. Const., art. II, § 2, cl. 2 ("The President ... shall have Power, by and with the Advice and Consent of the Senate, to make Treaties."); see also United States v. Lara , 541 U.S. 193, 201, 124 S.Ct. 1628, 158 L.Ed.2d 420 (2004) (explaining that "during the first century of America's national existence ... Indian affairs were more an aspect of military and foreign policy than a subject of domestic or municipal law" (citation omitted, alteration in original)). The more than 300 treaties that resulted from these diplomatic efforts, like all treaties, had the full force of federal law upon their ratification by the Senate. See McGirt v. Oklahoma , ––– U.S. ––––, 140 S. Ct. 2452, 2462, 207 L.Ed.2d 985 (2020) (explaining that Indian treaties are the "supreme Law of the Land" under the Supremacy Clause); 2 Charles Henry Butler, The Treaty-Making Power of the United States § 405 (1902) (canvassing the history of treatymaking with the Indian tribes).

But treatymaking was only one avenue of regulating affairs with the tribes. The Constitution also permits Congress "[t]o regulate Commerce ... with the Indian Tribes." U.S. Const. art. I, § 8, cl. 3. The Supreme Court has interpreted that language, the Indian Commerce Clause, as giving Congress "plenary and exclusive" authority to legislate generally with respect to tribal matters. Lara , 541 U.S. at 200, 124 S.Ct. 1628 (citations omitted). In exercise of that power Congress has come to "subject[ ] the tribes to substantial bodies of state and federal law." County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation , 502 U.S. 251, 257, 112 S.Ct. 683, 116 L.Ed.2d 687 (1992). And it has used that power more generally to "regulate and modify the status of the tribes." Lara , 541 U.S. at 200, 124 S.Ct. 1628 (quoting William Canby, American Indian Law 2 (3d ed. 1998)).

Eventually Congress's broad Article I powers overcame those of the President under Article II. This became particularly clear when, in 1871, Congress decreed that "[n]o Indian nation or tribe ... shall be acknowledged or recognized as an independent nation, tribe, or power with whom the United States may contract by treaty." 25 U.S.C. § 71. This law put an end to all executive treatymaking with the tribes

46 F.4th 557

going forward, and in that way further limited the principle of the tribes as independent sovereigns. See, e.g., Bay Mills Indian Cmty. , 572 U.S. at 788, 134 S.Ct. 2024 (referring to the tribes as "domestic dependent nations" and explaining that "[a]s dependents, the tribes are subject to plenary control by Congress" (cleaned up)). And along those same lines the Supreme Court has since recognized Congress's power to unilaterally modify or even abrogate treaties with the tribes. See McGirt , 140 S. Ct. at 2462 ; Reich v. Great Lakes Indian Fish & Wildlife Comm'n , 4 F.3d 490, 493 (7th Cir. 1993).

But even as Congress in 1871 carved a bigger role for itself going forward, it took care to emphasize that existing Indian treaties retained full effect—at least until further notice. See 25 U.S.C. § 71 (providing that "no obligation of any treaty lawfully made and ratified with any such Indian nation or tribe prior to March 3, 1871, shall be hereby invalidated or impaired"). Unless Congress expressly says otherwise, then, an Indian treaty remains the "supreme Law of the Land." McGirt , 140 S. Ct. at 2462 (quoting U.S. Const. art. VI, cl. 2).

The overarching lesson of this first century of Indian relations is that, when it comes to the tribes, what Congress says almost always goes. The plenary nature of Congress's tribal powers, the Supreme Court has emphasized, permits Congress to take actions that lessen tribal sovereignty. See Lara , 541 U.S. at 200, 124 S.Ct. 1628. But the exclusive nature of those powers ensures that only Congress may do so. The key takeaway is the recognition that, "[u]nless and until Congress acts, the tribes retain their historic sovereign authority." Bay Mills Indian Cmty. , 572 U.S. at 788, 134 S.Ct. 2024 (cleaned up).

2. The Tribes and the States

Then come the states. As the Supreme Court emphasized just this past Term in Oklahoma v. Castro-Huerta , the states have important sovereign interests of their own. See ––– U.S. ––––, 142 S. Ct. 2486, 2493, 213 L.Ed.2d 847 (2022). Though federal law designates certain lands—including the four reservations at issue in this case—"Indian country," 18 U.S.C. § 1151(a)...