Pickerel Lake Outlet Ass'n v. Day Cnty.
| Decision Date | 22 December 2020 |
| Docket Number | #29082,#29074,#29066 |
| Citation | 2020 S.D. 72 |
| Parties | PICKEREL LAKE OUTLET ASSOCIATION, a South Dakota non-profit corporation, GARY WALD, KELSEY BECKSTROM, GREG BURGESS, NANCY BURGESS, LAUREN JOHNSON, KATHLEEN JOHNSON, GREG JOHNSON, MARY JOHNSON, BRUCE MAY, RHONDA MAY, MARK THOMPSON, JUNE THOMPSON, JUSTIN HANSON, MATT PAULSON, JOSH LARSON, SCOTT KRAM, KIM KRAM, THOMAS MEYER, DALITA MEYER, MICAH LIKNESS, JOHN WOODMAN, RAMONA WOODMAN, ROGER RIX, PAM RIX, CLARK LIKNESS, GERRY LIKNESS, GREG PETERSON, EMERY SIPPEL, MARC SIPPEL, LYNN PETERSON, SCOTT VOGEL, ROBERT BISGARD, AL VANDERLAAN, JASON SNELL, RON BELDEN, BENJAMIN JOHNSON, NICOLE JOHNSON, PAUL TVINNEREIM, KRIS TVINNEREIM, DAWN FRIEDRICHSEN, Plaintiffs and Appellants, v. DAY COUNTY, SOUTH DAKOTA, a South Dakota Public Corporation and THE STATE OF SOUTH DAKOTA, Defendants and Appellees. |
| Court | South Dakota Supreme Court |
#29066, #29074, #29082-a-JMK
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT DAY COUNTY, SOUTH DAKOTA
THE HONORABLE JON S. FLEMMER Judge
JACK H. HIEB
ZACHARY W. PETERSON of
Richardson, Wyly, Wise,
Sauck & Hieb, LLP
Aberdeen, South Dakota
Attorneys for plaintiffs
and appellants.
DANNY R. SMEINS
Day County State's Attorney
Webster, South Dakota
Attorneys for defendant and
appellee, Day County.
[¶1.] The Pickerel Lake Outlet Association, a South Dakota domestic non-profit corporation, and forty non-Indian owners of permanent improvements around Pickerel Lake (the Plaintiffs) filed a declaratory judgment action in circuit court challenging ad valorem property taxes that Day County assessed against them. They claimed that federal law preempted taxation because their structures are on land held in trust for the Sisseton-Wahpeton Oyate. The State defended the taxes and challenged the Plaintiffs' standing to sue. The circuit court concluded the Plaintiffs had standing and upheld the disputed taxes. The Plaintiffs appeal. We affirm.
[¶2.] Pickerel Lake, a spring-fed lake located in Day County, South Dakota,1 is a popular destination for various outdoor recreational activities. Many private cabins surround its shores, some of which are located on land the United States holds in trust for the Sisseton-Wahpeton Oyate (the Tribe) or its members.2 Theindividually named plaintiffs, none of whom are tribal members, belong to the Pickerel Lake Outlet Association (the Association). The Association leases 31.28 acres of the trust land surrounding Pickerel Lake from the Bureau of Indian Affairs (BIA) for the benefit of Association members. The land is identified as Allotment #1199 Henry Campbell.3 The Association's bylaws provide that the membership includes "a sub-leased lot of approximately fifty [feet] (50') of lake frontage[,]" but there is no evidence in the record that the members hold individual leases. The members do, however, own a variety of structures on the west side of Pickerel Lake, including cabins, sheds, cottages, garages, and other structures.
[¶3.] The Tribe collects ad valorem property taxes from the Plaintiffs for their structures.4 Day County (County) also assesses taxes against the Plaintiffs for the same cabins.5 The County's tax revenue is paid to the Webster Area SchoolDistrict #18-5, the Koskuisko Township, the County, and the Pickerel Lake Sanitary District, and is used to fund various public services. For example, the taxes levied for the Koskuisko Township pay for fire and road maintenance services. The County also uses its portion of the tax revenues to fund County administration, law enforcement, highways, planning and zoning, and emergency services. Taxes for the Pickerel Lake Sanitary District provide sewer services to the Plaintiffs' cabins.
[¶4.] The Plaintiffs objected to the assessment of the County's property taxes. Some have refused to pay them since 2013, while others have paid under protest pursuant to SDCL 10-27-2. On December 14, 2014, they commenced this action against the County to formally challenge its taxing authority. After over two years of litigation, the parties moved for summary judgment. The Plaintiffs centered their motion on preemption, theorizing that federal law expressly or implicitly forecloses the County from taxing permanent improvements on trust land without regard to ownership. They based their statutory express preemption argument solely on 25 U.S.C. § 5108 (formerly 25 U.S.C. § 465), a provision contained within the Indian Reorganization Act of 1934 (the IRA) that exempts land acquired pursuant to its provisions "from State and local taxation." Additionally,the Plaintiffs pointed to 25 C.F.R. § 162.017(a) () to support their claim of express preemption or field preemption.6
[¶5.] The State defended the County's authority to levy the taxes, arguing preemption did not apply because neither the Tribe, nor any tribal member owns any of the cabins subject to the County's tax. In so arguing, the State questioned the applicability of the federal statute, the BIA regulations, and the United States Supreme Court precedent on which the Plaintiffs relied. It also challenged the Plaintiffs' standing to sue, arguing their claim failed the "zone of interests" test.
[¶6.] The circuit court concluded the Plaintiffs had standing to sue and upheld the County's authority to assess the taxes. The Plaintiffs appeal, arguing the circuit court's decision to uphold the tax was erroneous. The State, by notice of review, challenges the Plaintiffs' standing to bring this suit.
[¶7.] "Although standing is distinct from subject-matter jurisdiction, a circuit court may not exercise its subject-matter jurisdiction unless the parties have standing." Lippold v. Meade Cty. Bd. of Comm'rs, 2018 S.D. 7, ¶ 18, 906 N.W.2d 917, 922. In consideration of this principle, we first address the question of standing raised by the State on notice of review. "Whether a party has standing tomaintain an action is a question of law reviewable by this Court de novo." Howlett v. Stellingwerf, 2018 S.D. 19, ¶ 11, 908 N.W.2d 775, 779.
[¶8.] The State's challenge to the Plaintiffs' standing to contest the County's taxation of their property rests entirely on the State's argument that the Plaintiffs do not fit within the "zone of interest" of § 5108 of the IRA. Congress passed the IRA "to rehabilitate the Indian's economic life and to give him a chance to develop the initiative destroyed by a century of oppression and paternalism." Mescalero Apache Tribe v. Jones, 411 U.S. 145, 152, 93 S. Ct. 1267, 1272, 36 L. Ed. 2d 114 (1973) (quoting H.R. Rep. No. 1804, 73d Cong., 2d Sess., 6 (1934)). The IRA "reflected a new policy of the Federal Government and aimed to put a halt to the loss of tribal lands through allotment." Id. at 151, 93 S. Ct. at 1272; see also Nichols v. Rysavy, 809 F.2d 1317, 1323 (8th Cir. 1987) (). It authorized the United States to acquire lands "within or without existing reservations . . . for the purpose of providing land for Indians." 25 U.S.C. § 5108.
[¶9.] In the State's view, the language and purpose of § 5108 is to shield Indians (rather than non-Indians) from taxation. The State then reasons that because § 5108 does not arguably protect the Plaintiffs, they do not have standing to assert a tax exemption on that basis. However, the State's argument misapplies the zone of interest test, which is used to determine "whether a legislatively conferred cause of action encompasses a particular plaintiff's claim." Lexmark Intern, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127, 134 S. Ct. 1377, 1387, 188 L. Ed. 2d 392 (2014) () (emphasis added). While the zone of interest test applies to all "statutorily created causes of action[,]" and requires that we presume that such an action "extends only to plaintiffs whose interests fall within the zone of interests protected by the law invoked[,]" see id. at 129, 134 S. Ct. at 1388, § 5108 is not a statute that creates a cause of action.
[¶10.] Further, the Plaintiffs did not bring suit under § 5108. Rather, they brought this action pursuant to the Declaratory Judgment Act, asserting that the County was without authority to impose ad valorem taxes against their property. "[T]o establish standing in a declaratory judgment action . . . a litigant must show: (1) an injury in fact suffered by the plaintiff, (2) a causal connection between the plaintiff's injury and the conduct of which the plaintiff complains, and (3) the likelihood that the injury will be redressed by a favorable decision." Abata v. Pennington Cty. Bd. of Comm'rs, 2019 S.D. 39, ¶ 12, 931 N.W.2d 714, 719. While it is true that "a court cannot be required to speculate as to the presence of a real injury[,]" see id. ¶ 11, 931 N.W.2d at 719, there is no need to speculate here.
[¶11.] It was the County's imposition of ad valorem taxation, and not the Secretary of the Interior's authority to acquire land under the IRA, that brought this action into circuit court. Neither party disputes that Plaintiffs have alleged an injury in fact caused by the County's assessment of taxes against the structures pursuant to SDCL 10-4-2.1, thereby satisfying the first two prongs for standing in a declaratory judgment action.7 It is equally beyond debate that the Plaintiffs have aredressable injury, namely, relief from their tax liability. Therefore, the Plaintiffs have standing to bring this action.
[¶12.] The State argues that the County has authority to assess the ad valorem...
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