White Earth Band v. County of Mahnomen, Minn., Civ. No. 07-3962 (MJD/RLE).
| Decision Date | 24 March 2009 |
| Docket Number | Civ. No. 07-3962 (MJD/RLE). |
| Citation | 605 F.Supp.2d 1034 |
| Parties | The WHITE EARTH BAND OF CHIPPEWA INDIANS, on its own behalf and its wholly-owned enterprise, the Shooting Star Casino, Plaintiffs, v. COUNTY OF MAHNOMEN, MINNESOTA et al., Defendants. |
| Court | U.S. District Court — District of Minnesota |
James T. Hamilton and Kevin C. Quigley, Hamilton Quigley & Twait PLC, for and on behalf of Plaintiffs.
Scott G. Knudson and Daniel J. Supalla, Briggs and Morgan, P.A., for and on behalf of Defendants.
This is an action for declaratory and injunctive relief and for money damages in response to the Defendants' alleged unlawful actions to assess and collect property taxes under state authority upon tribally owned lands located within the exterior boundaries of the White Earth Band Reservation. Am. Comp., ¶ 1.
Plaintiffs, The White Earth Band of Chippewa Indians (hereinafter the "Band") purchased certain parcels of land in 1991 upon which the Band operates gaming operations at the Shooting Star Casino (the "Casino Property"). Id. ¶¶ 1, 8. It is the Band's position that the Casino Property was purchased through funds made available in the White Earth Lands Settlement Act ("WELSA"), Pub. L. 100-153, Act of Nov. 5, 1987, 101 Stat. 886 (1986). As such, the Casino Property is not subject to state taxation. The Band seeks the refund of such real property taxes assessed and collected on the Casino Property for the tax years 1992 through 2005. Id. ¶ 1. The Defendants are Mahnomen County and its Treasurer, Auditor, Assessor and Commissioners (collectively "the County").
The matter is before the Court on cross motions of the parties. The County moves to dismiss on Eleventh Amendment or abstention grounds. The Band moves for summary judgment as to their claims for declaratory and injunctive relief, and the County has cross moved for summary judgment as to those claims.1
The White Earth Reservation ("Reservation") was established in 1867 pursuant to the Treaty with the Chippewa of the Mississippi, Mar. 19, 1867, 16 Stats. 719, Ratified Apr. 8, 1867, Proclaimed Apr. 18, 1867. (Quigley Aff., Ex. Nos. 1 and 2.) When established, lands within the Reservation were not subject to state property taxation. Shortly thereafter, however, the lands were made subject to the terms of the Indian General Allotment Act of 1887 ("IGAA"), 24 Stat. 388, 25 U.S.C. §§ 331, by passage of the Nelson Act of January 14, 1889 and the Clapp Amendments of 1904 and 1906.
The IGAA established the national policy of breaking up Indian reservations by allotting parcels of the reservation to individual Indians. Manypenny v. United States, 948 F.2d 1057, 1060 (8th Cir.1991). The Nelson Act applied the allotting policy to the Reservation providing each full or mixed-blood allottee a trust patent under which the United States would hold the allotted land for twenty-five years before conveying title to the allottee in fee. Id. Over the next twenty years, the United States issued over 8,000 allotments. Pursuant to the Indian Reorganization Act of 1934, 48 Stat. 984 (1934) (codified at 25 U.S.C. § 462 (1988)), all trust periods then in existence were extended indefinitely. Id. The Clapp Amendment, enacted in 1906, purported to remove all restrictions on the sale of land allotted to adult mixed-blood Indians. Id. Conflicts over the proper interpretation of the Clapp Amendments led to many disputed land transactions. Id. Thereafter, Reservation land holdings plummeted from approximately 830,000 to 57,000 acres. Id.
In State of Minnesota v. Zay Zah, 259 N.W.2d 580 (Minn.1977), the Minnesota Supreme Court was asked to review a quiet title action with respect to real estate located within the Reservation. The court ultimately determined that based upon applicable federal Indian law, land held in trust by a member of the tribe was not subject to state property taxation, unless the patent owner applies for, and receives from the United States, a fee patent. Id. at 589. As a result, a non-Indian who had obtained such lands within the Reservation through forfeiture proceedings lost title to such lands.
Following the Zay Zah decision, the Band asserts near panic occurred among non-Indian land owners on the White Earth Reservation, causing significant tension between Indians and non-Indians. See generally, 131 Cong. Rec. S17480-01 (Quigley Aff., Ex. No. 13); see also, Manypenny, 948 F.2d at 1059-62. To restore order following the Zay Zah decision and the uncertainties that arose due to the applicable federal laws, Congress enacted WELSA to "settle unresolved claims relating to certain allotted Indian lands on the White Earth Indian Reservation, to remove clouds from the titles to certain lands and for other purposes." WELSA, Pub. Law 99-264, 100 Stat. 61 (1986); Manypenny, at 1061. WELSA was meant to address "claims on behalf of Indian allottees or heirs and the White Earth Band involving substantial amounts of land within the White Earth Reservation in Minnesota [that] are the subject of existing and potential lawsuits involving many and diverse interests in Minnesota, and are creating great hardship and uncertainty for government, Indian communities and non-Indian communities." WELSA § 2(1).
For example, through WELSA, titles were settled by "retroactively ratifying land transactions, extinguishing claims, and authorizing compensation to original allottees or their heirs from whom title was taken or transferred." Manypenny, at 1061, WELSA §§ 6, 8. In addition, WELSA provided for the establishment of a $6,600,000 grant to the Band referred to as "The White Earth Economic Development and Tribal Government Fund" and required the State of Minnesota to donate 10,000 acres of land to the United States to be held in trust for the Band. WELSA § 12(b), 10.
WELSA further provides that any lands within the exterior boundaries of the reservation acquired through this fund WELSA § 18.
The Band alleges that after it acquired the Casino Property with WELSA funds, the Band negotiated gaming compacts with the State of Minnesota pursuant to the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § § 2701 et seq. ("Compacts"). The Compacts did not provide for the payment of any taxes on any gaming activity consistent with IGRA. Id. Thereafter, in 1995, the Band applied to the federal government to put the Casino Property into trust. At that time, the Band asserts it also underwent significant crises within its tribal government, which resulted in governmental dysfunction and turmoil from 1996 through 2001. Am. Comp. ¶ 12. As a result of this dysfunction, the trust application was not vigorously pursued. Id.
After the Band purchased the property in 1991, the County treated the Casino Property as unrestricted fee land, and assessed property taxes thereto. After construction of the Shooting Star Casino on the Casino Property, the assessed property taxes significantly increased due to the corresponding increase in the property values. Id. ¶ 13.
In 2002, the Band again pursued its trust application. The Bureau of Indian Affairs ("BIA") eventually determined that "the White Earth Band used White Earth Land Settlement Act funds, and/or earnings of the funds, for the purchase of the fee parcels for the Shooting Star Casino in Mahnomen County, Minnesota." Plaintiffs Ex. 1 (Bates No. 000199). A Notice of Intent to take the Casino Property into trust as a mandatory acquisition was forwarded to the affected governments. Id. ¶ 15.
The State of Minnesota properly appealed this decision to the Interior Board of Indian Affairs ("IBIA"). The County, however, did not file a timely appeal.
By Order dated July 3, 2008, the IBIA affirmed the decision of the BIA. The IBIA specifically found that the record supported the Regional Director's decision, which included the Office of Indian Gaming Management's ("OIGM") analysis of the financial documents, together with supporting documents. State of Minnesota v. Acting Midwest Regional Director, 47 IBIA 122, 127 (2008) (Quigley Aff., Ex. No. 5.)2
The Band asserts that the payments of property taxes since 1992 have been a significant and severe hardship. Am. Comp. ¶ 17. In 2006, after receiving the BIA's decision, the Band withheld further payment of property taxes, placing those amounts in escrow. Id. The Band commenced a federal mediation process with the County, but no settlement has been reached. Id. ¶ 18.
On February 2, 2007, the Minnesota State District Court for the Ninth District issued a Notice of Delinquent Taxes. The Notice provided that the "listed property is subject to forfeiture because of delinquent taxes." Id. ¶ 20. The Band responded pursuant to Minn.Stat. § 278.01. Venue was transferred to the Minnesota Tax Court ("Tax Court Action"). The judge in the Tax Court Action agreed to determine the sufficiency of the BIA's decision that: 1) WELSA funds were used to purchase the Casino Property; 2) if such funds were used, the status of lands under mandatory acquisition—that is whether such acquisition creates a restriction on land that preempts state taxation; and 3) whether IGRA preempts the imposition of property taxes on tribal lands used for gaming purposes. Id. ¶ 21. Because the Band believed the issues identified by the Tax Court for resolution are exclusively federal, and because it believed it to be in the best interests of the parties, the Band dismissed the Tax Court Action and thereafter filed this action. Id. ¶ 22. The tax delinquency proceeding initiated by the County in state district court was not affected by the Band withdrawing its petition in the Tax Court Action. (Larson Aff., Exs. E and F.)
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