Property Taxation of Indian Land After County of Yakima v. Confederated Tribes and Bands of the Yakima Nation

RECENT DEVELOPMENT Property Taxation of Indian Land After County of Yakima v. Confederated Tribes and Bands of the Yakima Nation Robert W. McGee* In 1987, Yakima County, Washington, initiated foreclosure proceedings on properties belonging to the Yakima Indian Nation and its members. The county's foreclosure was precipitated by the property owners' failure to pay past due ad valorem and excise taxes. Despite vigorous arguments by the Yakima Nation, the United States, and the thirty-one Yakima Indian families likely to be rendered homeless by an adverse decision, the United States Supreme Court held in County of Yakima v. Confederated Tribes and Bands of the Yakima Nation,' that states have the power to impose ad valorem taxes on reservation land owned in fee by Indians.2 This Recent Development provides a brief summary of that decision. The Yakima Indian Reservation consists of about 1.3 million acres and is located in southeastern Washington. The United States holds eighty percent of the land in trust for the benefit of the Tribe or its individual members, and the other twenty percent is owned in fee by either the Tribe, individual members, or non-Indians. Virtually all of the reservation is within Yakima County.4 Yakima County imposes ad valorem taxes on real estate * This Recent Development was submitted by Robert W. McGee, an Associate Professor at the W. Paul Stillman School of Business, Seton Hall University. 1. 112 S. Ct. 683 (1992). 2. Id. at 694. The Court also held, however, that the states may not impose an excise tax on the sale of such lands. Id. 3. Id. at 687. Non-Indian ownership arose as a result of the rights that were distributed during the allotment era. See id. (citing Brendale v. Confederated Tribes and Bands of the Yakima Indian Nation, 492 U.S. 408, 415 (1989)). 4. Id. 1437 1438 University of Puget Sound Law Review [Vol. 16:1437 and excise taxes on the sale of real estate.5 It has imposed and collected these taxes on the Reservation's fee lands without incident for decades. This changed in 1987, when Yakima County initiated foreclosure proceedings against parties who had not paid their ad valorem or excise taxes. These attempts at collection caused the Yakima Nation to file suit for declaratory and injunctive relief. The Tribe claimed that federal law prohibited the imposition or collection of these taxes on feepatented lands that were held either by the Tribe or its members.7 The District Court awarded the Tribe summary judgment and prohibited Yakima County from imposing or collecting taxes on fee-patented lands.' The Ninth Circuit Court of Appeals agreed that an excise tax could not be imposed; however, it held that an ad valorem tax would be impermissible only if it would have a "'demonstrably serious' " impact on the " 'political integrity, economic security, or the health and welfare of the tribe.' "9 The Ninth Circuit remanded the case to the District Court for such a determination. The Supreme Court granted certiorari to decide whether the tax was proper.' 0 Previously, the Supreme Court has held that states do not have the power to tax reservation lands and reservation Indians absent cession of jurisdiction or a federal statute that would permit taxation." The Court has also historically withheld recognition of Congressional authorization to allow state taxation unless the intent of Congress is unmistakably clear. 2 In light of these holdings, Yakima County argued that Section 5. WASH. REV. CODE §§ 82.45.070, 84.52.030 (1989). An ad valorem tax is a tax that is assessed according to value. In the case of an ad valorem property tax, it is assessed with regard to the property's value. An excise tax is a tax assessed on the manufacture, sale, or consumption of certain commodities such as liquor, tobacco, and gasoline. Excise taxes are generally assessed on commodities that have inelastic demand curves, which means that the people who buy the product will tend not to reduce usage much if the tax causes the price to increase. 6. Yakima Nation, 112 S. Ct. at 687. 7. Id. 8. Id. 9. County of Yakima v. Confederated Tribes and Bands of the Yakima Nation, 903 F.2d 1207, 1218 (9th Cir. 1990) (quoting Brendale, 492 U.S. at 431), affd, 112 S. Ct. 683 (1992). 10. Yakima Nation, 112 S. Ct. at 687. 11. Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148 (1973). 12. Montana v. Blackfeet Tribe, 471 U.S. 759, 765 (1985); see also California v. Cabazon Band of Mission Indians, 480 U.S. 202, 215 n.17 (1987). 1993] County of Yakima v. Yakima Nation 1439 6 of the General Allotment Act 13 provided the county with express authority to tax the fee-patented lands. 1 4 Section 6 of the Act provides: At the expiration of the trust period and when the lands have been conveyed to the Indians by patent in fee.... then each and every allottee shall have the benefit of and be subject to the laws, both civil and criminal, of the State or Territory in which they may reside .... Provided, That the Secretary of the Interior may, in his discretion, and he is authorized, whenever he shall be satisfied that any Indian allottee is competent and capable of managing his or her affairs at any time to cause to be issued to such allottee a patent in fee simple, and thereafter all restrictions as to sale, incumbrance, or taxation of said land shall be removed.' 5 In accepting Yakima County's argument, the Supreme Court cited to the Burke Act of 190616 as providing congressional authorization for the state taxation of Indian lands. 7 In particular, the Court stated that, through the Burke Act, Congress manifested its intent to permit state taxation by "specifically mentioning immunity from land taxation 'as one of the restrictions that would be removed upon conveyance in fee'" of Indian lands. 8 The Yakima Nation contended, however, that, with respect to an Indian reservation, Section 6 was "a dead letter."' 9 Specifically, the Yakima Nation argued that Congress repealed Section 6 when it terminated the allotment program and restored tribal sovereignty through the Indian Reorganiza13. General Allotment Act of 1887, ch. 119, 24 Stat. 388 (codified as amended at 25 U.S.C. §§ 331-334, 336, 339, 341, 342, 348, 349 (1989)). This Act, also known as the Dawes Act, gave the President authority to allot most tribal lands without first obtaining the consent of affected Indian nations. In order to prevent the quick sale or encumbrancing of the allotted land, the Act provided that each parcel would be held in trust by the United States for 25 years or more. After this period expired, a fee patent could be issued to the Indian allottee. See Yakima Nation, 112 S. Ct. at 686. 14. Yakima Nation, 112 S. Ct. at 688. 15. 25 U.S.C. § 349 (1989). 16. Burke Act of 1906, ch. 2348, 34 Stat. 182. ThisAct gave the President the option of issuing a patent in fee simple before the expiation of the relevant trust period if the allottee was found to be competent and capable of managing his own af (...truncated)