Ninth Circuit Decides Important Tax Case in Tribes' Favor
In Confederated Tribes of the Chehalis Reservation v. Thurston County Board of Equalization, 2013 WL 3888429 (9th Cir. 2013), the Confederated Tribes (Tribe) had formed CTGW, a limited liability company (LLC), with Great Wolf Resorts, Inc. (GW), a non-Indian company specializing in the development and operation of water parks and hotels, to build and operate Great Wolf Lodge (Lodge), a water park and lodge.
The lodge was located on the "Grand Mound Property," land, outside the Tribe's reservation, that the Tribe had purchased in 2002. In 2007, the Department of the Interior took title to the land in trust pursuant to Section 5 of the Indian Reorganization Act, 25 U.S.C. § 465. The Tribe and GW owned 51% and 49% shares of the profits, respectively. GW, the managing member of the LLC, contracted with another non-tribal company to manage the facility. CTGW obtained a 25-year lease from the Tribe providing that CTGW would own the Lodge's physical structures for 25 years, at which time the Tribe would become the owner.
The county sought to impose its property tax in the amount of $800,000 on the full value of the Lodge improvements, arguing that CTGW was not entitled to any tribal tax immunities and that Washington law classified the improvements as "personal property." The Tribe sued for injunctive relief, but the district court granted summary judgment to the county, holding that, under the balancing test of White Mountain Apache Tribe v. Bracker, the state's interest in collecting the tax outweighed the Tribe's interests in developing the site without state interference.
In a decision that will likely influence courts across the country, the Ninth Circuit reversed the district court and held that the county was barred from assessing property taxes on the Grand Mound Property by the Supreme Court's 1983 decision in Mescalero Apache Tribe v. Jones. According to the court, "Mescalero makes it clear that where the United States owns land covered by § 465, and holds it in trust for the use of a tribe (regardless of "the particular form in which the tribe chooses to conduct its business, § 465 exempts permanent improvements on that land from state and local taxation." The Court rejected the county's arguments that Mescalero was distinguishable based on GW's status as an LLC and 49% minority ownership and that the improvements were "personal" rather than real property under Washington law. Interestingly, the court declined to engage in a balancing of interests under the rule of White Mountain Apache Tribe v. Bracker, a major focus of the parties' briefs:
Unlike the cases requiring us to undertake a Bracker analysis, the case before us involves only property taxes on permanent improvements on non-reservation land owned by the United States and held in trust for Indians. In this context, we are bound by Mescalero's holding that such taxes are preempted under § 465, and need not consider Bracker or any other theory of preemption.
Mescalero sets forth the simple rule that § 465 preempts state and local taxes on permanent improvements built on non-reservation land owned by the United States and held in trust for an Indian tribe. This is true without regard to the ownership of the improvements. Because the Supreme Court has not revisited this holding, we are required to apply it.
The Court's decision does not necessarily contradict the Second Circuit's recent decision in Mashantucket Pequot Tribe v. Town of Ledyard, 2013 WL 3491285 (2d. Cir. 2013) (see summary below) because the subject of the local tax in that case, gaming machines, could not be characterized as permanent improvements to the land.
State and local taxing jurisdictions have become increasingly aggressive in recent years, attempting to reach into Indian country and extract value from joint ventures involving non-Indians. These efforts constitute a serious threat to Indian country economic development. The Ninth Circuit's decision is a welcome event. A petition to the U.S. Supreme Court to review the decision is possible.
Mining Symposium To Feature Godfrey & Kahn Attorneys, Tribal Attorney
The Wisconsin State Bar will present a Mining Law Symposium at the Jefferson Street Inn, 201 Jefferson Street, Wausau, Wisconsin, on Wednesday, August 28, from 8:30 a.m. to 4:30 p.m. The planning committee for the event includes Art Harrington, emeritus leader of Godfrey & Kahn's environmental law team.
The symposium will address recent changes in Wisconsin mining law generally and the proposed Penokee Hills taconite mine in particular. The Penokee Hills mine would be located at the headwaters of the Bad River, a sensitive water system that flows through the Bad River Chippewa reservation. The symposium will feature the tribal, governmental and industry perspectives on the proposed mine. Tribal Attorney Erick Arnold will explain the legal position of the Bad River Tribe. Godfrey & Kahn environmental law team leader John Clancy will address the process by which the U.S. Army Corps of Engineers and Environmental Protection Agency will consider the mining company's permit applications.
The attorney CLE symposium will be followed by a plenary session, open to the general public, on the proposed Penokee Range mine. For more information, please click here.
Godfrey & Kahn Attorneys Pierson and Clancy to Present on Financing Renewable Energy, September 11 in Tulsa
Environment & Energy Strategies team leader John Clancy and Indian Nations Law team leader Brian Pierson will present "Green Energy for Tribal Housing" on Wednesday, September 11, from 1:30 - 3:30 p.m. at the Native Learning Center's Indian Housing Training Conference in Tulsa, Oklahoma. The presentation will:
- describe strategies and financing sources to help tribes and Tribally Designated Housing Entities (TDHEs) achieve energy independence consistent with tribes' Seven Generations tradition;
- discuss wind, biomass and other renewable energy technologies with a particular focus on solar energy projects due to their special suitability for housing;
- describe how tribes and TDHEs can partner with developers who, by taking advantage of federal investment tax credits, can provide 25-30% of the cost of developing solar systems;
- explain how reduced energy costs and state and federal grants can cover additional portions of development costs and how, after a period of 5 or 6 years, the system can potentially be fully paid for, leaving the TDHE with nearly cost-free energy in place of environmentally harmful carbon-based energy; and
- discuss development of generation facilities that can power tribal enterprises and tribal housing and the permissible uses of the Indian Housing Block Grant and other financing sources in connection with such projects. We will illustrate recommended clean energy strategies with case studies.
Registration is free for Native Americans and those working within Indian Country. For more information or to register, please click here.
Godfrey & Kahn works extensively with tribes, tribal subsidiaries and industry partners to take full advantage of tribal energy resources and to help tribes achieve long term, sovereignty-enhancing energy independence. For more information, contact Indian Nations Law Team Leader Brian Pierson at 414.287.9456 or firstname.lastname@example.org.
Attorney Pierson to Present on Leasing, October 10 in Las Vegas
Godfrey & Kahn's Indian Nations Law team leader Brian Pierson will present "The HEARTH Act and Its Impact on Leasing Tribal Lands for Economic Development" with Donald ("Del") Laverdure at 10:15 a.m. on Thursday, October 10 as part of the Tribal Rights, Sovereignty and Economic Development Conference in Las Vegas. Del will address the HEARTH Act, leases covered by the Act, processes for tribes to develop and implement regulations and the approval process. Brian's presentation will focus on practical tips for taking advantage of the Act, critical elements of a successful regulatory structure and tribal leasing programs.
For more information or to register, click here.
Godfrey & Kahn Attorneys Publish Series on Internal Investigations
Godfrey & Kahn attorneys Sean Bosack and Dan Blinka have authored a six-part series "The Do's and Don'ts of Corporate Internal Investigations," published by InsideCounsel, an on-line publication for in-house legal department leaders.
Sean and Dan are members of Godfrey & Kahn's Litigation Practice Group and Sean is also a member of the firm's White Collar Defense & Investigations Practice Group. Among other matters, the series addresses the key issues of (1) maintaining confidentiality throughout investigations while carefully working to uncover the details of potential fraud, regulatory violations or other corporate misconduct and (2) determining whether, and when, to report -- to the media, audit committee, executives, or the government -- the results of your investigations, and what details to divulge.
The series can be accessed by clicking here.
Godfrey & Kahn's White Collar Defense and Investigations Practice Group include former state and federal prosecutors and attorneys with FBI and state prosecutorial experience. Godfrey & Kahn has assisted tribes in conducting internal investigations and in responding to state and federal investigations of tribes and tribal entities. For more information, contact Brian Pierson at 414.287.9456 or email@example.com.