PIERRE, S.D. (KELO) — A federal law doesn’t bar the Day County government from assessing property taxes on permanent improvements such as buildings owned by non-Indians on land held in trust for the Sisseton–Wahpeton Oyate, the South Dakota Supreme Court has ruled.
In a decision released Wednesday, the justices agreed that Circuit Judge Jon Flemmer didn’t err when he upheld the county’s right to impose the tax.
The Pickerel Lake Outlet Association and 40 non-Indian owners of permanent improvements around the lake brought the suit against the county in 2014. Some land around the lake is held in trust by the U.S. government for the Sisseton-Wahpeton Oyate or its tribal members.
The 40 individually named plaintiffs are members of the lake outlet association. The association leases 31.28 acres of trust land from the federal Bureau of Indian Affairs for the benefit of association members. The members own a variety of buildings and other structures on the west side of Pickerel Lake, including cabins, sheds, cottages and garages.
The tribal government collects property taxes from association members for their structures. Day County also assesses taxes for the same cabins, with the revenue going to the Webster school district, Koskuisko township, Day County and the Pickerel Lake sanitary district. The tribal government wasn’t a party to the case.
Justice Janine Kern wrote the Supreme Court’s unanimous decision in favor of Day County. The justices said the non-Indian structure owners had standing to bring the suit but the federal law exempting some trust lands from state or local taxation that their attorneys cited hadn’t been shown to apply.
“Central to this inquiry is an understanding that subtle differences exist among different individual types of Indian trust land. Indeed, simply stating that land is held in trust by the United States, as the Plaintiffs have done, does not explain how the land acquired its trust status,” Justice Kern wrote. She said the non-Indians in the case hadn’t specifically shown the area the association leases from the tribe had been returned to trust under the federal 1934 Indian Reorganization Act.
The justice also was unpersuaded by an argument that the South Dakota Constitution prohibited the taxation and that a U.S. Supreme Court decision known as Chevron blocked the taxation. Wrote Kern, “Congress has not authorized the BIA to preempt the State’s authority to tax structures owned by non-Indians. As we have previously stated, neither the Tribe nor individual Indians are involved in this action which concerns taxes levied only against non-Indians who own buildings that are not, themselves, held in trust under the provisions of the IRA.”
Justice Kern said two U.S. Supreme Court decisions, Fisher and Thomas, and a 1919 decision by the South Dakota Supreme Court in Lebo v. Griffith strengthened the state court’s current holding that federal law doesn’t pre-empt state or local taxation of structures owned by non-Indians on trust land. On Lebo, which considered school taxes on the Cheyenne River Indian Reservation, she wrote: “Although more than one hundred years have passed, this holding stands the test of time.”