Appeals courts decisions on tribal taxation at odds

WASHINGTON, D.C. - The 10th U.S. Circuit Court of Appeals ruled in early April that the Chickasaw Nation of Oklahoma must pay federal excise taxes on its pull-tab gaming operation.

However, three weeks later, another court, the Ninth Circuit Court of Appeals, reached a different conclusion in a similar pull-tab case involving the Shakopee Mdewakanton Sioux Community of Minnesota.

If either decision is appealed, the issue may finally be decided in the U.S. Supreme Court. And, a spokesman for the Chickasaw Nation says it is prepared to do just that.

In the Shakopee case, the court sided with the tribe finding that the Indian Gaming Regulatory Act (IGRA) intended to exempt Indian gaming from all relevant excise taxes.

"This was a very nice victory for the tribes, but clearly it was the right result," said Mary Streitz, partner with the law firm Dorsey & Whitney and lead council for the Shakopee in their case.

In the earlier Chickasaw case, the 10th Circuit Court rejected this argument, concluding that relevant provisions of IGRA being considered do not exempt tribes from taxation and are ambiguous at best.

However, in the Shakopee decision, the Ninth Circuit Court went as far as to cite the 10th Circuit decision, stating that it failed to apply the "Indian canon of construction."

This term refers to a legal doctrine which requires federal courts to resolve statutory ambiguities in favor of the affected Indian tribe. The doctrine was established in 1985 when the U.S. Supreme Court stated in Montana vs.. Blackfeet that, "statutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit".

Following this doctrine, the Ninth Circuit found that the relevant legal provision in IGRA was ambiguous and could be construed as exempting Indian pull-tabs from excise taxes, therefore, the case must be resolved in favor of the tribe. For the Chickasaw, the 10th Circuit never considered the "Indian canon of construction," finding that IGRA did not exempt the tribe from taxation.

"The Chickasaw used very different arguments in their case," said Strietz." The court was not given the opportunity to look at all sides of the issue."

In the Shakopee case, the Ninth Circuit Court also stated that while the law is unclear, one of the primary purposes of IGRA was " to promote tribal economic development and self-sufficiency," and that the law was drafted to place tribes and states on equal footing with regard to gaming through tribal-state compacts.

Under IGRA, tribal gaming is only authorized in states where gaming is already legal and is therefore a state-authorized gaming operation.

Many times, state-authorized gaming activities, such as lotteries, are exempt from taxation. It was the Ninth Circuit Court's opinion that tribes may also be eligible for exemption. In recognizing this point the court concluded, "equal treatment of tribes and states with respect to exemptions from federal wagering taxes is consistent with this (IGRA's) legislative intent, and is in accord with the concept of co-equal sovereignty."

Thus, in it's decision the Ninth Circuit Court recognized the sovereign status of tribes, their equal treatment under the law, and the intent of Congress when it originally passed IGRA. With both cases eligible for appeal, it is possible the issue ultimately may be resolved in the Supreme Court.

It is unclear at this time if the federal government or the Chickasaw Nation plans to appeal either case.