DETROIT - A federal district court judge has ruled that the state of
Michigan cannot collect taxes on fee land owned by the Keweenaw Bay Indian
Community on the L'Anse Reservation in upper Michigan.
This decision, which runs counter to the Cass County v. Leech Lake Chippewa
decision handed down by the U.S. Supreme Court, doesn't mean that all
tribes across the country are affected by this new decision, according to
Skip Durocher, attorney for the Keweenaw Bay Indian Community who is with
the Minneapolis-based law firm Dorsey & Whitney LLP.
The land in question is fee simple land owned by the tribe and individual
For some tribes that might fall under this ruling, it could allow for
easier access to home ownership, business development and other economic
development opportunities - but also have an adverse economic impact for
some counties, townships and states.
In his ruling, U.S. District Court Judge David W. McKeague relied heavily
on the 1854 treaty by which the L'Anse Reservation was created. Unlike the
tribes of Minnesota, where Congress passed an act that allowed for taxation
on fee lands, that act did not extend to the Keweenaw Bay Indian Community,
McKeague wrote in his opinion.
McKeague wrote "that allowing land on reservations that are fee simple
properties does not mean the ratification of the 1854 treaty meant the
Congress intended the land to be taxed."
He analyzed the treaty and its intent to form his opinion.
"It [the treaty] is consistent with treaty language, it is pretty clear all
along," Durocher said.
In the Cass County case, Congress passed an act that allowed taxation of
fee simple lands within the reservation's exterior boundaries. McKeague
said he could not find any such intent by Congress to do the same at
The 1922 statute addressed the taxability of land which gave the secretary
of the Interior authority to act for the president. McKeague said that the
words used in the statute do not apply to the Keweenaw Bay case.
"The court is well aware that Congress has the power to address the
alienability of the land at issue in this case. If Congress had addressed
the alienability of the reservation land at issue here, but not the
taxability, the principle announced by the Supreme Court in Cass County
would 'fill in the blanks' so to speak, and dictate that the land be
"Such is not the case here," McKeague wrote.
Alienability is a legal term used to indicate that land is allowed to be
sold or transferred to other individuals.
Some treaties signed in or around 1854 contain language that exempted
reservation lands from levy, sale or forfeiture. That exemption could be
lifted if the state Legislature removed those restrictions, subject to
approval by Congress.
"Similarly, there is no language in the 1854 treaty of issue in this case
that purports to make land taxable after the state Legislature removes
restrictions on levy, sale or forfeiture," McKeague said.
"The community had an agreement with the local townships through the tribal
gaming compact that it would contribute 2 percent of the gross revenues
from gaming to the local townships. Part of that 2 percent was to be
payment in lieu of taxes; the townships were in full agreement," Durocher
After the Cass County decision the state tax commission decided it had a
right to impose property taxes on the tribes and tribal members and
instructed the townships to do so.
"They balked and then the state said it would seize all tax rolls unless
they agreed to the tax," Durocher said.
There was already a judgment that stated local townships couldn't bind the
community to a tax judgment.
The issue went to state court where the community won, but on appeal it
lost. Federal court was the next step.
The state was asked to agree to allow for payment in lieu of taxes rather
than have the community make double payments, but the state would not
agree. The community then filed the federal lawsuit in August 2003.
It is expected the state will appeal the case. If there is an appeal it
will go the 6th Circuit Court of Appeals, the court to which McKeague was
McKeague was one of three judges recently approved for appointments to
appellate courts who were confirmed by the Senate after a compromise was
reached between the two political parties.