ONEIDA NATION HOMELANDS, N.Y. -- With a strong push from U.S. District
Judge David Hurd, talks are continuing to settle tax disputes between the
Oneida Indian Nation of New York and its neighboring jurisdictions.
Hurd ruled Oct. 27 that Madison County could not use foreclosure to collect
property tax bills on the Oneidas' non-reservation holdings. He later
issued a temporary restraining order on Oneida County, pending a hearing
Nov. 7. The ruling, based on the Oneidas' sovereign immunity, was a major
victory for the nation after a string of legal defeats for New York state
But Hurd strongly urged alternate means of settling the tax liabilities
following the U.S. Supreme Court's City of Sherill v. Oneida Indian Nation
of New York decision on March 29. The Supreme Court said the Oneida Nation
could not unilaterally assert sovereignty and, therefore, tax immunity over
parcels it had reacquired within the boundaries of its previous
In early October, the nation reached an agreement with Sherrill to pay
$59,814 in back taxes. It offered the compact as a model for settlements
with other local governments, but local politicians have been reluctant to
accept it. Tax collection on Indian lands has emerged as a major issue in
local elections pending on Nov. 8, as the Sherrill decision re-energized
Officials in Madison and Oneida counties have accelerated foreclosure
proceedings against Oneida parcels, but Hurd emphatically called a halt in
his Oct. 27 ruling. In a preamble to a permanent injunction against Madison
County, he wrote, "A District Court should not permit the taking of a
sovereign nation's land against its will by foreclosure or any other means,
without the express approval of the United States Government. In this
country, such an extraordinary remedy -- taking a sovereign nation's land
against its will -- has never been legally sanctioned."
Hurd anticipated the objection from local governments that the Sherrill
case had given them a right to collect taxes without a remedy. He
repeatedly cited the 1991 Supreme Court case Oklahoma Tax Commission v.
Citizen Band Potawatomi, which produced an analogous situation. Like Chief
Justice William Rehnquist in that decision, he suggested the alternate
means of negotiating a "mutually acceptable" agreement.
In a final footnote, Hurd observed, "As in the Sherrill case, there is
always the possibility of a settlement agreement between the parties. This,
of course, would be the best final result. However, a settlement would
require a spirit of cooperation and compromise on the part of both sides
which has heretofore appeared to be sorely lacking."
"Otherwise," he concluded, "this and other federal and state litigation
will continue into the indefinite future."
The Oneida Nation has filed 22 court challenges to foreclosure proceedings
by its neighbors, but its reaction to Hurd's ruling underlined a preference
for negotiations. A statement released by spokesman Mark Emery read, "As
America's first allies, the Oneida Nation has always tried to work for a
settlement that benefits all Central New Yorkers. The Nation will continue
to work hard for agreements that meet the financial needs of our neighbors
and move the area forward."
Emery denied a report in a local paper that the Oneidas had cut off tax
talks after Hurd's decision. He said the nation had offered versions of the
Sherrill compact to the city of Oneida, the village of Canastota, the town
of Verona and Oneida County. The five-page compact with Sherrill provides
for payment of back taxes without interest or penalties. It sets up a
framework of advance notification for health and weights and measures
inspections by local governments, which were previously ruled out by the
nation's assertion of sovereign status on its properties.
The compact also specifies that it will not apply to any land put into
trust for the Oneidas by the federal government, the process recommended by
the Sherrill decision for reestablishing tribal sovereignty on reacquired
parcels of the former reservation.
The pending land-into-trust applications give the Oneida Nation a powerful
incentive to settle tax issues. The Interior Department informed it earlier
this summer that it could not grant trust status to land encumbered by tax
In announcing the compact jointly with Sherrill, Oneida Nation
Representative Ray Halbritter said, "The Oneida Nation is gratified to
resolve all disputes with the city of Sherrill and hopes to be able to do
the same with all of its neighbors."
The Oneida Nation also allayed a conflict with most neighboring school
districts by paying their recently delivered tax bills. Emery explained
that the school district bills were now due, but that county taxes were not
yet assessed. He said that payments had come out of the Nation's Silver
Covenant fund, which had provided voluntary contributions to local schools
Since it began in 1996, the Silver Covenant fund paid more than $8 million
in grants to seven school districts and four local governments. "The Nation
didn't receive credit" for these payments as tax payments in the past, said
Emery, "so this time when the Nation made payments from the Silver Covenant
fund, it sent them out with the tax bills."
Other than noting that the fund had been used for tax payments, he left
unclear the future of the voluntary program.
He also said that the payment to the joint Vernon-Verona-Sherrill school
district was handled differently than others because that district included
the nation's Turning Stone Resort and Casino. He said the nation paid only
on the value of the land, not developments. He said that valuation of
Turning Stone was a separate legal issue, now in litigation. Although
Verona has made an initial assessment of $378 million, the nation maintains
that the casino resort has no commercial value because it cannot be
transferred to any other owner.
The two counties have estimated that their tax claims will total around $8
million. Emery said the Oneidas couldn't say what amount they would offer
in the compacts because they had not yet received tax bills from the
counties. The counties' property tax bills go out around the end of
December, he said.
Hurd's decision seemed to surprise county officials because he had recently
ruled against the Cayuga Nation in a separate case. Citing the Sherrill
case, he allowed local officials in Cayuga territory to order the closing
of two small Class II gaming operations the Cayugas had opened.