Taxation examined by Supreme Court

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Oneidas make strong arguments with far-reaching implications

WASHINGTON - The U.S. Supreme Court heard final arguments Jan. 11 in a case
that could go beyond the immediate issue of taxation to revisit the
establishment of reservations and the definition of Indian country. City of
Sherrill, New York v. Oneida Indian Nation of New York, et al., will be
decided by the end of June.

At issue is whether land within original treaty boundaries once lost to the
Oneida Indian Nation (by illegal means) and reacquired by them can be taxed
by the local government of Sherrill. In theory at least, a decision in the
city's favor could lead to local taxation of other Oneida businesses
established on reacquired lands. Other nations of the Iroquois Confederacy,
most of which signed treaties at issue in the case, could conceivably
follow suit.

Though the Oneidas' Turning Stone Resort and Casino didn't get a single
mention in the Supreme Court, the nation's successful enterprises have
contributed heavily to local economies wherever the tribe has turned,
leading some to question the city's sense in going to the mat over about
$3,000 in annual tax losses. In its questioning, the court probed the
potential for damages.

In arguing its case for levying taxes on the tribe after a losing streak in
the lower courts, Sherrill maintains the Oneida reservation lost Aboriginal
title to the land by longevity - for 190 years it didn't come forward with
a complaint over original reservation land that had been lost as tribal
dominions. In addition, attorney Ira S. Sacks said the tribe conceded its
own sovereignty in New York state in a pair of historical treaties.

The nation argues that only Congress can disestablish reservation land, and
has never done so in the case of the Oneida; therefore the prohibition
against state taxation of a sovereign tribal government stands. In
addition, attorneys for the Oneidas argued on Jan. 11 that the nation
asserted its sovereignty over the land in question immediately after
reacquiring it. Michael R. Smith, a Washington-based attorney, began his 20
minutes by rebutting any idea that the Oneidas have been inconsistent in
acknowledging their own Aboriginal title and sovereignty in New York. To
the contrary, he said, the city has been inconsistent on that point;
whereas it now insists the tribe lost Aboriginal title, either by time or
treaty, on another occasion it sought a federal easement on tribal lands,
implicitly acknowledging the federal superintendence that is a defining
feature of reservations.

That brought Justice Antonin Scalia to the real point at play in the
exchange: "You're saying it's inalienable" - that is, the city sought a
federal easement because the tribal land was in trust status as a
protection against its loss by the tribe, another defining feature of
reservation land. "But for non-Indians it is?" - that is, the same land
that is inalienable to Indians was alienable, subject to loss, when owned
by non-Indians.

Smith agreed, adding that it's a historical issue.

That seemed to bring out a concern of other justices that losses stay
historical. Sandra Day O'Connor asked for reassurance that the case does
not extend to tribal eviction of non-Indians if the land in question is
found to be tribal land. The point is germane because eviction would be a
serious disruption of a community's "just expectations," a key legal
threshold that simply removing some land from tax rolls doesn't begin to
reach. But her tacit reference to a separate Oneida claim on 270,000 acres
of land illegally taken by the state was well understood by all of the
principals; in that claim, the nation seeks compensation rather than, as in
this one, repossession of its land.

"We're not asserting eviction ... for land that is not in our actual
possession," Smith responded, meaning the 270,000 acres. But neither is the
nation waiving underlying rights, he added.

Justice Stephen G. Breyer developed the theme a little further for the
court. If a tribe owns 22 square miles of treaty land in north-central New
York state and it can't get possession of the land - "it can still get
value?"

Indeed, Smith said. The tribe could expect "retrospective damages for
trespass."

Breyer would return to his line of questioning later, but first Scalia
reverted to a frequent theme of his own - the inconvenience of multiple
sovereigns and their jurisdictions in a single legal system.

"This is a terrible situation for governance to be in," he snapped, "and
part of the problem is that the Oneida did not complain for 190 years."

In the same vein, he said the Oneida are asking the court to "just create a
chaotic situation in New York state if we say you have jurisdiction over
any piece of land you buy."

Of course, the tribe would not assert jurisdiction over just any piece of
land it purchased, but over land within the boundaries of its original
reservation. Smith met the barrage with a reminder that Congress has sole
control over tribal land.

Scalia turned to a 1788 tribe-state treaty, noting that ambiguous phrasing
in such documents must be interpreted as the parties themselves understood
it. Subsequent history suggests the Oneidas thought New York had
jurisdiction over the treaty lands, he said.

No, Smith said, later documents and treaties protect the Oneida from that
interpretation.

Now an assistant solicitor general at the Department of Justice, Malcolm L.
Stewart, came before the court. The DOJ supports the Oneida position, asked
the Supreme Court not to hear the case, and filed a "friend of the court"
or amicus brief on behalf of the tribe. Stewart said the city's argument
for title loss to the tribe through passage of time is wrong because the
original tribal dispossession was itself a "distinct" injury, and title
cannot be extinguished by "adversarial possession."

Scalia said with some impatience that when a party has been injured, the
remedy is to come forward with a timely claim.

Stewart said the tribe had done so after purchasing the lands in Sherrill,
in 1997.

Finally, Breyer returned to the potential for a damages action, pending the
disposition of the case. "A damages action is far more serious than taking
lands off the tax roll ... Are we dealing with negotiating positions [in the 270,000-acre Oneida claim]? ... What are we dealing with here?"

More than taxes, Scalia interjected. "It isn't just taxes we're talking
about. It's jurisdiction." He called taxes only one aspect of a larger
jurisdiction.

All the usual cautions apply: It is impossible to predict high court
opinion from oral argumentation. More so in this case, which involves a
1788 tribe-state treaty, the 1790 Nonintercourse Act, an 1838 treaty
between the tribe and the federal government, the statutory definition of
Indian country, Supreme Court precedent on the definition of Indian
country, 10 amicus briefs and enough fine points of Indian law to furnish a
university curriculum.

Bearing all that in mind, attorneys for Sherrill did appear to have a hard
time making headway with their argument that the Oneidas have lost title to
original treaty lands. The Nonintercourse Act prohibits transfer of tribal
land without federal approval, yet New York state "continued its aggressive
efforts to acquire Iroquois territory across New York, including the Oneida
reservation, without federal consent," according to a preview of the case
provided by the American Bar Association. The justices took note of the
Nonintercourse Act in their questioning, and it's hard for a layman anyway
to see how its provisions, could fail to support the Oneidas.

The city contends the 1788 tribe-state treaty set aside lands for Indian
use, instead of establishing a reservation that met the standards of later
federal law for Indian country. (The argument relies on Alaska v. Native
Village of Venetie, a Supreme Court ruling that required a federal
set-aside of tribal lands and federal superintendence.) But several
justices seemed to cast doubt on the validity of that reading, especially
in light of later treaties between the federal government and the tribe.

Sherrill also maintains that an 1838 treaty, containing a federal offer to
remove the tribe from New York to Kansas, means the tribe sacrificed title
to New York lands but never left the state under terms of the treaty. But
Justice O'Connor pointed out that removal to Kansas was highly provisional,
depending (among other things) on "suitable arrangements" that were never
made. Justice David Souter reminded city attorneys of a government
negotiator on the 1838 treaty who solemnly assured the tribe it wouldn't
have to leave New York if it signed the treaty, a role highlighted by lower
courts. At the end of the hearing, Souter stated "There's no indication
they [Oneidas] ceded anything in New York."

Reflecting the case's countless intersections with Indian law, the hearing
drew a heavy turnout of attorneys, among them Ginny Boyle of Gardner Carton
& Douglas in Washington, and Marguerite Smith of the Shinnecock in New
York. A handful of tribal leaders also attended, including Ray Halbritter
and Keller George from the Oneida Indian Nation of New York.