Native American Legal Update : Native American Law : Foster Pepper Law Firm : Northwest, Seattle, Spokane, Portland Lawyer & Attorney

Flag of the Nisga'a Nation (University of Victoria)

In a break from long-standing land control policies, the Nisga’a First Nation in British Columbia is set to begin allotting property to its members, who can then mortgage, lease, or sell it – even to non-Nation members.

The new policy is part of an ongoing effort to improve the economic circumstances of the Nisga’a. After three years of study, the Nisga’a government has concluded that restrictions on private property ownership by its members has been a significant obstacle to financial growth. The new policy will provide Nisga’a members with freehold title to their homes, which they can then sell or mortgage as they please, and the policy may soon be extended to the Nation’s commercial and industrial properties.

This new policy from a First Nation in Canada will contrast sharply with policies among Tribal nations located within the United States. The property allotment policy implemented by the federal government during the 20th Century is generally viewed as having been an economic and social disaster for Native communities. The selling off of Tribal lands, typically at below-market value in order to obtain much needed cash, resulted in the “checkerboarding” of Native reservations and an alienation of Native peoples from their traditional homelands. Tribes also lost control of significant mineral wealth and water/mining rights due to the loss of ownership of their lands.  Most Tribes within the U.S. have spent the decades since the end of allotment trying to regain lost lands and return them to permanent Tribal status.

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Eloise Cobell (Photo by Karen Kuehn)

A class-action suit regarding mismanagement of lands affecting 500,000 Native Americans recently got a boost, as the U.S. Court of Appeals for the D.C. Circuit has ruled in the Cobell litigation that the federal government must provide an accounting for land royalties owed to individual plaintiffs.

The lawsuit was filed 13 years ago and claims compensation for Native Americans for land-related royalties from the profits of oil, gas, grazing, and timber – commodities that were taken from Tribal lands that the government has managed in trust for Tribal members since the 19th Century. In 2008, U.S. District Judge James Robertson ruled that an accurate accounting by the Department of Interior was impossible, and awarded the group of plaintiffs $455 million, a fraction of the $47 billion+ being claimed in the lawsuit.

The U.S. Court of Appeals for the D.C. Circuit disagreed with this result, and found that the lower court erred in eliminating the government accounting. Chief Judge David B. Sentelle said the decision essentially allowed the Interior Department "to throw up its hands and stop the accounting." "Without an accounting, it is impossible to know who is owed what," Sentelle wrote. "The best any trust beneficiary could hope for would be a government check in an arbitrary amount."

The D.C. Circuit panel acknowledged that the task is complicated and the Interior Department should focus on the "low-hanging fruit", dealing with clear cases where compensation is owed. "We must not allow the theoretically perfect to render impossible the achievable good," Sentelle wrote.
 

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(Photo courtesy of Martha Lou Perritti)

In nearly every jurisdiction throughout the United States, local governments derive a significant portion of their operating revenue from property taxes.  The money land owners pay in property taxes goes to fund basic infrastructure such as roads and schools and services such as police and fire protection.

There is however one jurisdiction within which the local government cannot collect property taxes: Tribal lands held in federal trust.

Tribal governments cannot impose property taxes on reservation land that has been taken into trust by the federal government, which is typically most if not all of the land owned by Tribal members within the bounds of a reservation.  Tribes are thus deprived of the benefit of countless millions of dollars in revenue that would normally be available to any other municipality.  With poverty and sub-standard facilities still endemic on reservations throughout America, there is a sad irony in the fact that the place where property taxes could do the most good are the only places they cannot be collected and put back into the community.

The denial of taxing authority to Tribes also has another negative impact on Native Communities, this time in the context of the national consciousness.  In order to make up for unavailable property tax revenue, many Tribes utilize alternative income sources such as casino gaming and discounted tobacco products to finance basic services within their reservations.  Since in most states these offerings are only available within the sovereign territory of a Tribe, many Americans hold an ill-informed view that Native Americans enjoy "special privileges", and that other benefits and services to Tribes should therefore be curtailed.  The lack of understanding of why these alternative revenue sources are necessary could perhaps be overcome by touring the decrepit infrastructure with which many Tribal Communities continue to be saddled, but such ventures by non-Natives are far from routine.

There's no insurmountable obstacle to allowing Tribes to tax land within their jurisdictions.  The federal government could enter into taxing agreements with Tribes that would allow for collection of some form of property tax, which Tribes could help structure so as to increase revenue without placing an undue financial burden on Tribal members.  Numerous models for such agreements already exist, in the form of retail sales tax compacts between state and Tribal governments for business activities occurring on reservations.

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