953 N.W.2d 82
S.D.2020Background
- Plaintiffs: Pickerel Lake Outlet Association and 40 non‑Indian owners of cabins and other permanent structures on land the United States holds in trust near Pickerel Lake (Allotment #1199). The Association leases the trust parcel from the BIA.
- Both the Sisseton–Wahpeton Oyate (Tribe) and Day County assessed ad valorem taxes on the same structures; some plaintiffs refused to pay County taxes or paid under protest and sued for a declaratory judgment (challenging County taxation).
- Plaintiffs argued federal law preempted the County tax, relying principally on 25 U.S.C. § 5108 (IRA fee‑to‑trust tax exemption) and 25 C.F.R. § 162.017(a) (BIA regulation stating permanent improvements on leased Indian land are not subject to state/local taxes).
- State/County contended plaintiffs lacked an appropriate statutory basis and that County taxation of non‑Indian‑owned structures was permitted; State also challenged standing under the zone‑of‑interests test.
- The circuit court found plaintiffs had standing but upheld the County tax; on appeal the South Dakota Supreme Court affirmed, holding plaintiffs failed to prove the land was acquired pursuant to the IRA and federal law did not preempt the County’s nondiscriminatory ad valorem tax.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring declaratory action | Plaintiffs suffer concrete injury from County tax and may seek declaration that tax is preempted | State argued plaintiffs fall outside §5108 "zone of interests" and thus lack standing | Court: Standing satisfied under Declaratory Judgment Act tests (injury, causation, redressability); zone‑of‑interests inapplicable because suit is under the Declaratory Judgment Act, not §5108 as a cause of action |
| Express preemption under 25 U.S.C. § 5108 (IRA) | §5108 exempts lands acquired pursuant to the IRA and related permanent improvements from state/local taxation; BIA regs confirm | State: §5108 applies only to lands actually taken into trust under the IRA (fee‑to‑trust); parties did not show IRA acquisition here | Court: Plaintiffs failed to prove land was acquired pursuant to the IRA (no fee‑to‑trust showing); §5108 therefore does not expressly preempt County tax |
| Preemption via BIA regulations (25 C.F.R. §162.017) | BIA regulation and Dept. of Interior statements occupy the field of Indian leasing and preclude State taxation of permanent improvements | State: Agency proclamations cannot override absence of congressional intent; no agency authority to preempt State taxation of non‑Indian‑owned structures here | Held: Court declined to defer to agency proclamations for preemption; performed its own conflict analysis and found no congressional intent to preempt County taxation |
| Implied preemption / field preemption | Federal leasing scheme and regs show comprehensive federal control, leaving no room for state taxes on improvements | State: Taxation of non‑Indian improvements is a traditional state power; no federal scheme displacing it; taxes are nondiscriminatory and do not impair tribal interests | Held: No implied preemption — historical presumption against preempting traditional state taxation, limited federal regulation here, and precedent upholding similar taxes support County authority |
Key Cases Cited
- Mescalero Apache Tribe v. Jones, 411 U.S. 145 (U.S. 1973) (held IRA exemption preempted state use tax on materials used to make permanent tribal improvements)
- White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (U.S. 1980) (established balancing test for conflicting state/tribal/federal interests in Indian country regulation)
- DeCoteau v. Dist. Cty. Ct. for Tenth Judicial Dist., 420 U.S. 425 (U.S. 1975) (addressed reservation disestablishment and categories of trust land)
- Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (U.S. 2014) (articulated zone‑of‑interests test for statutory causes of action)
- Yankton Sioux Tribe v. Podhradsky, 606 F.3d 994 (8th Cir. 2010) (discussed different categories of trust land, including allotted vs. IRA trust lands)
- Wyeth v. Levine, 555 U.S. 555 (U.S. 2009) (advised courts to perform independent conflict analysis rather than rely solely on agency preemption proclamations)
- Oklahoma Tax Comm’n v. Sac & Fox Nation, 508 U.S. 114 (U.S. 1993) (treated various trust lands as Indian country for federal preemption analyses)
- Thomas v. Gay, 169 U.S. 264 (U.S. 1898) (upheld state taxation of property owned by non‑Indian lessee on Indian land)