*1 attorney’s RE- tive relief and fees is The decision of
VERSED. in dismissing Riehardet’s claims under
article sections and 3 of the Alaska
Constitution is AFFIRMED. EQUALIZATION
The BOARD OF FOR KETCHIKAN, OF BOROUGH Alas
ka, Borough and the Assessor of the
Ketchikan, Alaska, Worley, Ap Michael
pellants,
ALASKA NATIVE BROTHERHOOD SISTERHOOD,
AND CAMP NO. an association;
unincorporated and Ketchi Corporation, federally
kan Indian organization, Appellees.
chartered NATIVE
ALASKA BROTHERHOOD SISTERHOOD,
AND CAMP NO. association;
unincorporated and Ketchi Corporation, federally
kan Indian organization, Cross-Appel
chartered
lants, EQUALIZATION
The BOARD OF FOR KETCHIKAN, OF BOROUGH Alas
ka, Borough and the Assessor For the Ketchikan, Alaska, Worley, Michael
Cross-Appellees.
Nos. 6492 and 6605. of Alaska.
June *2 Walker, Atty., Mun. Ketchi- W.
Russell kan, cross-appellees. appellants Mullendore, Bigelow, Teresa V. Robert G. McConaughy, Roberts & Shefel- Bennet A. man, cross-ap- Anchorage, appellees pellants. Gen., Price, Wilson Atty. E. Asst.
Robert Gen., Juneau, Condon, for State of Atty. L. as amicus curiae. Alaska RABINOWITZ, BURKE, C.J., and Before COMPTON, JJ. MATTHEWS AMENDED OPINION COMPTON, Justice. whether appeal in this is
The issue raised the Ketchikan Indi- by real leased property (“KIC”) from the Alaska Corporation Sisterhood, Camp Native Brotherhood under fed- (“ANB/ANS”) exempt is No. taxes assessed property eral law from the superior of Ketchikan. The Borough under 25 exempt it court ruled (1934). For the reasons set U.S.C. § below, ruling that this we conclude forth cross-appeal argues incorrect. KIC should nonethe- superior court’s decision either of by this court on less be affirmed is ex- (1) the leased two bases: holds and taxation because KIC empt from (2) the sovereign capacity, or uses it in its from taxation leased instrumentality. it is a federal rejected specifically and we conclude argument, second did not so. The court proper to do argument consider the held and because it is from taxation sovereign capacity, used KIC its even Native Center. This diversion of funds is We though this issue was permissible law, raised under federal but KIC be- reject this and thus con- argument as well lieves should not required do so. KIC is clude The ANB/ANS and appealed subject to local valorem taxes under ad assessment up- Board. The Board ad- law. We therefore need not held assessment. The ANB/ANS and argument dress the the Board of raised *3 KIC then appealed this decision supe- to the Equalization Borough for the Ketchikan rior court for a trial pursuant de novo to AS (“the Board”) superior the that erred 29.53.140(f). The Board moved to have KIC in ruling that KIC is entitled to costs and dismissed the on from action the basis that attorney’s prevailing fees as the party. it is not proper a party because it is the status of the property owner and not of the AND I. FACTUAL PROCEDURAL lessee that determines whether property the BACKGROUND exempt is from superior The taxation. pursuant formed to 25 U.S.C. court denied this motion. 476, section 16 of the Reorganiza- The Board and KIC then filed cross-mo- constitution, tion Act of It a 1934. has for summary tions judgment. sought bylaws charter, and a each of has a declaratory judgment that the property approved the In United States. all improvements located on it are ex- parcel KIC leased a land located empt local ad valorem taxes under within Borough Ketchikan from both federal and state The law. ANB/ANS The fifty ANB/ANS. lease is for term of join did not in this motion. The Board years, with an option to renew for another sought declaratory judgment that fifty years. paid by The rental is per property exempt is not year. Using funds, federal from taxation. On $25.00 23,1981, constructed a October two-story building, court issued a called order, “Native Center.” At the end of memorandum of the lease decision con- term, cluding title to the building property exempt will revert to the under cultural, ANB/ANS. various law pursuant KIC conducts to 25 U.S.C. § educational, vocational, health commu- The Board moved to this re- have decision nity service programs considered, at the Native Center. but its motion was denied. The order, however, court amended its indi- Shortly after construction of the Native cate that only the leasehold interest of KIC Center, KIC received a Real As- Property the improvements on the property Borough sessment Notice from the of Ket- taxation; exempt from real property Borough chikan. The mistakenly believed exempt. owned is not ANB/ANS that KIC was the fee of the proper- owner ty. Borough subsequently The directed appeals judgment The Board from the Assessment Notice to the The ANB/ANS. it. against entered KIC has filed a cross- having was assessed as a value of appeal preserve for court’s consider- this $406,050.00, $381,300.00 of which is attribut- ation the alternative which it bases able improvement. Native Center judgment believes the could superior court’s The record does not disclose annual affirmed, i.e., exempt liability being challenged it in taxation either because KIC uses prop- its sovereign capacity
The or because the apparently ANB/ANS without taxes, erty is a The pay any instrumentality. funds to and KIC contends liability joined cross-appeal. the tax in KIC’s therefore will fall ANB/ANS upon it. with KIC contends that “be The State of Alaska has filed brief curiae, forced to divert federal funds” designated this court as amicus in which it for programs conducted at the Native Cen- contends leased is not ter pay taxes because it does under federal law from ad valorem have other funds can be used for the taxes.
II.
tribe. 411
DISCUSSION
at
36 L.Ed.2d
under 25
Exemption
U.S.C. §
A.
however,
agree
Board,
125. We
ruled that under 25
superior court
The
holding abrogates
prerequisite
that this
KIC is
465 the
leased
U.S.C. §
being
in the name of the
of title
taken
valorem taxes. This
from local ad
United
in trust for the Indians
as follows:
provides
section
circumstances, which
the most limited
hereby
the Interior is
Secretary
The
not exist
case.
do
in this
authorized,
discretion,
acquire,
in his
Mescalero,
operated
In
the Indian tribe
relinquishment, gift,
through purchase,
reserva-
adjacent
ski resort
land
exchange,
assignment, any
thirty
The
land
tion.
lands,
rights
or surface
rights,
water
Forest Ser-
from the United States
years
lands,
existing reserva-
within or without
noted that
vice.
tions,
re-
trust
otherwise
including
by the
technically acquired
was not
land
allotments,
allottee
whether the
stricted
*4
tribe, “[b]ut,
in trust for the
United States
deceased,
purpose
or
for the
of
living
be
out, ‘it
has pointed
as the
General
Solicitor
Indians.
providing land for
meaningless
the Unit-
would have been
for
States,
title to the
already had
ed
rights acquired
Title to
lands or
any
use
forest, to
title to itself for the
of
convey
461, 462, 463,
to
pursuant
sections
lease ar-
Tribe.’
We think the
...
466-470, 471-473, 474, 475,
question
in
was sufficient
rangement here
be
in the
and 479 of this title shall
taken
in the land
bring
to
Tribe’s interest
for
name of the
in trust
United States
465.”
immunity
within the
afforded
§
or individual Indian for
the Indian tribe
1274 n.
155 n.
S.Ct. at
U.S'.
lands
acquired,
which the land is
and such
n. 11. These facts
Land not
held in trust
restricted
itself.
however,
The regulations,
make it
may
status
acquired
be
for an indi-
apparent
an Indian
vidual Indian
aor
tribe in trust status
tribe is not exempt from local ad valorem
when
acquisition
such
is authorized
taxes under 25
U.S.C.
unless the
§
of Congress.
act
acquisition
No
of land United States holds the title to the property
status,
in
including
trust
a transfer of
in trust for
and,
furthermore,
Indians
land
already held in trust
restricted
the United States
actively ap
must
status,
acquisi-
shall
valid unless the
prove the acquisition
of land
trust status.
Secretary.
tion is
approved
The United
did
(1981)
not approve
C.F.R.
120a.9
states:
§
the acquisition of KIC’s
leasehold
trust
An individual Indian or tribe desiring
status and the United States does not hold
acquire
land
trust status shall file a
title to the leasehold in
trust
KIC. Ac
request
written
approval
such ac-
cordingly,
property is
quisition with the Secretary. The re-
taxation under 25
465.1
quest
need not be in
U.S.C.
special
form but
identity
shall set
the parties,
out the
conclusion,
In
view
we need not
description
acquired,
of the land to be
determine the
validity
the Board’s con-
and other information which would show tention that KIC’s property could not be
*5
that
the acquisition comes within the
exempt under 25
465 pursuant
U.S.C.
§
terms of this part.
120a.l,
25 C.F.R.
states,
which
in part,
§
It
be
should
noted that
25 C.F.R.
regulations
“These
do not cover the acquisi-
120a.2(g) (1981) defines
§
“land” to mean
tion of land in trust
in
status
the
therein,”
“real
interest
any
Alaska, except acquisitions for the Metla-
which would include a leasehold interest
katla
Community
of the Annette
such
acquired by
as that
It is
of some
Island Reserve or its members.”2
120a.l0(e)
interest
that 25
specifi-
C.F.R. §
Exemption
B.
Theory
of Sover-
cally provides
requests
that
evaluating
“[i]n
eign Capacity
for the acquisition
status,
of land in trust
cross-appeal,
the
On
KIC
Secretary shall
contends that
the
impact
consider . ..
the
on
judgment
the State
its
should
political
and
subdivisions
be affirmed on either of
resulting from the removal of the land
two
alternative bases. The first alternative
the tax rolls.”
proposed by
basis
isKIC that its leasehold
by
supported
recognized procedure
1. This
transferring
conclusion is
the decision
for
land
Leading
Supreme
of the South Dakota
Court
the United States
in trust
for Indian tribes
Fighter
121,
County Gregory,
v.
89 S.D.
1980, i.e.,
prior
existed
the time KIC
denied,
(S.D.),
1032,
N.W.2d 114
cert.
U.S.
entered into
lease
its
with the ANB/ANS.
563,
96 S.Ct.
balanced,
apparent
it is
that the
taxation because
is a federal instrumen-
taxing authority
summarily
is reasonable.
The
re-
tality.
assertion
against
argument,
The taxes assessed
“the
jected
finding
this
it to be
non-discriminatory
ad valorem
deserving of
least
extended discussion.”
from
generated
taxes. The revenues
The
into which
agree.
We
disfavor
to
and fire
police
be used
provide
taxes will
doctrine of federal
instrumentalities
premises, as well as
protection to the
amply
by
fallen is
demonstrated
the Court’s
water,
services
electrical and sewer
provide
in
comments Mescalero:
interest
building. Like the state
to the
doc
intergovernmental
immunity
The
has a
in
Ketchikan
Washington,
identified
variety
was once
in
in a
vogue
trine
much
in
these revenues
strong
raising
interest
and,
respect
of contexts
they are for
taxing
affairs, was
held to bar a
consistently
prop-
be
services that must
provided
of,
product
state tax on
lessees
or the
interest
erty. We believe that Ketchikan’s
from,
tribes
or income
restricted lands of
obtaining
provide
in
these
revenues
theory
or individual Indians. The
the serv-
services from the beneficiaries of
was in
instrumentality
that a federal
outweigh KIC’s
sufficiently great
ices is
volved and that
the tax would interfere
retaining
provide
in
the revenues to
the max
realizing
with the Government’s
We
services to its members.
governmental
ap
return for
This
imum
its wards.
that, assuming
is an
therefore conclude
survive;
and de
did not
its rise
proach
assuming that the
Indian tribe and further
Hel
in Indian
is described in
cline
affairs
though
applies
v. Lee test
even
Williams
Corp., 303
vering v. Mountain Producers
obviously not
reservation Indian
KIC is
...
623],
C. law—automati matter constitutional Instrumentality taxation. cally from state reject that even if we its first argues at judgment 411 U.S. S.Ct. at L.Ed.2d argument, “alternative” its earlier quoted on the basis at 120. The Court should nonetheless affirmed Choctaw, & Gulf R. its leased decision Oklahoma case, analysis inappropri specifically suggests opinion “In this 5. KIC our indicates: opinion issued ate view recent does not seek its tax return to assess Navajo Supreme in Ramah governmental provides Court for the functions Revenue, -U.S. School Board v. Bureau of paying must bear those who the burden -, 102 S.Ct. -, - U.S. tax.” contrary, analysis we that our To the conclude at 1183. complete Ramah. In that is in accordance with us, however, In the case the taxes before case, a state struck down assessed Ketchikan are in return gross receipts imposed non-Indian on a prop governmental provides functions it building constructed subcontractor of school erty Accordingly, the tax is Navajo for the tribe on their reservation. preempted impermissible, nor implicitly preempt *8 Court held that the tax was apparent regulations because is that when comprehensive regulatory ed state, federal, and tribal inter the “relevant governing scheme of autono the construction - ests,” Ramah, at -, 102 S.Ct. at U.S. The court mous Indian educational facilities. 3399, 1180, at examined 73 L.Ed.2d generate reve noted that the tax served balanced, taxing au assertion of Ketchikan’s state, providing nue for the not which was thority is reasonable. correlative services the tribe. The Court’s
1023
531,
Mackey,
536,
Co. v.
256 U.S.
41 S.Ct.
the necessary prerequisite
because
to such
1076, 1080(1921), stating,
tax-exemption,
65 L.Ed.
that the property
be held
used,
in
tribe,
‘mere fact
is
United States
trust for the
“[T]he
others,
among
by the
as an
not
United States
satisfied
KIC. We
conclude that
effecting
instrument
for
purpose
its
does neither
the bases suggested by KIC for
”
not relieve it from state
411
affirming
taxation.’
nonetheless
judgment
has
151,
1271,
at
at
36
at
U.S.
S.Ct.
L.Ed.2d
merit. The ad valorem property taxes do
concluded,
121. The Court then
“We ac
not
impermissibly impinge upon KIC’s
cordingly decline the invitation to resurrect
“tribal autonomy,” assuming that KIC is an
the expansive version of the
Indian tribe
intergovern
and that the economic burden
mental-immunity
it,
doctrine that has
so of the
taxes will fall upon
because the
consistently rejected
Borough’s
times.” Id.
in
modern
generating
reve-
154,
1273,
at
at
nue
S.Ct.
36 L.Ed.2d
non-discriminatory
pay
In Moe
services provided
v. Confederated
and Kootenai
Salish
ex-
Tribes,
13,96
ceeds
463,474
1634,
KIC’s interest
retaining
U.S.
n.
reve-
S.Ct.
provide governmental
nue to
13,
96,
programs
1641 n.
107 n. 13
Finally,
members.
taxes cannot be
Supreme
Court indicated
impermissible
held
“federal
in-
that Mescalero “effectively eliminated [the
strumentality doctrine” because the
United
instrumentality] doctrine as
basis
Supreme
Court
specifically
has
re-
immunizing
Indians from state taxa
jected the
application
current
of that doc-
tion.”
trine to immunize Indians from state taxa-
The
indicated
tion.
that whether or
an entity
not
should be
judgment
superior
court
is
exempt from taxation
is a feder
therefore REVERSED and the case is RE-
al instrumentality
essentially
policy
de
MANDED for further proceedings consist-
legislature
cision for the
not
a constitu
ent with this opinion.
tional issue for the courts. Oklahoma Tax
Co.,
342,
Commission Texas
365-
CONNOR, J., not participating.
561, 573-74,
93 L.Ed.
(1949).
stated, “But,
The Court has
so far
RABINOWITZ, Justice, concurring.
private persons
as
claiming
concerns
immu
agree
11(A)
I
with Part
of the court’s
nity
ordinary
for their
operations
business
opinion
that the
(even though
govern
in connection with
not
from the Ketchikan ad valorem
activities),
implied
mental
no
constitutional
taxes under 25 U.S.C.
and with Part
§
rest
immunity
merely hypotheti
can
11(C),
not
governmental
cal interferences
func
I
instrumentality.
taxation
a federal
”
tions ....
Id. at
S.Ct.
join
result
Part 11(B),
also
reached in
L.Ed. at 739.
that KIC is not immune from local taxation
sovereign
as a
I
entity, although
Similarly, we
conclude
ground
holding
on the conclusion that
immune from the as
constitutionally
enjoys
KIC is not an Indian tribe and
no
sessed ad valorem property taxes under the
immunity.
sovereign
doctrine of federal
instrumentalities
be
alleged
cause the interference with KIC’s
entity
A
asserting sovereign
Native
im
governmental
provision of
services caused munity shoulders the burden of
it is
proving
simply
taxes
is not substantial
New
Mashpee
tribe. See
Tribe v.
Sea
enough.
6,n.
bury Corp., 592 F.2d
586-87
(1st Cir.),
denied,
cert.
III. CONCLUSION
Admitted
We conclude that the
ly,
legal
principles
of tribal status are
erred in holding
subject
great
that KIC’s leasehold inter
uncertainty.
Felix S.
See
tax-exempt
est is
under of Federal
U.S.C.
Cohen’s Handbook
Indian Law
*9
In
ed.);
Canby,
type
American
is the
of
would
(1982
community
W.C.
which
3-15
of
(1981).
In the absence
recognized by
government.
Law 3-6
be
federal
dian
that
Tribe,
anticipate
Mashpee
Cf.
recognition1 I
federal
F.2d at
sovereignty
tribal
claim
colorable
1978,
Department
the Interior
In
adjudi
difficult
exceedingly
might prove
published
regulations
final
entitled “Proce-
Haldane, 569 P.2d
Atkinson v.
cate. Cf.
an American
Establishing
dures for
(federal
1977)
govern
151,
(Alaska
162-63
Group Exists
Tribe.”
Indian
as an Indian
Metlakatla
Indian
recognized
ment had
83,
Fed.Reg.
Part
13326 et
See
C.F.R.
tribe). The in
as
Indian
Community
30, 1982).2
83.7
(March
25 C.F.R.
seq.
§
however,
such a
present
does not
case,
stant
prerequisites
sets forth detailed
for federal
claim.
colorable
recognition
organiza-
of a Native American
in various
Reviewing the criteria used
Among
Indian
are:
tion as an
tribe.
these
determining
whether
circumstances
(b)
portion
Evidence that a substantial
tribe, I
considered a
group
Native
be
petitioning group
specif-
of the
inhabits
satisfying any
falls short of
think the KIC
community
ic area or lives in a
viewed as
may
status
extant definition.
Tribal
other
American Indian and distinct from
explicit
recognition.
established
federal
area,
in the
and that its mem-
populations
respect federal deter
The state courts must
bers are descendants of an Indian
area,
enti
recognized
minations in this
historically
specific
which
inhabited
sovereign immunity.
ties will be accorded
area.3
Atkinson, 569 P.2d
162-63. While
(c) A
which estab-
statement of facts
recogni
federal
KIC has not been accorded
petitioner
lishes that
has maintained
tion,
inquiry
not
under
this does
end all
authori-
political
tribal
influence or other
Bottomly v. Passama
standards.
autonomous
ty over
members as an
Tribe, 1061,
(1st
quoddy
1064-65
F.2d
throughout
until
entity
history
Dana,
Cir.1979); Maine
A.2d
present.
denied, cert.
553-54
It is
I think it evident
the KIC falls short
1025 government, guidelines. the federal The members of federal an group Indian may particular any KIC are not descended from also seek to establish as a matter of histori- community, but are natives dif- cal Indian of fact it has and continues to exist as fering groups who to live in Ketchi- happen independent sovereign an entity entitled to They kan. do a area specific immunity.5 not inhabit In the days earliest of Indian which could be viewed as American Indian law adjudication, the United States Su- or as distinct from other communities. The preme analysis Court turned to historical regulations require evaluating rights also that “the and of powers Indian petitioner has been identified from histori- nations.6 present cal times until the on a substantial- On the of basis the record before us it basis, Indian,’
ly continuous as ‘American could not said that the KIC has ever ” ‘aboriginal’ 83.7(a). 25 C.F.R. § independent an functioned as nation. Be- pursuant KIC was formed to a 1934 stat- cause there is showing by a total lack of ute.4 possessed ever the attributes of Theoretically arguments from sovereignty distinct necessary suggest existence centering upon policy nation,” the actions or of the as a dependent “domestic I would recognition 4. Another set of federal criteria for which the Indian tribes never have been de- generated prived”). of tribes has 16 under section Act, Reorganization of Indian 25 U.S.C. 476. See Felix Cohen’s Handbook of Federal Georgia, (5 6. In Cherokee Nation v. 30 U.S. (1982 ed.). Indian 13 re- 1, Law Similar to the Pet.) 17, 25, (1831), 8 L.Ed. 31 Chief Justice 83, quirements set Part forth 25 C.F.R. John Marshall characterized the Indian tribes Department of Interior histo- has looked dependent independent as “domestic nations” — ry of the tribe’s relation the United States political sovereignty pre-dated societies whose government, political the tribe’s exercise au- of expansion the westward territorial of the Unit members, thority over its soli- the “social ed States: darity” group. of Id. argument So much of the as intended to prove the character of the Cherokees as a relationships 5. State the Indian tribes State, political society separated as a distinct analyzed have sometimes been ple principle under the sim others, capable managing of its own power police state does itself, has, governing opin- affairs and in the sovereign not extend over distinct An entities. majority judges, ion of a of the been com- extent, analysis, parallel alternative to some pletely They successful. have been uniform- government enjoys the federal exclusive ly treated as the settlement of power to Indian See conduct affairs. McLana country. our The numerous treaties made Ariz., 164, 172, han v. Tax Comm’n of 411 U.S. recognize with them the United States 1257, 1262, 129, (1973) 93 36 S.Ct. L.Ed.2d people capable maintaining as them a (“the away trend has been from the idea war, peace responsi- being relations of sovereignty inherent Indian bar to state political ble in their character for viola- jurisdiction upon and toward reliance engagements, any aggres- tion their pre-emption”), citing Apache Mescalero Tribe sion committed the citizens of the United Jones, 145, 1267, 411 U.S. 93 S.Ct. by any community. individual of their (1973). McLanahan, however, rec spirit Laws have been enacted in the of these ognized continuing vitality aof historical government plainly treaties. The acts of our recognize sovereignty principle: vastly over “[I]t State, the Cherokee Nation as a simplify problem say nothing re and the courts bound those acts. mains of the notion that reservation Indians are Pet.) (5 at L.Ed. 30. See also separate people jurisdiction, to whom state Pet.) 515, Georgia, (6 Worcester v. legislation, may and therefore state tax (1832). 8 L.Ed. The Court’s extend.” 411 U.S. at perspective relationship historical of the Trading L.Ed.2d at 134. See Warren Post Co. govern- Indian nations state and federal Comm’n, v. Ariz. Tax 380 U.S. 85 S.Ct. ments survived into modern times. In See also Co Ariz., F. McLanahan Tax Comm’n of 411 U.S. hen, Courts, Rights 1257, 1262, Indian the Federal 36 L.Ed.2d (1940) (“The right Minn.L.Rev. of self- the Court cautioned that must “[i]t government something granted always is not to the be remembered that the various by any Congress. independent sovereign Indians act of It is rather tribes were once tribes, nations, original right sovereignty inherent and of the Indian and that their claim to recognized by legislators, right long predates courts and that of our own Government.” argument based historical reject any is bound to afford the
fact that this court Because immunity. my sovereign I can regard agree in this
conclusion *11 11(B) majority in Part
result obtained join I do not in the court’s
opinion, although precedent.
application of federal court in Part approach taken
11(B) the existence of a hypothesizing the “in attempts apply
KIC “tribe” Lee, Williams v.
fringement” test of 269, 270, 217, 220, 3 L.Ed.2d setting too divorced (1959), in a applica reality permit meaningful test, as explained
tion. The Williams Arizona, v. Tax Commission of
McClanahan designed “was
resolve conflict [the] [between jurisdiction] by providing its interest protect up
State could
point self-government where tribal that, problem
be affected.” The here is shows, the
far as the record KIC does Thus, I
operate government. as a view one unproductive undertaking,
as an fed necessarily import distorts law, to determine whether attempt
eral community at the cen provided services gov part
ter are to be considered KIC’s
ernmental function. MORGAN, Petitioner, L.
Roderick MORGAN, Respondent.
Diana
No. of Alaska.
Supreme Court 1, 1983.
July