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Seminole Tribe wins major decision in taxation dispute in Florida

Wednesday, August 26, 2015

Seminole Tribe Chairman Jim Billie and Interior Secretary Sally Jewell signed a HEARTH Act agreement in January 2015. Photo from Department of the Interior / Facebook

The state of Florida cannot impose a rental tax on the Seminole Tribe, a federal appeals court ruled on Wednesday in a case being watched closely across Indian Country.

In a unanimous decision, 11th Circuit Court of Appeals concluded that the tax infringes on the tribe's rights. Citing the Indian Reorganization Act of 1934 and U.S. Supreme Court precedents dating to the 1980s, a three-judge panel said the state failed to explain why it should be allowed to assert authority on the reservation.

"The state of Florida has not shown any state interest in its rental tax beyond the general raising of revenue to provide generalized services nor has it pointed to any state regulation of Indian-land leasing that would render the federal regulations nonexclusive," Judge Robin S. Rosenbaum wrote for the majority.

On a second issue, though, the court sided with the state. A utility tax does not affect the tribe's rights because it falls on third parties and is not pre-empted by federal laws or regulations, Rosenbaum said.

The Council Oak Tree is one of the most important locations on the Seminole Tribe's reservation in Hollywood, Florida Photo from Pietro / Wikipedia

"Just as the state cannot assert a generalized interest in raising revenue to support its taxes, the tribe cannot demonstrate congressional intent to preempt a specific state tax by bundling up an assortment of unrelated federal and tribal interests tied together by the common thread of electricity use," the decision read.

At the same time, the 11th Circuit left open the possibility for a different conclusion. That means the tribe could show that the tax infringes on its interests once the case returns to the lower court for further proceedings

But for now, the tribe's legal team is celebrating. The decision will likely affect a similar taxation dispute involving the Poarch Band of Creek Indians in neighboring Alabama, also in the 11th Circuit, and it helps solidify a win in a similar case from the 9th Circuit Court of Appeals, where more than 200 tribes are based.

"This is a significant victory for our client and Native American tribes across the country," attorney Glen Stankee of Akerman LLP said. "In holding that federal law prohibits state taxation of rentals of Indian land, this decision helps define the limits of states' taxing authority in Indian Country."

The Seminole Hard Rock Hotel & Casino in Hollywood, Florida. The state has been imposing a rental tax on a company that operates the food court at the casino and another one in Tampa. Photo from Facebook

"While not all states tax rentals of commercial property, the court resolved a variety of legal issues and applied important principles that will significantly benefit tribes in all types of state tax cases in the years to come," Stankee added.

The ruling comes as the Obama administration asserts a stronger interest in protecting tribes from encroachments by state and local governments. Earlier this month, the Department of Justice filed briefs in support of the Tulalip Tribes in a dispute in Washington involving $40 million in annual taxes.

In that case, the tribe argues that the taxes don't provide any benefits to the reservation beyond raising revenue for the state and Snohomish County That kind of "generalized interest" was rejected by the 11th Circuit in its decision.

"A state’s interests in a particular tax can outweigh federal and tribal interests, but to do so, the state’s tax must relate to services it provides in connection with the entity and activity being taxed and not merely serve a generalized interest in raising revenue," Rosenbaum wrote.

President Barack Obama signed H.R.205, the HEARTH Act of 2012, into law on July 30, 2012. Photo by Pete Souza / White House

The 11th Circuit also took notice of a Bureau of Indian Affairs regulation from December 2012 which confirmed that tribal lands are exempt from state and local taxes. Although the court did not blindly accept the rationale behind the rule, Rosenbaum said it provided "substantial evidence of the extensive federal regulation of Indian land leasing" that tipped the scales in the Seminole Tribe's favor.

More recently, the Interior Department has begun citing the Helping Expedite and Advance Responsible Tribal Homeownership (HEARTH) Act as another example of the federal government's interest in protecting tribal rights. Although the law was not brought up in the Florida case, the Seminole Tribe has taken advantage of its provisions.

"As more tribes see the possibilities of using their lands that the HEARTH Act has made available to them, the department will be able to further support their goals of meeting their communities’ needs and achieving economic self-sufficiency," Assistant Secretary Kevin Washburn said on Tuesday as he announced two more HEARTH Act approvals.

Turtle Talk has posted documents from the case, Seminole Tribe v. Stranburg.

11th Circuit Decision:
Seminole Tribe v. Stranburg (August 26, 2015)

Federal Register Notices:
HEARTH Act Approval of Seminole Tribe of Florida Regulations (August 12, 2015)
Residential, Business, and Wind and Solar Resource Leases on Indian Land (December 5, 2012)