Business | Law

9th Circuit sides with Chehalis Tribe in county taxation dispute

Tuesday, July 30, 2013

The Chehalis Tribe of Washington has won a taxation dispute that went before the 9th Circuit Court of Appeals.

The tribe operates Great Wolf Lodge, a water park, on a parcel of trust land known as the Grand Mound Property. Officials in Thurston County imposed taxes on the structures there because they are owned by a limited liability corporation.

In a unanimous decision today, the 9th Circuit determined that the tax is prohibited by federal law. The court said it doesn't matter that the structures aren't owned by the tribe.

"The Grand Mound Property at issue here is owned by the United States and held in trust pursuant to § 465," the court stated, referring to 25 U.S.C. § 465.

"Under Mescalero, § 465’s exemption from state and local taxation applies to the permanent improvements on that land," the court continued. "Thus, neither Thurston County nor any other state or local entity can tax the Great Wolf Lodge or other permanent improvements on that land."

In Mescalero Apache Tribe v. Jones, the U.S. Supreme Court arrived at the same conclusion back in 1973. "Because the Supreme Court has not revisited this holding, we are required to apply it," the 9th Circuit observed.

The 9th Circuit noted that the Bureau of Indian Affairs recently finalized a regulation that bars state and local taxation of improvements on Indian land. But the court said the rule was merely a confirmation of existing law so it didn't need to be addressed.

The regulation, incidentally, is being challenged in federal court in California, which also falls in the 9th Circuit.

Turtle Talk has posted documents from the tax case, Chehalis Tribe v. Thurston County.

9th Circuit Decision:
Chehalis Tribe v. Thurston County (July 30, 2013)

District Court Decision:
Chehalis Tribe v. Thurston County (April 2, 2010)