Supreme Court Hears Tax Case Over Indian Land Boundary

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By Matthew Beddingfield

Jan. 20 — The U.S. Supreme Court heard oral arguments in a case involving the imposition of a 10 percent tax on alcohol purchases within an Omaha Tribe's Indian reservation, and whether or not an 1882 act of Congress diminished the boundary of the reservation.

During oral arguments Jan. 20, the Nebraska solicitor general and the assistant to the solicitor general at the Justice Department argued over a request by individual petitioners to remit the 10 percent tax. The Omaha Tribe denied the request and informed the petitioners they were subject to the Omaha Tribal Code because the disputed area of Pender, Neb., was within the Omaha reservation (191 DTR K-1, 10/2/15).

Nebraska Solicitor General James D. Smith told the court that the disputed Indian area “is that of a land that long ago lost its Indian character,” and that it was the intent of Congress through an 1882 act that the disputed area would be diminished from the reservation.

Justice Antonin Scalia challenged Smith regarding the diminishment of the tribe's boundaries, saying that it “doesn't make any sense” that actions of a later Congress concerning a reservation's excess land would automatically align with the intent of the 1882 Congress when it enacted a particular statute.

What's at Stake

Justice Sonia Sotomayor also questioned Smith as to what the state would lose if it didn't win the case. The U.S. government already limits the tribe's power to tax by requiring the tribe to obtain governmental permission, she added.

Smith responded that the issue for the state becomes adding an additional sovereign—the tribe—into an area over which the tribe hasn't previously exercised authority, which would cause confusion as to the justifiable expectations of those who live in the disputed area.

A further concern is whether or not the tribe decides to provide services that the state can provide when collecting the tax, Smith added.

“And, in fact, the idea of local control is if the people in the disputed area are unhappy about what the Tribe is doing, unlike it's their local city council, they don't get to vote,” Smith said.

Paul D. Clement, of Bancroft PLLC and a former U.S. solicitor general, who represented the individual petitioners challenging the tax in dispute, argued that Congress hadn't diminished the reservation, but simply opened up a portion of the reservation for settlement within existing boundaries.

No Supporting Language

According to Clement, “there is no language in the statute that supports a finding of diminishment.”

Clement added that if the court were to rule in favor of Nebraska, the parties would then have to reconstruct a right-of-way in order to preserve a jurisdictional boundary.

Justice Ruth Bader Ginsburg questioned Clement on what else the tribe could do in the way of governance in the area besides the liquor sales tax. Clement responded that there is a potential to disrupt the existing revenue-sharing agreement with the state, as well as make cooperative agreements with the state to tax Indians when they make purchases in Pender, the only village on the disputed land.

Further, when two tribal members are involved in an altercation in Pender, the tribal authorities could be contacted and could handle the matter in tribal court, he explained.

The DOJ's Allon Kedem, who argued against Nebraska, urged the court to consider that the outcome of the case could have potentially disturbing ramifications.

“The single most unsettling thing that this Court could do would be to suggest that the borders of those reservations depend not on what Congress said about them, but on shifting demographic patterns or who provides what services where,” Kedem said.

No date has been set as to when a decision is expected.

To contact the reporter on this story: Matthew Beddingfield in Washington at

To contact the editor responsible for this story: Brett Ferguson at

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