In Minnesota, are tribal or individual Indian lands held in fee simple exempt from local property tax under the 'Indian lands' exemption in § 272.01?

Plain-English summary

Mahnomen County wanted to know whether it could levy property tax on land owned in fee by individual Indians or by the Minnesota Chippewa Tribe and the White Earth Band. The county had been taxing fee land owned by individual Indians for many years but had not taxed tribal or band fee land, treating it as exempt under state law. The 1992 U.S. Supreme Court decision in County of Yakima v. Yakima Indian Nation had cleared the federal-law obstacle to local taxation of allotted fee land owned by tribes or members. The Minnesota Department of Revenue read Yakima to mean all reservation fee land was now taxable, and Mahnomen County Attorney Gerald Paulson asked the AG to interpret the state statute.

Minn. Stat. § 272.01, subd. 1 makes all real and personal property in the state taxable, "except Indian lands and such other property as is by law exempt from taxation." The statute does not define "Indian lands." Reasonable readings ranged from "all land within reservation boundaries" to "only federal trust land." The AG had to pick one.

The AG read the term narrowly. The "Indian lands" exemption, the AG concluded, applied only to land held in trust by the United States for an Indian tribe, a tribal member, or an individual Indian, and to land owned by a tribe or individual Indian subject to a federal statutory restraint against alienation. Land that an Indian tribe or individual Indian owned in fee simple, free of federal restrictions, did not fall within the exemption.

The reasoning traced through the statute's history. The legislature added the "Indian lands" exemption in 1961 (H.F. 392, authored by Representative Harry Basford). The bill responded to the 1959 enactment of a privilege tax on lessees of otherwise-tax-exempt property. Trust land had long been beyond state taxation under federal law, but its lessees could be taxed under the new 1959 provisions, and that prospect threatened to erase the practical value of the federal exemption when tribes leased trust property for revenue. The 1961 bill carried tribal-government support, including resolutions from the Red Lake Tribal Council and the White Earth Reservation Council, both of which described the bill as preserving the tax-exempt status of "Indian Trust Land" and "Federal Trust Land." Nothing in the legislative record suggested the bill was meant to take fee land off the tax rolls.

The AG also relied on the long-standing canon that exemptions from taxation are construed narrowly, and on the practical consequence that reading the exemption to cover all reservation land or all tribally owned land would have erased a substantial part of the tax base in counties with reservations, a result the legislature could not have intended.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical context: what the AG concluded

The AG's interpretation rested on five threads. First, the legislative history. The 1961 House Tax Committee minutes recorded Representative Basford explaining that the bill was a response to the 1959 privilege-tax legislation, which had inadvertently swept in leased Indian Trust Land. The two tribal resolutions submitted in support of H.F. 392 both spoke of "Trust Land," not of fee land. The AG read this record as evidence that the legislature intended to protect a category that had already been understood as exempt, not to create a new exemption sweeping in property never before treated as exempt.

Second, the textual choice. "Indian lands" appears in other federal statutes with varying definitions. Some, like the Indian Gaming Regulatory Act (25 U.S.C. § 2703), define it to include trust and restricted-status land. Others, like the National Indian Forest Resources Management Act (25 U.S.C. § 3101 et seq.), use a similar definition. The federal jurisdictional term "Indian country" (18 U.S.C. § 1151) is much broader, including all land within reservation boundaries. The AG observed that if the Minnesota legislature had meant to import the broader "Indian country" definition, it would have used that established federal term rather than the undefined "Indian lands."

Third, the practical consequence of a broad reading. Treating all land within reservation boundaries as exempt would have meant exempting fee land owned by non-Indians within reservation boundaries, an outcome the legislature plainly did not intend. Treating all tribally owned land as exempt would have given tribal fee ownership a tax preference that individual Indian fee ownership did not enjoy, with no statutory basis for the distinction.

Fourth, the canon of narrow construction of tax exemptions. The Minnesota Supreme Court had applied this rule in Great Northern Railway v. Minnesota, 216 U.S. 206 (1910), Camping and Education Foundation v. State, 282 Minn. 245, 164 N.W.2d 369 (1969), Ramaley v. City of St. Paul, 226 Minn. 406, 33 N.W.2d 19 (1948), and DePonti Aviation, Inc. v. State, 280 Minn. 30, 157 N.W.2d 742 (1968).

Fifth, the underlying federal-law backdrop in 1961. Federal law forbade state taxation of trust and restricted lands. Cases like The New York Indians, 72 U.S. (5 How.) 761 (1867), The Kansas Indians, 72 U.S. (5 How.) 737 (1867), United States v. Rickert, 188 U.S. 432 (1903), and Oklahoma Tax Commission v. United States, 319 U.S. 598 (1943) all rested on that federal bar. The 1961 legislature was working against that backdrop, and the AG read the state exemption as parallel to the federal protection then understood to govern trust land. After Yakima removed any remaining federal-law bar to taxation of allotted fee land, the state exemption stood alone, and the AG would not read it to do more work than the legislative history supported.

The AG cautioned in a footnote that the Bureau of Indian Affairs had taken a position that state and local governments lacked jurisdiction to tax fee land owned by Indians on reservations, and the United States had appeared in several pending federal cases challenging local taxation of such lands. The disposition of those cases in light of Yakima was unclear when the opinion issued.

Common questions

Q: I am an individual Indian who owns my home in fee on a Minnesota reservation. Was my home taxable in 1993 after this opinion?
A: Yes, under the AG's reading. If the title was fee simple and not subject to a federal restriction on alienation, the home was subject to ad valorem property tax. Whether that is still the rule today depends on later cases, later AG opinions, and any statutory changes.

Q: What about land held in trust by the United States for a tribal member?
A: That fell within the AG's exempt category. Trust land remained exempt because the United States, not the tribal member, held legal title, and federal law forbade state taxation.

Q: What did the term "restricted status" mean in the opinion?
A: Restricted status land is land owned by an Indian or a tribe but subject to a federal statutory restriction against alienation. The general restriction derives from 25 U.S.C. § 177. The AG treated such land as exempt for the same reason as trust land: the federal restriction on the owner's control made the state's exemption appropriate.

Q: Did the AG opinion bind the Department of Revenue?
A: AG opinions are advisory. They guide local officials and are commonly followed, but they are not binding precedent the way a court ruling is. The Department of Revenue had taken a similar position before the AG opinion issued.

Q: What was the practical consequence for tribal economic development?
A: Tribes that wanted to keep property off the local tax rolls had to either hold the land in trust with the federal government or rely on a federal restriction on alienation. Buying property in fee, even for tribal government purposes, exposed the property to local property tax.

Q: Could the legislature have written the exemption more broadly?
A: Yes. The AG repeatedly noted that the term was ambiguous and rested its narrow reading on the legislative history of H.F. 392 and the canon that exemptions are narrowly construed. The legislature could amend the statute to broaden the exemption.

Q: Does this opinion say anything about leases of trust land?
A: It does not directly hold on lease taxation, but the AG noted in passing that federal cases (Fort Mohave Tribe, Agua Caliente Band, Chief Seattle Properties) had upheld state and local taxation of non-Indian leasehold interests in trust or restricted lands. The 1961 bill carved out leases of Indian lands from the privilege tax in § 272.01, subd. 3.

Background and statutory framework

Three layers of law govern property tax on Indian-owned land in Minnesota.

Federal law. Trust land cannot be taxed by states; the federal government holds title. Restricted-status land, owned by an Indian or tribe but subject to a federal restraint against alienation, similarly cannot be taxed. Yakima held that allotted land that has come into fee status (the trust period having ended) is subject to local ad valorem taxation, because Congress in the General Allotment Act expressly authorized taxation once the trust period expired (25 U.S.C. § 349). Other federal cases have applied this reasoning to non-Indian leasehold interests in trust or restricted land.

Minnesota Statutes § 272.01. Subdivision 1 makes all real and personal property taxable, except "Indian lands" and other categories exempted by law. Subdivision 2 imposes a privilege tax on lessees of otherwise tax-exempt property used for profit-making purposes. Subdivision 3 carves out exemptions from the privilege tax, including Indian lands and property of tribal corporations organized under the Indian Reorganization Act of 1934 (48 Stat. 984).

The 1961 amendment. Act of April 14, 1961, ch. 361, 1961 Minn. Laws 554 added the Indian-lands exemption to subdivisions 1 and 3, sponsored by Rep. Harry Basford of Becker County. The legislative record shows the bill responded to the 1959 enactment of the privilege tax provisions and to tribal concern about lease-tax exposure.

Other state statutes use the term "Indian lands" in the gaming and gambling-compact context (Minn. Stat. §§ 3.9221, 240.13, subd. 9, and 349.61, subd. 2). Those statutes were adopted in the IGRA framework and presumably borrow the IGRA definition (which includes both trust land and restricted-status land within reservation boundaries with tribal jurisdiction). The AG did not extend that definition to the tax statute.

The opinion was signed by Assistant Attorney General Gregory P. Huwe on behalf of AG Hubert H. Humphrey III.

Citations and references

Minnesota statutes:
- Minn. Stat. § 272.01, subd. 1 (general tax with Indian lands exemption)
- Minn. Stat. § 272.01, subd. 2 (privilege tax on lessees)
- Minn. Stat. § 272.01, subd. 3 (exemptions from privilege tax)
- Minn. Stat. § 3.9221 (tribal-state gambling compacts)
- Minn. Stat. § 240.13, subd. 9 (horse racing telecasts to Indian lands)
- Minn. Stat. § 349.61, subd. 2 (gambling compacts on Indian lands)
- Minn. Stat. § 645.16 (statutory construction principles)

Federal statutes:
- 25 U.S.C. § 177 (restriction on alienation of Indian land)
- 25 U.S.C. § 331 et seq. (General Allotment Act / Dawes Act)
- 25 U.S.C. § 349 (taxation authorization after trust period)
- 25 U.S.C. §§ 393, 396a (leasing of unallotted trust lands)
- 25 U.S.C. § 415 (leasing of restricted Indian lands)
- 25 U.S.C. § 2703 (IGRA definition of Indian lands)
- 25 U.S.C. § 3101 et seq. (National Indian Forest Resources Management Act)
- 18 U.S.C. § 1151 (definition of Indian country)
- 18 U.S.C. §§ 1154, 1156 (Indian country liquor prohibitions)
- 18 U.S.C. § 1162 (Pub. L. 280 criminal jurisdiction)
- 28 U.S.C. § 1360 (Pub. L. 280 civil jurisdiction)
- Burke Act of 1906, 34 Stat. 182
- Indian Reorganization Act of June 18, 1934, 48 Stat. 984

Cases:
- County of Yakima v. Yakima Indian Nation, 112 S. Ct. 683 (1992)
- The New York Indians, 72 U.S. (5 How.) 761 (1867)
- The Kansas Indians, 72 U.S. (5 How.) 737 (1867)
- United States v. Rickert, 188 U.S. 432 (1903)
- Oklahoma Tax Commission v. United States, 319 U.S. 598 (1943)
- Board of Commissioners v. Seber, 318 U.S. 705 (1943)
- United States v. City of Detroit, 355 U.S. 466 (1958)
- United States v. Erie County, 31 F.Supp. 57 (W.D.N.Y. 1939)
- Bryan v. Itasca County, 426 U.S. 373 (1976)
- State of Minnesota v. Zay Zah, 259 N.W.2d 580 (1977)
- Fort Mohave Tribe v. County of San Bernadino, 543 F.2d 1253 (9th Cir. 1976)
- Agua Caliente Band of Mission Indians v. County of Riverside, 442 F.2d 1184 (9th Cir. 1971)
- Chief Seattle Properties, Inc. v. Kitsap County, 541 P.2d 699 (1975)
- Great Northern Railway v. Minnesota, 216 U.S. 206 (1910)
- Camping and Education Foundation v. State, 282 Minn. 245, 164 N.W.2d 369 (1969)
- Ramaley v. City of St. Paul, 226 Minn. 406, 33 N.W.2d 19 (1948)
- DePonti Aviation, Inc. v. State, 280 Minn. 30, 157 N.W.2d 742 (1968)
- Grava v. County of Pine, 268 N.W.2d 723 (1978)
- Johnson v. McIntosh, 8 Wheat 543, 5 L.Ed. 681 (1823)

Other:
- Felix S. Cohen, Handbook of Federal Indian Law (1982 ed.)
- William C. Canby, Jr., American Indian Law in a Nutshell (2d ed. 1988)
- Act of April 14, 1961, ch. 361, 1961 Minn. Laws 554 (H.F. 392)
- Resolutions of the Red Lake Tribal Council (No. 21-61) and the White Earth Reservation Council (March 25, 1961)

Source

• Landing page: https://www.ag.state.mn.us/Office/Opinions/
• Original PDF: https://www.ag.state.mn.us/Office/Opinions/414a5-19930504.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

TAXATION: INDIAN LANDS: The exemption from ad valorem taxation for Indian lands in Minn. Stat. § 272.01, subd. 1 applies only to lands held in trust by the United States for the benefit of an Indian Tribe, its members, or an individual Indian, and lands owned by an Indian Tribe or an individual Indian subject to federal statutory restraints on alienation. The exemption does not apply to lands owned in fee simple title by Indian Tribes or individual Indians.

414A-5
May 4, 1993

Mr. Gerald S. Paulson
Mahnomen County Attorney
Mahnomen County Courthouse
P.O. Box 439
Mahnomen, MN 56557

Dear Mr. Paulson:

In your letter to the Attorney General, you state substantially the following:

FACTS

Fee title to certain real property located within Mahnomen County is held by individual Indians. Fee title to other real property in the county is variously held in the name of the Minnesota Chippewa Tribe, the White Earth Band of Chippewa, the governing body of the Tribe or Band, or in other names or designations indicating tribal interest or ownership. Additionally, title to other land is held by the United States in trust for the use and benefit of individual Indians or the White Earth Band.

Following the decision of the United States Supreme Court in County of Yakima v. Yakima Indian Nation, __ U.S. __, 112 S. Ct. 683 (1992), the Minnesota Department of Revenue issued a memorandum dated March 11, 1992 informing county officials that based on the Yakima case, all Indian reservation land owned in fee by individual Indians or by an Indian tribe is subject to ad valorem taxation, and that these lands should be classified and valued in the same way as other similar real property. In September, 1992, you contacted the Department of Revenue to inquire as to the meaning of the term "Indian Lands" as used in Minn. Stat. § 272.01, subd. 1, which states: "All real and personal property in this state, and all personal property of persons residing therein, including the property of corporations, banks, banking companies, and bankers, is taxable, except Indian lands and such other property as is by law exempt from taxation." (emphasis added). The Department responded in a letter dated September 30, 1992, that its position is that the statute exempts only lands held in trust by the federal government for the use and benefit of Indians and to lands owned in "restricted" status.

The Mahnomen County assessor has inquired how to classify Indian-owned land located in the county in light of these communications and the provisions of Minn. Stat. § 272.01, subd. 1 (1992).

You have indicated that Mahnomen County has, for many years, assessed ad valorem taxes on fee title lands owned by individual Indians. The county has not taxed fee title real estate owned by the Minnesota Chippewa Tribe or the White Earth Band, however, believing that such lands may be exempt under applicable State and/or federal law. Now that there is apparently no federal impediment to ad valorem taxation of fee owned tribal lands, the county assessor has asked whether such lands are exempt from taxation under the above provision of Minnesota law.

You then ask the following:

QUESTION

Does the exemption from ad valorem taxation of "Indian lands" in Minn. Stat. § 272.01, subd. 1 (1992) include any lands in addition to lands held in trust by the United States?

OPINION

In our opinion, the term "Indian Lands" as used in Minn. Stat. § 272.01, subd. 1 (1992) includes only those lands title to which is held in trust by the United States for the benefit of an Indian tribe, its members, or an individual Indian, and lands owned by an Indian tribe or individual Indian subject to federal statutory restraints against alienation.

The "Indian lands" language was added to Minn. Stat. § 272.01, subd. 1 by the Minnesota Legislature in 1961. Act of April 14, 1961, ch. 361, 1961 Minn. Laws 554. The 1961 legislation provides as follows:

CHAPTER 361 -- H.F. No. 392

An act relating to taxation of real property, excluding Indian lands from taxation; amending Minnesota Statutes 1957, Section 272.01, as amended by Extra Session Laws 1959, Chapter 1, Section 1 and Chapter 85, Section 1.

Be it enacted by the Legislature of the State of Minnesota:

Section 1. Minnesota Statutes 1957, Section 272.01, as amended by Extra Session Laws 1959, Chapter 1, Section 1, and Chapter 85, Section 1, is amended to read:

272.01 Property subject to taxation. Subdivision 1. All real and personal property in this state, and all personal property of persons residing therein, including the property of corporations, banks, banking companies, and bankers, is taxable, except Indian lands and such other property as is by law exempt from taxation.

Subd. 2. When any real or personal property which for any reason is exempt from ad valorem taxes, and taxes in lieu thereof, is leased, loaned, or otherwise made available and used by a private individual, association or corporation in connection with a business conducted for profit; except where such use is by way of a concession in or relative to the use in whole or part of a public park, market, fair grounds, airport, port authority, municipal auditorium, municipal museum or municipal stadium there shall be imposed a tax, for the privilege of so using or possessing such real or personal property, in the same amount and to the same extent as though the lessee or user was the owner of such property. Taxes imposed by this subdivision shall be due and payable as in the case of personal property taxes and such taxes shall be assessed to such lessees or users of real or personal property in the same manner as taxes assessed to owners of real or personal property, except that such taxes shall not become a lien against the property. When due, such taxes shall constitute a debt due from the lessee or user to the state, township, city, village, county and school district for which the taxes were assessed and shall be collected in the same manner as personal property taxes.

Subd. 3. The provisions of subdivision 2 shall not apply to:

(a) Federal property for which payments are made in lieu of taxes in amounts equivalent to taxes which might otherwise be lawfully assessed;

(b) Real estate exempt from ad valorem taxes and taxes in lieu thereof which is leased, loaned, or otherwise made available to telephone companies or electric, light and power companies upon which personal property consisting of transmission and distribution lines is situated and assessed pursuant to sections 273.37, 273.38, 273.40 and 273.41, or upon which are situated the communication lines of express, railway, telephone or telegraph companies, and pipelines used for the transmission and distribution of petroleum products;

(c) Property presently owned by any educational institution chartered by the territorial legislature;

(d) Inventories of raw materials, work in process and finished goods and machinery and equipment owned by the federal government and leased, loaned or otherwise made available and used by private individuals, associations or corporations in connection with the production of goods for sale to the federal government;

(e) Indian lands.

(f) Property of any corporation organized as a Tribal Corporation under the Indian Reorganization Act of June 18, 1934 (48 Stat. 984).

Subd. 4. In the event that any of the provisions of subdivision 3 render this act unconstitutional, that portion of subdivision 3 shall be severable and of no effect.

Approved April 14, 1961.

The term "Indian lands" is not defined in the statute, nor does it have a common and widely accepted meaning. Although the term appears elsewhere in state and federal law, its meaning varies according to purpose of the statute in which it is used. For most state, federal and tribal jurisdictional purposes, the governing legal term is "Indian country," defined in 18 U.S.C. § 1151. "Indian country" is defined as including (a) all land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and including rights-of-way through the reservation, (b) all dependent Indian communities within the borders of the United States, and (c) all Indian allotments, the Indian titles to which have not been extinguished. This definition appears in the federal criminal code section governing federal criminal laws applicable in Indian country. Later statutes delegating partial civil and criminal jurisdiction over Indian country to certain states used the same term, including principally Public Law 280, Act of Aug. 15, 1953, ch. 505, 67 Stat. 588 (codified as amended at 18 U.S.C. § 1162, 25 U.S.C. §§ 1321-1326; 28 U.S.C. § 1360). Had the Minnesota Legislature intended to adopt the federal statutory definition of "Indian country" for purposes of Minn. Stat. § 272.01, it would have used that term instead of the then undefined "Indian lands." Moreover, since Indian country includes all lands within the limits of any Indian reservation, including lands owned by non-Indians, an exemption for all lands within Indian country would have virtually eliminated the tax base in some counties, and exempted many properties for no apparent reason. By using the term Indian lands, the legislature clearly intended something more limited than the term Indian country as defined in federal law.

There are no reported cases construing the Indian lands provisions of Minn. Stat. § 272.01. The Minnesota cases relating to taxation of Indian property have focused exclusively on whether federal law prohibits or allows the imposition of such taxes. In the absence of a statutory definition or controlling case law, we must construe the term "Indian lands" in order to ascertain and effectuate the intention of the legislature. Minn. Stat. § 645.16 provides that the intention of the legislature may be ascertained by considering, among other matters:

(1) The occasion and necessity for the law;
(2) The circumstances under which it was enacted;
(3) The mischief to be remedied;
(4) The object to be attained;
(5) The former law, if any, including other laws upon the same or similar subjects;
(6) The consequences of a particular interpretation;
(7) The contemporaneous legislative history; and
(8) Legislative and administrative interpretations of the statute.

Contemporaneous legislative history of the Indian lands exemption is sparse. House file 392, the bill containing the exemption, was authored by Representative Harry Basford. The minutes of the House Committee on Taxes, to which the bill was referred, include the following entry from its March 9, 1961 meeting:

H.F. 392. Representative Harry Basford, author, explained that legislation was passed last session of the Legislature that provided that lands not in use but owned by the State and leased to farmers should no longer be tax exempt while such farmer is using the land. This included Indian lands owned by the Tribal Council. This bill provides that such lands shall be tax exempt.

Mr. Art Roemer stated that his department has no objection to this bill. However, in drafting the bill part of the law was inadvertently omitted. An amendment was drawn to correct this matter. Mr. Jack Peterson moved the adoption of the amendment. Mr. Tiemann seconded the motion. Motion carried. See Committee Report for amendment. Mr. Tiemann then moved that H.F. 392 as amended be recommended to pass. Mr. Bergeson seconded the motion. Motion carried.

There is no other substantive legislative history of H.F. 392 or its companion Senate Bill, S.F. 707.

This explanation of the bill by its author strongly suggests that the purpose of House File 392 was to correct a problem which had arisen as a result of legislation passed during the 1959 session of the legislature. The legislation referred to by Mr. Basford is Minn. Stat. § 272.01, subds. 2 and 3, enacted during the 1959 Extra Session of the Minnesota Legislature, Act of May 1, 1959, ch. 1, 1959 Minn. Laws Ex. Sess. 1397.

These provisions impose a privilege tax (sometimes called a "beneficial use tax") on lessees of otherwise tax exempt real estate who use the property for profit-making purposes. Unlike ad valorem taxes, the privilege tax on the lessee's use or possessory interest does not become a lien on the real estate. The owner of the real estate cannot lose the land in a tax forfeiture proceeding. The unpaid privilege tax is a personal debt of the lessee owed to the taxing authority. In all other respects, however, the privilege tax is equivalent to ad valorem taxes on the same property, and is assessed in the same manner.

As a result of the privilege tax, a person or entity owning otherwise tax exempt real estate cannot pass the benefits of the exemption along to someone leasing the property for profit-making purposes. The parties to the lease will have to take account of the economic impact of the privilege tax in negotiating the terms of the lease, and the tax exempt land owner loses any advantage he might have had in being able to offer lower lease payments due to property tax savings.

Certain property was not subject to the privilege tax. In Minn. Stat. § 272.01, subd. 3, the legislature carved out certain exceptions for lands (and by extension, landowners) on which the legislature did not want to impose either ad valorem property taxes or the equivalent privilege tax. When the privilege tax was initially adopted in 1959, three types of property were exempted: certain federal property, real estate used by utilities for transmission and distribution lines, and property owned by certain educational institutions. The privilege tax exemptions in Minn. Stat. § 272.01, subd. 3 did not create new exemptions to ad valorem property taxes. The privilege tax exemptions applied only to certain categories of real estate already exempt from ad valorem taxation under some other provision of law.

From his reported remarks, we conclude that Representative Basford intended House File 392 to relieve otherwise exempt Indian lands from the privilege tax. He wished to preserve the benefit of existing exemptions for Indian lands by insuring that the privilege tax would not be imposed even if the land was rented or leased for profit-making purposes.

This conclusion is also supported by contemporaneous resolutions adopted by two tribal governing bodies in support of the bill. Resolution No. 21-61 of the Red Lake Tribal Council provides as follows:

RESOLUTION NO. 21-61

WHEREAS, The Minnesota State Legislature, in the 1959 Extra Session of the Legislature, amended Minnesota Statutes 1957, Section 272.01, and thereby attempted to cause taxation of Indian Trust Land when said land or personal property was leased or loaned for business purposes, and

WHEREAS, The imposition of such taxation on Tribal, Band or individually owned land or personal property is considered to be an infraction of Indian rights permitted them by the United States Government, and

WHEREAS, The imposition of taxes impedes the function of Tribal, Band and individual land operations, making it difficult to lease Indian properties for revenues accruing to the Indians, and

WHEREAS, Mr. Harry Basford, State Representative, introduced in the 1961 Legislature, a Bill which will alleviate the taxation of Indian Trust Land and properties, said Bill referred to as H.F. No. 392, Companion S.F. --- and which was referred to Senate Committee on taxes.

NOW, THEREFORE, BE IT RESOLVED, That the Red Lake Tribal Council hereby respectfully request the Governor of the State of Minnesota, the State Senators, and the State Representatives, to support the amended Bill as aforementioned, in the interest of raising the standard of living for Indians living on Trust Lands and also to alleviate the possibility of future Court actions thereby the Indians believe that their Federal Trust Lands, and attachments owned by them to said land, are free from encumbrances of taxation by the State of Minnesota.

For: 8 - Against: 0

A similar resolution was adopted by the White Earth Reservation Council on March 25, 1961.

These resolutions were forwarded to Mr. Basford on March 22, 1961 and March 25, 1961 respectively, by the tribal organizations.

These resolutions indicate that, in the view of these affected Indian organizations, the purpose of H.F. 392 was to preserve the advantages of property tax exemption for trust lands leased for business purposes. While not necessarily dispositive of legislative intent, the tribal resolutions and the minutes of the House Committee on Taxes clearly indicate the occasion and necessity for the law, the circumstances in which it was enacted, and the object to be obtained. The bill does not appear to have been intended to extend the property tax exemption to lands which were not considered to be tax exempt before the adoption of the 1959 privilege tax provisions. Instead, it was intended to preserve the benefits of property tax exemption for Indian lands previously considered to be exempt, namely, trust lands.

In 1961 the state's authority to tax reservation Indians respecting other than their trust property was not clear. It was clear, however, that so-called "trust lands," or lands held by the United States in trust for the use and benefit of Indian tribes, or individual Indians, could not be taxed. The New York Indians, 72 U.S. (5 How.) 761 (1867); The Kansas Indians, 72 U.S. (5 How.) 737 (1867); United States v. Rickert, 188 U.S. 432 (1903); Oklahoma Tax Commission v. United States, 319 U.S. at 598, 602-603 (1943). The same reasoning applied to restricted status lands. Board of Commissioners v. Seber, 318 U.S. 705 (1943).

At the same time, there was authority for state taxation of leasehold or possessory interests in trust lands, at least where the lessee was non-Indian. United States v. City of Detroit, 355 U.S. 466 (1958); United States v. Erie County, 31 F.Supp. 57 (W.D.N.Y. 1939). Congress had expressly authorized the leasing of individual or tribe owned restricted Indian lands. Act of August 9, 1955, ch. 615, § 1, 69 Stat. 539, 25 U.S.C. § 415. The leasing of unallotted trust lands for certain purposes such as mining and grazing was also permitted. See, e.g., 25 U.S.C. §§ 393, 396a. When Congress granted general civil jurisdiction to other activities on reservation lands in 1953, it codified the long-standing federal bar to ad valorem taxation of trust land, but left unclear the states' authority to tax other interests, such as leaseholds. Pub. L. 280, § 4, 67 Stat. 589, 28 U.S.C. § 1360.

In this context, the intent of the Legislature in adopting H.F. 392 in 1961 was to resolve any uncertainty as to the tax status of leasehold interests in Indian lands held in trust, and to insure that such lands would not lose the advantages of their tax-exempt status when leased. The legislative history does not suggest that in adopting the "Indian lands" exemption, the legislature intended broadly to exempt categories of lands which previously had been taxed.

Moreover, other possible constructions of the exemption raise significant difficulties. If "Indian lands" were interpreted to include all lands within the boundaries of an Indian reservation, many lands historically taxed, such as lands owned in fee by non-Indians and by individual Indians, would go untaxed. The tax bases of counties with reservation lands would be seriously eroded, a result surely not intended by the legislature.

If "Indian lands" were construed to include any lands owned by a tribe or band, there would be no clear grounds for distinguishing tribal fee ownership from individual fee simple title ownership. As one commentator has observed, "The term 'Indian lands' refers to those lands that are held by Indians or tribes under some restriction or with some attribute peculiar to the Indian status of its legal or beneficial owners. Today any Indian can purchase real property (such as a residence in Phoenix or Chicago) in the public market and thereby acquire fee title that is freely disposable. That real property is not 'Indian land.'" William C. Canby, Jr., American Indian Law in a Nutshell, 256 (2d ed. 1988).

In contrast, a construction of "Indian lands" which limits its application to lands held in trust or subject to federal restrictions on alienation does not raise these difficulties. It recognizes attributes of land title peculiar to the Indian status of its legal or beneficial owners, and thereby effectuates the intent of the legislature in adopting House File 392 in 1961.

This conclusion is also supported by the doctrine that exemptions to taxation are to be narrowly construed. Great Northern Railway v. Minnesota, 216 U.S. 206, 221 (1910); Camping and Education Foundation v. State, 282 Minn. 245, 250, 164 N.W.2d 369, 372 (1969); Ramaley v. City of St. Paul, 226 Minn. 406, 412, 33 N.W.2d 19, 23 (1948); DePonti Aviation, Inc. v. State, 280 Minn. 30, 34, 157 N.W.2d 742, 746 (1968). Because the term "Indian lands" is ambiguous, and because the available legislative history strongly indicates that the limited purpose of the 1961 legislation establishing the exemption was to avoid application of the 1959 privilege tax amendments to Indian trust lands, we have concluded that the term "Indian lands," as used in Minn. Stat. § 272.01, subd. 1 does not apply to lands other than trust or restricted status lands.

In conclusion, the exemption for Indian lands from ad valorem property taxation in Minn. Stat. § 272.01, subd. 1 is intended to apply only to lands held in trust by the United States for the benefit of individual Indians or Indian tribes, or subject to restrictions on alienation, and does not include individual or tribal lands held in fee.

Very truly yours,

HUBERT H. HUMPHREY, III
Attorney General

GREGORY P. HUWE
Assistant Attorney General