Oneida Tribe of Indians of Wisconsin v. Village of Hobart, Wisconsin
Filing
68
ORDER signed by Judge William C Griesbach on 9/5/2012 granting 47 Motion for Summary Judgment; granting 53 Motion to Dismiss. (cc: all counsel) (Griesbach, William)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
ONEIDA TRIBE OF INDIANS OF WISCONSIN,
Plaintiff,
v.
Case No. 10-C-137
VILLAGE OF HOBART, WISCONSIN,
Defendant/Third-Party Plaintiff,
v.
UNITED STATES OF AMERICA,
UNITED STATES DEPARTMENT OF JUSTICE,
UNITED STATES DEPARTMENT OF THE INTERIOR,
and KENNETH SALAZAR, SECRETARY, UNITED
STATES DEPARTMENT OF THE INTERIOR,
Third-Party Defendants.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AND GRANTING
MOTION TO DISMISS
This case represents another battle in the ongoing conflict between the Oneida Tribe of
Indians of Wisconsin and the Village of Hobart over the regulatory control of the land situated
within their common boundaries. Plaintiff Oneida Tribe of Indians of Wisconsin (the Tribe) filed
this action on February 19, 2010, seeking a declaratory judgment that the Village of Hobart (the
Village) lacks authority to impose charges under its Storm Water Management Utility Ordinance
on parcels of land held in trust by the United States for the Tribe located on the Oneida Reservation
and within Hobart (subject trust lands). The Tribe also seeks injunctive relief enjoining the Village
from attempting to enforce its Ordinance upon tribal lands. (Compl., ECF No. 1.) There is no
question that the Tribe is the beneficial owner of the subject trust lands. The case is before me now
on the Tribe’s motion for summary judgment. The Tribe moves for summary judgment on two
claims for relief: first, that the charges imposed on its trust property under the Village’s Storm
Water Management Utility Ordinance (the Ordinance) constitute an impermissible tax on the subject
trust lands; and second, that federal common and statutory law preempt application of the Ordinance
on the subject trust lands, whether or not it constitutes a tax.1 (Tribe’s Br. in Supp., ECF No. 48 at
1–2.)
The Village denies that the Tribe is entitled to such relief, but in the alternative, if the Tribe
is not responsible for the utility charges, the Village claims that the United States must pay. Thus,
in July 2010, the Village filed a third-party complaint against the United States, alleging that the
United States, as holder of the bare title to the tribal trust lands, must pay the storm water fees if the
Tribe is not responsible for doing so. (Third Pty. Compl., ECF No. 15.) This Court dismissed the
third-party complaint, holding that the Village had failed to state a claim under the Administrative
Procedure Act (APA), 5 U.S.C. §§ 701–706, because there had been no final agency action. (April
18, 2011 Order, ECF No. 34.) The Village then presented the Department of the Interior with a
request for payment of $237,862.06 in storm water fees, which the Department denied by letter
dated October 20, 2011. (ECF No. 40-1.) Having thus obtained the final agency action required
for a suit under the APA, the Village has renewed its third-party claims against the United States.
1
The Tribe also asserts a third claim for relief: that imposition of the Ordinance on the
subject trust lands impermissibly infringes upon the Tribe’s inherent powers of self-government,
whether or not it constitutes a tax. But the Tribe concedes this third claim is dependent upon factual
allegations regarding storm water activities and programs relating to the subject trust lands that may
not be susceptible to disposition on summary judgment. (See, e.g., Compl. ¶ 20.) Accordingly it
will not be addressed here.
2
(Am. Third Pty. Compl., ECF No. 43.) The Village seeks a declaratory judgment that the United
States must pay “all past and future storm water related fees” and a monetary judgment “for all fees
currently due and owing.” (Id. at 16.) The Village also seeks declaratory and injunctive relief
affirming the Village’s jurisdiction to impose its Storm Water Management Utility charges on
Indian trust land and preventing the United States from invoking a federal regulation, 25 C.F.R.
§ 1.4, which exempts trust land from state and local property laws. Id. In response, the United
States filed a motion to dismiss the Amended Third Party Complaint for lack of subject matter
jurisdiction or failure to state a claim upon which relief can be granted. (Mot. to Dismiss, ECF No.
53.)
Both motions have been fully briefed and argued by the parties. For the reasons discussed
herein, the Court concludes that the Village’s Storm Water Utility Management charges constitute
an impermissible tax on Tribal trust property for which neither the Tribe nor the United States are
liable. Accordingly, the motions of the Tribe and the United States will be granted.
BACKGROUND
The Tribe is a federally recognized Indian tribe in possession of the Oneida Reservation,
set aside by treaty in 1838. (Treaty with the Oneida, 7 Stat. 566.) The Tribe adopted a Constitution
under the Indian Reorganization Act (IRA), which authorizes tribes to organize and authorizes the
Secretary of the Interior to acquire and hold land in trust for tribes. 25 U.S.C. §§ 465 and 476. On
December 21, 1936, the Secretary of the Interior approved the Tribe’s IRA Constitution. (Webster
Aff., ECF No. 49 ¶ 3.) The Tribe is located on the Oneida Reservation in Wisconsin, which was
established by the 1838 Treaty with the Oneida. The Reservation once encompassed 64,000 acres
3
of tribal land; all or almost all of that land was allotted and fell out of Tribal ownership between
1889 and 1934. Oneida Tribe of Indians of Wisc. v. Village of Hobart, 542 F. Supp. 2d 908, 910–12
(E.D. Wis. 2008). Following passage of the IRA, and particularly since the dramatic increase in
revenue the Tribe achieved after the enactment of the Indian Gaming Regulatory Act in 1988, the
Tribe has been reacquiring land within the original reservation, some of which has been taken back
into trust for the benefit of the Tribe by the Secretary of Interior.
Today, the United States holds in trust for the Tribe 148 parcels comprising approximately
1400 acres of land that are located within the boundaries of Hobart. (Stipulation of Facts, ECF No.
50, ¶¶ 4, 5.) The Tribe also owns land in fee within the Reservation, but that land is not the subject
of this action. The subject trust lands include, among others, the following parcels, as identified in
the county tax records: HB-1295, the site of the Oneida Police Department; HB-97, the site of the
Oneida Community Health Center; HB-1317, the site of the Tribe’s Oneida Elder Services Complex
and the Tribe’s Airport Road Child Care; HB-753, the site of the Oneida Cultural Heritage
Department; HB-753-2, the site of the Tribe’s Oneida Language House; HB-753-2 and HB-746, the
site of a tribal, five-acre storm water retention pond known as Osnusha Lake; and HB-1313-1, the
site of the Tribe’s community building known as Parish Hall. (Webster Aff., ¶¶ 18–24.) Parcels
held in trust also include an auto body shop, a park and a library. (Tribe’s Resp. To Village
Statement of Additional Facts, ECF No. 65, ¶¶ 26-37.) ) The parcels at issue are not contiguous,
but rather are interspersed throughout Hobart in a kind of checkerboard pattern.
The Town of Hobart (now the Village) was created by the state legislature in 1903 and lies
wholly within the exterior boundaries of the Reservation. Oneida Tribe, 542 F. Supp. 2d at 912.
In 2002, the Village incorporated under Wisconsin law, granting it additional authority under State
4
law. Id. at 913. According to the United States Census Bureau, the estimated 2011 population for
the Village was
6,254,
approximately 17.5% of which
were Native
American.
http://quickfacts.census.gov/qfd/states/55/5535150.html (last visited September 1, 2012). The
Village is adjacent to the City of Green Bay and the Village of Ashwaubenon.
In 2007, Hobart adopted its Storm Water Management Utility Ordinance in accordance with
the Clean Water Act (the CWA). Congress enacted the CWA “to restore and maintain the chemical,
physical, and biological integrity of the Nation’s waters.” 33 U.S.C. § 1251(a). As an operator of
a Municipal Separate Storm Sewer System (MS4), Hobart is required to “develop, implement, and
enforce a storm water management program designed to reduce the discharge of pollutants from
[the] MS4 to the maximum extent practicable (MEP), to protect water quality, and to satisfy the
appropriate water quality requirements of the Clean Water Act.” 40 C.F.R. § 122.34(a).
The Ordinance identifies its purpose as protecting the general public welfare: “The Village
of Hobart finds that the management of storm water and other surface water discharges within and
beyond its borders is a matter that affects the public health, safety, and welfare of the Village, its
citizens, businesses, and others in the surrounding area.” Village of Hobart Code of Ordinances
§ 4.501(1). To accomplish this purpose, the Ordinance creates a storm water management utility,
which is placed under the supervision of Hobart’s legislative body, the Board. Id. § 4.502(1) and
(2). The Ordinance authorizes the Village through the Storm Water Management Utility to
“acquire, construct, lease, own, and operate . . . such facilities as are deemed by the Village to be
proper and reasonably necessary for a system of storm and surface water management,” including
“surface and underground drainage facilities, sewers, watercourses, retaining walls and ponds and
such other facilities as will support a storm water management system.” Id. § 4.503(1). The
5
Ordinance also authorizes the Village through the Storm Water Management Utility to “establish
such rates and charges as are necessary to finance planning, design construction, maintenance,
administration, and operation of the facilities in accordance with the procedures set forth in this
ordinance.” Id. § 4.503(2).
Two basic types of “charges” are authorized under the Ordinance. First, a “base charge” is
imposed on all developed property “to reflect the fact that all developed properties benefit from
storm water management activities of the Village and that all developed properties contribute in
some way.”2 Second, an “equivalent runoff unit charge” (ERU) is imposed based upon the amount
of impervious area as determined by Hobart’s Administrator. Id. § 4.505(4)(a) and (b). In addition,
a flat “equivalent runoff unit charge” is imposed even on undeveloped parcels at the rate of
two-tenths of one unit per parcel up to 100 acres. Id. § 4.507(4)(g). The Ordinance authorizes
offsets against the “equivalent runoff charge” but offsets against the “base charge” are specifically
prohibited. Id. § 4.506(1). There are also percentage caps on the allowable credits which ensure
that some amount of the “equivalent runoff unit charge” will always be assessed.
The Ordinance also authorizes an additional special charge that is linked to the delivery of
storm water services, i.e., for those parcels “in a specific area benefited [sic] by a particular storm
water management facility,” and a one-time connection charge when a parcel converts from
undeveloped to developed or otherwise connects to Hobart’s system. Id. § 4.505(4)(c) and (d).
Offsets against the special charges are authorized, again subject to a percentage cap. Id. § 4.506(1).
2
The Ordinance defines developed property as real property that “has been altered from its
natural state by the addition of any improvements that may include a building, structure, impervious
surface, and change in grade or landscaping.” Id. § 4.504(3).
6
The Ordinance also sets forth a collection procedure and a set of penalties for nonpayment.
It provides that the property owner is responsible for the storm water charges on real property “that
he/she or it owns.” Id. § 4.508(2). Unpaid delinquent charges “shall be a lien upon the property
served and shall be enforced as provided in [Wis. Stat.] § 66.0809(3).” Id. § 4.508(3). The
statutory provision adopted by the Ordinance for enforcement is that set out in state law for the
collection of municipal public utility charges. This process requires delinquency notice; it further
provides that unpaid charges become a lien upon the property and “the clerk shall insert the
delinquent amount and penalty as a tax against the lot or parcel of real estate.” Wis. Stat.
§ 66.0809(3). Finally, the statute directs, “All proceedings in relation to the collection of general
property taxes and to the return and sale of property for delinquent taxes apply to the tax if it is not
paid within the time required by law for payment of taxes upon real estate.” Id.
So far, the Village has not asserted a base charge as part of its storm water management fees.
The current fees are based solely on the Equivalent Runoff Unit. Each year since its enactment,
Hobart has billed the Tribe for “charges” allegedly due under the Ordinance as to the subject trust
lands. (Stip. ¶¶ 8–11.) The Tribe has refused to pay the “charges” as it believes its trust land is
immune from the Ordinance and that Hobart lacks authority to impose charges under the Ordinance
on the subject trust lands.3 (Id. ¶¶ 8,9.) Because of its refusal to pay the allegedly outstanding
“charges,” the Tribe has received tax foreclosure notices from Brown County as to 143 of the
3
The Tribe had also requested the assistance of the Regional Director, Bureau of Indian
Affairs, Midwest Region, regarding Hobart’s demand. The Regional Director responded in a letter
to the Tribe and Hobart, dated March 24, 2009, that the “charge is clearly a tax that may not be
imposed on land held in trust by the United States.” (Compl., Ex. D. ECF No. 1.)
7
subject trust lands. (Webster Aff. ¶ 11.) These notices state that, unless payment is made, the Tribe
will incur “foreclosure costs and the publication of delinquent taxes in the newspaper.” Id.
It is on the basis of these facts that the Tribe contends it is entitled to judgment as a matter
of law. The Village opposes the Tribe’s motion, but contends that if the Tribe is not responsible
for the charges imposed under its Ordinance, then the Government is pursuant to Section 313 of the
CWA. Because the Village’s claim against the Government arises only if the Tribe is not liable, I
will address the Tribe’s motion first.
LEGAL STANDARD
A motion for summary judgment should be granted when there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Material” means that the factual dispute must
be outcome-determinative under law. Contreras v. City of Chicago, 119 F.3d 1286, 1291 (7th Cir.
1997). A “genuine” issue must have specific and sufficient evidence that, were a jury to believe it,
would support a verdict in the non-moving party’s favor. Fed. R. Civ. P. 56(e); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). The moving party has the burden of showing there are no
facts to support the non-moving party’s claim. Celotex, 477 U.S. at 322 (1986). In determining
whether to order a motion for summary judgment, the court should consider the evidence presented
in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255. When the record,
taken as a whole, could not lead a rational jury to find for the nonmoving party, there is no genuine
issue and therefore no reason to go to trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986).
8
ANALYSIS
A. The Village’s Storm Water Management Charges Constitute A Tax Upon Tribal Trust
Property.
The Supreme Court long ago determined that tribal lands, held by Indians with whom the
United States maintains a formal trust relationship, cannot be taxed by states wherein they are
located. The Kansas Indians, 72 U.S. 737 (1866). Although this immunity from taxation was lost
as to Indian lands that were conveyed by patent to tribal members during the allotment period, it was
restored to those lands later acquired and taken in trust by the Government under the Indian
Reorganization Act (IRA) of 1934. County of Yakima v. Confederated Tribes and Bands of Yakima
Indian, 502 U.S. 251, 264 (1992). The IRA expressly provided that lands taken into trust for an
Indian tribe would be “exempt from State and local taxation.” 25 U.S.C. § 465. It therefore remains
the law that “a State is without power to tax reservation lands and reservation Indians” absent some
federal statute permitting it. Okla. Tax Comm’n v. Chickasaw Nation, 515 U.S. 450, 458 (1995)
(quoting Cnty. of Yakima, 502 U.S. at 258). Courts have declined to find a grant of such authority
in federal statutes without clear Congressional intent. See Bryan v. Itasca Cnty., 426 U.S. 373,
380–87 (1976) (construing P.L. 280, 28 U.S.C. § 1360); Moe v. Confederated Salish & Kootenai
Tribes, 425 U.S. 463, 376 (1976) (construing the General Allotment Act (GAA), 25 U.S.C. § 349).
Based on this settled law, the Tribe argues that the Village has no right to impose charges on its trust
property under its Storm Water Management Utility Ordinance.
The Village does not dispute the Tribe’s claim that it’s trust property is exempt from Village
taxation. Instead, the Village denies it has imposed a tax on the Tribe’s trust property. The Village
contends that the charges its has imposed on the subject trust lands under its Ordinance constitute
9
not taxes, but fees for the services performed, or to be performed, by its Storm Water Management
Utility that will benefit all of the landowners of the Village, including the Tribe. Since the charges
do not constitute taxes, the Village contends they are lawful and the Tribe’s attempt to avoid them
should be rejected.
In support of its argument that the Storm Water Utility Management charges are not taxes,
the Village cites a string of decisions which apply state law to determine the validity of a given
“tax” under either a state constitutional provision or state statute.4 But as the Tribe points out, the
determination of whether a given charge upon Indian property constitutes an impermissible tax is
determined by federal, not state, law. See Carpenter v. Shaw, 280 U.S. 363, 368–69 (1930)
(“Where a federal right is concerned we are not bound by the characterization given to a state tax
by the state courts or legislatures, or relieved by it from the duty of considering the real nature of
the tax and its effect upon the federal right asserted.”). Moreover, whereas tax exemptions are
generally construed narrowly, tax exemptions granted to Indians by the federal government are
liberally construed. Id. at 366-37.
A tax is “a monetary charge imposed by the government on persons, entities, or property to
yield public revenue.” BLACK’S LAW DICTIONARY 1469 (7th ed. 1999). A fee, on the other hand,
is generally a “charge for labor or services.” Id. at 629. Of course, governments can also impose
4
See El Paso Apt. Ass’n v. City of El Paso, 2008 WL 2641350 (W.D. Tx. June 24, 2008)
(state constitution); Church of Peace v. City of Rock Island, 828 N.E. 2d 1282 (Ill. App. 2005) (state
statute); Smith v. Spokane Co., 948 P.2d 101 (Wash. Ct. App. 1997) (state constitution); Sarasota
Co. v. Sarasota Church of Christ, 667 S.2d 180 (Fla. 1995) (state statute); City of River Falls v. St.
Bridget’s Catholic Church of River Falls, 182 Wis. 2d 436 (Ct. App. 1994) (state constitution); City
of Littleton v. State, 855 P.2d 448 (Colo. 1993) (state constitution); Long Run Baptist Ass’n v. Sewer
Dist., 775 S.W.2d 520 (Ky. Ct. App. 1989) (state constitution); Zelinger v. City and Cnty. of
Denver, 724 P.2d 1356 (Colo. 1986) (state constitution); Teter v. Clark Cnty., 104 Wash. 2d 227
(1985) (state constitution); State v. Jackman, 60 Wis. 2d 700 (1973) (state constitution).
10
fees. And “[t]he line between a tax and a fee, and a tax and a fine, is sometimes fuzzy . . . .”
Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651 F.3d 722, 729 (7th Cir. 2011) (en
banc). Yet, courts are frequently required to distinguish between them. The issue most frequently
arises in federal courts in the context of deciding whether the requested relief is barred by the Tax
Injunction Act, 28 U.S.C. § 1341.
Perhaps the clearest discussion of the issue appears in San Juan Cellular Telephone Co. v.
Public Service Commission of Puerto Rico, 967 F.2d 683 (1st Cir.1992). There, then Chief Judge,
now Justice, Breyer set out a framework for distinguishing between a tax and a fee:
Courts have had to distinguish “taxes” from regulatory “fees” in a variety of
statutory contexts. Yet, in doing so, they have analyzed the legal issues in similar
ways. They have sketched a spectrum with a paradigmatic tax at one end and a
paradigmatic fee at the other. The classic “tax” is imposed by a legislature upon
many, or all, citizens. It raises money, contributed to a general fund, and spent for
the benefit of the entire community. See, e.g., National Cable Television Ass'n. v.
United States, 415 U.S. 336, 340-41(1974); Robinson Protective Alarm Co. v. City
of Philadelphia, 581 F.2d 371, 376 (3d Cir.1978); Butler [v. Maine Supreme
Judicial Court, 767 F. Supp. [17] at 19 (D. Me. 1991). The classic “regulatory fee”
is imposed by an agency upon those subject to its regulation. See New England
Power Co. v. U.S. Nuclear Regulatory Commission, 683 F.2d 12, 14 (1st Cir.1982).
It may serve regulatory purposes directly by, for example, deliberately discouraging
particular conduct by making it more expensive. See, e.g., South Carolina ex rel.
Tindal v. Block, 717 F.2d 874, 887 (4th Cir.1983), cert. denied, 465 U.S. 1080
(1984). Or, it may serve such purposes indirectly by, for example, raising money
placed in a special fund to help defray the agency's regulation-related expenses. See,
e.g., Union Pacific Railroad Co. v. Public Utility Commission, 899 F.2d 854, 856
(9th Cir.1990); In re Justices, 695 F.2d at 27; see also National Cable, 415 U.S. at
343-44.
967 F.2d at 685. Distilled further, San Juan Cellular suggests that in determining whether a
government exaction is a tax or a fee, a court should focus on three questions: “(1) What entity
imposed the fee? (2) What parties are being assessed the fee? (3) Is the revenue generated by the
fee expended for general public purposes or used for the regulation and benefit of the parties upon
11
whom the assessment is imposed?” McLeod v. Columbia County, GA, 254 F. Supp.2d 1340, 1345
(S.D. Ga. 2003). If the exaction is imposed by the legislature upon all, or almost all, of the citizens
or property to accomplish a general public purpose, it is more likely to be a tax. If, on the other
hand, the charge is imposed by a government agency on a specific subset of citizens or conduct
subject to regulation by the agency and is set at such amount as to discourage certain conduct or
defray the costs of the agency, it is a fee.5
In McLeod, the plaintiff landowners sued their county in state court seeking to enjoin the
assessment and collection charges imposed under a storm water management ordinance virtually
identical to the one at issue here. Upon removal of the case to federal court, the Court raised the
question of whether the Tax Injunction Act precluded federal jurisdiction. Using the framework
described above, the Court concluded that the charges imposed on the property constituted taxes and
remanded the case back to state court for lack of federal jurisdiction. I find the Court’s analysis
persuasive here.
Like the ordinance in McLeod, a fair reading of the Ordinance in this case reveals that it is
the legislative body, here, the Village Board, that imposed the fee. Although the Village established
a Storm Water Management Utility, the Ordinance expressly states that “the Village Board is
5
The Village offers a different test in its attempt to determine whether charges imposed by
local governments upon federal facilities constitutes a service charge or a tax. It cites Massachusetts
v. United States, 435 U.S. 444 (1978). The Tribe notes that the question in Massachusetts was
whether a federal charge imposed on state interests constituted a tax — not whether a local charge
could be imposed on a federal interest. Id. at 446. Federal immunity from state taxation is
predicated on the Supremacy Clause whereas state immunity from Federal taxation is implied from
the states’ relationship to the national government within the constitutional scheme. Id. at 455. The
difference is significant and makes the two analytically distinct. Massachusetts is accordingly
inapplicable here.
12
exercising its authority . . . . to set the rates for storm water management services.” Ordinance at
§ 4.502(1). It is the Village, acting through the Storm Water Management Utility that is authorized
to “establish such rates and charges as are necessary to finance planning, design construction,
maintenance, administration, and operation of the facilities in accordance with the procedures set
forth in this ordinance.” Id. at § 4.503(2). Finally, the Ordinance states that “The amount of the
charge to be imposed, for each customer classification shall be made by resolution of the Village
Board.” Id. at § 4.505(3). Thus, just as the Village Board is authorized to levy taxes on property
within the Village, see Wis. Stat. § 61.34(4), it also is the body that determines the Storm Water
Management charges. In fact, the assessments made under the Ordinance are collected in the same
way and using the same procedure as unpaid property taxes. Ordinance at § 4.508.
The question of who is assessed the fees also supports the conclusion that the fee is a tax.
The Ordinance authorizes an assessment on all property within the district, whether developed or
not. Id. § 4.507(4). It expressly directs the Village Board to “establish a uniform system of storm
water service charges that shall apply to each and every lot or parcel within the Village.” Id. at
§ 4.505(1). The fact that the Village has not fully implemented its program and has so far assessed
only the ERU rates and not the base charges authorized by the Ordinance does not alter the analysis.
The Village has not suggested that the fact it has failed to so far fully implement the Ordinance
reflects any intent to retreat from its claimed authority to impose such charges on all of the Tribe’s
trust property. Nor has the Village argued that its phased implementation of the Ordinance should
somehow change the result.
Finally, the revenue generated by the fees is for a public benefit, as opposed to the individual
owners of the property upon which the charges are assessed. See McCleod, 254 F. Supp.2d at 1348
13
(“Storm water management was and is the type of service that is often funded through general tax
revenue.”). Storm water run-off can carry pollutants into waterways and thereby cause damage to
the environment. But the resulting damage is to the public generally, not the individual property
owner. Everyone who lives in the Village, and even many outside the Village boundaries, have an
interest in preventing environmental damage due to storm water run-off.
The Village argues that the assessments should nevertheless be considered fees rather than
taxes because the rates imposed are set at a rate reasonably estimated to cover the costs of the
program, and the Village created and maintains a separate budget for storm water management
purposes. All revenue generated from the fees are used solely to fund the Storm Water Management
Utility in the performance of its duties, and none of the money is commingled with the Village’s
general fund. But the segregation of funds for a particular purpose is not enough to change the
character of the assessment. In Schneider Transport, Inc. v. Cattanach, for example, the Seventh
Circuit held that registration fees for trucks charged by the Wisconsin Department of Transportation
was a “tax” even though the fees were deposited in a segregated fund used for highway construction.
657 F.2d 128, 132 (7th Cir.1981), cert. denied, 455 U.S. 909 (1982). Storm water management and
control, like highway construction, is a public service typically funded by government through tax
revenue.
In reality, the Village’s funding mechanism for its storm water management utility operates
comparably to a school tax. Each property owner within a community is assessed a school property
tax regardless of whether the property owners themselves have children attending public schools.
The goal of school property tax is, of course, to benefit the community as a whole rather than
individuals receiving a denominated service. Like a school tax, Hobart’s ordinance assesses each
14
property within the community a charge, the revenues of which will be collected to support the
operation of the storm water management utility that benefits the community as a whole. In short,
Hobart’s “charge” is a tax for all meaningful purposes here. And like property taxes used to pay for
schools, the storm water management fees confer a benefit on the public generally, as opposed to
only those who pay.
Notwithstanding these considerations, the Village argues that in Section 313 of the CWA
Congress expressly defined storm water charges as permissible fees owed for otherwise tax exempt
properties, including Indian Tribes. Section 313 reads, in pertinent part, as follows:
(a) Compliance with pollution control requirements by Federal entities.
Each department, agency, or instrumentality of the executive, legislative, and judicial
branches of the Federal Government (1) having jurisdiction over any property or facility, or (2)
engaged in any activity resulting, or which may result, in the discharge or runoff of pollutants, and
each officer, agent, or employee thereof in the performance of his official duties, shall be subject
to, and comply with, all Federal, State, interstate, and local requirements, administrative authority,
and process and sanctions respecting the control and abatement of water pollution in the same
manner, and to the same extent as any nongovernmental entity including the payment of reasonable
service charges….
33 U.S.C. § 1323(a). The CWA goes on to define what is meant by a reasonable service charge that
may be asserted even though taxation is prohibited:
(c) Reasonable service charges.
(1) In general
For the purposes of this chapter, reasonable service charges described in subsection
(a) include any reasonable nondiscriminatory fee, charge, or assessment that is—
(A) based on some fair approximation of the proportionate contribution of the
property or facility to stormwater pollution (in terms of quantities of pollutants, or
volume or rate of stormwater discharge or runoff from the property or facility); and
(B) used to pay or reimburse the costs associated with any stormwater management
program (whether associated with a separate storm sewer system or a sewer system
that manages a combination of stormwater and sanitary waste), including the full
range of programmatic and structural costs attributable to collecting stormwater,
reducing pollutants in stormwater, and reducing the volume and rate of stormwater
discharge, regardless of whether that reasonable fee, charge, or assessment is
15
denominated a tax.
Id. Based on these provisions, the Village argues that Congress has expressly defined storm water
charges as permissible fees, rather than taxes, and authorized the collection of such fees from Indian
Tribes otherwise immune from state and local taxation. (Hob. Br. in Op., ECF No. 57, at 6.)
Section 313 of the CWA, however, is not the kind of clear statement of intent that is required
to allow local taxation of Indian trust land. See Cass County, Minn. v. Leech Lake Band of
Chippewa Indians, 524 U.S. 103, 110 (1998) (“We have consistently declined to find that Congress
has authorized such taxation unless it has ‘made its intention to do so unmistakably clear.’ (quoting
Yakima, 502 U.S. at 258)). That section, by its terms, establishes the Government's duty to comply
with the substantive and procedural requirements of the CWA at federal facilities and explicitly
waives its immunity for civil penalties. U.S. Dept. of Energy v. Ohio, 503 U.S. 607, 627-28 (1992).
But it says nothing about Indian tribes or property owned by Indian tribes. It therefore falls far short
of the unmistakable clarity required for a waiver of immunity from taxation.
That the CWA does not provide the Village the power to tax the Tribe is also clear from the
general framework of the CWA. The CWA prohibits the discharge of pollutants into navigable
waters unless the discharge is authorized under a National Pollutant Discharge Elimination System
(NPDES) permit. 33 U.S.C. § 1342. Permits can be issued by the EPA or by state agencies subject
to EPA review. 33 U.S.C. § 1342. States can establish their own water quality standards for waters
within their boundaries. 33 U.S.C. § 1313. In 1987, Congress amended the CWA to authorize
Indian tribes to apply to the EPA for authorization to establish and administer a system for issuing
permits within their reservations. 33 U.S.C. § 1377(e). In the absence of tribal regulation of
reservations, though, the EPA itself remains the proper authority to administer CWA programs on
tribal trust lands “because state laws may usually be applied to Indians on their reservations only if
16
Congress so expressly provides.” Wisconsin v. EPA, 266 F.3d 741, 747 (7th Cir. 2001) (emphasis
added);see also State of Washington, Dep’t of Ecology v. EPA, 752 F.2d 1465 (9th Cir. 1985)
(construing a related environmental statute and concluding it precluded state and local authority over
tribal lands). Nothing in the language of Section 313 of the CWA suggests that Congress intended
to provide State or local governments authority to administer the CWA on Indian trust lands. The
statute merely requires that federal agencies with jurisdiction over property or facilities comply with
local regulations regarding storm water management.
The Village also suggests that Congress’ 2011 amendment to the CWA adding subsection
(c), which defined the “reasonable service charges” for which federal agencies are liable under
subsection (a), constitutes a Congressional determination that such charges are not taxes and can
thus be properly assessed against tribal trust property. Again, the Village reads too much into the
language of the statute. It simply states that the federal agency in charge of the facility is to be
responsible for the charges regardless of what they are called. For the reasons set forth, the Court
concludes that the Village’s storm water management charges against the Tribe’s trust property
constitute an impermissible tax. Accordingly, the Village will be enjoined from assessing or
collecting such taxes.
B. The Village May Not Collect Its Storm Water Management Charges Against the
Government.
Having concluded that the storm water management charges on the subject trust lands
constitute an impermissible tax, I now turn to the question of whether the Village’s third-party
complaint against the United States should be dismissed. The Government argues that dismissal
17
is appropriate because this Court lacks subject matter jurisdiction and the complaint fails to state
a claim upon which relief may be granted. Before reaching the merits on the Government’s 12(b)(6)
motion to dismiss, the Court must first determine whether there is any arguable basis for subject
matter jurisdiction.
Under Federal Rule of Civil Procedure 12(b)(1), a court may dismiss an action for lack of
subject matter jurisdiction. “[T]he district court must accept the complaint’s well-pleaded factual
allegations as true and draw reasonable inferences from those allegations in the plaintiff’s favor.”
Transit Express, Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001) (citing Rueth v. EPA, 13 F.3d
227, 229 (7th Cir. 1993)). However, the plaintiff bears the burden of establishing jurisdictional
requirements. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009).
Moreover, when considering a motion to dismiss for lack of jurisdiction, “the district court may
properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has
been submitted on the issue to determine whether in fact subject matter jurisdiction exists.”
Johnson v. Apna Ghar, Inc., 330 F.3d 999, 1001 (7th Cir. 2003) (quoting Long v. Shorebank Dev.
Corp., 182 F.3d 548, 554 (7th Cir. 1999)).
In a suit against the United States, “the jurisdictional allegations in the plaintiff’s complaint
must refer to a statute that waives the sovereign’s immunity.” Metro. Sanitary Dist. Of Greater
Chicago v. United States, 737 F. Supp. 51, 52 (N.D. Ill. 1990). The Village’s complaint refers to
§ 313 of the CWA, 33 U.S.C. § 1323(a), and asserts the statute is a waiver of the Government’s
immunity. Under 28 U.S.C. § 1331, federal courts “have original jurisdiction of all civil actions
arising under the Constitution, laws, or treaties of the United States.” According to Supreme Court
precedent, “[t]his provision for federal-question jurisdiction is invoked by and large by plaintiffs
18
pleading a cause of action created by federal law.” Grable & Sons Metal Prods., Inc. v. Darue
Eng’g & Mfg., 545 U.S. 308, 312 (2005).
A federal cause of action “may be created either
expressly or by implication.” Id. at 282. Courts have held that Congressional intent to create a
federal cause of action can be found in a federal statute “permit[ting] a claimant to bring a claim
in federal court.” Int’l Union of Operating Eng’rs, Local 150, AFL-CIO, v. Ward, 563 F.3d 276,
283 (7th Cir. 2009). As an initial matter, the Village’s claim does arise under the laws of the United
States sufficient to confer jurisdiction under § 1331 provided that the Village’s interpretation of the
statute is correct.
The Village, in its amended third-party complaint seeks declaratory judgment that “it may
impose upon the property held in trust for the benefit of the Oneida Tribe of Indians of Wisconsin
(“Tribe”), its storm water ordinances and assert fees and charges associated therewith, all pursuant
to the Village’s storm water ordinances and the Clean Water Act.” (Am. Third Pty. Compl., ECF
No. 43, ¶ 1.) For the reasons outlined above, the Village’s claim that it can assess its charges against
the Tribe’s trust property fails. Since the Tribe’s trust property is immune, there is no liability to
impose upon the United States. To require the United States to pay the Village’s storm water
management fees would circumvent the immunity from taxation that Indian trust lands enjoy. For
this reason alone, the Village’s claims against the United States should be dismissed.
The Village contends, however, that the United States is liable in its own right because it
owns the property in trust for the Tribe and has expressly waived its own immunity. The Village
again relies on CWA Section 313(a), claiming that this subsection contains, if not a waiver of
19
immunity as to the Tribe, at least a waiver of United States’ immunity. (Hobart Br. in Opp’n, ECF
No. 58 at 3–6.) To repeat, Section 313(a) provides in pertinent part :
Each department, agency, or instrumentality of the executive, legislative, and judicial
branches of the Federal Government (1) having jurisdiction over any property or
facility, . . . shall be subject to, and comply with, all Federal, State, interstate, and
local requirements, administrative authority, and process and sanctions respecting
the control and abatement of water pollution in the same manner, and to the same
extent as any nongovernmental entity including the payment of reasonable service
charges.
33 U.S.C. § 1323(a) (emphasis added). According to the Village, the language “jurisdiction over
any property” is a waiver of the Government’s immunity as it relates to its position as title holder
over the subject trust lands. (ECF No. 58 at 3–4.)
As the Government points out, Congress can, of course, waive federal sovereign immunity
to suit, Block v. North Dakota, 461 U.S. 273, 280 (1983), but it must do so unequivocally. Under
the Supreme Court’s strict construction rule, any waiver of sovereign immunity must not only be
express, but also must be “construed strictly in favor of the sovereign” and “not
‘enlarged . . . beyond what the language requires.’” Dep’t of Energy v. Ohio, 503 U.S. at 615
(citations omitted). The waiver may not be implied, assumed, or based upon inference or ambiguity.
Lane v. Pena, 518 U.S. 187, 192 (1996); Bethlehem Steel Corp. v. Bush, 918 F.2d 1323, 1329 (7th
Cir. 1990). The existence of “plausible” alternative interpretations of statutory language “is enough
to establish that a reading imposing monetary liability on the Government is not ‘unambiguous,’”
United States v. Nordic Vill., Inc., 503 U.S. 30, 37 (1992), and therefore cannot stand.
The language of Section 313 does not reasonably support a construction that would, in
essence, substitute the immunity of Indian tribes from taxation of their trust property for liability on
the part of the federal government. Certainly, it falls far short of unequivocally indicating such an
20
intent by Congress. By its terms, Section 313 requires federal facilities to comply with the specified
state and local water pollution control requirements and therefore is a waiver of sovereign immunity
from suit in specific instances. Simply stated, holding bare legal title over Indian lands is not
sufficient to bring such property within the jurisdiction of the United States within the meaning of
Section 313(a). The Village’s claim against the United States therefore fails. The United States is
immune from the Village’s suit and subject matter jurisdiction is therefore lacking. Accordingly
the Village’s third party claims will be dismissed.
CONCLUSION
As suggested above, this is not the first case over which this Court has presided between the
Tribe and the Village, and it is unlikely to be the last. The central problem is that a significant
portion of land interspersed throughout the Village is owned by a sovereign Indian tribe and is
therefore not subject to the Village’s taxing and regulatory or zoning powers. Although counsel for
the Government stated at oral argument that checkerboard patterns of Indian trust land within
municipal boundaries are not unique to the Village of Hobart, it is clear that such situations present
serious problems for local governments. Providing and funding public services becomes more
difficult as various parcels are removed from the municipal tax rolls and are no longer subject to
municipal zoning or land use regulations. See Amanda Hettler, Beyond A Carcieri Fix: The Need
For Broader Reform Of The Land-Into-Trust Process Of The Indian Reorganization Act Of 1934,
96 Iowa L. Rev. 1377, 1396-98 (2011). These difficulties are exacerbated when the land placed in
trust is interspersed throughout the municipal boundaries. In order to overcome them, there must
be cooperation between the Village and the Tribe. The plain fact, however, is that the interests of
21
the Village and the Tribe are not aligned; their constituencies are not the same and they have vastly
different plans for the future. As a result, cooperation is more difficult. But this does not change
the law.
For the reasons set forth above, the “charges” in the Ordinance cannot stand against the
Tribe. The “charges” under the Ordinance constitute an impermissible tax on the Tribe’s trust
property. The Tribe is therefore immune from Hobart’s Storm Water Management Utility
Ordinance. Accordingly, the Tribe’s motion for summary judgment (ECF No. 47) is GRANTED.
The clerk is directed to enter judgment in favor of the Tribe declaring that the Tribe’s trust land is
immune from the Village’s Storm Water Management Utility Ordinance and that the Village lacks
authority to impose charges under the Ordinance on the Tribe’s land directly or indirectly. The
judgment shall also enjoin the Village from attempting to impose and collect “charges” under the
Ordinance from the Tribe or from foreclosing on the Tribe’s lands.
Furthermore, the Village’s claims against the United States are dismissed for lack of subject
matter jurisdiction because Section 313 of the CWA does not constitute a waiver of the United
States’ sovereign immunity over Indian trust lands. Accordingly, the United States’ motion to
dismiss (ECF No. 53) is GRANTED.
SO ORDERED this
5th
day of September, 2012.
s/ William C. Griesbach
William C. Griesbach
United States District Judge
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