Quinault Indian Nation v. Grays Harbor County

This case presents the question whether Congress's intention
to permit state taxation of Indian land unambiguously
encompasses the unique taxation scheme now before us. See
Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 765
(1985) (states are permitted to tax Indians "only when Congress
has made its intention to [permit such taxation] unmistakably
clear").

In 1998, the Quinault Indian Nation ("Quinault Nation" or
"Nation") purchased approximately 4,500 acres of forest land,
most of which was located in Grays Harbor County, Washington
("Grays Harbor" or "the County"). Two years later, the
Quinault Nation transferred the land to the United States to
hold in trust for the Nation, thereby triggering a $58,000 compensating
tax imposed by the County. Under Washington's
tax law, land classified for forest use is assigned a reduced
property valuation for property tax purposes. Under certain
circumstances, the sale or transfer of forest use land deprives
the property of its favorable tax status and triggers the imposition
of a tax on the seller-transferor.

Believing that the County lacked federal congressional
authority to levy this tax, the Quinault Nation sought declara-tory
and injunctive relief from the tax in district court. Grays
Harbor urged that the tax fell within the scope of permissible
state taxation of an Indian tribe. Faced with competing inter-pretations
of the Washington statute, the district court granted
summary judgment in favor of Grays Harbor, holding that the tax was a permissible "taxation of land" under the Indian
General Allotment Act of 1887, 24 Stat. 388, as amended, 25
U.S.C. § 331 et seq., as construed by the Supreme Court in
County of Yakima v. Confederated Tribes & Bands of the Yakima
Indian Nation, 502 U.S. 251 (1992).

On appeal, our analysis rests on the Court's teaching in
County of Yakima. As the Supreme Court reminded us in that
case, our choice between reasonable constructions of the General
Allotment Act "must be dictated by a principle deeply
rooted in this Court's Indian jurisprudence: ‘Statutes are to be
construed liberally in favor of the Indians, with ambiguous
provisions interpreted to their benefit.' " Id. at 269 (quoting
Blackfeet Tribe, 471 U.S. at 766).

The result in this case boils down to whether the tax is
characterized as a permissible taxation of land, that is an "ad
valorem tax,"
1
or as an impermissible tax more akin to an "excise
tax."
2
Fairly characterized, the tax is triggered by the sale
or transfer of the property and the amount of the tax is derived
from a formula that is a hybrid of market value and tax sav-ings.
The tax simply does not fall easily within the ad valorem
category. And although the excise tax box may not be a perfect
fit, because the transfer of the property triggers the tax,
it is more akin to an excise tax than any other. In this nether
world of Indian taxation, the ambiguity inherent in this tax
scheme tips the balance in favor of the Quinault Nation. Con-sequently,
because the construction is plagued with ambiguity,
and because it is not enough to be persuaded that the
County's is a permissible or even the better reading, we
reverse.

* * *

Click the case caption above for the full text of the Court's opinion.

Reversed.

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