(CN) - The U.S. Supreme Court on Tuesday held that the town of Pender, Neb., is within the boundaries of an Indian reservation and therefore subject to a tribal tax on liquor sales by local businesses.
In a unanimous ruling, the justices held that Congress did not diminish the Omaha Indian Reservation in 1882 when it allowed the tribe to sell some of its land to non-Indians.
The tribe imposed a 10 percent tax on liquor sales in 2006. But Pender retailers the state of Nebraska argued that 98 percent of the town was non-Indian and that the tribe had not asserted jurisdiction over the area for more than 100 years.
They sought declaratory relief and a permanent injunction barring the tribe from asserting its jurisdiction over the town. But a federal court decided the case in the tribe's favor and the Eighth Circuit later affirmed.
As recounted in an opinion written by Justice Clarence Thomas, the Omaha Tribe entered into a treaty with the United States in 1854 creating a 300,000 acre reservation for the Tribe to live on. As part of the agreement, the Omahas relinquished all right and title to land west of the Mississippi River and an agreed upon right-of-way, and were paid $840,000 over the next 40 years.
Over the ensuing decades, the tribe sold additional land to the government, but in 1992, Congress revised how the sales were handled. Rather than being paid a fixed sum for a specific parcel of land, the tribe's profits would be entirely dependent first, on how much land would be allocated for sale to third parties, and second, to how many nonmembers of the tribe actually bought land.
The changes opened the door for non-Indians to purchase portion of a 50,000-acre-plus tract of the reservation and for members of the tribe to select tracts west of an existing government right-of-way.
Once the tribe members selected their tracts, the Interior Secretary declared the remainder of the 50,000 acres open to settlement by non-Indians. One of those who took the government up on its offer of land was W.E. Peebles, who purchased the 160 acres that became the town of Pender.
Today the town boasts 1,300 residents, but few members of the tribe have ever lived there. Despite this, the tribe sought to assert jurisdiction over Pender when it amended its Beverage Control Ordinance.
The ordinance requires retailers to obtain a liquor license from the tribe (costing $500, $1,000 or $1,500 depending upon the class of license), and imposes a 10 percent sales tax on liquor sales. Those who violate the ordinance are subject to a $10,000 fine.
The question before the court was whether the 1882 Act "diminished" the tribal land or simply enabled nonmembers of the tribe to purchase land within the reservation. If the latter was the case, then federal, state and tribal authorities would share jurisdiction over opened but "undiminished" reservation lands.
Upon review, wrote Justice Clarence Thomas, the court found the 1882 Act did not extinguish the land's former use as a reservation, nor did it return it in any other way to the public domain.
"The 1882 Act empowered the Secretary to survey and appraise the disputed land, which then could be purchased in 160-acre tracts by nonmembers."
The Act opened the disputed lands to settlement, and enabled parcels to be sold "piecemeal in 160-acre tracts," Thomas said.
In addition, "rather than the Tribe's receiving a fixed sum for all of the disputed lands, the Tribe's profits were entirely dependent upon how many nonmembers purchased the appraised tracts of land," the justice wrote.
"From this text, it is clear that the 1882 Acts falls into another category of surplus land Acts: those that 'merely opened reservation land to settlement and provided that the uncertain future proceeds of settler purchases should be applied to the Indians' benefit,'" he continued.
"Our conclusion that Congress did not intend to diminish the reservation in 1882 is confirmed by the text of earlier treaties between the United States and the Tribe," Thomas wrote.
"In light of the statutory text, we hold that the 1882 Act did not diminish the Omaha Indian Reservation. Because petitioners have raised only the single question of diminishment, we express no view about whether equitable considerations of laches and acquiescence may curtail the Tribe's power to tax retailers of Pender in light of the Tribe's century-long absence from the disputed lands," he said.
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