Oneida Tribe of Indians of WI v. Village of Hobart, WI, No. 12-3419 (7th Cir. 2013)

Annotate this Case

In 2007 Hobart, Wisconsin passed an ordinance assessing stormwater management fees on all parcels in the village, including land owned by the Oneida Nation of Wisconsin, an Indian tribe, to finance construction and operation of a stormwater management system. Title to 148 parcels in Hobart, about 1400 acres or 6.6 percent of the village’s total land, is held by the United States in trust for the Oneida tribe (25 U.S.C. 465). Tribal land is interspersed with non-tribal land in a “checkerboard” pattern. The tribe sought a declaratory judgment that the assessment could not lawfully be imposed on it. Hobart argued that if that were true, the federal government must pay the fees; it filed a third‐party complaint against the United States. The district court entered summary judgment for the tribe and dismissed the third‐party claim. The Seventh Circuit affirmed, holding that the federal Clean Water Act did not submit the land to state taxing jurisdiction and that the government’s status as trustee rather than merely donor of tribal lands is designed to preserve tribal sovereignty, not to make the federal government pay tribal debts.

Download PDF

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 12 3419 ONEIDA TRIBE OF INDIANS OF WISCONSIN, Plaintiff Appellee, v. VILLAGE OF HOBART, WISCONSIN, Defendant Third Party Plaintiff Appellant, v. UNITED STATES OF AMERICA, et al., Third Party Defendants Appellees. ____________________ Appeal from the United States District Court for the Eastern District of Wisconsin. No. 10 C 137 William C. Griesbach, Chief Judge. ____________________ ARGUED SEPTEMBER 18, 2013 DECIDED OCTOBER 18, 2013 ____________________ Before BAUER, POSNER, and TINDER, Circuit Judges. POSNER, Circuit Judge. In 2007 the Village of Hobart, Wis consin passed an ordinance assessing stormwater manage ment fees on all parcels of land in the village, including those owned by the Oneida Nation of Wisconsin, an Indian 2 No. 12 3419 tribe. The purpose of the assessment was to finance the con struction and operation of a stormwater management sys tem. The tribe sought a declaratory judgment that the as sessment could not lawfully be imposed on it. Hobart con tended that if the tribe was right on that score (Hobart thought it was wrong), the United States must pay the fees; and so it filed a third party complaint against the United States. The district judge rendered summary judgment for the tribe and granted the motion of the United States to dis miss the third party claim. The Village appeals both rulings. Hobart is a small town in rural Wisconsin, near Green Bay. Its population is less than 7000, of whom about 17 per cent are Indians of the Oneida tribe. The Indians homes are not confined to one neighborhood. They are scattered throughout the village and as a result the Indian and non Indian properties form an irregular checkerboard pattern. The village itself is an enclave in the tribe s reservation. The significance of the checkerboard pattern is that title to 148 parcels of land in Hobart comprising about 1400 acres, amounting to 6.6 percent of the village s total land is held by the United States in trust for the Oneida tribe. Con gress has authorized the federal government to buy land and hold it in trust for Indian tribes. 25 U.S.C. § 465; Carcieri v. Salazar, 555 U.S. 379, 381 82 (2009). Normally the land is, as in this case, within the boundaries of an Indian reservation. The non Indian parcels in Hobart are technically part of the surrounding Oneida reservation as well, but they are subject to state rather than tribal sovereignty, and thus are subject to state taxation and regulation. Tribal trust land, in contrast, may not be taxed by either state or local governments. 25 U.S.C. § 465. No. 12 3419 3 The federal government holds little more than bare le gal title to the trust land; with immaterial exceptions the tribe governs trust lands just as it does lands to which it holds title. See, e.g., 25 U.S.C. § 415(a); Montana v. United States, 450 U.S. 544, 557 (1981). And so trust lands are part of Indian country, 18 U.S.C. § 1151; Oklahoma Tax Commission v. Sac & Fox Nation, 508 U.S. 114, 123 (1993) in fact the larg est part. Cohen s Handbook of Federal Indian Law § 15.03, p. 997 and n. 1 (Nell Jessup Newton ed., 2012). One may wonder why the government holds legal title to any Indian land why it doesn t just buy land and give it to an Indian tribe or, simpler still, give the tribe the money to buy the land. The reason is to increase the likelihood that In dian territory will remain Indian territory; for unlike land held in fee simple by an Indian tribe, trust land is inalienable without federal authorization. See 25 U.S.C. §§ 81, 177; 25 C.F.R. § 152.22. So one may wonder how it is that non Indians own land in Hobart even though the village is en tirely within the boundaries of the Oneida reservation. The answer is that over time and through a variety of statutory provisions a great deal of Indian land has been acquired by non Indians. See Cohen s Handbook, supra, § 1.04, pp. 73 74; §16.03[2][b], pp. 1073 74. Federal trusteeship underscores the fact that land ac quired by the federal government in trust for Indians is, like original tribal land, for the most part not subject to state ju risdiction. Although the Supreme Court no longer believes that the treaties and laws of the United States contemplate the Indian territory as completely separated from that of the states, Worcester v. Georgia, 31 U.S. 515, 557 (1832) (Marshall, C.J.); see Nevada v. Hicks, 533 U.S. 353, 361 (2001), it remains 4 No. 12 3419 true that Indian treaties, executive orders, and statutes preempt state laws that would otherwise apply by virtue of the states residual jurisdiction over persons and property within their borders. Federal preemption of state law in the field of Indian affairs has persisted as a major doctrine in the Supreme Court s modern Indian law jurisprudence. Cohen s Handbook, supra, § 2.01[2], p. 112. So when the federal gov ernment acquires land in trust for Indians, the consequence is to reestablish [the Indians ] sovereign authority over that land. City of Sherrill v. Oneida Indian Nation, 544 U.S. 197, 221 (2005). It is awkward for parcels of land subject to one sovereign to be scattered throughout a territory subject to another. But actually it s a familiar feature of American government. Fed eral facilities of all sorts, ranging from post offices to military bases, are scattered throughout the United States, and are subject to only as much regulation by states and local gov ernments as the federal government permits. A similar scat ter is common in Indian country, primarily as a result of al lotment acts (later repealed) in the late 1800s and early 1900s, notably the Dawes (General Allotment) Act of 1887, 25 U.S.C. § 331 acts allotting reservation land to individual families to liberate them from tribal ownership that Con gress in that era considered socialistic, to encourage their as similation into mainstream American life, and not inci dentally to facilitate the transfer of Indian land to non Indians. See Cohen s Handbook, supra, § 1.04, pp. 72 75. The question in this case is whether the federal govern ment has authorized the Village of Hobart to assess fees on Indian lands in the village (or taxes whether the assess ments are fees or taxes is a separate issue, discussed at the No. 12 3419 5 end of this opinion) to pay for its stormwater management program. Although the authority of a state or local government over Indian territory is limited, it is not negligible, especially when Indians and non Indians live in close proximity. No one doubts that Village of Hobart firefighters can enter Indi an land in the village in the same circumstances in which they can enter land owned by non Indians. But the only premise that the Village advances for a right to impose on the Indian lands charges for pollution control is section 313(a) of the Clean Water Act, 33 U.S.C. § 1323(a), which provides, so far as relates to this case, that each department, agency, or instrumentality of the execu tive, legislative, and judicial branches of the Federal Gov ernment (1) having jurisdiction over any property or facili ty, or (2) engaged in any activity resulting, or which may result, in the discharge or runoff of pollutants, and each of ficer, 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, adminis trative 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 charg es. Hobart argues that this provision subjects tribal trust lands to local authority over stormwater runoff a cause of water pollution acknowledged by Congress in enacting stormwater amendments to the Clean Water Act. See 33 U.S.C. § 1342(p). Unmanaged stormwater runoff absorbs pollutants in its path and often deposits them in nearby bod ies of water that are classified as waters of the United States 6 No. 12 3419 and therefore subject to federal regulation. See National Pol lutant Discharge Elimination System Regulations for Revi sion of the Water Pollution Control Program Addressing Storm Water Discharges, 64 Fed. Reg. 68,722, 68,724 (Dec. 8, 1999). Hobart s stormwater management program (adopted though not yet fully implemented) is intended to reduce, so far as the Clean Water Act requires, pollution caused by stormwater runoff. Although section 313(a) does waive federal immunity from local regulation of stormwater runoff, it does not ad dress the underlying authority of local governments to regu late that runoff on Indian lands. The federal Environmental Protection Agency has the whip hand. Congress has author ized it to establish and enforce nationwide standards for regulating pollution, including stormwater pollution, of wa ters of the United States. 33 U.S.C. §§ 1251(a), (d); 1361(a). The agency s National Pollutant Discharge Elimination Sys tem, cited above, requires that the discharge of stormwater into waters of the United States comply with permits that shall require controls to reduce the discharge of pollutants to the maximum extent practicable, including management practices, control techniques and system, design and engi neering methods, and such other provisions as the Adminis trator or the State determines appropriate for the control of such pollutants. 33 U.S.C. § 1342(p)(3)(B)(iii); see also 40 C.F.R. § 122.34(a). But notice the phrase or the State determines. Congress has authorized the EPA to delegate to states the authority to issue stormwater management permits within their bounda ries, 33 U.S.C. § 1342(b), and Wisconsin is one of the states to which the authority has been delegated. But the uniform No. 12 3419 7 understanding has been that states and their subdivisions are not authorized to regulate stormwater or other pollution on Indian lands, including Indian trust lands. Cohen s Hand book, supra, § 10.02[1], at 789 90. Those lands are not exempt from the Clean Water Act. But it is the Indian governments of those lands, in this case the government of the Oneida tribe, rather than states, that can be delegated regulatory au thority under the Act. See 33 U.S.C. § 1377(e)(2); 40 C.F.R. § 122.31(b). So far as federal regulation of water pollution is concerned, tribes equal states they are not subservient to them. The eleven federally recognized tribes in Wisconsin oc cupy about a thousand square miles. Wisconsin Department of Administration, Division of Intergovernmental Relations, Tribes of Wisconsin 3, Appendices A through K (July 2013), ftp://doaftp1380.wi.gov/Doadocs/2011_Tribes_of_WI_v_7 2013.pdf (visited Oct. 15, 2013). They are self governing enti ties, and there is no indication that in section 313(a) of the Clean Water Act (a section that contains no mention of Indi ans) Congress decided to place the regulation of pollution in their territory under state control. Other federal properties in a state post offices, for example are subject to delegated state administration of the Clean Water Act, but not Indian reservations, which for purposes of the Act are equated to states. 33 U.S.C. § 1377(e); 40 C.F.R. § 131.3(j). Wisconsin itself, in applying for permitting authority under the Act in 1979, disclaimed authority to regulate stormwater runoff on Indian lands. And Hobart acknowl edged this by applying for a runoff permit not from the state but from the EPA. It couldn t obtain a permit from the state because it wanted the permit to cover the 148 Indian parcels, 8 No. 12 3419 and the state had disclaimed regulatory authority over those parcels. For the same reason, the Oneida tribe couldn t ob tain a permit from the State of Wisconsin either, and so it too applied to the EPA for a permit. (The EPA has granted tenta tive, but not yet final, permits to both Hobart and the tribe.) It does seem odd (to pick up on an earlier point) that there should be two separate stormwater management pro grams in tiny Hobart, administered by different sovereigns. Indeed, given the checkerboard pattern of Indian and non Indian land ownership in the village, it s difficult to see how there can be separate programs. We are told that both the tribe and the Village have at least some stormwater runoff facilities in the village, serving their respective constituen cies. It s difficult to visualize that; the Village presumably owns all the streets, and storm sewers run under streets. But storm sewers are not the only devices for regulating storm water runoff; alternatives include retention ponds, and ap parently there is one or more of them on Indian land in Ho bart. Nevertheless we can imagine an argument, built on our earlier example of the Village s authority to deploy its fire fighters on Indian parcels, for an exception of necessity a common law graft onto the Clean Water Act to the Oneida tribe s exclusive authority over Indian land. But the Village doesn t argue for such an exception; it doesn t deny the fea sibility of cooperative arrangements between it and the tribe, which has signed cooperative service agreements with other government bodies in the area. So Hobart loses its case against the tribe. And there is an other reason it must lose. Because federal law forbids states and local authorities to tax Indian lands, the tribe can t be No. 12 3419 9 forced to pay the assessment decreed by the challenged or dinance if the assessment is a tax. In Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651 F.3d 722, 728 (7th Cir. 2011) (en banc), we rejected the cumbersome multifactor tests that some courts had used to try to distinguish between taxes and fees. We said that the only material distinction [between taxes and fees] is be tween exactions designed to generate revenue taxes, whatever the state calls them ¦ and exactions designed either to punish (fines, in a broad sense) rather than to generate revenue (the hope being that the punishment will deter, though deterrence is never perfect and therefore fines generate some state revenues), or to compensate for a service that the state provides to the persons or firms on whom or on which the exaction falls (or, what is similar, to compensate the state for costs imposed on it by those per sons or firms, other than costs of providing a service to them): in other words, a fee. Judged by this standard which Hobart accepts the stormwater runoff assessment is a tax rather than a fee. It is designed to generate revenue to pay for a governmental pro ject. It is not a fee for a service provided to a particular land owner. The landowners in the village are unlikely to be harmed by stormwater runoff, and therefore helped by the Village s stormwater management program. Pollution caused by the runoff would affect the streams and other bodies of water, none of them in the village so far as ap pears, into which the stormwater carries pollutants. Neither is the fee a penalty for the landowner s imposition of a cost on the Village; the causal relation between a particular land owner s activities and the amount of stormwater runoff pol lution resulting from rainstorms in Hobart is obscure, and 10 No. 12 3419 the assessment scheme does not assign causal responsibility for particular pollution to particular landowners. Further more, unpaid stormwater runoff assessments become liens on the property subject to the assessments, and are enforcea ble in the same manner as real property taxes though the imposition, let alone the foreclosure, of liens on land to which the federal government holds legal title is out of the question. In its third party complaint against the United States, the Village argues that if the Oneida tribe isn t liable to pay the assessment, the federal government is, by virtue of the waiv er in section 313(a) of the Clean Air Act of its immunity from reasonable service charges. But a tax is not a reasonable service charge; section 313(a) makes no reference to tribal lands; and the federal government is merely the holder of legal title to the 148 parcels in question, not the occupant. The government s status as trustee rather than merely donor of tribal lands is designed to preserve tribal sovereignty, not to make the federal government pay tribal debts. Anyway there are no tribal debts to Hobart. AFFIRMED.

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.