'I`AXATION: lNDIAN L.-\NDS: The exemption from ad valorem taxation for lndian lands in
Minn. Stat. § 272.01. subd. 1 applies only to lands held in trust by the_United States ror the
benefit ot` an lndia.n 'l`ribe. its inembers. or an individual Indian. and lands owned by_ an lndran
Tribe or an individual lndian subject to federal statutory restraints on'alienati.on._ _'Ihe
exemption does riot apply to lands owned in fee simple title by lnoian Tribes or individual

Indians.

nav 4, 1993 414A'5

Mr. Gerald S. Paulson
Mahnomen Counry Attorney
Mal'inomen County Courthouse
P.O. Box 439

Mahnomen. MN 56557

Dear Mr. Paulson:

In your letter to the Attomey General. you state substantially the following:

FAC'I`S

Fee title to certain real property located within Mahnonien County is held by individual
Indians.1 Fee title to other real property in the county is variously held in the name of the
Minnesota Chippewa 'l'ribe, the White Earth Band of Chippewa. the governing body of the
'I`ribe 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 Uniteu' States Supreme Court in Coungg of Yaltima v.
Yal112 S. Ct. 683 
(1992), the Minnesota Depa.rtment of
Revenue issued a memorandum dated March ll. 1992 informing county officials that based on
the X__al<_i'i'ti_a 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.2 In September, 1992, you contacted the

l. '['here is no single statutory or judicial definition of "Indian." For purposes 05 lhiS
opinion, "Indian" refers to an enrolled member of a federally recognized tnbe.
Felix S. Cohen, Handbook of Federal Indian Law 19 ( 1982 ed.)

2. The concl\".lon of the U.S. Supreme Court that the County of Yakima, Washington was
entitled to impose ad valorem taxes on fee land owned by individual Indians and by the
Yalcima Indian Nan‘on was based on provisions of the Indian Geneial Allotment Act of
1887 (also known as the Dawes Act), 24 Stat. 388, as amended, 25 'U.S.C. § 331 et. s_eq.
and the Burke Act of 1906, 34 Stat. 182. The Court found express authority for taxation
of fee-patented land on which any period of trusteeship has expired in § 6 of the Geneml
Allotment Act, as amended, 25 U.S.C. § 349. 'I`lie Court’s reasoning thus presumably
applies to any lands owned in fee title traceable to patents distributed pursuant to_tlie
General Allotment Act. Although we assume that the holding also applies to fee`utles
originating in patents issued under other federal laws either incorporating me provisions
of the General Allotment Act or containing similar language expressly permitting taxation
(g&, the Nelson Act, 25 Stat. 642), it is likely that differences in allotment acts will
provide a basis for future litigation.

Mr. (lerald S. Paulson
Page - 2 -

Depanmeni of Revenuc to inquire as to the meaning of the term "lndian Lands" as used in
Minn. Stat. § 172.01. subd. l. which states: "All real and personal property in this state. and
all personal property ot` persons residing therein. including the property of corporations.
banks. banking companies and bankers. is taxable. UptlndiaM 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 "restiicted" status.3

The Malinomen County assessor has inquired how to classify Indian-owned land located
in the county in light ot` these communications and the provisions of Minn. Stat. §272.01.
subd. l (19921.

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 E.arth 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.4 the
county assessor has asked whether such lands are exempt from taxation under the above
provision of Minnesota law.

You then ask the following:
QUEST!ON

Does the exemption from ad valorem taxation ot` "lndian lands" in Minn. Stat. § 272.01.
subd. l (l992l include any lands in addition to lands held in trust by the United States?

3. I_.ands owned in restricted status means land subject to a restriction by the United States
against alienation. The general restriction on alienation of Indian land derives from
federal statutory law. See, e.g., 25 U.S.C. § 177: Felix S. Cohen, Handbook of Federal
Indian Law 508 et. seq., (1982 ed.).

4. We have been informed by the United States Department of the lnterior, Ofl`ice ol_` _the
Field Solicitor in Minneapolis that the Bureau of Indian Affairs may take the position
that. the Yakima decision notwithstanding, state and local governments have no
jurisdiction to tax Indian owned fee land on Indian reservations We were not informed
of the legal basis for this position. The United States has appeared in several pending
federal district court cases which raise the issue of local/state ad valorem taxation of lands
owned in fee by Indian tribes. See e.g., Assiniboine and Sioux Tribes v. Montana,
CV-89-271-BLG-JFB (D. Mont.); Blackfeet Trlbe v. Adams et al., CV-89»lOO-GF (D.
Mont.); United States v. South Dakota and Todd County, Civ. 90-3017 (C.D. S. Dak.);
United States v. Michigan, 91~CV-10103-BC (E.D. Mich.). The ultimate disposition of
these cases in light of ¥akima is not clear.

 

 

\/1r. Gerald S. Paulson
Page - 3 -

()PINION

ln our opinion. the term "lndian Lands" as used in Minn. Stat. § 271.01. subd. l (1992)
includes only those lands title to which is held in trust by the United States for the benefit of
an lndian tribe_ its members or an individual lndian. and lands owned by an Indian tribe or
individual Indian subject to federal statutory restraints against alienation.

The "lndian lands" language was added to Minn. Stat. §272.01. subd. l by the
Minnesota Legislature in 1961.5 Act ot` Apri`l 14. 1961. ch. 361. 1961 Minn. Laws 554.
The 1961 legislation provides as tollows:

CHAPTER 361 -- H.F. No. 392

An act relating to taxation oi` real proYriy, excluding Indian lands from
taxation' amending Minnesota Statutes 1957, Section 272.01, as amended by
wa Session Laws 1959, Chapter l, Section l and Chapter 85, Section l.

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

 

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

272.01 Propert)l subject to taxation. Subdivision 1. All real and
personal property in this state. and all personal property of persons r aiding
therein. including the property of corporations, banks, banking companies, and
bankers. is taxable. except Indian lands and such other proErty 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 prot`it; 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

5. The territorial laws included a tax exemption for "the property of all Indians, who are not
citizens, except lands held by them by purchase." Minn. Stat. ch. 9. _S_ec.`[V.?.
(1849-1858). This provision was repealed in 1865 with the wholesale revision in that
year of statutory law. Report of the Revision Conimission ch. ll. § 3.

Mr. Gerald S. Paulson
Page - 4 -

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
govemment_;

(c) Indian lands.

m Pro@rty of any co[@ration organized as a Trlbal Coi_*@ration under
the Indian Reorganization Act of .lurie 18. 1934. (48 Stat. 984L

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.

Mr. Gerald S. Paulson
Page - 5 -

The term "lndian 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.6 For most state. federal
and tribal jurisdictional purposes. the governing legal term is "lndian country," defined in
18 U.S.C_ § 1151. "lndian country" is defined as including (a) all land within the limits of
any Indian reservation under the jurisdiction of the United States Govemment. 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 extinguished7 This definition appears in

6. For example, the term "lndian lands" is defined in the indian Gaming Regulatory Act.
25 U.S.C. §2703. ("IGRA") as including all lands within the limits of any Indian
reservation. and any lands title to which is either held in trust by the United States for the
benefit of any Indian tribe or individual or held by any Indian tribe or individual subject
to restriction by the United States against alienation and over which an Indian tribe
exercises governmental power. The term "lndian lands" is also used in Minn. Stat.
§ 3.9221, authorizing the negotiation of tribal-state gambling compacts pursuant to the
IGRA: Minn. Stat. § 240.13, subd. 9. authorizing transmission of horse racing telecasts
to sites on Indian lands; and Minn. Stat. §349.61. subd. 2. also relating to compacts
governing gambling on Indian lands. Although these statutes do not provide a definition
of "lndian lands" they were adopted in contemplation of the federal IGRA and
presumably incorporate the IGRA detinition. Other laws define the term differently
(see, e.g., National Indian Forest Resources Management Act. at 25 U.S.C. §3101
et. seq., in which "lndian lands" is defined to mean only land held in trust by the United
States or by an Indian or tribe subject to a restriction by the United States against
alienation).

7. The meaning of the term "lndian country" has also varied over the years. lt was initially
used as a specific jurisdictional term in the 1834 Trade and Intercourse Act, Ch. 16_1, § 1,
4 Stat. 729. The 1834 definition was repealed in 1874, leaving the term subject to
judicial interpretation until 1948, when the current federal definition was codified. 'l_'he
1834 statutory definition of Indian country was expressly tied to Indian land titlc, which
includes aboriginal occupancy, executive order reservations. lands in federal trust or
restricted status, and the fee ownership of removal tribes and of the New Mexico Pueblo
tribes. All such lands were subject to federal restrictions. In adopting the 1948
delinition, which included land owned iii unrestricted fee simple within Indian reservation
boundaries. Congress changed the rule of prior case law as well as the 1834 delinition.
Felix S. Cohen, Handbook of Federal Indian law at 27 n.8, 35-36 ( 1982 ed.). However,
a modified definition of "lndian country" was adopted in 1949 for purposes of the indian
country liquor prohibition laws. 18 U.S.C. §§ 1154, 1156. This definition excludes from
Indian country fee patented lands within non-Indian communities and all rights of way.

Footnote 7 continued next page.

Mr. Gerald S. Paulson
Page - 6 -

the federal criminal code section governing federal criminal laws applicable in Indian country.
Later statutes delegating partial civil and criminal jurisdiction over lndian country to certain
states used the same term, including principally Public Law 280, Act of Aug. 15, 1953.
ch. 505, 67 Stat. 588 (coditied 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 Fedcral statutory
definition of "lndian country" for purposes of Minn. Stat. § 272.01. it would have used that
term instead of the then undefined "lndian lands." Moreover. since lndian country includes all
lands within the limits of any lndian reservation. including lands owned by non-lndians, 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
lndian lands. the legislature clearly intended something more limited than the tertii lndian
country as defined in federal law.

There are no reported cases construing the lndian lands provisions of Minn. Stat.
§272.01. The Minnesota cases relating to taxation of lndian property have focused
exclusively on whether federal law prohibits or allows the imposition of such ta.xes.8 In the
absence of a statutory definition or controlling case law. we must construe the term "lndian
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:

Footnote 7 continued.
thus restoring part of the pre-1948 definition for liquor control purposes. 
Cohen, supra,

at 45-46
.

8. See, e.g., State of Minnesota v. ZayZah, 
259 N.W.2d 580 
(1977) (trust patent issued to
Indian rendered his land free from taxation during the period of trust); w
Coun_ty, 
426 U.S. 373 
(1976) (county not authorized under federal law to levy personal
property tax on Indian resident’s mobile home located on land held in trust by United
States for members of Chippewa tribe).

Mr. Gerald S. Paulson

Page - 7 -
( l) 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.

Contempotaneous legislative history of the lndian lands exemption is sparse. House tile

392, the bill containing the exemption. was authored by Representative Harry Basford.9 The

minutes of the House Committee on Taxes, to which the bill was referred, include the

following entry from its March 9. 1961 meeting:

9.

10.

ll.

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 'I`ribal 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.10 An
amendment was drawn to correct this matter. Mr. lack 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 cai'ried.11

Representative Basford represented Becker County in the Minnesota Legislature from
1949-1961. Minnesota Legislative Manual 1961-62. He also chaired the Legislattve
lnterim Committee on lndian Affairs. Minnesota l_egislative Manual 1957-58.

The inadvertent omission referred to is apparently Minn. Stat. § 272.01, subd. 3(¢_1),
relating to inventory owned by the federal govemment, and adopted in the 1959 special
session. Act of July 2, 1959, chapter 85, 1959 Minn. Laws. Ex. Sess. 1900.

Records of the Minnesota Legislature. Minnesota State Archives, Minnesota History
Center.

Mr. Gcrald S. Paulson
Page - 8 -

Tliere 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 l, 1959. ch. l. 1959 Minn. Laws Ex. Sess. 1397. which provides as follows:

EXTRA SESSION

CHAP'I`ER l -- H.F. NO. 37

An act relating to the taxation of exempt real and personal property
leased, loaned or made available to individuals, associations or corpprations in
connection with a business conducted for protit; amending Minnesota §tatutes

l957émuons 272.01 and 273.19.
Be it enacted by the Legislature of the State of Minnesota:

Section 1. Minnesota Statutes 1957, Section 272.01, is amended to read:

272.01 Property subject to taxation. Subdivision l. 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 such as is by law exempt from taxation.

Subd. 2. When any real or Ersonal property which for any r_e@n is
exempt from ad valorem taxes, and taxes in lieu thereof, is leased, l@ed, or
otherwise made available and used by a private ingividual, associatipn or
compratipn in connection with a business condupted for proiit; except wheg such
rig is by way of a concession in or relative to the use in whole or m of a public
park, market, fair grounds, aipport, port authority, municipal auditprium,
municipal museum or municipal stadium there shall be imposed a taxl for the

rivile e of o usin or ssessin such r or rsonal ro in the same

amount and to the same extent as though the lessee or user was the pwner of such
ro rt . Taxes im sed b thi subdivisi n sh l be du and able in the

case of p_ersonal prop§Lty taxes and such Les shall be asses@ to sugh lM or

users freal or rsonal ro rt in thesam manner es wn

of real or Ersonal progrty, except that such gx_es shall not pecomp a lien against
the progrty. When due, such taxes shall constitute a debt due fgm the leg or

Mr. Gerald S. Paulson
Page - 9 -

user to the state, township, city, village, county and school district for which the

taxes were ass_essed and shall be collected in the same manner as personal
progrty 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;

1b1 Real estate exempt from ad valorem taxes and taxes in lieu thereof

which is leased, loaned or otherwise made available to telephone companies c'
clectric. 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
pip_elines used for the transmission and distribution of Etroleum products;

(c) Property presently owned by anv_educational institution chartered by
the territorial legislature

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

Sec. 2. Minnesota Statutes 1957. Section 273.19. is amended to read:

273. 19 Lossew and equitable owners. Property held under a lease for a
term of three or more years. and not taxable under section 272.01, subdivision 2,
or under a contract for the purchase thereof, when the property belongs to the
state, or to any religious, scientific_. or benevolent society or institution,
incorporated or unincorporated, or to any railroad company or other corporation
whose property is not taxed in the same manner as other property, or when the
property is school or other state lands. shall be considered. for all purposes of
taxation, as the property of the person so holding the same.

Sec, 3. The provisions of this act shall apply to taxes for the year 1959
and sub@uent years.

Approved May 1, 1959.

Mr. Gerald S. Paulson
Page - lO -

These provisions impose a privilege tax (sometimes called a "benet`icial use tax") on
lessees ot` otherwise tax exempt real estate who use the property for profit-making purposes.12
Unlike ad valorem taxes. the privilege tax on the lessees use or possessory interest does not
become a lien on the real estate. The owner ot` 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 authorityl In all other respects. however. the privilege tax is equivalent to ad valorem
taxes on the same propen_v. and is assessed in the same manner.

As a result ot` the privilege tax. a person or entity owning otherwise tax exempt real
estate cannot pass the benefits ot` 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. ln 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

 

12. Minn. Stat. § 272.01. subd. 2 is an almost verbatim adoption of the Michigan provision
approved in United States v. City of Detroit, 
355 U.S. 466 
(1958), which upheld a
statute providing for real property taxation of business leases of tax exempt property as
applied to a lessee of federally owned land. S_ee_ Grava v. County of Pin§, 268 N.W.Zd
723, 727 (1978).

Mr. (.lcrald S. Paulson
Page - ll -

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.

P`ile 392 to relieve otherwise exempt lndian lands from the privilege tax. He wished to
preserve the benefit of existing exemptions for lndian lands by insuring that the privilege tax
would not be imposed even if the land was rented or leased for profit-making purposes.13
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

From his reported remarks. we conclude that Representative Basford intended House

provides as t`ollows:

13.

@soLuTiON No. 21-61

WHEREAS, The Minnesota State Legislature, in the l959 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. 'I`he imposition of such taxation on 'I`ribal. Band or individually
owned land or personal property is considered to be an infraction of Indian rights
permitted them by the United States Govemment. and

WHEREAS, 'l'he 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

The purpose and effect of the exemption from the privilege tax for property of any
corporation organized as a Tribal Corporation under the Indian Reorganization .A..ct of
June 18, 1934 in Minn. Stat. §272.01, subd. 3(0 is not clear. If such property is not
included within the general exemption for "lndian lands" in Minn. Stat. §272.01,
subd. 1, then the property is not exempt from ad valorem taxation under state law and
the privilege tax imposed by § 272.01, subd. 2 does not apply (unless some o_ther
provision of state or federal law exempts the property from state ad valorem taxation).
lf, on the other hand, property owned by a Tribal Coiporation is included within the
term "lndian lands," then it is also covered by the exemption from the privilege tax for
Indian lands in Minn. Stat. § 272.01, subd. 3(e), and no additional exemption is needed.

Mr. (lerald S. Paulson
Page ~ 12 -

properties. said Bill referred to as F.[sic] No. 392, Companion S.F. --- and
which was referred to Senate Committee on taxes.

NOW. THEREFORE, BE lT RESOLVED. That the Red l_.al188 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-lndian. United States v. Citv of
DLi'oit, 
355 U.S. 466 
(19581; 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. .-\ct of August 9. 1955. ch. 615. § l. 69 Stat. 539. 25 U.S.C. §415. The
leasing of unalloted 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. § 1360.15

ln 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 lndian 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 "lndian lands" exemption. the

legislature intended broadly to exempt categories of lands which previously had been taxed.

15. later cases established that Pub. L. 280 was not a general grant of authority to the states
to impose personal property taxes on Indian owned property located on Trus_t lands.
Bgan v. ltasca County, 
426 U.S. 373 
(1976). However, other cases have continued to
support the authority of state and local governments to tax non-Indian leasehold interests
in Trust or restricted status lands. Fort Mohave Tribe v. Coun f San B_e , 
543
F.2d 1253 
(9th Cir. 1976) cert. deniQ 
430 U.S. 983 
(1977); M_Qa_l_mnw_l$ag§_gf
Mission lggians v. County of Riverside, 
442 F.2d 1184 
(9th Cir. 1971), cert, @iQ
405 U.S. 933 
(1972); Chief Seattle Pro],'§rties, lnc. v. Ki_tsap County, 
541 P.2d 699
(1975).

Mr. Gerald S. Paulson
Page - 16 -

Moreover. other possible constructions of the exemption raise significant difficulties If
"lndian 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 lndians, would go untaxed. The tax bases of counties with reservation lands would
be seriously eroded. a result surely not intended by the legislature

if "lndian 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. i\s one commentator has observed. "The term `lndian lands’ refers to those
lands that are held by Indians or tribes under some restriction or with some attribute peculiar
to the lndian status of its legal or beneficial owners. Today any lndian 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 'lndian land."‘ William C. Canby,
Jr., American lndian Law in a Nutshell, 256 (2d ed. 1988).

In contrast, a construction of "lndian 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 lndian status of its legal or beneficial owners.
and thereby effectuates the intent of the legislature in adopting House File 392 in 1961.16

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. Cig of St. Paul, 
226 Minn. 406
, 412, 
33 N.W.2d 19
, 23 (1948); M
Aviation Inc. v. State, 
280 Minn. 30
, 341 
157 N.W.2d 742
, 746 (1968). Because the term

 

16. This view is also consistent with early judicial recognition that Indian lan_ds are lands

whose sale, if not consented to by the sovereign (the United States and its European
'Jredecessors), can give the purchaser no valid title as against the sovereign. J_thm
_\dclntosh, 8 Wheat 543, 
5 L. Ed. 681 
(1823).

 

Mr. Gerald S. Paulson
Page - 17 -

"lndian 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 lndian trust lands, we have concluded that
the term "lndian lands." as used in Minn. Stat. § 272.01. subd. 1 does not apply to lands other
than trust or restricted status lands.

ln conclusion, the exemption for lndian 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 lndian tribes. or subject to restrictions on

alienation. and does not include individual or tribal lands held in fee.

Very truly yours,

HUBERT H. HUMPHREY, lII
Attorney General

GREGORY P. HUWE
Assistant Attomey General