United States District Court, D. Nebraska
RICHARD M. SMITH, et al., Plaintiffs,
MITCH PARKER, et al., Defendants, and STATE OF NEBRASKA, Plaintiff-Intervenor and THE UNITED STATES, Defendant-Intervenor
For Richard M. Smith, Donna Smith, Doug Schrieber, Susan Schrieber, Rodney A Heise, Thomas J Welsh, Jay Lake, Julie Lake, Keith Brehmer, Ron Brinkman, Village of Pender, Plaintiffs: Mark D. Hill, LEAD ATTORNEY, HUSCH, BLACKWELL LAW FIRM - OMAHA, Omaha, NE; V. Gene Summerlin, Jr., LEAD ATTORNEY, Lincoln, NE.
For State of Nebraska, Intervenor Plaintiff: David D. Cookson, David A. Lopez, Jon C. Bruning, Katherine J. Spohn, Ryan S. Post, LEAD ATTORNEYS, ATTORNEY GENERAL'S OFFICE - NEBRASKA, Lincoln, NE.
For Mitch Parker, In his official capacity as Chairman of the Omaha Tribal Council, Barry Webster, In his official capacity as Vice-Chairman of the Omaha Tribal Council,Amen Sheridan, In his official capacity as Treasurer of the Omaha Tribal Council, Rodney Morris, In his official capacity as Secretary of the Omaha Tribal Council, Eleanor Baxter, In her official capacity as Member of the Omaha Tribal Council,Ansley Griffin, In his official capacity as Member of the Omaha Tribal Council and as the Omaha Tribe's Director of Liquor Control, Defendants: Mark J. Peterson, Nora M. Kane, Patricia A. Zieg, LEAD ATTORNESY, STINSON, LEONARD LAW FIRM - NEBRASKA, Omaha, NE.
For United States, Intervenor Defendant: Daron Carreiro, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE - ENVIRONMENTAL ENFORCEMENT, Washington, DC.
MEMORANDUM AND ORDER
Richard G. Kopf, Senior United States District Judge.
The plaintiffs are owners or agents of businesses and clubs in Pender, Nebraska, that sell alcoholic beverages. They have sued Omaha Tribal Council members in their official capacities for prospective injunctive and declaratory relief from the Omaha Tribe's attempt to enforce its liquor-license and tax scheme on the plaintiffs. The plaintiffs claim that because they are not located on a federally recognized Indian reservation or in " Indian country,"  they are not subject to the Omaha Tribe's jurisdiction, and the defendants have therefore exceeded their
authority under 18 U.S.C. § 1161  and under federal common law by trying to exercise tribal jurisdiction over the plaintiffs. The plaintiff-intervenor, the State of Nebraska, alleges that the Omaha Tribe has exceeded its tribal authority under federal common law by attempting to enforce its liquor-license and tax scheme against the retailers in Pender, but also requests a permanent injunction prohibiting the Omaha Indian Tribe from asserting any tribal jurisdiction whatsoever within all 50,157 acres of Thurston County, Nebraska, lying west of the now-abandoned right-of-way of the Sioux City and Nebraska Railroad--in other words, the State's challenge is not limited to Pender, Nebraska. (Filing 107, Complaint-in-Intervention of Intervenor State of Nebraska.)
This matter is before the court on cross-motions for summary judgment (Filings 113 & 116) after a lengthy stay  to allow the plaintiffs to exhaust their remedies in the Omaha Tribal Court. The pivotal issue in this case is whether Congress intended to " diminish"  the boundaries of the Omaha Indian Reservation in Nebraska when it enacted an 1882 Act that ratified an agreement for the sale of Omaha tribal lands to non-Indian settlers. If Congress intended to diminish the Omaha Reservation, the area involved would no longer constitute Indian country, and the Omaha Tribe could not regulate and tax alcohol sales in Pender, Nebraska. Atkinson Trading Co., Inc. v. Shirley, 532 U.S. 645, 653, 121 S.Ct. 1825, 149 L.Ed.2d 889 (2001) (" An Indian tribe's sovereign power to tax--whatever its derivation--reaches no further than tribal land." ).
I. STANDARD OF REVIEW
After litigants have exhausted their remedies in tribal court, the federal district court " should review the Tribal Court's findings of fact under a deferential, clearly erroneous standard. The Tribal Court's determinations of federal law should be reviewed de novo while determinations of Tribal law should be accorded more deference."
Duncan Energy Co. v. Three Affiliated Tribes of Fort Berthold Reservation, 27 F.3d 1294, 1300 (8th Cir. 1994) (citations omitted) (discussing district court's review of tribal court's determination of its own jurisdiction).
The parties agree that the ultimate issue in this case--whether the Omaha Indian Reservation was diminished by an 1882 act of Congress--is a question of federal law and, therefore, is subject to this court's de novo consideration. (Filing 118, Pls.' Br. Supp. Mot. Summ. J. at CM/ECF pp. 31-37 (arguing that tribal court's decision has no legal effect, but " [e]ven if the Court engages in traditional judicial review, a de novo standard applies" ); Filing 138, Defs.' Br. Opp'n Pls.' Mot. Summ. J. at CM/ECF pp. 15-17 (" the ultimate question of whether the Omaha Indian Reservation was diminished is subject to this Court's de novo review" ).)
II. UNDISPUTED MATERIAL FACTS
1. The Village of Pender, Nebraska, (" Pender" ) is a village as defined by Neb. Rev. Stat. § 17-201 with a population of approximately 1,300 residents in northeastern Nebraska, and is a plaintiff in this litigation. Pender is a political subdivision of the State of Nebraska, the county seat of Thurston County, and is governed by a Village Board of Trustees.
2. The remaining plaintiffs are and were at all relevant times residents of Thurston County and owners of or agents for establishments engaged in the sale of alcoholic beverages in or near Pender, Nebraska. Each of the plaintiffs holds a valid liquor license from the State of Nebraska and has fully complied with all of Nebraska's requirements to engage in the retail sale of alcohol.
3. The Omaha Tribe of Nebraska is a federally recognized Indian Tribe organized and chartered under the Indian Reorganization Act of 1934. Indian Entities Recognized and Eligible to Receive Services from U.S. Bureau of Indian Fairs Notice, 75 Fed. Reg. 60810 (Oct. 1, 2010). Defendants are or were at all relevant times members or officials of the Omaha Tribal Council.
4. The plaintiffs' primary customers are not members of the Omaha Tribe, but rather nonmember residents of Pender and the surrounding areas. None of the plaintiffs are members of the Omaha Tribe, parties to any contracts with the Omaha Tribe, or involved in any other formal business relationship with the Tribe. Finally, none of the plaintiffs have applied for a license or remitted any taxes to the Omaha Tribe under the " Beverage Control Ordinance," discussed below.
B. The Beverage Control Ordinance License and Tax Structure
5. On February 28, 2006, the Secretary of the Interior approved amendments to
Title 8 of the Omaha Tribal Code. (Amendment (Title 8 of the Tribal Code) to Omaha Tribe's Beverage Control Ordinance, 71 Fed. Reg. 10056 (Feb. 28, 2006) (the ordinance, as amended, is hereinafter referred to as the " Beverage Control Ordinance" ).
6. The purpose of the Beverage Control Ordinance " is to govern the sale, possession and distribution of alcohol within the Omaha Tribe's Indian Reservation." The Beverage Control Ordinance requires establishments that sell alcohol to obtain a license for a fee that varies by license class and imposes a 10-percent sales tax on the purchase of alcohol from any licensee.
7. The licensing scheme contained within the Beverage Control Ordinance introduces three classes of liquor licenses--A, B, and C. Class A licenses are issued to " Package Dealers" and require a $1,000.00 application fee; Class B licenses are issued to " On-Sale Dealers" and require a $1,500.00 application fee; and Class C licenses are issued to " Wholesalers" and require a $500.00 application fee. Each license is valid for one year, but may be extended for an additional 30 days, provided that a new license application is pending at the time of expiration. The Beverage Control Ordinance also institutes a 10-percent sales tax to be levied on the retail price of all sales of alcoholic beverages. The 10-percent sales tax must be remitted to the Omaha Tribe.
8. Any entity applying for a license under the Beverage Control Ordinance must also grant unlimited access to its books and premises to the Omaha Tribe. The Beverage Control Ordinance states: " [An applicant's] premises, for the purpose of search and seizure laws shall be considered public premises, and that such premises and all buildings, safes, cabinets, lockers, and store rooms thereon will at all times on demand of the Tribal Council or a duly appointed Tribal or Federal policeman, be open to inspection."
9. Non-tribal members who fail to comply with the licensing and taxing scheme imposed by the Beverage Control Ordinance are subject to administrative fines in the amount of $10,000.00 per violation.
C. Enforcement of the Beverage Control Ordinance
10. The Omaha Tribe has attempted to enforce the Beverage Control Ordinance against the individual plaintiffs. In particular, on December 19, 2006, plaintiff Richard M. Smith, owner of a convenience store in Pender that has sold alcoholic beverages for the last 38 years, received a letter from the Omaha Tribe. The letter included an application to obtain a liquor license from the Omaha Tribe for his convenience store, Smitty City West, and a request to remit the 10-percent alcohol tax imposed by the Beverage Control Ordinance on a monthly basis. Smith did not take any action in response to the December 19, 2006, letter because he believed that his business was not located within the Omaha Indian Reservation, nor was he affiliated with the Omaha Tribe.
11. On or about January 31, 2007, the plaintiffs received a Second Notice from the Omaha Tribe via registered mail. The Second Notice was addressed to " all manufacturers, importers, wholesalers, and retailers of alcoholic beverages within the Omaha Indian Reservation." This notice informed the plaintiffs that " the Omaha Tribe's Director of Liquor Control has determined that [they] are subject to the requirements of the Alcoholic Beverage Control Title." The Second Notice also stated that because the plaintiffs were not in compliance with the Beverage Control Ordinance, they were subject to fines of up to $10,000.00 per violation. The Second Notice threatened " enforcement actions in Omaha Tribal Court."
12. On April 17, 2007, the United States District Court for the District of Nebraska granted the plaintiffs a temporary restraining order prohibiting the enforcement of the Beverage Control Ordinance in Pender, Nebraska, and that order was later extended by a stipulation of the parties. (Filings 16 & 29.)
13. On October 4, 2007, the United States District Court for the District of Nebraska stayed the original proceeding in order for the plaintiffs to exhaust any potential remedies available in the Omaha Tribal Court. (Filing 53.)
14. On January 7, 2008, the plaintiffs filed an action in the Omaha Tribal Court seeking a judgment declaring that Pender is not within the boundaries of the Omaha Reservation and an injunction prohibiting the enforcement of the Beverage Control Ordinance in Pender. In those proceedings, the plaintiffs retained Emily Greenwald, Ph.D., as their expert witness to prepare a historical report. Defendants retained R. David Edmunds, Ph.D., Watson Professor of American History for the University of Texas at Dallas, as their expert witness to prepare a historical report.
15. On February 4, 2013, pursuant to cross-motions for summary judgment, the Omaha Tribal Court determined that Congress did not " intend to diminish the boundaries of the Omaha Indian Reservation" in the applicable 1882 Act, which is discussed in detail below. (Filings 82-1 & 86.) Stipulating that exhaustion was complete, the parties returned to this court for resolution of this matter.
D. The 1854 Treaty
16. In 1854, the Omaha Tribe entered into a treaty with the United States government in which the Tribe agreed to " cede to the United States all their lands west of the Missouri River, and south of a line drawn due west from a point in the centre of the main channel of said Missouri River due east of where the Ayoway river disembogues out of the bluffs, to the western boundary of the Omaha country, and forever relinquish all right and title to the country south of said line[.]" (Filing 115-2, at CM/ECF p. 2.)
17. In consideration of and payment for the land ceded by the Omaha Tribe, the United States agreed to pay the Omaha Tribe a sum certain paid over a certain number of years.
18. In the Treaty of 1854, the Omaha Indians also made a commitment to allow railroads to construct a right-of-way across their reservation at some point in the future, and in 1880, they agreed to grant the Sioux City and Nebraska Railroad a right-of-way from the northern edge of their reservation generally southeastward until it crossed the southern boundary of the Omaha Indian Reservation.
19. As a result of the 1854 Treaty, the actual boundaries of the Omaha Reservation were set in 1855, and the original size of the Omaha Reservation was approximately 300,000 acres. Pender is within the original boundaries of the Omaha Reservation as established in 1855.
E. 1865 Omaha Land Sale: Winnebago Reservation
20. On March 6, 1865, the Omaha Tribe entered into a treaty with the United States government under which the Tribe agreed to " cede, sell, and convey to the United States" a portion of the Omaha Reservation for the sum certain of $50,000.00 for the establishment of the Winnebago Reservation. (Filing 115-3 at CM/ECF p. 2.)
21. The size of the Winnebago Reservation created by the 1865 Treaty was approximately 98,000 acres, leaving the
Omaha Reservation with approximately 202,000 acres. The General Land Office (" GLO" ) conducted a survey of the remaining Omaha Reservation from 1866 to 1867 which was approved by the GLO Commissioner in 1867.
22. The 1865 Treaty provided for the allotment of the remaining portion of the Omaha Reservation to individual Omaha Tribe members and also provided that the Omaha Tribe was to " vacate and give possession of the lands ceded by this treaty immediately after its ratification."
23. In March 1871, the Omaha received certificates for their individual allotments, all of which were in the eastern half of the Omaha Reservation. The Omaha Tribe members later learned that the certificates they were given for the allotments provided in the 1854 and 1865 Treaties did not provide fee-simple title to the land, causing the Omaha Tribe to request allotments that would guarantee fee-simple title to the reservation land so allotted.
F. The 1872 Act Regarding the Western Portion of the Omaha Reservation
24. In August 1871, the Omaha chiefs appealed to Congress " to provide for the enactment of a law authorizing the sale of 50,000 acres of the most western portion of their reservation . . ." to raise funds for farming and housing. Congress did not enact the requested legislation.
25. In October 1871, the Omaha chiefs sent a letter to Congress and " earnestly renew[ed] the petition presented to Congress at its last session" calling for " the sale of near 50,000 acres from the most western portion of our reservation as can be separated from the remainder by a line running along the section-lines from north to south."
26. On January 22, 1872, Commissioner of Indian Affairs F.A. Walker recommended the proposed legislation to Congress and stated, " I believe that the general idea of diminishing these reservations for the purpose of securing higher cultivation of the remaining lands, is consonant with sound policy."
27. On June 10, 1872, Congress enacted legislation that authorized the Secretary of the Interior, with the consent and concurrence of the Omaha Tribe, to " cause to be surveyed, if necessary, a portion of their reservation in the State of Nebraska, not exceeding fifty thousand acres, to be taken from the western part thereof, and to be separated from the remaining portion of said reservation by a line running along the section lines from north to south. The said lands so separated shall be appraised . . . . [and] the Secretary of the Interior shall be, and hereby is, authorized to offer the same for sale for cash in hand." The 1872 Act also contained provisions allowing other Indian tribes to sell portions of their reservation lands.
28. Only 300.72 acres of the Omaha Reservation were actually sold under the terms of the 1872 Act. The Commissioner reported: " By the provision of the act of June 10, 1872, 49,762 acres have been appraised for sale [and are held] in trust for said Indians, leaving 143,225 acres as their diminished reserve."
G. 1873 Ponca Agreement Regarding the Western Portion of the Omaha Reservation
29. On November 6, 1873, the Omaha and Ponca chiefs signed a resolution to sell a portion of the Omaha Reservation to the Ponca Tribe. Both tribes wished to settle the Ponca on the western part of the Omaha Reservation surveyed and appraised for sale in 1872.
30. The sale of land from the Omahas to the Poncas was never completed.
H. 1874 Omaha Land Sale: Wisconsin Winnebagoes
31. In 1874, following the Omaha's unsuccessful attempt to sell land to the Poncas, Congress appropriated funds to purchase additional land from the Omaha Tribe for the Wisconsin Winnebagoes from the eastern part of the Omaha Reservation. The amount of land sold to the Wisconsin Winnebagos was reported as 12,374.53 acres.
I. 1880 Proposal Regarding the Western Portion of the Omaha Reservation
32. In 1880, Nebraska Senator Alvin Saunders again offered a bill to accomplish the sale of 50,000 acres from the western portion of the Omaha Reservation first proposed as part of the 1872 Act. In support of this effort, Senator Saunders stated: " The bill provides for a survey and sale of fifty thousand acres. There was a bill passed some eight years ago [the 1872 Act] authorizing the sale of this land, and only about three hundred acres of land were sold under it. The Secretary now recommends that we deduct that from this bill so that the survey may stand as it is, 49,461.71 acres instead of fifty thousand acres."
33. Later in the debate, Senator Saunders explained why the 1872 Act was unsuccessful: " Let me state the reason for it. A bill was passed some seven or eight years ago authorizing it to be sold in smaller tracts, but people would not go and settle around the Indians when they could get lands as cheap or cheaper off a distance from them. The object now is that we may get, if possible, persons to emigrate in colonies and go and make their own settlements where they will not be isolated from society."
34. Senator Saunders went on to state: " The Indians want the land sold . . . [T]hey want this money put out at interest so that they can have the interest to use in improving their farms. They are very desirous to have the land sold. They even would have it sold at a lower figure than this bill names if it cannot be sold at that."
35. Senator Saunders' 1880 proposal did not advance.
J. 1882 Act Regarding the Western Portion of the Omaha Reservation
36. On February 20, 1882, the Senate introduced Senate Bill 1255, which provided for the sale of up to 50,000 acres from the western portion of the Omaha Reservation.
37. During the first floor debate on this bill, Senator Saunders stated: " It happens to be one of those few cases where I believe everybody is satisfied to have a bill of this kind passed. The Indians want it passed so as to put the money derived from the sale on interest. The white people are there ready to buy the land and put it in cultivation." In support of the bill, Senator Saunders read a letter into the record stating: " [T]here are no Indians living on the western portion of the Omaha Reservation; that no land has been allotted to any of them so far as I can ascertain; and furthermore  there are no improvements such as housing, fencing upon the 50,000 acres of land alluded to in your letter." Senator Saunders also stated: " Twice they have expressed themselves already in open council in favor of it, and the bill requires that it shall be done a third time, and that the land shall not be sold until they do decide in open council that they want it sold."
38. Senator Saunders explained that the 1882 Act " practically breaks up that portion at least of the reservation which is to be sold, and provides that it shall be disposed of to private purchasers." He went on to state that under the bill, " [t]he lands that [the tribe] occupy are segregated
from the remainder of the reservation, and the allottees receive patents to the separate tracts, so that the interest and control and jurisdiction of the United States is absolutely relinquished."
39. Specific to the land west of the right-of-way, Senator Saunders explained that the Omahas did not want to live in the area to be sold. " I do not think an acre of this land will be sold to the Indians. . . ," and " I did not think as a matter of fact a single acre of land [west of the right-of-way] would go into the hands of Indians." Senator Saunders' belief was consistent with the report submitted by the local agent which stated, " there are no Indians living on the western portion of the Omaha reservation."
40. Senator Dawes reported, " Last summer I saw the representatives of this tribe, and I heard them myself state . . . they were very anxious to sell a portion of their real estate and obtain the money, so that the interest of the money they could use for the improvement of the residue of their property. They had more land than they could occupy, as I heard them myself."
41. Senator Dawes explained, " When this bill came in I was troubled lest the sale of 50,000 acres would leave the [Omaha] reservation too small. I went personally to the Indian Bureau to satisfy myself upon that point, and by the Commissioner of Indian Affairs I was assured that it would leave an ample reservation, as much as, if all the Indians should take in severalty, would give each one a farm and have some left for such increase of numbers as might probably be expected in the next twenty-five years; that there was no apprehension on the part of the Department; they were satisfied."
42. On April 20, 1882, the Senate passed the bill and referred it to the House Committee on Indian Affairs. On July 1, 1882, the House committee offered a substitute bill that authorized both the sale ...