No DD UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT POARCH BAND OF CREEK INDIANS, Plaintiff/Appellee,

Transcription

1 Case: Date Filed: 09/21/2015 Page: 1 of 40 No DD UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT POARCH BAND OF CREEK INDIANS, Plaintiff/Appellee, v. JAMES HILDRETH, JR., in his official capacity as Tax Assessor of Escambia County, Alabama Defendant/Appellant. On Appeal from the United States District Court for the Southern District of Alabama Case No. 1:15-cv CG-C INITIAL BRIEF OF APPELLANT Bryan M. Taylor (ASB-0390-Y81T) Spencer T. Bachus, III (ASB-5865-A58S) Steven M. Brom (ASB-2541-N74B) BACHUS, BROM & TAYLOR, LLC 4908 Cahaba River Road, Suite 204 Birmingham, AL Telephone: (205) Attorneys for Defendant/Appellant

2 Case: Date Filed: 09/21/2015 Page: 2 of 40 Poarch Band of Creek Indians v. Hildreth No DD CERTIFICATE OF INTERESTED PERSONS Appellant James Hildreth, Jr., certifies that the following persons, firms, and entities have an interest in the outcome of this case: Bachus, Brom & Taylor, LLC Counsel for Defendant/Appellant Bachus, III, Spencer T. Counsel for Defendant/Appellant Brom, Steven M. Counsel for Defendant/Appellant Dauphin, Charles A. Counsel for Plaintiff/Appellee Granade, Callie V.S. U.S. District Judge (S.D. Ala.) Hildreth, Jr., James Defendant/Appellant Kilpatrick Townsend & Stockton LLP Counsel for Plaintiff/Appellee Poarch Band of Creek Indians Plaintiff/Appellee Reeves, Mark H. Counsel for Plaintiff/Appellee Smith, David C. Counsel for Plaintiff/Appellee Taylor, Bryan M. Counsel for Defendant/Appellant i

3 Case: Date Filed: 09/21/2015 Page: 3 of 40 STATEMENT REGARDING ORAL ARGUMENT This appeal presents an issue of first impression regarding the taxation of claimed Indian trust lands in light of a 2009 U.S. Supreme Court decision casting a cloud of doubt over the validity of the fee-to-trust transfers executed some 30 years ago. This is an issue of immense public importance, given the potential tax revenues at stake to support schools, public safety, and other vital county services. Oral argument would assist the Court in this case because it involves the contested construction, scope, and applicability of federal statutes; the disputed applicability and effect of Supreme Court and Eleventh Circuit precedent; and a challenge to the district court s jurisdiction and the Indian tribe s standing. Accordingly, Defendant-Appellant James Hildreth, Jr., in his official capacity, respectfully requests oral argument. ii

4 Case: Date Filed: 09/21/2015 Page: 4 of 40 TABLE OF CONTENTS CERTIFICATE OF INTERESTED PERSONS. i STATEMENT REGARDING ORAL ARGUMENT... ii TABLE OF CITATIONS.. v STATEMENT OF SUBJECT-MATTER & APPELLATE JURISDICTION. ix STATEMENT OF THE ISSUES.. 1 STATEMENT OF THE CASE. 1 I. Course of Proceedings and Disposition in the Court Below... 3 II. Statement of the Facts. 3 A. Legal Background Property Tax Assessment in Alabama The Indian Reorganization Act of B. Federal Recognition and Trust Acquisitions for the Poarch Band 7 C. The Supreme Court s Decision in Carcieri v. Salazar. 7 D. Escambia County s Response to Carcieri 9 III. Standard of Review..10 SUMMARY OF THE ARGUMENT.. 11 ARGUMENT...13 I. An Evidentiary Hearing Was Required to Support the District Court s Findings and Conclusions. 13 II. The Tribe Failed to Satisfy its Burden to Establish a Substantial Likelihood of Success on the Merits 14 iii

5 Case: Date Filed: 09/21/2015 Page: 5 of 40 A. The District Court Lacks Subject-Matter Jurisdiction 14 B. The Tribe Lacks Standing and Failed to State a Claim C. The 465 Tax Exemption Does Not Apply to the Poarch Creek Property The Poarch Creek Property is Not Exempt According to the Plain Language of The Poarch Creek Property is Taxable Under Bailess v. Paukune The Poarch Creek Property is Taxable Because the Federal Trust is Void Ab Initio III. The Harm to Escambia County of the Preliminary Injunction Outweighs the Harm of an Assessment of the Poarch Creek Property. 28 CONCLUSION CERTIFICATE OF SERVICE 30 iv

6 Case: Date Filed: 09/21/2015 Page: 6 of 40 TABLE OF CITATIONS Cases Alabama Dep t of Revenue v. National Peanut Festival Ass n, Inc., 51 So.3d 353 (Ala. Civ. App. 2010) Alabama v. Delaney s, Inc., 668 So.2d 768 (Ala. Civ. App. 1995)... 4, 27 * * Alabama v. PCI Gaming Auth., No , ---F.3d ---, 2015 WL (11th Cir. 2015)... 5, 26, 27 Bailess v. Paukune, 344 U.S. 171, 73 S. Ct. 198 (1952)... 12, 21, 22, 23 Bischoff v. Osceola Cnty., 222 F.3d 874 (11th Cir. 2000) Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) Boswell v. Abex Corp., 317 So. 2d 317 (Ala. 1975)... 4 * Carcieri v. Salazar, 555 U.S. 379 S. Ct 1058 (2009)... Passim Central N.Y. Fair Bus. Ass n v. Jewell, No. 6:08-CV-0660, 2015 WL (N.D.N.Y. 2015)... 6 City of Pinson v. Utils. Bd., 986 So. 2d 367 (Ala. 2007)... 4 City of Santa Clara v. Andrus, 572 F.2d 660 (9th Cir. 1978) Colbert v. United States, 785 F.3d 1384 (11th Cir. 2015) v

7 Case: Date Filed: 09/21/2015 Page: 7 of 40 Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 68 S. Ct. 715 (1948) Confederated Tribes of Grand Ronde Cmty. of Or. v. Jewell, 75 F. Supp. 3d 387 (D.D.C. 2014)... 6 Crane Co. v. State ex rel. Davis, 90 So. 873 (Ala. Ct. App. 1921)... 5 * Dixon v. United States, 381 U.S. 68, 85 S. Ct (1965) Employers Ins. of Wassau v. Browner, 52 F.3d 656 (7th Cir. 1995) Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 68 S. Ct. 1 (1947) Federal Maritime Comm n v. Anglo-Canadian Shipping Co., 335 F.2d 255 (9th Cir. 1964) Flav-O-Rich, Inc. v. Birmingham, 476 So.2d 46 (Ala. 1985)... 4 Hollywood Mobile Estates, Ltd. V. Seminole Tribe, 641 F.3d 1259 (11th Cir. 2011)... 17, 18 * Legal Envtl. Assistance Found., Inc. v. E.P.A., 118 F.3d 1467 (11th Cir. 1997)... 24, 26 Lexmark Int l, Inc. v. Static Control Components, Inc., 134 S. Ct (2014) Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007) Manhattan Gen. Equip. Co. v. Commissioner, 297 U.S. 129, 56 S. Ct. 397 (1936) vi

8 Case: Date Filed: 09/21/2015 Page: 8 of 40 Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S. Ct (1976) * * * Moon v. Med. Tech. Associates, Inc., 577 F. App x 934 (11th Cir. 2014)... 10, 11, 13 New York v. Salazar, 2012 WL (N.D.N.Y. 2012)... 6, 14 NLRB Union v. Fed. Labor Relations Auth., 834 F.2d 191 (D.C. Cir. 1987)... 26, 27 No Casino in Plymouth v. Jewell, No. 2:12-CV TLN, 2014 WL (E.D. Cal. 2014)... 6, 7 Trujillo v. Florida, 481 F. App x 598 (11th Cir. 2012) United States v. Carnival Corp., No CG-C (S.D. Ala. Sep. 19, 2014) United States v. John, 437 U.S. 634, 98 S. Ct (1978) * United States v. Mississippi Tax Comm n, 505 F.2d 633 (5th Cir. 1974)... 15, 16 Utah Power & Light Co. v. United States, 243 U.S. 389, 37 S. Ct. 387 (1917) Federal Statutes 5 U.S.C U.S.C * * 25 U.S.C Passim 25 U.S.C Passim vii

9 Case: Date Filed: 09/21/2015 Page: 9 of U.S.C ix * 25 U.S.C ix, U.S.C ix, 14, 15, 16 State Statutes and Constitutional Provisions Ala. Const. art IV, Ala. Code (1975)... 4 Ala. Code (1975)... 3 Ala. Code (1975)... 3, 4, 5 Regulations and Rules 48 Fed. Reg (1983)... 9 * 49 Fed. Reg. 24,083 (June 11, 1984) Fed. Reg (Apr. 18, 1985)... 7 Other Authorities * Black s Law Dictionary 1356 (9th ed. 2009) Scott A. Taylor, Taxation in Indian Country after Carcieri v. Salazar, 36 Wm. Mitchell L. Rev. 590 (2010)... 8 viii

10 Case: Date Filed: 09/21/2015 Page: 10 of 40 STATEMENT OF SUBJECT-MATTER AND APPELLATE JURISDICTION This is an appeal of a preliminary injunction granted by the District Court for the Southern District of Alabama (Hon. Callie V.S. Granade). Defendant- Appellant filed a timely notice of appeal on July 28, This Court has appellate jurisdiction under 28 U.S.C. 1292(a)(1). The district court entertained subjectmatter jurisdiction under 28 U.S.C Defendant-Appellant contests subjectmatter jurisdiction pursuant to the Tax Injunction Act ( TIA ), 25 U.S.C ix

11 Case: Date Filed: 09/21/2015 Page: 11 of 40 STATEMENT OF THE ISSUES 1. Whether the district court erred in failing to hold an evidentiary hearing into the 1934 status of the Poarch Band of Creek Indians prior to finding that 25 U.S.C. 465 exempts the Tribe s claimed trust lands from state and local property taxes. 2. Whether the district court erred in finding that the Poarch Band of Creek Indians satisfied its burden to establish a substantial likelihood of success on the merits of its claim that 25 U.S.C. 465 exempts the Tribe s claimed trust lands from state and local property taxes. 3. Whether the district court erred in finding that the threatened injury to the Tribe of a tax assessment outweighs the preliminary injunction s harm to Escambia County. STATEMENT OF THE CASE Plaintiff, the Poarch Band of Creek Indians (the Poarch Band or Tribe ), filed suit to prevent Defendant-Appellant, James Hildreth, Jr., in his official capacity as Tax Assessor of Escambia County, Alabama, from assessing taxes under Alabama law on certain lands and improvements in Escambia County, including the Poarch Band s $240 million Wind Creek Casino and Hotel (the Poarch Creek Property ). The district court granted the Tribe s request for a preliminary injunction based on section 5 of the Indian Reorganization Act 1

12 Case: Date Filed: 09/21/2015 Page: 12 of 40 ( IRA ), 25 U.S.C. 465, which authorizes the Secretary of the Interior (the Secretary ) to acquire land in trust for the purpose of providing land for Indians and provides that lands acquired pursuant to this Act... shall be exempt from State and local taxation. 1 Hildreth principally contends that the Poarch Creek Property is not eligible for the 465 tax exemption because it is not land that was acquired pursuant to the IRA, but in contravention of it. In 2009, the U.S. Supreme Court held that the IRA, by its terms, only authorizes the Secretary to acquire lands in trust for Indian tribes that were under federal jurisdiction at the time of the IRA s enactment in Carcieri v. Salazar, 555 U.S. 379, 381, 129 S. Ct. 1058, 1061 (2009). Because the Poarch Band presented no evidence nor even alleged that it is one of the Indian tribes, as defined in the IRA, for whom the Secretary is 1 More fully, 465 provides in relevant part: The Secretary of the Interior is authorized, in his discretion, to acquire... any interest in lands... for the purpose of providing land for Indians.... Title to any lands or rights acquired pursuant to this Act... shall be taken The Secretary in the name of of the the Interior United is States authorized, in trust for in the his Indian discretion, tribe to or acquire individual... any Indian interest for in which lands the... land for the is purpose of providing land for Indians.... Title to any lands or rights acquired pursuant to this Act... shall be taken in the name of the United States in trust for the Indian tribe or individual Indian for which the land is acquired, and such lands or rights shall be exempt from State and local taxation. 2

13 Case: Date Filed: 09/21/2015 Page: 13 of 40 authorized to take and hold land in federal trust, the Poarch Band failed to satisfy its burden to establish a substantial likelihood of success on the merits that the Poarch Creek Property is entitled to tax-exempt treatment under 465. Hildreth also challenges the district court s subject-matter jurisdiction, the Tribe s standing, and the sufficiency of the Tribe s claim. I. Course of Proceedings and Disposition in the Court Below The Poarch Band filed this action for injunctive and declaratory relief against Hildreth on May 26, The Tribe moved for a preliminary injunction on June 4, Hildreth filed a request for an evidentiary hearing on June 12 and filed his response to the Tribe s motion on June 17 (a corrected response substituting the response he filed on June 16). The Tribe filed its reply on June 24, and the court allowed Hildreth to file a sur-reply on July 9, On July 22, 2015, the district court issued the preliminary injunction enjoining Hildreth from assessing the Poarch Creek Property. The court never held the evidentiary hearing requested by Hildreth. Hildreth filed a timely notice of appeal on July 28, II. Statement of the Facts A. Legal Background 1. Property Tax Assessment in Alabama Under Alabama law, property is assessed and ad valorem taxes are levied annually. See Ala. Code , On October 1 of each year, a statutory 3

14 Case: Date Filed: 09/21/2015 Page: 14 of 40 lien accrues upon every taxpayer s property for the payment of taxes assessed by the tax assessor. Ala. Code (1975). The lien continues against the property until the taxpayer pays all taxes assessed for that year. Id. Whenever the tax assessor discovers that taxable property has escaped taxation in any of the last five years, he is required by Alabama law to value and assess the property for those years and apply a ten-percent penalty (an escape assessment ). Ala. Code (1975). The burden is on the taxpayer to clearly establish any claimed right to a tax exemption. Pinson v. Utils. Bd., 986 So. 2d 367, 370 (Ala. 2007). In all cases of doubt as to legislative intention, the presumption is in favor of the taxing power. Alabama Dep't of Revenue v. National Peanut Festival Ass'n, Inc., 11 So. 3d 821, 827 (Ala. Civ. App. 2008) (quoting Flav O Rich, Inc. v. Birmingham, 476 So. 2d 46, 48 (Ala. 1985) (internal quotation marks and citations omitted)). Furthermore, under the Alabama Constitution, the tax assessor has no power or discretion to waive a taxpayer s state or county tax liability. See Alabama v. Delaney's, Inc., 668 So. 2d 768, 774 (Ala. Civ. App. 1995) (citing Boswell v. Abex Corp., 317 So. 2d 317, 319 (Ala. 1975) (citing in turn Ala. Const. art IV, 100)). Thus, if a taxing authority errs in granting a statutory tax exemption to which the taxpayer is not legally entitled, the taxpayer nonetheless remains liable for the tax and has no right to rely on an erroneous administrative interpretation of the statute, 4

15 Case: Date Filed: 09/21/2015 Page: 15 of 40 not even a longstanding one. See id. A taxpayer s liability for unpaid property taxes is limited only by the statute governing escape assessments, Ala. Code , which effectively operates as a statute of limitations on the tax assessor by barring the issuance of an assessment for any year beyond the statutory five-year look-back period. Crane Co. v. Alabama ex rel. Davis, 90 So. 873, 874 (Ala. Ct. App. 1921), rev'd on other grounds, 90 So. 871 (1921). 2. The Indian Reorganization Act of 1934 The Indian Reorganization Act ( IRA ), 25 U.S.C , enacted in 1934, authorizes the Secretary of the Interior to acquire land and hold it in trust for the purpose of providing land for Indians and provides that land acquired pursuant to this Act... shall be exempt from State and local taxation. 25 U.S.C Congress expressly limited the class of Indian tribes to which it intended to extend this tax exemption. The term Indian is defined, in relevant part, as persons of Indian descent who are members of any recognized Indian tribe now under Federal jurisdiction. 25 U.S.C. 479 (emphasis added). As the Supreme Court has held and this Court has acknowledged, [T]he term now under Federal jurisdiction in 479 unambiguously refers to those tribes that were under the federal jurisdiction of the United States when the IRA was enacted in Carcieri, 555 U.S. at 395, 129 S. Ct. at 1068 (2009); Alabama v. PCI Gaming Auth., No , 2015 WL , at *7 (11th Cir. Sep. 3, 2015). Thus, 5

16 Case: Date Filed: 09/21/2015 Page: 16 of 40 substituting the term Indian in 465 with its definition in 479, the statute exempts such lands or rights as are acquired pursuant to the IRA for the purpose of providing land for [members of a recognized Indian tribe that was under federal jurisdiction when the IRA was enacted in 1934]. Consequently, an Indian tribe s jurisdictional status in 1934 is a threshold inquiry that must be resolved by the Department of the Interior (the Department ) or a court in order to determine whether the IRA applies to a particular Indian tribe, and an agency s decision absent such an analysis is legally deficient. New York v. Salazar, No. 6:08 CV 00644, 2012 WL (N.D.N.Y. 2012) (remanding a fee-to-trust decision to the Interior Department in light of Carcieri for analysis of the tribe s 1934 jurisdictional status). Accordingly, following Carcieri, the Secretary adopted a two-part test for analyzing whether a tribe was under federal jurisdiction in 1934 so as to be considered one of the Indian tribes covered by the IRA, and the courts examine the Secretary s analysis for an abuse of discretion. See, e.g., Central N.Y. Fair Bus. Ass'n v. Jewell, No. 6:08-CV- 0660, 2015 WL , at *4-10 (N.D.N.Y. 2015); Confederated Tribes of Grand Ronde Cmty. v. Jewell, 75 F. Supp. 3d 387, , (D.D.C. 2014); see also No Casino in Plymouth v. Jewell, No. 2:12-CV TLN, 2014 WL , at *5-7 (E.D. Cal. 2014) (denying judgment on the pleadings as to the IRA s applicability because the court had not yet reviewed the administrative 6

17 Case: Date Filed: 09/21/2015 Page: 17 of 40 record, where the Interior Department had undertaken an analysis of the tribe s 1934 jurisdictional status after the Supreme Court s decision in Carcieri but before formally adopting its two-part test). Thus a court cannot say whether or not a tribe is an Indian tribe within the meaning of 465 and 479 without the benefit of a factual review of the tribe s 1934 status. See No Casino in Plymouth, 2014 WL , at *6. B. Federal Recognition and Trust Acquisitions for the Poarch Band On June 11, 1984, the Interior Department formally recognized and established a government-to-government relationship with the Poarch Band of Creeks. 49 Fed. Reg. 24,083 (June 11, 1984). Within months, the Department accepted nearly 230 acres into federal trust for the Poarch Band, including some of the Poarch Creek Property at issue in this case. See 50 Fed. Reg (Apr. 18, 1985); (Doc. 11-1). Shortly thereafter, Hildreth asked the Alabama Attorney General for an advisory opinion as to whether the land was exempt from taxation. The Attorney General at that time advised Hildreth that the land was due taxexempt treatment under 25 U.S.C Ala. Atty. Gen. Op (1986) (the 1986 AG Opinion ). Deferring to the state Attorney General, Hildreth ceased assessing any property deeded to the United States in trust for the Poarch Band. C. The Supreme Court s Decision in Carcieri v. Salazar 7

18 Case: Date Filed: 09/21/2015 Page: 18 of 40 In 2009, however, the U.S. Supreme Court handed down its decision in Carcieri, consciously upending 75 years of administrative interpretation of the IRA and casting doubt on the tax-exempt status of lands held in federal trust for post tribes. 2 See Scott A. Taylor, Taxation in Indian Country after Carcieri v. Salazar, 36 Wm. Mitchell L. Rev. 590, 610 (2010). In Carcieri, Rhode Island challenged the Interior Secretary s claimed authority under 465 to take land into federal trust for the Narragansett Indian Tribe, a tribe that received federal recognition in Carcieri, 555 U.S. at 384, 129 S. Ct. at Because [t]he Secretary may take land into trust only for the purpose of providing land for Indians, the Court looked to 479, which defines Indians as persons of Indian descent who are members of any recognized Indian tribe now under Federal jurisdiction. Carcieri, 555 U.S. at , 129 S. Ct. at (quoting 25 U.S.C 465, 479) (emphasis in original). The Court examined the meaning of the word now in 479, id. at , 129 S. Ct. at , and held: [F]or purposes of 479, the phrase now under Federal jurisdiction refers to a tribe that was under federal jurisdiction at the time of the statute s enactment. As a result, 479 limits the Secretary s authority to taking land into trust for the purpose of providing land to members of a tribe that was under federal jurisdiction when the IRA was enacted in June Because the record in this case establishes that the Narragansett Tribe was not under 2 As used in this brief, post-1934 Indian tribe is intended to refer to tribes that were federally recognized after

19 Case: Date Filed: 09/21/2015 Page: 19 of 40 federal jurisdiction when the IRA was enacted, the Secretary does not have the authority to take the parcel at issue into trust. Id. at , 129 S. Ct. at Importantly, the Court also concluded that the Narragansett s 1983 federal recognition gave rise to a presumption that the tribe was not under federal jurisdiction in 1934, a presumption the tribe could not overcome given the tribe s failure to present arguments to the contrary. See id. at 395, 129 S. Ct. at 1068 (citing the Narragansett s notice of federal acknowledgment, 48 Fed. Reg (1983)). D. Escambia County s Response to Carcieri On April 17, 2012, Escambia County Commission Chairman David Stokes asked the Interior Secretary in writing to provide the United States Government s position concerning the validity of its title to and interest in the Poarch Creek Property in light of Carcieri. Stokes requested that the Department promptly take official agency action, by order, deed of conveyance, or other appropriate measure, to formally relinquish such interest because, pursuant to Carcieri, the United States appears to be legally precluded from acting as trustee for the benefit of the [Poarch Band]. Letter from David Stokes, Chairman, Escambia County Commission, to Ken Salazar, Secretary, Department of the Interior 3 (Apr. 17, 2012). The Department responded on June 4, 2012, with a terse, two-paragraph letter that summarily concluded that the Poarch Band enjoys all rights and privileges 9

20 Case: Date Filed: 09/21/2015 Page: 20 of 40 associated with having its Reservation held in trust by the United States under federal law. (the Laverdure Letter ) (Doc. 11-3). The letter evidenced no effort undertaken by the Department to analyze whether the Poarch Band was under federal jurisdiction in On or about January 22, 2013, Hildreth again wrote the Alabama Attorney General, requesting to know whether the 1986 AG Opinion was still conclusive and authoritative as applied to the Poarch Creek Property in light of Carcieri. In his response, the Attorney General clarified the 1986 AG Opinion by including this notation on the front page: Before relying on this opinion, see the decision in Carcieri v. Salazar. (Doc. 11-2). On January 7, 2014, Hildreth informed the Poarch Band of his intent to proceed with the appraisal of the Poarch Creek Property. (See Doc. 11-4). Over the course of the next year, the Poarch Band refused to cooperate with Hildreth s valuation of the property. (See Docs to 11-9). Therefore, Hildreth s office completed the appraisals without the benefit of any information from the Tribe. The Poarch Band filed this action on May 26, 2015 (See Docs. 1, 11). III. Standard of Review This Court reviews a district court s decision to grant a preliminary injunction for abuse of discretion. Moon v. Med. Tech. Associates, Inc., 577 F. App'x 934, 936 (11th Cir. 2014). In so doing, findings of fact of the district court 10

21 Case: Date Filed: 09/21/2015 Page: 21 of 40 are reviewed for clear error, and legal conclusions are reviewed de novo. Id. (citation omitted). This scope of review will lead to reversal only if the district court applies an incorrect legal standard, or applies improper procedures, or relies on clearly erroneous factfinding, or if it reaches a conclusion that is clearly unreasonable or incorrect. Id. (citation omitted). SUMMARY OF THE ARGUMENT The district court erred in finding that 25 U.S.C. 465 exempts the Poarch Creek Property from state and local taxation because the United States holds title in trust for the Poarch Band. 1. The district court failed to hold an evidentiary hearing necessary to conduct the threshold inquiry into whether the Poarch Band was under federal jurisdiction in Because 465, by its terms, applies only to Indian tribes that were under federal jurisdiction at the time of the statute s enactment in 1934, a finding regarding the tribe s 1934 status is a prerequisite to resolution of all the other issues in this case. The district court s injunction without a hearing, then, was clearly erroneous factfinding. 2. The Poarch Band failed to satisfy its burden to establish a substantial likelihood of success on the merits. First, because the Tribe made no showing that it is an Indian tribe within the meaning of the IRA (i.e., a tribe that was under federal jurisdiction in 1934) the district court lacked subject-matter jurisdiction 11

22 Case: Date Filed: 09/21/2015 Page: 22 of 40 pursuant to the TIA under binding precedent of this Circuit. And the tribe failed to establish standing and failed to state a claim for relief under 465. Secondly, the Tribe failed to establish that the Poarch Creek Property is entitled to exemption from state and local taxes under 465. In applying 465, the court erroneously construed the term Indian, broadly reading 465 as exempting all lands taken into federal trust for any federal recognized Indian tribe. This conclusion is in direct conflict with the U.S. Supreme Court s Carcieri decision confirming that 465, by its terms, does not apply to all federally recognized Indian tribes, but only to those tribes that were under federal jurisdiction when the statute was enacted in Therefore, the district court s conclusion that the Poarch Creek Property is tax-exempt is clearly incorrect. The Poarch Creek Property is subject to taxation for the following independently sufficient reasons: (1) The tax exemption does not apply to the property according to the plain language of 465, which only exempts land lawfully taken into trust pursuant to the IRA (i.e., for the purpose of providing land to members of Indian tribes that were under federal jurisdiction in (2) Section 465 does not preclude taxation because the trust is dry and passive under the Supreme Court s decision in Bailess v. Paukune, 344 U.S. 171, 73 S. Ct. 198 (1952). And (3) the Secretary s unlawful trust takings for the ineligible post-1934 Poarch Band are void ab initio as beyond statutory authority. 12

23 Case: Date Filed: 09/21/2015 Page: 23 of 40 Disregarding key arguments and overlooking the totality of Hildreth s defense, the district court improperly shifted the burden to Hildreth to present compelling evidence to contradict a finding that his defense must fail because he did not initially bring a timely claim against the Tribe under the Administrative Procedure Act ( APA ), 5 U.S.C The court further erred in concluding, implicitly, that the Poarch Band is likely to succeed on the merits, notwithstanding the APA challenges that Hildreth would bring. 3. Finally, the district court erred in finding that the balance of the harms weighs in favor of the Poarch Band. Whatever theoretical injury a tax assessment might do to the Tribe, it cannot outweigh the substantial harm done to Escambia County by the preliminary injunction. ARGUMENT I. An Evidentiary Hearing Was Required to Support the District Court s Findings and Conclusions The district court erred in granting the preliminary injunction without holding the evidentiary hearing requested by Hildreth. (See Doc. 15). When the propriety of an injunction turns on factual findings, a court cannot decide the merits of the preliminary injunction until an evidentiary hearing is held to resolve the contested issues. Moon, 577 Fed. App x at 936 (11th Cir. 2014). Because the IRA defines Indian to exclude tribes that were not under federal jurisdiction in 1934, an Indian tribe s jurisdictional status in 1934 is a 13

24 Case: Date Filed: 09/21/2015 Page: 24 of 40 threshold inquiry that must be resolved to determine whether the IRA even applies to a particular Indian tribe. New York v. Salazar, 2012 WL , at *14 (N.D.N.Y. 2012). In the absence of evidence to the contrary, it is presumed that a tribe federally recognized after 1934, like the Poarch Band, was not under federal jurisdiction in 1934 and, therefore, is not one of the Indian tribes entitled to the protection of the IRA. See Carcieri, 555 U.S. at , 129 S. Ct. at 1068, and 555 U.S. at , 129 S. Ct. at (Breyer, J., concurring). Because the district court did not hold an evidentiary hearing on the Poarch Band s 1934 status, it could not have reasonably concluded that the Poarch Band is an Indian tribe entitled to relief under the IRA. Therefore, the district court s findings were in error, and the preliminary injunction should be reversed. II. The Tribe Failed to Satisfy its Burden to Establish a Substantial Likelihood of Success on the Merits A. The District Court Lacks Subject-Matter Jurisdiction The Poarch Band cannot succeed on the merits because the district court lacks subject-matter jurisdiction pursuant to the Tax Injunction Act ( TIA ), 28 U.S.C. 1341, which provides: The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State. Notwithstanding the TIA, the district court entertained jurisdiction under 28 U.S.C 1362, which gives federal district courts jurisdiction of all civil actions, brought 14

25 Case: Date Filed: 09/21/2015 Page: 25 of 40 by any Indian tribe or band with a governing body duly recognized by the Secretary of the Interior, wherein the matter in controversy arises under the Constitution, laws, or treaties of the United States. The court s finding of jurisdiction flies in the face of the binding precedent in this Circuit laid down in United States v. Mississippi Tax Comm n, 505 F.2d 633 (5th Cir. 1974). 3 In that case, the Fifth Circuit held that the TIA bars federal courts from entertaining subject-matter jurisdiction over a challenge to state and local taxation brought on behalf of a post-1934 Indian tribe. Id. at 638, The court explicitly rejected the invocation of 1362 jurisdiction, id. at 638, because the tribe involved was not an Indian tribe as defined by the IRA; that is, it was not a recognized Indian tribe now under Federal jurisdiction as of the IRA s enactment in June Id. at 643 (quoting 25 U.S.C. 479). Accordingly, the court reversed the district court s preliminary injunction against the assessment and collection of taxes from the Mississippi Band of Choctaw Indians and its instrumentalities for lack of subject-matter jurisdiction. Mississippi Tax Comm n compels the same result in the present case. As in that case, the district court s invocation of 1362 to defeat the TIA s clear jurisdictional barrier was incorrect 3 The Fifth Circuit s 1974 opinion in Mississippi Tax Comm n is binding precedent in the Eleventh Circuit. See Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981). 15

26 Case: Date Filed: 09/21/2015 Page: 26 of 40 because the post-1934 Poarch Band is not an Indian tribe within the meaning of the IRA and, therefore, not for purposes of jurisdiction under 1362, either. The contrary result in Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S. Ct (1976), did not upset the rule in Mississippi Tax Comm n. The Moe tribe s 1934 status was never an issue in that case. The tribe s reservation was unquestionably set aside in 1855 pursuant to a treaty with the United States. Id. at 466, 96 S. Ct. at Therefore, Moe is distinguishable from Mississippi Tax Comm n and does not support subject-matter jurisdiction in this case. The district court s reliance on United States v. John, 437 U.S. 634, 98 S. Ct (1978) is also misplaced. To be sure, the Court in John criticized the Fifth Circuit s historical analysis of the Mississippi Choctaw Band. But John only reached a different conclusion specific to the Mississippi Choctaw historical status; it did nothing to disturb the holding laid down in Mississippi Tax Comm n that the TIA bars federal courts from exercising jurisdiction over tax challenges by post Indian tribes. Moreover, John did not involve a tax dispute and had nothing to do with subject-matter jurisdiction under either 28 U.S.C or the TIA; rather, the Court in John found that the Mississippi Choctaw reservation was Indian country for purposes of federal criminal jurisdiction under the Major Crimes Act. Therefore, John is inapposite, and subject-matter jurisdiction in this 16

27 Case: Date Filed: 09/21/2015 Page: 27 of 40 case is precluded by the TIA under Mississippi Tax Comm n absent a finding that the Poarch Band was under federal jurisdiction in B. The Tribe Lacks Standing and Failed to State a Claim The Poarch Band cannot succeed on the merits because it lacks standing to assert the 465 tax exemption. The party invoking federal jurisdiction bears the burden of proving standing. Hollywood Mobile Estates Ltd. v. Seminole Tribe, 641 F.3d 1259, 1265 (11th Cir. 2011) (quoting Bischoff v. Osceola Cnty., 222 F.3d 874, 878 (11th Cir.2000)). The Poarch Band here seeks protection under the IRA. However, it is not an Indian tribe within the meaning of the statute. Because the Poarch Band was not federally recognized until 1984 and failed to advance any argument that it was under federal jurisdiction in 1934, the Tribe is presumptively excluded from the class of Indian tribes entitled to invoke the IRA s protections. See Carcieri, 555 U.S. at , 129 S. Ct. at Like the Narragansett Tribe in Carcieri, the Poarch Band failed to allege that it is an Indian tribe within the meaning of 479. The Poarch Band also failed to make any showing that its interests fall with the zone of interests protected by the law invoked. See generally Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1388 (2014) (holding that a statutory cause of action is presumed to extend only to plaintiffs whose interests fall within the zone of interests protected by the law invoked); see also Trujillo v. Florida, 481 F. App'x 598, 599 (11th Cir. 2012) 17

28 Case: Date Filed: 09/21/2015 Page: 28 of 40 (holding that prudential standing requires the plaintiff to allege sufficient facts showing that the claims fall within the zone of interests protected by the statute in question). Although Hildreth raised lack of standing as an affirmative defense in his Answer, (see Doc. 24 at 10-11), the district court did not address it. This was clear legal error. In the absence of standing, a court is not free to opine in an advisory capacity about the merits of a plaintiff's claims, and the court is powerless to continue. Hollywood Mobile, 641 F.3d at 1265 (quoting CAMP Legal Def. Fund, Inc. v. City of Atlanta, 451 F.3d 1257, 1269 (11th Cir.2006)). Therefore the preliminary injunction should be reversed and the Poarch Band s claim dismissed for lack of standing. Likewise, Hildreth raised failure to state a claim as an affirmative defense. (See Doc. 24 at 8). By failing to allege that it was under federal jurisdiction in 1934, the Poarch Band failed to allege a critical element of its claim that it is an Indian tribe, as defined in 479, entitled to relief under 465. Therefore, the Poarch Band s claim should also be dismissed for failure to state a claim. C. The 465 Tax Exemption Does Not Apply to the Poarch Creek Property 1. The Poarch Creek Property is Not Exempt according to the Plain Language of

29 Case: Date Filed: 09/21/2015 Page: 29 of 40 The district court committed clear legal error in enjoining Hildreth from assessing taxes based on a statutory tax exemption that, by its very terms, does not apply to the Poarch Creek Property. Where the plain language of a statute clearly indicates the meaning, the court must follow the statute s mandate. U.S. v. Carnival Corp., No CG-C (S.D. Ala. Sep. 19, 2014) (citing Carcieri, 555 U.S. at 380 ( When a statute s text is plain and unambiguous, the statute must be applied according to its terms. )). In interpreting a statute, [this Court] look[s] first to the statute's plain meaning and, if the statutory language is facially unambiguous, [the] inquiry comes to an end. Lowery v. Alabama Power Co., 483 F.3d 1184, 1199 (11th Cir. 2007) (citation omitted). The Supreme Court has already determined that 25 U.S.C. 465 and 479 impose plain and unambiguous restrictions on the Secretary s exercise of trust authority. Carcieri, 555 U.S. at 395, 129 S. Ct. at Accordingly, to the extent not already defined by statute, [this Court] assign[s] all terms their ordinary meaning. Colbert v. United States, 785 F.3d 1384, 1390 (11th Cir. 2015). The statute under which the Poarch Band claims relief is clear that the only lands exempt from state and local taxation are those which have been lawfully acquired in trust pursuant to the Secretary s limited authority under 465. Lands unlawfully acquired, i.e., acquired without authority, are not exempt. 19

30 Case: Date Filed: 09/21/2015 Page: 30 of 40 Section 465 provides, in relevant part, that any lands or rights acquired pursuant to this Act... shall be exempt from State and local taxation. 25 U.S.C. 465 (emphasis added). The ordinary meaning of pursuant to is in compliance with; in accordance with; under [or]... as authorized by... [or] in carrying out. Black's Law Dictionary 1356 (9th ed. 2009). The Secretary is authorized by 465 to accept land into trust only for the purpose of providing land for Indians as defined in 479. Carcieri, 555 U.S. at , 129 S. Ct. at 1064 (emphasis added). Therefore, the Secretary only acts pursuant to the IRA (i.e., in compliance with, in accordance with, as authorized by, or in carrying out the IRA) when he accepts land into trust for the purpose of providing land to an Indian tribe that was under federal jurisdiction when the IRA was enacted in See Carcieri, 555 U.S. at , 129 S. Ct. at Land taken for anyone else is taken in violation of, not pursuant to, the IRA, and is therefore not tax-exempt. The district court s opinion misreads the statute, resulting in the erroneous finding that the tax exemption clause in 465 applies to the Poarch Creek Property simply because it is land held in trust by the United States government for the benefit of a federally recognized tribe as evidenced by the deeds to the property. (Doc. 36 at 1, 12). But that is not what the statute says, nor what Congress intended. See Carcieri, 555 U.S. at 391, 129 S. Ct. at [L]and held in trust by the United States is not the land to which the tax exemption clause refers; it 20

31 Case: Date Filed: 09/21/2015 Page: 31 of 40 refers to land acquired pursuant to this Act, i.e. land lawfully acquired for the purpose of providing land for Indians (members of a recognized Indian tribe that was under federal jurisdiction in 1934). The taking of trust title in the name of the United States and the exemption from state and local taxation are two independent legal consequences of a trust acquisition pursuant to 465. Nothing in 465 indicates that the Secretary s taking of title to land in the name of the United States for an ineligible Indian tribe renders the land tax exempt. The test, quite plainly, is whether the land was acquired for Indians as the term is defined in the IRA. Consequently, if the Poarch Band is not an Indian tribe within the meaning of the IRA a tribe that was under federal jurisdiction in 1934 the Secretary could not have taken the Poarch Creek Property in trust pursuant to the IRA, and the Poarch Creek Property is not tax-exempt. The burden to allege and argue its 1934 status was on the Tribe. See Carcieri, 555 U.S. at , 129 S. Ct. at 1068, and 555 U.S. at , 129 S.Ct. at (Breyer, J., concurring). Because the Poarch Band failed to allege or present any evidence establishing that it was under federal jurisdiction in 1934, the district court abused its discretion in finding that the Tribe met its burden to establish a likelihood of success on the merits. 2. The Poarch Creek Property is Taxable under Bailess v. Paukune Even though the Poarch Creek Property is titled in the name of the United States in trust for the Poarch Band, it is nonetheless subject to assessment under 21

32 Case: Date Filed: 09/21/2015 Page: 32 of 40 traditional trust law principles, as demonstrated by the case of Bailess v. Paukune, 344 U.S. 171 (1952). In that case, the Supreme Court held that county taxing authorities are not barred from assessing land held in trust by the United States for Indians where the purported beneficiary does not qualify as an Indian within the meaning of the applicable statute. 344 U.S. at 173. In Bailess, the Court reversed a state court injunction barring local taxing authorities from levying taxes on (and advertising for tax sale) an interest in land that had been held in trust by the United States for [Apache Indian] Paukune and his heirs for over 45 years. See id. at The federal trust had been established for Paukune in 1901 under the General Allotment Act, ch. 119, 24 Stat. 388, 389 (1887) (repealed 1934). But Paukune died in The land went untaxed for the next 28 years until 1947, when the county tax assessor finally assessed Paukune s widow s one-third interest in the land. Even though the United States still held the land in trust at the time of the assessment, the Court ruled that the widow s interest was subject to taxation if she was not an Indian embraced within the policy of the General Allotment Act. See id at 173. The Court explained: If Juana is not an Indian, the United States has no interest of hers in the land to protect. True, the United States holds the legal title to the land. But [i]f she is not within the class whom Congress sought to protect, the trust is a dry and passive one; there remains only a ministerial act for the trustee to perform, namely the [termination of the trust]. 22

33 Case: Date Filed: 09/21/2015 Page: 33 of 40 Id. (emphasis added). Thus the Court reversed and remanded the case for determination as to whether Juana was an Indian. The Poarch Band s claim here is analogous to Juana s claim in Bailess and, likewise, must fail. (This argument should not be misconstrued as a challenge to the Native American ancestry of Poarch Band tribal members. The point is that, legally, what matters here is whether the Poarch Band satisfies the statutory definition of Indian in the IRA.). Federal trusts established under 465 are authorized by Congress only for the purpose of providing land for Indians, as defined in 479. Carcieri, 555 U.S. at 387 (quoting 25 U.S.C. 465) (emphasis added). Applying Bailess, then, if the Poarch Band is not an Indian tribe within the class whom Congress sought to protect through enactment of the IRA, the United States has no interest to protect and, notwithstanding its legal title, the trust is a dry and passive one which does not preempt state and local ad valorem taxation. See Bailess, 344 U.S. at 173. Therefore, in order to succeed on the merits of its claim, the Poarch Band has the burden show that it is an Indian tribe within the class whom Congress sought to protect. This it hasn t done and cannot do. The Poarch Band, first recognized in 1984, presumptively doesn t fall within the class Congress sought to protect in the IRA. Thus, under Bailess and Carcieri, even though the United States may still 23

34 Case: Date Filed: 09/21/2015 Page: 34 of 40 hold title to the Poarch Creek Property, it does not do so for the congressionally authorized purpose of providing land for Indians within the meaning of the IRA. See Carcieri 555 U.S. at 387. The trust is therefore dry and passive, and the Escambia County Tax Assessor is not precluded from assessing the property for taxation. See Bailess, 344 U.S. at The Poarch Creek Property is Taxable Because the Federal Trust is Void Ab Initio The Poarch Band is unlikely to succeed on the merits because the Secretary s decisions to take the Poarch Creek Property into federal trust were unlawful, unconstitutional, ultra vires, and are thus void ab initio. As this Court has acknowledged, agency action inconsistent with or contrary to the agency s statutory authority is void ab initio: The power of an administrative [agency] to administer a federal statute and to prescribe rules and regulations to that end is not the power to make law... but the power to adopt regulations to carry into effect the will of Congress as expressed by the statute. A regulation which does not do this, but operates to create a rule out of harmony with the statute, is a mere nullity. Legal Envtl. Assistance Found., Inc. v. E.P.A., 118 F.3d 1467, 1473 (11th Cir. 1997) (quoting Dixon v. United States, 381 U.S. 68, 74, 85 S. Ct. 1301, 1305, (1965) (quoting in turn Manhattan Gen. Equip. Co. v. Commissioner, 297 U.S. 129, 134, 56 S. Ct. 397, 400 (1936))); see also City of Santa Clara v. Andrus, 572 F.2d 660, 677 (9th Cir. 1978) ( [A]dministrative actions taken in violation of 24

35 Case: Date Filed: 09/21/2015 Page: 35 of 40 statutory authorization or requirement are of no effect. (citing Utah Power & Light Co. v. United States, 243 U.S. 389, 410, 37 S. Ct. 387, 392 (1917); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S. Ct. 1, (1947); Federal Maritime Comm n v. Anglo-Canadian Shipping Co., 335 F.2d 255, 258 (9 th Cir. 1964))); Employers Ins. of Wassau v. Browner, 52 F.3d 656, 665 (7th Cir. 1995) (agency action plainly in excess of the agency s powers may be disregard[ed]... as void, a nullity ). Applying this rule to the present case, the Secretary s purported trust takings for the Poarch Band were of no effect, and, for purposes of the tax exemption at least, the trust is to be treated as if it doesn t exist. Section 465 requires that the Secretary take land into trust only for the purpose of providing land for Indians, and the definition of Indian in 479 is limited to members of tribes that were under federal jurisdiction in Carcieri, 555 U.S. at 394, 129 S. Ct. at As a result, 479 limits the Secretary s authority to taking land into trust for the purpose of providing land to members of a tribe that was under federal jurisdiction when the IRA was enacted in June Id. at 382, 129 S. Ct. at Like the Narragansett Tribe in Carcieri, the Poarch Band wasn t federally recognized until the 1980s and has never been found by the Secretary to have been under federal jurisdiction in 1934 within the meaning of 479. Therefore, the presumption is that the Poarch Band is not one of the tribes for whom Congress 25

36 Case: Date Filed: 09/21/2015 Page: 36 of 40 authorized the Secretary to take land into trust through 465. See Carcieri, 555 U.S. at , 129 S. Ct. at 1068, and 555 U.S. at , 129 S. Ct. at (Breyer, J., concurring) (holding that the Narragansett Tribe was a post-1934 tribe in view of its failure to raise arguments contesting that presumption). The Tribe failed to allege or present any evidence before the district court to overcome this presumption. Consequently, the Secretary acted beyond his statutory authority under 465, the purported trust is therefore void ab initio, and the district court erred in finding that the Poarch Band had established a likelihood of success. The district court incorrectly concluded that Hildreth cannot defend this action by challenging the validity of the federal trust takings for the Poarch Band because he has not brought a timely APA claim. But this Court recently acknowledged precedent in this Circuit for allowing an untimely challenge to final agency action on the ground that it was outside the agency s statutory authority. See PCI Gaming, 2015 WL , at *9 (citing Legal Envtl. Assistance Found., 118 F.3d at (citing in turn NLRB Union v. Fed. Labor Relations Auth., 834 F.2d 191, 195 (D.C. Cir. 1987))). For example, even after the statutory limitations period has expired, a party may challenge agency action on the ground that the issuing agency acted in excess of its statutory authority... by way of defense in an enforcement proceeding. NLRB Union, 834 F. 2d at 195. That is analgous to what Hildreth is doing here. 26

37 Case: Date Filed: 09/21/2015 Page: 37 of 40 Unlike Alabama s claim in PCI Gaming, Hildreth s challenge here is not an impermissible untimely collateral attack on the Secretary s trust-takings for the Poarch Band. First, PCI Gaming is distinguishable because Hildreth did not initiate this lawsuit; the Poarch Band did, putting this case in a very different procedural posture. See PCI Gaming, 2015 WL , at *9 ( We are in no position, given the procedural posture of this case, to disturb the Secretary s long-ago decisions to take the lands in question into trust. (Emphasis added)). Second, unlike Alabama, Hildreth has asserted a counterclaim directly challenging the trust-takings under the APA and joining the Interior Secretary as a counterclaim defendant. 4 The counterclaim is not time-barred because Hildreth falls squarely within the exception recognized in PCI Gaming that gives a party affected by agency action an opportunity to question [its] validity when the party could not have brought a timely challenge. NLRB Union, 834 F.2d at 196 (internal quotation marks omitted). PCI Gaming, 2015 WL , at *9. Hildreth could not have brought a challenge within six years of the trust takings for the assessments he intends to pursue here for the years 2009 to present. Under Alabama law, ad valorem taxes, like federal income taxes, are levied on an 4 In his response in opposition to the preliminary injunction, Hildreth informed the district court of his intent to join the Interior Secretary. (See Doc. 20 at 13-14). Since the filing of this appeal, Hildreth has filed his Amended Answer, Affirmative Defenses and Counterclaims, Doc. 41 at (filed Aug. 4, 2015), asserting APA claims against the Interior Secretary and other Federal defendants. 27