The Bush administration handed the Oneida Nation of New York another setback on Friday, deeming the tribe's lands taxable because they are not held in trust.

Documents from the top acting officials of the Bureau of Indian Affairs indicated the tribe is on the hook for millions of dollars in unpaid taxes on 18,000 acres of ancestral land. The tribe has refused to pay because two federal courts determined that the land is considered Indian Country, free from state and local jurisdiction.

The landscape changed on March 29, when the U.S. Supreme Court reversed the favorable rulings. An 8-1 decision stated that the tribe cannot "unilaterally" assert sovereignty over the repurchased properties without going through the BIA's land-into-trust process.

The tribe has since submitted land-into-trust applications for all 18,000 acres but that hasn't stopped local officials from seeking millions in unpaid taxes. So far, the tribe has defended itself from the proceedings by stating that its properties are held in "restricted" status under federal law.

"We've had decisions by the bureau saying, 'Yes, it is Indian Country,'" Keller George, an Oneida Nation official, told Indianz.Com in an interview. Restricted lands cannot be taxed.

But Jim Cason, the associate Interior deputy secretary who is also the acting assistant secretary at the BIA, informed the tribe otherwise on Friday. He said the Supreme Court's decision "unmistakably held that the lands at issue ... are subject to real property taxes," Cason wrote in the letter to Nation Representative Ray Halbritter.

"In the event these taxes are not paid, we believe such lands are subject to foreclosure," Cason added.

The letter further stated that the BIA will not acquire the properties unless any tax disputes are resolved. "Accordingly, we urge the Nation to resolve any outstanding tax liens that may now encumber any of the lands for which you are seeking the United States to accept in trust," Cason said.

An internal memo from Mike Olsen, the acting principal deputy assistant secretary, also struck at the tribe's case. Olsen ordered a BIA subordinate to remove any mention of "restricted status" from the deed documents the tribe had submitted as part of its land-into-trust application.

The BIA's actions are the Bush administration's first concrete response to the Supreme Court decision. Previously, a BIA official had called the ruling "quite depressing" but noted the tribe could to through the land-into-trust process.

The tribe previously anticipated completing the steps to have the land placed in trust would take six to nine months. But it is likely that it will take much longer, given the large amount of acreage at issue and the ongoing tax proceedings.

One town alone has asked the tribe for $13 million. Other jurisdictions are seeking equally high amounts in unpaid tax bills dating back several years.

The Bush administration had supported the Oneida Nation in briefs to the high court. The tribal land, regardless of its trust staus, "is entitled to the same immunity from state and local taxation that tribal land in a reservation presumptively enjoys," government attorneys wrote.

At the time, the Department of Justice urged the court to show restraint and limit its decision to taxation, the only issue presented in the case. But officials in New York have taken a broad interpretation and say they have power over all ancestral properties purchased by tribes who lost the land in illegal transactions.

The decision also derailed settlements New York Gov. George Pataki (R) made with five tribes whose lands were stolen by the state. After creating deals that would allow the tribes to reassert sovereignty in the state, he announced just one land claim settlement with the St. Regis Mohawk Tribe of New York last week.

Bureau of Indian Affairs Documents:
Jim Cason / Mike Olsen (June 10, 2005)

Relevant Links:
Oneida Nation - http://www.oneida-nation.net

Oneida Nation Decision:
Syllabus | Opinion [Ginsburg] | Concurrence [Souter] | Dissent [Stevens]