HEARTH Act Regulations, Federal Preemption of State & Local Taxes, and the Seminole Case

This week, the Department of the Interior published notice in the Federal Register that it has approved HEARTH Act Regulations for the Seminole Tribe of Florida. The Federal Register Notice is here.

In the notice, the Assistant Secretary explained that tribal leasing regulations adopted under the HEARTH Act will preempt state and local taxation in the same manner as under the BIA’s own leasing regulations:

The strong Federal and tribal interests against State and local taxation of improvements, leaseholds, and activities on land leased under the Department’s leasing regulations apply equally to improvements, leaseholds, and activities on land leased pursuant to tribal leasing regulations approved under the HEARTH Act. Congress’s overarching intent was to ‘‘allow tribes to exercise greater control over their own land, support self-determination, and eliminate bureaucratic delays that stand in the way of homeownership and economic development in tribal communities.’’ 158 Cong. Rec. H. 2682 (May 15, 2012). The HEARTH Act was intended to afford tribes ‘‘flexibility to adapt lease terms to suit [their] business and cultural needs’’ and to ‘‘enable [tribes] to approve leases quickly and efficiently.’’ Id. at 5–6.

The Department of the Interior published similar statements earlier this summer.

The Seminole Tribe of Florida is presently litigating whether the BIA’s leasing regulations preempt the State of Florida’s taxes on activities occurring on its trust lands.  That case is pending before the Eleventh Circuit Court of Appeals.  Materials are here.

The Seminole Tribe’s leasing regulations under the HEARTH Act don’t appear to impact that pending case.

DOI’s interpretation of the HEARTH Act is consistent with the recent shift in federal policy supporting preemption of state and local taxes in Indian country.  See, the Federal Government’s intervention supporting the Tulalip Tribes in their tax dispute with the State of Washington.

It will be interesting to see how DOI’s interpretation of the HEARTH Act will play out in the future, if when state and local governments try to levy taxes on lands subject to tribal leasing regulations under the HEARTH Act.  Stay tuned.