BILL ANALYSIS AND FISCAL IMPACT REPORT		Page 1 of  2

DATE: February 24, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY 
BILL NUMBER:  HB-873

SPONSOR:  Representative Watchman

BILL SHORT TITLE:  Indian Country Definition

DESCRIPTION: This bill is a reprise of 1999’s HB-826, 1997’s HB-776, 1996’s HB-704 and 1995's HB-73, and, indirectly, several bills from the 1998 session. It provides a definition of Indian Country for the purposes of New Mexico statute (Chapter 12, Article 2 is entitled, “Statutory Construction”) as follows:
(1) all land within the limits of any reservation of an Indian nation, tribe or pueblo under the jurisdiction of the United States government, notwithstanding the issuance of any patent and including rights of way running through the reservation;
(2) all dependent Indian communities within the borders of New Mexico whether within the original or subsequently acquired territory;
(3) all Indian allotments, the Indian titles to which have not been extinguished, including rights of way running through the allotments; and
(4) lands held by the United States in trust for any Indian tribe, nation, or pueblo or by any Indian tribe, nation, pueblo, or tribal member subject to a restriction by the United States against alienation.

The first three components of the definition track the Federal definition of “Indian Country” in 18 U.S.C. 1151. Paragraph (4) is from case law.

EFFECTIVE DATE:  Emergency clause, effective on signing.

FISCAL IMPACT:  Indeterminate. Depends on how much land individual Indians and Indian tribes acquire in fee, and where that land is located. Should a tribe acquire land in downtown Albuquerque, the impact could be significant.

OTHER IMPACTS AND ISSUES:
Precisely what land is included within Indian Country determines many important jurisdictional issues including taxation, application of various civil law (child custody, torts, divorce, police protection) and criminal law. This jurisdictional determination, however, is a Federal law issue. For the state to write into its law a definition of Indian Country is either unnecessary or confusing. To the extent that Federal law is broader, it will control. To the extent that Federal law is construed more narrowly, confusion will result. The proposed state statutory definition would be somewhat broader than the federal definition. It includes lands held in fee by a tribe. Under federal statute (25 U.S.C. 177), all land owned by tribes are subject to restriction by the United States against alienation. Thus the definition would include any land a tribe would acquire. 

Under Buzzard v. Oklahoma Tax Commission, 992 F.2d 1073 (10th Cir. 1993), however, the federal definition of Indian Country for tax purposes does not include fee land owned by the tribe subject to restriction against alienation. Thus the proposed definition for state law would differ from the federal definition. Assuming that the state statutory definition would bind the state, it would therefore increase Indian Country and have a fiscal impact -- and potentially a large fiscal impact -- on the state.

The tax consequences of this “Indian Country” definition are significant. The largest question mark right now is the Indian School property in Albuquerque, on which the Indian Pueblo Cultural Center is conducting extensive commercial activity. Is that Indian Country? It is certainly questionable whether any of the tribes can impose tribal taxes on sales at IPCC, since this property is not the sovereign territory of any of them, and has never been. The land was privately owned, bought by the federal government for use as an Indian school, and run as such for many years. It was never historically tribal land. But because the land is held by the U.S. in trust for all Indians, some might argue that it is tribal land. Others would argue that it must be held in trust for a particular tribe or pueblo. The definition proposed in this bill would not resolve the issue.

This bill may have unanticipated tax consequences for other tribal economic development activities in other parts of the state. There is a distinction between land held in trust for tribes for some economic development purpose, that the U.S. Supreme Court held was to be treated as off-reservation land for the purpose of taxing activities in Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973), and land held in trust by the US for tribes as reservation land. More and more tribes are likely to be in a position to purchase land in downtown anywhere and deed it to the US in trust, without the state’s having any say so in the matter. Between the tribes and the federal government, substantial amounts of state land can be taken out of state jurisdiction. Maintaining the distinction between land acquired by the federal government as a home for tribes vs. land acquired for an economic development project is an important distinction for the state to maintain.