II. The plaintiff argues that because the Chippewas were not "landless," strictly speaking, the land could not properly be taken in trust for them. Judge Gesell rejected this very argument in City of Tacoma v. Andrus, 457 F. Supp. 342 (D.D.C.1978), and this court sees no sound reason to depart from this precedent. Recognizing that City of Tacoma is virtually impossible to distinguish, the plaintiff assaults it frontally, but the passages from the legislative history and the administrative decisions quoted by the plaintiff fail to support its position.
The plaintiff makes two other related arguments, both of which are similarly unconvincing. First, it argues that the decision to acquire the land in trust erroneously turned not on a need-for-land standard but on an "unusual circumstance" standard, and under Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971), this flawed procedure fatally undermines the decision. The court is persuaded that the standard as articulated reflects a broad and thoroughly acceptable mode of analysis, particularly in view of the deference due to expert agencies. Id. at 824. Second, the plaintiff argues that the IRA prohibits the Secretary from holding lands in trust for the persons from whom the land was acquired. Here the Chippewas bought the tract and then gave it to the Secretary. The plaintiff contends that the IRA "clearly contemplates something more than the mere transferral of interests in already-owned land from fee to trust status for the same individual or tribe." Plaintiff's Brief 36. The IRA contains no express prohibition of such a step, however, and the plaintiff's attempt to infer such a prohibition from the language of section 465 is unavailing. The procedure followed here is entirely consistent with both the letter and spirit of the statute.
III. In response to the plaintiff's due process contention, the defendants make five arguments: (1) municipalities are not persons protected by the due process clause of the fifth amendment; (2) taxation and regulatory powers are not property interests protected by due process; (3) the plaintiff received actual notice and a hearing; (4) the notice and hearing requirements for which the plaintiff argues would entail excessive fiscal and administrative burdens for the defendants; and (5) because of the binding consent decree, which precludes most possible regulatory disputes between the plaintiff and the Tribe's housing project, and because of the minimal tax dollars at stake, the plaintiff cannot be harmed by the acquisition of the land in trust; therefore no notice and hearing were required.
The first of these arguments, that municipalities are not persons within the meaning of the fifth amendment, runs contrary to the weight of logic and clear precedent. City of Santa Clara v. Andrus, 572 F.2d 660, 675 (9th Cir. 1978); Township of River Vale v. Town of Orangetown, 403 F.2d 684, 686 (2d Cir. 1968) ("We hold that a municipal corporation like any other corporation is a "person' within the meaning of the fourteenth amendment and is entitled to its protection.").
The second argument, that municipal taxing and regulatory powers are not property interests protected by the fifth amendment, is similarly unavailing. The main authorities cited by the defendants, Bishop v. Wood, 423 U.S. 890, 96 S. Ct. 2074, 46 L. Ed. 2d 121 (1976), and Paul v. Davis, 424 U.S. 693, 96 S. Ct. 1155, 47 L. Ed. 2d 405 (1976), deal with unrelated aspects of the due process clause and do not support their position. Contrary to the defendants' assertions, these taxing and regulatory powers more than "resemble" traditional property rights. Indeed, they represent significant values to which the plaintiff has a "legitimate claim of entitlement," Board of Regents v. Roth, 408 U.S. 564, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d 548 (1972), and which may not be denied without due process. The defendants assert that such powers are not "compensable" and that they have no "exchange value," so they lack sufficient traditional attributes of property to support application of the due process guarantees. The error of this contention is revealed by, inter alia, the issuance of general revenue bonds, which involves municipal borrowing backed by the general taxing power. Such bonds reflect the economic significance of these powers, and this economic significance renders the defendants' argument meritless.
Because the plaintiff is a person within the meaning of the fifth amendment, and because the interests affected by the Secretary's action are property interests protected by the due process clause, the plaintiff was necessarily entitled to some due process of law. The remaining issue is whether the process that the plaintiff received was adequate to satisfy the fifth amendment. It is to this issue that the defendants' last three arguments pertain, and it is on this issue that the defendants prevail.
According to the plaintiff, it is "undisputed that the Federal Defendants accepted the 76-acre tract of land in trust without giving formal notice to the Plaintiff City and other interested parties, and without providing the City ... an opportunity to comment on the acquisition of that tract in trust...." Plaintiff's Brief at 39. It argues that due process requires, at a minimum, (a) "appropriate notice," by which it means formal notice of the location and size of the property involved and the parties seeking to acquire the property, Plaintiff's Brief 43, 43 n. 48, and (b) an opportunity to submit written comments. The plaintiff contends that it received neither of these.
As the defendants contend in their third argument, the plaintiff received a great deal of actual notice in the form of newspaper articles, letters from interested persons, and even more direct communications with city officials. This is clear from the exhibits submitted by the defendants. The plaintiff itself states that what it failed to receive was "formal notice," and in response to the defendants' contention that the actual notice given was sufficient to satisfy the demands of due process, the plaintiff responds not with a claim of lack of actual notice but instead with a challenge to the adequacy of its opportunity to comment. Thus, the questions before the court are whether the plaintiff was entitled to formal notice rather than informal notice and whether its opportunity to comment, if any, was consistent with the demands of due process.
The Constitution itself defines what process is due when a property interest is infringed,
but due process is inherently flexible. See Cafeteria & Rest. Wkrs. U., Local 473 v. McElroy, 367 U.S. 886, 81 S. Ct. 1743, 1748, 6 L. Ed. 2d 1230 (1961) ("The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation."); Joint Anti-Fascist Refugee Comm. v. McGrath, 341 U.S. 123, 71 S. Ct. 624, 643, 95 L. Ed. 817 (1951) ("But "due process,' unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances."). In the circumstances here it is clear that the fundamental fairness required by due process was satisfied by the actual notice that the plaintiff received. The extent of this actual notice was considerable, and there is no indication whatsoever that the plaintiff was prejudiced by the absence of formal notice.
Moreover, and it is here that the defendants' fourth argument is germane, the court is persuaded that to require formal notice of the sort requested by the plaintiff, in addition to the informal notice actually received, would be to create an administrative obstacle that is unjustifiable at least in the case at hand. Such a requirement would be gratuitous. Where due process is at issue, the Supreme Court has mandated consideration of "the fiscal and administrative burden that the additional or substitute procedural requirement would entail," Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 903, 47 L. Ed. 2d 18 (1976). Here such consideration weighs clearly in favor of the defendants.
The defendants' fifth argument, that "the consent decree governing the housing project eliminates all significant effects on plaintiff for the taking in trust," Defendants' Brief 35, may also be treated in this context. This court is not persuaded that the consent decree eliminates all significant effects of the Secretary's action and thereby precludes application of the due process clause. Manifestly, that agreement does not remove all disputes between the parties, who disagree on its ramifications in terms of taxes and the application of various housing regulations. To be sure, such disputes might ultimately be resolved in favor of the defendants, thereby eliminating the plaintiff's property interests, as the defendants argue. It is hardly clear at present that this will occur, however, and this court is not the proper forum in which to determine the effects of the consent decree. On the other hand, that decree does remove some of the disputes between the parties, and to that extent it lessens the plaintiff's stakes in the present action. Therefore, in view of the weighing of interests mandated by Mathews v. Eldridge in the context of due process disputes, the consent decree does add some-but not determinative-support for the defendants' position that no more process was due.
As for the plaintiff's contention that it was denied an opportunity to be heard, the court is again persuaded that the plaintiff received all that was constitutionally required. It appears from the defendants' second exhibit, an affidavit by Joseph Lumsden, the Chairman of the Board of Directors of the Sault Ste. Marie Tribe of Chippewa Indians, that on December 1, 1976, there was a public hearing called by the Sault Ste. Marie City Commission on the subject of trust status for the very land now in dispute. Attending this hearing were all members of the City Commission; other city officials; a representative of the Bureau of Indian Affairs, which is a branch of the Department of Interior; representatives of the Tribe; and others. Approximately fifteen individuals and group representatives made presentations in support of or in opposition to the proposed action. The plaintiff's demand for more-in particular, for an opportunity to submit written comments-lacks support in precedent and manifest fairness. As above, the defendants' fourth and fifth arguments bolster this result.
IV. The court having determined that the land was properly taken in trust, there remain the two issues of whether the land is subject to the plaintiff's criminal jurisdiction and whether it is subject to the plaintiff's land use regulations.
(a) Criminal Jurisdiction. Chapter 53 of Title 18, United States Code, provides for, inter alia, federal criminal jurisdiction over lands that are "Indian country" within the meaning of 18 U.S.C. § 1151.
Here the plaintiff contends that even if the land was properly taken in trust, that land does not fall within the scope of this statute. Section 1151(b), the subsection relevant to the case at hand, defines "Indian country" as "all dependent Indian communities within the borders of the United States...." (Emphasis supplied.)
All parties agree that the term "dependent Indian community" derives from the cases of United States v. McGowan, 302 U.S. 535, 58 S. Ct. 286, 82 L. Ed. 410 (1937), and United States v. Sandoval, 231 U.S. 28, 34 S. Ct. 1, 58 L. Ed. 107 (1913). Hence, in order to determine the proper scope of section 1151(b) it is proper to turn to these cases, as explicated by two subsequent rulings, United States v. Martine, 442 F.2d 1022 (10th Cir. 1971), and United States v. Mound, 6 ILR F-159 (D.S.D.1979).
In United States v. Martine the court stated,
The Sandoval case indicates that the proper approach to (applying section 1151(b) is to consider) the nature of the area in question, the relationship of the inhabitants of the area to Indian Tribes and to the federal government, and the established practice of government agencies toward the area.
442 F.2d at 1023. The opinion in United States v. Mound sets forth a similar approach.
To say the least, analysis of these factors calls for an extensive factual inquiry, and the court is persuaded that the necessity for such an inquiry precludes summary judgment for either side at this time and under these circumstances. The Secretary emphasizes that at present the disputed parcel is uninhabited, and the planned housing project has not been built. Therefore the court cannot possibly evaluate such matters as the relationship of the inhabitants of the area with the Tribe or the type of organization that will eventually be established on the land. Clearly, this case is not ripe, and any ruling by the court would be purely advisory.
(b) Land Use Regulations. Conceding that section 465, if applicable, precludes state or local taxation of the land, Plaintiff's Brief 53, the plaintiff argues that "its powers regarding land use regulation over the 76-acre parcel have in no way been diminished by the tax exemption contained in § 465." Id. As with the issue of criminal jurisdiction, the defendants argue that this issue is not justiciable, both because there has been no violation of or attempt to enforce any of the plaintiff's land use laws and because potential disputes along these lines were resolved by the consent degree in United States v. City of Sault Ste. Marie. It appears, however, that although the consent agreement resolves potential disputes with respect to some such laws, the plaintiff routinely enforces a variety of additional construction and maintenance codes that are not addressed at all in the agreement. Moreover, these laws are comprehensive in the time and geographic scope of their application, so it is implausible to say that because there has as yet been no enforcement action they are not currently in effect. Hence, there is a justiciable controversy regarding these laws.
It has long been the position of the Department of Interior that municipal land use laws may not be enforced on tribal trust lands except as permitted by the Secretary. In furtherance of this position the Secretary promulgated 25 C.F.R. § 1.4, which restricts state regulatory power over all land held in trust by the federal government.
The plaintiff concedes that if section 1.4 is valid, it would apply to the tract in issue. Plaintiff's Brief 54.
The plaintiff challenges the validity of section 1.4, contending, first, that its promulgation was not authorized by any statute and, second, that it is inconsistent with the Supreme Court's ruling in Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S. Ct. 1267, 36 L. Ed. 2d 114 (1975). Neither argument is persuasive.
In support of the former point the plaintiff cites two professional works
and two district court decisions, Norvell v. Sangre de Cristo Development Co., Inc., 372 F. Supp. 348 (D.N.M.1974), rev'd on other grounds, 519 F.2d 370 (10th Cir. 1975); Rincon Band of Mission Indians v. County of San Diego, 324 F. Supp. 371 (S.D.Cal.1971), rev'd on other grounds, 495 F.2d 1 (9th Cir. 1974), cert. denied, 419 U.S. 1008, 95 S. Ct. 328, 42 L. Ed. 2d 283 (1974). As the defendants point out, however, neither district court ruling survived on appeal,
and the arguments in those rulings and both professional works were expressly considered and rejected by the Ninth Circuit in Santa Rosa Band of Indians v. Kings County, 532 F.2d 655, 664-68 (9th Cir. 1975). In support of section 1.4 the Santa Rosa Band opinion commented, "We think 25 U.S.C. § 465, which authorizes the Secretary to purchase land for the "purpose of providing land for Indians' and to take the title to such lands in trust, when read against the history of Federal policy governing use and control of Indian trust property, is sufficient to sustain the regulation...." Id. at 665-66.
As it must in order to prevail, the plaintiff attacks Santa Rosa Band directly, arguing in particular that section 465's express exemption of tribal trust land from state and local taxation yields a negative implication that no additional exemption-for example, exemption from land use regulations-was intended by Congress. This court is more persuaded, however, by the Ninth Circuit's response to this very argument:
Section 465 explicitly exempted the lands acquired from state taxation. Rather than reading the omission of a provision exempting the lands from state regulation as evidencing a congressional intent to allow state regulation, we read the omission as indicating that Congress simply took it for granted that the states were without such power, and that an express provision was unnecessary; i.e., that the exemption was implicit in the grant of trust lands under existing legal principles.
532 F.2d at 666 n.17.
The plaintiff also argues that the Santa Rosa Band court failed to consider the impact of Mescalero Apache Tribe, which, according to the plaintiff, fatally undermines the defendants' position. In Mescalero Apache Tribe, however, what the Court upheld-over challenges based on the section 465 exemption from state and local taxation-was taxation of the income of a ski resort operated on land outside the boundaries of the Indian reservation. The Court emphasized that this taxed activity took place outside the reservation and that the tax was imposed not on the land itself but on income from the land. Moreover, it upheld a section 465-based claim of immunity from the state's use tax on permanent improvements on the land.
For these reasons the court is persuaded that the plaintiff's challenge to section 1.4 must fail, and its land use regulations may not be applied to the 76-acre tract except as permitted by the Secretary.
An appropriate Judgment accompanies this Memorandum Opinion.
On Motion To Reconsider
This matter comes before the court on plaintiff's motion for summary judgment. Plaintiff asks the court to reconsider its ruling on the issues of procedural due process. See Memorandum Opinion filed August 29, 1980 at 162-164. For the reasons stated below, the court's previous opinion is modified to state that plaintiff is not a person within the meaning of the Fifth Amendment and that plaintiff's tax and regulatory powers are not property interests protected by the Fifth Amendment.
This court's August 29, 1980 opinion reasons that the plaintiff was entitled to due process because it is a person within the meaning of the Fifth Amendment. Two cases are cited in support of that proposition. Principal reliance is placed on City of Santa Clara v. Andrus, 572 F.2d 660, 675 (9th Cir. 1978). In that case appellant argued that a city is not a "person" entitled to due process protection under the Fifth Amendment. The court said it was "by no means convinced that (appellant's) argument is correct," but it did not decide the issue, it only assumed it for purpose of the argument before it.
The second case this court relied upon is Township of River Vale v. Town of Orangetown, 403 F.2d 684, 686 (2d Cir. 1968). That case held a municipal corporation is a person within the meaning of the Fourteenth, not the Fifth Amendment. Moreover, that aspect of the case may be overruled by a later Second Circuit case, Aguayo v. Richardson, 473 F.2d 1090, 1100-1101 (1973).
In South Carolina v. Katzenbach, 383 U.S. 301, 323-4, 86 S. Ct. 803, 815-16, 15 L. Ed. 2d 769 (1966), the Court said:
Some of these contentions may be dismissed at the outset. The word "person" in the context of the Due Process Clause of the Fifth Amendment cannot by any reasonable mode of interpretation, be expanded to encompass the States of the Union, and to our knowledge this has never been done by any court. (emphasis added.)
It is well settled that a municipality is a creature of the state, created by the state legislature for the exercise of such powers as the state sees fit, e.g., City of Trenton v. State of New Jersey, 262 U.S. 182, 185-90, 43 S. Ct. 534, 536-37, 67 L. Ed. 937 (1923), and plaintiff concedes as much. See also Tally v. City of Detroit, 54 Mich.App. 328, 220 N.W.2d 778 (1974) (municipality is an arm of the state under Michigan law). It is difficult to imagine how a municipality can be a "person" under the Fifth Amendment if its progenitor, the state, cannot be. Plaintiff argues that a municipal corporation has, like a private corporation, a life independent from the state during its existence. It points out that the similarity between municipal corporations and private corporations was recently noted by the Supreme Court when it stated, "by 1871 municipalities-like private corporations-were treated as natural persons for virtually all purposes of constitutional and statutory analysis." Owen v. City of Independence, 445 U.S. 622, 100 S. Ct. 1398, 1409, 63 L. Ed. 2d 673 (1980). However, it is equally true that municipalities and states are treated the same for virtually all legal purposes. Although both private and municipal corporations are "persons" for most purposes, the distinction between the two is that a municipality operates as an agent or subdivision of the state, while a private corporation functions totally apart from the state. Thus a state cannot confer a constitutional status upon a municipality which the state does not itself enjoy, since the municipality performs the same function as the state.
Judge Friendly urged the same result in his opinion in Aguayo v. Richardson, 473 F.2d 1090, 1101 (1973). Although stating that a city might be a "person" under the Fifth Amendment for purposes of a claim of discriminatory treatment, he said "a city would clearly lack standing to raise due process claims (e.g. lack of fair hearing) relating to its citizens." There is no practical difference between saying a party is not entitled to the protection of due process and that the party has no standing to assert due process claims, and Judge Friendly's opinion affirms the district court holding that the City of New York lacked standing to assert constitutional claims against federal defendants. Accordingly, plaintiff in this case cannot assert due process claims on the basis that a city is a person within the meaning of the Fifth Amendment.
In addition, plaintiff's taxation and regulatory powers are not compensable property rights, but are only an expectation. United States v. 6.321 Acres of Land, 479 F.2d 404, 406. A mere expectation does not rise to the level of a "legitimate claim of entitlement," Board of Regents v. Roth, 408 U.S. 564, 571, 92 S. Ct. 2701, 2706, 33 L. Ed. 2d 548 (1972), which would entitle plaintiff to Fifth Amendment protection.