Court Opinion

ID: 9699414
Source: CourtListenerOpinion
Date Created: 2023-08-25 20:23:00.337152+00
Date Added: 2024-06-11T18:20:49.913343
License: Public Domain

DAVID T. PROSSER, J.
¶ 39. (dissenting). Wisconsin law requires the Wisconsin Department of Revenue to refund 70 percent of the state excise tax on cigarettes that an Indian tribe collects for the state on its reservation or trust lands, provided that "[t]he land on which *572the sale occurred was designated a reservation or trust land on or before January 1, 1983." Wis. Stat. § 139.323(3) (2007-08).1 If the land on which the sale occurred was not designated a reservation or trust land on or before January 1,1983, the state keeps the entire tax.
¶ 40. In this case, the Ho-Chunk Nation seeks a refund of 70 percent of the tax collected on its DeJope trust land on the east side of Madison in Dane County. The issue presented is whether this property "was designated . . . trust land on or before January 1,1983." Id.
¶ 41. The answer to this question turns on the meaning of the word "designated." The majority opinion is grounded on the premise that the phrase "was designated ... trust land" means exactly the same as the phrase "was trust land" — that is, the word "designated" really means nothing in the context of the passage in which it appears. See majority op. ¶¶ 2-4. Because I disagree, I respectfully dissent.
I
¶ 42. Wisconsin Stat. § 139.323 has an interesting history, and understanding that history is essential to understanding the statute.
¶ 43. In the late 1970s, Wisconsin imposed an occupational tax on the sale of cigarettes. Wis. Stat. § 139.31 (1979-80). The nature of the tax was problematic when the tax was applied on Indian reservations. In a May 1979 opinion, Attorney General Bronson La Follette advised the Department of Revenue that Wisconsin's cigarette tax laws did not apply to Indian *573persons or Indian tribes selling cigarettes on Indian reservations. 68 Wis. Op. Att'y Gen. 151 (1979).
¶ 44. The Attorney General's opinion materially advantaged Indian smoke shops, where tribes sold cigarettes to both Indians and non-Indians without imposition of a state cigarette tax.
¶ 45. By 1981 non-Indian merchants began to complain about the loss of cigarette sales to tax exempt tribal smoke shops, and the state began to notice the loss of cigarette tax revenue. "The Legislative Fiscal Bureau said about 11,000 cases of untaxed cigarets were sold by 'tribal smokeshops' in 1979 and 1980." Eldon Knoche, Revenue Loss in Sale of Cigarets, Milwaukee Sent., May 2, 1981 (on file with the Legislative Reference Bureau, Madison, Wisconsin). The newspaper reported that non-Indians "apparently are flocking to the tribes to buy the cigarets minus the tax of 16 cents a pack, or $1.60 a carton." Id.
¶ 46. Legislation was soon introduced to convert Wisconsin's cigarette tax from an occupational tax to an excise tax. See 1981 A.B. 500 (introduced May 14,1981). This legislation was based on Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134, 151-160 (1980), where the Supreme Court upheld Washington's excise tax on on-reservation sales of cigarettes to non-tribal purchasers.
¶ 47. In 1982 the Joint Committee on Finance incorporated a cigarette excise tax into its revision of 1981 Senate Bill 783, the so-called budget adjustment bill. See Senate Substitute Amendment 1 to 1981 S.B. 783. The Committee's provision exempted cigarettes sold to enrolled tribal members. See id.
¶ 48. Governor Lee Sherman Dreyfus vetoed the provision. However, in his April 29, 1982 veto message, Dreyfus said the following:
*574I am vetoing conversion of the current occupational tax on cigarettes to an excise tax effective July, 1983. Sale of unstamped cigarettes to non-Indians is a serious and mounting problem in Wisconsin with an estimated revenue loss of more than $4 million annually. There is no question that state government and Wisconsin's tribes must have serious discussions to resolve this and other tax problems. However, such negotiations are more likely to be conducted in "good faith" if a forced mid-1983 solution is not in the statutes. The tribes should understand that the intent of the Legislature to end the serious erosion of our cigarette tax base is absolutely clear. A comprehensive and fair solution to state-tribe tax problems must be found and soon, or the legislature will re-enact this law.
Veto message of Lee Sherman Dreyfus, Governor, 1981 S.B. 783 (April 29, 1982) (on file with the Legislative Reference Bureau, Madison, Wisconsin).
¶ 49. During the remainder of 1982, representatives of the Department of Revenue met with representatives of Wisconsin's 11 Indian tribes and bands, attempting to come up with an agreement. These negotiations are summarized in the minutes of the Wisconsin Legislative Council's Native American Study Committee. See Wisconsin Legislative Council, Summary of Proceedings, Native American Study Committee, for May 12, 1982, at 4-5; July 19, 1982, at 11-12; and November 15, 1982, at 6-8, 10.
¶ 50. In 1983 Governor Anthony Earl's first budget contained language to implement the agreement negotiated by the previous administration. See 1983 S.B. 83, §§ 1496-1506. A March 24, 1983 analysis for the Joint Committee on Finance described the provision as follows:
Senate Bill 83 (the 1983-85 biennial budget bill) contains language to implement a recently-negotiated *575agreement between the Department of Revenue and representatives of Indian tribes in the state, which would require Indian sellers of cigarettes to impose a portion of the state cigarette tax on sales to non-Indians. This would be accomplished by converting the current cigarette occupational tax to an excise tax, to be imposed on the first taxable event in the state and passed on to the ultimate consumer. Under the negotiated agreement... cigarettes sold by distributors to Indians or Indian organizations for resale would be exempt from 70% of the state excise tax (i.e., subject to a tax of 7.50 per pack), and payment of the non-exempt portion would be evidenced by the appropriate tax stamp purchased by distributors and affixed to each pack sold to Indian sellers for resale. According to the language of SB 83, this special tax rate would only be applicable if a tribe imposed an additional 7.50 per pack tax of its own; otherwise, the full amount of excise tax would be due. The use tax imposed by current law on unstamped cigarettes brought into the state would not apply to cigarettes taxed at the special rate for Indians. In addition, the Department of Revenue would be authorized to enter into agreements with Indian tribes to provide refunds of cigarette taxes paid through the purchase of stamped cigarettes by Indians. The Department would adopt administrative rules regarding the refund provision, specifying the tribal alternatives of maintaining separate records of sales to Indians, or agreeing to a formula for determining the refund amount (for example, Wisconsin per capita cigarette consumption multiplied by the reservation population).
Memorandum from Bob Lang, Director, Legislative Fiscal Bureau, to Members, Joint Committee on Finance, at 2 (March 24, 1983) (regarding 1983-85 Biennial Budget: Cigarette Tax — Sale of Untaxed Cigarettes by Indians to Non-Indians) (on file with the Legislative Reference Bureau, Madison, Wisconsin).
*576¶ 51. The fiscal paper noted that the proposal came in response to the fact that "the state is not currently collecting any significant cigarette tax revenues on sales by Indians to non-Indians, and this creates a price differential potentially equal to the amount of tax (250 per pack) between sales to non-Indian purchasers by Indians and sales by non-Indian retailers." Id. at 3.
¶ 52. The paper added that, since December 1978, "untaxed cigarettes have been sold by Indians currently operating from about twenty sites on reservations and two on Tribal trust lands." Id.
(Tribal trust lands are property purchased by Indians or tribes and deeded to the U.S. Department of the Interior's Bureau of Indian Affairs, and treated as reservation land for many purposes. The Attorney General has indicated that such lands are treated as reservation land for purposes of cigarette taxes.)!2] The highest sales have reportedly been in the Green Bay area (Oneida tribe), Wisconsin Dells (Winnebago tribe) and on the Lac Court Oreilles reservation in northwest Wisconsin. Sales of untaxed cigarettes by Indians have grown from approximately 264,000 cartons in 1979-80 to over 1,480,000 cartons in 1981-82, and are expected to reach 2,280,000 cartons in 1982-83. Most of these sales are to non-Indians, and the cigarette tax revenue not collected on such taxable sales is estimated at nearly $5.2 million in 1982-83, increasing between 40% and 50% per fiscal year. Based on current experience with deliveries of unstamped cigarettes to Indian sellers, foregone cigarette tax collections are estimated to *577be $7.7 million in 1983-84 and $11.0 million in 1984-85. In addition, foregone sales tax collections on these purchases would he approximately $1.2 million in 1982-83, $1.7 million in 1983-84, and $2.5 million in 1984-85.
Id. at 3-4.
¶ 53. On April 19, 1983, a subcommittee of the Joint Committee on Finance proposed a revision of the Governor's budget proposal. In line with present law, it called for imposition of a full excise tax (e.g., 25 cents a pack) on Indian cigarette sales but provided a 70 percent refund to the tribes. Plan Would Alter Cigaret Tax Rule, Milwaukee Sent., April 20, 1983 (on file with the Legislative Reference Bureau, Madison, Wisconsin).
¶ 54. Carrying a new name, the Legislative Council's American Indian Study Committee met on April 22,1983, and discussed these developments in the Joint Finance Committee. It voted unanimously to support the Finance subcommittee's proposal after learning from Kenneth Funmaker, Sr., a member of the Winnebago tribe (now Ho-Chunk Nation) that the tribe had acquired "land in the Town of Blooming Grove, Dane County, for purposes of establishing a smoke-shop." Wisconsin Legislative Council, Summary of Proceedings, American Indian Study Committee, for April 22, 1983, at 10-11. Three members of the committee who voted to support the proposal (Jim Schlender, Rita Keshena, and Gerald Hill) were members of the Great Lakes Inter-Tribal Council (GLITC) team that negotiated the original cigarette tax agreement with the Department of Revenue. See Letter from Patricia S. Smith, Chairperson, American Indian Study Committee, State of Wisconsin Legislative Council, to Senator Gerald D. Kleczka and Representative Mary Lou Munts, Co-Chairpersons of the Joint Committee on *578Finance (May 4, 1983) (on file with the Legislative Reference Bureau, Madison, Wisconsin).
¶ 55. The Joint Committee on Finance ultimately approved the recommendation of its subcommittee. It introduced a substitute amendment to the budget on May 26, 1983. The budget was enacted by the legislature on July 1, 1983, and became law after its publication on July 22, 1983. 1983 Act 27; see also Bulletin, Wisconsin Legislature, Part 1 Senate, Senate Bill 83, at 35-41 (1983).
II
¶ 56. The majority opinion sets out several key dates for the property in question:
In 1982, the Ho-Chunk Nation (the Nation)... received permission from the United States Department on the Interior, Bureau of Indian Affairs (BIA), to acquire a five-acre parcel of land known as the DeJope Property. A Washington, D.C., BIA official sent a memo dated August 20, 1982, to a Minneapolis BIA official, stating in relevant part, 'You are, therefore, authorized to accept conveyance to the United States in trust upon consideration of appropriate title evidence in accordance with the requirements of 25 CFR 120a. 12 [1982]." On October 29, 1982, the seller of the DeJope Property received payment from the Nation and conveyed the title by delivery of a warranty deed. On January 31, 1983, the Minneapolis BIA Area Director signed the deed, accepting the conveyance. The deed was recorded with the Dane County Register of Deeds on March 18, 1983.
Majority op., ¶ 6.
¶ 57. These dates must be compared to the dates related to Wis. Stat. § 139.323: (1) 1983 Senate Bill 83 was introduced on February 8, 1983, eight days after *579the January 31, 1983 date that the majority considers controlling; (2) a Joint Finance subcommittee proposed the pertinent revision to the budget on April 19,1983, 78 days after the date that the majority believes is controlling; and (3) the 1983-85 budget became law on July 23, 1983, 173 days after the date the DeJope property officially went into trust, although § 139.323 did not take effect until October 1, 1983. By October 1, 1983, the DeJope property had been in trust for eight months.
¶ 58. From the perspective of the state, Wis. Stat. § 139.323 was a generous accommodation to Wisconsin Indian tribes because it permitted tribal governments to secure 70 percent of all excise tax collected on the sale of cigarettes to non-tribal purchasers on tribal land. Under this formula, tribal revenues would automatically increase every time the state raised the cigarette tax. Because tribes had the ability to acquire additional land, put it into trust, and use it to facilitate additional cigarette sales, the Joint Committee on Finance must have concluded that it had to cut off new land for Indian smoke shops to prevent further erosion of the state's cigarette tax base. This appears to be the reason for the January 1, 1983 cutoff date.
¶ 59. Budget writers knew full well that the budget would not be passed overnight. Hence, they had to devise a statutory obstacle to the designation of new trust land before the budget became law. A cutoff of January 1, 1983, served that purpose.
¶ 60. The legislature could easily have said the following in Wis. Stat. § 139.323:
(3) The land on which the sale occurred was reservation or trust land on or before January 1, 1983.
However, that language would have excluded the De-Jope property that had become trust land before the *580budget provision was even conceived and had been purchased by the Ho-Chunk Nation — with explicit prior approval of the BIA — long before January 1,1983.
¶ 61. Inasmuch as tribal legislators from the GLITC Cigarette Committee included a Ho-Chunk representative (Harry Steindorf), see Memorandum from Wisconsin Judicare — Indian Unit to Members of the GLITC Cigarette Committee (October 18, 1982) (on file with the Legislative Reference Bureau, Madison, Wisconsin), it is implausible that committee members were unaware of the plans of the Ho-Chunk Nation for the DeJope Property. It is implausible that key leaders in the legislature, the executive branch, and among the tribes deliberately excluded from cigarette tax refund eligibility five acres of property that had been owned by the Ho-Chunk Nation since October 29, 1982, and had been officially in trust since January 31, 1983, before the legislation was passed.
¶ 62. To accept the majority opinion requires us to believe that in 1983 all relevant decision makers, except the Ho-Chunk, knowingly and deliberately excluded the DeJope Property — even though it already had trust status — without any documentation of such intentional discrimination.
¶ 63. The majority's statutory analysis must be considered against this background.
Ill
¶ 64. The majority opinion rejects the conclusion of both the court of appeals and the circuit court that Wis. Stat. § 139.323 is ambiguous in the context of this dispute. See majority op. ¶¶ 21-22, 26. It makes this determination even though it acknowledges that the word "designate" has multiple definitions. The majority opinion states the following:
*581The court of appeals noted that dictionary definitions of the word [designate] led to opposite interpretations: "The definitions the Nation chooses — 'select' and 'nominate,' see Brack's] L[aw] Dictionary] 447 (6th ed. 1990) — have a preliminary sense to them that would support the Nation's proposed construction. However, the definitions 'specify,' 'give a name or title to,' and 'characterize,' see A[merican] Heritage] C[ollege] Dictionary] 376 (3d ed. 1993), suggest that the property would need to actually be held in trust before the property could be so specified, named, titled or characterized."
Id., ¶ 22 n.5 (quoting Ho-Chunk Nation v. DOR, 2008 WI App 95, ¶ 16, 312 Wis. 2d 484, 754 N.W.2d 186).
¶ 65. The American Heritage Dictionary includes among the definitions of "designate" the following: "To select and set aside for a duty, an office, or a purpose." American Heritage Dictionary 506 (3d ed. 1992). This definition is illuminated by focusing on the adjective "designate" — "Appointed but not yet installed in office." Id.
¶ 66. To illustrate the use of the word "designate" to signal a probability, a possibility, or even a contingency, we can look to a statement issued by the White House on January 20, 2009:
In order to ensure continuity of government, Defense Secretary Robert Gates has been designated by the outgoing Administration, with the concurrence of the incoming Administration, to serve as the designated successor during Inauguration Day, January 20th.
Press Release, The White House, Office of the Press Secretary (January 20, 2009). In short, Secretary Gates was designated to become President of the United States if the higher ranking officials slated by statute to succeed the President in the event of a disaster were *582unable to do so. Of course, Secretary Gates was never elected President and never became President, but he undoubtedly was designated successor to the President for one day.
¶ 67. This use of the phrase "was designated" is wholly consistent with the Ho-Chunk's position. On August 20, 1982, BIA "designated" the DeJope property as property it would accept in trust status. On October 29, 1982, the Nation received title to the property, and thereafter, in documents conveyed to the BIA, the Nation again "designated" the property as property set aside for trust status. On December 7, 1982, the Great Lakes BIA office sent a memo and forwarded a deed to the Minneapolis BIA office for the Area Director's signature, following up BIA's earlier designation.
¶ 68. The majority rejects this use of the word. It acknowledges that the word "designated" is not part of the federal regulations, but it insists upon use of the word as though the word identified the critical decision point in a formal process.
¶ 69. Subchapter II of Chapter 139 of the Wisconsin Statutes deals with cigarette taxes. Section 139.30 sets out a series of definitions, including "Indian tribe," § 139.30(5), "Reservation," § 139.30(9) and "Trust lands," § 139.30(13m), that are employed in the sub-chapter.
¶ 70. "Trust lands" are defined as "any lands in this state held in trust by the U.S. government for the benefit of a tribe or a member of a tribe." Wis. Stat. § 139.30(13m).
¶ 71. This definition does not help the State in its interpretation of the word "designated." Under the statute, "trust lands" are lands "held in trust by the U.S. government." Id. The word "designated" does not appear in the Wisconsin definition and the phrase "was *583designated" does not add anything when the phrase is used with respect to an already existing status.
¶ 72. The fact is, however, that this "trust lands" definition was not enacted until 1999. 1999 Wis. Act 9. Hence, the meaning of "trust land" in 1983 was not confined by a Wisconsin statutory definition. Turning to federal law would make sense ¿/there were evidence that the legislature relied on a delineated federal process or if the word "designated" appeared in the federal regulations. There does not appear to be such evidence.
¶ 73. What the legislature was familiar with was a 1982 opinion from Attorney General La Follette. See 71 Wis. Op. Att'y Gen. 82 (1982). Among the statements La Follette made in his opinion are the following:
Regardless of how land came to be reserved for Indian use by the federal government, the legal status of such reserved land is the same.
Id. at 83 (citation omitted).
It also appears to make no difference whether the land in question is held in trust by the United States for the use of an Indian tribe or an individual tribe member, as with allotments, or whether the tribe holds the fee title to the land.
Id. at 85 (emphasis added).
¶ 74. Attorney General La Follette's opinion explains as follows:
In the leading case on cigarette taxes involving sales by ■ Indians within reservation boundaries, Moe v. Salish & Kootenai Tribes, 425 U.S. 463 (1976), the Court made clear that for purposes of taxation jurisdiction, all lands located within the exterior boundaries of an Indian reservation would be treated the same. The Court did not distinguish between land located within the reser*584vation which remained in trust status, either for the tribe or individual tribe members, and land that had been alienated and is now owned in fee by Indians or non-Indians. The [CJourt refused to distinguish between fee and trust lands because it considered "checkerboard jurisdiction" within reservation boundaries to be unworkable.
Id. at 86 (emphasis added).
¶ 75. This latter passage is significant because it shows that land within the boundaries of a reservation need not be "reservation" or "trust land" to be treated as such. The statutory definition of "reservation" in Wis. Stat. § 139.30(9) mirrors this principle.3 Thus, Wis. Stat. § 139.323 authorizes a 70 percent refund of excise taxes on cigarettes sold on land within the boundaries of an Indian reservation, even though the land is not "held in trust by the U.S. government for the benefit of a tribe or member of a tribe."
¶ 76. Wisconsin Stat. § 139.323 begins with the following statement: "The department shall refund 70% of the taxes collected under s. 139.31(1) in respect to sales on reservations or trust lands of an Indian tribe...." This provision employs the definitions in § 139.30 to cover all land within a reservation's boundaries and all trust land — that is, all land being held in trust at the time of the sale. The phrase "was-designated" in subsection (3) looks backward to a different time. In that context, the word "designated" is either superfluous or it conveys a different meaning. There is no reason why the legislature would not have used the *585phrase "was a reservation or trust land on or before January 1, 1983," unless the word "designated" had special meaning. The phrase "reservation or trust land" and the phrase "land... designated a reservation or trust land" are not likely to mean exactly the same thing.
¶ 77. Unlike this dissent, the majority opinion does not justify its holding on any historical or policy basis. It relies instead on unpersuasive interpretive tools. In my view, the only way we would be justified in denying the Ho-Chunk Nation the requested refund on its DeJope tax collections would be to cite documentary evidence showing that this property was considered and intentionally excluded.
¶ 78. For the reasons stated, I respectfully dissent.
¶ 79. I am authorized to state that CHIEF JUSTICE SHIRLEY S. ABRAHAMSON and JUSTICE ANN WALSH BRADLEY join Section III of this dissent.

 All subsequent references to the Wisconsin Statutes are to the 2007-08 version unless otherwise indicated.

 Attorney General La Follette issued an opinion on March 10,1982, that land purchased and held in trust for Indian tribes or tribal members under the superintendence of the federal government has the same status as official reservation land. 71 Wis. Op. Att'y Gen. 82 (1982).

 " 'Reservation' means all land within the boundaries of the Bad River, Forest County Potawatomi, Lac Courte Oreilles, Lac du Flambeau, Menominee, Mole Lake, Oneida, Red Cliff, St. Croix, and Stockbridge-Munsee reservations and the Winnebago Indian communities." Wis. Stat. § 139.30(9).