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Volume 7 - Opinions of Counsel SBEA No. 122

Opinions of Counsel index

Indians exemption (utility property) - Indian Law, §§ 6, 90; Real Property Tax Law, § 454:

Utility real property located within an Indian reservation but not owned by the Indian nation, tribe or band in occupancy, is subject to taxation.

We are questioned concerning the taxable status of certain public utility property located within the Tonawanda Indian Reservation, which is within the Town of Alabama in Genesee County. These consist of three parcels: New York Telephone-Outside Plant; New York Telephone-Station Equipment; Niagara Mohawk Power Corporation-Distribution System.

Section 454 of the Real Property Tax Law provides, in pertinent part, that the “real property in any Indian reservation owned by the Indian nation, tribe or band occupying them shall be exempt from taxation”. Section 6 of the Indian Law provides that “[n]o taxes shall be assessed, for any purpose whatever, upon any Indian reservation in this state, so long as the land of such reservation shall remain the property of the nation, tribe or band occupying the same.”

The right of a telephone company to install wires across the Tonawanda Indian Reservation was considered by the Court of Appeals in Jemison v. Bell Telephone Co., 186 N.Y. 493, 79 N.E. 728 (1906). The Court held that the predecessor statute to what is now section 90 of the Indian Law was valid and not violative of the Federal Constitution, Article 1, section 8, which concerns the regulation of commerce with the Indian tribes. (Section 90 of the Indian Law provides for the erection of poles and wires “and other necessary fixtures thereto” across the lands of the Seneca Indians on the Tonawanda Reservation. Telephone lines, wires and poles are taxable real property in this State (RPTL, §§102(12)(d), 300).)

In 1 Op. Counsel SBEA No. 84, we examined the taxable status of real property located in another Indian reservation. We concluded that the provisions of section 454 of the Real Property Tax Law and section 6 of the Indian Law are merely restatements of the principal of sovereign immunity, that is, that Indian lands within a reservation are immune from any taxation which would interfere with the rights of the Indian nation therein.

In Thomas v. Gay, 169 U.S. 264 (1897)and Wagoner v. Evans, 170 U.S. 588 (1897), the United States Supreme Court held that the property of all persons, within the limits of a reservation, except that of Indians, is subject to taxation by the State. Although those cases concerned the taxation of personal property (cattle) located on reservation lands, the Supreme Court has held that a state has the power to tax railroads, including track and right of way, passing through an Indian reservation lying within its exterior limits (Utah and Northern Railway Company v. Fisher, 116 U.S. 28 (1885); The Maricopa and Phoenix Railroad Company v. Territory of Arizona, 156 U.S. 347 (1894)). “If the plaintiff lawfully constructed and now operates a railroad through the reservation, it is not perceived that any just rights of the Indians under the Treaty can be impaired by taxing the road and property used in operating it” (Utah and Northern Railway Company, supra, 116 U.S., at 32).

Accordingly, it is our opinion that because the utility real property in question is not “owned by the Indian nation, tribe or band occupying them,” it is subject to taxation, although located within an Indian Reservation.

November 1, 1982

Updated: