In City of Sherrill v. Oneida Indian Nation of New York, 544 U.S. 197 (2005), the Supreme Court ruled that too much time had passed for the Oneida Indian Nation to assert sovereignty over land that was illegally taken from it by the state of New York in the early 19th century. Although the transfer of title from the tribe to the state violated the federal Trade and Intercourse Act, 25 U.S.C. §177, and thus was of no validity whatsoever and although no federal or state statute of limitations barred the tribe's property claim against the state, the doctrine of laches was applied to deny the tribe sovereign powers over land it had repurchased from a non-Indian owner even though that land had been within its original reservation and those lands had never been taken by the United States – the only sovereign with the power to extinguish tribal title to the land. As a result, although the tribe had reunited title and possession by purchasing the land, the Supreme Court held the land to be subject to state property taxation.
When the tribe refused to pay property taxes on its land, two N.Y. counties brought tax foreclosure actions against the tribe and its lands. The Second Circuit ruled, in Oneida Indian Nation of New York v. Madison and Oneida County, 2010 WL 1659452, that the tribe's sovereign immunity barred the lawsuit, making it impossible for the counties affirmatively to enforce their right to collect the taxes. The court did not mention an alternative ground for denying the foreclosure action: the Trade and Intercourse Act prohibits any transfer of title to tribal land without the consent of the United States. There is some doubt about whether the Act applies to land held in fee simple but the District Court in the Oneida case held that it did and was an alternative ground for denying the counties the power to proceed with the tax foreclosure case. See Oneida Indian Nation v. Oneida County, 432 F.Supp.2d 285, 292 (N.D.N.Y. 2006).
The Supreme Court took certiorari in the case, Madison County, N.Y. v. Oneida Indian Nation of New York, 2010 WL 2753782, 79 USLW 3062, 79 USLW 3220, 79 USLW 3226 (U.S. Oct 12, 2010), and federal Indian law specialists fear that the Court may choose an alternative ground to overrule the Court of Appeals decision. The Court may find the Oneida reservation to have been implicitly diminished even though no treaty or Act of Congress has formally taken those lands out of the reservation borders. In general, Congress must act explicitly to alter the borders of Indian country especially in a case like this in which Congress never ratified the arrangements by which New York took over Oneida lands.
On Nov 30, 2010, the Oneida Indian Nation wrote to the Supreme Court to announce that the tribe had formally waived sovereign immunity with regard to claims against it for unpaid property taxes. It did not waive other defenses it might have, especially its claims that the taxes were not authorized by state law.