Pittsburg & Midway Coal Min. Co. v. Watchman, 94-2060

• Decision Date: 19 April 1995
• Docket Number: No. 94-2060,94-2060
• Citation: 52 F.3d 1531
• Parties: PITTSBURG & MIDWAY COAL MINING COMPANY, Plaintiff-Appellee, v. Derrick WATCHMAN; Victor Joe; Lee Bergen; Bruce Keizer; Joe Shirley, Individually and as members of the Navajo Tax Commission; Ronnye Etcitty, Individually and as Deputy Director of the Navajo Tax Commission, Defendants-Appellants, United States of America; Ray Powell, Commissioner of Public Lands for the State of New Mexico; Santa Fe Pacific Railroad Company; Santa Fe Pacific Gold Corporation; New Mexico Oil and Gas Association, Amici Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1531

52 F.3d 1531

PITTSBURG & MIDWAY COAL MINING COMPANY, Plaintiff-Appellee, v. Derrick WATCHMAN; Victor Joe; Lee Bergen; Bruce Keizer;

Joe Shirley, Individually and as members of the Navajo Tax

Commission; Ronnye Etcitty, Individually and as Deputy

Director of the Navajo Tax Commission, Defendants-Appellants,

United States of America; Ray Powell, Commissioner of

Public Lands for the State of New Mexico; Santa Fe Pacific

Railroad Company; Santa Fe Pacific Gold Corporation; New

Mexico Oil and Gas Association, Amici Curiae.

No. 94-2060.

United States Court of Appeals, Tenth Circuit.

April 19, 1995.

Rehearing and Suggestion for Rehearing In Banc Denied May 23, 1995.

Paul E. Frye (Lisa M. Enfield, Nordhaus, Haltom, Taylor, Taradash & Frye, Albuquerque, NM, Herb Yazzie, Atty. Gen., and Marcelino Gomez, Navajo Nation Dept. of Justice, Window Rock, AZ, with him on the briefs), Nordhaus, Haltom, Taylor, Taradash & Frye, Albuquerque, NM, for defendants-appellants.

Christopher Lane (James G. di Zerega and Kent R. Olson, The Pittsburg & Midway Coal Mining Co., Englewood, CO, with him on the brief), Sherman & Howard L.L.C., Denver, CO, for plaintiff-appellee.

Lois J. Schiffer, Acting Asst. Atty. Gen., Edward J. Shawaker and John T. Stahr, Attys., Dept. of Justice, Washington, DC, and Tim Vollmann, Regional Sol., U.S. Dept. of Interior, Albuquerque, NM, on the brief for amicus curiae U.S.

Lynn H. Slade and Walter E. Stern, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, on the brief for amici curiae Santa Fe Pacific R. Co. and Santa Fe Pacific Gold Corp., Edmund H. Kendrick and Galen M. Buller, Montgomery & Andrews, P.A., Santa Fe, NM, on the brief for amicus curiae New Mexico Oil and Gas Ass'n.

Harry N. Relkin, Sp. Asst. Atty. Gen., Santa Fe, NM, on the brief for Amicus Curiae Ray Powell, Com'r of Public Lands for the State of N.M.

Before MOORE and BARRETT, Circuit Judges; and DOWNES, District Judge. ^*

JOHN P. MOORE, Circuit Judge.

This case represents the second time this controversy has appeared before us. In 1986, the Pittsburg & Midway Coal Mining Company (P & M) filed an action in federal court seeking an injunction and declaratory judgment that the Navajo Nation lacked jurisdiction to impose its Business Activities Tax on the "source gains" from P & M's South McKinley Mine. ¹ The Navajo Nation replied the federal court should abstain based on the tribal abstention doctrine, allowing the tribal court to hear the issue first. The Tribe offered two different theories in support of its position.

First, the land area containing the mine was part of the Navajo Reservation. In Pittsburg & Midway Coal Mining Co. v. Yazzie, 909 F.2d 1387 (10th Cir.), cert. denied, 498 U.S. 1012, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990) (Pittsburg & Midway I ), we rejected the Navajo Nation's first contention. ² We held the 1907-08 expansion of the Navajo Reservation by approximately 1.9 million acres was diminished by two subsequent Executive Orders issued in 1908 and 1911. Id. at 1422. Therefore, the mine was not on reservation land.

Second, the Tribe argued the tribal abstention doctrine applied because the area was Indian country within the meaning of 18 U.S.C. Sec. 1151. Because the district court did not reach this issue, we did not consider it in the first appeal. Instead, we directed the district court to address the issue on remand, which it has now done. The district court held the area in question was not Indian country, making it inappropriate to dismiss P & M's complaint for failure to exhaust tribal remedies. We now reverse and remand for further factual findings by the district court.

I. BACKGROUND

The South McKinley Mine is located outside the Navajo Reservation in northwestern New Mexico near the Arizona-New Mexico border. The mine is directly adjacent to a companion mine located within the formal Navajo Reservation boundary. The mine consists of approximately 15,677.40 acres or 20 to 25 square miles. The parties have stipulated before the district court about the title of the surface and subsurface estates where the mine is located.

Five interests each have an ownership share in part of the surface title to the mine site area: (1) the United States holds title to 7,347.23 acres or approximately 47% in trust for individual Navajo allottees with the Bureau of Indian Affairs (BIA) acting as trustee; (2) non-Indian private parties including P & M hold title to 6,303.68 acres or 40%; (3) the Navajo Nation holds title to 1,131.46 acres or 7%; (4) the United States holds title to 830.94 acres or 5% as public lands managed by the Bureau of Land Management (BLM); and (5) the State of New Mexico holds title to 64.09 acres or less than 0.5%.

In contrast, three interests each own part of the subsurface coal estate: (1) the United States holds title to 8,178.17 acres or 52%; (2) Cerillos Land Company, the successor in interest to the Santa Fe Pacific Railroad, holds title to 7,430.14 acres or 47%; and (3) the State of New Mexico holds title to 64.09 acres or less than 0.5%. P & M has leased the right to conduct its mining operations from these various titleholders. None of the subsurface coal rights are owned by, or held in trust for, the Navajo Nation or any individual Navajos.

The Navajo Nation's Business Activities Tax imposes a 5% levy on source gains, less certain deductions, derived from commercial activities within the Tribe's jurisdiction. The Navajo Tax Commission administers the complicated statutory scheme. Navajo Trib.Code, tit. 24, Secs. 401-445 (1985 Supp.). P & M has continued to pay this tax under protest during the pendency of this litigation.

Our remand instructions to the district court were:

We remand for consideration of whether some or all of P & M's South McKinley Mine is within Indian country under 18 U.S.C. Secs. 1151(b) or (c) and, if so, whether the court is obligated to abstain from initially deciding whether the Tribe can tax P & M's source gains from the mine.

Pittsburg & Midway I, 909 F.2d at 1422. In fulfilling these instructions, the district court applied the following statutory definition of Indian country:

18 U.S.C. Sec. 1151. Indian country defined

Except as otherwise provided in sections 1154 and 1156 of this title, the term "Indian country", as used in this chapter, means (a) all land within the limits of any Indian reservation under the jurisdiction of the United States Government, notwithstanding the issuance of any patent, and, including rights-of-way running through the reservation, (b) all dependent Indian communities within the borders of the United States whether within the original or subsequently acquired territory thereof, and whether within or without the limits of a state, and (c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of-way running through the same.

In its Memorandum Opinion and Order, the district court first concluded, "[t]he Tenth Circuit ruled the mine site is outside the reservation. The site does not fall within an Indian allotment. Therefore, the site is part of 'Indian country' only if it is a dependent Indian community." Pittsburg & Midway Coal Mining Co. v. Watchman, No. 86-1442-M at 3 (D.N.M. June 11, 1993) (Memorandum Opinion ). The district court then applied this court's test for determining a dependent Indian community, Blatchford v. Sullivan, 904 F.2d 542 (10th Cir.1990), cert. denied, 498 U.S. 1035, 111 S.Ct. 699, 112 L.Ed.2d 689 (1991), using the South McKinley Mine site for its analysis. The court rejected the Tribe's suggestion that the Tsayatoh Chapter was the appropriate community of reference. ³ Memorandum Opinion, at 3-5. Applying Blatchford, the district court concluded the mine site was not a dependent Indian community within the meaning of 18 U.S.C. Sec. 1151(b). Id. at 5-7.

After the court's order, the Navajo Nation filed a motion to alter or amend the judgment pursuant to Fed.R.Civ.P. 59. Responding to this motion, the district court concluded:

The parties have stipulated that 47% of the surface right[s] of the mine are held in trust by the United States for Navajo allottees and an additional 7% of the surface is held by the Navajo Tribe. The allotments are Indian country by definition under 18 U.S.C. Sec. 1151(c). However, I declined to find that the mine was in Indian country for purposes of removing this case to the jurisdiction of the Tribal Court, and I decline to alter or amend the judgment in response to defendants' motion.

Pittsburg & Midway Coal Mining Co. v. Watchman, No. 86-1442-M at 1-2 (D.N.M. Jan. 19, 1994) (Rule 59 Order ). Because the district court concluded the mine was not located in Indian country, it did not reach the issue of whether the tribal abstention doctrine or one of its three exceptions applied in this case.

On appeal, the Navajo Nation raises three issues. First, the Tribe argues the district court should have abstained pursuant to the tribal abstention doctrine until P & M had exhausted all its available tribal remedies. The Navajo Nation contends none of the three exceptions to the tribal abstention doctrine are applicable. Second, the Nation argues the district court erred in concluding that none of the South McKinley Mine site is within a Navajo trust allotment. The 48 trust allotments making up 47% of the land area of the mine are by definition Indian country under 18 U.S.C. Sec. 1151(c). The Tribe specifically points to the seemingly irreconcilable inconsistency between the court's conclusions the trust allotments are definitionally Indian country, and the mine is not located in Indian country. Third, the Navajo Nation believes the district court incorrectly chose the mine site itself as the community of reference for its dependent Indian community analysis. The entire Tsayatoh Chapter should have been used instead. ⁴

In response, P & M first argues the tribal abstention doctrine should not be applied because "the...