532 U.S. 645 (2001), 00-454, Atkinson Trading Co, Inc. v. Shirley

Docket Nº:Case No. 00-454
Citation:532 U.S. 645, 121 S.Ct. 1825, 149 L.Ed.2d 889
Case Date:May 29, 2001
Court:United States Supreme Court

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532 U.S. 645 (2001)

121 S.Ct. 1825, 149 L.Ed.2d 889



SHIRLEY et al.

Case No. 00-454

United States Supreme Court

May 29, 2001

Argued March 27, 2001



In Montana v. United States, 450 U.S. 544, this Court held that, with two limited exceptions, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian land within a reservation. Petitioner's trading post on such land within the Navajo Nation Reservation is subject to a hotel occupancy tax that the Tribe imposes on any hotel room located within the reservation's boundaries. The Federal District Court upheld the tax, and the Tenth Circuit affirmed. Relying in part on Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, the latter court complemented Montana 's framework with a case-by-case approach that balanced the land's non-Indian fee status with the Tribe's sovereign powers, its interests, and the impact that the exercise of its powers had on the nonmembers' interests. The court concluded that the tax fell under Montana 's first exception.


The Navajo Nation's imposition of a hotel occupancy tax upon non-members on non-Indian fee land within its reservation is invalid. Pp. 649-659.

(a) Montana 's general rule applies to tribal attempts to tax nonmember activity occurring on non-Indian fee land. Tribal jurisdiction is limited: For powers not expressly conferred them by federal statute or treaty, tribes must rely upon their retained or inherent sovereignty. Their power over nonmembers on non-Indian fee land is sharply circumscribed. Montana noted only two exceptions: (1) a tribe may regulate the activities of nonmembers who enter consensual relationships with the tribe or its members; and (2) a tribe may exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the tribe's political integrity, economic security, or health or welfare. 450 U.S., at 565-566. Montana 's rule applies to a tribe's regulatory authority, id., at 566, and adjudicatory authority, Strate v. A-1 Contractors, 520 U.S. 438, 453. Citing Merrion, respondents submit that Montana and Strate do not restrict a tribe's power to impose revenue-raising taxes. However, because Merrion noted that a tribe's inherent taxing power only extended to transactions occurring on trust lands and involving the tribe or its members, 455 U.S., at 137, it is easily reconcilable with the Montana-Strate line of authority. A tribe's sovereign power to tax reaches no

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further than tribal land. Thus, Merrion does not exempt taxation from Montana' s general rule, and Montana is applied straight up. Because Congress had not authorized the tax at issue through treaty or statute, and because the incidence of the tax falls upon nonmembers on non-Indian fee land, the Navajo Nation must establish the existence of one of Montana 's exceptions. Pp. 649-654.

(b) Montana 's exceptions do not obtain here. Neither petitioner nor its hotel guests have entered into a consensual relationship with the Navajo Nation justifying the tax's imposition. Such a relationship must stem from commercial dealing, contracts, leases, or other arrangements, Montana, supra, at 565, and a nonmember's actual or potential receipt of tribal police, fire, and medical services does not create the requisite connection. Nor is petitioner's status as an "Indian trader" licensed by the Indian Affairs Commissioner sufficient by itself to support the tax's imposition. As to Montana 's second exception, petitioner's operation of a hotel on non-Indian fee land does not threaten or have a direct effect on the tribe's political integrity, economic security, or health or welfare. Contrary to respondents' argument, the judgment in Brendale v. Confederated Tribes and Bands of Yakima Nation, 492 U.S. 408, 440, did not give Indian tribes broad authority over nonmembers where the acreage of non-Indian fee land is minuscule in relation to the surrounding tribal land. Irrespective of the percentage of non-Indian fee land within a reservation, Montana 's second exception grants tribes nothing beyond what is necessary to protect tribal self-government or control internal relations. Strate, supra, at 459. Whatever effect petitioner's operation of its trading post might have upon surrounding Navajo land, it does not endanger the Navajo Nation's political integrity. Pp. 654-659.

210 F.3d 1247, reversed.

Rehnquist, C. J., delivered the opinion for a unanimous Court. Souter, J., filed a concurring opinion, in which Kennedy and Thomas, JJ., joined, post, p. 659.

Charles G. Cole argued the cause for petitioner. With him on the briefs were Shannen W. Coffin and William J. Darling.

Marcelino R. Gomez argued the cause and filed a brief for respondents.

Beth S. Brinkmann argued the cause for the United States as amicus curiae urging affirmance. On the brief were Acting Solicitor General Underwood, Acting Assistant

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Attorney General Cruden, Deputy Solicitor General Kneedler, Edward C. DuMont, E. Ann Peterson, and William B. Lazarus. [*]

Chief Justice Rehnquist delivered the opinion of the Court.

In Montana v. United States, 450 U.S. 544 (1981), we held that, with limited exceptions, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian fee land within a reservation. The question with which we are presented is whether this general rule applies to tribal attempts to tax nonmember activity occurring on non-Indian fee land. We hold that it does and that neither of Montana 's exceptions obtains here.

In 1916, Hubert Richardson, lured by the possibility of trading with wealthy Gray Mountain Navajo cattlemen, built the Cameron Trading Post just south of the Little Colorado River near Cameron, Arizona. G. Richardson, Navajo Trader 136-137 (1986). Richardson purchased the land

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directly from the United States, but the Navajo Nation Reservation, which had been established in 1868, see 15 Stat. 667, was later extended eight miles south so that the Cameron Trading Post fell within its exterior boundaries. See Act of June 14, 1934, ch. 521, 48 Stat. 960-962. This 1934 enlargement of the Navajo Reservation—which today stretches across northeast Arizona, northwest New Mexico, and southeast Utah—did not alter the status of the property: It is, like millions of acres throughout the United States, non-Indian fee land within a tribal reservation.

Richardson's "drafty, wooden store building and four small, one-room-shack cabins overlooking the bare river canyon," Richardson, supra, at 135, have since evolved into a business complex consisting of a hotel, restaurant, cafeteria, gallery, curio shop, retail store, and recreational vehicle facility. The current owner, petitioner Atkinson Trading Company, Inc., benefits from the Cameron Trading Post's location near the intersection of Arizona Highway 64 (which leads west to the Grand Canyon) and United States Highway 89 (which connects Flagstaff on the south with Glen Canyon Dam to the north). A significant portion of petitioner's hotel business stems from tourists on their way to or from the Grand Canyon National Park.

In 1992, the Navajo Nation enacted a hotel occupancy tax, which imposes an 8 percent tax upon any hotel room located within the exterior boundaries of the Navajo Nation Reservation. See 24 Navajo Nation Code §§ 101-142 (1995), App. to Pet. for Cert. 102a-124a. Although the legal incidence of the tax falls directly upon the guests, the owner or operator of the hotel must collect and remit it to respondents, members of the Navajo Tax Commission. §§ 104, 107. The nonmember guests at the Cameron Trading Post pay approximately $84,000 in taxes to respondents annually.

Petitioner's challenge under Montana to the Navajo Nation's authority to impose the hotel occupancy tax was rejected by both the Navajo Tax Commission and the Navajo

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Supreme Court. Petitioner then sought relief in the United States District Court for the District of New Mexico, which also upheld the tax. A divided panel of the Court of Appeals for the Tenth Circuit affirmed. See 210 F.3d 1247(2000).

Although the Court of Appeals agreed with petitioner that our cases in this area "did make an issue of the fee status of the land in question," id., at 1256, it nonetheless concluded that the status of the land as "fee land or tribal land is simply one of the factors a court should consider" when determining whether civil jurisdiction exists, id., at 1258 (citing 18 U.S.C. § 1151). Relying in part upon our decision in Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), the court "complement[ed]" Montana 's framework with a "case-by-case approach" that balanced the non-Indian fee status of the land with "the nature of the inherent sovereign powers the tribe is attempting to exercise, its interests, and the impact that the exercise of the tribe's powers has upon the nonmember interests involved." 210 F.3d, at 1255, 1257, 1261. The Court of Appeals then likened the Navajo hotel occupancy tax to similar taxes imposed by New Mexico and Arizona, concluding that the tax fell under Montana 's first exception because a "consensual relationship exists in that the non-member guests could refrain from the privilege of lodging within the confines of the Navajo Reservation and therefore remain free from liability for the [tax]." 210 F.3d, at 1263 (citing Buster v. Wright, 135 F. 947, 949 (CA8 1905)). The dissenting judge would have applied Montana without "any language or 'factors' derived from Merrion " and concluded that, based upon her view of the record, none of the Montana exceptions applied. 210 F.3d, at 1269 (Briscoe, J., dissenting).

We granted certiorari, 531 U.S. 1009 (2000), and now reverse.

Tribal jurisdiction is...

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