617 F.2d 537 (10th Cir. 1980), 78-1154, Merrion v. Jicarilla Apache Tribe
|Docket Nº:||78-1154, 78-1251.|
|Citation:||617 F.2d 537|
|Party Name:||J. Gregory MERRION and Robert L. Bayless, d/b/a Merrion and Bayless, Jerome T. McHugh, Chase Oil Company, Dugan Production Corporation, Consolidated Oil and Gas, Inc., Southland Royalty Company, Tesoro Petroleum Corporation, Amerada Hess, Supron Energy Corporation, Energy Reserves Group, Inc., J. M. Huber Corporation, Continental Oil Company, Atlan|
|Case Date:||February 22, 1980|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
Argued and Submitted Sept. 12, 1979.
Rehearing Denied April, 25, 1980.
Robert J. Nordhaus and Terry D. Farmer of Nordhaus, Moses & Dunn, Albuquerque, N. M., for defendants-appellants Jicarilla Apache Tribe, Jicarilla Apache Tribal Council and Gwendolyn Velarde.
Maryann Walsh, Atty., Washington, D. C. (James W. Moorman, Asst. Atty. Gen., Sanford Sagalkin, Deputy Asst. Atty. Gen., Neil T. Proto, Atty., Peter R. Steenland, Jr., Atty., Dept. of Justice, Washington, D. C., with her on the briefs), for defendant-appellant Cecil Andrus, Secretary of the Interior.
Bruce D. Black of Campbell, Bingaman & Black, P. A., Santa Fe, N. M., and Jason W. Kellahin of Kellahin & Kellahin, Santa Fe, N. M., for plaintiffs-appellees Merrion and Bayless, et al.
John R. Cooney of Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, N. M. (R. H. Landt of Amoco Production Company, Denver, Colo., Richard L. Marler of Marathon Oil Company, Findlay, Ohio, Mark B. Thompson, III, of Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, N. M., with him on the briefs), for plaintiffs-appellees Amoco Production Company and Marathon Oil Company.
George P. Vlassis, Phoenix, Ariz. (Lawrence A. Ruzow, Katherine Ott, Gary Verburg, Phoenix, Ariz., of counsel), of Vlassis, Ruzow & Crowder, Phoenix, Ariz., filed an amicus curiae brief for the Navajo Nation.
Reid Peyton Chambers of Sonosky, Chambers & Sachse, Washington, D. C. and Marvin J. Sonosky, Washington, D. C., of counsel, filed an amicus curiae brief for the Shoshone Indian Tribe and the Assiniboine and Sioux Tribes.
Charles A. Hobbs, Washington, D. C., filed an amicus curiae brief for National Congress of American Indians, Inc., the Arapaho Tribe of the Wind River Reservation, and the Three Affiliated Tribes of The Fort Berthold Reservation.
Toney Anaya, Atty. Gen., and Jan Unna, Sp. Asst. Atty. Gen. of N. M., Santa Fe, N. M., filed an amicus curiae brief for the State of New Mexico.
Robert B. Hansen, Atty. Gen., Richard L. Dewsnup, Dallin W. Jensen, Frank V. Nelson, Asst. Attys. Gen. of Utah, Salt Lake City, Utah, filed an amicus curiae brief for the State of Utah.
John J. Rooney, Acting Atty. Gen. of Wyoming, Cheyenne, Wyo., Allen I. Olson, Atty. Gen. of North Dakota, Bismarck, N. D., and Mike Greeley, Atty. Gen. of Montana, Helena, Mont., filed an amicus curiae brief for the States of Wyoming, North Dakota and Montana.
Before SETH, Chief Judge, and HOLLOWAY, McWILLIAMS, BARRETT, DOYLE, McKAY and LOGAN, Circuit Judges (en banc).
LOGAN, Circuit Judge.
This appeal arises out of two suits, consolidated for trial, brought by appellees against the Jicarilla Apache Tribe and its Tribal Council (the Tribe). Appellees (lessees), who are non-Indians, produce oil and gas from within the Tribe's reservation pursuant to leases granted them under the auspices of the Secretary of the Interior. After the Tribe enacted an oil and gas severance tax to be measured by production from oil and gas wells within the reservation, lessees sued the Tribe and Secretary of Interior, Cecil Andrus, 1 seeking a declaratory judgment and injunction that would prohibit enforcement of this tax. After a nonjury trial, the judge permanently enjoined enforcement declaring the tax "illegal, unconstitutional, invalid and void."
The issues on appeal are whether,
(1) the district court had jurisdiction over the claims against the Tribe and the Secretary of the Interior,
(2) the Tribe has the inherent power to levy the severance tax,
(3) the tax violates the Commerce Clause of the United States Constitution, and
(4) Congress preempted tribal taxation.
The Jicarilla Apache Tribe is an Indian Tribe occupying an executive order reservation in northwestern New Mexico. The Tribal Council is the legislative arm of the Tribe's government. In 1968 the Tribe adopted a revised constitution pursuant to the Indian Reorganization Act of 1934, §§ 16, 17, 25 U.S.C. §§ 476, 477. Article XI of that constitution provides, in pertinent part,
Section 1. The inherent powers of the Jicarilla Apache Tribe, including those conferred by Section 16 of the Act of June 18, 1934, (48 Stat. 984), as amended, shall vest in the tribal council and shall be exercised thereby subject only to limitations imposed by the Constitution of the United States, applicable Federal statutes and regulations of the Department of the Interior and the restrictions established by this revised constitution.
(e) Taxes and Fees. The tribal council may levy and collect taxes and fees on tribal members, and may enact ordinances, subject to approval by the Secretary of the Interior, to impose taxes and fees on non-members of the tribe doing business on the reservation.
The revised constitution was approved by the Under Secretary of the Interior in 1969.
In 1976 the Tribal Council adopted an ordinance imposing a severance tax on "any oil and natural gas severed, saved and removed from Tribal lands." The operators are required to pay the tax, which is due at the time of severance and is payable monthly. The tax rate is assessed at the wellhead per barrel of crude oil and per million BTU of natural gas "sold or transported off the Reservation." "Royalty gas, oil or condensate taken by the Tribe in kind, and used by the Tribe" is exempt from taxation. The Secretary, through the Acting Area Director of the Bureau of Indian Affairs, formally approved the tribal ordinance in December of 1976.
Among the trial court's findings of fact are the following: Approximately 80% of the oil and gas produced by lessees is shipped interstate for sale outside the state of New Mexico; the tax would generate
over two million dollars annually; the lessees would be able to pass the majority of the tax burden on to their customers; if the lessees are required to absorb the tax, the ability of some of the lessees to operate profitably some of the existing oil wells on the reservation would be substantially limited; those lessees not able to profitably operate wells "would be required to shut down such wells resulting in a loss of natural resources and an unjust return of the wells to the Jicarilla Apache Tribe"; and the tax burden on the price of oil and gas would be more than 29% of the interstate price of old gas and over 12.5% of the price of old oil.
Based upon these findings the trial court held that (1) neither tribal sovereignty nor the Indian Reorganization Act of 1934 empower the Tribe to enact the tax; (2) 25 U.S.C. § 398c grants the State of New Mexico the exclusive right to tax lessees; and (3) the tax discriminates against and constitutes a multiple burden on interstate commerce in violation of the Commerce Clause.
Before proceeding to the merits, we must consider two jurisdictional questions whether the trial court had jurisdiction to enjoin the Secretary of the Interior from taking any action to enforce the tax, and whether the court had jurisdiction over the Tribe.
Lessees sued the Secretary on the basis that in approving the Tribe's tax ordinance he violated the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 et seq. The APA is not an independent grant of federal jurisdiction. Califano v. Sanders, 430 U.S. 99, 105-07, 97 S.Ct. 980, 984-85, 51 L.Ed.2d 192 (1977). Since only injunctive relief is sought, an action can be maintained against the Secretary under the 1976 amendments to 5 U.S.C. § 702. Appellees admit waiving the defense that the Secretary improperly delegated his approval function to the local official of the Bureau of Indian Affairs. The only arguments made in this Court that the Secretary acted unlawfully under the APA go to the merits of the tax and are treated hereafter.
The Tribe asserts that under the doctrine of sovereign immunity it could not be sued and therefore the trial court was without jurisdiction, 2 citing Santa Clara Pueblo v. Martinez, 436 U.S. 49, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978) and United States v. United States Fidelity & Guar. Co., 309 U.S. 506, 60 S.Ct. 653, 84 L.Ed. 894 (1940). Those cases clearly hold a tribe cannot be sued absent consent. See also Puyallup Tribe, Inc. v. Department of Game, 433 U.S. 165, 97 S.Ct. 2616, 53 L.Ed.2d 667 (1977). Here the Tribal Council, as the duly constituted legislative body of the Tribe, by the terms of the severance tax ordinance, expressly consented to suits against the Tribe in the United States District Court or in the Jicarilla Apache Tribal Court. The ordinance was approved by the representative of the Secretary of the Interior. The question is whether this...
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