Blackfeet Tribe of Indians v. Groff
| Decision Date | 14 December 1982 |
| Docket Number | No. 81-3041,81-3041 |
| Citation | 729 F.2d 1185 |
| Parties | The BLACKFEET TRIBE OF INDIANS, Plaintiff-Appellant, v. William A. GROFF, Director, Montana, Department of Revenue, State of Montana; Glacier County, Montana; and Pondera County, Montana, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard B. Collins, Boulder, Colo., for plaintiff-appellant.
Douglas Anderson, Conrad, Mont., argued, Helena S. Maclay, Missoula, Mont., Allen B. Chronister, Asst. Atty. Gen., Helena, Mont., Bruce McEvoy, Kalispell, Mont., Deirdre Boggs, Missoula, Mont., on brief, for defendants-appellees.
On Appeal from the United States District Court for the District of Montana.
Before SNEED, ANDERSON, and REINHARDT, Circuit Judges.
The Blackfeet Tribe of Indians (the "Tribe") filed suit seeking equitable relief against state taxation of oil and gas production undertaken by the Tribe's non-Indian lessees on the Blackfeet Reservation. Named as defendants were William Groff as Director of the Montana Department of Revenue, the State of Montana, Glacier County, Montana, and Pondera County, Montana (all simply the "State"). The district court, the Honorable Paul G. Hatfield presiding, granted the State's motion for summary judgment. 1 We affirm.
The Blackfeet Tribe, under the supervision of the Department of the Interior, is the lessor of 125 parcels of tribal land for oil and gas mining purposes. The Tribe is the beneficial owner of the mineral rights in issue. The United States holds the legal title in trust for the Tribe. The lessees (or "producers") are not Indian or Indian-owned entities. The Tribe receives royalty payments based on the amount of oil and gas produced. Oil and gas leasing on the reservation began in 1932 and has continued until the recent past.
Four Montana taxing statutes are at issue. 2 One has been in force at all times relevant to this action. Two were enacted in the 1970's and the other in 1953. All four statutes tax different aspects of the production of the oil and gas extracted by the non-Indian lessees. The Tribe admits it has not paid any of these taxes directly to the State; the producers have paid the taxes. The Tribe asserts, however, that the producers have deducted the Tribe's share of taxes from the royalty payments.
The Tribe brought this action in 1978. Both the Tribe and the State moved for summary judgment. The district court granted summary judgment in favor of the State.
District Judge Hatfield based his grant of summary judgment on the belief the 1924 Act authorized state taxation of reservation oil and gas production; because the 1924 Act authorized the taxes at issue, it was unnecessary to reach the issue of whether the legal incidence of the tax is on the Tribe. The Tribe argues on appeal that the 1924 Act is no longer in effect and the incidence of the tax adversely impacts its inherent right of sovereignty. As this appeal is from a summary judgment, our review is the same as that of the trial court. National Industries, Inc. v. Republic National Life Ins. Co., 677 F.2d 1258, 1265 (9th Cir.1982). Few, if any, facts are in dispute. Virtually all issues are legal and involve the often difficult questions of jurisdiction in Indian Country.
A state's power to tax transactions arising in Indian Country is severely limited. This is especially true when Indian interests are affected. Thus, it was early established that the states could not tax Indian trust property. The Kansas Indians, 72 U.S. (5 Wall.) 737, 18 L.Ed. 667 (1867). More recently, it has been held that the states may not tax the income earned by tribal members on the tribe's reservation, McClanahan v. Arizona State Tax Commission, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973), the personal property of tribal members, Bryan v. Itasca County, 426 U.S. 373, 96 S.Ct. 2102, 48 L.Ed.2d 710 (1976), or sales involving tribal members, Moe v. Confederated Salish and Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976), and Washington v. Confederated Tribes of the Colville Reservation, 447 U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10 (1980).
State jurisdiction over the affairs of non-Indians in Indian Country often presents more difficult issues. Such jurisdiction must usually be analyzed in terms of federal preemption and/or the Tribe's limited right of sovereignty. White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 142, 100 S.Ct. 2578, 2583, 65 L.Ed.2d 665, 672 (1980). If the state taxation of non-Indians in Indian Country is not preempted, Warren Trading Post Co. v. Arizona Tax Commission, 380 U.S. 685, 85 S.Ct. 1242, 14 L.Ed.2d 165 (1965), it may be upheld if the state's interest in taxing the non-Indians is substantial and outweighs the sovereignty interest of the tribe. See Confederated Colville Tribes, supra, 447 U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10.
The major exception to the limited power of the states to tax Indian or non-Indian interests in Indian Country is when there is an express authorization by Congress for the tax. See Bryan v. Itasca County, supra, 426 U.S. 373, 96 S.Ct. 2102, 48 L.Ed.2d 710, and McClanahan v. Arizona State Tax Commission, supra, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129. The district judge found, and the State argues, such authorization exists. Our task, then, is to determine whether Congress has evinced its consent to the taxes at issue.
We have little difficulty finding such consent in the Act of May 29, 1924, 43 Stat. 244 (the "1924 Act"). This statute, currently codified at 25 U.S.C. Sec. 398, amended the Act of February 28, 1891, 26 Stat. 795, 25 U.S.C. Sec. 397. 3 The 1891 Act authorized the leasing of tribal property for grazing and mining purposes, within certain specified regulations. The 1924 Act includes a specific procedure for oil and gas leasing and provides in part:
That the production of oil and gas and other minerals on such lands may be taxed by the state in which said lands are located in all respects the same as production on unrestricted lands, and the Secretary of the Interior is authorized and directed to cause to be paid the tax so assessed against the royalty interests on said lands....
The 1924 Act's authorization of state taxation of oil and gas production and net proceeds under tribal leases on the Blackfeet Reservation was upheld in British-American Oil Prod. Co. v. Board of Equalization of Montana, 299 U.S. 159, 57 S.Ct. 132, 81 L.Ed. 95 (1936).
The Tribe contends the 1924 Act's tax authorization was abrogated by the Act of May 11, 1938, 52 Stat. 347, codified at 25 U.S.C. Secs. 396a-396g (the "1938 Act"). 4 The 1938 Act did not expressly repeal the 1924 Act. 5 While we recognize the 1938 Act was an attempt to provide uniformity in an area which has been described as a "patch-work state," F. Cohen, Handbook of Federal Indian Law, 328 (1942 Ed.), we cannot agree with the Tribe that this act impliedly repealed the 1924 Act's tax authorization. 6
At the outset, we note the opinion in Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982), while not dispositive, offers support for our conclusion the 1938 Act did not repeal the 1924 Act. In Merrion, the Court upheld the right of the Jicarilla Apache Tribe to tax oil and gas production on its reservation. New Mexico had in existence its own oil and gas production taxes pursuant to the Act of March 3, 1927, 44 Stat. 1347, 25 U.S.C. Secs. 398a-e. The 1927 Act's main purpose was to extend the 1924 Act's coverage to executive order reservations. See, F. Cohen, Handbook of Federal Indian Law, 534 (1982 Ed.) The Court noted in Merrion that it was not deciding the issue whether the state could tax oil and gas production through leases entered under the 1938 Act. 455 U.S. at 151, fn. 17, 102 S.Ct. at 909, fn. 17, 71 L.Ed.2d at 38, fn. 17. Nonetheless, the Court treated the 1927 and 1938 Acts as a composite whole and made no indication the state lacked the authority to tax. We believe a similar analysis should apply to the 1924 and 1938 Acts.
The 1938 Act attempts to make uniform the law governing the leasing of tribal (unallotted) lands for mineral purposes. Letter from Charles West, Acting Secretary of the Interior, to the House Committee on Indian Affairs, June 17, 1937, reprinted in H.R.Rep. No. 1872, 75th Cong., 3d Sess. (1938); S.Rep. No. 985, 75th Cong., 1st Sess. (1937). It does so by regulating the leasing of all minerals, not solely certain types of mineral leasing. 25 U.S.C. Sec. 396a. It also regulates the procedures for entering a lease and allows the Department of Interior to issue rules to that effect. 25 U.S.C. Sec. 396d. The legislative history also makes it clear the 1938 Act was designed to further the purposes of the Indian Reorganization Act of 1934, 25 U.S.C. Secs. 461-479. Letter from Charles West, supra. The Reorganization Act was quite clearly an effort to reverse the assimilation policies of the Allotment Acts and to encourage Indian self-government. See Fisher v. District Court, etc., 424 U.S. 382, 387, 96 S.Ct. 943, 946, 47 L.Ed.2d 106, 111 (1976). The 1938 Act furthers these goals by giving tribes more control over the decisions to lease and by streamlining the leasing process to secure a higher economic return to the tribes.
Against the policy and scope of the 1938 Act, we must balance the long-recognized rule that repeals by implication are strongly disfavored. Morton v. Mancari, 417 U.S. 535, 549, 94 S.Ct. 2474, 2482, 41 L.Ed.2d 290, 300 (1974); Posadas v. National City Bank, 296 U.S. 497, 503, 56 S.Ct. 349, 352, 80 L.Ed. 351, 355 (1936). As explained by the Supreme Court in Posadas:
There are two well-settled categories of repeal by implication--(1) where provisions in the two acts are in...
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