Blackfeet Tribe of Indians v. State of Mont.

• Decision Date: 03 April 1984
• Docket Number: No. 81-3041,81-3041
• Citation: 729 F.2d 1192
• Parties: BLACKFEET TRIBE OF INDIANS, Plaintiff-Appellant, v. STATE OF MONTANA, Director of the Montana Department of Revenue, Glacier County, Montana, and Pondera County, Montana, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1192

729 F.2d 1192

BLACKFEET TRIBE OF INDIANS, Plaintiff-Appellant, v. STATE OF MONTANA, Director of the Montana Department of Revenue, Glacier County, Montana, and Pondera County, Montana, Defendants-Appellees.

No. 81-3041.

United States Court of Appeals Ninth Circuit.

Argued and Submitted En Banc

Nov. 16, 1983.

Decided April 3, 1984.

Richard B. Collins, Boulder, Colo., for plaintiff-appellant.

Helena S. Maclay, Missoula, Mont., Chris D. Tweeten, Asst. Atty. Gen., Helenea, Mont., Deirdre Boggs, Missoula, Mont., for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before GOODWIN, WALLACE, KENNEDY, ANDERSON, FLETCHER, FARRIS, PREGERSON, CANBY, BOOCHEVER, NORRIS and REINHARDT, Circuit Judges.

FLETCHER, Circuit Judge:

This case involves the scope of state authority to tax the proceeds of tribal mineral leases, and requires that we examine a series of congressional enactments regulating the leasing of tribal land for oil and gas production.

Between 1932 and 1968, the Blackfeet Tribe executed 125 leases authorizing the mining of oil and gas on tribal land located within the Blackfeet Indian Reservation. Approximately 12 of the leases were made under the authority of the Act of February 28, 1891, ch. 383, 26 Stat. 795, as amended by the Act of May 29, 1924, ch. 210, 43 Stat. 244 (codified at 25 U.S.C. Secs. 397-98 (1976)). The balance of the leases were made under the authority of the Act of May 11, 1938, ch. 198, 52 Stat. 347 (codified at 25 U.S.C. Secs. 396a-396g (1976)). All 125 leases remain in operation today and will continue until the oil and gas supply is exhausted. The Tribe is paid royalties calculated on the basis of the amount of gas or oil produced under the leases. The State of Montana imposes four distinct taxes on the Tribe's royalty interests, without distinguishing between the royalties collected pursuant to 1938 Act leases and the royalties collected under 1891 Act leases. See Mont.Code Ann. Secs. 15-36-101 to -121 (1981) (Oil and Gas Severance Tax); Mont.Code Ann. Secs. 15-38-101 to -109 (1981) (Resource Indemnity Trust Tax); Mont.Code Ann. Secs. 82-11-131 to -132 (1981) (Oil and Gas Conservation Tax); Mont.Code Ann. Secs. 15-23-601 to -612 (1981) (Oil and Gas Net Proceeds Tax). Montana assesses the Tribe's share of all four taxes against the producer-lessees, who then deduct it from the royalties payable to the Tribe.

In 1977, the Solicitor of the Department of the Interior issued an opinion concluding that Montana was entitled to tax the production of oil and gas under 1891 Act leases but could not tax tribal proceeds from 1938 Act leases. Tax Status of The Production of Oil and Gas from Leases of The Fort Peck Tribal Lands Under The 1938 Mineral Leasing Act, 84 Interior Dec. 905 (1977). ¹ Montana continued to assess taxes against the Tribe's royalty interests under all 125 leases. In 1978, the Tribe filed an action in federal court seeking to enjoin Montana's taxation of tribal royalties. The district court, 507 F.Supp. 446, entered summary judgment for the State of Montana, holding that the 1924 amendment to the 1891 Act expressly authorized state taxation of production of oil and gas on Indian lands, and that the 1938 Act left that authority undisturbed.

A panel of this court affirmed the district court's decision. We ordered a rehearing en banc in order to resolve a conflict between the opinion and our decision in Crow Tribe of Indians v. State of Montana, 650 F.2d 1104 (9th Cir.1981), amended, 665 F.2d 1390 (9th Cir.), cert. denied, --- U.S. ---, 103 S.Ct. 230, 74 L.Ed.2d 182 (1982).

Montana argues on appeal that Congress consented to the imposition of its taxes in the Act of May 29, 1924. The Tribe concedes that the 1924 Act expressly consented to taxation of oil and gas production on Indian land, but argues that the 1924 Act was implicitly repealed by section 7 of the Act of May 11, 1938. ² Alternatively, the Tribe argues that the consent to taxation found in the 1924 Act is inapplicable to production of oil and gas under leases governed by the 1938 Act. The legislative history of the two statutes contains little explicit guidance, and resort to conventional "canons of construction" yields inconsistent results. ³ Our resolution of this difficult issue requires a thorough analysis of the language, purpose and historical contexts of both statutory schemes.

I

We begin with the well settled principle that state taxation of tribal income from activities carried on within the boundaries of the reservation is impermissible unless Congress has expressly consented to the imposition of the tax. See Bryan v. Itasca County, 426 U.S. 373, 96 S.Ct. 2102, 48 L.Ed.2d 710 (1976); Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976). We must resolve whether the 1924 Act explicitly consented to the taxes here at issue. The consent to taxation contained in the 1924 Act was part of an amendment to the Act of February 28, 1891, ch. 383, 26 Stat. 794, which was itself an amendment to the General Allotment Act of February 8, 1887, ch. 119, 24 Stat. 388. The 1924 Act was one of a series of similar statutes providing for non-Indian leasing and development of Indian lands within the context of the policies embodied in the General Allotment Act. See, e.g., Appropriations Act of June 30, 1919, ch. 4, Sec. 26, 41 Stat. 3, 31-34 (codified as amended at 25 U.S.C. Sec. 399 (1976)); Act of September 20, 1922, ch. 347, 42 Stat. 857 (codified at 25 U.S.C. Sec. 400 (1976)). ⁴ Our analysis therefore begins with the program reflected in the General Allotment Act of 1887, and Congress's efforts to effectuate it.

The primary purpose of the General Allotment Act was the speedy assimilation of the Indians. See generally 17 Cong.Rec. 1630-35, 1762-64 (1886); F. Cohen, Handbook of Federal Indian Law 128-32 (1982). Each Indian was to receive an allotment of land, to be held in trust for 25 years. ⁵ The Forty-Ninth Congress envisioned a period during which the Indians would be "civilized" and the tribal system destroyed, after which the Indians would succeed to fee ownership of their lands and all of the privileges and obligations of citizenship. See, e.g., 17 Cong.Rec. 1632 (1886) (remarks of Mr. Maxey); id. at 1763 (remarks of Mr. Dawes); F. Cohen, supra, at 131-32; G.D. Taylor, The New Deal and American Indian Tribalism 4-5 (1980). The Act further provided for the sale of surplus land, and the use of the proceeds for the education and civilization of members of the tribes. ⁶

In 1891, Congress responded to public pressure to open reservation land for settlement and mining by amending the allotment act to permit short term leases of unallotted lands and lands allotted to aged and disabled allottees. See Act of February 28, 1891, ch. 383, Sec. 3, 26 Stat. 794, 795; F. Cohen, supra, at 134-35. ⁷ In 1910, Congress enacted a measure permitting short term leasing of allotted lands and directing the Secretary of the Interior to supervise the expenditure of funds earned under the leases. ⁸ See Act of June 25, 1910, ch. 431, Sec. 4, 36 Stat. 855, 856. The Indian Appropriations Act of 1919 included comprehensive provisions permitting long term mineral leasing of unallotted lands in western states. See Appropriations Act of June 30, 1919, ch. 4, Sec. 26, 41 Stat. 3, 31-34 (codified as amended at 25 U.S.C. Sec. 399 (1976)). The Act of May 29, 1924, ch. 210, 43 Stat. 244, extended the terms of 1891 Act oil and gas production leases from a ten-year period to "as long as oil or gas shall be found in paying quantities," authorized the Secretary of the Interior to enter into further oil and gas leases for the extended period, and consented to state taxation of mineral production on unallotted lands "bought and paid for" by the Indians. See British-American Oil Producing Co. v. Board of Equalization, 299 U.S. 159, 57 S.Ct. 132, 81 L.Ed. 95 (1936). ⁹ Between 1920 and 1930, several other statutes were enacted to permit the leasing of additional categories of reservation land. ¹⁰

All of these leasing provisions had a number of common features. The leases were regulated and approved by the Secretary of the Interior. ¹¹ The proceeds were paid to the Secretary of the Interior and disbursed, by congressional appropriation, for the benefit of the Indians. The tribes had no authority to police or cancel leases or to direct the purposes for which revenue earned under the leases would be spent. See generally F. Cohen, supra, at 533-34.

The legislative history of these enactments reflects certain common themes. Congress evinced concern about the increasing size of Indian appropriations, and desired that a greater portion of the federal expenditures be made from the Indians' funds. See, e.g., H.Rep. No. 1791, 69th Cong.2d Sess. (1927); 68 Cong.Rec. 4574-75 (1927) (remarks of Mr. Letts); 58 Cong.Rec. 175 (1919) (remarks of Mr. Snyder); id. at 207-08 (colloquy); F. Cohen, supra, at 135-36. Representatives expressed frustration at the fact that the assimilation sought under the General Allotment Act failed to proceed with the contemplated dispatch. See, e.g., 68 Cong.Rec. 4704 (1927) (remarks of Mr. Morrow); 58 Cong.Rec. 174-75 (1919) (remarks of Mr. Snyder). States complained that reservation lands were remaining tax exempt for too long a period, see 58 Cong.Rec. 180-81 (1919) (remarks of Mr. McKeown); id. at 184 (remarks of Mr. Howard); 45 Cong.Rec. 6079 (1910) (colloquy), and urged strenuously that the lands be opened for increased non-Indian development and settlement. See, e.g., 68 Cong.Rec. 4575 (1927) (remarks of Mr. Frear); 58 Cong.Rec. 181 (1919) (remarks of Mr. McKeown); id. at 216 (remarks of Mr. Carter); 45 Cong.Rec. 6096 (1910) (remarks of Mr. McGuire); F. Cohen, supra, at 128, 134-35.

The 1924 Act was responsive to these concerns. By extending the period of oil and gas production leases it encouraged further non-Indian...