Burlington Northern v. FORT PECK TRIBAL EXEC. BD.
| Decision Date | 23 November 1988 |
| Docket Number | CV-87-120-GF.,No. CV-87-055-GF,CV-87-055-GF |
| Citation | 701 F. Supp. 1493 |
| Parties | BURLINGTON NORTHERN RAILROAD, Plaintiff, v. FORT PECK TRIBAL EXECUTIVE BOARD, Fort Peck Tribal Tax Commission, Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation: Kenneth E. Ryan, Tribal Chairman; and Paula Brien, Tribal Secretary/Accountant, Defendants. BURLINGTON NORTHERN RAILROAD, Plaintiff, v. BLACKFEET TRIBE OF the BLACKFEET INDIAN NATION; Blackfeet Tribal Business Council; Blackfeet Tax Administration Division; Earl Old Person, Chairman; Archie St. Goddard, Vice Chairman; Marvin Weatherwax, Secretary; and Eloise C. Cobell, Treasurer, Defendants. |
| Court | U.S. District Court — District of Montana |
Michael E. Webster, Bruce R. Toole, Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Mont., for plaintiff.
Harry S. Sachse, Marvin J. Sonosky, Reid Peyton Chambers, William R. Perry, Sonosky, Chambers & Sachse, Washington, D.C., Ray F. Koby, Swanberg, Koby & Swanberg, Great Falls, Mont., for Fort Peck Tribal Executive Bd., et al.
Jeanne S. Whiteing, Boulder, Colo., Phillip Roy, Donald Kittson, Browning, Mont., for Blackfeet Tribe of Blackfeet Indian Nation, et al.
The plaintiff, Burlington Northern Railroad, challenges the authority of the Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation, Montana, to impose a tax upon the right-of-way occupied by the Railroad across the Fort Peck Indian Reservation. On May 15, 1987, this court granted the Railroad's request for preliminary injunctive relief, thereby enjoining the Tribes from levying the disputed tax upon the Railroad's right-of-way. The matter is presently before the court on cross-motions for summary judgment for a determination of whether the Tribes should be permanently enjoined from attempting to levy a tax upon the Railroad's right-of-way.
On January 27, 1987, the Tribal Executive Board, as governing body of the Assiniboine and Sioux Tribes, enacted an ordinance implementing a tax known as a "utility property tax". The ordinance was designed to tax the property interests of public and private utilities using tribal trust lands on the Fort Peck Indian Reservation. In general, the tax rate is 3% of the value of the interest held. The ordinance was approved by the Area Director of the Bureau of Indian Affairs on January 28, 1987. The first tax assessments under the ordinance were sent to the taxpayers on April 15, 1987, with payment due by May 15, 1987. Before any taxes were collected, the Railroad brought this action seeking to invalidate the tax as applied to that entity.
The Railroad takes the position that because the right-of-way upon which it operates was established pursuant to an act of Congress, the Tribes have been divested of their sovereign authority to impose a tax with respect to that right-of-way. In the alternative, the Railroad seeks a declaration that the ordinance is null and void, as violative of the Commerce Clause of the United States Constitution and section 306 of the Railroad Revitalization and Regulatory Reform Act, Pub.L. 94-210, 90 Stat. 31 (49 U.S.C. § 11503). The Tribes, on the other hand, view the imposition of the tax as a legitimate exercise of their sovereign authority.
In Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed. 2d 21 (1982), the United States Supreme Court recognized the "power to tax is an essential attribute of Indian sovereignty because it is a necessary instrument of self-government and territorial management." Id., at 137, 102 S.Ct. at 901. Referring to its earlier decision in Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10 (1980), the Court reiterated that "the power to tax transactions occurring on trust lands and significantly involving a tribe or its members is a fundamental attribute of sovereignty which the tribes retain unless divested of it by federal law or necessary implication of their dependent status." 455 U.S. at 137, 102 S.Ct. at 901. The power of an Indian tribe to tax derives from the tribe's general authority, as sovereign, to control economic activity within its jurisdiction, and to defray the cost of providing governmental services by requiring contributions from persons or enterprises engaged in economic activities within that jurisdiction. 455 U.S. at 137, 102 S.Ct. at 901. Consequently, a tribe's interest in levying taxes on nonmembers is strongest when the revenues are derived from value generated on the reservation by activities involving the tribe, and when the taxpayer is the recipient of tribal services. 455 U.S. at 138, 102 S.Ct. at 902. Therefore, "a tribe has the power to tax nonmembers only to the extent the nonmember enjoys the privilege of trade or other activity on the reservation to which the tribe can attach a tax." 455 U.S. at 141-142, 102 S.Ct. at 903-904. The Court recognized, as evident, the fact that there exists a "significant territorial component to tribal power: a tribe has no authority over a nonmember until the nonmember enters tribal lands or conducts business with the tribe." 455 U.S. at 142, 102 S.Ct. at 904.
The rationale expressed by the Court in Colville, and expounded upon in Merrion, requires a tribal interest in the subject matter to justify a tribal tax. See, F. COHEN, HANDBOOK OF FEDERAL INDIAN LAW, 433-434, n. 27. Use of trust land by a non-Indian supplies such an interest, but on fee land the interest must be based on other circumstances. Id., citing, Collins, Implied Limitations on the Jurisdiction of Indian Tribes, 54 Wash.L. Rev. 479, 508-21 (1979). In those precedential cases in which the use of tribal property by non-Indians was not involved, the tribal interest sufficient to justify a tribal tax upon non-Indians emanated from the fact that the non-Indians entered the reservation for the purpose of transacting business with Indians. See, Kerr-McGee Corporation v. Navajo Tribe of Indians, 471 U.S. 195, 105 S.Ct. 1900, 85 L.Ed.2d 200 (1985); Washington v. Confederated Colville Tribes, supra; Morris v. Hitchcock, 194 U.S. 384, 24 S.Ct. 712, 48 L.Ed. 1030 (1904); Buster v. Wright, 135 F. 947 (8th Cir.1905), appeal dismissed, 203 U.S. 599, 27 S.Ct. 777, 51 L.Ed. 334 (1906).
In the matter sub judice, the Railroad concedes, as it must, the general power of the various Indian tribes to tax the transactions of non-Indians which occur on trust lands and significantly involve a tribe or its members. The court perceives the Railroad's challenge to the contested tax to be predicated upon its conclusion that the territorial component, essential to the valid exercise of the Tribes' taxing authority, is absent with respect to the subject right-of-way. The position of the Railroad is based upon its conclusion that the right-of-way is not tribal property and that the Tribes' interest in the operation of the railroad upon that right-of-way is insufficient to justify the imposition of a tribal tax.
The Tribes on the other hand, confident the right-of-way is properly considered reservation trust land, submit the tax must be sustained as a legitimate exercise of the Tribes' inherent sovereign authority. The Tribes see no legitimate basis upon which application of the tax to the Railroad's right-of-way can be distinguished from application of the tax to any other non-Indian business holding a possessory interest on reservation land. Tribal consent, the Tribes submit, was essential to the establishment of the right-of-way. The Tribes view the right-of-way as but an easement, with beneficial title to the land over which the right-of-way crosses remaining in the Tribes. The Tribes contend the implementation of the tax is a valid exercise of their sovereign authority to control economic activity within the tribes' jurisdiction. In the opinion of the Tribes, their possessory interest tax is indistinguishable, in essence, from the tribal tax sustained by the Supreme Court in Merrion. The initial question to be addressed is whether Congress, in establishing the subject right-of-way, intended to extinguish the Tribes' beneficial title to the land comprising the right-of-way.
Analysis must obviously begin with a review of the history pertinent to the establishment of the subject right-of-way. Pursuant to the Act of April 15, 1874, 18 Stat. 28, Congress set apart a vast area of land in that area of the western United States, which is now the State of Montana, as the "Blackfeet" reservation for the "use and occupation" of numerous Indian tribes, including the Assiniboine and Sioux Tribes. By the Act of May 1, 1888, 25 Stat. 113, Congress established the present diminished boundaries of three Indian reservations, i.e., Fort Peck, Fort Belknap and Blackfeet. The Act of May 1, 1888, represented the congressional ratification of, inter alia, a December 28 and 31, 1886, agreement between the United States and the Assiniboine and Sioux Tribes, whereby the Tribes ceded and relinquished all their right, title and interest in and to all lands embraced within the 1874 reservation, not specifically set apart and reserved as separate reservations for these Tribes. Between the time the 1886 Agreement was reached amongst the Assiniboine and Sioux Tribes and the United States, and the passage of the Act of May 1, 1888, ratifying that agreement, Congress passed the Act of February 15, 1887, 24 Stat. 402, which granted the subject right-of-way to the Burlington Northern's predecessor-in-interest. The right-of-way passed through lands of the 1874 reservation which were eventually included within the boundaries of the Fort Peck Indian Reservation as established by the Act of May 1, 1888.1
Review of the history pertinent to the establishment of the Fort Peck Indian Reservation reveals that the Tribes' property rights in the reservation were established by specific acts of Congress....
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