Merrion v. Jicarilla Apache Tribe Amoco Production Company v. Jicarilla Apache Indian Tribe

• Decision Date: 30 March 1981
• Docket Number: 80-15,Nos. 80-11,s. 80-11
• Citation: Merrion v. Jicarilla Apache Tribe Amoco Production Company v. Jicarilla Apache Indian Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed.2d 21 (1981)
• Parties: J. Gregory MERRION and Robert L. Bayless, etc., et al., Petitioners, v. JICARILLA APACHE TRIBE, et al. AMOCO PRODUCTION COMPANY and Marathon Oil Company, Petitioners, v. JICARILLA APACHE INDIAN TRIBE, et al
• Court: U.S. Supreme Court

455 U.S. 130

102 S.Ct. 894

71 L.Ed.2d 21

J. Gregory MERRION and Robert L. Bayless, etc., et al., Petitioners,

v JICARILLA APACHE TRIBE, et al.

AMOCO PRODUCTION COMPANY and Marathon Oil

Company, Petitioners,

v. JICARILLA APACHE INDIAN TRIBE, et al.

Nos. 80-11, 80-15.

Argued March 30, 1981.

Reargued Nov. 4, 1981.

Decided Jan. 25, 1982.

Syllabus

Respondent Indian Tribe, pursuant to its Revised Constitution(which had been approved by the Secretary of the Interior (Secretary) as required by the Indian Reorganization Act of 1934), enacted an ordinance (also approved by the Secretary) imposing a severance tax on oil and gas production on the tribal reservation land.Oil and gas received by the Tribe as in-kind royalty payments from lessees of mineral leases on the reservation are exempted from the tax.Petitioners, lessees under Secretary-approved long-term leases with the Tribe to extract oil and natural gas deposits on reservation land, brought separate actions in Federal District Court to enjoin enforcement of the tax.The District Court, consolidating the actions, entered a permanent injunction, ruling that the Tribe had no authority to impose the tax, that only state and local authorities had the power to tax oil and gas production on Indian reservations, and that the tax violated the Commerce Clause.The Court of Appeals reversed, holding that the taxing power is an inherent attribute of tribal sovereignty that has not been divested by any treaty or Act of Congress, and that there was no Commerce Clause violation.

Held:

1.The Tribe has the inherent power to impose the severance tax on petitioners' mining activities as part of its power to govern and to pay for the costs of self-government.Pp. 136-152.

(a) The power to tax is an essential attribute of Indian sovereignty because it is a necessary instrument of self-government and territorial management.This power enables a tribal government to receive revenues for its essential services.The power does not derive solely from the Tribe's power to exclude non-Indians from tribal lands but from the Tribe's general authority, as sovereign, to control economic activities within its jurisdiction, and to defray the cost of providing governmental services by requiring contributions from persons or enterprises engaged in such activities.Here, petitioners, who have availed themselves of the privilege of carrying on business on the reservation, benefit from police protection and other governmental services, as well as from the advantages of a civilized society assured by tribal government.Under these circumstances, there is nothing exceptional in requiring petitioners to contribute through taxes to the general cost of such government.The mere fact that the Tribe enjoys rents and royalties as the lessor of the mineral lands does not undermine its authority to impose the tax.Pp. 137-144.

(b) Even if the Tribe's power to tax were derived solely from its power to exclude non-Indians from the reservation, the Tribe has the authority to impose the severance tax.Non-Indians who lawfully enter tribal lands remain subject to a tribe's power to exclude them, which power includes the lesser power to tax or place other conditions on the non-Indian's conduct or continued presence on the reservation.The Tribe's role as commercial partner with petitioners should not be confused with its role as sovereign.It is one thing to find that the Tribe has agreed to sell the right to use the land and take valuable minerals from it, and quite another to find that the Tribe has abandoned its sovereign powers simply because it has not expressly reserved them through a contract.To presume that a sovereign forever waives the right to exercise one of its powers unless it expressly reserves the right to exercise that power in a commercial agreement turns the concept of sovereignty on its head.Pp. 144-148.

(c) The Federal Government did not deprive the Tribe of its authority to impose the severance tax by Congress' enactment of the 1938 Act establishing the procedures for leasing oil and gas interests on tribal lands.Such Act does not prohibit the Tribe from imposing the tax when both the tribal Constitution and the ordinance authorizing the tax were approved by the Secretary.Nor did the 1927 Act permitting state taxation of mineral leases on Indian reservations divest the Tribe of its taxing power.The mere existence of state authority to tax does not deprive an Indian tribe of its power to tax.Moreover, the severance tax does not conflict with national energy policies.To the contrary, the fact that the Natural Gas Policy Act of 1978 includes taxes imposed by an Indian tribe in its definition of costs that may be recovered under federal energy pricing regulations, indicates that such taxes would not contravene such policies and that the tribal authority to do so is not implicitly divested by that Act.Pp. 149-152.

2.The severance tax does not violate the "negative implications" of the Commerce Clause.Pp. 152-158.

(a)Courts are final arbiters under the Commerce Clause only when Congress has not acted.Here, Congress has affirmatively acted by providing a series of federal checkpoints that must be cleared before a tribal tax can take effect, and in this case the severance tax was enacted in accordance with this congressional scheme.Pp. 154-156.

(b) Even if judicial scrutiny under the Commerce Clause were necessary, the challenged tax would survive such scrutiny.The tax does not discriminate against interstate commerce since it is imposed on minerals either sold on the reservation or transported off the reservation before sale.And the exemption for minerals received by the Tribe as in-kind payments on the leases and used for tribal purposes merely avoids the administrative make-work that would ensue if the Tribe taxed the minerals that it, as a commercial partner, received in royalty payments, and thus cannot be deemed a discriminatory preference for local commerce.Pp. 156-158.

617 F.2d 537, 10th Cir., affirmed.

Jason W. Kellahin, Santa Fe, N.M., for petitioners in 80-11.

John R. Cooney, Albuquerque, N.M., for petitioners in 80-15.

Robert J. Nordhaus, Albuquerque, N.M., and Louis F. Claiborne, Washington, D.C., for respondents.

Justice MARSHALLdelivered the opinion of the Court.

Pursuant to long-term leases with the Jicarilla Apache Tribe, petitioners, 21 lessees, extract and produce oil and gas from the Tribe's reservation lands.In these two consolidated cases, petitioners challenge an ordinance enacted by the Tribe imposing a severance tax on "any oil and natural gas severed, saved and removed from Tribal lands."SeeOil and Gas Severance TaxNo. 77-0-02, App. 38.We granted certiorari to determine whether the Tribe has the authority to impose this tax, and, if so, whether the tax imposed by the Tribe violates the Commerce Clause.

I

The Jicarilla Apache Tribe resides on a reservation in northwestern New Mexico.Established by Executive Order in 1887,¹ the reservation contains 742,315 acres, all of which are held as tribal trust property.The 1887 Executive Order set aside public lands in the Territory of New Mexico for the use and occupation of the Jicarilla Apache Indians, and contained no special restrictions except for a provision protecting pre-existing rights of bona fide settlers.² Approximately 2,100 individuals live on the reservation, with the majority residing in the town of Dulce, N.M., near the Colorado border.

The Tribe is organized under the Indian Reorganization Act of 1934, ch. 576,48 Stat. 984,25 U.S.C. §§ 461 et seq., which authorizes any tribe residing on a reservation to adopt a constitution and bylaws, subject to the approval of the Secretary of the Interior (Secretary).³ The Tribe's first Constitution, approved by the Secretary on August 4, 1937, preserved all powers conferred by § 16 of the Indian Reorganization Act of 1934, ch. 576,48 Stat. 987,25 U.S.C. § 476.In 1968, the Tribe revised its Constitution to specify:

"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."Revised Constitution of the Jicarilla Apache Tribe, Art. XI, § 1.

The Revised Constitution provides that "[t]he tribal council may enact ordinances to govern the development of tribal lands and other resources,"Art. XI, § 1(a)(3).It further provides that "[t]he 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,"Art. XI, § 1(e).The Revised Constitution was approved by the Secretary on February 13, 1969.

To develop tribal lands, the Tribe has executed mineral leases encompassing some 69% of the reservation land.Beginning in 1953, the petitioners entered into leases with the Tribe.The Commissioner of Indian Affairs, on behalf of the Secretary, approved these leases, as required by the Act of May 11, 1938, ch. 198,52 Stat. 347,25 U.S.C. §§ 396a-396g(1938 Act).In exchange for a cash bonus, royalties, and rents, the typical lease grants the lessee "the exclusive right and privilege to drill for, mine, extract, remove, and dispose of all the oil and natural gas deposits in or under" the leased land for as long as the minerals are produced in paying quantities.App. 22.Petitioners may use oil and gas in developing the lease without incurring the royalty.Id., at 24.In addition, the Tribe reserves the rights to use gas without charge for any of its buildings on the leased land, and to take its...