Montana v. Blackfeet Tribe of Indians, No. 83-2161

• Court: United States Supreme Court
• Writing for the Court: POWELL
• Citation: 85 L.Ed.2d 753,471 U.S. 759,105 S.Ct. 2399
• Parties: MONTANA, et al., Petitioners v. BLACKFEET TRIBE OF INDIANS
• Docket Number: No. 83-2161
• Decision Date: 15 January 1985

471 U.S. 759 105 S.Ct. 2399 85 L.Ed.2d 753 MONTANA, et al., Petitioners

v.

BLACKFEET TRIBE OF INDIANS.

No. 83-2161. Argued Jan. 15, 1985. Reargued April 23, 1985. Decided June 3, 1985. Syllabus

The 1891 Act that first authorized mineral leasing of Indian lands was amended by a 1924 Act that provided 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." The Indian Mineral Leasing Act of 1938, which was enacted to obtain uniformity of Indian mineral leasing laws, also permitted mineral leasing of Indian lands, but contained no provision authorizing state taxation nor did it repeal specifically such authorization in the 1924 Act. A general repealer clause of the 1938 Act, however, provides that "[a]ll Act[s] or parts of Acts inconsistent herewith are hereby repealed." Respondent Indian Tribe filed suit in Federal District Court challenging the application of several Montana taxes to respondent's royalty interests under oil and gas leases issued to non-Indian lessees pursuant to the 1938 Act, and seeking declaratory and injunctive relief. The District Court granted summary judgment for the State, holding that the taxes were authorized by the 1924 Act and that the 1938 Act did not repeal this authorization. The Court of Appeals reversed in pertinent part.

Held: Montana may not tax respondent's royalty interests from leases issued pursuant to the 1938 Act. Pp. 764-768.

(a) Two canons of statutory construction apply to this case: the States may tax Indians only when Congress has manifested clearly its consent to such taxation, and statutes are to be construed liberally in favor of Indians. Pp. 764-766.

(b) When the 1924 and 1938 Acts are considered in light of these principles, it is clear that the 1924 Act does not authorize Montana to impose the taxes in question. Nothing in either the text or legislative history of the 1938 Act suggests that Congress intended to permit States to tax tribal royalty income generated by leases issued pursuant to that Act. The Act contains no explicit consent to state taxation nor is there any indication that it was intended to incorporate implicitly the 1924 Act's taxing authority. The 1938 Act's general repealer clause cannot be taken to incorporate consistent provisions of earlier laws and surely does not satisfy the requirement that Congress clearly consent to state taxation. Moreover, the language of the 1924 Act's taxing provision belies

Page 760

any suggestion that it carries over to the 1938 Act, since the words "such lands" in the taxing provision refer to lands subject to mineral leases under the 1891 Act and its 1924 amendment. Pp. 766-768.

729 F.2d 1192 (CA 9 1984), affirmed.

Deirdre Boggs, Missoula, Mont., for petitioners.

Jeanne S. Whiteing, Boulder, Colo., for respondent.

Edwin Smiley Kneedler, Washington, D.C., for the U.S. as amicus curiae by special leave of Court.

Page 761

Justice POWELL delivered the opinion of the Court.

This case presents the question whether the State of Montana may tax the Blackfeet Tribe's royalty interests under oil and gas leases issued to non-Indian lessees pursuant to the Indian Mineral Leasing Act of 1938, ch. 198, 52 Stat. 347, 25 U.S.C. § 396a et seq. (1938 Act).

I

Respondent Blackfeet Tribe filed this suit in the United States District Court for the District of Montana challenging the application of several Montana taxes ¹ to the Tribe's royalty interests in oil and gas produced under leases issued by the Tribe. The leases involved unallotted lands on the Tribe's reservation and were granted to non-Indian lessees in accordance with the 1938 Act. The taxes at issue were paid to the State by the lessees and then deducted by the lessees from the royalty payments made to the Tribe. The Blackfeet sought declaratory and injunctive relief against enforcement of the state tax statutes.² The Tribe argued to the District Court that the 1938 Act did not authorize the State to tax tribal royalty interests and thus that the taxes were unlawful. The District Court rejected this claim and

Page 762

granted the State's motion for summary judgment. The court held that the state taxes were authorized by a 1924 statute, Act of May 29, 1924, ch. 210, 43 Stat. 244, 25 U.S.C. § 398 (1924 Act), and that the 1938 Act, under which the leases in question were issued, did not repeal this authorization. The District Court was not persuaded by a 1977 opinion of the Department of the Interior supporting the Blackfeet's position, noting that the Department previously had expressed contrary views, 507 F.Supp. 446, 451 (1981).

A panel of the United States Court of Appeals for the Ninth Circuit affirmed the District Court's decision. On rehearing en banc, the Court of Appeals reversed in part and remanded the case for further proceedings. 729 F.2d 1192 (1984). The court held that the tax authorization in the 1924 Act was not repealed by the 1938 Act and thus remained in effect for leases executed pursuant to the 1924 Act. The court also held, however, that the 1938 Act did not incorporate the tax provision of the 1924 Act, and therefore that its authorization did not apply to leases executed after the enactment of the 1938 Act. The court reasoned that the taxing provision of the 1924 Act was inconsistent with the policies of the Indian Reorganization Act of 1934, 48 Stat. 984, 25 U.S.C. § 461 et seq. (IRA). Since the 1938 Act was adopted specifically to harmonize Indian leasing laws with the IRA, Congress could not have intended the 1924 Act to apply to leases issued under the 1938 Act. The court remanded the case to the District Court to determine where the legal incidence of the taxes fell, and directed the court to consider whether, if the taxes fell on the oil and gas producers instead of the Indians, the taxes were pre-empted by federal law. We granted the State's petition for certiorari to resolve whether Montana may tax Indian royalty interests arising out of leases executed after the adoption of the 1938 Act. 469 U.S. 815, 105 S.Ct. 80, 83 L.Ed.2d 28 (1984). We affirm the decision of the en banc Court of Appeals that it may not.

Page 763

II

Congress first authorized mineral leasing of Indian lands in the Act of Feb. 28, 1891, 26 Stat. 795, 25 U.S.C. § 397 (1891 Act). The Act authorized leases for terms not to exceed 10 years on lands "bought and paid for" by the Indians. The 1891 Act was amended by the 1924 Act. The amendment provided in pertinent part:

"Unallotted land . . . subject to lease for mining purposes for a period of ten years under section 397 . . . may be leased . . . by the Secretary of the Interior, with the consent of the [Indian] council . . ., for oil and gas mining purposes for a period of not to exceed ten years, and as much longer as oil or gas shall be found in paying quantities, and the terms of any existing oil and gas mining lease may in like manner be amended by extending the term thereof for as long as oil or gas shall be found in paying quantities: Provided, 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: Provided, however, That such tax shall not become a lien or charge of any kind or character against the land or the property of the Indian owner." Act of May 29, 1924, ch. 210, 43 Stat. 244, 25 U.S.C. § 398.

Montana relies on the first proviso in the 1924 Act in claiming the authority to tax the Blackfeet's royalty payments.

In 1938, Congress adopted comprehensive legislation in an effort to "obtain uniformity so far as practicable of the law relating to the leasing of tribal lands for mining purposes." S.Rep. No. 985, 75th Cong., 1st Sess., 2 (1937) (hereafter Senate Report). Like the 1924 Act, the 1938 Act permitted,

Page 764

subject to the approval of the Secretary of the Interior, mineral leasing of unallotted lands for a period not to exceed 10 years and as long thereafter as minerals in paying quantities were produced. The Act also detailed uniform leasing procedures designed to protect the Indians. See 25 U.S.C. §§ 396b-396g. The 1938 Act did not contain a provision authorizing state taxation; nor did it repeal specifically the authorization in the 1924 Act. A general repealer clause was provided in § 7 of the Act: "All Act [sic] or parts of Acts inconsistent herewith are hereby repealed." The question presented by this case is whether the 1924 Act's proviso that authorizes state taxation was repealed by the 1938 Act, or if left intact, applies to leases executed under the 1938 Act.

III

The Constitution vests the Federal Government with exclusive authority over relations with Indian tribes. Art. I, § 8, cl. 3; see Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 670, 94 S.Ct. 772, 779, 39 L.Ed.2d 73 (1974), citing Worcester v. Georgia, 6 Pet. 515, 561, 8 L.Ed. 483 (1832). As a corollary of this authority, and in recognition of the sovereignty retained by Indian tribes even after formation of the United States, Indian tribes and individuals generally are exempt from state taxation within their own territory. In The Kansas Indians, 5 Wall. 737, 18 L.Ed. 667 (1867), for example, the Court ruled that lands held by Indians in common as well as those held in severalty were exempt from state taxation. It explained that "[i]f the tribal organization . . . is preserved intact, and recognized by the political department of the government as existing, then they are a 'people distinct from others,' . . . separated from the jurisdiction of [the State], and to be governed exclusively by the government of the Union." Id., at 755. Likewise, in The New York Indians, 5 Wall. 761, 18 L.Ed. 708 (1867), the Court...