Norvell v. Sangre de Cristo Development Company, Inc.

• Decision Date: 20 February 1974
• Docket Number: Civ. No. 9106.
• Citation: 372 F. Supp. 348
• Parties: David L. NORVELL, Attorney General of the State of New Mexico, Plaintiff, Board of Commissioners of Santa Fe County, Plaintiff-Intervenor, v. SANGRE de CRISTO DEVELOPMENT COMPANY, INC., a New Mexico corporation, et al., Defendants, Mescalero Apache Tribe, Defendant-Intervenor.
• Court: U.S. District Court — District of New Mexico

372 F. Supp. 348

David L. NORVELL, Attorney General of the State of New Mexico, Plaintiff, Board of Commissioners of Santa Fe County, Plaintiff-Intervenor, v. SANGRE de CRISTO DEVELOPMENT COMPANY, INC., a New Mexico corporation, et al., Defendants, Mescalero Apache Tribe, Defendant-Intervenor.

Civ. No. 9106.

United States District Court, D. New Mexico.

February 20, 1974.

Paul L. Bloom, Special Asst. Atty. Gen., Santa Fe, N. M. (David L. Norvell, Atty. Gen.), for plaintiff.

Antonio Anaya, Special Asst. Dist. Atty. (James C. Thompson, Dist. Atty., Santa Fe County), for Board of Commissioners of Santa Fe County.

Charles D. Olmsted, Santa Fe, N. M., for defendant Sangre De Cristo Development Co., Inc.

Richard J. Smith, Asst. U. S. Atty. (Victor R. Ortega, U. S. Atty.), Albuquerque, N. M., Anthony S. Borwick, Atty., Dept. of Justice, Washington, D. C., for the federal defendants.

Jefferson R. Rhodes, Fettinger & Burroughs, Alamogordo, N. M., for the Mescalero Apache Tribe.

MEMORANDUM OPINION

BRATTON, District Judge.

This action presents for decision the question of what authority a state may exert over non-Indians who have entered into a 99 year lease with an Indian tribe under which the non-Indians propose to develop the leased land as a subdivision of homes, together with appropriate commercial and recreational facilities.

The lease involved in this controversy was entered into in 1970 between the defendant Sangre de Cristo Development Company and the Pueblo of Tesuque and was approved by the Secretary of the Interior as provided by 25 U.S.C.A. § 415(a) and 25 C.F.R. § 131. The lease covers pueblo land situated in Santa Fe County within five miles from the boundary of the city of Santa Fe, and the subdivision begun on the land is called Colonias de Santa Fe.

The Pueblo of Tesuque has a membership of approximately 350, of whom nearly 300 live at the pueblo. The leased land lies approximately two miles from the pueblo where the members live and is further separated from the pueblo and the non-leased lands by a major highway. A city of several thousand non-Indian residents, together with a golf course, motel, and other commercial developments, is planned for the leased land.

In negotiating the lease, the lessor, lessee, and participating federal authorities proceeded from the premise that the state of New Mexico should not and would not have jurisdiction over a development of the kind contemplated because of its location on Indian land. This was anticipated in part because of the disclaimer in the state's enabling act and its constitution,¹ which was never amended to allow the state to assume the criminal and civil jurisdiction offered states under Public Law 280.² Since the time of the enactment of Public Law 280, there had been imposed upon the assumption of such jurisdiction the further requirement that consent to it be given by the affected Indians by a majority of the adult Indians voting at a special election held for that purpose pursuant to the provisions of 25 U.S.C. A. §§ 1321-1326.³ In the absence of this state and Indian action, it was thought that supreme and exclusive authority and control should repose in Congress.

Those involved in the lease negotiations also thought that the federal policy of encouraging non-Indians to invest in and develop business ventures in Indian country to the end that the economic conditions of Indians in Indian country will be improved, as expressed in 25 U. S.C.A. § 415(a) and 25 C.F.R. § 131, pre-empted the field, so that no room was left for the assertion of state jurisdiction.

Finally, it was thought that the fact that the land itself was tax-exempt would inure to the benefit of the lessees, so that their leasehold interest would be tax-exempt and their activities on the land would not be subject to other state taxes.

This is not to say that the lease negotiators were unaware of the state's disagreement with their position. A field solicitor of the Department of Interior who was involved in the negotiations testified that they knew that the state asserted it had jurisdiction over such a leasehold interest. The government attorney was not certain which sovereign was the proper one to charter a government for the development and, pending that determination by Congress or the courts, a selection was made of the pueblo. However, it was anticipated that the role of the tribe would be that of a landlord and that the developer and the residents of the subdivision would provide the needed governmental services and that no such services would be provided by the pueblo.

Once the lease had been finalized, the state of New Mexico moved rapidly to assert its jurisdiction and control over the development. In a series of exchanges, state officials notified the company that the state considered its laws controlling, and the company responded that the state had no jurisdiction over activities upon land leased from the Pueblo of Tesuque and lacked jurisdiction to impose and collect any tax.

The company brought suit in state court, seeking to enjoin the City of Santa Fe and the Board of County Commissioners of Santa Fe County from exercising platting and planning authority and subdivision control conferred upon them by N.M.Stat.Ann. §§ 14-18-1 through 14-20-24 (1953) (Repl.1968) and N.M.Stat.Ann. §§ 70-3-1—70-3-9 (1953) (Supp.1971). On appeal, the New Mexico Supreme Court held that the United States had pre-empted or reserved all control over the subdivision, planning and platting of leased Indian lands, so that there was no room for the state or its political subdivisions to impose additional or conflicting controls.⁴ In so deciding, the court relied upon 25 U.S.C.A. § 415(a) and the regulations promulgated by the Secretary of the Interior at 25 C.F.R. §§ 1.4, 131.

The state then filed the present action. It claims that the company has refused to comply with applicable state laws as follows:

(1) The company has refused to obtain a dispenser's license pursuant to N. M.Stat.Ann. §§ 46-5-1, 46-5-2 (1953), before offering for sale liquor at a motel it plans to build on the subdivision;

(2) The company has refused to comply with the Construction Industries Licensing Act, N.M.Stat.Ann. §§ 67-35-1 et seq. (1953) (Supp.1973), including the Act's standards relating to all phases of building and to permits, and, to date, has built a sales office at the subdivision without such compliance;

(3) The company has refused to submit to the platting and planning authority of the county under the Land Subdivision Act, N.M.Stat.Ann. §§ 70-3-1 et seq. (1953) (Supp.1971), and has offered for sale and has sold subleases without having the county commission's prior approval of the plat of the subdivided land (4) The company has stated it is not bound by the state's Water Quality Act, N.M.Stat.Ann. §§ 75-39-1 et seq. (1953), nor by N.M.Stat.Ann. § 12-1-4(8) (1953), governing water supplies and sewage disposal;

(5) The company has refused to pay an ad valorem tax on its leasehold interest and to declare and pay such a tax on its on-site sales office as required by N.M. Stat.Ann. § 72-1-1 (1953); and

(6) The company has refused to pay a gross receipts tax pursuant to N.M. Stat.Ann. §§ 72-16A-1 et seq. (1953) (Supp.1973), on receipts derived from the sale of soft drinks at its sales office.

The state also asserted that its false advertising statutes, N.M.Stat.Ann. §§ 49-12-1 et seq. (1953), are applicable. The company has conceded that the statutes do apply to its advertising, all of which is conducted off the reservation, so this is no longer an issue in the case.

It is the state's contention that the above statutes extend to the defendant company and its activities by virtue of the company's non-Indian status and by virtue of the state's police power.

The state has joined the Secretary of the Interior, the Commissioner of Indian Affairs, and the Area Supervisor of the Albuquerque Area office of the Bureau of Indian Affairs as defendants in this action, claiming that they, in reliance on 25 C.F.R. § 1.4, authorized Sangre de Cristo Development Company to develop and use the leased lands without regard to and in violation of the laws of New Mexico when they approved the lease agreement and subdivision plats and a master plan for the land. The federal activities, the state contends, were unlawful or ultra vires of the federal defendants' lawful authority. Thus, the state directly challenges the validity of 25 C.F.R. § 1.4.⁵ In the state action, there was no challenge to the validity of the regulation. Neither the state nor the Secretary of Interior were parties to that action. There being no challenge to the validity of the regulation, the state supreme court correctly interpreted it as a complete preemption of the field.⁶ In the present action, the Secretary is a party and its validity has been challenged, so that this issue must now be considered.

While the federal defendants initially denied reliance upon the challenged regulation, it is admitted that they knew of it at the time of the lease negotiations and believed that it reflected the existing law covering the Secretary's authority with regard to the application of state law to leases of Indian land, a position in which they are supported by the defendant company and the amici curiae.

In essence the state of New Mexico's position is that, while the lease is between Indians and non-Indians and involves Indian land, the involvement of non-Indians is to such a degree that state jurisdiction is called into play, and thus, the present case is an exception to the general rule that authority over Indian affairs rests with the federal government to the exclusion of state government.⁷ It is claimed that where, as here, the activities sought to be reached by the state are non-Indian activities, the state has jurisdiction unless limited by federal enactment.⁸ Hence, the state seeks to prove that, without regard to Public Law 280 and...