Tribe v. Homans
| Decision Date | 02 October 2009 |
| Docket Number | No. CIV 07–772 JP/WDS.,CIV 07–772 JP/WDS. |
| Citation | 775 F.Supp.2d 1259 |
| Parties | UTE MOUNTAIN UTE TRIBE, Plaintiff,v.Rick HOMANS, Secretary of Taxation and Revenue Department for the State of New Mexico, Defendant. |
| Court | U.S. District Court — District of New Mexico |
Daniel H. Israel, Boulder, CO, Peter Ortego, Towaoc, CO, Timothy A. Vollmann, Albuquerque, NM, for Plaintiff.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND MEMORANDUM OPINION
The State of New Mexico levies five taxes on oil and gas operations throughout New Mexico, including operations on the Ute Mountain Ute Reservation, that lies partly within the State of New Mexico along New Mexico's border with Colorado. On August 10, 2007, the Ute Mountain Ute Tribe (“UMUT”) filed a Complaint (Doc. No. 1) against the Secretary of the Taxation and Revenue Department for the State of New Mexico. The Complaint is divided into three claims for relief. Under the First Claim for Relief, the UMUT alleged that the imposition of the state taxes violates federal common law, the federal right of the UMUT to self-determination, and the Supremacy Clause of the United States Constitution. In the Second Claim for Relief, the UMUT asserted that the State of New Mexico's imposition of an ad valorem property tax on oil and gas production equipment violates the Fourteenth Amendment and the Enabling Act of June 20, 1910 in which the State of New Mexico disclaimed any taxing jurisdiction over lands held by the United States of America for the benefit of tribes. In the Third Claim for Relief, the UMUT sued under 42 U.S.C. § 1983 claiming that the State of New Mexico taxes deprive individual Ute Mountain Ute Tribal members of their “property rights and the privileges and immunities secured to them under federal law and the Constitution.” The UMUT seeks an injunction prohibiting the State of New Mexico from imposing the five state taxes on operations on UMUT's lands in New Mexico.
In a Memorandum Opinion and Order (Doc. No. 15) filed February 4, 2008, the Court denied Defendant's Motion to Dismiss (Doc. No. 7) as to the First Claim for Relief and the Second Claim for Relief, but granted the Motion to Dismiss as to the Third Claim for Relief and, therefore, dismissed with prejudice the UMUT's Third Claim for Relief under 42 U.S.C. § 1983 and its accompanying claim for attorney's fees under 42 U.S.C. § 1988.
On May 6 through May 8, 2009, the Court held a non-jury trial on the UMUT's remaining claims. Following the presentation of all evidence, the Court issued proposed Findings of Fact based on the evidence introduced at trial. Counsel were permitted to and did submit written comments and suggestions on the Court's proposed Findings of Fact. After taking the comments and suggestions into account, the Court provided counsel with the Court's final Findings of Fact (which were not docketed at the time). The Court then permitted counsel to submit briefs on the law as it related to the Court's final Findings of Fact. The parties have now submitted briefs on the law, which the Court found to be helpful and which the Court has taken into account.
In accordance with Fed.R.Civ.P. 52(a), the Court makes the following FINDINGS OF FACT AND CONCLUSIONS OF LAW.
1. The UMUT is a federally recognized Indian Tribe.
2. A person is eligible to be an enrolled member of the UMUT if the person is at least 50% Ute Mountain Ute by blood.
3. There are currently slightly more than two thousand enrolled members of the UMUT.
4. A reservation for the UMUT (“Reservation”)—and reservations for other Ute Indians—were first established by treaty in 1868. Treaty Between the United States of America and the Tabeguache, Muache, Capote, Weeminuche, Yampa, Grand River, and Uintah Bands of Ute Indians, Mar. 2, 1868, 15 Stat. 619; Cuthair v. Montezuma–Cortez, Colo. Sch. Dist. No. RE–1, 7 F.Supp.2d 1152, 1158 (D.Colo.1998) ().
5. The Reservation was decreased in size by the Brunot Agreement, which Congress ratified in 1874, Act of Apr. 29, 1874, 18 Stat. 37, and again by a second agreement ratified by Congress in 1880, Act of June 15, 1880, 21 Stat. 199.
6. The Reservation is a hybrid treaty/statutory reservation; it is not an executive reservation.
7. The Reservation lies mainly in the State of Colorado, but also lies partly in the State of Utah and partly in the State of New Mexico.
8. The headquarters of the UMUT are in Towaoc, Colorado.
9. The present eastern and southern boundaries of the New Mexico portion of the Reservation (“New Mexico lands”) were fixed by Congress in 1895. Act of Feb. 20, 1895, 28 Stat. 677.
10. The New Mexico lands are bounded on the north by the New Mexico–Colorado state line.
11. The present western boundary of the Reservation in New Mexico was fixed in a quiet title action in the United States District Court for the District of New Mexico between the UMUT and the Navajo Tribe. Navajo–Ute Boundary Dispute Act of 1968, Pub. L. 90–256 (Feb. 14, 1968) (); Ute Mountain Tribe of Indians v. Navajo Tribe of Indians, 409 U.S. 809, 93 S.Ct. 68, 34 L.Ed.2d 70 (1972) ().
12. The New Mexico lands consist of all sections in Townships 31 and 32 North in Ranges 14 and 15 West of the New Mexico Principal Meridian, and the easternmost two-thirds of the sections in Townships 31 and 32 North in Range 16 West of the New Mexico Principal Meridian.
13. The New Mexico lands are unallotted. Act of Feb. 20, 1895, 28 Stat. 677.
14. No part of the New Mexico lands is held privately in fee.
15. The New Mexico lands are held in trust for the UMUT by the United States.
16. No member of the UMUT resides in the New Mexico lands.
17. No other person resides in the New Mexico lands.
18. Tribal members can choose to reside in the New Mexico lands, subject to approval by the UMUT.
19. The only economic activities on the New Mexico lands are grazing and extraction of oil and natural gas.
20. The only roads in the New Mexico lands are unpaved roads.
21. There is no other transportation infrastructure, such as rail lines or air strips, on the New Mexico lands.
22. Members of the UMUT use the unpaved roads in the New Mexico lands for gathering wood and running livestock; and oil and gas operators use the unpaved roads for survey and for access to their wells and equipment.
23. Access to the unpaved roads is primarily from New Mexico state roads.
24. The UMUT and the Bureau of Indian Affairs (“BIA”) share jurisdiction over the roads in the New Mexico lands.
25. The roads in the New Mexico lands are maintained in part by the UMUT and in part by the oil and gas operators.
26. Before an oil and gas operator creates a new unpaved road on the New Mexico lands for survey purposes, the operator must have approval from the BIA.
27. Before an oil and gas operator creates or modifies a road on the New Mexico lands for drilling or maintenance purposes, the operator must have approval from the Bureau of Land Management (“BLM”).
28. The State of New Mexico plays no part in the creation, maintenance, or approval of roads on the New Mexico lands.
29. Oil and natural gas lie in reservoirs underneath the surface of the earth.
30. In many circumstances, multiple distinct operators have a leasehold or other property interest that grants them the right to extract oil and/or natural gas from the same reservoir.
31. In that circumstance, the rights are correlative: one operator's exercise of its right to extract oil or natural gas affects the amount and location of the resource in the reservoir and as a result affects the rights of the other operators in the same reservoir.
32. In the absence of constraints on production, multiple operators extracting oil or natural gas from a common reservoir will race to extract the resource as quickly as possible.
33. This race to extract can cause economic waste of the oil or gas resource, either from depressed market prices or from storage costs.
34. This race to extract can also cause physical waste of the oil or gas resource by decreasing pressure in the reservoir or by causing the resource to flow into other areas, making extraction impossible or inefficient.
35. Defects in well design or integrity can also cause waste of the resource by allowing escape of the resource or by allowing water into the reservoir.
36. Historically, waste has been addressed through private agreements or statutory provisions, known as pooling or unitization, that treat a reservoir as a common resource and constrain the operators extracting oil or gas from it.
37. The constraints are typically in the form of well spacing, setbacks, and limits on the rate of production from a well.
38. In addition to addressing waste, these constraints allow each operator to receive the operator's just and equitable share of the reservoir.
39. Statutes may provide for compulsory or forced pooling where the operators are unable to come to agreement.
40. Pools can grow or shrink as new resources are discovered or existing ones are depleted.
41. Two pools can become connected through discovery of resources between them.
42. Extraction of oil and gas often involves extraction of groundwater as a by-product, known as “produced water.”
43. Produced water is typically alkaline and not usable for municipal or agricultural purposes; it is also potentially a pollutant.
44. Operators often dispose of produced water by injecting it into wells.
45. Injection of produced water can make oil remaining in a reservoir easier to extract.
46. If produced water is not injected correctly, a formation or a zone can be fractured, resulting in waste of the resource or contamination of groundwater.
47. When revenues from a producing...
To continue reading
Request your trial