White Mountain Apache Tribe v. Bracker
| Decision Date | 29 June 1978 |
| Docket Number | CA-CIV,No. 1,1 |
| Citation | 120 Ariz. 282,585 P.2d 891 |
| Parties | WHITE MOUNTAIN APACHE TRIBE, an Indian tribe established pursuant to Executive Order, E. H. Loveness Lumber Sales Co., an Oregon Corporation d/b/a Pinetop Logging Company, qualified to do business in the State of Arizona, Basin Building Materials Company, an Oregon Corporation d/b/a Pinetop Logging Company, qualified to do business in the State of Arizona, Appellants, v. Robert M. BRACKER, Chairman of the Arizona Department of Transportation Board, Armand Ortega, Vice Chairman of the Arizona Department of Transportation Board, Edward J. McCarthy, Ralph A. Watkins, Jr., John W. McLaughlin, John Houston, William A. Erdmann, Robert M. Bracker and Armand Ortega, members of the Board, Arizona Department of Transportation, and William A. Ordway, Director, Arizona Department of Transportation, and Philip Thorneycroft, Assistant Director, Arizona Department of Transportation, Motor Vehicle Division, Appellees. 3226. |
| Court | Arizona Court of Appeals |
This appeal involves the right of the State of Arizona to collect taxes from a non-Indian private carrier on gross receipts derived from its travel over Indian tribal roadways and a diesel fuel "use tax" expended from travel over these same roadways.
Appellants, E. H. Loveness Lumber Sales and Basin Building Materials Company, both Oregon corporations, are authorized to do business in Arizona as Pinetop Logging Company (Pinetop). Pinetop and the White Mountain Apache Tribe 1 brought an action against various officials of the State of Arizona, including the governor, the attorney general, the Arizona Corporation Commission, the Arizona Highway Department and the Arizona Highway Commission, seeking a refund of use fuel taxes and motor carrier license taxes paid under protest by Pinetop and for declaratory relief prohibiting the various defendants from attempting to regulate the relationship between Pinetop and the tribe. 2
The trial court granted the Arizona Highway Commission's motion for partial summary judgment on Pinetop's claim of immunity from the state's use fuel and motor carrier license taxes. The judgment on the partial summary judgment was made appealable and was timely appealed. The only issue remaining for trial was Pinetop's claim that under state law it was partially exempt from the motor carrier license tax due to the so-called "pulpwood exemption" to this tax. This issue proceeded to trial on a detailed stipulation of facts, depositional testimony and exhibits. The trial court entered judgment finding that Pinetop did not qualify for the "pulpwood exemption" and Pinetop likewise appeals from that judgment. By stipulation, these two appeals have been consolidated.
The undisputed facts show that Pinetop has contracted with the Fort Apache Timber Company (FATCO) to sell, load, and transport to the mill, timber growing on the Fort Apache Indian Reservation. FATCO is an economic organization created by the White Mountain Apache Tribe to oversee and control the harvesting and sale of lumber located on that reservation. The timber itself is owned by the United States for the benefit of the tribe and is under the supervision of the Department of the Interior, Bureau of Indian Affairs (B.I.A.), which has in turn, pursuant to statutory authority, entered into an agreement with FATCO for the harvesting, processing and selling of timber grown on the reservation. The White Mountain Apache Tribe has no treaty relationship with the United States, its reservation having been created by executive order.
Although B.I.A. has contracted with FATCO for certain lumbering operations, the B.I.A. directly selects the trees to be cut, dictates how many trees will be harvested, where logging roads will be built, and how they will be maintained. The B.I.A. also controls the type of equipment Pinetop can use to haul lumber, the speeds logging equipment may travel, and the width, length, height and the weight of loads.
Pinetop has had a contractual relationship with the tribe (approved by B.I.A.) since 1969. Its entire logging operation is conducted on the Fort Apache Indian Reservation and, with the exception of passing over state highways at a few locations, 3 Pinetop vehicles use only roads built and maintained by B.I.A., the tribe, or Pinetop itself.
In 1971, the Arizona Highway Department, pursuant to A.R.S. § 40-641 () and A.R.S. § 28-1552 (use fuel taxes), sought to collect a motor carrier license tax of 2.5% Of Pinetop's gross receipts from its carrier operations and the sum of eight cents per gallon for diesel fuel used by Pinetop in the propulsion of its motor vehicles. These taxes were paid under protest and suit was brought for their recovery.
A.R.S. § 40-601(A)(10) provides a "pulpwood exemption," that is, any private motor carrier in the business of harvesting pulpwood logs is exempt from the 2.5% Common carrier license tax.
It appears that 60% Of the logs actually harvested by Pinetop are ultimately used for pulpwood. All logs harvested and hauled by Pinetop are delivered to FATCO milling operations at Whiteriver, Arizona. At that point, the logs are segregated according to size for milling. If a particular log cannot be processed in the two mills located at Whiteriver, it is sent to a "chipper" which reduces the log to chips which are then sold to Southwest Forest Industries Paper Mill in Snowflake, Arizona. Pinetop does not harvest or haul pulpwood logs or chips directly to Southwest Forest Industries nor does it have any contractual relationship with Southwest Forest Industries.
By affidavit, it is alleged that since the tribe and Pinetop did not contemplate the tax liability of Pinetop for its logging operations, the tribe has agreed to pay the taxes involved in this litigation to Pinetop.
Pinetop contends its operations on the Fort Apache Indian Reservation are immune from state taxation on three theories: (1) that there exist statutory or constitutional prohibitions against such taxation; (2) that such taxation is prohibited by reason of federal preemption; and (3) that such taxation results in an infringement on Indian self-government.
In addition, Pinetop asserts that in any event, under state law it is entitled to a partial exemption on the motor license tax under the so-called "pulpwood exemption." These contentions will be discussed in the order presented.
Arizona has sought the collection of taxes in dispute under A.R.S. § 40-641 and A.R.S. § 28-1552. These statutes provide in part:
A.R.S. § 28-1552:
"For the purpose of partially compensating the state for the use of its highways, an excise tax is imposed at the rate of eight cents per gallon upon use fuel used in the propulsion of a motor vehicle on any highway within this state . . . ."
Pinetop argues that the Arizona Enabling Act, 36 Stat. 557, 569, makes it immune from the imposition of the taxes involved. In this regard, it concedes that the Arizona courts' interpretation of that act would not prohibit the tax sought to be imposed. 4
Rather, Pinetop argues that since the Arizona Enabling Act was the result of a federal statute, federal interpretation must prevail. It then argues that McClanahan v. State Tax Commission, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973), can be construed as holding that the Arizona Enabling Act prohibits the taxation sought here.
We do not determine here whether federal law has usurped the power of the courts of the State of Arizona to interpret its own organic law, for in our opinion, McClanahan does not have the force Pinetop attributes to it, and other federal cases interpreting other similar enabling acts come to a contrary conclusion.
The Arizona Enabling Act, 36 Stat. 557, 569 provides in part:
"That the people inhabiting said proposed State do agree and declare that they forever disclaim all right and title . . . to all lands lying within said boundaries owned or held by any Indian or Indian tribes, the right or title to which shall have been acquired through or from the United States . . . but nothing herein . . . shall preclude the said State from taxing as other lands and other property are taxed any lands and other property outside of an Indian reservation owned or held by any Indian . . . ."
In McClanahan, the United States Supreme Court held that this portion of the Enabling Act was an expression of Congress' assumption that the states lacked jurisdiction over Indians living on the reservation. McClanahan v. State Tax Commission, supra, 411 U.S. at 175, 93 S.Ct. at 1264, 36 L.Ed.2d at 137. As to that portion of the Enabling Act allowing the taxation of non-reservation Indians, McClanahan held:
(emphasis added) 411 U.S. at 176, 93 S.Ct. at 1264, 36 L.Ed.2d at 138.
However, there is nothing in McClanahan, which would indicate that Arizona's Enabling Act intended to prohibit the taxation of non-Indians whose contractual business...
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White Mountain Apache Tribe v. Bracker
...permit its proposed intrusion into the federal regulatory scheme with respect to the harvesting and sale of tribal timber. P. 150. 120 Ariz. 282, 585 P.2d 891, Neil Vincent Wake, Phoenix, Ariz., and Michael J. Brown, Tucson, Ariz., for petitioners. Elinor H. Stillman, Washington, D.C., for ......
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White Mountain Apache Tribe v. Williams
...affirmed the state trial court judgment, characterizing the Tribe's arguments as "pure sophistry." White Mountain Apache Tribe v. Bracker, 120 Ariz. 282, 290, 585 P.2d 891, 899 (Ct.App.1978), rev'd, 448 U.S. 136, 100 S.Ct. 2578, 65 L.Ed.2d 665 After the Arizona Supreme Court declined review......
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White Mountain Apache Tribe v. Williams
...affirmed the state trial court judgment, characterizing the Tribe's arguments as "pure sophistry." White Mountain Apache Tribe v. Bracker, 120 Ariz. 282, 290, 585 P.2d 891, 899 (Ct.App.1978), rev'd, 448 U.S. 136, 100 S.Ct. 2578, 65 L.Ed.2d 665 After the Arizona Supreme Court declined review......