Amicus Curiae Brief — Burlington Northern Railroad v. Blackfeet Tribe of the Blackfeet Indian Reservation

A

, : FILED

A

No. 91-545 MAY 28 1992

BFICE OF THE CLERK

Iu the Supreme Court of the United States

OCTOBER TERM, 1991

BURLINGTON NORTHERN RAILROAD COMPANY,

PETITIONER

v,

INDIAN RESERVATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

KENNETH W. STARR

Solicitor General

BARRY M. HARTMAN

Acting Assistant Attorney General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

RICHARD H. SEAMON

Assistant to the Solicitor General

EDWARD J. SHAWAKER

VICKI L. PLAUT

Attorneys

Department of Justice

Washington, D.C. 20530

202) 514-2217

~)

QUESTION PRESENTED

Whether an Indian tribe may tax the value of a rail-

road right of way that belongs to a nonmember, and that

crosses tribal trust lands, only if the tribe has a con-

sensual relationship with the nonmember.

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(1)

TABLE OF CONTENTS

Page

et et condods NN ID RENE) SORIA EO RANA AR LR 1

LS i RE ORD PE Se ce ee 7

Ne sintaepaonasiionen 21

TABLE OF AUTHORITIES

Cases:

Adams Express Co. V. Ohio, 165 U.S. 194 (1897).. 19

Atchison, Topeka & Santa Fe Ry. Vv. Deputy Area

Director, 93 Interior Dec. 79 (Bd. Indian App.

ela rc titi SU een Od acne RR a 15

Brendale v. Confederated Tribes & Bands of the

Yakima Indian Nation, 492 U.S. 408 (1989) _.7, 13, 14

Cardin Vv. De La Cruz, 671 F.2d 363 (9th Cir.),

cert. denied, 459 U.S. 967 (1982) .............00000000.. 8

Conoco, Inc. V. Shoshone & Arapahoe Tribes, 569

pe SR | a ne 15

Cotton Petroleum Corp. Vv. New Mexico, 490 U.S.

tS cI I ce 7,18

County of Yakima v. Confederated Tribes & Bands

of the Yakima Indian Nation, 112 S. Ct. 683

aehaiaaals Pt ter oad BEAST ster DERE TO or Pea 20

Delta Air Lines, Inc. Vv. August, 450 U.S. 346

nk TEA” Aa FEE OR ae, DEE ae 15

Great Northern Ry. v. United States, 315 U.S. 262

(7948) ........ sais REREAD RDN Spm ~ RACERS REIT RE EE 6

Kerr-McGee Corp. Vv. Navajo Tribe, 471 U.S. 195

ad SETS a eee RIPE Cet OR TESSE 8,9,17

Merrion Vv. Jicarilla Apache Tribe, 455 U.S. 130

RINSE ae roe 1, 5, 7, 8, 9, 11, 14, 19

Montana Vv. United States, 450 U.S. 544 (1981) _7, 8, 12,

13, 14, 17

Morris v. Hitchcock, 194 U.S. 384 (1904) _............ 8

Navajo Communications Co. v. Navajo Taz

Comm’n, 18 Indian L. Rep. 6068 (Navajo Sup.

(RRNA RIES a ea ee ne co 15

Nevada V. United States, 463 U.S. 110 (1983) ___.. 18

(TIT)

IV

Cases—Continued: Page

New Mevxico v. Mescalero Apache Tribe, 462 U.S.

Es, ID re IE CT RUSE Oe OE Ant aS . 18,14

Powers of Indian Tribes, 55 Interior Dec. 14

I coc (ieacasia tte ceectansh ates etancechasescsecadatiedsineaiaiaeadas 8

Protest Filed by Railbox Co., et al., In re, Tribal

Ct. Nos. CV-87-54, CV-87-55 & CV-87-56 (Tribal

AE I TR TE acocccesnivsicecuacicdnceenantduicnconcneanniin 15

Pullman’s Palace Car Co. Vv. Pennsylvania, 141

A RN ag 19

Quill Corp. v. North Dakota, No. 91-194 (May 26,

MOTD Sectussie taba chsisla hin asin clita aiciaticipiate a 20

Snow V. Quinault Indian Nation, 709 F.2d 1319

(9th Cir. 1983), cert. denied, 467 U.S. 1214

| SERRE ONS eee ere Se: De Ee GT A 15

Thomson V. Pacific R.R., 76 U.S. (9 Wall.) 579

SEED ctconinaasesieesass casanaickindaaitiaeueniiassiieeaienttedminee 19

United States v. Mazurie, 419 U.S. 544 (1975) _..... 8

United States v. Wheeler, 435 U.S. 313 (1978) ....... 8

Washington v. Confederated Tribes of the Colville

Indian Reservation, 447 U.S. 134 (1980)..1, 5, 6, 7, 8, 9,

10, 11, 13, 14, 18

White Mountain Apache Tribe v. Bracker, 448

A ee es 8,14

Williams v. Lee, 358 U.S. 217 (1959) ............22........ 8

Constitutions, statutes and regulations:

U.S. Const. :

Art. I, §8, Cl. 8 (Interstate Commerce

2 20s oot 1 bel ee AO nels ABE SINS stetetas 5, 7, 15

pp SER ean EE SY IR GOAT lesa ine ase ld 15

I ce Uk ne Si 15

Treaty With the Blackfoot Indians, Oct. 17, 1855,

ee ae sicakinaieeeieaticmdaaadaaios 2

Blackfeet Const. :

At. Vi, § 2) .................. pdealenaaihalcsoneecmaaicycaan 4

Fort Peck Const. :

(i 5 SESE CERRO See 4

Act of Apr. 15, 1874, ch. 96, 18 Stat. 28 00... save 2

Act of Feb. 15, 1887, ch. 130, 24 Stat. 402 3

a I MI icchieniccestoninchcenippnnecessocbsdsdcnntinmnentbconss 3,17

Regulations—Continued : Page

Act of May 1, 1888, ch. 213, 25 Stat. 113 0-0... 3

Bae, Fis ee es BPE cetvericctesepscecivecsnnananecans 2-3,17

Crow Allotment Act of 1920, ch. 224, 41 Stat. 751..... 12

General Allotment Act of 1887, ch. 119, 24 Stat.

SANE SEA ERT Rep pOM Rte Nae CES Ee ECL 12

Railroad Revitalization and Regulatory Reform

Bak, Ge es ee Oe By cenicnnitircscctnrcleniceicami 5,15

Be as Fe ID Sntsdaddenindeidassoseiienciinteniies - dues 5

Superfund Amendments and Reauthorization Act

of 1986, 42 U.S.C. 11001-11050 ............................ 19

Mont. Code Ann. (1990) :

i INTE criti ncidindsechitentiemiaipaaniadenibammnanianiamiatbe 19

SRS ere OREN a EERE DP: He 4,19

re 4

25 C.F .R.:

| Se CEE RCo Renan peor 17

I UE ici acicealp eneanniommnaconuinesbionbiins 17

RN oo eet 17

BGs Os I GED wicieissiteidacdenancaiessacielaiatinatiomnaans 19

Miscellaneous:

1991 Moody’s Transportation Manual ..............-...-.--- 1,18

The Official Railway Guide (Nov./Dec. 1991) .......... 2

In the Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-545

BURLINGTON NORTHERN RAILROAD COMPANY,

PETITIONER

VU.

BLACKFEET TRIBE OF THE BLACKFEET

INDIAN RESERVATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s order

inviting the Solicitor General to express the views of the

United States.

STATEMENT

This case concerns the authority of the respondent

Indian Tribes to tax the value of railroad rights of way

that cross reservation lands held in trust for the Tribes

by the United States. Both courts below upheld the

tribal taxes, relying primarily on this Court’s decisions in

Merrion Vv. Jicarilla Apache Tribe, 455 U.S. 130 (1982)

(Merrion), and Washington v. Confederated Tribes of

the Colville Indian Reservation, 447 U.S. 134 (1980)

(Colville).

1. Petitioner, the Burlington Northern Railroad Com-

pany, onerates the largest railroad system in the United

States. 1991 Moody’s Transportation Manual 1. In 1990,

petitioner transported some 305 million tons of freight,

including coal, grain, and industrial and forest products.

Id. at 14. Those operations generated revenues in excess

of $4.6 billion. Jd. at 4.

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9

_

Petitioner succeeded to its main northern line from the

St. Paul, Minneapolis, and Manitoba Railway Company.

Br. in Support of Mot. for Prelim. Inj. in Fort Peck 5.

See The Official Railway Guide B11, B23-B24 (November

December 1991). At issue here are two portions of the

line: an 84-mile stretch across the Fort Peck Reserva-

tion, located in the northeastern part of the State and

occupied by the Assiniboine and Sioux Tribes, and a

58.18-mile stretch across the Reservation of the Blackfeet

Tribe, located in the northwestern part of the State. See

Fort Peck Br. in Opp. 4: Blackfeet Br. in Opp. 1.

The land underlying these two stretches of track is held

in trust for the Tribes by the United States. On each

Reservation, the track is crossed by roads used by tribal

members and nonmembers alike.' Petitioner’s operations

have sometimes caused fires and accidents along the rights

of way. CR 16 in Fort Peck, Exh. 11, 111; CR 8 in

Blackfeet, Att. 1, { 11.

2. The Tribes’ federally recognized interest in their

Reservations dates back to 1855. In that year, the United

States created, by treaty, one massive Reservation for

the Blackfeet and other signatory Tribes. Treaty With

the Blackfoot Indians, Oct. 17, 1855, 11 Stat. 657; see also

Act of Apr. 15, 1874, ch. 96, 18 Stat. 28. Between 1886

and 1887, the Blackfeet, Assiniboine, and Sioux Tribes

entered into an agreement with the United States to cre-

ate separate Fort Peck and Blackfeet Reservations out of

portions of the 1855 Reservation. Article VIII of that

agreement (Pet. App. 55a) provided:

1In 1986, 6536 members and 2215 nonmembers resided on the

Blackfeet Reservation. Clerk’s Record (CR) 8 in Burlington North-

ern R.R. v. The Blackfeet Tribe, et al., No. CV-87-120-GF (D

Mont.), Att. 1, 14 (Blackfeet). In 1987, 5400 Indians resided on

the Fort Peck Reservation, and nonmember residents numbered in

the thousands. CR 16 in Burlington Northern R.R. v. Fort Peck

Tribal Executive Bd., No. CV-87-55-GF (D. Mont.), Exh. 11, {2

(Fort Peck). The two cases were considered together by the district

court and consolidated by the court of appeals. Pet. App. 2a ml.

3

(W]henever in the opinion of the President the public

interests require the construction of railroads * * *

through any portion of either of the separate reserva-

tions established and set apart under the provisions

of this agreement, right of way shall be, and is

hereby, granted for such purposes, under such rules,

regulations, limitations, and restrictions as the Sec-

retary of the Interior may prescribe; the compensa-

tion to be fixed by said Secretary and by him

expended for the benefit of the Indians concerned.

Congress ratified the agreement in the Act of May 1,

1888, ch. 213, 25 Stat. 113, 115-116 (Pet. App. 54a-56a).

Afier the Tribes signed the agreement, but before

passage of the 1888 Act, Congress enacted separate legis-

lation authorizing petitioner’s predecessor-in-interest—the

St. Paul, Minneapolis, and Manitoba Railway Company

—to apply for a right of way through Indian reservation

lands in a portion of northern Montana that included

what is now the Fort Peck Reservation. Act of Feb. 15,

1887, ch. 130, 24 Stat. 402 (1887 Act). The 1887 Act

required the company to compensate the Indians for the

right of way, and provided that “[the] operation of

(the| railroad shall be conducted with due regard for the

rights of the Indians, and in accordance with such rules

and regulations as the Secretary of the Interior may make

to carry out this provision.” § 4, 24 Stat. 403.

In 1850, petitioner’s predecessor obtained a right of way

across the Fort Peck Reservation pursuant to the 1887

Act and a right of way across the Blackfeet Reservation

pursuant to the 1888 Act. Pet. App. 21a, 24a-25a, 42a:

Blackfeet Br. in Opp. 3 n.4.

3. The Fort Peck and Blackfeet Tribes enacted the

taxes challenged here in 1986 and 1987. The Tribes con-

cluded that their existing taxes (e.g., on oil and gas

production and timber harvesting) were insufficient, espe-

cially in light of decreased federal funding for tribel

services, such as police and fire protection and emergency

medical services. See CR 16 in Fort Peck, Exh. 11, 9% 4-

10, 13-18; CR 8 in Blackfeet, Att. 1, {9 2-4, 6-7. Both

4

tax laws were adopted following a period for public com-

ment and were approved by the Secretary of the Interior,

through the Bureau of Indian Affairs (BIA). CR 11 in

Fort Peck, Exhs. 5, 6.’

The Fort Peck Tribes impose an ad valorem tax on all

utility property on reservation trust land, except utility

property valued at less than $200,000 or owned by the

Tribes or the United States. Pet. App. 57a-61la. Non-

exempt utility property, which includes petitioner’s right

of way, is generally taxed at 3% of its assessed value.

Id. at 58a. The value is “presumed to be equal to the full

value per linear mile of the utility as assessed by the

State of Montana.” IJbid.; see Mont. Code Ann. §§ 15-23-

201, 15-6-145 (1990). Taxpayers may, however, elect any

other valuation method that is “reasonablle] and ac-

curate[].’’ Pet. App. 59a.

The Blackfeet Tribe imposes a 4° “possessory interest

tax” on the value of “any non-exempt interest in real

property” on its Reservation, including interests “held

under an easement or right-of-way.” Pet. App. 64a-65a.

The Blackfeet law exempts property used as a homesite,

farm, or ranch; commercial property used in retail sales

or service; and any government property (tribal, federal,

state, or local) or utility property that exclusively serves

the Reservation. Jd. at 66a-67a. The value of a posses-

sory interest is deemed to be its “market value [as] stated

on the assessment books of the county assessor,” id. at

65a, although, as under the Fort Peck law, the taxpayer

may choose an alternative valuation method, id. at 66a.

4. Petitioner challenged the Fort Peck and Blackfeet

taxes in the United States District Court for the District

of Montana.* On cross-motions for summary judgment,

2 Each Tribe was required by its constitution to obtain the Sec-

retary’s approval! of such tax measures. Fort Peck Const. Art. VII,

§3, CR 11 in Fort Peck, Exh. 3; Blackfeet Const. Art. VI, § 1(h).

8 Both the Fort Peck and Blackfeet tax laws prescribe adminis-

trative review procedures and provide for subsequent review in

tribal courts. Blackfeet Br. in Opp. App. 9-10; Mem in Support of

5

the district court sustained the taxes. Pet. App. 16a-47a.

It began by noting that “[petitioner] concedes, as it must,

the general power of the various Indian tribes to tax the

transactions of non-Indians which occur on trust lands

and significantly involve a tribe or its members.” 7d. at

20a; see also id. at 18a-19a (citing Merrion and Colville).

The court then held that the lands underlying petitioner’s

rights of way are trust lands, rejecting petitioner’s argu-

ment that the Tribes’ property interests in the lands were

extinguished by the 1887 and 1888 Acts. Pet. App. 24a-

35a, 4la-47a. The court likewise rejected petitioner’s

arguments that the Railroad Revitalization and Regula-

tory Reform Act (4R Act), 49 U.S.C. 11503 et segq.,

abrogated the Tribes’ power to tax and that the tribal

taxes violate the 4R Act’s ban on discriminatory state

taxes (see 49 U.S.C. 11503(b)) and the Interstate Com-

merce Clause (Art. I, § 8, Cl. 8). Pet. App. 36a-40a.

5. The court of appeals affirmed. Pet. App. la-1l5a.‘

Like the district court, it began with the principle enunci-

ated in Merrion and Colville that “the power to tax

transactions occurring on trust lands and significantly

involving a tribe or its members is a fundamental attri-

bute of sovereignty which the tribes retain unless divested

of it by federal law or necessary implication of their

dependent status.” Pet. App. 6a (quoting Merrion, 455

U.S. at 187, and Colville, 447 U.S. at 152). Applying that

Mot. to Dismiss in Fort Peck, Exh. 1, at 2-3, 8-12. Petitioner did

not avail itself of those procedures, and respondents accordingly

moved to dismiss petitioner’s actions for failure to exhaust tribal

remedies. The district court denied the motions, and the court of

appeals affirmed that ruling. Pet. App. 3a n.2. The exhaustion issue

is not raised in this Court.

* As an initial matter, the court of appeals held that sovereign

immunity required dismissal of petitioner’s claims against the

tribal legislative and executive bodies. Pet. App. 4a, 15a. The

court allowed the claims against tribal officials to stand, however,

holding that sovereign immunity does not bar claims for prospec-

tive relief against tribal officials who have allegedly violated fed-

eral law. Id. at 5a. No issues of sovereign immunity are presented

in this Court.

6

principle, the court of appeals rejected petitioner’s argu-

ments that the Fort Peck and Blackfeet taxes are invalid

because “(A) the rights of way are not on trust lands,

(B) [petitioner’s] activities * * * do not significantly

involve the Tribes, and (C) the Tribes have been divested

of their sovereign power to tax.” Pet. App. 6a.

First, the court held that the challenged taxes do con-

cern tribal trust lands. Pet. App. 6a-10a. It concluded

that the Tribes’ interests in the lands underlying the

rights of way were not extinguished by the Acts of 1887

and 1888, because those Acts gave petitioner’s predecessor

“only an easement, and not a fee.” Jd. at 8a (quoting

Great Northern Ry. v. United States, 315 U.S. 262, 271

(1942) ) ; see also Pet. App. 10a.

Second, the court held that the Tribes have a “signifi-

cant interest in the subject matter” over which they have

asserted taxing authority, Pet. App. 10a (quoting Colville,

447 U.S. at 153), since “[petitioner’s] activities involve

use of tribal lands and * * * [petitioner] is the recipient

of tribal services,” including “the intangible benefits of

a civilized society, and the tangible benefits of police

and fire protection.” Pet. App. 10a (citation omitted).

The court rejected petitioner’s contention that its opera-

tions are not subject to tribal taxation because it has no

“consensual! relationship” with the Tribes and because its

operations are controlled by state and federal, rather than

tribal, authorities. “The relevant question,” the court

stated, “is * * * whether [petitioner] receives benefits

from the Tribes for which it may be taxed. The answer

to that question is yes.” Jd. at lla. In the alternative,

the court held that the relationship between petitioner

and the Tribes is consensual in nature because it arose

when “the Tribes consented to railroad rights of way by

joining in * * * the agreement ratified by the Act of

1888 and [petitioner’s predecessor] chose to run rail lines

through the reservations by voluntarily applying for

rights of way.” ZJd. at 1la n.7.

Third, the court held that the Tribes have not been

divested of their taxing authority, either by the legislation

7

creating their Reservations and granting the rights of

way, or by the 4R Act. Pet. App. 1la-13a.°

DISCUSSION

The court of appeals correctly held that the Fort Peck

and Blackfeet taxes are within the scope of tribal taxing

authority recognized by this Court’s decisions in Merrion

v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), and

Washington Vv. Confederated Tribes of the Colville Indian

Reservation, 447 U.S. 134 (1980). Contrary to the con-

tentions of petitioner and its amici, Merrion and Colville

are fully consistent with—and thus do not need to be

“reconcil[ed|” with (Pet. 15)—Montana v. United States,

450 U.S. 544 (1981), and Brendale v. Confederated Tribes

& Bands of the Yakima Indian Nation, 492 U.S. 408 (1989).

Neither Montana nor Brendale—which concerned tribal

regulation of nonmembers’ activities on fee lands—held

that a consensual relationship must exist in order for an

Indian tribe to exercise civil authority over nonmembers

who conduct activities on Indian trust lands. And none

of the four decisions suggests that this Court analyzes

tribal tax laws under a framework different from the one

used to analyze other types of civil law adopted by a

tribe. We discern no tension among this Court’s decisions

nor any conflict among the lower courts on the question

presented here. The petition for a writ of certiorari

should therefore be denied.*®

5 The court of appeals also rejected petitioner’s contentions that

the tribal taxes are barred by the provision in the 4R Act prohib-

iting discriminatory state taxes, Pet. App. 13a-l4a, and by the

Interstate Commerce Clause, id. at 14a-15a (discussing Cotton

Petroleum Corp. Vv. New Mexico, 490 U.S. 163, 190-193 (1989) ).

Petitioner does not renew those claims in this Court.

® Although petitioner poses two questions at the outset of its

petition (Pet. i), it discusses only the first question (whether tribal

taxing authority over nonmembers depends on the existence of a

consensual relationship) in the body of the petition. Petitioner

does not discuss the second question (the effect, if any, that federal

control over a taxpayer has on tribal taxing authority), although

petitioner does claim that federal control is revelant to whether

——

8

1. This Court has long recognized that “the Indian

tribes retain ‘attributes of sovereignty over both their

members and their territory.’” White Mountain Apache

Tribe v. Bracker, 448 U.S. 136, 142 (1980) (quoting

United States v. Mazurie, 419 U.S. 544, 557 (1975));

see also Williams v. Lee, 358 U.S. 217, 223 (1959). The

Court reaffirmed this very principle in two of the cases

upon which petitioner chiefly relies. See Montana v.

United States, 450 U.S. 544, 563 (1981) (quoting United

States v. Wheeler, 435 U.S. 313, 323 (1978)). Among

these attributes of sovereignty is the power of taxation.

Kerr-McGee Corp. v. Navajo Tribe, 471 U.S. 195, 198

(1985); Merrion, 455 U.S. at 137, 1389; Montana, 450

U.S. at 565-566; Colville, 447 U.S. at 152-153; Morvis v.

Hitchcock, 194 U.S. 384, 391-392 (1904). Indeed, “[t]he

power to tax is an essential attribute of Indian sov-

ereignty because it is a necessary instrument of self-

government and territorial management.” Merrion, 455

U.S. at 187; see Kerr-McGee, 471 U.S. at 201.

Because tribal authority extends both to tribal mem-

bers and to tribal territory, it is not limited to members

of the tribe. See Montana, 450 U.S. at 565-566; Cardin v.

De La Cruz, 671 F.2d 363, 366 & n.3 (9th Cir), cert.

denied, 459 U.S. 967 (1982). It includes as well the

“authority to tax the activities or property of non-Indians

taking place or situated on Indian lands, in cases where

the tribe has a significant interest in the subject matter.”

Colville, 447 U.S. at 153; see also ibid. (“Except where

Congress has provided otherwise th[e] power [to tax] may

be exercised over members of the tribe and over nonmem-

bers, so far as such nonmembers may accept privileges of

trade, residence, etc., to which taxes may be attached

as conditions.”) (quoting, with emphasis, Powers of In-

dian Tribes, 55 Interior Dec. 14, 46 (1934)). Although

that authority may be “divested * * * by federal law

or necessary implication of [a tribe’s] dependent status,”

it is widely understood “that federal law to date has net

a consensuai relationship exists. Pet. 17-i8; see also Pet. Reply Br.

7. We address that claim at note 15, infra.

9

worked a divestiture of Indian taxing power.” Colville,

447 U.S. at 152; see Merrion, 455 U.S. at 149-152.

This Court most recently addressed tribal authority to

tax economic activity by nonmembers on tribal trust lands

in Merrion.’ Merrion involved a challenge to a sever-

ance tax imposed by the Jicarilla Apache Tribe on oil and

gas extracted from leased trust lands. 455 U.S. at 133,

135-136. In sustaining the tax, the Court declined to

adopt the narrow view that tribal taxing authority is

based solely on a tribe’s power to exclude nonmembers

from tribal land. Instead, the Court held that the taxing

power “derives from the tribe’s general authority, as

sovereign, to control economic activity within its jurisdic-

tion, and to defray the cost of providing governmental

services by requiring contributions from persons or enter-

prises engaged in economic activities within that jurisdic-

tion.” Jd. at 137.*

The Court in Merrion relied to a significant extent on

its earlier decision in Colville, which also upheld tribal

authority to tax the activities of nonmembers on trust

lands. In Colville, the Court reviewed an excise tax that

the State of Washington imposed on cigarettes purchased

by nonmembers on reservation trust lands. 447 U.S. at

141-142. Those purchases were also subject to tribal taxes.

Id. at 144-145. Although the Court upheld the State’s

cigarette tax, it rejected the State’s argument that the

tribes lacked authority to impose their own cigarette taxes

as well. The Court held that “{tlhe power to tax transac-

tions occurring on trust lands and significantly involving

a tribe or its members is a fundamental attribute of

sovereignty which the tribes retain unless divested of it

7 The Court’s later decision in Kerr-McGee also concerned a tribal

tax on nonmember activities on trust lands, but Kerr-McGee ad-

dressed only the question whether the tax had to be approved by

the Secretary of the Interior. 471 U.S. at 198.

8 The Court in Merrion also held, in the alternative, that the

severance tax was a valid exercise of the tribe’s power to exclude

the lessees. 455 U.S. at 144-148.

10

by federal law or necessary implication of their dependent

status.” Jd. at 152.

2. In reviewing the Fort Peck and Blackfeet taxes,

the court of appeals properly applied this Court’s holdings

in Merrion and Colville. The court concluded that the Fort

Peck and Blackfeet taxes are permissible exercises of

tribal authority because (1) the lands underlying peti-

tioner’s rights of way are tribal trust lands; (2) peti-

tioner receives both tangible and intangible benefits from

the Tribes in connection with its operations on the rights

of way; and (3) federal law has not divested the Tribes

of their taxing power.

Petitioner does not challenge any of these conclusions in

this Court. Instead, although petitioner accepted the Mer-

rion and Colville test below, it now contends that the

language in Merrion and Colville upon which the court of

appeals relied cannot be reconciled with Montana and

Brendale. Specifically, petitioner argues that the latter

two decisions establish that a tribe may tax a non-

member’s activities—-even on trust lands—only if there is

a consensual relationship between the tribe and the tax-

payer. Pet. 9, 10-16; Pet. Reply Br. 5.° A similar argu-

ment, however, was rejected in Merrion. Moreover,

neither Montana nor Brendale adopted a consensual-

relationship requirement for the exercise of tribal civil

®In the court of appeals, petitioner initially acknowledged that

a tribal tax on nonmember activities could be sustained on the basis

of either a “consensual relationship” or a territorial nexus. Thus,

petitioner’s argument that a consensual relationship is necessary

was based on its assertion that the Tribes retain no property in-

terest in the lands underlying the rights of way. See 88-4429 Pet.

C.A. Br. 20-21, 30, 32-34; 88-4429 Pet. C.A. Reply Br. 21-24; 88-

4428 Pet. C.A. Br. 17-18, 26-27, 28-31; 88-4428 Pet. C.A. Reply Br.

21-24; see also, e.g., Br. in Support of Mot. for Prelim. Inj. in

Blackfeet 34-38; Concluding Br. of the Pltf. in Blackfeet 25-26.

The quite different argument that petitioner advances in this

Court—-that a “consensual relationship” is vequired for any exer-

cise by a tribe of civil authority over nonmembers, regardless of

whether a territorial nexus exists--was first squarely presented to

the court of appeals only in petitioner’s petition for rehearing and

suggestion of rehearing en banc.

11

authority over nonmembers on trust lands. Finally, peti-

tioner is wrong in asserting that the Merrion, Colville

analysis of tribal tax laws differs from the Montana/

Brendale analysis of other types of tribal civil laws.

a. The Court in Merrion rejected the argument that

the scope of a tribe’s taxing authority over its trust lands

must be determined by the terms of any contractual or

other consensual relationship between the taxpayer and

the tribe. The taxpayer in Merrion had argued that the

tribe could not tax oil and gas produced under its leases

with the tribe because the tribe had not reserved the

right to impose such a tax in the lease agreements. The

Court rejected that argument because it “confuse[d] the

Tribe’s role as commercial partner with its role as sov-

ereign.” 455 U.S. at 145. The Court also rejected the

related notion that “the power to tax depends on the

consent of the taxed,” concluding that consent “has little

if any role in measuring the validity of an exercise of

legitimate sovereign authority.” Jd. at 147.

Like the taxpayer in Merrion, petitioner confuses the

Tribe’s role as an entity capable of entering into com-

mercial arrangements with its role as a sovereign. Peti-

tioner asserts that a tribe may tax only those nonmem-

bers with whom it has a “business relationship.” Pet. 18.

The Court in Merrion made clear, however, that a tribe’s

taxing power is not derived from commercial arrange-

ments or “conditioned on the assent of [the] nonmember.”

455 U.S. at 147.

b. To be sure, a consensual relationship is one form of

“significant involv|ement]” (Colville, 447 U.S. at 152)

that may support the exercise of a tribe’s civil authority.

That is the teaching of Montana and Brendale. Contrary

to petitioner’s contention (Pet. 8, 15-16), however, noth-

ing in Montana or Brendale suggests that a consensual

relationship is the exclusive basis for tribal regulation of

nonmember activities on trust lands.

At issue in Montana was the authority of the Crow

Tribe “to regulate hunting and fishing by non-Indians on

lands within its reservation owned in fee simple by non-

Oe

12

Indians.” 450 U.S. at 547. The Court “readily agree[d]”’

with the court of appeals’ conclusion that the tribe could

“prohibit nonmembers from hunting or fishing on land

belonging to the Tribe or held by the United States in

trust for the Tribe.” Jd. at 557. The Court reached a

different conclusion, however, with respect to the “power

of the Tribe to regulate non-Indian fishing and hunting

on reservation land owned in fee by nonmembers of the

Tribe.” Jbid. The Court explained that, in light of the

policy underlying the General Allotment Act of 1887, ch.

119, 24 Stat. 388, and the Crow Allotment Act of 1920,

ch. 224, 41 Stat. 751, by which certain reservation lands

passed into fee status, “[i]t defies common sense to sup-

pose that Congress would intend that non-Indians pur-

chasing allotted lands would become subject to tribal

jurisdiction when an avowed purpose of the allotment

policy was the ultimate destruction of tribal government.”

450 U.S. at 560-561 n.9. The Court concluded that neither

the Crow treaties nor the Tribe’s inherent sovereignty

was “so broad as to support the application of [the hunt-

ing and fishing regulation] to non-Indian lands.” Jd. at

563; see also id. at 559.

The Court in Montana emphasized, however, that even

fee lands and non-Indian activities on such lands are not

altogether immune from tribal regulation:

Indian tribes retain inherent sovereign power to ex-

ercise some forms of civil jurisdiction over non-

Indians on their reservations, even on non-Indian fee

lands. A tribe may regulate, through taxation, licens-

ing, or other means, the activities of nonmembers

who enter consensual relationships with the tribe or

its members, through commercial dealing, contracts,

leases or other arrangements. A tribe may also retain

inherent power to exercise civil authority over the

conduct of non-Indians on fee lands within its reser-

vation when that conduct threatens or has some direct

effect on the political integrity, the economic security,

or the health or welfare of the tribe.

13

450 U.S. at 565-566 (citations omitted). This passage

indicates that a “consensual relationship[]’” may support

the exercise of tribal authority “even on non-Indian fee

lands.” Ibid. The passage cannot be read, as petitioner

would have it (Pet. 15), to mean that a consensual rela-

tionship is the exclusive basis for tribal authority over

trust lands. Indeed, the Court made clear elsewhere in its

opinion that a tribe’s authority is broader over trust lands

than over fee lands, 450 U.S. at 557, and the Court re-

peatedly stressed that its analysis and holding concerned

the regulation of non-Indian activities on fee lands. 7d.

at 557, 563, 564, 565, 566; see also New Mevxico V.

Mescalero Apache Tribe, 462 U.S. 324, 330-331 (1983).

Brendale likewise recognized a distinction between

trust and fee lands. In Brendale, the Court held that the

Yakima Nation had authority to regulate use of fee

lands in the “closed” area of its reservation, but not

those in the “open” area. Although a plurality would

have held, relying on Montana, that the Yakima Nation

lacked authority over fee lands in both areas, it dis-

tinguished Colville primarily on the ground that Colville

“did not involve the regulation of fee lands, as did Mon-

tana.” 492 U.S. at 427. Moreover, the plurality made

clear that its approach did not affect “[t]he power to

tax transactions occurring on trust lands and significantly

involving a tribe or its members.” Jbid. (quoting Colville,

447 U.S. at 152). Similarly, in his separate opinion,

Justice Stevens took it as a given that the Yakima

Nation “retain[ed| authority to regulate the use of trust

land.” 492 U.S. at 445.

ce. Petitioner contends that Merrion and Colville have

“cause|d] mischief” (Pet. Reply Br. 5) because they

“suggest that tribal taxing authority” should be analyzed

differently from “other exercises of sovereignty over non-

members” (Pet. 9). That contention, however, rests on

petitioner’s erroneous view that, in analyzing non-tax

laws, the Court in Montana and Brendale imposed a

consensual-relationship requirement in all circumstances.

a

14

As explained above, neither Montana nor Brendale sug-

gests that a consensual relationship is an absolute pre-

requisite for the exercise of tribal civil authority, es-

pecially on trust lands.

Moreover, petitioner is wrong in suggesting that Mer-

rion and Colville reflect an approach to analyzing. tribal

tax laws that is different from the approach used in

Montana and Brendale to analyze other types of tribal

civil laws. In each of the four cases, the Court proceeded

in a similar manner: It considered whether the tribe’s

inherent sovereignty or its power under treaties or other

agreements with the United States provided a sufficient

source of authority for the challenged law. The Court

also inquired whether tribal powers were limited by legis-

lation or divested by implication. Brendale, 492 U.S. at

422-432 (plurality opinion) ; id. at 441-447 (opinion of

Stevens, J.); id. at 450-462 (opinion of Blackmun, J.) ;

Merrion, 455 U.S. at 186-152; Montana, 450 U.S. at

557-566; Colville, 447 U.S. at 152-154. To be sure, under

this approach, a tribe’s authority to tax property and

activities on trust lands may exceed its authority to im-

pose other forms of regulation on fee lands. But that

is merely a consequence of the historical and common-

sense facts that Indian tribes have retained only some

attributes of sovereignty (see Montana, 450 U.S. at 563) ;

that Congress has limited certain tribal powers more

than others (see id. at 557; Colville, 447 U.S. at 152);

and that a tribe’s nexus to a nonmember’s activity may

be stronger in some circumstances than in others. It is no

basis for criticism that the validity of a tribal law may

depend to a significant extent on the type and locus of

regulation—e.g., whether it is taxation or zoning, on

trust or fee lands. Petitioner’s attempt to obliterate the

established distinction between Indian trust lands and

non-Indian fee lands for these purposes ignores the “sig-

nificant geographical component” of tribal sovereignty,

New Mewico v. Mescalero Apache Tribe, 462 U.S. at 835

n.18 (quoting White Mountain Apache Tribe, 448 U.S.

at 151), which embraces a tribe’s “territory” as well as

its “members.” Montana, 450 U.S. at 563.

15

In sum, petitioner’s criticism of the court of appeals’

reliance on Merrion and Colville is misplaced.” The

Fort Peck and Blackfeet taxes fall well within the scope

of tribal taxing power under Merrion and Colville. Fur-

thermore, there is no conflict between Merrion and Col-

ville on the one hand, and Montana and Brendale on

the other.'' The decisions are entirely compatible, for the

latter involved fee lands. Together, these decisions com-

10 Petitioner also errs in criticizing the court of appeals for

failing adequately to consider the extent of the Tribes’ power to

exclude it from their Reservations. Pet. 16 n.12. The court of

appeals did not consider that issue because petitioner did not raise

it. Petitioner therefore should not be permitted to raise it in this

Court. See, e.g., Delta Air Lines, Inc. v. August, 450 U.S. 346, 362

(1981).

11 Nor is there a “state of confusion,” as petitioner asserts (Pet.

11; see also Pet. Reply Br. 6), among the lower courts on the

question whether a tribe may tax nonmember activities on trust

lands in the absence of a consensual relationship. Two decisions

cited by petitioner (Pet. 11 n.8) are inapposite. In Navajo Com-

munications Co. Vv. Navajo Tax Comm’n, 18 Indian L. Rep. 6068

(Navajo Sup. Ct. 1991), a taxpayer unsuccessfully argued that it

had been granted a waiver from a tribal tax. In Atchison, Topeka

& Santa Fe Ry. v. Deputy Area Director, 93 Interior Dec. 79 (Bd.

Indian App. 1986), the taxpayer unsuccessfully challenged the

BIA’s approval of a tribal tax, arguing that the approval violated

the Administrative Procedure Act, the Fifth and Fourteenth Amend-

ments, the Interstate Commerce Clause, and the 4R Act. The other

decisions cited by petitioner are consistent with the decision below.

In Snow v. Quinault Indian Nation, 709 F.2d 1319, 1320-1323 (9th

Cir. 1983), cert. denied, 467 U.S. 1214 (1984), the court relied on

Merrion to uphold a tribal license fee on reservation business activi-

ties. In Conoco, Inc. v. Shoshone & Arapahoe Tribes, 569 F. Supp.

801, 801-802, 806-807 (D. Wyo. 1983), the court relied on Merrion

and Colville to uphold a tribal severance tax on oil and gas pro-

duced from leased tribal trust lands. Finally, in Jn re Protest Filed

by Railbox Co., et al., Tribal Ct. Nos. CV-87-54, CV-87-55 & CV-87-

56 (Dec. 14, 1990), slip op. 9-12, the Tribal Council of the Pueblo

of Acoma upheld an ad valorem tax on railroads cars that crossed

its Reservation, concluding that the Pueblo retains a property in-

terest in the land underlying the railroad and that a consensual

relationship exists between the railroad company and the Pueblo,

aaa ene lle

16

pel rejection of petitioner’s unduly restrictive view of

tribal taxing authority over trust lands.”

38. As the court of appeals correctly held (Pet. App.

lla n.7), even if a “consensual relationship” were neces-

sary to sustain the exercise of tribal taxing authority in

a case such as this, that requirement is satisfied here.’

That alternative holding does not warrant review, because

it was based on the specific facts, legislation, and execu-

tive agreement under which petitioner’s predecessor ob-

tained the rights of way across the Fort Peck and Black-

feet Reservations.

In any event, petitioner’s challenge to the court’s

holding lacks merit. Petitioner asserts that the court

erroneously relied on the fact that “100 years ago [peti-

tioner’s and the Tribes’] predecessors contracted inde-

pendently with the same third party.” Pet. 19.*4 That

assertion obscures the relevant facts. The “third party”

to which petitioner refers was the United States, which

was acting in its capacity as a trustee for the Tribes when

it granted the rights of way. Moreover, the rights of way

that petitioner’s predecessor sought and obtained were

consented to by the Tribes themselves in the agreement

that Congress ratified in the 1888 Act. Finally, the 1887

Act providing for the right of way through what became

the Fort Peck Reservation required that the railroad be

12 This case presents no occasion for addressing vetitioner’s con-

cern (Pet. 10, 28-29) that the Blackfeet tax might apply to some

lands owned in fee by nonmembers. No fee lands are at issue in

this case.

13 The district court made no finding on the issue whether a con-

sensual relationship existed because in the district court, petitioner

“eoncede[d] * * * the general power of the various Indian tribes

to tax the transactions of non-Indians which occur on trust lands

and significantly involve a tribe or its members.” Pet. App. 20a.

Petitioner primarily argued that its rights of way were not on

trust lands. See, e.g., Br. in Support of Mot. for Prelim. Inj. in

-Blackfeet 14-19; Concluding Br. of the Pltf. in Blackfeet 19-23.

Petitioner does not press that argument here.

14 The United States acted on hehalf of the Tribes that are before

the Court, not any tribal “predecessors.”

17

operated “with due regard for the rights of the Indians,

and in accordance with such rules and regulations as the

Secretary of the Interior may make,” § 4, 24 Stat. 403, and

the agreement ratified by the 1888 Act similarly provided

that the railroad would be subject to “such rules, regula-

tions, limitations, and restrictions as the Secretary of the

Interior may prescribe,” Art. VIII, 25 Stat. 115-116.

Thus, by applying for rights of way pursuant to those

enactments, petitioner’s predecessor acknowledged the con-

tinuing interest of the Indians in the operation of the

railroad across tribal trust lands, and voluntarily bound

itself to an arrangement not only with the United States,

but also with the Tribes.

Petitioner nonetheless asserts (Pet. Reply Br. 6 & n.6)

that it is not in privity of contract with the Tribes. That

assertion, even if correct, is irrelevant. This Court has

never suggested that only a formal contract can create a

“consensual relationship[]” sufficient to support tribal

taxing authority. See Montana, 450 U.S. at 565. Indeed,

petitioner itself recognizes that looser arrangements may

qualify as “consensual relationships.” See Pet. 14 (find-

ing it “apparent” that nonmembers who voluntarily enter

a reservation to buy cigarettes have entered into a “‘con-

sensual relationship”). Thus, assuming arquendo that a

consensual relationship provides the exclusive basis for

tribal taxation of nonmembers, the absence of a formal

contract between petitioner and the Tribes would not con-

demn the tribal taxes.’ In any event, for present pur-

15 Contrary to petitioner’s contention (Pet. 9; see also Pet. 18,

24; Pet. Reply Br. 8), the fact that petitioner cannot move or

abandon its rights of way without federal approval is likewise

irrelevant to the existence of a consensual relationship. The non-

member taxpayers in Kerr-McGee were similarly subject to ‘‘com-

prehensive [federal] regulations governing the operation of oil and

gas leases.” 471 U.S. at 199 (citing 25 C.F.R. Pt. 211 (1984) ).

Those regulations required the taxpayer-lessees to obtain federal

approval before commencing or abandoning lease operations. See 25

C.F.R. 211.20, 211.27. The fact that the lessees were subject to ex-

tensive federal regulation did not affect the fact that their leases

with the tribes constituted ‘‘conscasual relationships.” Petitioner

itself acknowledges as much when it describes Kerr-McGee as in-

60

18

poses, the consensual relationship between petitioner’s

predecessor and the trustee (the United States), which

acted on behalf of the beneficiaries (the Tribes), places

petitioner in privity with the beneficiaries as well. Cf.

Nevada v. United States, 463 U.S. 110, 135, 141-142

(1983).

4. Petitioner and its amici contend that the court of

appeals erred in concluding that petitioner’s operations

“significantly involved” the Tribes and their members.

Pet. 21; see also States Amicus Br. 14; Ass’n of Ameri-

can R.R. Amicus Br. 16 n.11. That contention does not

warrant further review.

Contrary to petitioner’s contention (Pet. 21), the court

of appeals’ conclusion was not based solely on the fact

that petitioner operates, and therefore has a substantial

physical presence, on trust lands. The court of appeals

also relied on petitioner’s receipt of tribal services,

including “the intangible benefits of a civilized society,

and the tangible benefits of police and fire protection.”

Pet. App. 10a (citation omitted). Compare Cotton Petro-

leum, 490 U.S. at 189-191. The court’s analysis was thus

faithful to the principle that tribes retain “(t]he power

to tax transactions occurring on trust lands and signifi-

cantly involving a tribe or its members.” Colville, 447

U.S. at 152.

Moreover, petitioner understates the impact of its rail-

road operations on the Tribes and their members. Even

with appropriate precautions, railroad operations are in-

herently dangerous. See, e.g., Petition for Cert. in Bur-

lington Northern R.R. v. Ford, No. 91-779, Apps. E, F

(argued Apr. 20, 1992) (88 accident claims by employees

currently pending against Burlington Northern in Mon-

tana state courts alone). The trains that cross the Reser-

vations travel at significant speeds and frequently carry

hazardous materials. See 1991 Moody’s Transportation

Manual 14 (product listing). Because of the potential for

accidents to cause a release of hazardous materials, the

volving consensual relationships between the tribe and the taxpayer.

Pet. 14-15.

19

Tribes are required to develop emergency response plans

under the Superfund Amendments and Reauthorization

Act of 1986, 42 U.S.C. 11001-11050. See 40 C.F.R. Pt. 355

(1991). In addition, other types of accidents and fires

have occurred along petitioner’s rights of way, requiring

tribal expenditures for police and firefichting services,

See CR 16 in Fort Peck, Exh. 11, 111; CR 8 in Black-

feet, Att. 1, 11.

The tribal taxes at issue here reflect “egitimate efforts

by a government to defray the costs of services made nec-

essary by a taxpayer’s presence and activities within its

jurisdiction. In this respect, the Tribes’ taxes are, like

the tax at issue in Merrion, similar te those imposed by

“{nJumerous other governmental entities.” 445 U.S. at

138. State taxes on the value of railroad property

abound, having been upheld by this Court since the last

century. See Adams Express Co. v. Ohio, 165 U.S. 194,

220 (1897); Pullman’s Palace Car Co. v. Pennsylvania,

141 U.S. 18 (1891); Thomson v. Pacific R.R., 76 U.S. (9

Wall.) 579 (1870). Montana. for example, levies an ad

valorem property tax on railroad rights of way and other

commercial property. Mont. Code Ann. §§ 15-6-101, 15-6-

145 (1990). “Under these “irgumstances, there is noth-

ing exceptional in requiring petitioner!] to contribute

through taxes to the general cost of tribal government.”

Merrion, 455 U.S. at 137-138, ©

d. Petitioner (Pet. 22-30: Pet. Reply Br. 8-10) and

its amici (see, e.g., Ass’n of American R.R. Br. 2, 4

8) advance several] policy reasons why this Court should

adopt a rule requiring that a consensual relationship exist

before a tribe may tax nonmembers. Petitioner and its

amici are particularly concerned about the potential for

unrestricted and discriminatory taxation by tribes. With-

16 Petitioner reimburses the BIA, not the Tribes. for BIA’s

direct, out-of-pocket costs of fire suppression caused by the rail-

road. Contrary to petitioner’s Suggestion (Pet. Reply Br. & n.8),

petitioner does not otherwise support tribal fire, police, or medical

services, or the hazardous substance emergency planning that is

made necessary, in part, by trains crossing reservation trust lands.

20

out minimizing the possible importance of that concern if

tribal taxes (either alone or when added to state taxes)

should prove unduly burdensome, it does not furnish a

basis for further review here.

The courts below did not address whether the tribal

taxes challenged here are excessive or discriminatory. Nor

do we. The proper forum for presentation of such argu-

ments is Congress, which, in passing the 4R Act, has pro-

hibited imposition of certain discriminatory taxes by

States, but not by Indian tribes. Congress alone is in a

position to balance the interests of the tribes in raising

revenues by taxing property and activities on trust lands

against the impact such taxes might have on the main-

tenance of a national rail network. The Court should

decline petitioner’s attempt to circumvent the political

process and to have the judiciary address its concerns

indirectly—namely, by importing a novel and narrowly

defined “consensual relationship’ requirement into the

body of law governing a tribe’s sovereign authority over

trust lands on its reservation. “If |petitioner| believes

that the objectives of the [4R Act’s nondiscrimination

provision] are too much obstructed by the clearly retained

remnant of an earlier policy, it must make that argument

to Congress.” County of Yakima v. Confederated Tribes

& Bands of the Yakima Indian Nation, 112 S. Ct. 683,

692 (1992); ef. Quill Corp. v. North Dakota, No. 91-194

(May 26, 1992).

21

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

BARRY M. HARTMAN

Acting Assistant Attorney General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

RICHARD H. SEAMON

Assistant to the Solicitor General

EDWARD J. SHAWAKER

VICKI L. PLAUT

Attorneys

MAY 1992

TW OU. 8. GOVERNMENT PRINTING OFrice; 19902 312324 45440