Amicus Curiae Brief — Kerr-McGee Corp. v. Navajo Tribe

ti a - Suprere Court, US. |

. dD

,iLlse

NOY 23 iSe4

No. 84-68 pie tance? L aaa

In The

Supreme Court of the United States

October Term, 1984

sy

—{)

KERR-MeGEE CORPORATION,

Petitioner,

v.

THE NAVAJO TRIBE OF INDIANS, et al.

Respondents.

)

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR TEE NINTH CIRCUIT

—,*

.

BRIEF AMICUS CURIAE TEXACO, INC.

—O

Bravce Dovetas Biack

Campset. & Briack, P.A.

P.O. Box 2208

Santa Fe, NM 87501

(505) 988-4421

Counsel for Te raco, Ine.

CUCKLE LAW BHRILF PRINTING CU bUU) BID T7427 Eat 343

TABLE OF CONTENTS

Pages

INTEREST OF AMICUS CURIAE : » -

SUMMARY OF ARGUMENT 2

ARGUMENT:

Introduction 2

I. The Secretary of the Interior has a duty to re-

view and supervise tribal action which has an

impact upon Indian resources and federal li-

censees.

e

~~

A. The federal government has plenary author-

ity over tribal lands and resources. 5

B. The Secretary of the Interior has a duty to

review tribal -esolutions which affect tribal

resources and federal leases thereof. . 8

C. The Secretary of the Interior has the legal au-

thority to control development of tribal prop-

erty and resources, _. ._ n

Il. The Secretary of the Interior has a duty to pro-

tect the Constitutional rights of non-Indians do-

ing business on the reservation under federal auv-

thority. _ B

Ill. Tribal Taxation of federal lessees without Secre-

tarial approval is inconsistent with the status of

Indian tribes as domestic dependent sovereigns. 20

CONCLUSION 95

TABLE OF AUTHORITIES

Cases

Armstrong v. United States, 306 F.2d 520 (10th

Cir. 1962) 12

Badow v. Higginson, 638 F 2d 172 (10th Cir. 1980)

cert. denied 452 U.S. 954 (1981) 8

TABLE OF AUTHORITIES—Continued

Pages

Ballinger v. United States, ex rel. Frost, 216 US.

240 (1910) - _ 13

Barta v. Oglala Siour Tribe, 146 F.Supp. 917,

(D.S.D. 1956), afd, 259 F.2d 553 (8th Cir.

1958), cert. demied, 358 U.S. 932 (1959)

23

Blackfeather v. United States, 190 U.S. 368 (1908). 7

9

ll

Boesche v. Udall, 373 U.S. 472 (1963)

Brader v. James, 246 U.S. 88 (1918)

Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831) 20

Cherokee Nation v. Hitchcock, 187 U.S. 294 (1902) _7,8,9

Cherokee Nation v. Southern Kansas — Ce.,

135 U.S. 641 (1890) ——— —

Choctaw Nation v. United States, 119 US. 1 1ses) . 2

City of Tulsa v. Southwestern Bell Telephone, 5

F. Supp. 822 (N.D. Okla. 1934), afd, 75 F.2d

343 — Cir. 1935), cert. dented, 295 U.S. 744

(1935) . ae —————eEeE

Colliflower v. Garland, 342 F 2d 369 » (9th Cir. 1965)... W

Crabtree v. Madden, 54 F. 426 (8th Cir. 1893)...

Creek Nation v. United States, 97 Ct. Cl. 591 vanes

aff'd, 318 U.S. G29 (1943) 7

Crow Tribe of Indians v. State of Montana, 469

F. Supp. 14 (D. Mont. 1979) —— —

Ex parte Crow Dog, 108 U.S. 556 (1883) ___. — a.

Ex parte Webb, 225 U.S. 663 (1912) ean, ‘a

Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810) _ 20

— Motors Acceptance ~~ e pcemeseeee 96

N.M. 113, 628 P 2d 683 (1981) —__J______........

ili

TABLE OF AUTHORITIES—Continued

Pages

Hallowell v. United States, 221 U.S. 317 (1911) 2S 6

Healy v. James, 408 U.S. 169 (1972) 14

Hoover & Bracken Energies v. United States

Dept. of Interior, 723 F.2d 1488 (10th Cir. 1983),

cert. denied, 83 L.Ed.2d 39 (1984) 0. » ©

Hynes v. Grimes Packing Co., 337 U.S. 86 (1949) 8

Independent Warehouses v. Scheele, 331 U.S. 70

(1947) a. of

In re Sah Quah, 31 F. 327 (D. Alaska , 1886) Seamiblisenn 14

Iron Crow v. Oglala Sioux Tribe, 231 F.2d 89 (8th

Cir. 1956) CO 23

Jicarilla Apache Tribe v. United States, 601 F.2d

1116 (10th Cir. 1979), cert. denied, 444 U.S. 995

(1979) 7

Johnson v. M’Intosh, 21 U.S. (8 Wheat.) 543 (1823) ..6, 21

Kenai Oil & Gas, Inc. v. Dept. dies the ow 671

F.2d 383 (10th Cir. 1982) ... ee ©

Kennerly v. District Court, 400 U.S. 423 (1971) —— 10, 21

Klamath & Modoc Tribes v. United States, 436

F.2d 1008 (Ct. Cl. 1971), cert. denied, 404 U.S.

950 (1971) .. om 2

Lone Wolf v. Hitchcock, 187 U.S. 553 (1903) 7

Marbury v. Madison, 5 U.S. 137 (1803) —....-.

Marchie Tiger v. Western Investment Co., 221 US.

286 (1911) eee =

Martin v. Hunter’s Lessee, 14 U.S. 304 (1816) |

; Menominee Tribe of Indians v. United States, 607

F.2d 1335 (Ct. CL. octmaadea cert. denied, 445 US.

950 (1980) W.. Ce eee

iv

TABLE OF AUTHORITIES—“ontinued

Pages

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

TEED scvcensenssenesesmmnesiisiienteniinisaiditiabaciiibeleamina 13, 14, 15, 16, 23, 24

Mescalero Apache Tribe v. Jones, 411 U.S. 145

(1973) ennmnvnnnsnsnsna ue 2

Moapa Band of Paiute Indians v. U.S. Dest. of

8 0 eS 11

Montana v. United States, 450 U.S. 544 (1981),

reh. denied, 452 U.S. 911 (1981) ................... 20, 23, 25

Morris v. Hitchcock, 194 U.S. 384 (1904) 00000 8

Morton v. Ruiz, 415 U.S. 199 (1974) ccccnncnncnnnnminnn 6

Muskogee National Telephone Co. v. Hall, 118 F.

BM QQ(GaYa S —=Eey—x_— . 8

Nadeau v. Union Pacific R.R. Co., 253 U.S. 442

Gee 7

National Mutual Building € Loan Assoc. v. Bra-

han, 193 U.S. 635 (1904) .. cities Ue

Navajo Tribe of Indians v. United States, 624 F.

GG e—————— a 9

Nevada v. Hall, 440 U.S. 410, 426, reh’g denied,

441 U.S. 917 (1979) . cciaaanmiamietaaeen Un

New Mexico v. Mescalero » Apache Tribe, 462 U.S.

324 (1983) . mumendiies iota,

New York Indians v. United States, 40 Ct. Cl. 448

ee ae See » a

Northern Cheyenne Tribe v. Hollowbreast, 425

US. G49 (1976) ce im

Oglala Sioux Tribe v. Hallett, 708 F.2d 326 + (st

Cir. 1983) | asneinien —

Oklahoma v. Atchison. T.&€ S.F. rR ., 220 U.S. 227

(1911) . es . . 6

TABLE OF AUTHORITIES—Continued

Pages

Oliphant v. Suquamish Indian Tribe, 435 U.S. 191

(1978) : 7, 17, 18, 20

One 1958 Plymouth Sedan v. Pennsylvania, 380

i seauiaiiiiih, dinuiasiiinbaibbinitinls 19

Oneida Indian Nation v. County of Oneida, 719

F.2d 525 (2d Cir. 1963) —........................ 6

People v. Budd, 117 N.Y. 1, 22 N.E. 670 (1889),

" . § § | Sg aE erie ea 18

People v. McCovey, 205 Cal. Rptr. 643, 685 P.2d

ff RRSERL eee TR ae ee 8,12

People v. Martm, 326 U.S. 496 (1946) 00. 21

Petersen v. Clark, 285 F. Supp. 700 (N.D. Cal. 1968) ..... 17

Quechan Tribe v. Rowe, 531 F.2d 408 (9th Cir. 1976) 20

Rainbow v. Young, 161 F. 835 (8th Cir. 1908) 0000... —

Ralpho v. Bell, 569 F.2d 607 (D.C, Cir. 1977) ............. » =

Riverside and Dan River Cotton Mills v. haere

237 U.S. 189 (1915) .. ee ee: | ae

Rockbridge v. Lincoln, 449 F.2d 567 (9th Cir. 1971) ... 10

Rosebud Sioux Tribe v. sitatdlh 430 U.S. 584

STIIITD attiinteuiienbtninstiaitemadiniittiualiasiiaiiaiiatteniiimbiincenimingsl 7, 21, 25

Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978) . 13

Settler v. Yakima Tribal Court, 419 F.2d 486

(9th Cir. 1969), cert. denied, 398 U.S. 903 (1970)... 20

Shoshone Tribe ts Indians v. United States, 299

U.S. 476 (1937) . ai alata sediniiniiag-

Southern R. Co. v. Greene, 216 U.S. 400 (1910) . 4

vi

TABLE OF AUTHORITIES—Continued

Pages

Starr v. Long Jim, 227 U.S. 613 (1913) —......... iain 8

State of California by & through Brown v. Watt,

668 F.2d 1290 (D.C. Cir. 1981) ... at: 2

State of New Mexico v. Aamodt, 537 F.2c 1102

(10th Cir. 1976), cert. denied, 429 U.S. 1121 (1977) 12

Stevens v. Cherokee Nation, 174 U.S. 445 (1899) 0. = 8

Talton v. Mayes, 163 U.S. 376 (1896) oe = 18

Taylor v. Tayrien, 51 F.2d 884 (10th Cir. 1931),

Cert. demied, 284 U.S. G72 (UGSD) nnn cncccccccccceaesencssnneennnrenee i

Tee-Hit-Ton Indians v. United States, 348 US.

272 (1955), reh’g. denied, 348 U.S. 965 (1955) . 7,8

Tenneco Oil Company v. Sac & Fox Tribe of In-

dians, 725 F.2d 572 (10th Cir, 1984) ees 19

Toledo v. Pueblo de Jemez, 119 F.Supp. 429 (D.

a —————————— .

Udall v. Littell, 366 F.2d 668 (D.C. Cir. 1966),

cert. denied, 385 US. 1007 (1967), reh’g. aenied,

LL - =

United States v. 43 Gallons bad Whiskey, 93 U.S.

ff EE ES IS RE s

United States v. 9,345.53 Acres, 256 F. manaaila 603

(W.D.N.Y. 1966) . aaoduaail —

United States v. Alcea Band of | Titlamooks, 341

U.S. 48 (1951) .. ‘ani inden 7

United States v. prea 430 U.S. 641 (1977) — .

United States v. Barnsdall Ol Co., 127 F.2d 1019

(10th Cir. 1942) ..... RSS Se I 2 ae 12

United States v. Birdsall, 233 U.S. 223 (1914) .......... 12

United States v. Bd of County Commr’s Osage

County, 961 US. 198 (1919) ene 7

vii

TABLE OF AUTHORITIES—Continued

Pages

United States v. Brown, 381 U.S. 437 (1965) 0... . 18

United States v. Camp, 169 F. waned 568 scone

Wash. 1959) 11

United States v. Clapox, 35 F. 575 (D. Or. 1988) ees 12

United States v. County of Humboldt, 3 Indian

L.Rep. 6482 (N.D. Cal. 1976) 25

United States ». Douglas, 190 F. 482 (8th Cir. 1911) .. 10

United States v. Gray, 201 F. 291 (8th Cir. 1912) ........ 10

United States v. John, 437 U.S. 634 (1978) ...... a 11

United Staies v. Kagama, 118 U.S. 375 (1886) ....... 21

United States v. McBratney, 104 U.S. 621 (1881) ......... 21

United States v. Mazurie, 419 U.S. 544 (1975) 00... 22

United States v. Mitchell (Mitchell IT), 103 S.Ct.

i _y————EESE 8,9

United States v. Navarre, 173 U.S. 77 (1899) | ——

United States v. Nelson, 29 F. 202 (D. Alas. 1886),

aff'd, 30 F. 112 (Or. Cir. 1887)... i.

United States v. Nice, 241 U.S. 591 11916) a inneniaaaen

United States v. Quiver, 241 U.S. 602 (1916) 21

United States v. re 45 US. od esti 567

(1846) .. emis — '

United States v. Sandstrom, 2 22 F. r Supp 190 (wD

Okla. 1938) . - pees ——

United States v. Sioux Nation, 448 U.S, 371 1 (1980) — 7

United States v. Stanolin Crude Oil Purchasing

Co., 113 F.2d 194 (10th Cir. 1940) 12

United States v. United States Coin & Currency,

401 U.S. 715 (1971) didiaiaiainsniaideamnimmanenin 19

viii

TABLE OF AUTHORITIES—Continued

Pages

United States v. Waller, 243 U.S. 452 (1917) S88

United States v. Wheeler, 435 U.S. 313 (1978) —..17, 21

White Mountain Apache Tribe v. Bracker, 448

U.S. 136 (1980) 8,24

Worcester v. Georgia, 31 VS. (6 Pet.) 515 (1832)... —s 6

Yavapai-Prescott, Indian Tribe v. Watt, 707 F.2d

1072 (9th Cir. 1983), cert. demed, 78 L.Ed.2d

723 (1983) = a... Ww

Youngstown Sheet & Tube Co. v. Sawyer, 343 US.

579 (1952) 13

Statutes aNpb RecuLaTiIons

United States Constitution, Article 1, § 8, Clause lL. 6

United States Constitution, Article I, § 8, Clause 3... 5

United States Constitution, Artic!> IIIT —. 16

United States Constitution, Article Ii. § 2000... 6

United States Constitution, Article TV, § 2, Cleuse 1 6

United States Constitution, Article IV, § 3, Clause 20. 6

Act of April 18, 1796, Ch. 13, § 4, 1 Stat. 452, 453.0... 6

Act of July 27, 1868, Ch. 259, 15 Stat. 228 ve

Act of March 3, 1871, Ch. 120 §3, 16 Stat. 570.0... 21

Act of Aug. 15, 1876, Ch. 289, $5, 19 Stat. 176, 200

(codified presently 25 U.S.C. § 261) 200000 Oda

Trade and Intercourse Act of July 22, 1790, Ch. 33,

1 Stat. 137 6

Trade aud Intercourse Act of 1876, Ch. 30, § 3,

1 Stat. 469, 470 ... -_ 6

ix

TABLE OF AUTHORITIES—Continued

Pages

Trade and Intercourse Act of March 3, 1799, Ch.

46, § 4, 1 Stat. 743 6

Trade and Intercourse Act of 1834, Ch. 161, § 3,

4 Stat. 729 (25 U.S.C. § 263) 5

U.S.C. 1976:

18 U.S.C. § 1151 eee . &

18 U.S.C. § 1165 : 22

235 U.S.C. § 2. ; 12,13

25 U.S.C. § 9 12,13

25 U.S.C. § 71 , 21

25 U.S.C. § 81 , _§11

25 U.S.C. § 85 ——

25 U.S.C. § 121-125 7,9, 11

235 U.S.C. § 177 — \

25 U.S.C. § 261 aa ae

25 U.S.C. § 263 -_

25 U.S.C. § 311 . 11

25 U.S.C. § 311-321 7 :

25 U.S.C. § 311-328 7

25 U.S.C. § 312 11

25 U.S.C. § 319 11

25 U.S.C. § 321 - ae 8

25 U.S.C. § 323 is ————

25 U.S.C. § 396 =< a eee

25 U.S.C. § 396(a)-(g) — 11

25 U.S.C. § 396(d) ae fleet eaten

25 U.S.C. § 397 11

x

TABLE OF AUTHORITIES—Continued

Pages

25 U.S.C. § 399 11

25 U.S.C. § 402(a) 11

25 U.S.C. § 406 11

25 U.S.C. § 407 11

25 U.S.C. § 415 ——— ~9, 11

25 U.S.C. § 476 (Indian Reorganization Act) —.... 15, 23, 24

25 U.S.C. § 564 7

25 U.S.C. § 903(a) - 7

43 U.S.C. § 1457 8

25 C.F.R. § 1.4(b) 25

25 C.F.R. § 211 10

30 C.F.R. § 206 10

Navaso TripaL CopE

N.T.C. T 7, § 134 7 24

N.T.C. T 7, § 201 17

N.T.C. T 7, § 204 17

N.T.C. T 7, § 321 18

N.T.C. T 7, § 322 18

N.T.C. T 7, § 326 17

N.T.C., T 24, § 201 4 4

N.T.C., T 24, $ 212 1,4

N.T.C., T 24, § 214 ie 4

N.T.C., T 24, § 215 5

N.T.C., T 24, $217 5, 16

N.T.C., T 24, § 219 16

xi

TABLE OF AUTHORITIES—Continued

Pages

N.T.C., T 24, $ 222 16

N.T.C., T 24, § 401 ........... 4

N.T.C., T 24, § 401(b) 4

Se er I iii cieieesebinilensiieniinntenentienieilananiidedl 4, 24

N.T.C., T 24, § 418 1,5

N.T.C., T 24, § 421 5

N.T.C., T 24, § 425 16

N.T.C., T 24, § 426 .. 16

MISCELLANEOUS AUTHORITIES

Balancing the Interests in Taxation of Non-Indian

Activities on Indian Lands, 64 Iowa L.R. 1459

(1979) 22

Bennett, Problems and Prospects in Developing

Indian Communities, 10 Ariz. L.R. 649 (1968) 00. = 2

Bureau of Competition, Report to the Federal

Trade Commission on Mineral Leasing on In-

dian Lands, 11, 17, 47 (October, 1975) 3

Cohen, Handbook of Indian Law (U.N.M. ed. 1971) ..... 24

Comptroller General’s Report to the Senate Com-

mittee on Interior and Insular Affairs, 94th

Cong., 2d Sess., Management of Indian Natural

Resources, Pt. 2 (Comm. Print. 1976) 3

Federal Indian Law (U.S.G.P.O. 1958) 12

Indian Police, 18 Op.Atty.Gen. 440 (1886) 0. 24

Indian Taxation of Non-Indians, 50 Tenn.L.R. 403

SEITE. cipesticeiennneldaenetebietesiiieatebienneseienitiieieaneetieececiatnnemicesieve 16

Interior Department Notices to Lessees, 1-7 —......... 10

xii

TABLE OF AUTHORITIES—Continued

Pages

Jurisdiction of Courts of the Choctaw Nation, 7

Op.Atty.Gen. 174 (1855) 7,9

Memorandum of the Solicitor to the Commissioner

of Indian Affairs (June 3, 1941) 9, 22

Mettler, A Unified Theory of Indian Tribal Sov-

ereignty, 30 Hastings L.J. 89 (1978) cee —

Mineral Management Services Payor Handbook —... 10

Navajo-Hom Rehabilitation Act, Proposed Con-

stitution for Navajo Tribe, II Int.Sol.Op. 1641

( Sn shila osetia iiieaseliataiaaaiaeial ieee senna 24

Navajo Tribal Council Resolution, CJA-1-59 000.24

Newton, Federal Power over Indians: Its Sources,

Scope and Limitations, 132 U.Pa.L.R. 195 (19864) ..... 16

Oliver, The Legal Status of American Indian

Tribes, 38 Or. LB. 193 (1959) ne nneeencsecesscsssneee seneieded . 2

Order 551, Fed.Reg. Oct. 30, 1958 24

Powers of Indian Tribes, 55 1.D. 14 (1934) 0. 22

Regulation of Traders on the Navajo Reservation,

60 L.D. 176 (1948) 7,22

Right of the Cherokees to Impose Taxes on Trad-

ers, 1 Op.Atty.Gen. 645 (1824) 9, 22

Secretary’s Power to Regulate Conduct of Indians,

I Int.Sol.Op. 531 (1935) seeenesialiepaiaiininanntintangnie » =

Testimony of Carol E. Dinkins, Assistant Attor-

ney General, Department of Justice, on Ancient

Indian Land Claims: Hearings before the Se-

lect Committee on Indian Affairs, 97th Cong.,

2d Sess. 37 (1982) wre 7

The Federalist No. 3, (Wesleyan U.Ed. 1961) 0. 7

eee

TABLE OF AUTHORITIES—Continued

Pages

Treaty Status of the Muckleshoot Indian Tribe,

80 I.D. 222 (1972) . 13

U.S.G.S. Conservation Division Manual, Part 647

Chapters 2, 15 10

Williams & Cole, “Resource Revenue and Rights

Reclamation: A Tax and Sulphur Emissions

Program of the Navajo Nation”, p. 3, March,

1978 3

INTEREST OF AMICUS CURIAE

Texaco, Inc., produces oil and gas from a portion of

the Navajo Indian Reservation located in the State of

Utah. Texaco has 43 oil and gas leases authorizing it to

produce oil and gas on the Navajo Reservation. These

leases were entered into between the Navajo Tribe and

Texaco, Inc., and were expressly approved by the United

States Department of the Interior. Texaco, Inc. has in-

vested over $42,000,000 on the acquisition and develop-

ment of these leaseholds.

In 1978, the Navajo tribal council adopted a business

activity tax and a possessory interest tax. Both of these

taxes purport to empower the Navajo tax commission to

impose substantial penalties on Texaco in the event the

Navajo tax commission determines that Texaco has not

fully complied with the provisions of these tribal tax ordi-

nances. Among the penalties are included the right to

“attach and seize assets of the taxable person,” and to

terminate all their ‘‘rights to engage in productive activity

within the Navajo Nation” (Navajo Tribal Code, Title 24,

§§ 212, 418). Although Texaco’s leases were initially ap-

proved, and have since been extensively regulated, by the

Interior Department, it has refused to supervise, or even

review, Navajo taxation of non-Incian mineral lessees.

In addition to its leases on the Navajo Reservation,

Texaco and its subsidiaries have mineral leases, also ap-

proved by the Department of the Interior, with otxer In-

dian tribes. Some of these Indian tribes are considering,

or are in the process of imposing, taxes on the productive

activities of Texaco and its subsidiaries. If these tribal

taxes, like the Navajo business activity and possessory in-

terest taxes, are imposed without review and supervision

1

2

by the Secretary of the Interior, Texaco is fearful that it

may be deprived of its constitutional and property rights.

—

Vv

SUMMARY OF ARGUMENT

The federal government has plenary authority over

tribal lands and resources. Congress has delegated its

authority to control the development of tribal property to

the Secretary of the Interior. The Secretary of the In-

terior has a duty to review tribal resolutions which affect

trival resources and federal leases thereof. The Secretary

of the Interior also has a duty to protect the Constitu-

tional rights of non-Indians doing business on the reserva-

tion under federal authority. Tribal taxation of federal

lessees is inconsistent with the status of Indian Tribes as

domestic dependent sovereigns and ineffective without See-

retarial approval.

ray

ARGUMENT

Introduction

At least fifteen types of valuable minerals, including

oil, gas, helium, coal, shale, uranium and zine are known to

exist in significant quantities on Indian reservations.’

In 1975, the United States Government estimated that 33

Indian reservations contained between 100 and 200 billion

tons of coal, which would constitute 7-13% of the nation’s

total identifiable reserves.2 At that time Indian-held re-

sources also accounted for over 15% of the total of all

iBennett, Problems and Prospects in Developing Indian

Communities, 10 Ariz. L.R. 649, 660 (1968).

2Comptroller General’s Report to the Senate Committee on

Interior and Insular Affairs, 94th Cong., 2d Sess., Management

of Indian Natural Resources, Pt. 2, pp. 77-8 (Comm. Print.

1976).

mining on Federal lands. The Department of the In-

terior has estimated that the oil and gas reserves of 40

Indian Reservations amount to 4.2 billion barrels of oil and

17.5 trillion cubic feet of gas.’ Indian oil and gas leases

were estimated in 1974 to cover a collective acreage of

4,187,644, and produce at least 30,685,000 barrels of oil

and 125,080,000 mefs of gas annually.* Such leases are

increasing and the Navajo Tribe possesses abundant quan-

tites of several of these strategic natural resources.*

In light of their belief that they were not being ade-

quately compensated under the mineral leases approved

by the Interior Department, the Navajo Tribe adopted a

business activity tax and a possessory interest tax in 1978.°

3Id.

4Bureau of Competition, Report to the Federal Trade Com-

mission on Mineral Leasing on Indian Lands, 11, 17, 47 (Octo-

ber, 1975).

Ibid. at 10.

6Two members of the Navajo Tax Commission admitted

that these taxes were designed to produce added income from

what the Tribe perceived as “the existing inequitable lease

arrangements.” After so describing the goal of the Navajo

possessory interest tax, the Navajo tax commissioners stated:

If lessees, faced with the prospect of a sizeable possessory

interest tax, find it in their interest to renegotiate their

existing leases, the tribal government is willing to do so,

but until such time as the new lease is agreed upon, there

should be a flow of additional revenues from the tax. Ibid.

at p. 15.

(Williams and Cole, ‘Resource Revenue and Rights Reclama-

tion: A Tax and Sulphur Emissions Program of the Navajo

Nation,” p. 3, March, 1978.)

4

The business activity tax is to be applied at a rate not less

than 4% nor greater than 8%. §401(b).’ The initial rate

for the business activity tax was set at 5%. Id. It pur-

ports to apply to every sale, whether ‘‘within or without

the Navajo Nation of Navajo goods or services”. § 403(2)

This tax was submitted to the Secretary of the Interior

for approval, but he refused to pass upon the validity of

the tax.

The possessory interest tax, adopted by the Navajo

Tribal Council in January, 1978, would require any person

having ownership rights in any lease granted by the Tribe

to pay an annual tax on the value of the leasehold interest

at a rate of between 1% and 10% of its value as assessed

by the tribal tax commission. §201 This rate, like that

of the business tax, is subject to change by the Navajo tax

commission. $4 201, 401

Under the Navajo possessory interest tax, a taxpayer

may be subjected to having “all rights to engage in pro-

ductive activity within the Navajo Nation suspended by

the [Navajo tax] commission and shall be subject to per-

manent loss of all rights to engage in productive activity

with the Navajo Nation”. § 214 It also allows the Navajo

tax commission ‘‘to attach and seize assets of a taxable

person.” 4212 In addition to allowing the tribe to seize

Texaco’s assets and suspend its right to engage in busi-

ness, the possessory interest tax allows the tribe to assess

substantial penalties. It provides a penalty of up to one-

half of one percent of the total value of the taxpayer’s

possessory interest, as assessed by the Tribe, for any tax-

payer failing timely to file a declaration of taxable inter-

7All references to the specific sections of the business

activity tax and the possessory interest tax are to the Navajo

Tribal Code, Title 24 (1979 Supp.).

5

est. §215 Another two-tenths of one percent of the value

of the taxpayer’s possessory interest may be assessed as a

penalty by the commission for each month’s delay in filing

a tax declaration. (J/bid.)

The Navajo business activity tax also gives the Nava-

jo tax commission the power to seize the taxpayer’s assets

and to terminate all the taxpayer’s ‘‘rights to engage in

productive activity within the Navajo Nation...” §¢ 418

Additionally, the business activity tax provides that “[a]

person required to provide information necessary or help-

ful for the assessment or collection of a tax who fails to

do so may be fined up to $5000 for each offense and may

have all rights to engage in productive activity within the

Navajo Nation suspended.” § 421

Both the Navajo taxes also contain provisions provid-

ing penalties for any taxpayer who attempts to ‘‘defeat

the tax”. § 217 |

I

The Secretary of the Interior has a duty to review

and supervise tribal action which has an impact

upon Indian resources and federal licensees.

A. The federal government has plenary author-

ity over tribal lands and resources.

While ‘he United States Constitution does not recog-

nize Indian tribes as sovereign governmental entities, it

does invest the Congress with the power to regulate and

supervise Indian tribes and their activities, particularly

with non-Indians.’ !'rom its earliest days, Congress in-

terpreted this Constitutional authority over Indian affairs

8While the Constitution only grants federal authority over

“Indian tribes” specifically in relation to control over the reg-

ulation of commerce, Article |, § 8, Clause 3, plenary federal

power over tribal activities and relations with non-Indians was

(Continued on next page)

6

broadly. As early as 1790, Congress voided sales of land

by ‘‘any Indians, or any nation or tribe of Indians” with-

out the consent of the United States.? Other early enact-

ments by. Congress controlled travel'® and settlement"

and every aspect of trade with Indians” by non-Indians

in Indian territory.

(Continued from previous page)

recognized as having roots in other constitutional provisions

at an early date. In Worcester v. Georgia, 31 U.S. (6 Pet.) 515

(1832), Chief Justice John Marshall made reference to several

Constitutional provisions in concluding Congress was vested

with broad authority over Indian affairs, saying:

“That instrument [the Constitution] confers on congress

the powers of war and peace; of making treaties and of

\ regulating commerce with foreign nations and among the

several states, and with the Indian tribes. These powers

comprehend all that is required for the regulation of our

intercourse with the Indians. They are not limited by any

restrictions on their free actions.” 31 U.S. (6 Pet.) at 559.

In his concurrence in Worcester, Justice McClean relied

more upon the Property Clause (Article IV, § 3, Cl. 2) to au-

thorize federal control over tribal reservations. Johnson v.

M’Intosh, 21 U.S. (8 Wheat.) 543, 587-8 (1823), Oklahoma v.

Atchison, T. & S.F. Ry, 220 U.S. 227, 285 (1911) and Hallowell

v. United Staies, 221 U.S. 317, 324 (1911), also trace Congres-

sional power over Indian reservations to the Property Clause.

This Court has also found other Constitutional sources author-

izing Congressional legislation relating to other specific Indian

problems. Morton v. Ruiz, 415 U.S. 199 (1974) (Article | § 8

Cl. 1); Ex parte Webb, 225 U.S. 663 (1912) (Article IV § 3 Cl. 1);

United States v. Navarre, 173 U.S. 77 (1899) (Article Ill § 1)

*Trade and Intercourse Act of July 22, 1790, Ch. 33, 1 Stat.

137, currently codified as 25 U.S.C. § 177 (1976). This Act con-

tinues to invalidate tribal attempts to transfer land without fed-

eral approval. Oneida Indian Nation v. County of Oneida, 719

F.2d 525 (2d Cir. 1983).

Trade and Intercourse Act of 1876, Ch. 30, § 3, 1 Stat.

469, 470.

Trade and Intercourse Act of March 3, 1799, Ch. 46, § 4,

1 Stat. 743.

Act of April 18, 1796, Ch. 13, § 4, 1 Stat. 452, 453; Trade

and Intercourse Act of 1834, Ch. 161, § 3, 4 Stat. 729 (Current-

(Continued on next page)

7

Since the adoption of the Constitution, “the commonly

shared presumption of Congress,'’ the executive brauch,”

and lower federal courts’'S (Oliphant v. Suquamish Indian

Tribe, 435 U.S. 191, 206 (1978)) has been that the federal

government has virtually plenary power over Indian tribes,

their land, and the resources thereof. This Court has aiso

long recognized pervasive federal authority over Indian

lands'* and the activities thereon."

(Continued from previous page)

ly 25 U.S.C. § 263). Contemporary writers also recognized that

Congress must have the power to regulate commerce between

Indians and non-Indians so that the federal government could

prevent disputes between the two Vg See, e.g., The Fed-

eralist No. 3 at 16-17 (Wesleyan U.Ed. 1961).

'3See e.g., 25 U.S.C. § 564; 25 U.S.C. § 903(a); 25 U.S.C.

§ 121-125; 25 U.S.C. § 311-328.

4Regulation of Traders on the Navajo Reservation, 60 |.D.

176 (1948); Jurisdiction of Courts of the Choctaw Nation, 7 Op.

Atty.Gen. 174 (1855); Testimony of Carol E. Denkins, Assistant

Attorney General, Department of Justice, on Ancient Indian

Land Claims: Hearings before the Select Committee on indian

Affairs, 97st Cong., 2d Sess. 37 (1982).

'Sjicarilla Apache Tribe v. United States, 601 F.2d 1116

(10th Cir. 1979), cert. denied, 444 U.S. 995 (1979); Menominee

Tribe of Indians v. United States, 607 F.2d 1335 (Ct. Cl. 1979),

cert. denied, 445 U.S. 950 (1980); Klamath & Modoc Tribes v.

United States, 436 F.2d 1908 (Ct. Cl. 1971), cert. denied, 404

U.S. 950 (1971); Creek Nation v. United States, 97 Ct. Cl. 591

(1942), aff'd, 318 U.S. 629 (1943); United States v. Nelson, 29

F. 202 (D. Alas. 1886), aff’d, 30 F. 112 (Or. Cir. 1887).

'6United States v. Sioux Nation, 448 U.S. 371 (1980); Tee-

Hit-Ton Indians v. United States, 348 U.S. 272 (1955), reh. de-

nied, 348 U.S. 965 (1955); United States v. Alcea Band of Tilla-

mooks, 341 U.S. 48 (1951); Rosebud Sioux Tribe v. Kniep, 430

U.S. 584 (1977); Northern Cheyenne Tribe v. Hollowbreast, 425

U.S. 649 (1976); Shoshone Tribe of Indians v. United States, 299

U.S. 476 (1937); Nadeau v. Union Pacific R.R. Co., 253 U.S. 442

(1920); United States v. Bd of County Commr’s Osage County,

251 U.S. 128 (1919); Marchie Tiger v. Western Investment Co.,

221 U.S. 286 (1911); Blackfeather v. United States, 190 U.S. 368

(1903); Lone Wolf v. Hitchcock, 187 U.S. 553 (1903); Cherokee

Nation v. Hitchcock, 187 U.S. 294 (1902).

_ "United States v. Antelope, 430 U.S. 641 (1977); Hynes v.

Grimes Packing Co., 337 U.S. 86 (1949); United States v. Nice,

(Continued on next page)

B. The Secretary of the Interior has a duty to re-

view Tribal resolutions which affect Tribal

resources and federal leases thereof.

The federal government has a property interest in

Indian lands and the Secretary of the Interior has a duty

to manage those lands not only for benefit of the Indians

but also the public at large.'"* Under federal law the Sec-

retary of the Interior has a general duty to “make the tribal

property productive”’’ and therefore to supervise every

aspect vital to the development of tribal resources.”° In

New Mexico v. Mescalero Apache Tribe, 462 U.S. 324

(1983) this Court recognized, “Federal law commits to the

Secretary and the tribal council the responsibility to man-

age the reservation’s resources.” Although the resource

involved in the Mescalero case was game rather than oil,

this Court found: “Federal law requires the Secretary to

(Continued from previous page)

241 U.S. 591 (1916); United States v. Waller, 243 U.S. 452

(1917); Cherokee Nation v. Southern Kansas Railway Co., 135

U.S. 641 (1890); Stevens v. Cherokee Nation, 174 U.S. 445,

478 (1899); United States v. 43 Gallons of Whiskey, 93 U.S.

188 (1876).

18Tee-Hit-Ton Indians v. United States, supra; Starr v. Long

Jim, 227 U.S. 613, 625 (1913); Cherokee Nation v. Hitchcock,

187 U.S. 294 (1902); United States v. Rodgers, 45 U.S. (4 How.)

567 (1846); State of California by and through Brown v. Watt,

668 F.2d 1290 (D.C. Cir. 1981); Badoni v. Higginson, 638 F.2d

172 (10th Cir. 1980), cert. denied, 452 U.S. 954 (1981); see also

43 U.S.C. § 1457.

'9Cherokee Nation v. Hitchcock, 187 U.S. 294 at 307 (1902).

20United States v. Mitchell (Mitchell 11), 102 S. Ct. 2961,

77 L.Ed.2d 580 (1983); White Mountain Apache Tribe v. Bracker,

448 U.S. 136 (1980); People v. McCovey, 205 Cal. Rptr. 643,

685 P.2d 687 (1984).

f

9

review each of the tribe’s hunting and fishing ordinances.”

462 U.S. at 615. Tribal action impacting the development

of tribal property or resources therefor requires Secre-

tarial approval and implementation.”!

The necessity for Secretarial involvement in tribal

taxes on the value of, and the business generated from,

oil and gas leases specifically authorized by the Interior

Department is even more clear. The courts have recog-

nized that the Secretary has a duty to comprehensively

regulate mineral production on Indian leases for the bene-

fit of both the publie and Indian tribes.”* The Interior

Department has therefore traditionally been integrally in-

volved in every aspect of oil and gas development on In-

dian reservations. Moreover, Section 396(d) of the In-

dian Mineral Leasing Act* makes it clear Congress in-

tends the Secretary to directly regulate “all operations

under oil or gas, or other such mineral lease issued pur-

suant to the terms” of the Act. The Secretary of the In-

terior has recognized his obligations to implement the In-

2125 U.S.C. §§ 81, 415, 121-125, 311-321 (1976); Jurisdic-

tion of Courts of the Choctaw Nation, 7 Op.Atty. Gen. 174

(1855); Right of the Cherokees to Impose Taxes on Traders, 1

Op.Atty. Gen. 645 (1824); Memorandum of the Solicitor to the

Commissioner of Indian Affairs (June 3, 1941).

22United States v. Mitchell, supra; Kenai Oii & Gas, Inc.

v. Dept. of the !/nterior, 671 F.2d 383, 387 (10th Cir. 1982);

Navajo Tribe of Indians v. United States, 624 F.2d 981, 987

(Ct. Cl. 1980); Hoover & Bracken Energies v. United States

Dept. of interior, 723 F.2d 1488 (10th Cir. 1983), cert. denied.

83 L.Ed.2d 39 1984).

*3Boesche v. Udall, 373 U.S. 472 (1963); Cherokee Nation

v. Hitchcock, supra; Taylor v. Tayrien, 51 F.2d 884 (10th Cir.

1931), cert. denied, 284 U.S. 672 (1931).

7425 U.S.C. §§ 396a-396g (1976).

10

dian Mineral Leasing Act and has promulgated regula-

tions governing virtually every aspect of the operation of

such leases.”®

It is clear that the imposition of the possessory inter-

est tax and the business activity tax by the Navajo tribal

council will have a direct impact upon not only the energy

companies and non-Indian public, but upon the Tribe it-

self. Since the Secretary of the Interior has a duty to

supervise and manage tribal assets, unilateral tribal action

which will affect, and potentially inhibit development of

these assets cannot be allowed.”* If the Tribe increases

the ievel of these taxes without participation by the fed-

eral government, it is clear that in the long term tribal re-

sources may not be developed in the best interest of the

tribe or the nation. Tribal actions which so clearly impact

the developrrent of tribal and national resources, there-

fore, cannot be implemented without the participation and

concurrence of the Secretary of the Interior.

When the Secretary of the Interior has the duty to

monitor and regulate Indian activities he cannot simply

decide not to become involved.”” He cannot, therefore, ful-

2825 CFR § 211 and 30 CFR § 206; Interior Department

Notices to Lessees, 1-7; Mineral Management Services Payor

Handbook; United States Geological Service Conservation Man-

ual, Part 647, Chapters 2 and 15.

26Yavapai-Prescott Indian Tribe v. Watt, 707 F.2d 1072 (9th

Cir. 1983), cert. denied, 78 L.Ed.2d 723 (1983); U.S. v. 9,345.53

acres, 256 F. Supp. 603, 605 (W.D.N.Y. 1966). Cf. Kennerly v.

District Court, 400 U.S. 423 (1971), (unilateral transfer of tribal

jurisdiction ineffectual in the absence of federal authorization

or participation).

27Rockbridge v. Lincoln, 449 F.2d 567, 571 (9th Cir. 1971);

United States v. Douglas, 190 F. 482 (8th Cir. 1911); United

States v. Gray, 201 F. 291 (8th Cir. 1912); United States v. Sand-

strom, 22 F. Supp. 190 (N.D. Okla. 1938).

11

fill his statutory duty to supervise tribal resource develop-

ment by merely delegating his authority to the Navajo

tribal council, without any procedure for review by federal

authorities.”*

C. The Secretary of the Interior has the legal au-

thority to control development of tribal prop-

erty and resources.

Over the years, Congress has delegated much of its au-

thority to regulate and control Indian property, resources

and activities to the Interior Department.” Congress has,

for example, required the Secretary of the Interior to ap-

prove both land sales and long-term leases by Indian

tribes.*° Sceretarial approval is even required before a tribe

may grant a right-cf-way across its land.*' Secretarial ap-

proval is also required for the sale or lease of natural re-

sources produced on tribal lands.** The Secretary is also

required to approve contracts obiigating tribal funds.”

28Oglala Sioux Tribe v. Hallett, 708 F.2d 326 (8th Cir.

1983); New York Indians v. United States, 40 Ct. Cl. 448 (1905);

United States v. Camp, 169 F. Supp. 568 (E.D. Wash. 1959).

29See, e.g., Act of July 27, 1868, Ch. 259, 15 Stat. 228; Act

of Aug. 15, 1876, Ch. 289, § 5, 19 Stat. 176, 200 (codified pres-

ently at 25 U.S.C. § 261); United States v. John, 437 U.S. 634

(1978); Brader v. James, 246 U.S. 88 (1918); Secretary’s Power

to Regulate Conduct of Indians, | Int.Op.Sol. 531 (1935). In

Moapa Band of Paiute Indians v. U.S. Dept. of Int., No. 84-

1593 (9th Cir.), the Interior Department refused to approve

a tribal ordinance allowing the tribe to operate a brothel on

the reservation.

3025 U.S.C. § 177, 399, 397, 402(a), 415 (1976).

3125 U.S.C. § 311, 312, 319, 321, 323 (1976).

3225 U.S.C. 396a, 397, 399, 406, 407 (1976).

3325 U.S.C. § 81, 85, 121-125 (1976).

12

In addition to delegations of authority to control spe-

cific matters, the Secretary has broad authority under 25

U.S.C. §§2 and 9 to govern Indian affairs in general.”

In Udall v. Littell, 366 F.2d 668 (D.C. Cir. 1966), cert. de-

nied 385 U.S. 1007 (1967). reh. denied 386 U.S. 939 (1967),

the Court relied in part on 25 U.S.C. § 2, which it found

‘‘delegates to the Secretary the supervision of the affairs

and public businesses of the Indian tribes.” 366 F.2d at

672. Speaking for a unanimous Court, Judge, now Chief

Justice, Burger, defined the power of the Secretary over

Indian business and contractual relationships in the fol-

lowing terms:

‘In charging the Secretary with broad responsibility

for the welfare of Indian tribes, Congress must be as-

sumed to have given him reasonable powers to dis-

charge it effectively. Courts have taken this approach

with respect to various aspects of Indian life, recog-

nizing that ‘[{t]his statute furnishes broad authority

for the supervision and management of Indian affairs

and property commensurate with the obligation of the

United States.’ ” 366 F.2d at 673.

In its treatise, Federal Indian Law (U.8S.G.P.O. 1958),

the Interior Department itself reviewed its broad statu-

tory authority under 25 U.S.C. 44 2 and 9 and concluded:

United States v. Birdsall, 233 U.S. 223 (1914); State of

New Mexico v. Aamodt, 537 F.2d 1102 (10th Cir. 1976), cert.

denied, 429 U.S. 1121 (1977); Armstrong v. United States, 306

F.2d 520 (10th Cir. 1962); United States v. Barnsdall Oil Co.,

127 F.2d 1019 (10th Cir. 1942); United States v. Stanolin Crude

Oil Purchasing Co., 113 F.2d 194 (10th Cir. 1940); Rainbow v.

Young, 161 F. 835 (8th Cir. 1908); United States v. Clapox, 35

F. 575 (D. Or. 1888); People v. McCovey, 205 Cal. Rptr. 643,

685 P.2d 687 (1984).

13

“Federal administrative power over Indian affairs,

vested in the Secretary of the Interior, is virtually all-

inclusive.” (Pp. 51-52.)%5

It is clear then, the Secretary of the Interior has the

legal authority to review the proposed Navajo taxes. He

also has a duty to do so.

II.

The Secretary of the Interior has a duty to pro-

tect the Constitutional rights of non-Indians do-

ing business on the reservation under federal au-

thority.

Even if the Secretary of the Interior did not have a

duty to supervise and control the development of tribal

property and resources, he would be obligated to review

the Navajo possessory interest and business activity taxes

before they could be imposed on non-Indian federal lessees.

Indian tribes are not constrained by the United States

Constitution in the same fashion or to the same extent as

the federal and state governments.*° The Secretary of the

Interior is, of course, bound to uphold the Constitutional

rights of all Americans.*’ While Indian tribes, then, may

3SThe Deputy Solicitor of the Interior Department specif-

ically represented to this Court that 25 U.S.C. §§ 2 and 9 pro-

vide a basis for Interior to “disapprove and certainly to refuse

to a any ordinance enacted by a tribe which bears

on others than members, and which has not been approved

and would affirmatively disapprove . . .” (Oral Argument in

Merrion v. Jicarilla Apache Tribe, No. 80-11, Nov. 4, 1984, Tr.

p. 43 [455 U.S. 130 (1982)]. For an excellent review of

the Interior Department’s recent interpretation of its broad

ara | mandate to govern all aspects of Indian affairs, see

Lay of the Muckleshoot Indian Tribe, 80 |1.D. 222, 225-

(1

3*Santa Clara Pueblo v. Martinez, 436 U.S. 49, 56 (1978);

Talton v. Mayes, 163 U.S. 376 (1896); Toledo v. Pueblo de

Jemez, 119 F. Supp. 429 (D.N.M. 154).

37¥Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579

bane Ballinger v. United States, ex rel. Frost, 216 U.S. 240

(1910).

14

arguably be able to govern non-Indians absent the limita-

tions on governmental power delineated in the Constitu-

tion, that venerable document does not contemplate en-

claves where the Constitutional rights of Americans may

be suspended.** As the Court recognized in Merrion, it is

important that the Interior Department be involved in the

review and administration of Indian tribal taxes over non-

Indians. Based on their ethnicity, non-Indians do not have

the right to vote in tribal elections or participate in tribal

government in any fashion. Taxation against a non-resi-

dent is always dangerous®® but it is particularly dangerous

in this situation, where the non-Indians have no means of

acquiring “residency” or the right to participate in tribal

government.” It is, therefore, imperative that the Interior

Department intervene to insure that any taxes imposed by

the tribal council are not arbitrary and comply with both

the national and tribal interest.

38Southern R. Co. v. Greene, 216 U.S. 400, 412 (1910); 258

U.S. 298, 309 (1922); Healy v. James, 408 U.S. 169, 180 (1972).

Tribal customs are clearly not an appropriate basis on which to

allow non-indians to be governed in contravention of their

Constitutional rights, by Indian tribes. In re Sah Quah, 31 F.

327 (D. Alas. 1886).

399As Justice Jackson said in Independent Warehouses v.

Scheele, 331 U.S. 70 (1947) (dissenting):

“But here the ultimate burden of the tax falls on consum-

ers of New York and elsewhere who have no representation

in the government which lays the tax and fixes its amount.

The authorities who have fixed the tax will never have to

answer to those who pay it. That is the evil of ‘taxation

without representation’ . . . it is a tax that falls ultimately

on non-residents of the taxing authority. If it is valid, |!

know of no reason why the community should bear any of

its own tax burdens.” 331 U.S. at 94-95.

4’In this nation each sovereign rns only with the con-

sent of the governed.” Nevada v. Hall, 440 U.S. 410, 426 reh.

denied 441 U.S. 917 (1979).

15

In Merrion v. Jicarilla Apache Tribe, 455 U.S. 130

(1982), this Court specifically found that Secretarial ap-

proval of tribal taxation imposed on non-Indians was

necessary, in part to prevent the unfair or arbitrary use

of tribal authority. Although this Court approved the

severance tax of the Jicarilla Apache Tribe in Merrion,

it pointed out repeatedly that since the Jicarillas had ac-

cepted the Indian Reorganization Act, 25 U.S.C. § 476,*'

both their Constitution and the tribal tax at issue had

been specifically reviewed and approved by the Interior

Department. More importantly, this Court emphasized

the necessity of Secretarial approval as a safeguard for

the constitutional rights of non-Indians subjected to tribal

authority. Speaking for the majority, Justice Marshall

pointed out that under the Indian Reorganization Act,

‘*Congress has affirmatively acted by providing a series

of federal checkpoints that must be cleared before a tribal

tax can take effect.” 455 U.S. at 155. After noting the

limitations inherent in tribal sovereignty (see Point III,

infra), Justice Marshall made the following relevant ob-

servations:

‘‘Of course, the tribe’s authority to tax non-members

is subject to constraints not imposed on other govern-

mental entities: the federal government can take

away this power, and the tribe must obtain the ap-

proval of the Secretary before any tax on non-mem-

bers can take effect. These additional constraints

minimize potential concern that Indian tribes will ex-

ercise the power to tax in an unfair or unprincipled

manner, and insure that any exercise of the tribal

‘IFor a detailed discussion of the failure of the Navajo tribe

to accept the Congressional authorization for tribal govern-

mental authority contained in the Indian Reorganization Act,

see the brief of the petitioner, Kerr-McGee, pp. 27-30.

16

power to tax will be consistent with national policies.”

455 U.S. at 141.”

It is particularly important that the Secretary review

and participate in the administration of the Navajo taxes

at issue, since they contain several features which have

the potential to be exercised ‘‘in an unfair or unprincipled

manner”, “[injeonsistent with national policies.” The

Navajo taxes, for example, have substantial potential to

deprive petitioners of their right to a hearing before an

impartial tribunal and thus, of due process of law.

The Navajo tribal taxes provide that the courts of

the Navajo tribe are vested with exclusive jurisdiction

over any and all persons subject to the tax. §§ 219, 425.

Both taxes contain provisions specifically prohibiting any

suit to restrain the assessment or collection of the taxes

‘‘in any court by any person’’ and for penalties for tax-

payers who ‘‘evade or defeat the tax.” §4 217, 222, 426.

Unlike the Jicarilla tax approved in Merrion which

specifically provided for review in federal court, neither

of the Navajo taxes allow for any review of non-Indians’

constitutional claims by a court sanctioned under Article

III of the United States Constitution.“ Texaco submits

*2Although the Navajos have rrr argued the Court

did not rely on Secretarial approval of the tribal tax in Merrion,

their argument is not consistent with the language of the opin-

ion, (see, e.g., 455 U.S. 151, n. 16) or its subsequent interpreta-

tions by legal commentators. Note Indian Taxation of Non-in-

dians, 50 Tenn.L.R. 403 (1983); Newton, Federal Power over In-

dians: Its Sources, Scope and Limitations, 132 U.Pa.L.R. 195,

234, n. 216 (1984).

It is especially important that the non-indian petitioners

herein have access to an Article Ill court, since the Navajo tribal

courts are obligated to resolve disputes under the “Customs and

(Continued on next page)

17

that it is not appropriate to subject non-Indians to judg-

ment ‘‘not by their peers, nor by the customs of their

people, nor the law of their land, but by . . . a different

race, according to the law of a social state of which they

have an imperfect conception.” Ez parte Crow Dog, 109

U.S. 556, 571 (1883).% The Secretary, therefore, has an

obligation to make sure non-Indians doing business on In-

dian reservations have access to a fair hearing before an

impartial tribunal with review by a court sanctioned under

Article III.*5 This is especially true here, since the Secre-

tary of the Interior had expressly rejected separate Nav-

ajo courts not subject to Interior Department review at

the time several of these mineral leases were executed.”

The provisions of the Navajo taxes which provide for

final review by the Navajo supreme judicial council are

(Continued from previous page)

Usages” of the Navajo tribe. N.T.C., T 7, § 204. Indeed, the

Navajo Supreme Judicial Council has a panel “composed of

persons learned in Navajo law, custom, tradition and culture,

including medicine men, retired judges, chapter officers, an-

thropologists, advocates, professors and other professionals” to

sit on each case and advise it. N.T.C., T 7, § 326.

“Compare United States v. Wheeler, 435 U.S. 313, 331-2

(1978) (recognizing such informal tribal custom is appropriate

to judge tribal members) with Oliphant v. Suquamish Indian

tribe, supra (1978) (rejecting Indian criminal jurisdiction over

non-members).

4SThe “very essence of civil liberty certainly consists in the

= of every individual to claim the protection of the laws

whenever he receives an injury. One of the first duties of gov-

ernment is to afford that protection.” Marbury v. Madison, 5

U.S. 137, 163 (1803). For that reason, the Constitution man-

dates that any challenge to the deprivation of a constitutionally

guaranted right be reviewable in an Article Ill Court. Martin

v. Hunter’s Lessee, 14 U.S. 304 (1816); Ralpho v. Bell, 569 F.2d

ra oo Cir. 1977); Petersen v. Clark, 285 F. Supp. 700 (N.D.

al. 1968).

**See preamble to CO-69-58 History, N.T.C. Title 7 § 201.

18 -

also troubling since the Navajo tribal council which adopt-

ed these taxes becomes the final arbiter of their legality

and applicability.” The Navajo supreme judicial council

consists of eight members, five of whom are members of

the current tribal council, with provision for the appoint-

ment of two former members of the tribal council. N.T.C.

Title 7, § 322. All members of the supreme judicial coun-

cil are appointed by the chairman of the tribal coun-

cil. Jd. When a legislative body such as the Navajo tribal

council initiates governmental action and then acts as the

final arbitrater thercof, the guarantee of due process of

law is in danger.*

The Secretary’s role as an arbiter of disputes between

Indian and non-Indians, then, is particularly critical in the

present situation. In Oliphant v. Suquamish Indian Tribe,

supra, this Court found that whatever original judicial

authority Indian tribes had over non-Indians operating

on the reservation had been relinquished to the federal

government. Speaking for the Court, Justice Rehnquist

said:

‘*But from the formation of the Union and the adop-

tion of the Bill of Rights, the United States has now

vested an equally great solicitude that its citizens be

protected by the United States from unwarranted in-

trusions on their personal liberty. The power of the

United States to try and criminally punish is an im-

*7After the Navajo court of appeals declared several tribal

council resolutions invalid, the tribal council passed a resolu-

tion creating the Navajo “Supreme Judicial Council” to have

final authority over all judicial proceedings. N.T.C. Title 7, § 321.

*8The danger for abuse when the legislature reviews and

passes upon the legality of its own pronouncements led to the

prohibition of Bills of Attainder in our Constitution. United

States v. Brown, 381 U.S. 437 (1965); People v. Budd, 117 N.Y. 1,

22 N.E. 670 (1889), aff'd 143 U.S. 517 (1892).

19

portant manifestation of the power to restrict per-

sonal liberty. By submitting to the overriding sover-

eignty of the United States, Indian tribes therefore

necessarily give up their power to try non-Indian

citizens of the United States, except in a manner

acceptable to Congress. This principle would have

been obvious a century ago when most Indian tribes

were characterized by a want of fixed laws [and] of

competent tribunals of justice. H.R. Regs. No. 474,

23d Cong., Ist Sess. 18 (1834). It should be no less

obvious today, even though present day Indian tribal

courts embody dramatic advances over their historical

antecedents. . . . These considerations, applied here

to the non-Indian rather than Indian offender, speak

equally strongly against the validity of respondent’s

contention that Indian tribes, although fully subor-

dinated to the sovereignty of the United States, retain

the power to try non-Indians according to their own

customs and procedure.’’ 435 U.S. at 210-211.

The enforcement provisions of the Navajo taxes could

subject the non-Indian federal lessees to seizure of all

their reservation property, permanent suspension of the

right to do business ‘‘within the Navajo Nation” and

thousands of dollars in penalties.“ These sanctions are

essentially punitive and quasi-criminal in character.°° The

Secretary, therefore, must uphold the federal interest in

protecting these non-Indian federal lessees against the

"That the lessees legitimately fear such sanctions is evi-

denced by Tenneco Oil Company v. Sac & Fox Tribe of Indians,

725 F.2d 572, 574 (10th Cir. 1984), wherein the Tribe notified the

lessee that ‘‘a petition for cancellation of Tenneco’s lease had

been submitted to the tribe’s business committee based on

Tenneco’s failure to comply with the newly enacted tribal tax.”’

United States v. United States Coin & Currency, 401 U.S.

715 (1971); One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S.

693, 700 (1965).

20

quasi-criminal sanctions which may be unilaterally imposed

by the tribe under the Navajo taxes.*!

ITI.

Tribal taxation of federal lesees without secretar-

ial approval is inconsistent with the status of In-

dian tribes as domestic dependent sovereigns.

Indian tribes have never been recognized as having

the right to exercise coercive governmental power over

non-Indians. Oliphant v. Suquamish Indian Tribe, supra.

‘‘Though Oliphant only determined inherent tribal auth-

ority in criminal matters, the principles on which it relied

support the general proposition that the inherent sover-

eign powers of an Indian tribe do not extend to the activ-

ities of nonmembers of the tribe.” Montana v. United

States, 450 U.S. 544 (1981) reh. denied, 452 U.S. 911

(1981). The Navajo tribe, therefore, does not have the

‘‘inherent sovereign power” to impose these taxes with-

out participation by the federal government.

As early as 1810 this Court recognized the limitations

of tribal authority over non-Indians.” The limited nature

of tribal sovereignty was first analyzed at length by Chief

Justice John Marshall in Cherokee Nation v. Georgia, 30

U.S. (5 Pet.) 1 (1831), where he described Indian tribes

as “domestic dependent nations”. In a concurring opinion,

Justice Johnson made it clear that Indian tribes were not

to be equated with the federal or state governments in

S1In the absence of direct federal involvement, such quasi-

criminal sanctions as seizure of a non-Indian’s property have

historically been found to be outside the realm of tribal powers,

in the absence of direct federal involvement. Quechan Tribe v.

Rowe, 531 F.2d 408, 411 (9th Cir. 1976); Settler v. Yakima Tribal

Court, 419 F.2d 486, 489 (9th Cir. 1969) cert. denied 398 U.S.

903 (1970); Colliflower v. Garland, 342-F.2d 369 (9th Cir. 1965).

52Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810).

21

terms of their governmental authority, especially over

non-Indians. 30 U.S. (5 Pet.) at 26. See also the con-

currence of Justice Baldwin. 30 U.S. (5 Pet.) at 48-49.%

In United States v. Kagama, 118 U.S. 375 (1886),

the Court interpreted an Act of Congress™ prohibiting fur-

ther treaties with Indian Tribes, as a recognition the Tribes

did not possess sovereignty in the sense of independent

governmental power, but were completely “dependent for

their political rights” on the government of the United

States. 118 U.S. at 384.

This Court’s more recent decisions have likewise rec-

ognized that Indian tribes are proscribed from exercising

those governmental powers verminated by Congress,°** as

well as those inconsistent with their dependent status.%°

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

Court recognized that Indian tribes do not possess govern-

mental sovereignty in the same sense, or from the same

source, as the United States government. In de-

scribing the areas of “sovereignty” necessarily withdrawn

as a result of the dependent status of Indian tribes, Jus-

tice Stewart, speaking for a unanimous Court, said:

83Other early decisions likewise recognized the limitations

inherent in the fact tribal sovereignty is “dependent”. Johnson

v. M’Intosh, 21 U.S. (8 Wheat.) 543, 574 (1823); United States v.

Rodgers, 45 U.S. (4 How.) 567 (1846); United States v. McBrat-

ney, 104 U.S. (14 Ott) 621 (1881); Choctaw Nation v. United

States. 119 U.S. 1, 27 (1886).

“This statute, the Act of March 3, 1871, Ch. 120 § 3, 16 Stat.

570 is presently codified as 25 U.S.C. § 71.

5SRosebud Sioux Tribe v. Kneip, 430 U.S. 584 (1977); Unit-

ed States v. Quiver, 241 U.S. 602 (1916).

56Kennerly v. District Court, 400 U.S. 423 (1971); People v.

Martin, 326 U.S. 496 (1946).

22

The areas in which such implicit divestiture of sov-

ereignty has been held to have occurred are those in-

volving the relations between an Indian tribe and non-

members of a tribe. . . . These limitations rest on the

fact that the dependent status of Indian tribes within

our territorial jurisdiction is necessarily inconsistent

with their freedom independently to determine their

external relations. 435 U.S. at 326.

In light of this “implicit divestiture of sovereignty”

over non-members of the tribe, tribal governmental action

must be implemented by federal authority to be effective

against non-Indians.” The Interior Solicitor has repeatedly

held “That the taxing power of Indian tribes does not ex-

tend to the levy by a tribe of a tax upon licensed traders,

in the absence of an authorization from the Commissioner

of Indian Affairs.” Regulation of Traders on the Navajo

Reservation, 60 I.D. 176, 178 (1948). See also Powers of

Indian Tribes, 55 1.D. 14, 48 (1934). Such opinions are

consistent with other decisions by legal officers of the ex-

ecutive branch * as well as those of the lower courts.”

This Court has also long recognized that in the absence

S7United States v. Mazurie, 419 U.S. 544, 547-8, 554 (1975);

Mettler, A Unified Theory of Indian Tribal Sovereignty, 30 Has-

tings L.J. 89, 135-6 (1978); Note, Balancing the Interests in Taxa-

tion of Non-Indian Activities on Indian Lands, 64 lowa L.R. 1459,

1464 (1979); Oliver, The Legal Status of American Indian Tribes,

38 Or.L.R. 193, 230-4 (1959). Cf. 18 USC § 1165 (federal crimin-

al penalties authorized to enforce tribal hunting and fishing or-

dinances.

88See e.g., Right of the Cherokees to Impose Taxes on

Traders, 1 Op. Atty. Gen. 645 (1824); Memorandum of the So-

licitor to the Commissioner of Indian Affairs, p. 2, June 3, 1941.

‘Muskogee National Telephone Co. v. Hall, 118 Fd. 382

(8th Cir. 1902); City of Tulsa v. Southwestern Bell Telephone,

5 F.Supp. 822 (N.D. Okla. 1934), aff'd 75 F.2d 343 (10th Cir.

1935), cert. denied 295 U.S. 744 (1935).

23

of federal approval and implementation, tribal action can-

not lawfully interfere with property rights sanctioned by

the federal government.” Indeed, in every case where tri-

bal taxation has been approved by the judiciary, it has

heen expressly sanctioned and/or implemented by the ex-

ecutive branch of the federal government.”

While Indian tribes retain the power to tax non-Indian

lessees when such taxation is approved or implemented by

the federal government,” then it is clear tribal taxation

of federal lessees without federal approval is “inconsistent

with their diminished status as sovereigns.” Montana v.

United States, supra. For this reason Congress adopted

a specific framework for federal supervision over, and par-

ticipation in, such tribal resolutions. Under the indian Re-

6°Cherokee Nation v. Southern Kansas Railway Co., 135 U.

S. 641 (1890).

6!Merrion v. jicarilla Apache Tribe, supra; Morris vy. Hitch-

cock, 194 U.S. 384 (1904) (tribal tax approved by the President

of the United States.) In both /ron Crow v. Oglala Sioux Tribe,

231 F.2d 89 (8th Cir. 1956) and Barta v. Oglala Sioux Tribe, 146

F.Supp. 917 (D.S.D. 1956), aff'd 259 F.2d 553 (8th Cir. 1958)

cert. denied 358 U.S. 932 (1959), the authority of the tribe to

levy taxes was approved and implemented through the proced-

ure specifically required under the Indian Reorganization Act,

25 U.S.C. § 476 (1976). In rejecting the contention that since

tribal power was an “inherent attribute of sovereignty,” the col-

lection of the tribal tax did not raise a federal question, the

Barta Court said:

“Thus the rights derived from original sovereignty have

been directly channeled into a federal statutory scheme

and all tribal powers are exercised under federal law. The

plaintiff's tribal constitution was not adopted under rules

established by tribal custom, but rather under authority

— by the Congress of the United States, namely, the

nelian Reorganization Act.” 146 F. Supp. at 918.

®2Merrion v. Jicarilla Apache Tribe, supra; Crabtree v. Mad-

den, 54 F. 426 (8th Cir. 1893); Iron Crow v. Oglala Sioux Tribe,

supra; Barta v. Oglala Sioux Tribe, supra.

24

organizat ‘et, 26 U.S.C. § 476, Congress established

‘fa serie. *ederal checkpoints”’ for implementation

of such oru.ua»ces. Despite repeated invitations by Con-

gress to participate under the Indian Reorganization Act,

the Navajos have declined to do so.™

The Navajos taxes at issue here are also beyond the

authority of the Tribe because they purport to have extra-

territorial effect. The Navajo Business Activity Tax is

imposed upon receipts from any ‘‘Navajo branch” for

‘*gross receipts of that branch from the sale, either within

or without the Navajo nation . . .” 4 403(2)

While the Navajo business activity tax does not con-

tain a definition of “Navajo Nation,” that phrase has been

defined in other contexts to include tribal and ailottee

lands beyond the borders off the Navajo Reservation.”

This Court has emphasized that there is a significant

geographical component to tribal sovereignty,” which can-

not be enlarged over non-Indians without express federal

delegation.*’ The Navajos do not have the authority to

Merrion v. jicarilla Apache Tribe, supra, 455 U.S. at 155.

“Since the Navajo tribe refused to channel its “retained

sovereignty” through the federally prescribed channels, it was

necessary for the Interior rtment to create a Navajo tribal

government out of whole cloth. Navajo-Hopi Rehabilitation

Act, Proposed Constitution for Navajo Tribe, I Int.Sol.Op. 1641

(1954); Order 551, Fed.Reg. Oct. 30, 1958; Navajo Tribal Coun-

cil Resolution, CJA-1-59.

See e.g. 18 U.S.C. § 1151 and N.T.C. Title 7 § 134, as dis-

cussed in General Motors Acceptance Corp. v. Chischilly, 96

N.M. 113, 628 P.2d 683 (1981).

**White Mountain Apache Tribe v. Bracker, supra.

*’Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148-9

(1973); General Motors Acceptance Corp. v. Chischilly, supra;

Cohen, Handbook of Indian Law, 148 fn. 236 (U.N.M. ed. 1971);

Indian Police, 18 Op.Atty.Gen. 440 (1886).

25

exercise unilateral jurisdiction over property which is not

owned by the tribe since it “bears no clear relationship to

tribal self-government”. Montana v. United States, supra

at 564. The exercise of such extraterritorial jurisdiction

would also raise due process questions.” That such extra-

territorial taxing jurisdiction is beyond the scope of tribal

sovereignty is emphasized by the fact the Secretary of

the Interior has disapproved tribal taxation of resources

in similar chagkerboard situations.”

CONCLUSION

For the reasons given above, the decision of the Court

of Appeals should be reversed.

Respectfully submitted,

Bruce Dove.as Biack

CampseLt & Brack, P.A.

Suite 1, 110 N. Guadalupe

P.O. Box 2208

Santa Fe, New Mexice 87501

Telephone: (505) 988-4421

Attorneys for Texaco, Inc.

68Riverside and Dan River Cotton Mills v. Menefee, 237 U.

S. 189 (1915); National Mutual Building & Loan Assoc. v. Bra-

han, 193 U.S. 635 (1904). See also opinion of Marshall, J. (dis-

senting) in Rosebud Sioux Tribe v. Kneip, supra.

“Crow Tribe of Indians v. State of Montana, 469 F. Supp.

154 at 156 (D. Mont. 1979). To the extent the Navajo taxes ap-

ply to tribal fee or trust land the Secretary has recognized he

may only such regulations “as he shall determine to be

in the best interest of the Indian owner or owners in achieving

the A = and best use of such p rty.” 25 C.F.R. § 1.4(b);

roe States v. County of Humboldt, 3 Ind.L.Rptr. 6482 (N.D.

. 1976).