Amicus Curiae Brief — Atkinson Trading Co. v. Shirley

TAN 9 Doo!

No. 00-454

In the

Supreme Court of the abit

+

ATKINSON TRADING COMPANY, INC.,

Petitioner,

V.

JOE SHIRLEY, JR., VICTOR JOE, DERRICK B.

WATCHMAN, and ELROY DRAKE, Members of the

Navajo Tax Commission; and STEVEN C. BEGAY,

Executive Director of the Navajo Tax Commission,

Respondents.

—_—o—

On Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

ae

BRIEF AMICUS CURIAE OF ROBERTA

BUGENIG, JAMES D. THOMPSON,

JULIA R. THOMPSON, AND PACIFIC LEGAL

FOUNDATION IN SUPPORT OF PETITIONER

a a

HAROLD E. JOHNSON JAMES S. BURLING

Of Counsel Counsel of Record

Pacific Legal Foundation Pacific Legal Foundation

10360 Old Placerville Road 10360 Old Placerville Road,

Suite 100 : Suite 100

' : Sacramento, California 95827

Sacramento, California 95827 Telephone: (916) 362-2833

Telephone: (916) 362-2833 Facsimile: (916) 362-2932

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation

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QUESTIONS PRESENTED

1. May an Indian tribe tax activity on land which is held

in fee simple by nonIndians and which was entirely outside of

the reservation until the reservation’s boundaries were extended

so that they now surround it?

2. May Congress delegate to a tribe regulatory authority

over property that is held in fee simple and was clearly subject

to state jurisdiction at the time the property was enveloped by

an expansion of the reservation’s boundaries?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ....: 6.0005 cs suankendagueawiees i

TABLE OF AUTHORITIES coc os ccs: ca ty vo view sea iil

IDENTITY AND INTEREST OF AMICI .................. l

SUMMARY OF ARGUMENT . .. ous ss 0e cc brvsb betes sce 2

ARGUMENT .. .0.. oucs been niw se een Ore ees 3

1. THE COURT BELOW GAVE INSUFFICIENT

WEIGHT TO THE FACT THAT PETITIONER’S

LAND IS FEE SIMPLE PROPERET oe cisincsvieccys 3

A. The Strong Presumption That NonIndian-Owned

Fee Simple Property Is Not Subject to Tribal

Taxation or Regulation Can Be Traced to the

History, Nature, and Status of Fee Simple

PYODOTRY, oon ccna cad bab weee ne aaee eee eeae sans 4

B. An Act of Congress, Such as That Which

Expanded the Navajo Reservation’s Boundaries,

Cannot Extinquish the Presumption of State

Jurisdiction over Fee Simple Property ........... 7

C. Recognizing a Congressional Delegation of

Regulatory Authority in This Case Would

Conflict with Clear Constitutional Precepts ....... 9

CONCLUSION

TABLE OF AUTHORITIES

Page

Cases

Atkinson Trading Company, Inc. v. Shirley,

210 F.3d 1247 (10th Cir. 2000) ........... 3-4, 6, 8, 11

Brendale v. Confederated Tribes and Bands of

the Yakima Indian Nation, 492 U.S. 408 (1989) ....... >

Bugenig v. Hoopa Valley Tribe, 2000 U.S. App.

Se eT CPU EN. ROU) ccc ccs seeneeneceeee 1-2

Burlington Northern Railroad Co. v. Red Wolf,

P56 F350 F059 GR Civ. WIGS)... ws cece ene scence, 8

County of Yakima v. Confederated Tribes and Bands

of the Yakima Indian, 502 U.S. 251 (1992) .......-.-. 6

Moe v. Confederated Salish and Kootenai

OSU gi RS So. | are area 6

Montana vy. United States, 450 U.S. 544 (1981) .... 4-5, 7-8

Printz v. United States, 521 U.S. 898 (1997) ........... 10

Rice v. Rehner, 463 U.S. 713 (1983) ............-7.--- 9

Strate v. A-1 Contractors, 520 U.S. 438 (1997) ....... 4,9

Thompson v. Adams, Montana District Court

a i a ce Ve 8 hn a ooh OS 1-2

United States v. Bevans, 16 U.S. 336 (1818) .........--. 7

United States v. Mazurie, 419 U.S. 544 (1983) ....... 9-1]

Williams v. Lee, 358 U.S. 217 (1959) .........--200-- 11

Rules

Supreme Court Rule 37.3 ........ 0... cece eee eee eee l

ee akin eo Ala NS 8 ]

: iV

TABLE OF AUTHORITIES—Continued

Page

Statutes

25 U.S.C. $6 331, €f 88g. 20 cece v env sencseedssesers 5

D0 Sak. FOO CIT) ok Sac raw kc een eee eee 5

Se ee A) oer her trary Soe ee 6

4B Seat, SGD (1936) x . on nec ce ee che eee 9

United States Constitution

Astiote 1. sectOm Gn. k oh a eee eR Oe 8

Tenth AmienRt 5 co ncn ccc ence nc ae eee eenes 9

Miscellaneous

General Allotment Act of 1887 ..........----50 +e eee 5

Vine Deloria, Jr., and Clifford M. Lytle,

American Indians, American Justice

(University of Texas Press, Austin 1983) ........--. 5

IDENTITY AND INTEREST OF AMICI’

Pursuant to Supreme Court Rule 37.3, written permission

from all parties for Pacific Legal Foundation to file this brief

has been lodged with the Clerk of this Court.

For more than two decades, Pacific Legal Foundation has

litigated in support of property rights and individuals adversely

affected by government tax and regulatory actions.

The Foundation’s focus has come to include the tax and

regulatory authority asserted by Indian tribes over nonIndian-

owned fee property located within the exterior boundaries of

Indian reservations.

Foundation attorneys, for instance, are representing Amici

James D. and Julia R. Thompson and the Custer Battlefield

Trading Company in Thompson v. Adams, Montana District

Court No. 98-110. This litigation challenges a 4% “resort tax”

that the Crow Indian Tribe imposed on gross receipts of a

nonIndian business located on nonIndian fee land within the

tribal reservation’s- exterior boundaries. The district court ruled

in favor of the Thompsons, and the case is pending before the

Ninth Circuit Court of Appeals.

In the case of Bugenig v. Hoopa Valley Tribe, 2000 U.S.

App. LEXIS 24746 (9th Cir. 2000), Foundation attorneys

represent Amicus Mrs. Roberta Bugenig in challenging the

Hoopa Valley Indian Tribe’s claim of regulatory jurisdiction

over timber harvesting activity on Mrs. Bugenig’s fee property.

' Pursuant to Supreme Court Rule 37.6, Amici Curiae Pacific

Legal Foundation, Roberta Bugenig, James D. and Julia R.

Thompson, and the Custer Battlefield Trading Company affirm

that no counsel for any party in this case authored this brief in

whole or in part; and, furthermore, that no person or entity has

made a monetary contribution specifically for the preparation or

submission of this brief.

2

The case under review implicates issues central to both the

Bugenig and Thompson litigation.

SUMMARY OF ARGUMENT

Reversal of the ruling below is called for because that

ruling wrongly disregards the special status, within Indian

reservations, of property held in fee simple. Such property

cannot be willy-nilly subjected to a tribe’s regulatory and taxing

authority without subverting the authority of the state and,

indeed, without doing violence to traditional understandings of

what fee simple ownership entails.

The very concept of fee ownership of property creates a

strong presumption that nonIndian-owned property that is held

in fee is not subject to tribal taxation, even when it lies within

the outer boundaries of an Indian reservation. Thus, this Court

has recognized that state jurisdiction supplants tribal

jurisdiction on formerly tribal properties that were privatized

through the allotment process. How much stronger is the

presumption of state jurisdiction where the property that is held

in fee was never tribal property to begin with?

When considering whether a tribe has acquired regulatory

authority over fee simple property within its exterior

boundaries, it is important to recognize the limits on

congressional power to declare such a thing so, especially

where the United States did not originally hold jurisdiction over

the property or activity that is now claimed to be under tribal

sway. An act of Congress cannot transfer jurisdiction over fee

property to an Indian tribe, where Congress did not itself have

jurisdiction over that property. To say the same thing, Congress

may not make such a transfer where it was a state that held

jurisdiction. Indeed, in the instances discussed by this Court

where Indian tribes have received express congressional

3

delegation of authority over property, states were not divested

of jurisdiction because the tribe’s authority had already been

recognized by a treaty that preceded the admission of the state

to the Union.

A too-casual acceptance of claims of congressional

delegation not only undermines state sovereignty; it also

potentially conflicts with recent court rulings that have stressed

the constitutional guardrails to congressional transfers of

various aspects of governmental authority.

For these reasons, Amici respectfully submit that this

Court should deny Respondents’ claim of regulatory authority

over Petitioner’s nonIndian guests.

ARGUMENT

I

THE COURT BELOW GAVE INSUFFICIENT

WEIGHT TO THE FACT THAT PETITIONER’S

LAND IS FEE SIMPLE PROPERTY

There is no question that the fee land owned by the

Atkinson Trading Company is fee simple property- See

Petitioner’s Appendix at 2a. Indeed, its status as fee property

antedates its inclusion within the exterior boundaries of the

Navajo Reservation. It was made an inholding in the reser-

vation as a result of a congressional expansion of the

reservation boundaries. Atkinson Trading Company, Inc. v.

Shirley, 210 F.3d 1247, 1265 (10th Cir. 2000) (Briscoe, J.,

dissenting). See Act of Congress of June 14, 1934, ch. 521, 48

Stat. 960, 961.

The significance of this fact is discounted by the court

below. See Atkinson, 210 F.3d at 1261: “Our reading of

Supreme Court precedent rejects the arbitrary factual basis of

fee status as the determinative factor” as to whether the tribe

has jurisdiction to impose a tax on an enterprise or activities

within its exterior boundaries. The Court proceeds to posit an

4

alternative analytical framework which applies, apparently,

irrespective of the fee status in question-namely a “balancing

test” in which “the impact of the [pronmembers’] activity on the

tribe [is balanced] with the severity of the tribe's proposed

regulation, taxation, or other imposition of jurisdiction.” /d. at

1267-68.

In fact, however, fee status is a crucial determinant under

this Court’s precedents. In Montana v. United States, 450 U.S.

544, 557 (1981), the Court was considering the “power of the

[Crow Tribe of Montana] to regulate non-Indian fishing and

hunting on reservation land owned in fee by nonmembers of the

Tribe.” In Strate v. A-] Contractors, 520 U.S. 438, 442 (1997),

the issue was claims against “nonmembers arising out of

accidents on state highways” running through Indian

reservations. In both Montana, 450 U.S. at 557, and Strate, 520

U.S. at 454, this Court indicated it would have analyzed these

tribal jurisdiction questions differently if they had involved

conduct by nonmembers on tribal land and not merely within

tribal boundaries.

In Strate, 520 U.S. at 446, this Court affirmed its rule that

where no treaty or statute indicates otherwise, the tribe is

presumed to lack civil authority over nonIndian lands within its

reservation boundaries—absent the narrow exceptions laid

down in Montana. Thus, it is the status of the land—not any

“balancing test”—that is the crucial determinant as to who has

authority, and where the land is held in fee—as in the case at

bar—the presumption is against tribal authority.

A. The Strong Presumption That NonIndian-Owned

Fee Simple Property Is Not Subject to Tribal

Taxation or Regulation Can Be Traced to the

History, Nature, and Status of Fee Simple Property

The primacy of state authority—as opposed to tribal

authority—when it comes to property owned in fee within the

boundaries of Indian reservations is exemplified in the

we

5

properties that become private as a result of the General

Allotment Act of 1887, 24 Stat. 390 (1887), 25 U.S.C. § 331,

et seg. Indeed, assimilation into general society—and the

dissolving of tribal society and authority—were the precise aims

of allotment policy.

A period of twenty-five years was established during

which the Indian owner was expected to learn proper

business methods; at the end of this time the land,

free of restrictions against sale, was to be delivered

to the allottee. With a free and clear title the Indian

became a citizen and came under the jurisdiction of

the state in which he or she resided... . Private

property, [federal officials] believed, [would lead]

people directly to a “civilized” state.

Vine Deloria, Jr., and Clifford M. Lytle, American Indians,

American Justice, at 9 (University of Texas Press, Austin

1983).

Because the aim and result of the Allotment Act was to

diminish tribal jurisdiction over fee lands, this Court has

recognized that it is logically consistent, under the Allotment

scheme, for state jurisdiction to supplant tribal authority on

those properties:

It defies common sense to suppose that Congress

would intend that non-Indians purchasing allotted

lands would become subject to tribal jurisdiction

when an avowed purpose of the allotment policy was

the ultimate destruction of tribal government.

Montana, 450 U.S. at 559 n.9; quoted in Brendale v.

Confederated Tribes and Bands of theYakima Indian Nation,

492 U.S. 408, 423 (1989) (plurality opinion).

To be sure, Congress ultimately repealed the Allotment

Act, but the jurisdictional changes that the act had effected were

not reversed.

6

While this Court has recognized limits on state jurisdiction

over Indians residing on fee lands within reservations—see, é.g.,

Moe v. Confederated Salish and Kootenai Tribes, 425 U.S. 463

(1976), disallowing certain direct state taxes on Indian residents

of a reservation—state regulatory jurisdiction over fee lands

themselves has been upheld. For instance, this Court has

approved real estate taxes on fee lands within reservations as

consistent with the Allotment Act, whether the owners of the

property are Indians or nonIndians, because the jurisdiction is

in rem rather than in personam. County of Yakima v.

Confederated Tribes and Bands of the Yakima Indian, 502 U.S.

251, 264-65 (1992).

If the presumption of state jurisdiction over property that

was privatized through allotment is so strong, how much more

powerful is the presumption as it attaches to property that was

never tribal property to begin with? Such is the Atkinson

property, which is fee property that was brought within the

reservation boundaries only when those boundaries were

expanded by Congress in 1934. Atkinson, 210 F.3d at 1265

(Brisco, J., dissenting).

Indeed, the very language of the Act expanding the tribe’s

boundaries gives rise to a presumption that Congress was not

assuming, curtailing, or delegating existing jurisdictions over

any fee property: “All valid rights and claims initiated under the

public land laws prior to approval hereof involving any lands

within the [areas added to the Navajo Reservation under the

act], shall not be affected by this Act.” 48 Stat. 961 (1934). If

Congress intended to be in any way altering jurisdiction over

“valid rights” on property that would henceforth lie within the

reservation’s boundaries, Congress could hardly have stated in

such a categorical way that those rights would remain

“unaltered.” Indeed, at the very essence of this case is the

acknowledgment that the extent and shape of rights on terrain

within Indian reservations depends on who holds jurisdiction

over that terrain.

a Te I a ie —

7

B. An Act of Congress, Such as That Which

Expanded the Navajo Reservation’s Boundaries,

Cannot Extinquish the Presumption of State

Jurisdiction over Fee Simple Property

In 1934, the year the Atkinson property was brought

within the boundaries of the Navajo Reservation by a

congressional act expanding those boundaries, 210 F.3d at

1265, Arizona was already a state. Therefore, the Atkinson

property was already under state jurisdiction at the point it

became an inholding within the Navajo Reservation.

This fact defeats an argument that the Atkinson land might

have been transferred to tribal jurisdiction through the act of

Congress that brought it within the tribe’s borders.

Indeed, the very act by which Congress expanded tribal

boundaries creates a presumption that existing jurisdiction over

fee property was not being disrupted. /d.

Indeed, a congressional transfer of jurisdiction of the

Atkinson property could not have taken place because

jurisdiction over the Atkinson land was not Congress’ to

delegate. The property came under the state’s jurisdiction. The

jurisdiction of a state, after all, “is co-extensive with its

territory; co-extensive with its legislative power.” United

States v. Bevans, 16 U.S. 336, 387 (1818).

The primacy of the state—and the fact, consequently, that

jurisdiction was not transferred to the reservation—is under-

scored by reviewing cases where Congress has been found to

have invested a tribe with jurisdiction over a particular activity

on fee property. In such cases, states have not been divested of

jurisdiction because the states in these cases did not have

jurisdiction to begin with.

In Montana, for instance, this Court noted that Indian

tribal sovereignty over nonmembers “cannot survive without

express congressional delegation.” 450 U.S. at 564. But the

8

instances that this Court discussed where express congressional

delegation had taken place involved circumstances where a

tribe’s jurisdiction was recognized before the particular state

became a state. /d. at 552-53. The Court referred, for instance,

to the Chippewa Treaty of 1854 (adopted before Minnesota

became a state), and the Crow Treaty of 1851 (adopted before

Montana’s statehood). /d. In neither case was there an attempt

to divest a state of existing regulatory jurisdiction over fee

property.

Nor does the case under review involve activity over

which the federal government had jurisdiction that it could

delegate. While Congress does have power under Article I,

section 8, to “regulate Commerce . . . with the Indian Tribes,”

the commerce on the Atkinson property to which the challenged

taxation applies is commerce between a nonIndian property

owner (Atkinson, 210 F.3d at 1249) and, to a great extent if not

exclusively, the owner’s nonIndian guests. /d. at 1270 (Briscoe,

J., dissenting).

Do the transactions of nonIndian guests, on nonIndian-

owned land, at the nonIndian-owned Atkinson hotel, restaurant,

and other enterprises, still have a ripple effect that transforms

them into commerce with “Indian Tribes” as understood by the

Indian Commerce Clause? Perhaps under an “aggregation”

analysis such a tenuous connection might be plausible, but this

Court’s precedents do not favor such extrapolation as a means

of justifying claims of jurisdiction over activity on fee land in

reservations. Specifically, under the second “exception” in the

Montana analysis, 450 U.S. at 566, this Court requires that

nonmembers’ activity on alienated land have “direct effect” on

atribe’s economic security, health, or welfare in order to justify

tribal jurisdiction. “We do not doubt the truth of John Donne’s

observation that ‘no man is an island.’ . . . However, the

Supreme Court has declined to employ this logic in conjunction

with the second Montana exception.” Burlington Northern

Railroad Co. v. Red Wolf, 196 F.3d 1059, 1065 (9th Cir. 1999)

9

(citing Strate v. A-] Contractors, 520 U.S. 438, 458-59 (1997)).

The aggregation approach is no more justified as a means of

discovering “commerce . . . with” an Indian tribe based on

‘transactions between a nonIndian enterprise on nonIndian-

owned land and nonIndian customers.

Moreover, Congress has made no assertion of authority

over the commerce on Atkinson’s property. Quite the opposite: —

The statute expanding the reservation’s boundaries

explicitly disclaimed any disruption of pre-existing

“rights and claims” on lands thus brought within the

reservation borders.

48 Stat. 960, 961 (1936).

While Congress could transfer to a tribe, say, the

regulation of liquor sales in Indian Country (United States v.

Mazurie, 419 U.S. 544, 547 (1983)), such sales, unlike the

activity on the Atkinson property, have always been squarely

within the ambit of the Indian Commerce Clause and subject to

congressional bans since at least 1832. Rice v. Rehner, 463

U.S. 713, 722 (1983).

Congress cannot take regulatory jurisdiction that it never

had and then delegate that authority to a tribe.

C. Recognizing a Congressional Delegation of

Regulatory Authority in this Case Would

Conflict with Clear Constitutional Precepts

The Tenth Amendment to the United States Constitution

states that “[t]he powers not delegated to the United States . . .

are reserved to the States.” A healthy respect for state

prerogatives mandates caution when considering whether the

United States Constitution countenances the federal government

transferring to a tribe state regulatory jurisdiction over

nonIndian land.

10

Likewise, federal delegation of regulatory power over

nonIndians’ activity on nonIndian-owned fee property is also

constitutionally problematic, to say the least, where, as in this

case, it was the state, not the federal government, that had

jurisdiction over that property even before it was brought within

the borders of the reservation. It should be noted that in recent

years courts have applied increasing scrutiny to purported

delegations of congressional authority. In Printz v. United

States, 521 U.S. 898, 923-24 (1997), for instance, this Court

struck down a federal administrative mandate on state officials

not only because it subverted state autonomy but also because

it impermissibly transferred federal executive branch authority

to “thousands of [local law-enforcement officials] without

meaningful Presidential control.” Jd. This Court, recognized

that “the power of the President would be subject to reduction,

if Congress could act as effectively without the President as

with him, by simply requiring state officers to execute its laws.”

Clearly, this Court has recognized clear constitutional

guardrails to congressional transfers of authority. In the case

at bar, it would be the State of Arizona’s prerogatives that

would be usurped by any assertion that Congress could delegate

regulatory authority over the Atkinson property, because that

property is and always has been subject to state jurisdiction.

Even where the federal government does have an original

jurisdiction, this Court has found that, for a delegation of such

authority to an Indian tribe to be lawful, the receiving entity

must have independent sovereign authority to administer the

delegated power. Thus, the Court noted in Mazurie, 419 U.S.

at 556-67. that there are “limits on the authority of Congress to

delegate its legislative power,” but that those limits are “less

stringent in cases where the entity exercising the delegated

authority itself possess independent authority over the subject

matter.”

1]

The Indian tribe in Mazurie possessed the requisite

“attributes of sovereignty over both their members and their

territory” that justified its receiving delegated authority over

liquor sales by a bar within the reservation’s boundaries. /d. at

557. But the transactions subject to tax challenged in the case

at Bar are distinguishable. They are between a nonIndian

property owner (Atkinson, 210 F.3d at 1249) and, to a great

extent if not exclusively, the owner’s nonIndian guests. /d. at

1270 (Briscoe, J., dissenting).

Petitioners in Mazurie had urged that because the party

subject to regulation was not a member of the tribe and could

not become a member of the tribe, the tribe could not be

delegated regulatory power over the party’s liquor sales. 419

U.S. at 557. This Court, id., responded by citing precedent

recognizing that tribal authority “could extend over nonIndians,

insofar as concerned their transactions on a reservation with

Indians.” “It is immaterial that respondent is not an Indian. He

was on the Reservation and the transaction with an Indian took

place there.” /d. at 558 (quoting Williams v. Lee, 358 U.S. 217

(1959)).

At least to the degree the transactions in the case on

review are between nonIndians and other nonIndians—which

may, indeed, be all or nearly all of the Atkinson transactions—

they do not fall within precedent cited in Mazurie to recognize

a tribal sovereignty over subject matter involving nonIndians.

Hence, not only does Congress lack power to delegate,

whether the tribe has the clear independent sovereignty

necessary to receive regulatory power in this context is in

question.

12

CONCLUSION

For the above reasons, this Court should recognize that the

Tribe does not have regulatory authority over Petitioner’s

nonIndian guests, and the ruling below should be reversed.

DATED: January, 2001.

Respectfully submitted,

HAROLD E. JOHNSON JAMES S. BURLING

Of Counsel Counsel of Record

Pacific Legal Foundation HAROLD E. JOHNSON

10360 Old Placerville Road, Pacific Legal Foundation

Suite 100 10360 Old Placerville Road,

Sacramento, California 95827 Suite 100

Telephone: (916) 362-2833 Sacramento, California 95827

Facsimile: (916) 362-2932 Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amicus Curiae

Pacific Legal Foundation