Amicus Curiae Brief — Atkinson Trading Co. v. Shirley

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Supreme Court, US.

TAN // 260 | (9) ‘FILED

No. 00-454 "JAN 11 2001

IN THE Canc aeae

Supreme Court of the Anited States

ATKINSON TRADING COMPANY, INC.,

Petitioner,

Vv.

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.

On Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

BRIEF OF AMICUS CURIAE

INTERSTATE NATURAL GAS ASSOCIATION OF

AMERICA IN SUPPORT OF PETITIONER

MICHAEL E. WEBSTER

Counsel of Record

NEIL G. WESTESEN

CROWLEY, HAUGHEY, HANSON,

TOOLE & DIETRICH P.L.L.P.

490 North 31st Street, TW II

P. O. Box 2529

Billings, MT 59103-2529

(406) 252-3441

Attorneys for Amicus Curiae

Interstate Natural Gas Association

of America

ee en ecumsaenniememeeenenegesienismmanniniaed

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D. C. 20001

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TABLE OF CONTENTS

Page

TABLE OF AU TERRE is iaicctiececsrecisccdiccicansctinecialighs il

INTEREST OF AMICUS CURIAE .............:.ccccssssssesess l

SUMMARY OF ARGUMENT ..............cssccscssesssssssecssces

PAIAIIOIEYE sipcinchicxsxsceccenciiahalbadisiahtotnitannitihieabiieatinsibipiiaten

I. THIS COURT SHOULD REVERSE THE

TENTH CIRCUIT BECAUSE IT FAILED

TO CONDUCT A PROPER INQUIRY INTO

WHETHER THE NAVAJO NATION HAD

JURISDICTION TO IMPOSE ITS TAX........... 6

A. The Power to Tax Cannot Be Exercised

Over Persons or Property Located Outside

The Jurisdiction of a Tribe ................cccceceeees 6

B. This Court Has Set Forth a Straightforward

Approach to Determine Whether an Indian

Tribe May Properly Exercise Civil

Jurisdiction, Including Taxing Jurisdiction,

Over Non-Indian Parties Engaged in

Business Activities on Non-Indian Owned

Land Or Its Equivalent ................sccccecsessessees 8

C. The Ninth Circuit Court of Appeals’

Decision in Big Horn County Electric

Cooperative Inc. v. Adams Reflects a

Proper Application of This Court’s

Jurisdictional Principles.......... pinneaipicinatnntencane 13

D. The Tenth Circuit’s Analysis in Atkinson is

_ Fatally Flawed And The Balancing Test

Advanced Therein Cannot Be Reconciled

With Montana And Its Progeny.................+. 15

Ae SRST SihliasenrniondininsiedpsaiiniiAantsncusiaintapsbiniibaisiiienids 17

TABLE OF AUTHORITIES

CASES Page

Atkinson Trading Company Inc. v. Shirley, 210

F.3d 1247 (20th Cle. 200) <.c.iscescencsessnocsnessveey passim

Big Horn County Electric Cooperative, Inc. v.

Adams, 219 F.3d 944 (9th Cir. 2000)..........0068 passim

Brendale v. Confederated Tribes and Bands of

the Yakima Indian Nation, 492 U.S. 408

(19D). orcssncnssssinvestoneasibiiaanasinenesamienacstindbmsanenties 10, 16

Louisville & Jeffersonville Ferry Company vy.

Commonwealth of Kentucky, 18 U.S. 385,

eg 23 SACK, BGS, 467 CIRO) eccciccreteeines 7

M’Culloch vy. State of Maryland, 17 US.

(4 Wheat) 316, 429 (1819) ..........cccsssceseoeereeees 6

Merrion v. Jicarilla| Apache Tribe, 455

U.S, 130 (TSG) svciensisestesdsretnsietcenicannianens passim

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

South Dakota vy. Bourland, 508 U.S. 679

(1DDS) .ncsrcereescsscecsustnsinetneeunnesatianaieaetaanaetinan 10, 12, 16

St. Louis v. The Ferry Company, 78 USS.

(11 Wall) 423, 429 (1B 7O)..ccicscscergevsansescsnoncceese 7

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

Washington v. Confederated Tribes of Colville

Indian Reservation, 447 U.S. 134 (1980)......6, 10, 14

STATUTES :

1S U.S.C. § 707 C8 86g iccisstcsisnscociornscemntinnsnnpnen l

16 U.S. § 118 bi cnensncneienneeneeeen 16, 17

25 U.S.C. § 323 €f 200 nicssctioennemmntigate 2

MISCELLANEOUS

S.C%. BR. 37...0scssssssesebcacereaensanaaes ]

;

INTEREST OF AMICUS CURIAE

The Interstate Natural Gas Association of America

(“INGAA”) respectfully submits this brief in support of the

Petitioner, Atkinson Trading Company, Inc., and its efforts to

obtain a reversal of the Tenth Circuit Court of Appeals’

decision in Atkinson Trading Company Inc. v. Shirley, 210

F.3d 1247 (10th Cir. 2000).'

INGAA is a_ non-profit national trade association

comprised primarily of interstate natural gas pipeline

companies regulated by the Federal Energy Regulatory

Commission (“FERC”) pursuant to the Natural Gas Act

(“NGA”).” Member companies operate approximately

200,000 miles of natural gas pipelines, together with related

facilities, within the United States, and INGAA’s members

account for more than 90% of all natural gas transported. and

sold in interstate commerce within the United States.

There are approximately 55 million acres of Indian land

located within the United States. As a consequence of the

location of this land, a number of INGAA member pipeline

companies have portions of their pipeline systems, and

certain related pipeline facilities, located within the

boundaries of Indian reservations. The routes utilized by

these pipeline companies were selected on the basis of

engineering and environmental factors, and the natural gas

pipelines located along these routes have been designed and

' Pursuant to Supreme Court Rule 37.6, amicus curiae states that no

counsel for any party to this dispute authored this brief in whole or in part

and no person or entity, other than amicus curiae and its members, made

any monetary contribution to the preparation or submission of this brief.

All parties have consented to the filing of this brief, and a joint letter

evidencing their consent is on file with the Office of the Clerk of this

Court.

7 15 U.S.C. § 717 et seq. z

;

{

’

constructed to effectively transport natural gas within the H

United States from areas of production to areas of use. The ;

efficient and uninterrupted accomplishment of _ this i

transportation function is essential to both the economic well

being of the United States and the physical well being of the ae

vast majority of its citizens. Because of the nature of the

business carried out by the members of INGAA, and the ;

importance of that business to our country, the transportation :

activities and the operational functions of INGAA’s members

are subject to extensive oversight by FERC.

For those pipelines which pass through Indian reservations,

INGAA’s members are required by federal law to obtain from

the United States grants of rights-of-way over those tracts of

Indian land which lie within the pipeline route. Most often,

these rights-of-way are granted under the authority of the

General Right-of-Way Act of 1948. 25 U.S.C. § 323 et seq.

Tribal governments often assert jurisdictional authority over

the on-Reservation portion of these pipelines. One area of

jurisdictional authority of particular interest to INGAA and its

members is the asserted power of Indian tribes to levy and

collect taxes on those pipelines and pipeline facilities located

within the exterior boundaries of Indian reservations. As

captive taxpayers who are unable to easily relocate their

natural gas pipelines, the level and extent of tribal taxation is

of particular importance to those members of INGAA who

are subject to tribal taxes. Thus, any decision which appears

to expand the scope of a tribe’s taxing authority, particularly

one that allows or supports the right of a tribe to tax a non-

Indian pipeline or activity which occurs within or upon non-

Indian owned fee land or its equivalent, is of critical

importance to INGAA.

2 gage 9

INGAA has a substantial interest in seeing the Tenth

Circuit’s decision herein reversed for a number of reasons.

INGAA, as a national trade association, has a strong interest

in ensuring that its members are subject to taxation only

Ee nen ere ne TNT ST ncn env rae

where the taxing entity possesses the proper jurisdictional

authority and power to tax. INGAA believes that this Court’s

precedent establishes that Indian tribes lack the jurisdictional

authority to tax a non-Indian party in connection with

business activity taking place on fee land or its equivalent and

not significantly involving a tribe or its members except

under certainly narrowly defined circumstances. Montana v.

United States, 450 U.S. 544 (1981). Since the Court has

determined, in Strate v. A-] Contractors, 520 U.S. 438

(1997), that federal rights-of-way granted to non-Indians are

to be equated with fee lands for purposes of determining

tribal jurisdiction, INGAA has a direct interest in any case

which would extend a tribe’s taxing authority over non-

Indians conducting activities on fee land or its equivalent.

INGAA also seeks confirmation for its members, and

indeed for all non-Indian parties who conduct business on fee

property or its equivalent within an Indian reservation, that

the taxing jurisdiction of an Indian tribe is synonymous with,

but not superior to other jurisdictional powers possessed by a

tribe. The Ninth Circuit Court of Appeals, in Big Horn

County Electric Cooperative, Inc. v. Adams, 219 F.3d 944

(9th Cir. 2000), carefully and correctly applied this Court’s

precedent regarding the exercise of a tribe’s jurisdiction over

non-Indian parties and concluded that an Indian tribe lacks

jurisdiction to impose a tax on the interests of a utility located

within a federally granted right-of-way across Indian trust

lands. The Tenth Circuit’s inconsistent decision in this regard

is reflective of, and results from, an incorrect jurisdictional

analysis which ignored the clear standards which this Court

has laid out for determining tribal jurisdiction over non-

Indians.

INGAA’s members have pipelines located in both the

Ninth and Tenth Circuits, as well as in circuits which have

not yet considered, in light of Strate, the jurisdictional

authority of an Indian tribe to tax a non-Indian party doing

business within reservations on fee property or its

jurisdictional equivalent. It is of great importance to

INGAA’s members that all federal courts properly apply the

straight-forward jurisdictional guidelines developed by the

Court’s holding in cases like Montana, Merrion v. Jicarilla

Apache Tribe, 455 U.S. 130 (1982), and Srrate, This

confirmation will help to insure consistency in any analysis of

the extent and nature of tribal jurisdiction to which a non-

Indian party may properly be subject, whether it be

jurisdiction to tax, to zone, to license or to adjudicate

disputes.

The Tenth Circuit’s holding in Atkinson that the Navajo

Tribe can tax non-Indian guests staying at a hotel on non-

Indian land, and the jurisdictional inquiry undertaken to reach

this conclusion, failed to consider the important jurisdictional

limitations which apply to tribal action involving fee lands or

their equivalent. The Tenth Circuit's analysis in Atkinson is

inconsistent not only with the precedent of this Court, but

also with the Ninth Circuit Court of Appeals decision in Big

Horn County Electric Cooperative. YNGAA thus has an

interest in, and supports the efforts of the Petitioner herein to

obtain a reversal of the Tenth Circuit’s decision.

SUMMARY OF ARGUMENT

This Court’s previous decisions establish that any

governmental entity seeking to impose a tax must have

jurisdiction over the property or activity being taxed before

the tax is valid and enforceable. The precedent of this Court

over the last 20 years. coupled with the decisions of other

federal courts which have properly applied the precedent of

this Court, has served to clarify, and set within more narrow

and precise boundaries, the extent to which an Indian tribe

may assert any form of civil jurisdiction, including

jurisdiction to tax, over a non-Indian party doing business

upon on-reservation, non-Indian fee land or its equivalent.

—~——_ —

The Tenth Circuit's unique balancing test for determining the

scope of a tribe’s taxing authority over non-Indians who are

engaged in activity on fee lands or its equivalent cannot be

reconciled with the decisions of this Court, nor decisions of

other federal courts which have considered the jurisdictional

authority of tribes in contexts similar to that presented in

Atkinson. The Tenth Circuit’s balancing test seemingly will

allow tribes to tax non-Indian parties under an inquiry that

gives little consideration to the principles that have been at

the center of this Court’s Indian jurisdiction cases, while at

the same time considering, for purposes of jurisdiction, the

asserted needs for, and/or uses to be made of, tribal tax

revenue. Such a test would legitimize the notion that a tribe

can “earn” jurisdictional authority to impose a tribal tax on a

non-Indian party by the appropriate utilization of the tax

revenue received, or by implementing a tax with a tax rate

small enough to escape a “finding” that the tax creates a

“disproportionate” burden on the taxpayer. Such a

determination lacks support in the law and highlights the

Tenth Circuit’s failure to adequately consider the threshold

issue of whether the Navajo Tribe had jurisdiction to tax

Atkinson in light of this Court’s clear and overriding rules

concerning the scope of tribal jurisdiction over non-Indians.

The Tenth Circuit’s failure to properly apply this Court’s

precedent and the practical implications of what its

“balancing test” will mean justifies reversal by this Court.

ARGUMENT

I. THIS COURT SHOULD REVERSE THE TENTH

CIRCUIT BECAUSE IT FAILED TO CONDUCT

A PROPER INQUIRY INTO WHETHER THE

NAVAJO NATION HAD JURISDICTION TO

IMPOSE ITS TAX

A. The Power to Tax Cannot Be Exercised Over

Persons or Property Located Outside The

Jurisdiction of a Tribe

INGAA recognizes that the right of a tribe to tax

“transactions occurring on trust lands and _ significantly

involving a tribe or its members” is an essential element of a

tribe’s inherent sovereignty. Washington v. Confederated

Tribes of the Colville Indian Reservation, 447 U.S. 134, 152

(1980). This power provides a means for funding essential

governmental services while also serving as a tool for

territorial management. See Merrion v. Jicarilla Apache

Tribe, 455, U.S. 130, 137 (1982). However, this power, like

all sovereign powers of a tribe, is limited in scope, and

extends only to the limits of a tribe’s jurisdictional authority.

The power of a sovereign to tax was considered nearly two

centuries ago by this Court in M’Culloch v. State of

Maryland, 17 U.S. (4 Wheat) 316, 429 (1819), wherein Chief

Justice Marshall noted:

It is obvious, that it (the power to tax) is an incident of

sovereignty, and is coextensive with that to which it is

an incident. All subjects over which the sovereign power

of a State extends, are objects of taxation; but those over

which it does not extend, are, upon the soundest

principles, exempt from taxation. This proposition may

almost be pronounced self-evident. (Emphasis added.)

Similar pronouncements have been repeated as this Court

has analyzed the taxing jurisdiction of various governmental

entities. See, Louisville & Jeffersonville Ferry Company v.

Commonwealth of Kentucky, 18 U.S. 385, , 23 S.Ct. 463,

467 (1903) (“While the mode, form, and extent of taxation

are, speaking generally, limited only by the wisdom of the

legislature, that power is limited by a principle inhering in the

very nature of constitutional government, namely, that the

taxation imposed must have relation to a subject within the

jurisdiction of the taxing government.”’)

This point was particularly well made in St. Louis v. The

Ferry Company, 78 U.S. (11 Wall) 423, 430 (1870), wherein

this Court stated:

Where there is jurisdiction neither as to the person nor

property, the imposition of a tax would be ultra vires and

void. If the legislature of a State should enact that the

citizens or property of another State or country should be

taxed in the same manner as the persons and property

within its own limits and subject to its authority, or in

any manner whatsoever, such a law would be as much a

nullity as if in conflict with the most explicit

constitutional inhibition. Jurisdiction is as necessary to

a valid legislative as to valid judicial action. (Emphasis

added.)

The above rulings by the Court establish a number of

important considerations in considering the scope of any

government’s power to tax. First, and foremost, the power to

tax is subject to jurisdictional limitations which must be

satisfied before a tax may properly be imposed. Where the

requisite jurisdiction is lacking, so, too, is the power to tax.

In addition, it is clear from the rulings of the Court that the

power to tax is a legislative power and thus is subject to those

jurisdictional limitations which apply to legislative actions.

The power to tax is but one of the sovereign powers of a tribe

and as such it is subject to the jurisdictional limitations which

have been applied to tribes in their efforts to assert civil

jurisdiction over non-Indians. Proper application of these

jurisdictional limitations evidences that the general civil

jurisdiction of a tribe does not extend to non-Indian parties

who are engaged in business activities on fee lands or its

equivalent within a reservation. Consequently, the power to

tax such activities, which is co-extensive with, but not

superior to the other jurisdictional powers of a tribe, is

lacking.

B. This Court Has Set Forth a Straightforward

Approach fo Determine Whether an Indian

Tribe May Properly Exercise Civil

Jurisdiction, Including Taxing Jurisdiction,

Over Non-Indian Parties Engaged in Business

Activities on Non-Indian Owned Land Or Its

Equivalent

Both the nature and the extent of tribal sovereignty have

been addressed numerous times in the last two decades by the

Court. In reviewing these decisions, a number of controlling

principles have developed which lead to the conclusion that

the Tenth Circuit’s decision in Atkinson, and the balancing

test formulated therein, improperly deviates from the Court's

precedent, misapplies the jurisdictional test set forth in

Montana, and should therefore be reversed.

In 1981, this Court decided the seminal case of Montana v.

United States, 450 U.S. 544, which undertook an extensive

review of tribal civil jurisdiction over non-Indians, with

particular emphasis on tribal attempts to regulate the activity

of non-Indians occurring on fee lands. In Montana, this

Court determined that the Crow Tribe lacked sufficient

jurisdiction to regulate the on-reservation hunting and fishing

by nonmembers of the Tribe where the activity occurred on

fee lands. In reaching its decision, the Court, noting the

diminished status of tribes as sovereigns, concluded that the

“exercise of tribal power beyond what is necessary to protect

tribal self-government or to control internal relations is

inconsistent with the dependent status of the tribes, and so

cannot survive without express congressional delegation.”

450 U.S. at 564. The Court made clear the general

proposition that the “inherent sovereign powers of an Indian

tribe do not extend to nonmembers of the Tribe.” 450 U.S. at

565.

In Montana, this Court recognized that tribes may, in

certain instances, exercise tribal civil jurisdiction over non-

Indians, even where Congress has not expressly authorized

such exercise and no specific treaty otherwise guarantees

such jurisdiction. These narrowly defined circumstances

were described as follows:

To be sure, Indian tribes retain inherent sovereign power

to exercise some forms of civil jurisdiction over non-

Indians on their reservations, even on non-Indian fee

lands. A tribe may regulate, through taxation, licensing,

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 reservation when that conduct

threatens or has some direct effect on the political

integrity, the economic security, or the health or welfare

of the Tribe. 450 at 565-566 (citations and footnote

omitted). '

The starting point of any analysis of tribal civil jurisdiction

over non-Indians begins with Montana and the presumption

that in the absence of express Congressional authorization to

the contrary, an Indian tribe lacks jurisdiction to assert civil

authority over non-Indians related to their activities or

property located on fee lands. This presumption also holds

irue for non-Indians in connection with their activities

conducted within or upon lands which are the equivalent of

fee lands for jurisdictional purposes. See Strate v. A-1

Contractors, 520 U.S. 438 (1997). Therefore, an Indian tribe

which seeks to assert jurisdiction over non-Indians on non-

Indian owned fee land or its equivalent has a heavy burden to

show that the tribe is not subject to the general presumption

that the tribe lacks such jurisdiction.’

Another case of particular relevance is Merrion v. Jicarilla

Apache Tribe, 455 U.S. 130 (1982). In Merrion, this Court

considered the Jicarilla Apache Tribe’s right to enforce a

severance tax against non-Indian oil companies on any “oil

and natural gas severed, saved and removed from Tribal lands

” 455 U.S. at 133 (emphasis added). The Jicarilla

Apache Tribe’s reservation, located in northwestern New

Mexico, is comprised entirely of lands held by the United

States in trust for the Tribe. /d. In upholding the right of the

Jicarilla Apache Tribe to impose its severance tax, the Court

looked to its prior decision in Washington v. Confederated

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

which held that the “power to tax transactions 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 by federal law or necessary

implication of their dependent status.” /d. at 152.

In Merrion, the non-Indian lessees were found to be within

the scope of the Tribe’s taxing jurisdiction based on their

direct contractual dealings with the Tribe and because all of

‘In this regard, this Court's decision in South Dakota v. Bourland, 508

U.S. 679 (1993) is instructive, inasmuch as Bourland forcefully notes that

_“tribal sovereignty over nonmembers ‘cannot survive without express

congressional delegation,’ (citing Montana) 450 U.S. at 564, and is

therefore not inherent.” 508 U.S. at 695, n. 15 (emphasis in original). See

also, Brendale v. Confederated Tribes and Bands of the Yakima Indian

Nation, 492 U.S. 408, 430 (1989) (Opinion of Justice White.) “The

governing principle is that the tribe has no authority itself, by way of

tribal ordinance or actions in the tribal court, to regulate the use of fee

land.”

the non-Indian oil company’s business within the Reservation

~was conducted on tribal lands. In the Court’s words:

[A] tribe has the power to tax nonmembers only to the

extent the nonmember enjoys the privilege of trade or

other activity on the reservation to which the tribe can

attach a tax. This limitation on tribal taxing authority

exists not because the tribe has the power to exclude

nonmembers, but because the limited authority that a

tribe may exercise over nonmembers does not arise until

the nonmember enters the tribal jurisdiction. We do not

question that there is a significant territorial component

to tribal power. A tribe has no authority over a

nonmember until the nonmember enters tribal lands or

conducts business with the tribe. 455 U.S. at 141, 142.

(Emphasis added.)

The Court’s opinion in Merrion repeatedly refers to the

“jurisdiction” of the tribe and the need for the taxed activity

to be within the tribe’s jurisdiction. In Merrion, all activities

of the non-Indian parties involved took place on-Indian trust

land pursuant to oil and gas leases entered into directly with

the tribe. Given these facts, the Court determined, with three

justices dissenting, that tribal jurisdiction to tax did exist.

Merrion, not surprisingly, contains no reference to Montana

and the jurisdictional presumption against tribal jurisdiction

present in Montana, However, it seems self-evident that this

omission resulted from the factual circumstances in Merrion,

and not because of any unique or special treatment given by

the Court to the taxing power of a tribe. Where, as in

Merrion, the activity to be taxed involves activities directly

involving a tribe and occurring only on Indian trust land,

Montana has no factual application.

The most recent decision of this Court directly governing

the issues in this case is the unanimous opinion in Strate v.

A-1 Contractors, 520 U.S. 438 (1997). Strate soundly

reaffirmed the Montana analysis for considering the scope of

; 12

tribal “civil authority” over non-Indians. Jd. at 446. In

addressing the adjudicatory jurisdiction of tribes over non-

Indians on non-Indian fee land or its equivalent, this Court

amplified on the broad application of Montana, stating:

While Montana immediately involved regulatory

authority, the Court broadly addressed the concept of

“inherent sovereignty.” Regarding activity on non-

Indian fee land within a_ reservation, Montana

delineated—in a main rule and exceptions—the bounds

of the power tribes retain to exercise “forms of civil

jurisdiction over non-Indians.” As to nonmembers, we

hold, a tribe's adjudicative jurisdiction does not exceed

its legislative jurisdiction. Absent congressional

direction enlarging tribal-court jurisdiction, we adhere to

that understanding. Subject to controlling provisions in

treaties and statutes, and the two exceptions identified in

Montana, the civil authority of Indian tribes and their

courts with respect to non-indian fee lands generally

“does not extend to the activities of nonmembers of the

tribe.” 520 U.S. at 438 (internal citations to Montana v.

United States omitted). (Emphasis added.)

The power to tax necessarily flows from a_ tribe's

“legislative jurisdiction” and is thus part of a tribe’s “civil

authority.” However, Montana in plain and unambiguous

terms made clear that the inherent sovereign powers of a tribe

do not, in general, extend to non-member activity on non-

Indian owned fee land. Bourland brought this point home by

concisely stating that in the absence of express Congressional

delegation, tribal sovereignty over non-Indians is not

inherent. Strate further reinforces this principle both as to fee

land and its equivalent. Since a tribe’s taxing authority is

merely one of the legislative powers which comprise a tribe’s

civil authority, and because the power to tax exists only

where the taxing entity has jurisdiction over the activity,

————————

person or property to be taxed, it is clear that the Navajo tribe

cannot properly impose its tax on the guests of Atkinson.

C. The Ninth Circuit Court of Appeals’ Decision

in Big Horn County Electric Cooperative Inc. v.

Adams Reflects a Proper Application of This

Court’s Jurisdictional Principles

In Big Horn County Electric Cooperative, Inc. v. Adams,

219 F.3d 944 (9th Cir. 2000), the Ninth Circuit was presented

with the issue of whether the Crow Tribe of Indians had the

jurisdictional authority to assess an ad valorem tax against the

utility property of a non-Indian electric cooperative where

that property was located within the boundaries of federally

granted rights-of-way which had been obtained by the

cooperative across Indian lands. The analysis which the

Ninth Circuit employed in reaching the determination that the

Crow Tribe lacked the necessary jurisdictional authority to

impose its tax reflects a proper application of the

jurisdictional guidelines provided by this Court.

In Big Horn County Electric Cooperative, the Ninth Circuit

first recognized the importance of determining whether the

Tribe’s actions were directed at property located on fee land

or its equivalent. As the Ninth Circuit stated, “The United

States Supreme Court has stated on several occasions that an

Indian tribe’s jurisdiction over nonmember conduct on non-

Indian fee land is extremely limited.” /d. at 949. The Ninth

Circuit then looked to Strate and to another decision of the

Ninth Circuit and concluded, consistent with these cases, that

the cooperative’s federally granted rights-of-way across

Indian lands were “the equivalent of non-Indian fee land for

the purpose of considering the limits of the Tribe’s regulatory

jurisdiction.” Jd. at 950.

Having concluded that the Crow Tribe’s taxes were thus

directed at property located within rights-of-way that were

jurisdictionally the equivalent of fee land, the Court then

observed that “post-Strate jurisprudence leaves no doubt that

Montana’s framework applies in determining a tribe’s

jurisdiction over nonmembers on non-Indian fee land.” /d.

The Ninth Circuit then acknowledged that under Montana’s

main rule, “a tribe has no civil regulatory authority over tribal

nonmembers.” /d. at 951. The Court then turned its analysis

to the two Montana exceptions.

The Ninth Circuit first considered whether the electric

cooperative had any consensual relationship which would

support the Crow Tribe's taxing efforts, and determined that

there existed no consensual relationship of a kind or type

required to support the Tribe’s tax. The Court then

considered whether the second exception outlined in Montana

would supply the requisite nexus for the Tribe’s taxing

efforts, and again the Ninth Circuit concluded that this

exception was not met. The Ninth Circuit rejected the Crow

Tribe’s argument that because revenues generated by the tax

financed important tribal services, the tax was essential to the

Tribe’s well being and thus fell within the second exception.

In considering and rejecting this argument, the Ninth Circuit

noted that this Court has indicated that the second Montana

exception is to be narrowly construed, and that the Tribe’s

“request for us to expand Montana’s second exception would

effectively swallow Montana’s main rule, because virtually

any tribal tax would thus fall under the second exception, a

result that the Supreme Court has never endorsed and which

conflicts with the Supreme Court’s view that tribal

jurisdiction is limited.” 219 F.3d at 951.

Finally, citing Merrion and Washington v. Confederated

Tribes of the Colville Indian Reservation the Ninth Circuit

rejected the Crow Tribe’s argument that its inherent sovereign

authority permitted the Tribe to impose its tax free of the

Montana rule. In rejecting this argument, the Ninth Circuit

noted that while “both cases contain broad language

regarding tribal taxation powers, neither case abrogates

Montana’s main rule.” 219 F.3d at 952. In its analysis of

these cases, the Ninth Circuit noted that both cases focused

on the power of a tribe to tax property or .ctivity occurring on

Indian land, and that both cases actually contain language

lending support to the Proposition that an attempt to reach

beyond tribal lands would be an “impermissible extension of

tribal jurisdiction.” The Ninth Circuit further concluded that

the reference to several taxation cases in the Montana opinion

effectively undercut any argument that tax cases were

somehow not subject to Montana’s main rule.

The Ninth Circuit’s decision in Big Horn County Electric

Cooperative illustrates the correct analysis that should be

undertaken by a court presented with the issue of whether a

tribe’s jurisdiction to tax can be extended to non-Indians

doing business on non-Indian lands within a reservation.

Such an analysis squares with the principles on_ tribal

jurisdiction which have been articulated and clarified by

decisions of this Court over the last 20 years. Clearly, the

Tenth Circuit’s meandering and disjointed analysis bears little

resemblance to the Ninth Circuit’s straightforward application

of the decisions of this Court. The Tenth Circuit's opinion

plainly highlights the dangers of Straying from the proper

application of Montana’s “pathmarking” analysis.

D. The Tenth Circuit’s Analysis in Atkinson is

Fatally Flawed And The Balancing Test

Advanced Therein Cannot Be Reconciled With

Montana And Its Progeny

The Petitioner, in the Legal Argument portion of its brief,

has well demonstrated the legal errors in the analysis

employed by the Tenth Circuit. Each of the errors noted by

the Petitioner in and of itself are sufficient to justify a reversal

of the Tenth Circuit, and collectively they demonstrate

plainly the confusion and unending promise of continuing

litigation that will certainly flow from the Tenth Circuit's

failure in Atkinson to follow the clear legal precedents

established by this Court.

The Tenth Circuit found a consensual relationship existing

between Atkinson’s lodgers and the Navajo Tribe based on a

theory of implied consent. Atkinson, 210 F.3d at 1261-1263.

According to the Tenth Circuit, those lodgers consented to the

jurisdiction of the Tribe by their mere presence on the Navajo

Reservation. If that were true, then there is no need to

conduct the Montana analysis in the first place, since any

exercise of jurisdiction by a tribe directed against

nonmembers found within the exterior boundaries of a

reservation would seemingly be authorized simply by their

being located within the Reservation. Montana’s main rule

cannot be so easily sidestepped or its consensual relationship

exception so broadly expanded. Plainly, if the implied

consent notion were an appropriate concept for determining

jurisdiction, the outcome of Montana, Brendale, Bourland

and Strate would have been different.

A similar problem exists with the Tenth Circuit's reliance

upon the “Indian country” definition of 18 U.S.C. § 1151 to

support its conclusion that “Congress, \in the exercise of its

plenary authority, has determined that all lands within the

outer bounds of the reservation are within Indian County and

are therefore subject to reasonable tribal authority.” Atkinson,

210 F.3d at 1258. This statement again evidences a clear

misunderstanding of the nature of this federal statute, as well

as disregard for the teachings of Montana and its progeny.

The purpose of 18 U.S.C. § 1151, as enacted by Congress,

was to determine the scope of federal criminal jurisdiction.

Thus, this statute evidences no Congressional intent

whatsoever to extend tribal civil jurisdiction to all non-

Indians within a Reservation. Further, Montana, Bourland,

Brendale, and Strate each support the proposition that non-

Indian owned fee land is not, solely by virtue of its location

within a reservation, subject to “reasonable tribal authority.”

EN ee

ae en ae ar ares

In fact, each holds quite to the contrary. Once again,

Montana’s main rule may not be so easily-avoided. Clearly

18 U.S.C. § 1151 has no application to the issue in this case.

The Tenth Circuit’s balancing test also fails to comport

with this Court’s jurisprudence on tribal civil jurisdiction over

non-Indians. If the Tenth Circuit’s decision is permitted to

stand, tribal jurisdiction over non-Indians may seemingly be

exerted wherever or whenever a tribe can point to some

potential benefits flowing from the Tribe to the party being

impacted by tribal action. This test, in practical effect,

ignores the Montana rule and its exceptions, and replaces

them with a test which, in all but the most egregious

situations, would support tribal jurisdiction.

The decisions of this Court on Indian jurisdiction over non-

Indians cannot be squared with the analysis of the Tenth

Circuit. Furthermore, the Tenth Circuit’s balancing test, if

upheld, wil! effectively overrule those principles of Indian

jurisdiction which have been developed by this Court to

clearly limit the scope of tribal jurisdiction over non-Indian

parties. Under current law tribes are presumed to lack the

power to impose taxes or otherwise assert civil jurisdictional

authority over non-Indians relative to activities occurring on

non-Indian owned fee land or its equivalent. The decision of

the Tenth Circuit deviated from the settled law of this Court,

and thus should be reversed.

CONCLUSION

The balancing test adopted by the Tenth Circuit to

determine whether a tribe should be allowed to tax a non-

Indian party begs the question of whether there exists tribal

jurisdiction to support such action in the first instance. To

conclude that a tribe can impose a tax based, even in part,

upon the benefits to be obtained from the revenue generated

by the tax, brings into the jurisdictional inquiry matters which

have no bearing on jurisdiction, and suggests that jurisdiction

can be earned by the taxing entity provided the entity makes

proper use of the tax revenues it receives. Under the

analytical framework set forth by this Court, as properly

applied by the Ninth Circuit Court of Appeals in Big Horn

County Electric Cooperative, it is clear that the Tenth

Circuit’s analysis was flawed and failed to examine the

jurisdictional reach of the Tribe’s taxing power in light of the

clear limitations which this Court has defined in regard to

such power. For the reasons stated above, this Court should

reverse the Tenth Circuit’s decision.

Respectfully submitted,