Cotton Petroleum Corp. v. New Mexico

Opinion

 [*166]  [***220]  [**1702]    JUSTICE STEVENS delivered the opinion of the Court.

 This case is a sequel to Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), in which we held that the Jicarilla Apache Tribe (Tribe) has the power to impose a severance tax on the production of oil and gas by non-Indian lessees of wells located on the Tribe's reservation. We must now decide whether the State of New Mexico can continue to impose its severance taxes on the same production of oil and gas.

All 742,135 acres of the Jicarilla Apache Reservation are located in northwestern New Mexico. Id., at 133. In 1887, President Cleveland issued an Executive Order setting aside this tract of public land "as a reservation for the use and occupation of the Jicarilla Apache Indians." 1 C. Kappler, Indian Affairs, Laws and Treaties 875 (1904). The only qualification contained in the order was a  [****8]  proviso protecting bona fide settlers from defeasance of previously acquired federal rights. ²  [*167]  Ibid. The land is still owned by the United States and is held in trust for the Tribe.

 [****9]   The Tribe, which consists of approximately 2,500 enrolled members, is organized under the Indian Reorganization Act. 48 Stat. 984, 25 U. S. C. § 461 et seq. The Indian Mineral Leasing Act of 1938 (1938 Act) grants the Tribe authority, subject to the approval of the Secretary of the Interior (Secretary), to execute mineral leases. 52 Stat. 347, 25 U. S. C. § 396a et seq. Since at least as early as 1953, the Tribe has been leasing reservation lands to nonmembers for the production of oil  [***221]  and gas. See Merrion, supra, at 135. Mineral leases now encompass a substantial portion of the reservation and constitute the primary source of the Tribe's general operating revenues.  In 1969, the Secretary approved an amendment to the Tribe's Constitution authorizing it to enact  [**1703]  ordinances, subject to his approval, imposing taxes on non-members doing business in the reservation. See Revised Constitution of the Jicarilla Apache Tribe, Art. XI, § 1(e) (Equity).  The Tribe enacted such an ordinance in 1976, imposing a severance tax on "any oil and natural gas severed,  [****10]  saved and removed from Tribal lands." Oil and Gas Severance Tax, Ordinance No. 77-0-02, Jicarilla Apache Tribal Code (hereinafter J. A. T. C.), Tit. 11, ch. 1 (1987) (Equity); see also Merrion, supra, at 135-136. The Secretary approved the ordinance later that year, and in 1982 this Court upheld the Tribe's power to impose a severance tax on pre-existing as well as future leases. See Merrion, supra. Subsequently, the Tribe enacted a privilege tax, which the  [*168]  Secretary also approved. See Oil and Gas Privilege Tax, Ordinance No. 85-0-434, J. A. T. C., Tit. 11, ch. 2 (1985). ³ 

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