Law School Case Brief
Merrion v. Jicarilla Apache Tribe - 455 U.S. 130, 102 S. Ct. 894 (1982)
A tribe's authority to tax non-Native Americans who conduct business on the reservation does not simply derive from the tribe's power to exclude such persons, but is an inherent power necessary to tribal self-government and territorial management.
Pursuant to its Revised Constitution, which had been approved by the Secretary of the Interior, respondent Tribal Council of the Jicarilla Apache Tribe enacted an ordinance imposing a severance tax on oil and gas production on the tribal land, the tax applying to any oil and natural gas severed, saved, and removed from tribal lands, but not applying to oil and gas consumed by petitioner lessees of the Tribe to develop their leases or received by the Tribe as in-kind royalty payments. The ordinance was approved by the Secretary. Subsequently, several individuals and corporations who, pursuant to long-term leases previously signed with the Tribe, extracted and produced oil and gas from the Tribe's reservation lands and who paid royalties to the Tribe brought actions in the United States District Court for the District of New Mexico to enjoin enforcement of the tax by either the tribal authorities or the Secretary. The District Court consolidated the cases and permanently enjoined enforcement of the tax, ruling that the Tribe lacked the authority to impose the tax because only state and local authorities had the power to tax oil and gas production on Indian reservations. Thus, the tax violated the commerce clause of the US Constitution. On appeal, the United States Court of Appeals for the Tenth Circuit reversed, holding that the taxing power is an inherent attribute of tribal sovereignty that had not been divested by any treaty or act of Congress.
Does tribal sovereignty include the inherent power to tax?
The United States Supreme Court affirmed, holding that the Tribe had the inherent authority to impose the severance tax both as part of its power to govern and to pay for the costs of self-government and from its power to exclude non-Indians from the reservation. Congress had not deprived the Tribe of this authority by its enactment of the Act of May 11, 1938 establishing the procedures for leasing oil and gas interests on tribal lands or the Act of March 3, 1927 permitting state taxation of mineral production on Indian reservations, and a severance tax not conflicting with national energy policies. Moreover, the Tribe's imposition of the tax did not violate the "negative implications" of the commerce clause, because Congress had affirmatively acted by providing a series of federal check-points that had to be cleared before the tribal tax could take effect. In any event, the tax did not discriminate against interstate commerce, as the tax did not treat minerals transported away from the reservation differently than it treated minerals that might be sold on the reservation, and the exemption for minerals received by the Tribe as in-kind payments on the leases and used for tribal purposes merely avoiding the administrative make-work that would ensue if the Tribe taxed the minerals that it, as a commercial partner, received in royalty payments. The Court explained that judicial scrutiny was not even necessary as the tax traveled through the precise channels established by Congress and obtained specific approval of the Secretary of the Interior, and the tax would survive judicial scrutiny if it were necessary. Under the Indian Reorganization Act, 25 U.S.C.S. §§ 476, 477, a tribe must obtain approval from the Secretary of the Interior before it adopts or revises its constitution to announce its intention to tax nonmembers
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