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The standard principles of statutory construction do not have their usual force in cases involving Indian law.
The 1891 Act that first authorized mineral leasing of Indian lands was amended by a 1924 Act that provided that "the production of oil and gas and other minerals on such lands may be taxed by the State in which said lands are located." The Indian Mineral Leasing Act of 1938, which was enacted to obtain uniformity of Indian mineral leasing laws, also permitted mineral leasing of Indian lands, but contained no provision authorizing state taxation nor did it repeal specifically such authorization in the 1924 Act. A general repealer clause of the 1938 Act, however, provides that "[all] [Acts] or parts of Acts inconsistent herewith are hereby repealed." Respondent Indian Tribe filed suit in Federal District Court challenging the application of several Montana taxes to respondent's royalty interests under oil and gas leases issued to non-Indian lessees pursuant to the 1938 Act, and seeking declaratory and injunctive relief. The District Court granted summary judgment for the State, holding that the taxes were authorized by the 1924 Act and that the 1938 Act did not repeal this authorization. The Court of Appeals reversed in pertinent part.
May Montana tax Blackfeet Tribe’s royalty interests from leases issued pursuant to the 1938 Act?
The canons of construction applicable in Indian law are rooted in the unique trust relationship between the United States and the Indians." Two such canons are directly applicable in this case: first, the States may tax Indians only when Congress has manifested clearly its consent to such taxation; second, statutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit. When the 1924 and 1938 Acts are considered in light of these principles, it is clear that the 1924 Act does not authorize Montana to enforce its tax statutes with respect to leases issued under the 1938 Act. Nothing in either the text or legislative history of the 1938 Act suggests that Congress intended to permit States to tax tribal royalty income generated by leases issued pursuant to that Act. The statute contains no explicit consent to state taxation. Nor is there any indication that Congress intended to incorporate implicitly in the 1938 Act the taxing authority of the 1924 Act. Contrary to the State's suggestion, under the applicable principles of statutory construction, the general repealer clause of the 1938 Act cannot be taken to incorporate consistent provisions of earlier laws. The clause surely does not satisfy the requirement that Congress clearly consent to state taxation. Nor would the State's interpretation satisfy the rule requiring that statutes be construed liberally in favor of the Indians. Moreover, the language of the taxing provision of the 1924 Act belies any suggestion that it carries over to the 1938 Act. The tax proviso in the 1924 Act states that "the production of oil and gas and other minerals on such lands may be taxed by the State in which said lands are located . . . ." Even applying ordinary principles of statutory construction, "such lands" refers to "[unallotted] land . . . subject to lease for mining purposes . . . under section 397 [the 1891 Act]." When the statute is "liberally construed . . . in favor of the Indians," it is clear that if the tax proviso survives at all, it reaches only those leases executed under the 1891 Act and its 1924 amendment.