Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982)
Merrion v. Jicarilla Apache Tribe
No. 80-11
Argued March 30, 1981
Reargued November 4, 1981
Decided January 25, 1982 *
455 U.S. 130
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT
Syllabus
Respondent Indian Tribe, pursuant to its Revised Constitution (which had been approved by the Secretary of the Interior (Secretary) as required by the Indian Reorganization Act of 1934), enacted an ordinance (also approved by the Secretary) imposing a severance tax on oil and gas production on the tribal reservation land. Oil and gas received by the Tribe as in-kind royalty payments from lessees of mineral leases on the reservation are exempted from the tax. Petitioners, lessees under Secretary-approved long-term leases with the Tribe to extract oil and natural gas deposits on reservation land, brought separate actions in Federal District Court to enjoin enforcement of the tax. The District Court, consolidating the actions, entered a permanent injunction, ruling that the Tribe had no authority to impose the tax, that only state and local authorities had the power to tax oil and gas production on Indian reservations, and that the tax violated the Commerce Clause. The Court of Appeals reversed, holding that the taxing power is an inherent attribute of tribal sovereignty that has not been divested by any treaty or Act of Congress, and that there was no Commerce Clause violation.
Held:
1. The Tribe has the inherent power to impose the severance tax on petitioners’ mining activities as part of its power to govern and to pay for the costs of self-government. Pp. 136-152.
(a) The power to tax is an essential attribute of Indian sovereignty because it is a necessary instrument of self-government and territorial management. This power enables a tribal government to receive revenues for its essential services. The power does not derive solely from the Tribe’s power to exclude non-Indians from tribal lands, but from the Tribe’s general authority, as sovereign, to control economic activities within its jurisdiction, and to defray the cost of providing governmental services by requiring contributions from persons or enterprises engaged in such activities. Here, petitioners, who have availed themselves of the privilege of carrying on business on the reservation, benefit from police protection and other governmental services, as well as from the advantages of a civilized society assured by tribal government. Under these circumstances, there is nothing exceptional in requiring petitioners to contribute through taxes to the general cost of such government. The mere fact that the Tribe enjoys rents and royalties as the lessor of the mineral lands does not undermine its authority to impose the tax. Pp. 137-144.
(b) Even if the Tribe’s power to tax were derived solely from its power to exclude non-Indians from the reservation, the Tribe has the authority to impose the severance tax. Non-Indians who lawfully enter tribal lands remain subject to a tribe’s power to exclude them, which power includes the lesser power to tax or place other conditions on the non-Indian’s conduct or continued presence on the reservation. The Tribe’s role as commercial partner with petitioners should not be confused with its role as sovereign. It is one thing to find that the Tribe has agreed to sell the right to use the land and take valuable minerals from it, and quite another to find that the Tribe has abandoned its sovereign powers simply because it has not expressly reserved them through a contract. To presume that a sovereign forever waives the right to exercise one of its powers unless it expressly reserves the right to exercise that power in a commercial agreement turns the concept of sovereignty on its head. Pp. 144-148.
(c) The Federal Government did not deprive the Tribe of its authority to impose the severance tax by Congress’ enactment of the 1938 Act establishing the procedures for leasing oil and gas interests on tribal lands. Such Act does not prohibit the Tribe from imposing the tax when both the tribal Constitution and the ordinance authoring the tax were approved by the Secretary. Nor did the 1927 Act permitting state taxation of mineral leases on Indian reservations divest the Tribe of its taxing power. The mere existence of state authority to tax does not deprive an Indian tribe of its power to tax. Moreover, the severance tax does not conflict with national energy policies. To the contrary, the fact that the Natural Gas Policy Act of 1978 includes taxes imposed by an Indian tribe in its definition of costs that may be recovered under federal energy pricing regulations indicates that such taxes would not contravene such policies, and that the tribal authority to do so is not implicitly divested by that Act. Pp. 149-152.
2. The severance tax does not violate the "negative implications" of the Commerce Clause. Pp. 152-158.
(a) Courts are final arbiters under the Commerce Clause only when Congress has not acted. Here, Congress has affirmatively acted by providing a series of federal checkpoints that must be cleared before a tribal tax can take effect, and, in this case, the severance tax was enacted in accordance with this congressional scheme. Pp. 154-156.
(b) Even if judicial scrutiny under the Commerce Clause were necessary, the challenged tax would survive such scrutiny. The tax does not discriminate against interstate commerce, since it is imposed on minerals either sold on the reservation or transported off the reservation before sale. And the exemption for minerals received by the Tribe as in-kind payments on the leases and used for tribal purposes merely avoids the administrative make-work that would ensue if the Tribe taxed the minerals that it, as a commercial partner, received in royalty payments, and thus cannot be deemed a discriminatory preference for local commerce. Pp. 156-158.
617 F.2d 537, affirmed.
MARSHALL, J., delivered the opinion of the Court, in which BRENNAN, WHITE, BLACKMUN, POWELL, and O’CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 159.