Atkinson Trading Co. v. Shirley
532 US 645, 149 L. Ed. 2d 889, 2001 U.S. LEXIS 4116 (2001)
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Rule of Law:
An Indian tribe's inherent sovereign authority does not extend to taxing nonmember activity on non-Indian fee land within a reservation unless the tribe can establish one of the two exceptions outlined in Montana v. United States.
Facts:
- In 1916, Hubert Richardson purchased land from the United States and built the Cameron Trading Post.
- In 1934, the Navajo Nation Reservation's boundaries were extended by Congress, causing the trading post property to fall within the reservation's exterior boundaries.
- The land on which the trading post is located has remained non-Indian fee land, owned by petitioner Atkinson Trading Company, Inc.
- Atkinson operates a large business complex on the site, including a hotel, that primarily serves tourists, most of whom are not members of the Navajo Nation.
- In 1992, the Navajo Nation enacted an 8 percent hotel occupancy tax applicable to all hotel rooms within its reservation.
- The legal incidence of the tax falls on the nonmember hotel guests, and Atkinson Trading Company is responsible for collecting and remitting it to the Navajo Tax Commission.
- Atkinson Trading Company is a federally licensed 'Indian trader,' authorized to conduct business with the Navajo Nation.
- The Navajo Nation provides generalized services in the area, such as police and fire protection, which are available to the trading post.
Procedural Posture:
- Atkinson Trading Company's challenge to the hotel occupancy tax was rejected by the Navajo Tax Commission.
- The Navajo Supreme Court affirmed the decision of the Navajo Tax Commission, upholding the tax.
- Atkinson Trading Company then filed suit in the United States District Court for the District of New Mexico, which also upheld the tax.
- Atkinson Trading Company (appellant) appealed to the U.S. Court of Appeals for the Tenth Circuit.
- A divided panel of the Tenth Circuit affirmed the district court's decision, finding the tax permissible under Montana's first exception.
- The United States Supreme Court granted certiorari to review the judgment of the Tenth Circuit.
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Issue:
Does an Indian tribe have the inherent sovereign authority to impose a hotel occupancy tax on nonmembers staying at a hotel located on non-Indian fee land within its reservation?
Opinions:
Majority - Chief Justice Rehnquist
No. An Indian tribe's inherent sovereign power to tax does not extend to the activities of nonmembers on non-Indian fee land. The general rule from Montana v. United States, which sharply circumscribes tribal civil authority over nonmembers on non-Indian fee land, applies directly to a tribe's taxing power. The Court's prior decision in Merrion v. Jicarilla Apache Tribe, which upheld a tribal tax, is distinguishable because it concerned activities on tribal trust lands, not non-Indian fee land. Neither of Montana's two exceptions applies here. First, no consensual relationship exists that justifies the tax; the generalized availability of tribal services is insufficient to create such a relationship, and the company's status as an 'Indian trader' has no nexus to the tax on its nonmember hotel guests. Second, the operation of a hotel on fee land does not threaten or have a direct effect on the political integrity, economic security, or health or welfare of the tribe, as required by the second exception.
Concurring - Justice Souter
No. The source of doctrine for tribal jurisdiction over non-Indians must be Montana v. United States. Montana's general proposition that the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers is the first principle. This principle applies regardless of whether the land at issue is tribal land or fee land; the status of the land is primarily relevant for determining whether the facts satisfy one of Montana's exceptions.
Analysis:
This decision significantly clarifies and reinforces the Montana framework as the controlling precedent for tribal civil jurisdiction, explicitly extending its restrictive rule to the power of taxation. By narrowly interpreting Montana's exceptions, the Court makes it more difficult for tribes to regulate or tax non-Indian businesses operating on fee lands within their reservations. The ruling solidifies a territorial approach to tribal jurisdiction, limiting a tribe's inherent authority primarily to its own members and its own trust lands, thereby diminishing tribal power over significant economic activity occurring within reservation boundaries.
