Kerr-McGee Corp. v. Navajo Tribe of Indians
1985 U.S. LEXIS 2738, 85 L. Ed. 2d 200, 471 U.S. 195 (1985)
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Rule of Law:
An Indian tribe's inherent sovereign power to impose taxes on business activities conducted on its land does not require approval from the Secretary of the Interior unless Congress has expressly and clearly mandated such approval in a federal statute.
Facts:
- In 1978, the Navajo Tribal Council enacted two ordinances imposing a Possessory Interest Tax and a Business Activity Tax on tribal lands.
- The taxes applied to both Navajo and non-Indian businesses operating within the Navajo Nation.
- Kerr-McGee Corporation was a substantial mineral lessee on the Navajo Reservation, and its business activities would be subject to these new taxes.
- The Navajo Tribe, which had declined to accept the provisions of the Indian Reorganization Act of 1934, was uncertain if federal approval for the taxes was necessary.
- The Tribe submitted the tax laws to the Bureau of Indian Affairs, which informed the Tribe that no federal statute or regulation required the Department of the Interior to approve or disapprove the taxes.
- The taxes had not yet been collected when the legal challenge began.
Procedural Posture:
- Kerr-McGee Corporation filed an action in the United States District Court for the District of Arizona, seeking to invalidate the Navajo taxes for lack of Secretarial approval.
- The District Court (trial court) granted a permanent injunction against the Tribe, agreeing that the taxes were invalid without the Secretary's approval.
- The Navajo Tribe, as appellant, appealed the decision to the United States Court of Appeals for the Ninth Circuit.
- The Court of Appeals reversed the District Court, holding that no federal statute or principle of law mandated Secretarial approval.
- Kerr-McGee Corporation, as petitioner, sought and was granted a writ of certiorari from the Supreme Court of the United States.
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Issue:
Does federal law require the Navajo Tribe of Indians to obtain approval from the Secretary of the Interior before imposing taxes on business activities conducted on its land?
Opinions:
Majority - Chief Justice Burger
No. Federal law does not require the Navajo Tribe to obtain Secretarial approval for its tax laws. The power to tax is an essential attribute of Indian sovereignty and a necessary instrument of self-government. While Congress may place limitations on a tribe's power to tax, it must do so with clear legislative intent. Neither the Indian Reorganization Act of 1934 (IRA) nor the Indian Mineral Leasing Act of 1938 contains such a clear limitation. The IRA does not apply because the Navajo Tribe did not adopt it, and even for tribes that did, the Act does not mandate Secretarial approval for all tribal tax laws. The Mineral Leasing Act grants the Secretary authority to regulate leasing 'operations,' but this authority does not extend to the tribe's distinct sovereign power to tax economic activity. The Court distinguished the tribe's role as a 'commercial partner' in leasing from its role as a 'sovereign' in taxing. In the absence of an explicit statutory command from Congress, the Court will not infer a requirement for Secretarial approval, as doing so would undermine the federal policy of promoting tribal self-government.
Analysis:
This decision significantly bolsters the doctrine of inherent tribal sovereignty, specifically affirming a tribe's independent power of taxation established in Merrion v. Jicarilla Apache Tribe. It establishes a clear statement rule: any congressional restriction on this fundamental sovereign power must be explicit and will not be implied from general regulatory statutes. This ruling provides tribes, particularly those not organized under the IRA, with greater fiscal autonomy to fund governmental services and promotes economic self-sufficiency without requiring federal oversight of their tax codes, thereby reinforcing the modern federal policy of supporting tribal self-government.
