Merrion v. Jicarilla Apache Tribe
1982 U.S. LEXIS 25, 455 US 130, 71 L. Ed. 2d 21 (1982)
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Rule of Law:
An Indian tribe's authority to impose a severance tax on non-Indian lessees operating on its reservation is an inherent attribute of tribal sovereignty and does not derive solely from its power to exclude non-members from its lands. This sovereign power to tax remains intact unless it is explicitly divested by federal law or surrendered in unmistakable terms.
Facts:
- The Jicarilla Apache Tribe, a federally recognized tribe organized under the Indian Reorganization Act, resides on a reservation in New Mexico established by Executive Order.
- Beginning in 1953, the Tribe entered into long-term mineral leases with various oil and gas companies, including Merrion (petitioners).
- These leases, approved by the Secretary of the Interior, granted the companies the exclusive right to extract oil and gas from reservation lands in exchange for royalties, rents, and bonus payments.
- The leases did not contain any provision authorizing the Tribe to impose a future severance tax on production.
- In 1968, the Tribe adopted a Revised Constitution, approved by the Secretary, authorizing the tribal council to impose taxes on non-members doing business on the reservation.
- In 1976, the Tribal Council enacted an ordinance imposing a severance tax on all oil and gas severed, saved, and removed from tribal lands.
- The Secretary of the Interior approved the 1976 severance tax ordinance.
Procedural Posture:
- The oil and gas lessees (petitioners) filed two separate lawsuits against the Jicarilla Apache Tribe in the U.S. District Court for the District of New Mexico, seeking to enjoin enforcement of the severance tax.
- The District Court consolidated the cases and permanently enjoined the tax, ruling that the Tribe lacked the authority to impose it and that the tax violated the Commerce Clause.
- The Tribe appealed to the U.S. Court of Appeals for the Tenth Circuit.
- The Court of Appeals, sitting en banc, reversed the District Court, holding that the taxing power is an inherent attribute of tribal sovereignty and that the tax did not violate the Commerce Clause.
- The U.S. Supreme Court granted certiorari.
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Issue:
Does the Jicarilla Apache Tribe have the inherent sovereign authority to impose a severance tax on non-Indian lessees' oil and gas production on tribal land, even when the leases were executed prior to the enactment of the tax ordinance?
Opinions:
Majority - Justice Marshall
Yes. The Jicarilla Apache Tribe has the inherent sovereign authority to impose the severance tax. The power to tax transactions occurring on tribal lands is a fundamental attribute of sovereignty, necessary for self-government and territorial management; it does not derive solely from the tribe's power to exclude non-members. The lessees, who avail themselves of the privilege of conducting business on the reservation and benefit from tribal governmental services, can be required to contribute to the general cost of that government. Even if the power were based on exclusion, it includes the lesser power to place conditions on continued presence, and the Tribe did not surrender this power in the leases. A waiver of a sovereign's taxing authority must be clear and unmistakable, and silence in a commercial lease is insufficient to extinguish such a fundamental power. Furthermore, no federal statute has divested the Tribe of this power, and the tax does not violate the Commerce Clause because it has passed federal administrative review and would survive the Complete Auto Transit test.
Dissenting - Justice Stevens
No. A tribe's power over non-members is narrowly confined and stems exclusively from its power to exclude them from its territory. The authority to tax a non-member is merely the power to attach conditions on a right of entry. By entering into binding leases that granted the lessees a vested right to be on the reservation and extract minerals, the Tribe bargained away its right to later impose a new tax unilaterally. The severance tax is an impermissible retroactive change to the terms of the bargained-for leases and infringes upon the lessees' vested contractual rights. The Court's holding improperly equates the limited sovereignty of a tribe over non-members with the broader sovereignty of states and the federal government.
Analysis:
This decision significantly strengthened tribal sovereignty by clarifying that the power to tax non-members is an inherent governmental power, not merely a proprietary right linked to land ownership (the power to exclude). It established that tribes, like other governments, can impose new taxes on existing commercial activities within their jurisdiction unless they have 'unmistakably' surrendered that power in a contract. This ruling provides tribes with a crucial tool for economic self-sufficiency and funding governmental services, while placing a high evidentiary bar on non-members who claim immunity from tribal taxation based on pre-existing commercial agreements.
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