Kerr-McGee Corporation v. Navajo Tribe of Indians

PETITIONER: Kerr-McGee Corporation
RESPONDENT: Navajo Tribe of Indians
LOCATION: Elstad's Residence

DOCKET NO.: 84-68
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 471 US 195 (1985)
ARGUED: Feb 25, 1985
DECIDED: Apr 16, 1985

Alvin H. Shrago - on behalf of the petitioner
Elizabeth Bernstein - on behalf of the respondents
Louis F. Claiborne - on behalf of the United States as amicus curiae in support of respondents

Facts of the case


Media for Kerr-McGee Corporation v. Navajo Tribe of Indians

Audio Transcription for Oral Argument - February 25, 1985 in Kerr-McGee Corporation v. Navajo Tribe of Indians

Warren E. Burger:

We will hear arguments next in Kerr-McGee against Navajo Tribe of Indians.

Mr. Shrago.

Alvin H. Shrago:

Mr. Chief Justice, and may it please the Court, at issue in this case is whether an Indian tribe may unilaterally, without any approval whatsoever from the Secretary of the Interior, impose taxes on non-Indian oil and gas lessees.

This issue arises in this case in the context of the Navajo Tribe of Indians, which has never adopted any constitution at all, and which in fact has twice rejected invitations by the Congress to adopt constitutions, first in Section 16 of the Indian Reorganization Act of 1934, and second in Section 6 of the Navajo Hopi Rehabilitation Act of 1950.

In June of 1982, the United States District Court for the District of Arizona held that the taxes, business activity tax and the possessory interest tax were invalid because they lacked Secretarial approval.

That decision was reversed by the Ninth Circuit Court of Appeals in April of 1984, which held that Secretarial approval was not required.

The case appears here today on a writ of certiorari to the Ninth Circuit Court of Appeals.

The facts in this case are as follows.

The petitioner conducts oil and gas operations on Navajo lands situated in the state of Arizona, lands that were set aside by the Treaty of 1868.

These operations are conducted pursuant to leases issued by the tribe and approved by the Secretary of the Interior or, more precisely, by his delegate, pursuant to Sections 396A and 396E of the Mineral Leasing Act of 1938, Title 25, United States Code.

From 1967 to 1979, the petitioner has paid over $7,500,000 in royalties in connection with these operations, and over $111,300 in rentals.

From 1979 to 1984, the petitioner has paid over $6,100,000 in royalties, and over $104,800 in rentals.

These payments are not made to the tribe.

They are not made to tribal officials.

They are made, rather, to officials of the Bureau of Indian Affairs, who handled these funds in trust for the tribe.

There is no question that the rate of royalty in these leases is fair and equitable.

It is set at 16 and two-thirds percent.

It is a one-sixth rate of royalty.

The two taxes at issue here, the possessory interest tax and the business activity tax, were enacted in January of 1978 and in April of 1978 by the Navajo Tribal Council.

The resolutions implementing these taxes explicitly state that the taxes are to be effective, and I quote,

"after approval by the Navajo Tribal Council. "

The taxes were not approved by the Secretary of the Interior.

The taxes purport to enable the Navajo Tax Commission to impose a number of penalties for non-compliance, including the penalty to attach and seize assets of the petitioner on the reservation, including the penalty to suspend or to prominently revoke all rights of the petitioner to engage in productive activity on the reservation, notwithstanding the right that was so granted to the petitioner in the leases themselves.

The complaint was filed by the petitioner in this case to challenge the validity of these taxes in May of 1979.

It was filed in the United States District Court for the District of New Mexico because petitioner also has operations on Navajo land situated on the New Mexico side of the border.

These are uranium mining operations, and are far larger in scope than the oil and gas operations which are situated on Navajo lands in Arizona.

The Federal District Judge in New Mexico dismissed petitioner's claims against the tribe and the Tax Commission themselves on the grounds of sovereign immunity, but the remaining claims proceeded against tribal officials on the doctrine of ex parte Young on the allegations that tribal officials were purporting to exceed their lawful authority.

In March of 1980, the District Judge in New Mexico transferred that portion of petitioner's challenge to these taxes which dealt with its operations in Arizona to the United States District Court for the District of Arizona.

The District Court in New Mexico stayed all further proceedings in New Mexico pending resolution of issues that at that time were pending before the Tenth Circuit, and which subsequently were pending before the United States Supreme Court.

I am referring to the Merrion decision.