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


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.

Alvin H. Shrago:

The case in New Mexico has still been stayed.

It is still presently under a stay.

In Arizona, all proceedings were stayed until this Court had rendered its decision in the Merrion case.

When the Court rendered its decision in Merrion, District Judge William Koppel entertained motions for summary judgment that had been filed by all of the litigants.

He granted summary judgment in favor of petitioner, holding the taxes to be void and invalid because they lacked Secretarial approval.

He based his decision on the collateral estoppel effect of a similar decision that had been rendered in similar litigation in the District of Utah, and in addition he held in any event after Merrion the tribe was required to obtain Secretarial approval before these taxes could become effective.

Now, the Ninth Circuit reversed that decision.

The Ninth Circuit held, and I quote,

“Secretarial approval is required only of those tribes that have chosen to include such a requirement in their constitution bylaws or charters. “

The Ninth Circuit did not refer to this Court’s decision in Merrion in reaching that conclusion, and the Ninth Circuit did not state any basis for that rationale.

Harry A. Blackmun:

Did the Tenth Circuit also reverse?

Alvin H. Shrago:

Yes, Justice Blackmun, the Tenth Circuit, before the Ninth Circuit rendered its decision, had rendered a decision in the case of Southland Royalty versus Navajo Tribe of Indians in which it had reversed the decision of the Federal District Judge in Utah, and the Ninth Circuit incorporated by reference the reasoning and the result in the Tenth Circuit’s decision.

It is our position that this holding is fundamentally inconsistent and fundamentally misconstrues the very basic nature of the relationship between the United States and the Indian tribes.

This is a holding which effectuates a radical change in some 200 years of tradition and custom of federal supervision over relations between Indians and non-Indians.

Sandra Day O’Connor:

Mr. Shrago, do you think the Merrion decision recognized only a limited sovereign power to tax conditioned on the requirement of the Secretary’s approval?

Alvin H. Shrago:

I think, Justice O’Connor, that the Merrion decision recognized that Indian tribes generally have an inherent power to tax.

However, I think the decision in Merrion also recognized that the Congress has regulated the manner and extent to which Indian tribes may exercise that power, and that is precisely–

Sandra Day O’Connor:

Well, your answer to my question is basically no, and if that is the case, why should we distinguish among tribes governed by the Indian Reorganization Act and tribes that aren’t?

Alvin H. Shrago:

–Because as this Court held in Merrion, the Indian Reorganization Act of 1934 set forth a procedure whereby tribes should adopt constitutions and then if they wish to tax non-Indians, announce their intention to tax non-Indians and have their taxing ordinances approved by the Secretary of the Interior.

The Court was explicit in explaining that this was, and I quote,

“the administrative process established by Congress to monitor such exercises of tribal authority. “

The Congress has regulated the manner and extent in which an inherent power may be exercised.

In fact, this is a point that Justice Stewart–

Sandra Day O’Connor:

Well, is there any specific provision of the Indian Reorganization Act that requires Secretarial approval of taxes?

Alvin H. Shrago:

–No, Your Honor.

In fact, there is no mention of taxes themselves in the Indian Reorganization Act.

There is specific mention in the Indian Reorganization Act of the concept of Secretarial approval with respect to the constitution itself.

And I might add that in 1954, after the Congress had extended a second invitation to the Navajos to adopt a constitution in Section 6 of the Navajo Hopi Rehabilitation Act of 1950, the solicitor rendered an opinion, and he was referring to the very language in Section 6 of that Act, the existing law language, which was taken almost verbatim from Section 16 of the Indian Reorganization Act of 1934.

And the solicitor explained that when a tribe adopts a constitution that allows it to exercise powers vested by existing law, that incorporated within the notion of vested by existing law is that before the exercise can take place, the Secretary must approve the exercise.

That was the Secretary’s interpretation as late as 1954.

William H. Rehnquist:

But that was of a tribe that had adopted a constitution.

Alvin H. Shrago:

No, Your Honor, this was in connection with a proposed constitution that was being drafted and circulated to the Secretary for his review, the constitution that was being proposed for the Navajos to adopt under Section 6 of the Navaho Hopi Rehabilitation Act.

They never adopted it.

William H. Rehnquist:

And what was the Secretary’s opinion with respect to that proposed constitution?

Alvin H. Shrago:

The proposed… the Secretary had a number of opinions with respect to that proposed constitution.

William H. Rehnquist:

But the one you just adverted to.

Alvin H. Shrago:

Yes, he did observe that there were some powers that were articulated in this proposed constitution that should be subject to Secretarial review, and he had some criticisms about the constitution that had at that time been drafted.

William H. Rehnquist:

Well, did he express the view that there was some statute on the books that would require them to be subject to Secretarial review as opposed to simply having it desirable as a matter of choice?

Alvin H. Shrago:

He expressed the view that the language existing law, vesting tribes with authority to exercise powers according to existing law, the same language that had been used in the 1934 Act, necessarily included the understanding that those powers, before they could be exercised, must be approved by the Secretary of the Interior.

This, of course, is the understanding that the Bureau of Indian Affairs had at the very outset, from adoption of the Indian Reorganization Act of 1934.

It is very clear from the legislative history, and it is very clear from the contemporaneous administrative interpretation.

For example, Commissioner John Collier, who was the draftsman of the Wheeler-Howard bill, the Indian Reorganization Act of 1934, explained, and I quote:

“The bill provides the machinery for a progressive establishment of home rule by tribes or groups of Indians. “

It is that machinery, the adoption of a constitution and approval by the Secretary of the Interior which is precisely what the Indian Reorganization Act was designed to accomplish.

That is precisely, as this Court recognized in Merrion, the administrative process established by Congress to monitor such exercises of tribal authority.

William H. Rehnquist:

But the Congress didn’t require the tribes to adopt constitutions.

Alvin H. Shrago:

That is correct, Justice Rehnquist.

This was optional with the tribes.

This was true of the original bill.

It was true of the bill as it proceeded through the Congress.

Sandra Day O’Connor:

And the tribes retained, if they didn’t adopt a constitution, certain sovereign powers, did they not?

Alvin H. Shrago:

Your Honor, there is a difference between–

Sandra Day O’Connor:

Did they not?

Alvin H. Shrago:

–I would say yes.

Sandra Day O’Connor:


And so the question is whether the power to tax is one of those sovereign powers.

Alvin H. Shrago:

I believe that question has been answered in Merrion, and we are not–

Sandra Day O’Connor:

And the Court said, yes, it includes that.

Alvin H. Shrago:

–That’s correct, but the Court also went further and said that before the power to tax could be exercised, it had to be approved by the Secretary of the Interior, and in fact Justice Marshall in the opinion in Merrion explicitly made the distinction between the existence of a sovereign power to tax, which he explained, that neither the tribe’s constitution, in that case the Jicarilla Apache Tribe, nor the Federal Constitution is the font of any tribal sovereign power to tax.

But he also explained, however, that in light of the Indian Reorganization Act, amendment of the tribe’s constitution to authorize the tax, to announce the intention to tax, was the necessary event or the critical event, as I believe he put it, necessary to effectuate the tax, and the word “effectuate” was highlighted.

Alvin H. Shrago:

In short, again we are talking about existence of a power and the manner and extent by which the Congress has regulated that power.

At the present time, it is essential that there be this administrative process for review of the tribal taxing power.

As the Court mentioned in Merrion, Secretarial approval is a necessary constraint to minimize the potential concern that tribes may exercise the power to tax in an unfair or unprincipled manner, or in any way inconsistent with overriding national interests.

Under this Court’s interpretation of Santa Clara Pueblo versus Martinez, we cannot challenge the unfairness of this tax under the due process or equal protection clauses of the Indian Civil Rights Act of 1968, nor can we challenge the due process and equal protection problems we have with these taxes under the Federal Constitution, since it has been held that those limitations do not apply to Indian tribes.

In short, the only relief that we have is if this administrative process established by Congress to monitor such exercises of tribal authority is upheld and respected by the Secretary.

That in fact is exactly what the Secretary did in connection with the Hopi Indian Tribe, which of course resides on the land situated within the exterior boundaries of the Navajo Tribe.

They attempted to enact a severance tax, and the Secretary of the Interior, actually the Assistant Secretary, disapproved the tax because in his opinion it violated the due process provision of the Indian Civil Rights Act of 1968.

Now, the Hopi Tribe has–

Warren E. Burger:

We will resume there at l: 00 o’clock, counsel.

Alvin H. Shrago:

–Thank you.

Warren E. Burger:

You may continue, counsel.

Alvin H. Shrago:

Thank you, Mr. Chief Justice.

In Merrion, this Court, referring to the Indian Reorganization Act of 1934, and the adoption of tribal constitutions to announce tribal intentions to tax as well as Secretarial approval of the specific taxing ordinances, held, and I quote,

“Here the Congress has affirmatively acted by providing a series of checkpoints that must be clear before a tribal tax can take effect. “

This was a point as to which the Court in Merrion was unanimous.

Justice Stevens in his dissent explained that to the extent that the power to tax was an attribute of sovereignty possessed by Indian tribes when the reorganization was passed, Congress intended the statute to preserve those powers for all Indian tribes that adopted a formal organization under the Act.

The serious problem with the construction that the Ninth Circuit gave to the Indian Reorganization Act is that it imputed to the Congress and to the executive officials of this nation, including John Collier himself, an intention to deceive the Indian tribes of this country by going around the country and telling them, this Act is for your benefit, this is an Act which is going to strengthen your tribal powers, this is an Act which is going to free you more and more from federal control.

Byron R. White:

Well, the Navajos maybe knew what they were doing.

Alvin H. Shrago:

That is exactly the point I am trying to make, Justice White, that if you adopt the argument that has been made by the Ninth Circuit–

Byron R. White:

Well, they just knew better.

Alvin H. Shrago:

–That they knew better than the draftsmen of the legislation and the Congress I think is a remarkable conclusion to reach.

Byron R. White:

May be.

Alvin H. Shrago:

Nevertheless, if that conclusion is reached, then the majority of Indian tribes in this nation that adopted constitutions under the IRA have been frankly tricked by the Congress, by President Roosevelt, by Commissioner Collier, by the federal government for 50 years.

And in fact as the Tenth Circuit recognized in the Southland Royalties Company case which is presently pending on a petition for rehearing, if this interpretation is upheld of the Indian Reorganization Act, it will encourage tribes which have adopted constitutions to repudiate their constitutions so that they may exercise these powers without federal supervision and federal control.

This would be the remarkable conclusion that the objectives of an Act of Congress can best be furthered by ignoring and repudiating the Act altogether.

It simply makes no sense.

The need for Secretarial approval, of course, is unquestioned.

As the Court observed in Merrion itself, Secretarial approval is one of those constraints that minimizes potential concern that the tribal taxing power may be exercised in an unfair or unprincipled manner, or that it may be exercised in a manner that is inconsistent with overriding national interests.

The Secretary under the present state of the law is the only one who can oversee the propriety of these tribal exercises of power.

Under the Martinez decision, the violation of the Indian Civil Rights Act by implementation of tribal power in a civil context as opposed to the criminal context simply cannot be reviewed by a federal court.

Alvin H. Shrago:

Indeed, as the Secretary has recently invalidated or refused to approve the severance tax enacted by the Hopi Tribe on the grounds that it violated the due process clause of the Indian Civil Rights Act of 1968, we see no reason, no basis, no principle either in logic or in fact by which the Secretary could claim that the identical tax which offends the identical due process clause of the Indian Civil Rights Act of 1968 should somehow be permitted to be implemented merely because the other tribe has not adopted a constitution under the IRA or under similar legislation, and in fact has not adopted a constitution at all.

To the contrary, we believe that the need for Secretarial review, federal oversight of tribal exercises of the taxing power is all the more pressing in the case of those tribes which have refused to adopt constitutions than it is in the case of those tribes which have at least followed the Congressional policy and adopted constitutions.

After all, the constitutional form of government in this nation is basic, principal, and fundamental.

In New Mexico versus Mescalero Apache Tribe, a unanimous decision of this Court involving hunting and fishing rights and regulation of those rights by the state or by the tribe, this Court observed that federal law commits to the Secretary and to the tribe the responsibility to manage the reservation’s resources.

The Court also unanimously held that federal law requires the Secretary to approve the tribe’s hunting and fishing ordinances, which of course the Secretary had done in that case.

This, of course, was also a matter on which the Court had remarked in United States versus Wheeler, a case involving the Navajo tribe itself.

In Wheeler, the Court distinguished between the existence of an inherent power, and that was the basis on which there was a dispute between the majority and the minority in Merrion, whether as a matter of inherent tribal power, the power existing, not on whether the manner and extent of that power had been regulated by the Congress.

The Court in Wheeler, a case involving the Navajo Tribe, explained that Congress has in certain ways regulated the manner and extent of the tribal power of self-government does not mean that Congress is the source of that power.

We have the difference between existence of the power and the manner in which that power can be exercised.

The Congress intended that for tribes to exercise the power to tax against non-Indians, at the very least that tax must be approved by the Secretary or, in the words of the Merrion Court, receive specific general approval before it could become valid.

This result, of course, is consistent with the legislative history underlying enactment of the Indian Reorganization Act.

John Collier explained that the bill provided the machinery for progressive establishment of home rule by tribes or groups of Indians.

The Senate report, which was presided over by Senator Wheeler, the sponsor of the bill, the Wheeler-Howard Act, in the Senate, explained that the legislation was intended, and I quote,

“to stabilize the tribal organization of Indian tribes by vesting them with real though limited authority and by prescribing conditions which must be met by such tribal organizations. “

Under the interpretation of the Indian Reorganization Act advocated by the Ninth Circuit, those tribes which rejected the Indian Reorganization Act would be vested with not limited power but with unlimited power, and that interpretation would encourage the majority of tribes in this country who have adopted constitutions in pursuance of the objectives of the Indian Reorganization Act to disband those constitutions, to repudiate them, to revoke them.

William J. Brennan, Jr.:

Has that yet happened with any tribe?

Alvin H. Shrago:

Yes, in fact, Justice Brennan, the United States points in its brief that it is now engaged in a process of encouraging tribes to eliminate the provisions in tribal constitutions calling for Secretarial review.

Apparently the notion is that tribal or Secretarial review is a matter that is required by tribal law and not by federal law.

That is the premise of that argument, which I submit is wrong and inconsistent with this Court’s holding in Merrion that IRA and adoption of a tribal constitution and Secretarial approval fulfill the administrative process established by Congress to monitor such exercises of tribal authority.

William J. Brennan, Jr.:

Well, would it be your view that once having adopted a constitution, the tribe may not of itself in any event disband the constitution?

Alvin H. Shrago:

No, Your Honor.

I think that that is a process which is provided for in the Act itself.

They certainly can, but if they do, then they will not bee following the administrative process established by Congress to monitor tribal exercises, at least of the taxing power, in the event they disband their constitutions.

In conclusion, the Ninth circuit decision rejects Merrion’s interpretation and holding with respect to the Indian Reorganization Act of 1934.

The Ninth Circuit’s decision interprets the Indian Reorganization Act of 1934 as an Act of Congressional deceit to trick Indians into contracting away, as the United States has explained it, their powers in the face of representations that the IRA would strength their government and free them from federal control.

The interpretations will encourage the majority of tribes who have adopted constitutions to repudiate them.

The result is that there will be unlimited exercise of absolute governmental power, ironically on lands owned in fee by the United States government itself.

We believe that 200 years of traditional federal supervision over Indian/non-Indian relations should be affirmed.

We submit that the Ninth Circuit’s decision should be reversed.

I would like to reserve the remainder of my time for rebuttal.

Warren E. Burger:

Ms. Bernstein.

Elizabeth Bernstein:

Thank you, Mr. Chief Justice, and may it please the Court, the Navajo Tribal Council enacted the broad-based tax laws at issue in this case because it is badly in need of funds to provide essential governmental services, including police, fire protection, roads, health care, clean drinking water, to a reservation of over 25,000 square miles.

These laws, like other tribal laws, were submitted in due course to the Department of the Interior, and it was the decision not of the tribe but of the Department of the Interior that there was nothing in federal law, federal regulations, or tribal law which conditioned the effectiveness of those tribal taxes on Secretarial approval.

The Secretarial has therefore repeatedly and in writing declined to act either approve or disapprove the laws as he asserts that it would be a gratuitous act of no effect.

Two and a half years after the possessory interest tax was enacted by the Navajo Tribal Council, Kerr-McGee amended its complaint to allege that the validity of the taxes depended on Secretarial action.

It is important to realize the scope of Kerr-McGee’s allegation.

There is no question in this case but that Congress, for example, has power to control, divest, limit tribal taxation.

But Kerr-McGee is alleging not just that Congress has delegated to the Secretary, for example, the power to regulate tribal taxation, not just that the Secretary in the absence of regulation even could veto a tribal ordinance, but rather, that in the absence of affirmative federal action which the Secretary has declined to take and determined to be unnecessary, a tribe’s exercise of its own inherent sovereign powers, powers which this Court has recognized to derive not from the federal government but from the tribe’s sovereignty, that the tribe may not exercise those powers, that the exercise remains ineffective, that the Secretary cannot even waive, either deliberately or through lapse of time, such a requirement.

One of the ironies of this case is that that was not even the case under the Jicarilla Apache constitution, which, although it does subject certain taxing laws to Secretarial approval, also provides that if the Secretary fails to disapprove a law submitted within 120 days, the law will become effective.

Other tribal constitution under the Indian Reorganization Act specifically allow the Secretary in his sole discretion in writing to waive an approval requirement.

The need for that kind of certainty and that kind of closure is a great in tribal government as it is anywhere else.

Kerr-McGee’s argument would throw tribal government into chaos.

It leads to the conclusion that there may be scores of tribal laws which have been on the books for decades now which everyone has believed to be effective but which according to Kerr-McGee would be ineffective because there was an approval requirement that was so subtle and so implicit that the Secretary didn’t know that it existed, and that the Secretary’s own determination that there was no such requirement has never sufficed to give effect to those laws.

Over 100 years ago the Senate Judiciary Committee upheld the validity of Chickasaw revenue ordinances which fell on non-Indians and which had been approved by no agent of the federal government.

In the Attorney General opinion cited in the United States’ brief in 18 Opinions of the Attorney General, it was… that earlier Senate Judiciary Committee determination was not reaffirmed, but the Attorney General went on to answer specifically the question, not only were these laws valid, but were they subject to revision or control by any department or officer of the United States, and concluded that they were not because Congress had not delegated that power to any agent or officer of the United States.

The argument about tribes having been tricked into reorganizing under the Indian Reorganization Act rests on a fundamentally incorrect assumption, which is that if the tribe organized under the Indian Reorganization Act, it was required to condition its laws in that constitution on Secretarial approval.

That has never been the case.

It has never been the Secretary’s interpretation of the law, nor did Congress say anything of the sort in the Indian Reorganization Act.

In fact, while the Act referred to Secretarial approval with respect to certain additional powers which were enumerated in the Indian Reorganization Act, with respect to the vesting of existing tribal powers in the tribes pursuant to their constitutions, there was no mention by Congress whatsoever of Secretarial approval.

Byron R. White:

What is the explanation or the speculation as to why the tribes, some tribes or perhaps all of them who adopted constitutions put in this requirement of Secretarial approval?

Elizabeth Bernstein:

Well, first of all, Your Honor, it was not the case that all tribes did so.

The United States cites examples of constitutions going all the way back to 1937 which did not contain such requirements.

I believe, though, that the explanation is that the Indian Reorganization Act was enacted because there were many, although not all, tribes which had essentially lost their tribal governments entirely during the allotment era.

And those tribes had very little experiences at that point, anyway, in operating a government.

Those tribes were specifically in need of additional guidance by the Secretary, and as well the approach of the Secretary and the Bureau of Indian Affairs to tribal government at that point was one of exerting a great deal of power over Indian tribes.

It may be that the Secretary carried that further than Congress wanted it to even in the Indian Reorganization Act.

Byron R. White:

What authority would the Secretary have under federal law to approve or disapprove a taxing ordinance even though the tribal constitution required it to do?

Could the tribe confer power on the Secretary?

Elizabeth Bernstein:

The Secretary’s–

Byron R. White:

I would think the Secretary would say, I don’t see any federal statute that gives me any power to approve or disapprove of a taxing ordinance of any tribe.

Elizabeth Bernstein:

–The Secretary’s position appears to be that as part of its duties with respect to the Indian tribes it is willing to review tribal ordinances in the event that that is the tribe’s wish.

The Secretary takes the position that if the tribe specifically conditions its laws on Secretarial approval, that the Secretary will review.

Byron R. White:

Well, then, what do you make out of the statement in Merrion that the Secretary’s, at least in connection with that tribe, the Jicarillas… it sounded from reading that opinion as though the Secretary had legal authority to turn down a taxing ordinance with respect to the Jicarillas.

Elizabeth Bernstein:

Well, because there was a provision in the Jicarilla constitution–

Byron R. White:

Why would that give the Secretary authority?

Elizabeth Bernstein:

–The tribe in that case, by adopting that constitution, was voluntarily conditioning its own powers on Secretarial approval.

Byron R. White:

I know, but how could the Secretary… why would the Secretary purport to approve or disapprove in the absence of some statute?

Elizabeth Bernstein:

I suppose it could be questioned whether the Secretary ought to be doing so even in those cases.

However, that is a practice which the Secretary has developed over a long period of time where the tribe voluntarily conditions–

William H. Rehnquist:

What standard does the Secretary use in that situation?

Elizabeth Bernstein:

–Well, the Secretary has recently issued guidelines which state what standards the Secretary will use, and the standard is essentially one of seeing whether or not the tribal law violates any other law, the tribal law… the tax law in question–

Byron R. White:

Well, if the Secretary is purporting then to exercise its authority, I just again wonder where he think he gets it.

And if he has it there, I don’t know, maybe you can find it in that same source whether the tribe has a constitution or not.

Elizabeth Bernstein:

–But the Secretary’s authority is a very different question.

The question of what the Secretary is authorized to do is very different from the question of what the Secretary is required to do.

Even if one assumes that Congress has authorized the Secretary in certain situations to approve or disapprove tribal law, that is a far cry–

Byron R. White:

Do you think Congress has authorized the Secretary to approve or disapprove any Indian taxing ordinance?

Elizabeth Bernstein:

–I think that the question obviously doesn’t arise, at least as between a tribe and the Secretary, if the tribe is willingly saying–

Byron R. White:

It has now arisen, the question has.

Elizabeth Bernstein:

–In other words, even if a tribe has constitution which requires Secretarial approval, I think that given–

William H. Rehnquist:

Well, is there some authority–

Elizabeth Bernstein:

–I don’t mean the question doesn’t arise.

I mean the dispute doesn’t arise if the tribe is willingly conditioning its laws on Secretarial approval.

Byron R. White:

–Well, the question arises whether the Secretary has Congressional authority to perform that function.

That is my question to you.

Does he or doesn’t he?

Elizabeth Bernstein:

We are not questioning the Secretary’s authority to act–

Byron R. White:

I know you aren’t, but where is the Congressional authority that you say is necessary for the Secretary to perform that function?

Elizabeth Bernstein:

–I have not said that express Congressional statement is necessary in order to empower the Secretary to act in those situations.

I do say that an express direction of Congress is necessary in order to require the Secretary to act, that is, in order to render a tribal law ineffective until the Secretary acts.

Elizabeth Bernstein:

I think that Congress has the power to condition or limit tribal powers over and against the desires of the tribe.

The situation of the tribal constitution presents a very different situation where the Secretary’s approval-disapproval authority is not over and against the desires of the tribe.

It is, in fact, with the cooperation, with, in fact, the tribes’s request to the Secretary for assistance.

Byron R. White:

I take it your bottom line, then, would be that if the Secretary turns it down, the tribe may put it into effect anyway.

Elizabeth Bernstein:

I would–

Byron R. White:

Insofar as federal law is concerned.

Elizabeth Bernstein:

–I would question the authority of the Secretary in the absence of a Congressional delegation to veto a tribal ordinance where Congress had not said that tribal exercise of that kind of power was conditioned on Secretarial approval or disapproval.

Byron R. White:

So the provisions in these constitutions is just, we want to submit the ordinance and approve it if you want to but you are not authorized to disapproved it.

Elizabeth Bernstein:

No, that is not the provision in the constitution.

If a tribe says in its own constitution, which is tribal law, we are commissioning the effectiveness of our laws on Secretarial approval or disapproval, then that tribe is saying that they will accept either approval or disapproval.

They are giving the Secretary the power with respect to their own laws.

Warren E. Burger:

This is a delegated power from the tribe to the Secretary, isn’t it?

They didn’t have to give it to them in the first place, did they?

Elizabeth Bernstein:

No, they do not have to do so, and they do not have to do so under the Indian Reorganization Act.

Warren E. Burger:

Then it is a delegated power in effect like appointing an agent, is it not, appointing the Secretary as agent for the tribe for certain purposes.

Would you agree with that?

Elizabeth Bernstein:

I think that the Secretary is still functioning as an agent of the United States, that Congress has delegated to the Secretary the power to–

Warren E. Burger:

Well, have they delegated… has Congress delegated any power with respect to this particular transfer of authority from the tribe to the Secretary?

Elizabeth Bernstein:

–Congress has not… has never expressly stated that, so far as I know, that the Secretary is to act on tribal taxing ordinances in any particular situation.

On the other hand, the Secretary does have… it is in the Secretary that Congress has placed the management of Indian affairs, but the tribe’s point here is that even if that were to go so… even if that general… that general authority, the fact that Congress has placed in the Secretary the management of Indian affairs, may well be enough to support the Secretary’s action as a federal agent when a tribe specifically says, we want the Secretary’s action on this law, we will condition its effectiveness on Secretarial action, but it is–

Warren E. Burger:

Can the tribe withdraw that delegated authority any time it wants to?

Elizabeth Bernstein:

–Well, it depends on how the tribe has stated that authority.

If it is stated in an Indian Reorganization Act Constitution, then it cannot withdraw it by itself for the simple reason that Congress has stated that those constitutions can’t be amended without Secretarial approval.

On the other hand, the Secretary is willingly encouraging tribes to remove those kinds of restraints which are not necessary under federal law.

If a tribe places that condition in some other way, then, that is, if it is not in the tribe’s constitution, then it may be possible for the tribe or eliminate that condition as well without further Secretarial involvement.

Byron R. White:

Ms. Bernstein, are these leases, tribal leases to Kerr-McGee or other private… are they subject to approval by the Secretary?

Elizabeth Bernstein:

The leases are subject to approval by the Secretary, and I want to specifically address the argument that has been made by Kerr-McGee that when Congress says to the Secretary, you should approve tribal leases of land, and of course… excuse me, that when it says that, that it means that the Secretary must approve or disapprove anything that the tribe does that bears on those lessees.

Of course, this is… Congress’s direction to the Secretary to approve those kinds of leases first of all is not limited to mineral leases.

It applies to other leases which Congress has enumerated, for example, residential, religious, recreational leases.

Second of all, so that there is no… it is incorrect to read the direction to the Secretary to approve mineral leases as meaning you, the Secretary, must make sure that tribal policy does not contravene federal energy or mineral policy any more than Congress intends to subject other sorts of tribal leases to federal recreational, religious, or residential policy.

Byron R. White:

Normally in administering these mineral leases or oil and gas leases, if Kerr-McGee or the lessee refused to live up to one of the terms of the lease, what happens?

Does the tribe give notice that the lease is terminated, or does it take the Secretary’s approval?

Elizabeth Bernstein:

The Secretary’s regulations specifically provide the Secretary is to be involved in termination of leases, but the Secretary’s role under these kinds of leasing statutes is limited and directed to proprietary matters.

First of all, it is not the case that these laws–

Byron R. White:

I suppose if this tribal ordinance is as valid as you suggest it is, and Kerr-McGee refused to pay it, to pay the tax, I supposed the tribe would think it should be able to cancel the lease.

Elizabeth Bernstein:

–There is no cancellation of lease provision asserted in the tax laws.

There are other penalties, other enforcement mechanisms of various sorts, none of which have been imposed yet.

Byron R. White:

And none of which would require the Secretary’s approval.

Elizabeth Bernstein:

I am not sure of that, Your Honor.

There are many different kinds of lessees, well, not only lessees, just businesses that are subject to these laws.

We concede, for example, we cannot imprison, you know, Kerr-McGee’s non-Indian employees while we may be able to imprison a Navajo employee for tax fraud.

It may also be the case that if it came down to the tribe seizing and selling property, if the tribe seizes and sells someone’s pickup truck, it does not need Secretarial approval.

If the tribe wants to seize and sell a leasehold, at that point there may be a Secretarial approval requirement if the regulations so provide, but that… the enforcement mechanisms are not at issue at this point because the tribe has not attempted to enforce them against anybody.

And those questions as to what are the federal limitations on any specific enforcement mechanism can only be answered when and if the tribe needs to use those enforcement mechanisms.

William H. Rehnquist:

Your opponent contends that they have no real way of challenging those things because of the Santa Clara case.

Elizabeth Bernstein:

Well, of course, they are, first of all, ignoring tribal forums entirely, which was exactly the remedy that was suggested in the Santa Clara case, and I think it is significant that it is in the Indian Civil Rights Act, not in the Mineral Leasing Act or in any other law by which the Secretary is supposed to protect tribal property, it is in the Indian Civil Rights Act that Congress has specifically directed itself to what protection should persons, non-Indians or Indian, within tribal jurisdiction have from the Indian tribes.

And Congress answered that question in the Indian Civil Rights Act, and that question did not involve Secretarial approval of tribal ordinances as a means of protecting it.

William H. Rehnquist:

So you say that your opponent is right, that they don’t have any way of challenging.

Elizabeth Bernstein:

No, they have tribal forums to go to.

The tax laws provide for two levels of appeal within the tribal forums, and of course if there were other kinds of federal laws violated, they have the same forum in the federal courts that they have in this case.

They keep referring, for example, to the fact that the Hopi ordinances were held to violate due process.

The due process violation was not a procedural one but arose from the fact that the Hopi tribe was asserting taxing jurisdiction beyond its territorial jurisdiction.

That is the kind of issue which would readily be heard in the federal courts to determine what the territorial jurisdiction of an Indian tribe is.

But there are certain kinds of violations which this Court has held Congress intended to be redressed in tribal forums.

Thank you, Your Honor, if there are no further questions.

Warren E. Burger:

Mr. Claiborne.

Louis F. Claiborne:

Mr. Chief Justice, and may it please the Court, petitioners have, in my view and perhaps in the Court’s view, never really explained what their argument is, whether it is that the power of Indian tribes to tax which survived dependent status was conditioned, hobbled, limited for the first time in 1934 or 1938, depending upon whether they are relying on the Indian Reorganization Act or the Indian Mineral Leasing Act, or whether their argument is that long before that and independent of those Acts of Congress the power of Indian tribes to tax non-Indians doing business on a reservation was always subject to Secretarial or federal approval.

It is not surprising that they do not choose between these two alternatives, because either one leads to a dead end.

The first, the one seemingly most emphasized, that is, reliance on the Indian Reorganization Act and the Indian Leasing Act of 1938, obviously founders on the main objective of those two statutes, which were to increase, not decrease, Indian self-government, to maximize, not to hobble the power of Indian tribes to earn their own revenues through taxation and other means.

Furthermore, they have difficulties under the text of both of those statutes.

Louis F. Claiborne:

As we know, the Indian Reorganization Act, first of all, is optional.

It requires no tribe to agree or not to.

It requires no tribe that does come under the Act to adopt a constitution.

It requires no such constitution to provide that taxing ordinances in particular or any others shall be subject to Secretarial approval.

Accordingly, the IRA is simply not a proper source for insisting that Congress imposed Secretarial approval as a precondition to the validity of any taxing ordinance effecting non-Indians.

Under the Mineral Leasing Act of 1938, similar problems arise.

That Act, to be sure, does give the Secretary pervasive regulation of leasing, the management of Indian property, and area traditionally governed, controlled, supervised pervasively by the government, but the Act has nothing whatever to do with the exercise not of the landlord’s right but of the governmental prerogatives of an Indian tribe, including the power of taxation.

Sandra Day O’Connor:

Mr. Claiborne, in your view, what is the source of the Secretary’s authority to approve any tribal tax?

Louis F. Claiborne:

Justice O’Connor, in the particular case of provisions in IRA constitutions, it seems to me that the source is the IRA itself insofar as Congress said the constitution adopted pursuant to this Act shall be valid only when approved by the Secretary, and impliedly Congress presumably permitted the Secretary or the tribe or the two together to include within such constitutions further approval requirements with respect to certain kinds of legislation.

Sandra Day O’Connor:

Is it presently the Secretary’s view that tribes with a written constitution under the IRA can amend their constitution and the Secretary will approve it if the amendment is to withdraw Secretarial approval to impose taxes?

Louis F. Claiborne:

Exactly so, Justice O’Connor, and as counsel for petitioners correctly stated, our brief recites that it has been the policy of the Department of Interior for some years now not merely to approve amendments to constitutions to remove what as a matter of federal law are unnecessary Secretarial review provisions, but to encourage amendment of tribal constitutions to that end, and a substantial number of tribal constitutions have recently been amended with that in mind.

Why don’t we turn to the alternative argument that seems to be made in part by the petitioners?

That is that from time immemorial, at least since the tribes became subject to the jurisdictions of the United States, their power of taxation has been somehow subjected to federal approval.

That is tantamount to saying that the power of taxation did not survive, and it amounts to nothing more than the privilege of asking the Secretary, if you agree, may we tax, and only if he says yes may they do it.

So that is hardly a sovereign inherent power that survived dependent status in the sense in which this Court indicated that power both in the Coville and in the Merrion cases.

It is, moreover, completely at odds with the historic distinction between the supervision of the United States over the property management function and attributes of Indian sovereignty.

In order to protect tribal land, in order to protect the Indians from being taken advantage of by outsiders, by their neighbors, by those who were selling them goods, the government has traditionally since the first Nonintercourse Act in 1790 and in a series of treaties and legislation ever since quite pervasively regulated property transactions so as to protect the Indians from being taken advantage of.

There is nothing, nothing at all comparable on the side of the exercise of Indian sovereign prerogatives, including the taxing power.

Sandra Day O’Connor:

Does the Secretary think there are any other overriding provisions of federal law, constitutional or otherwise, that might impact on the exercise by the tribe of its taxing powers?

Louis F. Claiborne:

Justice O’Connor–

Sandra Day O’Connor:

The commerce clause or anything else?

Louis F. Claiborne:

–This Court in the Merrion case was somewhat undecided as to whether the commerce clause in a full-fledged way limited the exercise of taxing power by Indian tribes.

For present purposes we accept that it would, or that the Indian commerce clause, its analogue, would present a limit on the kind of discriminatory taxation that might be envisaged.

Of course, there is a territorial limitation, the basis on which the Hopi ordinance was disapproved, and that is subject to, in our view, to control by federal courts as the challenge in this Court, in this case, it seems to us, is properly a case within federal jurisdiction and properly carried through the federal courts here, leaving aside the question of exhausting tribal remedies which may or may not have–

Byron R. White:

Well, what about taxing half the producers on the reservation and not taxing the other half?

Louis F. Claiborne:

–Well, that might indeed result in–

Byron R. White:

What would that trigger, if anything?

Louis F. Claiborne:

–Well, in line with the Martinez decision, it presumably would not trigger a claim under the Indian Civil Rights Act, though it is not clear to us whether the Court in Martinez really meant to bar all challenges under that statute, including those by non-Indians who have no other recourse.

It is arguable that that decision left that question for another day, and such a day is, of course, not here.

There is no charge here of any discrimination.

Louis F. Claiborne:

Indians as well as non-Indians are equally taxed.

Let me say one final word, and that is about the administrative construction of the relevant statutory background by the Department of the Interior.

It is charged that we have on the one hand said that it is a good idea to subject tribal taxation to federal approval and today take a difference stance.

There is a consistent strand, which is this.

The Department of Interior has at all times taken the view, correctly, that federal law, Congress has not required it to approve or disapprove any ordinance, but has permitted it to insist through the IRA and the writing of tribal constitutions that for a time in specific circumstances it was a wise idea, not mandated by Congress, but permitted by Congress to the Secretary, to supervise the exercise of tribal taxation, but as was no doubt anticipated, the Indian Reorganization Act succeeded to an extent where it is now felt, quite consistently, that the day has come when that supervision is no longer necessary, and accordingly it is now the policy of the department to remove that superintendence which was once thought more appropriate.

I think I have nothing further.

Warren E. Burger:

Do you have anything further, Mr. Shrago?

You have two minutes remaining.

Alvin H. Shrago:

Thank you.

The arguments of the respondents reflect a fundamental misunderstanding as to who the Secretary of the Interior is and who gives him authority.

He is an officer of the United States government, and he is charged with the responsibility for supervising Indian affairs.

He cannot–

Warren E. Burger:

All Indian affairs?

Alvin H. Shrago:

–Especially those affairs that concern relations between Indians and non-Indians.

I appreciate that the Court has deferred more to Indian tribes when they attempt or purport to exercise their powers only with respect to internal relations as opposed to matters that affect the rights or interests of non-members.

What the respondents are contending for today is a rule of law that somehow Indian tribes, who are domestic dependent nations, can authorize or limit the powers of the Secretary.

I submit that that is a fundamental misunderstanding of the role of Indian tribes and the role of the Secretary of the Interior.

Byron R. White:

Well, what is the basis for your position?

Mr. Claiborne says it is either this, that, or that.

Is it your contention that it has always been necessary for the Secretary to approve an Indian taxing ordinance, always, or do you rest on the IRA?

Alvin H. Shrago:

Your Honor, we rest really on both, and if I may explain that–

Byron R. White:

Well, on both, you don’t need the second if you are resting on the first.

It has always been true.

Is that it?

Alvin H. Shrago:

–At the time the IRA was enacted, the only cases, the only Attorney General opinions which had ever considered the Indian taxing powers were those involving four of the five civilized tribes of Oklahoma.

Each of these tribes had written languages and written constitutions, and it is our view that the Congress by enacting the Indian Reorganization Act of 1934 meant to encourage all Indian tribes, not just the five civilized tribes, to also adopt constitutions, and the Congress also placed into the Indian Reorganization Act of 1934 the standard or the notion of Secretarial review.

It is explicitly stated, Secretarial review of the tribal constitutions.

Warren E. Burger:

Your time has expired now.

Alvin H. Shrago:

Thank you.

Warren E. Burger:

Thank you, counsel.

Warren E. Burger:

The case is submitted.