Kerr-McGee Corp. v. Navajo Tribe of Indians

Citations: 85 L. Ed. 2d 200; 105 S. Ct. 1900; 471 U.S. 195; 1985 U.S. LEXIS 2738; 53 U.S.L.W. 4451; 84 Oil & Gas Rep. 213Docket: 84-68

Court: Supreme Court of the United States; April 16, 1985; Federal Supreme Court; Federal Appellate Court

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The Supreme Court case Kerr-McGee Corporation v. Navajo Tribe of Indians addressed the legality of tax ordinances enacted by the Navajo Tribal Council. The ordinances imposed taxes on leasehold interests in tribal lands and on receipts from property sales and services conducted on those lands. Kerr-McGee, a mineral lessee, challenged the taxes in Federal District Court, claiming they were invalid without the Secretary of the Interior's approval. The District Court ruled in favor of Kerr-McGee, but the Court of Appeals reversed this decision, stating that no law required such approval.

The Supreme Court held that the Secretary's approval is not necessary for the Navajo Tribe to impose these taxes. Key points include:

1. The Indian Reorganization Act of 1934 does not condition tribal taxation power on the Secretary's approval, and it does not apply to tribes like the Navajo that opted out of its provisions.
2. The Indian Mineral Leasing Act of 1938 does not require the Secretary's approval for tribal taxes, as the Act distinguishes between a tribe's role in mineral leasing and its sovereign ability to tax.
3. Other federal statutes that require Secretary supervision do not limit the Navajo Tribal Council's authority to tax non-Indians, affirming the principle of tribal self-government, which includes the power to tax members and non-members alike.

The Court affirmed the Court of Appeals' decision, confirming the validity of the Navajo tax ordinances.

Petitioner, a significant mineral lessee on the Navajo Reservation, sought to invalidate Navajo taxes in the United States District Court for Arizona, claiming they required approval from the Secretary of the Interior. The District Court ruled in favor of the petitioner, permanently enjoining the Tribe from enforcing its tax laws. However, the Ninth Circuit Court of Appeals reversed this decision, stating that no federal law or principle mandated Secretarial approval for the Navajo's tax laws, referencing the case of Southland Royalty Co. v. Navajo Tribe of Indians.

The Supreme Court granted certiorari and ultimately affirmed the Ninth Circuit's decision. The ruling referenced Merrion v. Jicarilla Apache Tribe, asserting that the power to tax is a fundamental aspect of Indian sovereignty and self-governance. The central issue was whether Congress required Secretarial approval for Navajo tax laws. Petitioner argued that the Indian Reorganization Act of 1934 (IRA) implied such a requirement. While the IRA allows tribes to adopt constitutions with Secretarial approval, it does not stipulate that tax powers must be contingent upon it, particularly for tribes like the Navajo that opted out of the IRA provisions.

Historical practices showed that while some tribal constitutions included Secretarial approval requirements for tax laws, this was not universally mandated by Congress. The IRA did not limit the Navajos' pre-existing authority to levy taxes, as recognized in earlier congressional and Department of the Interior statements. Furthermore, tribes with constitutions that included Secretarial approval could amend them to remove such requirements, illustrating the autonomy of the Navajo Tribe in managing their tax laws without federal oversight.

The Indian Mineral Leasing Act of 1938 mandates Secretarial approval for leasing oil and gas interests on tribal lands, with operations governed by regulations from the Secretary of the Interior. However, the Secretary does not require approval of tribal tax laws related to mineral production, which the petitioner argues is inconsistent with the Act. The distinction between a tribe's commercial role and its sovereign role is emphasized, particularly in the context of imposing taxes on economic activities. The Secretary is not compelled to review tribal tax laws, as such a requirement is not necessary for achieving the Act's goal of maximizing tribal revenues. Additionally, existing statutes that require Secretarial supervision do not limit the Navajo Tribal Council's authority to tax non-Indians, as promoting tribal self-government is a federal priority. The legitimacy of the Navajo Tribal Council, an elected governing body, is recognized, and it has not been deemed necessary for its tax laws to undergo Secretarial review. The Ninth Circuit's judgment is affirmed, and other challenges presented by the petitioner were rejected without pursuit for review. The Navajo Tribe's choice not to adhere to the Indian Reorganization Act (IRA) is deemed irrelevant to the case. The Tribal Council, comprising 88 members elected every four years, reflects active participation from the tribal electorate, with notable turnout in recent elections.