Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-95-02033/USCOURTS-ca10-95-02033-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

---

Patrick Fisher 

Clerk 

UNITED STATES COURT OF APPEALS 

Tenth Circuit 

Byron White United States Courthouse 

1823 Stout Street 

Denver, Colorado 80294 

(303) 844-3157 

April 23, 1996 

Elisabeth A. Shumaker 

Chief Deputy Clerk 

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION 

RE: 95-2033, Texaco, Inc. v. Hale 

April 8, 1996 by Judge Porfilio 

Please be advised of the fillowing correction to the captioned decision: 

Page 2, counsel for the defendants-appellees name is incorrectly listed as Lisa M. 

Enbfield and should be corrected to read Lisa M. Enfield. 

Please make this correction to your copy. 

Very truly yours, 

Patrick Fisher, 

Clerk 

By~cL~~ 

Barbara Schermerhorn 

Deputy Clerk 

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 1 
PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

TEXACO, INC.; TEXAS-NEW MEXICO 

PIPELINE, 

Plaintiffs-Appellants, 

v. 

ALBERT HALE, successor to Peterson 

Zah as President of the Navajo Nation; 

DAVID C. BRUNT, successor to 

Nelson Gorman and Stella Saunders as 

Commissioner of the Navajo Tax 

Commission; VICTOR JOE, successor to 

Nelson Gorman and Stella Saunders as 

Commissioner ofNavajo Tax 

Commission; BRUCE KEIZER, successor 

to Nelson Gorman and Stella Saunders as 

Commissioner of the Navajo Tax 

Commission; JOE SHIRLEY, successor 

to Nelson Gorman and Stella Saunders as 

Commissioner of the Navajo Tax 

Commission; LEE BERGEN, successor to 

Nelson Gorman and Stella Saunders as 

Commissioner of the Navajo Tax 

Commission; DERRICK WATCHMAN, 

member, Navajo Tax Commission; 

STEVEN BEGAY, successor to Derrick 

Watchman as Executive Director of the 

Navajo Tax Commission, 

Defendants-Appellees. 

No. 95-2033 

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 2 
• 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW MEXICO 

(D.C. No. CIV-87-0124 JC) 

Bradford C. Berge, Campbell, Carr & Berge, P.S., Santa Fe, New Mexico, for PlaintiffsAppellants. 

Paul E. Frye (Lisa M. Enbfield; Herb Yazzie, Attorney General; Marcelino R. Gomez; 

and C. Joseph Lennihan, Navajo Nation Department of Justice, with him on the 

briefs), Nordhaus, Haltom, Taylor, Taradash & Frye, LLP, Albuquerque, New Mexico, 

for Defendants-Appellees. 

Before PORFILIO, MCWILLIAMS, and ALARCON; Circuit Judges. 

PORFILIO, Circuit Judge. 

·Honorable Arthur L. Alarcon, Senior Circuit Judge for the United States Court of 

Appeals for the Ninth Circuit, sitting by designation. 

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 3 
This case involves the application of the tribal exhaustion 

doctrine to a taxation dispute involving land located outside 

Navajo Reservation borders but within Navajo Indian Country. 

Texaco, Inc. and Texas-New Mexico Pipeline (Appellants) seek 

federal declaratory relief against the Navajo Tax Commission and 

officials of the Navajo Tribe and the Navajo Tax Commission (the 

Tribe). We considered a prior appeal by Appellants in Texaco, Inc. 

v. Zah, 5 F.3d 1374 (lOth Cir. 1993) (Zah I), and remanded the case 

to the district court with specific instructions. Here, following 

the district court's reconsideration of the issues on remand, 

Appellants appeal the second dismissal of their claim. We affirm. 

Appellants conduct business activities within Navajo Indian 

Country. 1 Since 1978, the Tribe has imposed an Oil and Gas 

Severance Tax on Texaco and a Business Activity Tax on Texas-New 

Mexico Pipeline for their activities occurring within Navajo Indian 

Country but outside the formal boundaries of the Navajo 

Reservation. In 1987, Appellants filed suit in the United States 

District Court for the District of New Mexico seeking a declaratory 

injunction to prohibit Tribal taxation of Appellants' business 

1

Texaco possesses several mineral leases within Navajo Indian Country while Texas-New 

Mexico Pipeline owns and operates an interstate pipeline crossing Navajo Indian Country. 

-3-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 4 
activities occurring outside the formal boundaries of the Navajo 

Reservation. However, the district court dismissed Appellants' 

complaint without prejudice after finding Appellants failed to 

exhaust tribal remedies before seeking a federal forum. 

In Zab I, we considered two issues. First, Appellants 

contended the Tribe lacked jurisdiction to hear the dispute. We 

rejected that argument, holding "whether tribal courts have 

jurisdiction over non-Indians in civil cases 'should be conducted 

in the first instance in the Tribal Court itself,'" Zab, 5 F.3d at 

1376 (quoting National Far.mers Union Ins. Cos. v. Crow Tribe of 

Indians, 471 U.S. 845, 856 (1985)), unless one of the three 

exceptions to the tribal exhaustion rule is applicable. 2 We 

further held those exceptions were inapplicable to Appellants' 

case. 

Second, Appellants' argued even if the Tribe had jurisdiction, 

the federal court should not have been deprived of its jurisdiction 

to determine the propriety of taxing Appellants' activities 

occurring outside the Navajo Reservation. In response, we noted 

2 In National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985), 

the Supreme Court held tribal courts should determine whether they have jurisdiction over nonIndians in civil cases unless the "assertion of trial jurisdiction 'is motivated by a desire to harass 

or is conducted in bad faith,' or where the action is patently violative of express jurisdictional 

prohibitions, or where exhaustion would be futile because of the lack of an adequate opportunity 

to challenge the court's jurisdiction." ld. at 856 n.21 (citations omitted). 

-4-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 5 
the importance of comity and referred to the federal concerns 

behind the tribal exhaustion rule. We then stated, in reference to 

activities arising on reservation lands, "we have characterized the 

tribal exhaustion rule as 'an inflexible bar to consideration of 

the merits of the petition by the federal court.'" Zah, 5 F.3d at 

1378 (quoting Granberry v. Greer, 481 U.S. 129, 131 (1987)). 

However, we further noted: 

When the dispute involves non-Indian activity occurring 

outside the reservation the policies behind the 

tribal exhaustion rule are not so obviously served. 

Under these circumstances, we must depend upon the 

district courts to examine assiduously the National 

Far.mers factors in determining whether comity requires 

the parties to exhaust their tribal remedies before 

presenting their dispute to the federal courts. 

Id. Because the district court failed to examine those factors, we 

were unable to determine whether the district court abused its 

discretion. As a result, we vacated the district court's order and 

remanded the case "for further examination of the comity factors 

articulated in National Far.mers." Id. Those factors are: (1) 

furtherance of "the congressional policy of supporting tribal selfgovernment;" (2) promoting the "orderly administration of justice;" 

and (3) obtaining "the benefit of tribal expertise." Id. at 1377-

78 (citing National Far.mers, 471 U.S. at 856-57). 

On remand, after making a point by point analysis of the 

- 5-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 6 
National Far.mers factors, the district court concluded abstention 

was appropriate and again dismissed Appellants' case. Appellants 

now appeal, contending, despite the limited remand in Zab I, the 

district court's decision must be reversed for three reasons. 

First, they assert the district court's National Far.mers analysis 

was improper. Second, they argue the district court erred in 

assuming Appellants consented to tribal jurisdiction. Third, they 

maintain the district court, and this court in Zab I, erroneously 

held Indian Country defined the boundaries of the Tribe's civil 

jurisdiction. 

We start from the premise that the scope of the district 

court's jurisdiction was narrow following remand. The only matter 

returned to the district court was the "assiduous examination" of 

the National Far.mers comity factors. Cf. Sierra Club v. Lujan, 949 

F.2d 362, 365 {lOth Cir. 1991) {a limited remand circumscribes the 

scope of the issues for litigation to those defined in the remand 

order) . Likewise, the only issue before us is whether that 

examination was performed. 

Appellants argue the district court could not properly analyze 

the National Far.mers factors on remand without an evidentiary 

hearing and further discovery because there were factual issues in 

dispute. Quoting Williamson v. Tucker, 645 F.2d 404, 414 (5th 

-6-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 7 
Cir.), cert. denied, 454 U.S. 897 (1981), Appellants contend, when 

faced with a motion to dismiss raising factual issues, "the 

plaintiff should have an opportunity to develop and argue the facts 

in a manner that is adequate in the context of the disputed issues 

and evidence." Here, Appellants assert they "vigorously contested" 

the Tribe's allegation that all of their business activities 

occurred within Indian Country. Appellants also contend they 

contested the Tribe's allegation that Appellants consented to 

tribal jurisdiction by contract. Under this court's decision in 

Pittsburgh & Midway Coal Mining Co. v. Watchman, 52 F.3d 1531 (lOth 

Cir. 1995), Appellants argue the district court was required to 

allow further development of the facts to determine whether any of 

the dispute occurred in Indian Country and the extent to which the 

dispute lay within an independent Indian community. 

These questions, however, were not within the scope of the 

remand. The case was not postured as though the district court was 

just commencing consideration of a motion to dismiss. More 

importantly, however, in Zah I, Appellants conceded the disputed 

land fell within the definition of Navajo Indian Country as well as 

Indian Country. Zah, 5 F.3d at 1376, n.3. 

Nevertheless, Appellants now argue Watchman required the 

district court to make preliminary factual findings which, in turn, 

-7-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 8 
required further discovery in this case. Even though we stated in 

Watchman, "the application of the [tribal abstention] doctrine may 

differ outside the formal boundaries of a reservation," Watchman, 

52 F.3d at 1537, we also noted, "[t]he facts and circumstances of 

each individual situation will determine whether comity requires 

abstention in that particular instance." Id. 

Contrary to the circumstances of this case, however, in 

Watchman, one of the issues contested throughout the proceedings 

was whether the area subject to Indian taxation was Indian Country. 

Naturally, on remand the district court was instructed to determine 

the appropriate community of reference and to make detailed factual 

findings to determine whether the area .was in fact a dependent 

Indian community. Id. at 1546. Thus, under the circumstances, it 

was appropriate in Watchman for the district court to further 

develop the facts to reach its conclusion on remand. 

In this case, however, the district court was not required to 

further develop the facts because they had been conceded in Zab I. 

Moreover, even in their original complaint Appellants did not seek 

a declaration of what portion of the land constituted Indian 

Country. The relief they sought was a declaration that "the 

imposition and enforcement of the Navajo Oil and Gas Severance Tax 

and the Navajo Business Activities Tax on Plaintiffs' activities 

- 8-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 9 
beyond the borders of the Navajo Reservation [is] illegal, invalid 

and void." 

We believe the circumstances of this case make Watchman 

inapposite. In short, Watchman simply does not require factfinding hearings when the operative fact issues have been resolved 

through other means. 

Appellants make no other challenge to the district court's 

National Farmers analysis. Our review of the district court' s 

careful and detailed consideration of the circumstances leads us to 

conclude its judgment is free of error on this issue. 

Appellants next argue the district court erroneously assumed 

certain facts as true. We review the district court's factual 

findings for clear error. Steiner Corp. Retirement Plan v. Johnson 

& Higgins of California, 31 F.3d 935, 939 (lOth Cir. 1994), cert. 

denied, 115 S.Ct. 732 (1995). "A finding of fact is 'clearly 

erroneous' if it is without factual support in the record or if the 

appellate court, after reviewing all the evidence, is left with a 

definite and firm conviction that a mistake has been made." Raydon 

Exploration, Inc. v. Ladd, 902 F.2d 1496, 1499 (lOth Cir. 1990). 

Appellants contend the district court erred in assuming all of 

their activities occurred within Indian Country. Appellants argue 

they sought to show the district court, on remand, that some of 

-9-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 10 
their business is conducted on land that is not part of a dependent 

Indian community. Appellants also assert Indian Country is not 

synonymous with Navajo Indian Country. However, as discussed 

above, this is a latter day change of position from Appellants' 

previous concession that the disputed land was within the 

definition of both Navajo Indian Country and Indian Country. Even 

had the scope of the remand allowed the district court to consider 

this issue, it was entitled to rely upon Appellants' concession, 

and they are now without a basis for objection. 

Appellants also assert the district court erred in assuming 

Appellants entered contractual relationships with the Tribe and 

"acknowledged the authority of Navajo Law and its application to 

the extraction activities." Appellants argue the contracts were 

limited to activities and facilities within the Navajo Reservation. 

Nevertheless, the Tribe points to contractual language in which 

Texas-New Mexico Pipeline agreed to resolve disputes by applying 

"the laws of the Navajo Nation ... in the conduct of all activities 

of [Texas-New Mexico] within the Navajo Nation." Again, this issue 

is beyond the scope of the remand. Nevertheless, the district 

court did not, as suggested by Appellants, find Texaco was a party 

to this agreement. The court simply viewed the agreement as 

"another consideration" for determination of the Tribe's taxing 

- 10-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 11 
• 

power. The district court further found, although that agreement 

did not include Texaco, the business dealings of both Texaco and 

Texas-New Mexico Pipeline with the Tribe, including mineral leases 

with individual Navajo allotment owners, were sufficient to subject 

Texaco to the jurisdiction of the Navajo Nation as well. 

After viewing the record as a whole, we conclude there is 

factual support for the trial court's findings on both issues. The 

district court did not clearly err. 

AFFIRMED. 

- 11-

Appellate Case: 95-2033 Document: 01019279250 Date Filed: 04/08/1996 Page: 12