IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

SOUTH POINT ENERGY CENTER LLC, Plaintiff/Appellant,

v.

ARIZONA DEPARTMENT OF REVENUE, et al., Defendants/Appellees.

No. 1 CA-TX 20-0004 

Appeal from the Arizona Tax Court

 No. TX2013-000522

TX2014-000451

TX2015-000850

TX2016-001228

TX2017-001744

TX2018-000019

TX2019-000086

(Consolidated)

The Honorable Christopher T. Whitten, Judge

AFFIRMED

COUNSEL

Lewis Roca Rothgerber Christie LLP, Phoenix

By Patrick Derdenger, Karen M. Jurichko Lowell

Co-Counsel for Plaintiff/Appellant

Dickinson Wright PLLC, Phoenix

By Bennett Evan Cooper, Vail C. Cloar

Co-Counsel for Plaintiff/Appellant

FILED 3-19-2024
2

Gammage & Burnham, P.L.C., Phoenix

By Cameron C. Artigue, Christopher L. Hering

Counsel for Defendants/Appellees Arizona Department of Revenue and Mohave 

County

Arizona Attorney General’s Office, Phoenix

By Kimberly J. Cygan

Counsel for Defendant/Appellee Arizona Department of Revenue

Arizona Attorney General’s Office, Phoenix

By Jerry A. Fries

Counsel for Defendant/Appellee Mohave County

Kewenvoyouma Law, PLLC, Tempe

By Verrin T. Kewenvoyouma, Christopher Love

Co-Counsel for Amici Curiae Fort Mojave Indian Tribe, et al.

Jenner and Block, LLP, Washington, D.C.

By Charles W. Galbraith, Pro Hac Vice

Co-Counsel for Amici Curiae Fort Mojave Indian Tribe, et al.

OPINION

Judge Cynthia J. Bailey delivered the opinion of the Court, in which 

Presiding Judge Paul J. McMurdie and Judge D. Steven Williams joined.

B A I L E Y, Judge:

¶1 Plaintiff South Point Energy Center, LLC (“South Point”) 

appeals the tax court’s summary judgment for the Arizona Department of 

Revenue (“ADOR”) and Mohave County (collectively, “the County”). 

South Point argues that the tax court erred in concluding that the County’s 

valuation and taxation of South Point’s electric power generating plant 

(“the Plant”) is not preempted under White Mountain Apache Tribe v. Bracker, 

448 U.S. 136 (1980). The issue comes to us on remand from the Arizona 

Supreme Court, which directed us to consider whether applying the Bracker

interest-balancing test evidences Congress’s implicit intent to preempt 

taxing the Plant—a question previously raised by South Point on appeal but 

not decided by this court. See S. Point Energy Ctr. LLC v. Ariz. Dep’t of 

Revenue (South Point I), 251 Ariz. 263, 268, ¶ 24 (App. 2021), vacated in part 
SOUTH POINT v. ADOR, et al.

Opinion of the Court

3

and remanded by S. Point Energy Ctr. LLC v. Ariz. Dep’t of Revenue (South Point 

II), 253 Ariz. 30, 39, ¶¶ 37–38 (2022). For the following reasons, we affirm 

the tax court, which correctly ruled that the Plant is not exempt from the 

County’s tax under Bracker.

FACTS AND PROCEDURAL HISTORY1

¶2 In 1999, Calpine Construction Finance Co. (“Calpine”), a nonIndian-owned entity, leased 320 acres of undeveloped land on a long-term 

basis from the Fort Mojave Indian Tribe (“the Tribe”) to build and operate 

the Plant on reservation land. Beginning operations in 2001, the Plant is a 

“merchant plant” that sells electrical energy to public and private utility 

companies for resale to end-users. It does not supply electrical power to 

the Tribe or any person or entity on the reservation. The Tribe did not 

finance the Plant and does not contribute any operating funds.

¶3 Mohave County then assessed ad valorem property taxes 

against the Plant based on valuations determined by ADOR. See former 

Ariz. Const. art. 9, § 2(13) (“All property in the state not exempt under the 

laws of the United States or under this constitution or exempt by law under 

the provisions of this section shall be subject to taxation to be ascertained as 

provided by law.”)2; accord Ariz. Rev. Stat. (“A.R.S.”) § 42-11002. ADOR 

assessed the value of the Plant itself and the personal property used to 

operate the Plant; ADOR did not assess the value of the underlying land.

¶4 Calpine paid the taxes and unsuccessfully sued for a refund, 

arguing the Tribe, as lessor, owned all improvements to the leased 

property, thereby exempting the Plant from state taxation according to 

federal law. See Calpine Constr. Fin. Co. v. Ariz. Dep’t of Revenue, 221 Ariz. 

244, 249, ¶ 22 (App. 2009); see also Cass Cnty. v. Leech Lake Band of Chippewa 

Indians, 524 U.S. 103, 110 (1998) (“State and local governments may not tax 

Indian reservation land ‘absent cession of jurisdiction or other federal 

1 The facts set out in this section are largely taken from our supreme court’s 

opinion in South Point II. See 253 Ariz. at 31–33, ¶¶ 2–8.

2 In the November 8, 2022 general election, voters approved Proposition 130 

to amend the Arizona Constitution with regard to property tax exemption 

provisions. Article 9, Section 2, of the Arizona Constitution was amended 

effective December 5, 2022, to reflect the results of the election, and Section 

2(A) now provides: “All property in this state that is not exempt under the 

laws of the United States or under this section is subject to taxation as 

provided by law.”
SOUTH POINT v. ADOR, et al.

Opinion of the Court

4

statutes permitting it.’” (quoting Cnty. of Yakima v. Confederated Tribes & 

Bands of Yakima Nation, 502 U.S. 251, 258 (1992))). On appeal, this court

acknowledged the general rule that a lessor owns all real property 

improvements made by a lessee, but concluded the parties’ lease varied that 

rule by providing that Calpine owned all improvements. Calpine Constr., 

221 Ariz. at 248, ¶¶ 16–17. Consequently, this court affirmed the tax court’s 

judgment that Calpine was liable for property taxes based on the value of 

the Plant and related personal property. See id. at 246, ¶ 1.

¶5 After a series of transactions involving Calpine and several of 

its related entities, the Tribe’s land and the Plant were sublet to South Point, 

another Calpine-related entity, with the Tribe’s consent and approval by 

the United States Bureau of Indian Affairs (“the BIA”). In 2012, the Tribe 

and Calpine’s successor-lessees, which are included in references to “South 

Point,” executed an amended lease that remained in place during this 

lawsuit. The amended lease provides that no partnership exists between 

the Tribe and South Point. The amended lease also reaffirms that the Plant 

and “all [i]mprovements and associated materials, supplies, and 

equipment” are “owned and controlled” by South Point, and that at the 

expiration of the lease, South Point must remove all above-ground real 

property improvements and personal property, excepting roads and 

foundations.

¶6 The amended lease contemplates that ad valorem property 

taxes may be assessed on the Plant. In addition, the amended lease requires 

South Point to timely pay all taxes levied by any governmental entity to 

prevent the imposition of any liens and to hold the Tribe harmless against 

any imposed liens. The BIA approved the amended lease.

¶7 South Point initiated these consolidated lawsuits seeking a 

refund of payments for property taxes imposed from 2010 to 2018, to the 

extent they were based on valuations of the Plant. See A.R.S. § 42-11005 

(authorizing a lawsuit to recover illegally levied, assessed, or collected 

taxes). South Point did not challenge the tax assessments based on 

ownership of the Plant, as Calpine did in its earlier lawsuit. Instead, South 

Point argued that § 5 of the Indian Reorganization Act of 1934 (“the Act”), 

see 25 U.S.C. § 5108 (former 25 U.S.C. § 465), expressly preempts states from 

imposing property taxes on any real property improvements, regardless of 

ownership, located on land held in trust by the federal government to 

benefit Indian tribes or individual Indians. Alternatively, South Point 

argued that applying the balancing test announced in Bracker demonstrates

Congress’s implicit intent to preempt taxing the Plant.
SOUTH POINT v. ADOR, et al.

Opinion of the Court

5

¶8 The tax court rejected both of South Point’s arguments and 

granted summary judgment for the County. We reversed, concluding § 5 

of the Act expressly and categorically exempted permanent improvements 

on the Tribe’s land from state taxation regardless of ownership. See South 

Point I, 251 Ariz. at 269, ¶ 30. We remanded for the tax court to conduct an 

analysis under Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975),3

to determine which, if any, of the assets making up the Plant constituted

permanent tax-exempt improvements. South Point I, 251 Ariz. at 269, ¶ 30. 

We did not apply the Bracker balancing test but directed the tax court to do 

so in considering whether property taxes on the Plant’s impermanent assets 

were preempted. Id.

¶9 The Arizona Supreme Court granted the County’s petition for 

review to decide whether the Act’s § 5 “expressly preempts taxing 

permanent improvements constructed on tribal lands acquired under that 

section when those improvements are owned by non-Indians.” South Point 

II, 253 Ariz. at 33, ¶ 9. The supreme court then vacated a portion of our 

opinion, holding that the Act does not expressly preempt Mohave County’s 

ad valorem property tax on the Plant. Id. at 31, 39, ¶¶ 1, 37–38. The court 

remanded the case to this court, see ARCAP 23(m)(2), to decide the 

remaining issue we had not addressed: “whether the tax court correctly 

ruled that the Plant is also not impliedly exempt from the County’s tax 

under Bracker,” South Point II, 253 Ariz. at 39, ¶ 37.

¶10 On remand, we ordered additional briefing by the parties and 

invited other interested parties to file amicus briefs, setting forth their 

respective positions on the issue.

4 We now address the question presented 

to us on remand, and after consideration of Bracker and its progeny, we 

affirm the tax court.

DISCUSSION

¶11 “We review the tax court’s entry of summary judgment de 

novo, viewing the facts in the light most favorable to South Point as the 

nonmoving party.” South Point II, 253 Ariz. at 33, ¶ 10 (citing Dinsmoor v. 

3 Whether an asset is a permanent improvement or personal property turns 

on the guidelines set out in Whiteco. See 65 T.C. at 672–73. See also PPL Corp. 

v. Comm’r, 135 T.C. 176, 193–97 (2010); Trentadue v. Comm’r, 128 T.C. 91, 99–

108 (2007).

4 At oral argument on remand, the parties agreed that we need not remand 

for a Whiteco analysis.
SOUTH POINT v. ADOR, et al.

Opinion of the Court

6

City of Phoenix, 251 Ariz. 370, 373, ¶ 13 (2021)). We will affirm if there is no 

genuine issue of material fact and the moving party is entitled to judgment 

as a matter of law. Id. (citing Dinsmoor, 251 Ariz. at 373, ¶ 13; Ariz. R. Civ. 

P. 56(a)).

¶12 Preemption is a question of law, and we can decide the issue 

“based on a de novo Bracker analysis of the record before us.” Seminole Tribe 

of Fla. v. Stranburg, 799 F.3d 1324, 1329 (11th Cir. 2015). The burden rests on 

South Point, as plaintiff, to prove implied federal preemption of state law. 

See Pickerel Lake Outlet Ass’n v. Day Cnty., 953 N.W.2d 82, 92, ¶ 23 (S.D. 2020).

¶13 Our primary goal in interpreting federal statutes is to 

determine and give effect to Congress’s intent. See Steven H. v. Ariz. Dep’t 

of Econ. Sec., 218 Ariz. 566, 570, ¶ 14 (2008) (citing federal cases). We read 

words within the statutory context and aim to bring about the plain, logical 

meaning of a statute unless doing so would bring about an absurd result. 

See Conroy v. Aniskoff, 507 U.S. 511, 515–16 (1993); Armstrong Paint & Varnish 

Works v. Nu-Enamel Corp., 305 U.S. 315, 332–33 (1938); Welch v. Cochise Cnty. 

Bd. of Supervisors, 251 Ariz. 519, 523, ¶ 11 (2021). If the language is 

ambiguous, we consider secondary interpretive principles, such as an act’s 

subject matter, history, and purpose, and the consequences of differing 

interpretations. See Conroy, 507 U.S. at 516–18; United States v. Am. Trucking 

Ass’ns, 310 U.S. 534, 543–44 (1940); Welch, 251 Ariz. at 523, ¶ 11.

¶14 By statute, the United States Secretary of the Interior can

acquire “any interest in lands, water rights, or surface rights to lands, within 

or without existing reservations . . . for the purpose of providing land for 

Indians.” 25 U.S.C. § 5108. This statute further provides that “[t]itle to any 

lands or rights acquired . . . shall be taken in the name of the United States 

in trust for the Indian tribe or individual Indian for which the land is 

acquired, and such lands or rights shall be exempt from State and local 

taxation.” 25 U.S.C. § 5108.

¶15 In South Point II, our supreme court determined that although 

§ 5 of the Act “preempts state and local taxes imposed on land and rights 

acquired by the Secretary of the Interior and titled in the name of the United 

States in trust for Indian tribes or individual Indians,” “[w]hen that lessee 

is a non-Indian, § 5 does not preempt a state or locality from taxing the 

improvements.” 253 Ariz. at 39, ¶ 36. Thus, under the facts present here, 

no express authorization for preemption exists under § 5 of the Act. But

express authorization is not necessarily required for preemption to apply. 

See Bracker, 448 U.S. at 144. “In the absence of express pre-emptive 

language, Congress’ intent to pre-empt all state law in a particular area may 
SOUTH POINT v. ADOR, et al.

Opinion of the Court

7

be inferred where the scheme of federal regulation is sufficiently 

comprehensive to make reasonable the inference that Congress ‘left no 

room’ for supplementary state regulation.” Hillsborough Cnty. v. Automated 

Med. Laboratories, Inc., 471 U.S. 707, 713 (1985) (quoting Rice v. Santa Fe 

Elevator Corp., 331 U.S. 218, 230 (1947)). We will not, however, lightly 

presume that preemption exists. See Washington v. Confederated Tribes of 

Colville Indian Rsrv., 447 U.S. 134, 155–56 (1980).

¶16 Bracker imposes a balancing test that applies when “a State 

asserts authority over the conduct of non-Indians engaging in activity on 

the reservation.” 448 U.S. at 144. To determine whether a state or local tax 

on non-Indians doing business on the reservation is preempted, a court 

undertakes a “particularized inquiry into the nature of the state, federal, 

and tribal interests at stake, an inquiry designed to determine whether, in 

the specific context, the exercise of state authority would violate federal 

law.” Id. at 145; accord Dep’t of Tax’n & Fin. of N.Y. v. Milhelm Attea & Bros., 

Inc., 512 U.S. 61, 73 (1994) (“Resolution of conflicts of this kind does not 

depend on ‘rigid rules’ or on ‘mechanical or absolute conceptions of state 

or tribal sovereignty,’ but instead on ‘a particularized inquiry . . . .’”

(quoting Bracker, 448 U.S. at 142, 145)). In balancing these interests, “[t]he 

traditional notions of Indian sovereignty provide a crucial ‘backdrop’ 

against which any assertion of State authority must be assessed,” as does 

the fact that “both the tribes and the Federal Government are firmly 

committed to the goal of promoting tribal self-government, a goal 

embodied in numerous federal statutes.” New Mexico v. Mescalero Apache 

Tribe, 462 U.S. 324, 334–35 (1983) (internal citations omitted). If the state 

authority “interferes or is incompatible with” federal and tribal interests, 

the state authority will be preempted, “unless the State interests at stake are 

sufficient to justify the assertion of State authority.” Id. at 334 (citations 

omitted).

¶17 In applying Bracker, courts must consider “(1) the extent of the 

federal and tribal regulations governing the taxed activity; (2) whether the 

‘economic burden’ of the tax falls on the tribe or the non-Indian individual 

or entity; and (3) the extent of the state interest in justifying the imposition 

of the taxes.” Ute Mountain Ute Tribe v. Rodriguez, 660 F.3d 1177, 1187 (10th 

Cir. 2011). A federal statutory scheme, agency regulations, and day-to-day 

agency supervision can “inform the federal and tribal interests” and “signal 

a federal regulatory scheme that is so pervasive that it preempts the state 

tax.” Seminole Tribe, 799 F.3d at 1337 (citing Bracker, 448 U.S. at 145–48). 

Further, a tax may be impermissible when “a number of the policies 

underlying the federal regulatory scheme are threatened” by its 

application, and the taxing authority is “unable to justify the taxes except 
SOUTH POINT v. ADOR, et al.

Opinion of the Court

8

in terms of a generalized interest in raising revenue.” Bracker, 448 U.S. at 

151.

¶18 Courts have applied the Bracker interest-balancing test in 

several circumstances involving the imposition of state or local taxes on 

non-Indians. See, e.g., Yavapai–Prescott Indian Tribe v. Scott, 117 F.3d 1107, 

1111–12 (9th Cir. 1997) (ruling against preemption of state transaction 

privilege taxes on lodging, food, and beverage sales on tribal land); Gila 

River Indian Cmty. v. Waddell, 91 F.3d 1232, 1236, 1239 (9th Cir. 1996) 

(allowing transaction privilege taxes on tickets and concessionary items at 

a raceway and concert center on tribal land); Salt River Pima–Maricopa Indian 

Cmty. v. Arizona, 50 F.3d 734, 736, 738 (9th Cir. 1995) (holding that taxes on 

sales to non-Indians by a non-Indian business on Indian land were not 

preempted). But see Ramah Navajo Sch. Bd., Inc. v. Bureau of Revenue of N.M., 

458 U.S. 832, 841–43 (1982) (holding that a tax imposed on the gross receipts 

that a non-Indian construction company received from a tribal school board 

for the construction of a school for Indian children on the reservation was 

preempted because the Interior Department had a detailed regulatory plan 

for Indian schooling and the State of New Mexico had declined to take any 

responsibility for the education of the Indian children).

¶19 None of the aforementioned cases dealt with a property tax 

like the one at issue, however. In Seminole Tribe, an Indian tribe sued the 

Florida Department of Revenue executive director, challenging the 

imposition of a rental tax on rent paid to the tribe by non-Indian lessees for

the use of commercial space at the tribe’s casinos. 799 F.3d at 1326–27. The 

11th Circuit Court of Appeals held that the tax was preempted, partly

because it was a tax on “a right in land” rather than a tax on economic 

activity or tangible property removed from the land. Id. at 1331–32. In 

effect, Seminole Tribe held that the leases were so connected to the land that 

their taxation amounted to taxation of the land itself. Id. at 1329, 1331. 

Similarly, in Confederated Tribes of Chehalis Reservation v. Thurston County 

Board of Equalization, the Ninth Circuit Court of Appeals barred property 

taxes on permanent improvements on non-reservation Indian trust lands.

724 F.3d 1153, 1159 (9th Cir. 2013).

¶20 This case is distinguishable from Seminole Tribe and Chehalis. 

Here, the amended lease provides that the Plant and related operating 

equipment are owned and controlled by South Point, which must remove 

all above-ground real property improvements and personal property, 

except roads and foundations, at the expiration of the lease. And neither 

the land itself nor South Point’s leasehold interest in the land is a factor in 

the tax because (1) in determining the tax, ADOR assessed only the value 
SOUTH POINT v. ADOR, et al.

Opinion of the Court

9

of the Plant itself and the personal property used to operate it and did not 

assess the value of the underlying land, and (2) the amended lease provides 

that no partnership exists between the Tribe and South Point. Since land 

owned by the Tribe is exempt from state property taxes, no portion of the 

fee interest, including South Point’s leasehold interest, is taxed.

¶21 South Point relies on United States Department of the 

Interior/BIA regulations—and specifically 25 C.F.R. § 162.017(a)—as

support for its preemption argument. Recently, the South Dakota Supreme 

Court upheld an ad valorem property tax assessed by a local taxing 

authority on non-Indian owners of structures and permanent 

improvements located on Indian trust land. See Pickerel Lake, 953 N.W.2d at 

85, ¶ 1.

5 In considering the extent of the regulations governing the taxed 

activity, the court rejected reliance on 25 C.F.R. § 162.017(a) as authority for 

implied preemption, concluding that “Congress has not authorized the BIA 

to preempt the State’s authority to tax structures owned by non-Indians.” 

Pickerel Lake, 953 N.W.2d at 92–93, ¶¶ 25–29; see also South Point II, 253 Ariz. 

at 39, ¶ 35 (holding that “the regulation itself [25 C.F.R. § 162.017(a)] cannot 

preempt the County’s tax” and “we have no need to defer to the 

Department of Interior’s interpretation” (citations omitted)). The Pickerel 

Lake court further concluded that any preemptive language in the federal 

regulations should have no impact on its analysis and found “little evidence 

of congressional intent to supersede the State’s authority.” 953 N.W.2d at 

93, ¶ 30 (citing Wyeth v. Levine, 555 U.S. 555, 576 (2009)); see also South Point 

II, 253 Ariz. at 39, ¶ 35 (“The Department of Interior has taken the position 

in other cases that ‘§ 162.017 has no legal effect at all,’ and . . . is ‘agnostic’

on whether any specific state tax is preempted.” (citing Desert Water Agency 

v. U.S. Dep’t of the Interior, 849 F.3d 1250, 1254–55 (9th Cir. 2017) (adopting 

the view that the phrase “[s]ubject only to applicable Federal law” in the 

regulation means subject to a Bracker analysis))).

¶22 The court also reasoned that although the federal government 

retains exclusive power to regulate Indian affairs, it “has asserted little to 

no regulatory power in the area of state-imposed ad valorem taxes on 

structures owned by non-Indians,” and “[i]t is generally within the 

5 The court applied what it deemed a “standard preemption analysis”

rather than a Bracker analysis after noting (1) the parties agreed Bracker did 

not apply, (2) the Tribe had not intervened, and (3) the record contained no 

evidence that (a) tribal interests weighed against the county’s taxation 

authority with respect to non-Indian lessees, (b) the county’s separate ad 

valorem tax affected the Tribe’s ability to lease the land, or (c) the taxes had

otherwise impacted tribal interests. Pickerel Lake, 953 N.W.2d at 88, ¶ 12.
SOUTH POINT v. ADOR, et al.

Opinion of the Court

10

province of the State to assess property taxes.” Pickerel Lake, 953 N.W.2d at

94, ¶ 31 (citations omitted). The court noted that courts “presume that 

‘Congress does not intend to pre-empt areas of traditional state 

regulation,’” and “assume the State retains its historic power to regulate by 

imposing state and local taxes.” Id. (citations omitted). Finally, in 

concluding that implied preemption did not apply, the Pickerel Lake court 

held: “Because there is little or no federal regulatory scheme in place with 

respect to property taxes, and because the State’s taxation does not 

implicate Indians or their tribes, thereby implicating federal law, the State’s 

assessment of nondiscriminatory ad valorem property taxes against 

structures owned exclusively by non-Indians [on Indian trust land] is not 

[impliedly] preempted by federal law.” Id. at ¶ 32. See also N. Border Pipeline 

Co. v. State, 772 P.2d 829, 835 (Mont. 1989) (upholding a state property tax 

on a pipeline crossing tribal land); Thomas v. Gay, 169 U.S. 264, 273–74 (1898)

(holding that Oklahoma could tax cattle owned by non-Indian lessees of 

Indian land and rejecting the suggestion that the tax constituted a tax on the 

land); Utah & N. Ry. Co. v. Fisher, 116 U.S. 28, 29–30, 33 (1885) (upholding a 

territorial tax of a section of a non-Indian’s railroad that crossed onto 

reservation land, reasoning that the tax did not interfere with tribal

sovereignty).6

¶23 The truisms relied on by the Pickerel Lake court apply here as 

well, and South Point points to nothing about the federal regulation of 

power plants that is more extensive or intensive when a plant is on tribal 

land or how a particularized inquiry into the nature of the federal, tribal, 

and state interests at stake leads to the conclusion that the tax is preempted.

See generally Ute Mountain Ute Tribe, 660 F.3d at 1187. As the tax court noted, 

the pervasiveness of federal regulation of tribal leases is immaterial because 

no aspect of the lease is subject to tax, and federal regulation of power 

plants applies to all power plants regardless of their location; thus, if state 

or local taxation of power plants on reservations is preempted, state 

taxation on every other power plant would also be preempted.

¶24 As for whether the economic burden of the County’s property 

tax falls on the non-Indian entity (South Point) or the Tribe, see id., it is clear 

the tax is being levied on the Plant and related improvements, all of which 

are wholly and separately owned by South Point, and not on the land, 

which the Tribe owns, and that no partnership exists between South Point 

6 Bracker cited both Thomas and Fisher but did not overrule either case. See

448 U.S. at 142, 145; see also Mashantucket Pequot Tribe v. Town of Ledyard, 722 

F.3d 457, 472 (2d Cir. 2013) (concluding that “Thomas [and other pre-Bracker

non-Indian lessee cases] inform[]” but do not forgo a Bracker analysis).
SOUTH POINT v. ADOR, et al.

Opinion of the Court

11

and the Tribe. Thus, South Point is the actual taxpayer and bears the tax’s 

legal incidence. See Circle K Stores, Inc. v. Apache Cnty., 199 Ariz. 402, 407,

¶ 13 (App. 2001). Moreover, the United States Supreme Court has rejected 

the argument that when the federal government’s or a tribe’s interest in 

economic development on reservations—and the associated profitability 

that comes with that interest—might be indirectly affected, that indirect 

burden supports granting non-Indian contractors immunity from state or 

local taxation:

It is, of course, reasonable to infer that the existence of the 

state tax imposes some limit on the profitability of Indian oil 

and gas leases—just as it no doubt imposes a limit on the 

profitability of off-reservation leasing arrangements—but 

that is precisely the same indirect burden that we rejected as 

a basis for granting non-Indian contractors an immunity from 

state taxation in Helvering v. Mountain Producers Corp., 303 U.S. 

376 (1938); Oklahoma Tax Comm’n v. United States, 319 U.S. 598 

(1943); Oklahoma Tax Comm’n v. Texas Co., 336 U.S. 342 (1949); 

Moe v. Confederated Salish and Kootenai Tribes of Flathead 

Reservation, 425 U.S. 463 (1976); and Colville, 447 U.S. at 134.

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 191 (1989) (citations 

cleaned up); accord Waddell, 91 F.3d at 1239 (concluding that indirect 

economic effects, including those flowing from double taxation, were 

insufficient grounds to preempt a state tax). As the Supreme Court 

previously stated in Colville, “We do not believe that principles of federal 

Indian law, whether stated in terms of pre-emption, tribal self-government, 

or otherwise, authorize Indian tribes thus to market an exemption from 

state taxation to persons who would normally do their business elsewhere.”

447 U.S. at 155.

¶25 Moreover, no salient argument exists that should the property 

tax not be paid, the State could impose a tax lien on the underlying real

property, thereby damaging the Tribe. We cannot see how a tax lien could 

be imposed on land exempt from taxation, and A.R.S. § 42-17153 provides 

that “a tax that is levied on real or personal property is a lien on the assessed 

property.” (Emphasis added.) Under the amended lease, South Point’s 

property never becomes part of the land, so the Tribe’s land is not part of 

the assessed property.

¶26 Finally, as to the extent of the state interest in justifying the 

imposition of the taxes, see Ute Mountain Ute Tribe, 660 F.3d at 1187, we 

conclude that although South Point demands few direct services from the 
SOUTH POINT v. ADOR, et al.

Opinion of the Court

12

state or Mohave County, there has also been no complete declination of 

responsibility for services as found to exist in Ramah Navajo School Board, see

458 U.S. at 843–45, cited in Cotton Petroleum, 490 U.S. at 184–87. As the Cotton 

Petroleum court recognized, there is no “proportionality requirement”

imposed on the taxing authority, and preemption should occur only when 

there has been a “complete abdication or noninvolvement” by the state or 

County. 490 U.S. at 185.

¶27 Here, the tax revenue supports local services that help South 

Point, its employees, and the Tribe, including “services on the reservation” 

and “services off the reservation that benefit the reservation and members 

of the Tribe.” See id. at 171 n.7, 185 (relying on the trial court’s factual 

findings to distinguish the case from Bracker and Ramah Navajo School

Board). For example, the tax revenue supports the local school districts, and 

both tribal-member children and children of South Point non-Indian 

employees attend schools in these districts. See N. Border Pipeline, 772 P.2d 

at 835 (finding no preemption because “the State’s interest in funding the 

school districts involved here and providing local services outweighs the 

federal/tribal interests asserted”). Additionally, the tax helps Mohave 

County maintain roads that provide important and commonly used access 

to the Plant. Revenue from the tax also supports numerous other state and 

County services—some of which aid the reservation—including flood 

control, law enforcement and emergency planning, local fire districts, 

libraries, the County Recorder, and the Arizona Corporation Commission’s 

oversight and inspection of the pipelines used to fuel the Plant. A 

substantial state interest exists justifying the imposition of the taxes, and 

the funding of these numerous services militates against finding an implied 

preemption of the County’s tax. Accordingly, application of the interestbalancing test announced in Bracker does not establish Congress’s implicit 

intent to preempt taxing the Plant.

CONCLUSION

¶28 We affirm the tax court, which correctly ruled that the Plant 

is not impliedly exempt from the County’s tax under Bracker.