Opinion ID: 221996
Heading Depth: 3
Heading Rank: 2

Heading: Historical Backdrop of Tribal Sovereignty

Text: We look next to the historical backdrop of relevant tribal sovereignty in the field at issue viz., in the field of oil and gas leasing on treaty and statutory reservations. In Cotton Petroleum, the Supreme Court found that there was no history of tribal independence from taxation to serve as a backdrop to the analysis because, at least as to Executive Order reservations, state taxation of nonmember oil and gas lessees was the norm from the very start. 490 U.S. at 182, 109 S.Ct. 1698. The Ute Reservation, however, is a treaty and statutory reservation. Congress first authorized mineral leasing on statutory and treaty reservations in 1891. See Act of Feb. 28, 1891 (1891 Act), ch. 383, 26 Stat. 795 (codified at 25 U.S.C. § 397). At that time, the doctrine of intergovernmental tax immunity was the prevailing law, under which States were powerless to impose severance taxes on oil produced on Indian reservations unless Congress expressly waived that immunity. Cotton Petroleum, 490 U.S. at 181, 109 S.Ct. 1698 (discussing Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338 (1922)). Congress acted to expressly waive that immunity in regard to oil and gas lessees on tribal lands through the Act of May 29, 1924 (1924 Act), ch. 210, 43 Stat. 244 (codified at 25 U.S.C. § 398), which in clear language authorized states to tax oil and gas operations on treaty and statutory reservations. See 25 U.S.C. § 398 (stating that the production of oil and gas and other minerals on [tribal lands subject to lease for mining purposes] may be taxed by the State in which said lands are located in all respects the same as production on unrestricted lands). Therefore, as the district court noted, oil and gas leases on treaty reservations were immune from state taxation from 1891 until 1924, more than three decades of complete independence from state taxation. See, e.g., British-Am. Oil Producing Co. v. Bd. of Equalization of Mont., 299 U.S. 159, 163-66, 57 S.Ct. 132, 81 L.Ed. 95 (1936) (holding that the State of Montana, under the explicit authority of the 1924 Act, could impose a tax on non-Indian oil and gas lessees operating on tribal land, where the leases were entered into under that Act). After the 1924 Act was passed, oil and gas leases on statutory and treaty reservations were expressly subject to state taxation; that is, in complete contrast to the previous era of tax immunity, oil and gas operations on statutory and treaty reservations were wholly exposed to state taxation. [24] This era of waived immunity lasted until 1938a period of approximately fifteen yearswhen Congress enacted the IMLA, which, as discussed supra, neither expressly permits state taxation nor expressly precludes it. Cotton Petroleum, 490 U.S. at 177, 109 S.Ct. 1698. As we have previously concluded, neither the IMDA nor any other federal statute has materially altered the relevant taxation landscape since that time. Therefore, since 1938, oil and gas lessees operating on Indian reservations have been subject to nondiscriminatory state taxation, as long as Congress has not acted to expressly or impliedly preempt such taxation. See id. at 182-83, 109 S.Ct. 1698; see also R. at 225 (observing that after the IMLA was enacted in 1938, state taxation of leases was neither expressly authorized by Congress nor expressly prohibited under the Supreme Court's doctrine). Unlike executive reservationswhich had no history of tribal independence from state taxation of [oil and gas] lessees, Cotton Petroleum, 490 U.S. at 182, 109 S.Ct. 1698treaty and statutory reservations were immune from state taxation from 1891 to 1924, more than three decades. The district court concluded that this `important backdrop' of Tribal sovereignty... acts as a thumb on the scales in favor of the [Ute Tribe] that the United States Supreme Court in Cotton Petroleum did not afford the Jicarilla Apache Tribe. R. at 225-26. The district court was correct in noting that this historical backdrop of relevant tribal sovereigntynamely, the period of tax immunity from 1891 until 1924was not present in Cotton Petroleum. However, unlike the district court, we do not consider this distinction, as a legal matter, to be so significant as to tilt the scales in the Tribe's favor. As stated above, since the period of complete immunity from state taxation ended in 1924, for a period of more than eight decades, oil and gas lessees on statutory reservations have been either expressly subject to state taxation or have been subject to such taxation absent clear congressional disapproval. In other words, a review of the relevant history of taxation in this field demonstrates that for the lion's share of that history, state taxation has been permitted to some extent. Although this historywhich includes a shorter period of immunity followed by a much longer period of exposure to taxationis relevant and should be taken into consideration, we do not find that the scales, as the district court put it, are tipped significantly in the Tribe's favor. That is, we do not find that this backdrop weighs heavily in favor of a finding of preemption, particularly when viewed in conjunction with the remainder of our analysis. See Rice, 463 U.S. at 720, 103 S.Ct. 3291 (If ... we determine that the balance of state, federal, and tribal interests so requires, our pre-emption analysis may accord less weight to the `backdrop' of tribal sovereignty. (citing Washington, 447 U.S. at 154-59, 100 S.Ct. 2069; Jones, 411 U.S. 145, 93 S.Ct. 1267)).