Document: 336 U.S. 342 69 S.Ct. 561 93 L.Ed. 721 OKLAHOMA TAX COMMISSIONv.TEXAS CO. COMMISSION v. MAGNOLIA PETROLEUM Nos. 40 and 41. Argued Nov. 19, 1948. Decided March 7, 1949. Rehearing Denied April 25, See 958, 887. Mr. R. F. Barry, of Oklahoma City, Okl., for petitioner. B. W. Griffith, Tulsa, The Texas Co. Robert Richards, Magnolia Petroleum Justice RUTLEDGE delivered the opinion Court. 1 principal question is whether a lessee mineral rights in allotted restricted Indian lands immunized by Constitution against payment non-discriminatory state gross production taxes excise on petroleum produced from such lands. In effect issue this Court's previous decisions Howard Gipsy Oil Co., 247 503, 38 426, 62 1239; Large Howard, 248 549, 39 183, 63 416, State Barnsdall Refineries, 296 521, 56 340, 80 366, invalidating as applied to like lessees, have been so undermined later decisions, particular Helvering Mountain Producers Corp., 303 376, 58 623, 83 907, that they should now be overruled. 2 With certain exceptions,1 which was extracted sought taxed are held trust United States, pursuant allotments made under General Allotment Act,2 various members Pottawatomie, Apache, Comanche, Otoe Missouria Tribes.3 All located within at all material times were restricted4 alienation cestui owners without consent Secretary Interior.5 He approved each leases question. respondents Company (No. 40) 41) acquired their before levied assessments issue, either original lessees or assignment non-Indians who lessees. companies thus became right, title interest respective leases, subject only one-eighth royalty reserved lessors, assessments. It may taken operated conformity with applicable regulations Department Interior6 Oklahoma,7 except iin question.8 3 tax requires five per cent value production, including interests. imposed every person engaged petroleum, crude oil other oil, natural gas casinghead gas. exacted lieu its political subdivisions property minerals rights, producing machinery used connection any well, during year it produced, investment minerals, property. statute authorizes board equalization raise lower rate equate amount payable would if general ad valorem assessed producers taxation. board's changes review supreme court.9 consequence these provisions, has construed consistently courts lessee's property, not an occupation tax.10 4 one mill, formerly cent,11 barrel Oklahoma. enacted first 1933 defray expenses administering state's newly adopted proration law12 reenacted subsequent session legislature.13 tax, unlike Suprem Court oil. Refineries Tax Commission, 171 Okl. 145, 41 P.2d 918, affirmed, 366. 5 No. petitioner here, both less royalties lessors,14 September, October November, 1942. commission likewise taxes, royalties, Company's periods between June 1, 1942, 1946. orders entered after cases consolidated hearing heard it. 6 paid protest brought suit recover them trial court. After hearing, court sustained commission's demurrer company's amended petition ordered dismissed. Appeal duly 41, following different statutory procedure, appealed directly 7 Supreme Oklahoma, judge dissenting, invalid. rested flatly ground instrumentality Federal Government such, prior controlling Court, particularly Oil, cases, supra, question.15 case expressly distinguished decision related income there situated here. opinion, indicating writer's personal view reconsideration earlier well might sought, nevertheless stated: 8 'But thought beyond power engage reconsideration, cited higher authority far wholly sustain claim (the Company) immunity here involved. 9 'Upon questions federal law, citizens attorneys right rely upon our fixed duty follow leaving States Congress making necessary legal rules.' 10 From court's decisions16 Commission filed appeals We dismissed want jurisdiction. But treating applications certiorari,17 we granted writs argument. 333 870, 68 906, 907. Solicitor requested file brief amicus curiae. I. 11 course Choctaw, O. & G.R. Harrison, 235 292, 35 27, 59 234, decided 1914, 1936, problems taxation intergovernmental present seem solution well-settled fairly obvious principles. 12 long established owned private him performing services local taxes.18 And is, course, Territory Illuminating Board Equalization Tulsa County, 288 325, 53 388, 77 812. Both substance statute's explicit provisions consistent construction Court,19 so-called presently form carrying out contractual obligations produced. constitutionally impose form, levy being tentative measure To guard measure's utilized lay actually character, authorized, indeed required complaint, what taxation, provision judicial action. 13 Unembarrassed some therefore, Oklahoma's well-established line above.20 14 Moreover, even status instrumentalities, sense use term, fully conceded, seems difficult imagine how substantial interference functions developing leaseholds could flow requiring pay small exacts satisfy shares expense maintaining program. That system works respondents' benefit function, does producers, stabilizing eliminating waste, preventing runaway competition industry notorious those evils absence control. Cf. Railroad Rowan Nichols 310 573, 60 1021, 84 1368; Republic Natural Gas 334 62, dissenting Part III, 89, 972, 987. Indeed do exempt plan's regulatory features. They immune contributing support. As matter entirely fresh, contention weighty. II. 15 neither fresh. Each complicated squarely ruling invalid unconstitutional intrusions performance functions. Those explicitly strongly urged especially stricken foundation beneath latter no longer can stand reason consistency former. 16 true more recent pronouncements beaten large retreat prevailing ideas concerning breadth immunities run directions—to restrict scope persons seeking clothe themselves governmental character history immunity, aspects, represents rising expanding curve, tapering off into falling contracting one. 17 Our problem lies constitutional level. former specifically point, together ones deviating rationale. importance states' powers subjects impinge. though immediate closely policies ndian lands, equally tangent considerations affecting types situation raising immunity. For reasons will amiss consider context two conflicting courses decision. 18 Before turn survey, however, delimitations specific issues made. 19 These There possibility ultimate liability fall owner land. Wilson Cook, 327 474, 489, 66 663, 670, 90 793. Nor, noted, involve challenges Indian's share production.21 III. 20 Despite prospect reduce receive sale purchased becomes part mass must bear fair government. theoretical burden imposes regarded too remote indirect justify Government. City New Brunswick 276 547, 48 371, 72 693; Forbes Gracey, 94 762, 24 313; Tucker Ferguson, 22 Wall. 527, 805; see Weston Charleston, Pet. 449, 468, 481. Also noted above,22 party Where solely had removed leased stored tanks, Equalization, 812.23 equipment same sort exaction. Taber 300 57 334, 81 463. Thomas Gay, 169 264, 42 740, sustaining cattle grazing tribal Indians non-Indian cattle. 21 Anomalous light rulings evolution condemning forms direct than States. Private came 'federal instrumentalities' themselves, ranging net income. theory rejected analogous cases: A lessee, he lease, profits lease 'a hamper effort make best terms wards.' Gillespic 257 501, 506, 171, 173, 338. Alternatively, 'A them, destroy them.' 240 522, 530, 36 453, 456, 779. development progression 'from exemption * through new receipts serious impairment taxing Oklahoma.' Cohen, Handbook Law 257, n. 29(1942). outgrowth progressive extension early taxation.24 More immediately stems 'an employed control dependent race,' UnitedStates Rickert, 188 432, 437—439, 23 478, 480, 47 532. 1908 imposed, addition progenitor bearing label, state. Okla.Laws 1908, c. 71, Art. II, § 6. 1910 reenactment statute25 tax. McAlester-Edwards Coal Trapp, 43 510, 141 P. 794. statute, coal occupational supra. Next itself legislature revised 1915 again 1916, change taxes.26 tax.27 sub silentio invalidated memorandum opinions citing case, 416. 25 Suspicions overlooked fact rather taxes,28 dispelled Holmes' remark Gillespie pages 504—505, page 172, 338, noticed immaterial.29 If 'so interfere functions, saved because characterized.' James Dravo Contracting 302 134, 158, 208, 220, 82 155, 114 A.L.R. 318. 26 high-water mark 1922 when decision, derived sales his 27 last held, application rule strict congressional waivers, Congress' express waiver specified did extend taxes. challenge implied but pitched argument exemption.30 28 doctrine confer correlative state-owned place caused imposition observed '* effects government nondiscriminatory never considered adequate grounds aiding other.' Group Corp. Bass, 283 279, 282, 51 433, 75 1032. 29 Although turning point expansion permitted impair greater where, 'title' 'p ss' until ground. although Justices Brandeis, Stone, Roberts Cardozo contended principles reaffirmed majority Burnet Coronado 285 393, 52 443, 76 815, provided corollary case. This done holding barred 30 parallel privilege once accorded contractors with, agencies of, Government, Williams Talladega, 226 404, 33 116, 275, notwithstanding venerable contractor agency liable supra note 18. Decisions curtailing presaged Metcalf Eddy Mitchell, 269 514, 46 70 384. received consulting engineer temporary work. Equally significant Alward Johnson, 282 509, 273, 274, 496, 9, measured stage mails.31 31 Later 318; Silas Mason 186, 233, 187; contractor, Atkinson 20, 419, 621; purchases materials cost-plus contract Alabama King Boozer, 314 43, 86 3; Curry 14, 48, 9; severance severed timber pointed 32 Constitution, unaided Congressional legislation, (does prohibit) merely passed economically, otherwise, cost So enters normal incident organization territory independent sovereignties. asserted free spell paying added costs, attributable furnish supplies immunity.' 8—9, 45, 3. opportunity reexamine arose 1938 relies most secure reversal judgments cases. involved law proceeds school Wyoming. declined distinguish narrow available, taxpayer itself. 383, 626.32 34 Rather broader grounding, foundations decisions. 'The stated Holmes speaking leases' "a them,' 453 (at 456), 779,' 'upon (257 338.) needs nation, inquiry pressed conclusion basis *.' 384, 626. Noting limited strictly analogous,33 asserting 'the distinctions maintained attenuated teaching raised grave doubt supported,' 384—385, 627, went say: 37 'In numerous occasion declare competing principle, buttressed cogent considerations, crippled 'by extending laws, where laid instrumentality, remote, any, influence exercise government.' Willcuts Bunn, 216, 225, 125 (126), 127, 304, 71 1260, illustrations cited.' 385, 627. principle found require Rejecting insubstantial distinction based passage time compare reviewing denying claimed persons, 385—386, said: 'These variety enforce deem view—that gains operations cannot supported conceptions Regard effects.' 386, IV. Respondents urge effective since ent insist sharp drawn call l ssees function doing work Government.34 largely, altogether verbal, situations difference, overruled groundings permit limiting application.35 language quoted above nondiscriminatory. 'private persons' seek 'for lease.' perform operating hardly performed or, indeed, many stood identically respects. Moreover burdens likely appropriately judged 'regard effects,' inappropriately determined government,' case.36 True, say, step farther interfering production. depends levied. adaptation Marshall's oft-quoted aphorism McKenna 779, followed 505, namely, Chief Hughes rejoinder given another connection, while sits.' Panhandle Knox, 277 218, 223, 451, 857, 583. single paragraph challenged assumption 44 narrow, technical presumptive grounds. Its very repudiation bases securing broad exemptions, unjustified actual destructive government, national. result experience observation constant widening exempting process 45 Since reversed direction. True remains part. But, concerns claiming ordinary business (even activities), rest hypothetical interferences exemption. say remain others 'are harmony correct principle,' and, accordingly, be, are, accords reached Santa Rita 112 Mont. 359, 116 1012, 136 757. underlying supplied foundations, think imply, immunize permits action.37 shall extended essentially legislative character. created affirmative action,38 said implication resurrected implication.' 319 598, 604, 1284, 1286, 87 1612. Graves York ex rel. O'Keefe, 306 466, 595, 927, 120 1466: appears implying constituional assuming purpose create suggest, state, possible alternative support 'Congress acted exists unless waived,' several enactments Osages,39 Kaws,40 Quapaws,41 Five Civilized Tribes,42 authorize due account Indians' interest. enacting statutes removal cases; action occasioned favorable economic position Indians.43 resulting incidental legislation. Finally, refuse infer mere silence approval enunciated preclude case; accepted equanimity. Girouard 328 61, 69—70, 826, 829—830, 1084; 479—480, 597—598, 1466.44 49 Reversed remanded. 50 JACKSON concurs result. Interests hold kinds: (1) Undivided interests non-Indians; (2) (which still restricted) conveyed son allottee noncompetent deeds, Act 1907, Stat. 1018, U.S.C. 405, U.S.C.A. 405. February 8, 1887, amended, 331 et seq., seq. Apache Comanche tribes agreement 6, 1900, 676. Members Citizen Band Pottawatomie Tribe land 3, 1891, 1016. Allotments special agreement. Mills, Land Laws 438 (1924). nature described follows: retained title, giving paper writing, improperly called patent, showing future, President, entitled regular patent conveying fee.' 436, exceptions: immaterial instance 40, undivided 7/16th alienable non-Indians. 1/4th 1/3d deny portion However, conceded valid insofar owned, made, restriction. 389, 390, §§ 348, 349, 349. 108—109 (1942). Leases mining purposes Interior 783, 396, 396. 396d, 396d; C.F.R. 221.1—221.67. Okla.Stat. 81—286.17 (Conservation Gas), 291—303 (Regulation Inspection Wells) (Cum.Supp.1947); Order 1299—Cause 2935, Thirty-seventh Annual Report Corporation Comm'n Okla., 1944, p. 84. text excluded, irrelevant, evidence tendered show compliance regulations, introduced. three assigned Company. eight involved, lessors Tribes. assessment. notes 4. 821 (1941). (general) scheme falls day calendar month preceding month. purchaser pays sold authorized deduct settling producer (and applies him, 14). sold, himself (and, owner). id. 833. paramount lien 836. Of 78 treasury Ten county treasurer constitution maintenance highways. distribution among county's districts. remaining placed credit collection enforcement activities. 827 (Cum.Supp.1947). infra. period July 1943, Okla.Laws, 1941, tit. 68, 26, mill date, 26. act. acts. 1933, 131, 132; 1935, 59, 2; 1937, 1939, 66, 7; 26; 1945, 1947, 1220.1 receipts, collected manner (Cum.Supp.1947), deposited 'Conservation Fund' 'Interstate Compact Fund Id. 1220.3. cf. 13, provide, respect producer, monthly statement 'where facts based.' section establishing continuing Only rendered separate, unreported opinions. - —-,* —- —-.* denied Motion stay mandate pending date publication. judgment court' judgment, directions overrule 'and proceed views expressed.' On motion counsel modified provide reversed' 'final hereby plaintiff defendant sum sued for,' finality judgment. Pursuant 237(c) Judicial Code, 344(c), 2103, 2103. Thomson Pacific 579, 792; Union Pac. Peniston, 5, 787; Central People California, 162 91, 766, 903; Gromer Standard Dredging 224 362, 499, 502, 801; Mackey, 256 531, 535—537, 582, 583, 65 1076. text. infra, nless designed conceal distort unduly nature, customarily achieves avowedly laid, accomplish. American Mfg. St. Louis, 250 459, Hope Hall, 274 284, 639, 1049; Utah Power Light Pfost, 286 165, 548, 1038. ordinarily highest capable deciding binding e.g., Lodge, Knights Pythias Meyer, 265 30, 32—33, 885; Guaanty Trust Blodgett, 287 513, 244, 245, 463; Hartford Accident Indemnity N. Nelson 291 352, 358, 54 392, 394, 840. Galveston, H. S.A.R. Texas, 210 217, 227, 638, 640, 1031; Hanover Fire Insurance Harding, 272 494, 179, 372, 713; Carpenter Shaw, 280 363, 367—368, 121, 122—123, 74 478. nontaxable lessor's Choteau Burnet, 691, 1353; Superintendent Tribes Commissioner, 295 418, 55 820, 79 1517; Leahy Treasurer, 297 420, 507, 771. At Distinguishing Jaybird Mining Weir, 271 609, 592, 1112, lessor prepaid segregated. Kansas Indians, 737, 667; 761, 708. possessed attributes sovereignty. individual treaty homestead laws Act, op. cit. 257—258, 259—260. Lands outside reservation funds Shaw Gibson-Zahniser 575, 333, 709. exempted 1542, 188, limit homesteads, 412a, 412a. 260—261. legislation Commissioners Seber, 318 705, 920, 1094. 1910, 44, adding permitting tribe. 1915, 107, 2, subd. A; Further amendments 103, 4, O.S.1941, 821. 143, 163 537, curiam, 416; re Gross Production Wolverine 24, 154 L.R.A.1916F, 141, 1916 Act. Skelton Lead Zinc Co.'s 1919, 197 495, accord, Bergin 176, 199 209. E.g., Protest Bendelari, Agent, 97, 198 606. Meriwether Lovett, 166 73, 200; Royalty 177 238, 601; Peteet Carmichael, 191 593, 131 767. assumed difference opposite noticed. 495; capitulated Atchison, T. S.F.R. McCurdy, 148, 207 321. contemporary 125, capital gain resale municipal bonds taxable law. A. Jergins Trust, 508, 516, 439, 441, 925, city trust, stating circumstances disclosed.' Citing characterized corollary' 626, Among attempts 'true instrumentality' are: Buckstaff Bath House McKinley, 308 322; also 812, inconsistent ask us take. I incongruity perpetuate underscored withdrawing official salaries. Gerhardt, 304 969, 1427; 1466. generally, Powell, Waning Intergovernmental Immunities, Harv.L.Rev. 633; Remnant assert hypothetically instances margin successful unsuccessful operation. rental payments 189.16. Tribes, 183.24, 1928. curiae, states that, differences tracts reflected bonuses willing pay, exact comparison impossible. 160—161, 221, Pittman Home Owners Co p., 21, 15, 17—18, 11, 124 1263; Maricopa County Valley Nat. Bank, 357, 361, 587, 588, 834; 715—719, 925—927, 1094; 606 607, 1287—1288, 1612; Mayo 446, 1137, 1140, 1504, 147 761; Smith Davis, 323 111, 116—119, 157, 89 107. 255—256. 1250. stated, 176. 1248, 68. 496. H.R. Rep. 1377, 66th Cong., 3d Sess. 4; Rep 1278, 2—3; S. 704, (all relating Osage supra); 269, 68th 1st (both Kaw 431, 75th Sess.; Quapaw 1193, 70th 5; 982, Sess., 4—5 supra). recognized authorizing refund 'payment error therefore taxation.' 832. tell mention exclusively purport decide affords denies.

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