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Indian Nations Law Update - August 2011

August 11, 2011

Tenth Circuit Rules Against Ute Mountain Tribe in Tax Case

In Ute Mountain Ute Tribe v. Rodriguez, 2011 WL 3134838 (10th Cir.), The Ute (Tribe) generated revenue from oil and gas operations on its reservation through royalties and taxes. The Tribe sued the New Mexico in federal court, challenging the state's right to impose five additional taxes on reservation operators, including an oil and gas severance tax, oil and gas conservation tax, oil and gas emergency school tax, oil and gas ad valorem production tax, and oil and gas production equipment ad valorem tax. The Tribe had previously enacted a resolution that, in the event the state taxes were invalidated, its tribal own taxes would automatically increase in the amount of the disallowed state taxes. The Tribe argued that the state's taxes infringed its right of self-governments and that they were preempted by federal laws promoting self-determination and regulating mineral extraction on reservations.

Applying the balancing test prescribed by the Supreme Court in White Mountain Apache v. Bracker, a panel of the Tenth Circuit, by a 2-1 decision, upheld the state taxes, holding that (1) the focus of the "particularized inquiry" was (a) the extent of the federal and tribal regulations governing the taxed activity; (b) whether the "economic burden" of the tax fell on the tribe or the non-Indian individual or entity; and (c) the extent of the state interest justifying the imposition of the taxes; (2) the federal regulatory framework was largely the same as the regulatory scheme at play in the Supreme Court's 1989 decision upholding the taxes in Cotton Petroleum Corp. v. New Mexico, (3) though the federal regulations governing oil and gas operations on the Ute Reservation, including the Indian Mineral Leasing Act of 1938 and the Indian Mining Development Act of 1982, were "extensive," they were not "exclusive" for purposes of the Bracker balancing of interests, (4) the economic burden of the taxes fell on the non-Indian operators because they were not directly passed on to the Tribe, (5) indirect economic burdens on the Tribe's ability to increase its own taxes and attract new leases were not a proper justification for finding that the taxes are preempted, (6) the State-subsidized off-reservation infrastructure used to transport the oil and gas after it was severed from the reservation, including the roads used for transport and the authority provided to pipeline companies to construct and maintain pipelines, "substantially" contributed to the economic value of the resources extracted on the reservation and served as a "legitimate and important justification" for the imposition of the state's taxes. Finally, the court concluded that "there is no record evidence that the imposition of the five New Mexico taxes substantially interferes with the Ute Tribe's ability to govern itself."

In dissent, Judge Lucero argued that (1) the Tribe had adequately established that it bore the economic burden of the state taxes based on its inability to impose tribal taxes and (2) balancing the Tribe's interests against those of the state, the majority had improperly taken into account state off-reservation contributions.

Wisconsin Mining Law Symposium August 25th

The Wisconsin Bar Association will present a Mining Law Symposium Thursday, August 25, 2011 at the Jefferson Street Inn, 201 Jefferson St., Wausau, Wisconsin, from 8:30 a.m. to 4:30 p.m. The backdrop for the symposium includes the renewed interest in mining as a result of high commodity prices generally and, in particular, the proposal by Taconite Mining Company to conduct mining operations in the Gogebic (aka Penokee) range in northern Wisconsin, upstream from the Bad River Chippewa Reservation. The symposium will address:

  • current state and federal mining laws
  • the mining company's lobbying efforts to obtain dramatic changes in state mining laws
  • impacts on headwater streams and remote natural resources
  • impacts on tribes and treaty rights
  • the role of science in mining law impact assessments and mine closure
  • royalties, mineral rights, and local land-use issues

Godfrey & Kahn's Art Harrington, one of Wisconsin's preeminent environmental law attorneys, will provide an overview of federal, state and tribal laws that impact mining projects from the perspective of attorneys representing tribes. Thomas Pyper of Whyte & Hirschboeck will provide the mining company perspective. Mr. Harrington will also participate, with Forest County Potawatomi Attorney General Jeffrey Crawford, on a panel recounting the tribes' multiyear, successful effort to prevent sulfide mining in the Wolf River watershed.

The symposium has been approved for 7.5 Continuing Legal Education credits. Following the legal symposium, a plenary session, open to the general public, will be held on the proposed mining of the Gogebic Range near the Bad River reservation. Attorneys may register in the normal manner through the State Bar website. Search site for "mining law symposium."

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