Immunity of Lessees of Indian Lands.

Another line of anoma- lous decisions conferring tax immunity upon lessees of restricted Indian lands was overruled in 1949. The first of these cases, Choctaw & Gulf R.R. v. Harrison,172 held that a gross production tax on oil, gas, and other minerals was an occupational tax, and, as applied to a lessee of restricted Indian lands, was an unconstitutional burden on such lessee, who was deemed to be an instrumentality of the United States. Next, the Court held the lease itself a federal instrumentality immune from taxation.173 A modified gross production tax imposed in lieu of all ad valorem taxes was invalidated in two per curiam decisions.174 In Gillespie v. Oklahoma,175 a tax upon net income of the lessee derived from sales of his share of oil produced from restricted lands also was condemned. Finally a petroleum excise tax upon every barrel of oil produced in the state was held inapplicable to oil produced on restricted Indian lands.176 In harmony with the trend to restricting immunity implied from the Constitution to activities of the government itself, the Court overruled all these decisions in Oklahoma Tax Comm’n v. Texas Co. and held that a lessee of mineral rights in restricted Indian lands was subject to nondiscriminatory gross production and excise taxes, so long as Congress did not affirmatively grant him immunity.177


235 U.S. 292 (1914). [Back to text]
Indian Oil Co. v. Oklahoma, 240 U.S. 522 (1916). [Back to text]
Howard v. Gipsy Oil Co., 247 U.S. 503 (1918); Large Oil Co. v. Howard, 248 U.S. 549 (1919). [Back to text]
257 U.S. 501 (1922). [Back to text]
Oklahoma v. Barnsdall Corp., 296 U.S. 521 (1936). [Back to text]
336 U.S. 342 (1949). Justice Rutledge, speaking for the Court, sketched the history of the immunity lessees of Indian lands from state taxation, which he found to stem from early rulings that tribal lands are themselves immune. The Kansas Indians, 72 U.S. (5 Wall.) 737 (1867); The New York Indians, 72 U.S. (5 Wall.) 761 (1867). One of the first steps taken to curtail the scope of the immunity was Shaw v. Oil Corp., 276 U.S. 575 (1928), which held that lands outside a reservation, though purchased with restricted Indian funds, were subject to state taxation. Congress soon upset the decision, however, and its act was sustained in Board of County Comm’rs v. Seber, 318 U.S. 705 (1943). [Back to text]