|ATKINSON TRADING CO. V. SHIRLEY (00-454) 532 U.S. 645 (2001)
210 F.3d 1247, reversed.
[ Rehnquist ]
[ Souter ]
The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
ATKINSON TRADING CO., INC. v. SHIRLEY et al.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT
In Montana v. United States, 450 U.S. 544, this Court held that, with two limited exceptions, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian land within a reservation. Petitioners trading post on such land within the Navajo Nation Reservation is subject to a hotel occupancy tax that the Tribe imposes on any hotel room located within the reservations boundaries. The Federal District Court upheld the tax, and the Tenth Circuit affirmed. Relying in part on Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, the latter court complemented Montanas framework with a case-by-case approach that balanced the lands non-Indian fee status with the Tribes sovereign powers, its interests, and the impact that the exercise of its powers had on the nonmembers interests. The court concluded that the tax fell under Montanas first exception.
Held: The Navajo Nations imposition of a hotel occupancy tax upon nonmembers on non-Indian fee land within its reservation is invalid. Pp. 814.
(a) Montanas general rule applies to tribal attempts to tax nonmember activity occurring on non-Indian fee land. Tribal jurisdiction is limited: For powers not expressly conferred them by federal statute or treaty, tribes must rely upon their retained or inherent sovereignty. Their power over nonmembers on non-Indian fee land is sharply circumscribed. Montana noted only two exceptions: (1) a tribe may regulate the activities of nonmembers who enter consensual relationships with the tribe or its members; and (2) a tribe may exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the tribes political integrity, economic security, or health or welfare. 450 U.S., at 565566. Montanas rule applies to a tribes regulatory authority, id., at 566, and adjudicatory authority, Strate v. A1 Contractors, 520 U.S. 438, 453. Citing Merrion, respondents submit that Montana and Strate do not restrict a tribes power to impose revenue-raising taxes. However, because Merrion noted that a tribes inherent taxing power only extended to transactions occurring on trust lands and involving the tribe or its members, 455 U.S., at 137, it is easily reconcilable with the Montana-Strate line of authority. A tribes sovereign power to tax reaches no further than tribal land. Thus, Merrion does not exempt taxation from Montanas general rule, and Montana is applied straight up. Because Congress had not authorized the tax at issue through treaty or statute, and because the incidence of the tax falls upon nonmembers on non-Indian fee land, the Navajo Nation must establish the existence of one of Montanas exceptions. Pp. 38.
(b) Montanas exceptions do not obtain here. Neither petitioner nor its hotel guests have entered into a consensual relationship with the Navajo Nation justifying the taxs imposition. Such a relationship must stem from commercial dealing, contracts, leases, or other arrangements, Montana, supra, at 565, and a nonmembers actual or potential receipt of tribal police, fire, and medical services does not create the requisite connection. Nor is petitioners status as an Indian trader licensed by the Indian Affairs Commissioner sufficient by itself to support the taxs imposition. As to Montanas second exception, petitioners operation of a hotel on non-Indian fee land does not threaten or have a direct effect on the tribes political integrity, economic security, or health or welfare. Contrary to respondents argument, the judgment in Brendale v. Confederated Tribes and Bands of Yakima Nation, 492 U.S. 408, 440, did not give Indian tribes broad authority over nonmembers where the acreage of non-Indian fee land is miniscule in relation to the surrounding tribal land. Irrespective of the percentage of non-Indian fee land within a reservation, Montanas second exception grants tribes nothing beyond what is necessary to protect tribal self-government or control internal relations. Strate, supra, at 459. Whatever effect petitioners operation of its trading post might have upon surrounding Navajo land, it does not endanger the Navajo Nations political integrity. Pp. 813.
210 F.3d 1247, reversed.
Rehnquist, C. J., delivered the opinion for a unanimous Court. Souter, J., filed a concurring opinion, in which Kennedy and Thomas, JJ., joined.