Montana v. Crow Tribe of Indians
Citation: 28 ELR 21159
The Court holds that the Crow Tribe and the United States, as the tribe's trustee, may not recover state and county coal-extraction taxes imposed on and paid by the tribe's mineral lessee. The Court first notes that, as a general rule, a nontaxpayer may not sue for a refund of taxes paid by another. The Court then holds that its decision in Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163 (1989), indicates that the state had the power to tax the tribe's coal, but not at an exorbitant rate. Next, the Court rejects the tribe's argument that the tribe, not the state, should have received the mineral lessee's coal tax payments. Neither the state nor the tribe enjoys authority to tax to the total exclusion of the other. Moreover, the tribe itself could not have taxed its lessee during the period in question, for the U.S. Department of the Interior (DOI) had withheld the essential permission. The DOI did not approve the tribe's imposition of a coal tax on the land in question until September 1982, the tribe never sought judicial review of the DOI's pre-1982 disapprovals, the tribe's mineral lessee would pay no tax to the tribe absent the DOI's clearance, and Montana received no share of the post-1982 tax payments released from the district court's registry. The Court concludes that the district court correctly considered these factors in holding disgorgement an exorbitant, and therefore inequitable, remedy. The Court also rejects the tribe's alternative argument that by taxing the coal the state deprived the tribe of its fair share of economic rent. Again, the tribe could not have exacted a tax from its mineral lessee before 1983 because the DOI withheld approval. No evidence suggests that the lessee would have paid higher royalties, but for the state's tax. Furthermore, the district court's failure to award the tribe damages based on actual losses, in lieu of the state taxes collected, was not an oversight. The complaint contained no prayer for compensatory damages, and the proof did not establish entitlement to such relief. The Court, therefore, holds that the Ninth Circuit improperly overturned the district court's judgment.
Justices Souter and O'Connor concur in the Court's decision to vacate the judgment and remand for further proceedings. They, however, dissent from the Court's conclusions that effectively impede the district court from seriously weighing a claim to partial disgorgement under the tribe's complaint. The tribe's prayer naturally encompasses the lesser claim to disgorgement of any taxes in excess of the state's limit. And nothing in the record disentitles the tribe at least to press for disgorgement of some or all of the state's excess tax revenues.
Counsel for Petitioners
Clay R. Smith, Solicitor
Attorney General's Office
215 N. Sanders St., Helena MT 59620
Counsel for Respondents
Elizabeth A. Peterson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
Before Rehnquist, Stevens, Scalia, Kennedy, Thomas, and Breyer, JJ.