## Facts

- Atkinson Trading Company, Inc., a non-Indian corporation, owned and operated the Cameron Trading Post (including lodging) on non-Indian fee land located within the exterior boundaries of the Navajo Nation Reservation and surrounded by reservation land.
- The Navajo Nation enacted a hotel occupancy tax requiring an 8% charge on hotel rooms within the reservation boundaries; the tax was imposed on guests and collected and remitted by hotel operators.
- Navajo Nation officials and entities sought to enforce the tax against Atkinson’s hotel operations on the non-Indian fee parcel.
- Atkinson challenged the tax, asserting that tribal civil authority over nonmembers on non-Indian fee land is limited under the Montana framework.
- Tribal authorities and Navajo courts upheld the tax; a federal district court granted summary judgment for the Navajo Nation.
- The Tenth Circuit affirmed, reasoning that the tax fit within Montana’s “consensual relationship” exception and applying a balancing approach that considered tribal interests and impacts alongside the non-Indian fee status of the land.

## Issues

1. Whether the Montana framework governing tribal civil authority over nonmembers on non-Indian fee land applies to tribal taxation of nonmember activity on such land.
2. Whether the Navajo Nation’s hotel occupancy tax fell within Montana’s consensual relationship exception.
3. Whether the tax was valid under Montana’s exception for nonmember conduct that threatens or directly affects the tribe’s political integrity, economic security, or health or welfare.

## Decision

- The Supreme Court unanimously reversed the Tenth Circuit and held the hotel occupancy tax invalid as applied to nonmembers on non-Indian fee land within the reservation.
- The Court held that Montana’s general rule limiting tribal civil authority over nonmembers on non-Indian fee land applies to tribal taxation, absent federal authorization.
- The Court held the consensual relationship exception did not apply because the tax lacked a sufficient nexus to any qualifying consensual relationship between Atkinson (or its guests) and the tribe.
- The Court held the “threat-to-integrity” exception did not apply because the challenged conduct did not threaten the tribe’s political integrity, economic security, or health or welfare in the stringent sense required.
- A concurrence agreed with the judgment and stressed the narrow scope of tribal authority over nonmembers on non-Indian fee land.

## Legal Principles

- As a general rule, absent express federal authorization, tribes lack civil authority over nonmembers’ conduct on non-Indian fee land within a reservation, subject only to two limited Montana exceptions.
- Montana’s general rule applies to tribal taxation of nonmember activity on non-Indian fee land; inherent tribal taxing power does not extend beyond tribal land in this context.
- The consensual relationship exception requires a direct nexus between the asserted consensual relationship and the specific tax or regulation imposed; generalized contacts or receipt of governmental services are insufficient without that connection.
- The second Montana exception is narrowly confined to circumstances where nonmember conduct threatens or has a direct effect on tribal political integrity, economic security, or health or welfare at a level comparable to imperiling the tribal community’s subsistence.
- Lower courts may not replace Montana’s presumption and narrow exceptions with open-ended balancing tests that dilute the significance of non-Indian fee land status.

## Conclusion

The Court invalidated the Navajo Nation’s hotel occupancy tax as applied to nonmembers at a hotel on non-Indian fee land within the reservation, holding that tribal taxing authority in that setting is governed and constrained by Montana and that neither Montana exception justified the tax.


Atkinson Trading Co. v. Shirley, 532 U.S. 645 (2001)