## Facts

- The Jicarilla Apache Tribe adopted a revised constitution under the Indian Reorganization Act and enacted a severance tax on oil and gas production on reservation lands, exempting oil and gas received by the Tribe as in-kind royalty payments.
- Non-Indian oil and gas producers operated on the reservation under long-term mineral leases approved by the Secretary of the Interior; the Tribe was both the landowner-lessor and the territorial government.
- The lessees sued in federal district court to enjoin enforcement of the tribal tax.
- The district court permanently enjoined the tax, reasoning the Tribe lacked authority to impose it, that state and local governments held the relevant taxing power, and that the tax violated the Commerce Clause.
- The Tenth Circuit reversed, holding tribal taxing power is an inherent attribute of sovereignty not divested by treaty or statute, and finding no Commerce Clause violation.
- The Supreme Court granted certiorari in consolidated cases.

## Issues

1. Whether an Indian tribe has inherent sovereign authority to impose a severance tax on non-Indian lessees producing oil and gas on reservation lands.
2. Whether the Tribe waived or surrendered its taxing authority by entering into long-term, federally approved mineral leases.
3. Whether federal law preempted the tribal tax, whether state taxation displaced it, or whether the tax violated the Commerce Clause due to overlapping state and tribal taxes.

## Decision

- The Supreme Court affirmed the Tenth Circuit (6–3).
- The Court held the Tribe possessed inherent sovereign power to impose the severance tax on non-Indian lessees’ on-reservation production.
- The Court held the taxing power was not divested by treaty or Act of Congress and was not waived by the leases.
- The Court rejected the view that tribal taxing authority derived solely from the power to exclude nonmembers from tribal lands.
- The Court held the tax did not violate the Commerce Clause, notwithstanding concurrent state severance taxation.

## Legal Principles

- Indian tribes retain attributes of sovereignty, including taxation, unless Congress clearly withdraws them.
- A tribe’s power to tax nonmembers engaged in economic activity within tribal territory supports governance and funding of governmental services tied to that activity.
- Tribal taxing authority is not limited to, or dependent solely on, the tribe’s power to exclude nonmembers from tribal lands.
- Entry into federally approved mineral leases does not, without an explicit and unmistakable commitment, waive or surrender the tribe’s taxing power.
- Congressional authorization of state taxation on Indian lands does not, without clear expression, make state taxation exclusive or preempt tribal taxation.
- Overlapping state and tribal taxes on on-reservation production do not, by themselves, establish an unconstitutional burden on interstate commerce.

## Conclusion

The Court upheld the Jicarilla Apache Tribe’s severance tax as a valid exercise of inherent tribal sovereignty over nonmember oil and gas production on reservation lands, finding no lease-based waiver, no federal preemption, and no Commerce Clause prohibition based solely on concurrent state taxation.


Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982)