WASHINGTON - The U.S. Supreme Court struck another blow to tribal sovereignty and self-determination when it ruled against tribes' ability to tax non-tribal businesses and residents on tribal lands.
The unanimous ruling overturned a 10th Circuit Court of Appeals decision that agreed the Navajo Nation could collect an 8 percent hotel tax from the Atkinson Trading Post, which it had done since 1992.
In the opinion Chief Justice William Renquist wrote that "Indian tribes are unique aggregations possessing attributes of sovereignty over both their members and their territory, but their dependent status generally precludes extension of tribal civil authority beyond these limits."
The decision on the original case, Atkinson Trading Co., Inc. vs. Joe Shirley, Jr., brings out cheers from the non-Indian community, but in Indian country the decision is clearly one of discontent and disappointment.
"The decision is not only a direct attack on the Navajo Nation's inherent rights as a sovereign nation to tax, but is also a direct attack on all Indian tribes' sovereignty, and all Indian tribes should be concerned with a decision so blatantly unfair and unreasoned," said Kelsey A. Begaye, president of the Navajo Nation.
"Opinions such as this one, issued by the United States Supreme Court, clearly states that Indian tribes do not have a forum at the Supreme Court level. The Navajo Nation, working in concert with all Indian tribes, must become more politically active and assert their sovereign rights through the legislative process."
The case involves the taxation of a non-Indian owned business on fee land within the boundaries of the Navajo Reservation. The Navajo control more than 98 percent of the land within the vast reservation. Some of the reservation, which covers portions of Arizona, Utah and New Mexico, are fee lands occupied by non-Navajo residents and business owners.
For some states that filed an amicus brief in support of Atkinson Trading Post, the decision was applauded as a means to set the lines of jurisdiction in place. South Dakota Assistant Attorney General John Guhin said the decision was gratifying, and added that it was a significant step toward determining jurisdictional issues.
South Dakota has been involved in litigation with the tribes in the state over jurisdictional issues for a number of years.
Tribes have from time to time attempted to collect taxes on non-members who either reside within the boundaries of a reservation or own businesses. Each time the non-tribal courts ruled against the tribe.
The Crow Tribe in Montana has attempted several times to impose a tax on businesses along the Little Big Horn Battlefield area. The latest attempt was turned over by the Montana Bankruptcy Court when the tribe attempted to collect $98,000 in back taxes from a restaurant and resort company. The bankruptcy court ruled the tribe had no jurisdiction to collect the taxes.
The high court in the Atkinson case also used a Crow tribal decision on which to base its decision. That case involved hunting and fishing regulations of non-tribal members on the Crow reservation and the U.S. Supreme Court ruled against the tribe.
It gets more difficult for tribes to impose taxes as each case comes to a negative conclusion for the tribes. Mark Hubble, attorney for the Winnebago Tribe of Nebraska said the decision forces an economically inefficient government structure on reservation by having two governments deal with most collective problems.
"The Navajo Nation is still a sovereign government regardless of what the Chief Justice of the United States wrote down. We must aggressively seek remedies where we see fit from the United States Congress reminding them that they should support not undermine efforts of Indian nations to achieve self-sufficiency," said Navajo Speaker Edward T. Begay.
The trading post on the Navajo Reservation existed before the reservation land base was extended to surround the property. The trading post remained privately owned after the reservation extension. What began as a wooden store building and four small cabins grew into a complex of a hotel, restaurant, cafeteria, gallery, gift shop, retail store and recreational vehicle facility.
The Navajo Nation received $84,000 per year from Atkinson Trading Co. and with other hotels on the reservation put $1.2 million per year into its coffers.
Renquist wrote that the Montana-Crow Tribe decision over the hunting and fishing jurisdiction held "that the tribe may regulate, through taxation, licensing or other means, the activities of non-members who enter consensual relationships with the tribe or its members, through commercial dealings, contracts, leases, or other arrangements."
The court found that in the Montana case and with Atkinson, the non-tribal member parties involved did not agree to civil jurisdiction by the tribes.
"Once again the Supreme Court has shown its true colors when it comes to enhancing tribal sovereignty and diminishing a tribe's ability to tax non-Indians. It's in keeping with other decisions by the court that narrowed tribal sovereignty," said Michael Anderson, an attorney with Monteau, Peebles & Crowell.
"It's as if businesses on reservations don't benefit from locations on reservations. They benefit from tourism and infrastructure and other attributes the tribes provide.
"I'm sure the Atkinson Trading Post wouldn't make a dime off the reservation. Visitors come from all over the world to the reservation.
"The 10th Circuit ruled in favor of the tribe. Repeatedly the Supreme Court reached out and ruled against it, and, again it's not wise to take close cases to Supreme Court. It should be avoided at all costs."