10th Circuit rules for state in Ute Mountain Ute Tribe tax dispute

Wednesday, July 27, 2011  

The state of New Mexico can impose taxes on oil and gas development on the Ute Mountain Ute Reservation, the 10th Circuit Court of Appeals ruled today.

The Ute Mountain Ute Tribe sued the state for forcing non-Indian developers to remit five taxes on oil and gas drilling. A federal judge ruled that the state was pre-empted by federal law.

On appeal, the 10th Circuit reversed. By a 2-1 split, the court said the U.S. Supreme Court previously upheld the taxes in a 1998 case involving the Jicarilla Apache Nation.

The Indian Minerals Leasing Act "neither expressly permits state taxation nor expressly precludes it," the 10th Circuit said, quoting from Cotton Petroleum v. New Mexico. Most of the Ute Mountain Ute Tribe's leases with the non-Indian companies were all signed pursuant to the IMLA.

The court acknowledged that the federal government plays an "extensive" role in energy development in Indian Country. But the majority also said the state of New Mexico provides services to non-Indian companies and works in a "cooperative" manner with the federal government.

"'Oil extracted from the reservation' is transported by truck through New Mexico to refineries outside the [reservation]” on highways that are constructed and maintained by the state," Judge Jerome A. Holmes wrote for the majority.

Judge Carlos F. Lucero filed a dissent. He said the state's taxation "imposes a substantial economic burden on the tribe" and that "neither the tribe nor private oil and gas companies receive any on-reservation economic benefit in return."

Turtle Talk has posted documents from the case, Ute Mountain Ute Tribe v. Rodriguez.

10th Circuit Decision:
Ute Mountain Ute Tribe v. Rodriguez | Dissent (July 27, 2011)