Mont. argues right to tax Indian business

TUESDAY, OCTOBER 22, 2002

The state of Montana has asked the Supreme Court to overturn a ruling that freed Indian-owned businesses from state taxation.

In a request filed last month, the state disputed a near unanimous Montana Supreme Court ruling made in June. The court in a 6-1 decision said state laws carry no weight in Indian Country.

"The exercise of state jurisdiction over activities occurring entirely on Indian lands is an infringement on inherent tribal authority and is contrary to principles of self-government and tribal sovereignty," Justice Terry N. Trieweiler wrote for the majority.

The opinion was a victory for a farm business located on the Fort Peck Reservation and chartered under tribal law. Although Flat Center Farms Inc. was also incorporated in the state, its activities are limited to Indian-owned fee land and land held in trust.

But the state, in its September 18 brief, questions whether federal law can "preempt" its own corporate tax regulations. The petition for writ of certiorari, drafted by attorney general Mike McGrath's office, also disputes whether the business qualifies as "Indian," an issue that was raised but rejected at the state court.

The business is owned by Kim Murray, a member of the Fort Peck Tribes, and his wife Denise Murray. Denise Murray is a member of the Turtle Mountain Ojibwe Tribe of North Dakota.

After the Montana Department of Revenue in 1996 sent the Murrays a tax bill, a state review board concluded that the business should be taxed. The couple prevailed on two appeals.

The Assiniboine and Sioux tribes supported the business at the state court level. "Imposition of a state tax on an Indian controlled corporation, operated solely on Indian lands located within the exterior boundaries of the Fort Peck Indian Reservation impermissibly infringes" on tribal sovereignty, the tribes wrote in an amicus brief.

The farm's response to the state's petition is due this week. The state will be given a chance to reply.

The case is the first major Indian law challenge made to the Supreme Court in recent months. Since the disastrous 200-2001 term in which tribes lost five out of six cases, the Court has turned down numerous appeals affecting tribal rights. A spate of cases were rejected earlier this month.

The Court only has plans to hear two breach of trust cases in December.

Relevant Documents:
Flat Lower Court Ruling: Center Farms, Inc. v State of Montana No. 00-358 | Montana Supreme Court Briefs | Supreme Court Docket Sheet: No. 02-464

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Supreme Court Roundup (10/8)
Supreme Court beginning new term (10/1)
Mont. court strikes down state taxation (06/26)