698
Syllabus
Tribe and Westmoreland stipulated that Westmoreland would have no tax liability to the Tribe for the 1976-1982 period. Moreover, the deposited funds, Westmoreland's post-1982 tax payments, had been turned over in full to the United States for the benefit of the Tribe. The court further noted that Westmoreland did not timely endeavor to recover taxes paid to the State and counties, and the Tribe did nothing to prompt Westmoreland to initiate appropriate refund proceedings. The court received additional evidence concerning the effect of Montana's taxes on the marketability of Montana coal and described the parties' conflicting positions on that issue, but made no findings on the matter. The Ninth Circuit again reversed, holding that the District Court had ignored the law of the case and abused its discretion.
Held: The restitution sought for the Tribe is not warranted.
Pp. 713-719.
(a) As a rule, a nontaxpayer may not sue for a refund of taxes paid by another. The Ninth Circuit evidently had that rule in mind when it noted, in Crow I, that the Tribe was apparently not entitled to any refund of taxes Westmoreland had paid to Montana. The Tribe maintains, however, that the disgorgement remedy it gained does not fall within the "refund" category. The Tribe's disgorgement claim must be examined in light of this Court's pathmarking decision in Cotton Petroleum Corp. v. New Mexico, 490 U. S. 163. There, the Court clarified that neither the IMLA, nor any other federal law, categorically preempts state nondiscriminatory severance taxes on all extraction enterprises in a State, including on-reservation operations. Both State and Tribe have taxing jurisdiction over on-reservation production. The Court in Cotton Petroleum distinguished Crow II in a footnote, indicating that Montana had the power to tax Crow coal, but not at an exorbitant rate. Pp. 713-715.
(b) The Tribe first argues that it, not Montana, should have received Westmoreland's 1975-1982 coal tax payments; therefore the proper remedy is to require the State to turn all taxes it collected from Westmore-land over to the Tribe. However, as Cotton Petroleum makes plain, neither the State nor the Tribe enjoys authority to tax to the total exclusion of the other. This situation differs from cases like Valley County v. Thomas, 109 Mont. 345, 97 P. 2d 345, in which only one jurisdiction could tax a particular activity. Moreover, the Tribe could not have taxed Westmoreland during the period in question, for the Interior Department had withheld the essential permission, further distancing this case from Valley County. The District Court correctly took these and other factors into account in holding disgorgement an exorbitant, and therefore inequitable, remedy. Pp. 715-716.
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