Atkinson Trading Co. v. Shirley, 532 U.S. 645 (2001)

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OCTOBER TERM, 2000

Syllabus

ATKINSON TRADING CO., INC. v. SHIRLEY et al.

certiorari to the united states court of appeals for the tenth circuit

No. 00-454. Argued March 27, 2001—Decided May 29, 2001

In Montana v. United States, 450 U. S. 544, this Court held that, with two limited exceptions, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian land within a reservation. Petitioner's trading post on such land within the Navajo Nation Reservation is subject to a hotel occupancy tax that the Tribe imposes on any hotel room located within the reservation's boundaries. The Federal District Court upheld the tax, and the Tenth Circuit affirmed. Relying in part on Merrion v. Jicarilla Apache Tribe, 455 U. S. 130, the latter court complemented Montana's framework with a case-by-case approach that balanced the land's non-Indian fee status with the Tribe's sovereign powers, its interests, and the impact that the exercise of its powers had on the nonmembers' interests. The court concluded that the tax fell under Montana's first exception.

Held: The Navajo Nation's imposition of a hotel occupancy tax upon non-members on non-Indian fee land within its reservation is invalid. Pp. 649-659.

(a) Montana's general rule applies to tribal attempts to tax nonmember activity occurring on non-Indian fee land. Tribal jurisdiction is limited: For powers not expressly conferred them by federal statute or treaty, tribes must rely upon their retained or inherent sovereignty. Their power over nonmembers on non-Indian fee land is sharply circumscribed. Montana noted only two exceptions: (1) a tribe may regulate the activities of nonmembers who enter consensual relationships with the tribe or its members; and (2) a tribe may exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the tribe's political integrity, economic security, or health or welfare. 450 U. S., at 565-566. Montana's rule applies to a tribe's regulatory authority, id., at 566, and adjudicatory authority, Strate v. A-1 Contractors, 520 U. S. 438, 453. Citing Merrion, respondents submit that Montana and Strate do not restrict a tribe's power to impose revenue-raising taxes. However, because Merrion noted that a tribe's inherent taxing power only extended to transactions occurring on trust lands and involving the tribe or its members, 455 U. S., at 137, it is easily reconcilable with the Montana-Strate line of authority. A tribe's sovereign power to tax reaches no

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