Court rules against Crow tax
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JULY 18, 2000

In a potentially damaging ruling that could affect the ability for tribes to make money on businesses within reservation boundaries, the Ninth Circuit Court of Appeals has upheld a decision which ruled that the Crow Tribe of Montana does not have the right to impose taxes on a public utility.

In a ruling issued Friday, July 14, the court affirmed a lower court decision which found the tribe overstepped its authority by attempting to regulate business on non-Indian owned land. The ruling is another chapter in a long case involving the Crow tax.

In 1993, the tribe enacted a 3 percent tax on full fair market value of utility property located on tribal or trust lands within the reservation boundaries. Big Horn County Electric, who provides electric service to 1,700 customers, half of whom are tribal members, began paying the tribe's tax, but passed it along to customers.

The tribe in turn sued the Big Horn in tribal court and Big Horn countersued, claiming the tribe did not have the authority to impose taxes on non-Indian fee land within the reservation. Fee land is land which has passed out of Indian or tribal ownership but still exists within the reservation boundaries.

The tribal court ruled in favor of the tribe and in response, Big Horn filed suit in US District Court in Montana. Relying on a 1997 Supreme Court decision, Strate v. A-1 Contractors, the District Court ruled against the tribe and the Ninth Circuit affirmed.

The A-1 case ruled that Congressionally delegated rights-of-way are to be treated the same as fee land. Since Big Horn's transmission and distribution systems across the reservation were granted by the Secretary of Interior with the consent of the tribe and through Congressional delegation, they fall under the A-1 test, and therefore, are excluded from tribal sovereign authority.

The District Court also ruled the tribe to pay back Big Horn almost $200,000 the company had remitted to the tribe. The Ninth Circuit reversed this part of the decision, ruling that the lower court violated the sovereign immunity of the tribe.

The Ninth Circuit also considered its own prior taxation decision involving the Blackfeet Tribe. In Burlington Northern R.R. Co. v. Blackfeet Tribe, the court ruled the tribe could collect tax on the Northern's railroad property.

But that ruling was issued in 1991. The Strate case in 1997, the court said, effectively, makes the Blackfeet case "no longer good law."

Several tribes, including the Navajo Nation and the Assiniboine and Sioux Tribes of the Fort Peek Reservation, had filed amicus briefs with the court.

Ed Note: Due to a typographical error, the Strate v. A-1 Contractors decision was incorrectly stated as being issued in 1999. The correct year is 1997.

Get the Decision:
Big Horn v. Adams (9th Circuit. No. 99-35799. July 2000)

Related Decisions:
Strate v. A-1 Contractors (Supreme Court. 520 U.S. 438. 1997)
Burlington Northern R.R. Co. v. Blackfeet Tribe (9th Circuit. No. 88-4428, 88-4429. 1991)

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