Cotton Petroleum Corp. v. New Mexico

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163 (1989), was a United States Supreme Court case that decided whether states may impose taxes on non-Tribal commercial activity that takes place on Tribal land.[1][2] Cotton, a non-Indian corporation, extracted oil on the Jicarilla Apache Tribe and paid the Tribe a 6% severance tax.[3] The State of New Mexico collected an additional 8% severance tax, which it levied on all oil producers in the State. Cotton paid the state tax in protest and filed this lawsuit, asserting that the state tax was preempted by federal law. The Court applied Bracker balancing, weighing state, Tribal and federal interests. Because the state provided Cotton $89,384 in services, the Court found sufficient state interest to justify the state tax.[4][5] While amount collected in taxes, $2,293,953, far exceeded the value of the state services, the Court held there was no "proportionality requirement."[4] The Court further explained that current case law allows states to impose non-discriminatory taxes on non-Tribal entities that do business with Tribes, noting that Congress could offer immunity if it chose to do so.[6]

Cotton Petroleum Corp. v. New Mexico
Argued November 30, 1988
Decided April 25, 1989
Full case nameCotton Petroleum Corp. v. New Mexico
Citations490 U.S. 163 (more)
109 S. Ct. 1698; 104 L. Ed. 2d 209
Case history
PriorCotton Petroleum v. State, 106 N.M. 517, 745 P.2d 1170 (N.M. Ct. App. 1987)
Holding
There is no "proportionality requirement" that the amount collected from Tribes be equitable to the services rendered by the government. Further, current case law allows states can impose non-discriminatory taxes on non-Tribal entities that do business with Tribes, though Congress could offer immunity if it chose to do so.
Court membership
Chief Justice
William Rehnquist
Associate Justices
William J. Brennan Jr. · Byron White
Thurgood Marshall · Harry Blackmun
John P. Stevens · Sandra Day O'Connor
Antonin Scalia · Anthony Kennedy
Case opinions
MajorityStevens, joined by Rehnquist, White, O'Connor, Scalia, Kennedy
DissentBlackmun, joined by Brennan, Marshall

References
  1. Gluck, Daniel (1990). "A Tale of Two Taxes—Preemption on the Reservation: Cotton Petroleum Corp. v. New Mexico". The Tax Lawyer. 43 (2): 359–373. JSTOR 20771248.
  2. Haddock, David. "To Tax Tribes or Not To Tax Tribes". Lewis & Clark Law Review. 12 (4): 971–990.
  3. Carpenter, Charley (1990). "Preempting Indian Preemption: Cotton Petroleum Corp. v. New Mexico". Catholic University Law Review. 39 (2): 639–671.
  4. Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 185 (1989)
  5. Erhardt, Erin (2014). "States Versus Tribes: The Problem of Multiple Taxation of Non-Indian Oil and Gas Leases on Indian Reservations". American Indian Law Review. 38 (2): 533–566.
  6. 490 U.S. at 175
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