British-American Oil Producing Co. v. Board of Equalization of Mont.

Background

A company held a five-year mining lease, approved October 5, 1934, covering oil and gas deposits under allotted lands on the Blackfeet reservation. The allotted lands were held under trust patents that reserved all minerals to the United States for the benefit of the tribe until Congress said otherwise. Montana assessed a gross production tax and a net proceeds tax on the oil and gas taken under that lease, and the lessee challenged the State’s power to tax production from those reserved minerals.

Reasoning

The Court examined which statutes governed leasing of tribal mineral lands and whether the reserved mineral estate was “unallotted” under those laws. It found the Blackfeet reservation was created by Congress and that the mineral estate reserved for the tribe is tribal, unallotted land. Reading the special Blackfeet acts together with the broader 1891 and 1924 statutes, the Court concluded the lease was properly authorized and that the Act of May 29, 1924, expressly consented to state taxation of oil and gas production from such lands, with the Secretary of the Interior authorized to pay the tax assessed against royalty interests.

Real world impact

The decision means Montana may collect production and proceeds taxes on oil and gas produced under this lease and similar leases authorized under the statutes. It affects the tribe, leaseholders, and the State’s revenue from such production, and confirms that statutory consent, rather than a constitutional bar, governs the State’s taxing power in this context.