Montana v. Blackfeet Tribe of Indians

Background

The dispute was between the State of Montana and the Blackfeet Tribe over taxes taken from the Tribe’s royalty payments for oil and gas produced on unallotted reservation land. The Tribe had granted leases to non‑Indian companies under the Indian Mineral Leasing Act of 1938. Lessees paid Montana taxes and deducted those amounts from royalties paid to the Tribe. The Tribe sued to stop enforcement of the state taxes. Lower courts split, and the case reached the Supreme Court to decide whether Montana could tax royalties from leases executed under the 1938 law.

Reasoning

The core question was whether Congress clearly allowed states to tax tribal royalty income from leases made under the 1938 Act or left that authority unchanged from a 1924 law. The Court said the 1938 Act contains no clear consent for state taxation and reminded that statutes affecting tribes must be read in favor of the tribes. Because Congress did not unmistakably authorize state taxes for leases under the 1938 Act, the Court concluded Montana could not tax the Tribe’s royalty income from those leases. The Court also found administrative opinions supporting state taxation inconsistent and unpersuasive.

Real world impact

The ruling protects royalty income for tribes that use the 1938 leasing process by barring state taxes on those royalties. Oil companies that had paid and deducted state taxes may face changed withholding practices. The Court left open that older leases governed by the 1924 or 1891 laws might be treated differently under prior decisions.

Dissents or concurrances

A dissent argued the 1924 proviso clearly permits state taxation of production on the described lands and would have allowed Montana to tax these royalties, emphasizing the proviso’s plain language and earlier administrative practice.