A battle over whether Indian tribes or the state can collect taxes on the lucrative oil and gas reserves below Indian lands is being argued in court, but the Legislature is also sending unmistakable signals to Utah Indian tribes: "Let's talk."
"Our intent is to send a message to the tribes: Come work with us and let's resolve the problems," said Sen. Alarik Myrin, R-Altamont.The state has good reason to negotiate. It stands to lose hundreds of millions of oil and gas severance taxes from state coffers.
State lawmakers say the sticky issue centers on whether both the state and the Indian tribes can impose severance taxes on gas and oil. The Ute Reservation quadrupled in size to 4 million acres following a 1986 court decision reaffirming the tribe's original reservation boundary and giving the tribe full taxing authority over a vast sector of oil-rich Utah land.
The Utes passed a law last year implementing a hefty 10 percent severance tax on top of the state's 4 percent levy, though they later agreed to a sliding-scale tax fluctuating with oil prices.
The Utes have already sued the state over the double taxation issue, as have oil companies drilling on the Navajo Indian Reservation in southern Utah. In San Juan County, the Navajos have sued to recover severance taxes paid to the state going back 10 years - some $100 million.
The future revenue that could be lost is staggering.
"We have to negotiate with them," said House Majority Whip David Adams, R-Monticello. "We're going to negotiate with them whether they want to or not. There's too much at stake not to."
Utah Indian tribes have thus far balked at talks with the state, and dissension within the Ute Tribe itself has made negotiations even more difficult.
Myrin has sponsored a bill that would create a legislative task force to study the array of complicated issues and to make recommendations concerning legislation to address potential agreements. That bill received approval from a Senate committee Monday and was sent to the Senate as a whole. The only person to speak against it was Travis Parashonts, state director of Indians affairs, who questioned why no Indians were on the task force. Replied sponsor Myrin, "We have to decide the state's approach to negotiating with the tribes. They don't invite us to sit in on their strategy-planning sessions with their attorneys, do they?"
Meanwhile, Rep. Beverly Evans, R-Altamont, has introduced a second bill to place into an escrow account all state severance taxes collected on Indian lands pending the outcome of the litigation.
Utah officials are keeping a wary eye on another court case involving Cotton Petroleum Co. and New Mexico, which the U.S. Supreme Court is expected to rule on early this year.
Cotton is suing New Mexico to gain relief from paying severance tax to the state while it also pays tax to an Indian government for oil taken from Indian land. Oil companies say it is "double taxation."
There are yet other court issues to be settled, like whether the tribes have the jurisdiction to impose other taxes - such as property, business and sales taxes - on non-Indians living within the reservation boundaries. (Tribal members themselves are already exempt from most state taxes.)
And perhaps the most critical issue to be decided in a lawsuit originating with the Navajo Tribe is a "taxation without representation" question in which some Indian officials say they are not receiving a fair return of state benefits from taxes paid to the state from Indian lands.
"There are so many issues involved," said Rep. Dan Price, R-Vernal. "The hard part is getting them (Indians) to sit down with us and work out an agreement. We've got to decide what is fair and work together."
"But they're not negotiating," added Evans. "They are not even communicating with us. You're never going to resolve anything if you don't sit down and talk about it."