AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

Blaze Construction Company, an Oregon corporation owned by a member of the Blackfeet tribe, entered into contracts with the Bureau of Indian Affairs (BIA) to construct roads on several New Mexico Indian reservations under the Federal Lands Highways Program. The BIA provided funding, while the tribes contributed planning, materials, and labor. Blaze sought clarification from the New Mexico Taxation and Revenue Department regarding the applicability of gross receipts tax to these projects and was informed that the tax applied. Blaze did not pay the tax, leading to an assessment by the Department (paras 2-3).

Procedural History

• New Mexico Taxation and Revenue Department, January 1990: Upheld the assessment of gross receipts tax, penalties, and interest against Blaze Construction Company (para 4).
• Blaze Construction Co. v. New Mexico Taxation and Revenue Department, 117 N.M. 362, 871 P.2d 1368 (Ct. App. 1993): The Court of Appeals reversed the Department's decision, holding that the gross receipts tax was preempted by federal law under the Indian preemption doctrine (paras 1, 5).
• Arco Materials, Inc. v. New Mexico Taxation and Revenue Department, 118 N.M. 12, 878 P.2d 330 (Ct. App. 1994): The Court of Appeals similarly reversed the Department's decision, relying on its holding in Blaze (para 6).

Parties' Submissions

• Defendant-Petitioner (New Mexico Taxation and Revenue Department): Argued that Blaze and Arco, as federal government contractors, were subject to state gross receipts tax under United States v. New Mexico. Contended that the Indian preemption doctrine did not apply because the contracts were with the BIA, a federal agency, rather than directly with Indian tribes or members (paras 10-12).
• Plaintiff-Respondent (Blaze Construction Co.) and Petitioner-Respondent (Arco Materials, Inc.): Asserted that the gross receipts tax was preempted by federal law under the Indian preemption doctrine, as the projects were integral to tribal self-governance and economic development. Claimed that the tax burden indirectly hindered tribal interests (paras 5-6, 23).

Legal Issues

• Whether federal law preempts the imposition of New Mexico gross receipts tax on contractors' receipts for work performed under agreements with the BIA on Indian reservations (para 7).
• Whether Blaze Construction Company, as an Indian-owned corporation, is per se exempt from state taxation (para 7).

Disposition

• The Supreme Court of New Mexico reversed the Court of Appeals' decisions in both Blaze and Arco, holding that federal law did not preempt the imposition of the gross receipts tax (paras 25-26).

Reasons

Per Baca CJ (Montgomery and Franchini JJ. concurring):

• The Court held that Blaze Construction Company was not automatically exempt from state taxation because it was owned by a member of the Blackfeet tribe but operated on reservations of other tribes. Under Washington v. Confederated Tribes, tribal affiliation does not confer per se tax immunity (paras 7-8).
• The Court determined that the Indian preemption doctrine was inapplicable because Blaze and Arco contracted with the BIA, a federal agency, rather than directly with Indian tribes or members. The BIA acts as a federal authority, not as a tribal partner, in such contracts (paras 10-13).
• The Court clarified that Cotton Petroleum modified the Indian preemption doctrine by emphasizing legislative intent and rejecting the quid pro quo theory of taxation. The state's general interest in raising revenue was sufficient to justify the tax, even without direct regulatory functions or services provided in exchange (paras 19-22).
• The Court rejected the argument that the tax indirectly burdened tribal interests, finding no substantial impairment under Cotton Petroleum. The financial burden of the tax fell on the federal government, not the tribes, as the BIA funded the projects (paras 23-24).
• The Court reinstated the Department's assessments of taxes, penalties, and interest against Blaze and Arco (para 25).