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Court To Decide Mont. Tax Dispute

October 14, 1997

WASHINGTON (AP) _ The Supreme Court today agreed to decide whether Montana and one of its counties must pay the Crow Tribe $58 million in illegally collected taxes on coal mined on the reservation.

The justices, granting an appeal by state Attorney General John Mazurek, said they will decide whether the state and Bighorn County must surrender the tax proceeds even though the taxes were not paid by the tribe but by a company doing business with it.

In ruling that the Crow are entitled to the $58 million collected from 1975 to 1987, a federal appeals court ruled that the severance and gross-proceeds taxes ``had an adverse impact on the tribe’s ability to market its coal, increased the costs of coal production and reduced the royalty the tribe could charge.″

The unlawful taxation on Westmoreland Resources Inc.’s mining operations, the 9th U.S. Circuit Court of Appeals said, resulted in ``taking revenue that would otherwise go towards supporting the tribe and its programs.″

The appeals court, however, ruled that the state is not obligated to pay the tribe $250 million for potential taxes and interest lost when Shell Oil Co. abandoned plans to open a coal mine on the reservation because of the since-invalidated state tax.

That part of the 9th Circuit court’s ruling was left intact by the Supreme Court on Oct. 6.

The state’s appeal acted on today argued that the appeals court ruling ``constitutes an extraordinary and unprincipled expansion of quasi-contractual relief with potentially broad implications.″

Although the appeal did not dispute rulings that invalidated the state tax, Mazurek argued that the tribe should not be entitled to any recovery because Westmoreland _ the taxpayer _ has admitted it has no right to recovery.

``The monetary stakes here are enormous, and no reason exists to believe they will be any less so in future cases involving other states,″ Montana’s appeal said.

An award of prejudgment interest could push the money owed to the Crow Tribe above $250 million, the appeal said.

The tribe and the Clinton administration had urged the justices to reject Montana’s appeal.

The court’s decision in the case is expected by July.

The case is Montana vs. Crow Tribe, 96-1829.

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