source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    CAMP, COMPTROLLER OF THE CURRENCY v. PITTS et al.
    No. 72-864.
    Decided March 26, 1973
   Per Curiam.

In its present posture this case presents a narrow, but substantial, question with respect to the proper procedure to be followed when a reviewing court determines that an administrative agency’s stated justification for informal action does not provide an adequate basis for judicial review.

In 1967, respondents submitted an application to the Comptroller of the Currency for a certificate authorizing them to organize a new bank in Hartsville, South Carolina. See 12 U. S. C. §27; 12 CFR §4.2 (1972). On the basis of information received from a national bank examiner and from various interested parties, the Comptroller denied the application and notified respondents of his decision through a brief letter, which stated in part: “ [W] e have concluded that the factors in support of the establishment of a new National Bank in this area are not favorable.” No formal hearings were required by the controlling statute or guaranteed by the applicable regulations, although the latter provided for hearings when requested and when granted at the discretion of the Comptroller. Respondents did not request a formal hearing but asked for reconsideration. That request was granted and a supplemental field examination was conducted, whereupon the Comptroller again denied the application, this time stating in a letter that “we were unable to reach a favorable conclusion as to the need factor,” and explaining that conclusion to some extent. Respondents then brought an action in federal district court seeking review of the Comptroller’s decision. The entire administrative record was placed before the court, and, upon an examination of that record and of the two letters of explanation, the court granted summary judgment against respondents, holding that de novo review was not warranted in the circumstances and finding that “although the Comptroller may have erred, there is substantial basis for his determination, and ... it was neither capricious nor arbitrary.” 329 F. Supp. 1302, 1308. On appeal, the Court of Appeals did not reach the merits. Rather, it held that the Comptroller’s ruling was “unacceptable” because “its basis” was not stated with sufficient clarity to permit judicial review. 463 F. 2d 632, 633. For the present, the Comptroller does not challenge this aspect of the court’s decision. He does, however, seek review here of the procedures that the Court of Appeals specifically ordered to be followed in the District Court on remand. The court held that the case should be remanded “for a trial de novo before the District Court” because “the Comptroller has twice inadequately and inarticulately resolved the [respondents’] presentation.” The court further specified that in the District Court, respondents “will open the trial with proof of their application and compliance with the statutory inquiries, and proffer of any other relevant evidence.” Then, “[testimony may ... be adduced by the Comptroller or intervenors manifesting opposition, if any, to the new bank.” On the basis of the record thus made, the District Court was instructed to make its own findings of fact and conclusions of law in order to determine “whether the [respondents] have shown by a preponderance of evidence that the Comptroller’s ruling is capricious or an abuse of discretion.” 463 F. 2d, at 634.

We agree with the Comptroller that the trial procedures thus outlined by the Court of Appeals for the remand in this case are unwarranted under present law.

Unquestionably, the Comptroller’s action is subject to judicial review under the Administrative Procedure Act (APA), 5 U. S. C. § 701. See Association of Data Processing Service Organizations v. Camp, 397 U. S. 150, 156-158 (1970). But it is also clear that neither the National Bank Act nor the APA requires the Comptroller to hold a hearing or to make formal findings on the hearing record when passing on applications for new banking authorities. See 12 U. S. C. §26; 5 U. S. C. § 557. Accordingly, the proper standard for judicial review of the Comptroller’s adjudications is not the “substantial evidence” test which is appropriate when reviewing findings made on a hearing record, 5 U. S. C. § 706 (2) (E). Nor was the reviewing court free to hold a de novo hearing under § 706 (2) (F) and thereafter determine whether the agency action was “unwarranted by the facts.” It is quite plain from our decision in Citizens to Preserve Overton Park v. Volpe, 401 U. S. 402 (1971), that de novo review is appropriate only where there are inadequate factfinding procedures in an adjudicatory proceeding, or where judicial proceedings are brought to enforce certain administrative actions. Id., at 415. Neither situation applies here. The proceeding in the District Court was obviously not brought to enforce the Comptroller’s decision, and the only deficiency suggested in agency action or proceedings is that the Comptroller inadequately explained his decision. As Overton Park demonstrates, however, that failure, if it occurred in this case, is not a deficiency in factfinding procedures such as to warrant the de novo hearing ordered in this case.

The appropriate standard for review was, accordingly, whether the Comptroller’s adjudication was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” as specified in 5 U. S. C. § 706 (2) (A). In applying that standard, the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court. Respondents contend that the Court of Appeals did not envision a true de novo review and that, at most, all that was called for was the type of “plenary review” contemplated by Overton Park, supra, at 420. We cannot agree. The present remand instructions require the Comptroller and other parties to make an evidentiary record before the District Court “manifesting opposition, if any, to the new bank.” The respondents were also to be afforded opportunities to support their application with “any other relevant evidence.” These instructions seem to put aside the extensive administrative record already made and presented to the reviewing court.

If, as the Court of Appeals held and as the Comptroller does not now contest, there was such failure to explain administrative action as to frustrate effectivé judicial review, the remedy was not to hold a de novo hearing but, as contemplated by Overton Park, to obtain from the agency, either through affidavits or testimony, such additional explanation of the reasons for the agency decision as may prove necessary. We add a caveat, however. Unlike Overton Park, in the present case there was contemporaneous explanation of the agency decision. The explanation may have been curt, but it surely indicated the determinative reason for the final action taken: the finding that a new bank was an uneconomic venture in light of the banking needs and the banking services already available in the surrounding community. The validity of the Comptroller’s action must, therefore,, stand or fall on the propriety of that finding, judged, of course, by the appropriate standard of review. If that finding is not sustainable on the administrative record made, then the Comptroller’s decision must be vacated and the matter remanded to him for further consideration. See SEC v. Chenery Corp., 318 U. S. 80 (1943). It is in this context that the Court of Appeals should determine whether and to what extent, in the light of the administrative record, further explanation is necessary to a proper assessment of the agency’s decision.

The petition for certiorari is granted, the judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

       See 12 CFR § 4.12 (d) (1967). The regulations were amended in 1971, 36 Fed. Reg. 5051. For the present regulation, see 12 CFR §5.4 (1972).

       The letter reads in part:
      “On each application we endeavor to develop the need and convenience factors in conjunction with all other banking factors and in this case we were unable to reach a favorable conclusion as to the need factor. The record reflects that this market area is now served by the Peoples Bank with deposits of $7.2MM, The Bank of Harts-ville with deposits of $12.8MM, The First Federal Savings anil Loan Association with deposits of $5.4MM, The Mutual Savings and Loan Association with deposits of $8.2MM and the Sonoco Employees Credit Union with deposits of $6.5MM. The aforementioned are as of December 31, 1968.”

       Title 12 U. S. C. § 26 contemplates a wide-ranging ex parte investigation; it reads as follows:

        “Comptroller to determine if association can commence business.

      “Whenever a certificate is transmitted to the Comptroller of the Currency, as provided in this chapter, and the association transmitting the same notifies the comptroller that all of its capital stock has been duly paid in, and that such association has complied with all the provisions of this chapter required to be complied with before an association shall be authorized to commence the business of banking, the comptroller shall examine into the condition of such association, ascertain especially the amount of money paid in on account of its capital, the name and place of residence of each of its directors, and the amount of the capital stock of which each is the owner in good faith, and generally whether such association has complied with all the provisions of this chapter required to entitle it to engage in the business of banking; and shall cause to be made and attested by the oaths of a majority of the directors, and by the president or cashier of the association, a statement of all the facts necessary to enable the comptroller to determine whether the association is lawfully entitled to commence the business of banking.” (Emphasis added.)
      As to the APA, its requirement of a written statement of “findings and conclusions, and the reasons or basis therefor” (5 U. S. C. § 557 (c)(3)(A)), applies only to rulemaking proceedings (§ 553) and to adjudications “required by statute to be determined on the record after opportunity for an agency hearing” (§ 554 (a)). By its terms, then, the APA’s requirement of formal findings is not relevant since the National Bank Act plainly does not require agency hearings on applications for new banks.


text:
    OHIO MUNICIPAL JUDGES ASSN. et al. v. DAVIS et al.
    No. 72-1010.
    Decided March 26, 1973
   Per Curiam.

The motion of American Civil Liberties Union of Ohio, Inc., for leave to file a brief, as amicus curiae, is granted.

On the ground that it was beyond its authority to grant the primary relief sought, the United States District Court dismissed appellants’ suit which alleged that Art. IV, § 6 (B), of the Ohio Constitution denied equal protection of the laws under the Fourteenth Amendment to the United States Constitution. The judgment is affirmed, but on the ground that appellants’ constitutional challenge to Art. IV, § 6 (B), was without merit.

So ordered.


author: Mr. Justice White Mr. Justice Douglas,

text:
    MESCALERO APACHE TRIBE v. JONES, COMMISSIONER, BUREAU OF REVENUE OF NEW MEXICO, et al.
    No. 71-738.
    Argued December 12, 1972
    Decided March 27, 1973
    White, J., delivered the opinion of the Court, in which Burger, C. J., and Marshall, Blackmun, Powell, and Rehnquist, JJ., joined. Douglas, J., filed an opinion dissenting in part, in which Brennan and Stewart, JJ., joined, post, p. 159.

      George E. Fettinger argued the cause for petitioner. With him on the briefs was F. Randolph Burroughs.

      John C. Cook, Assistant Attorney General of New Mexico, argued the cause for respondents. With him on the brief was David L. Norvell, Attorney General.

       Briefs of amici curiae urging reversal were filed by Solicitor General Griswold, Assistant Attorney General Frizzell, Harry R. Sachse, Carl Strass, and Eva R. Datz for the United States; by Arthur Lazarus, Jr., Philip P. Ashby, Royal D. Marks, and George P. Vlassis for the Association on American Indian Affairs, Inc., et al.; by David H. Getches for the Native American Rights Fund; by Samuel W. Murphy, Jr., and William C. Pelster for Montana Inter-Tribal Policy Board; and by Raymond C. Simpson for Agua Caliente Band of Mission Indians.

        William, D. Dexter, Assistant Attorney General of Washington, and Eugene F. Corrigan filed a brief for Multistate Tax Commission as amicus curiae urging affirmance.

   Mr. Justice White

delivered the opinion of the Court.

The Mescalero Apache Tribe operates a ski resort in the State of New Mexico, on land located outside the boundaries of the Tribe’s reservation. The State has asserted the right to impose a tax on the gross receipts of the ski resort and a use tax on certain personalty purchased out of State and used in connection with the resort. Whether paramount federal law permits these-taxes to be levied is the issue presented by this case.

The home of the Mescalero Apache Tribe is on reservation lands in Lincoln and Otero Counties in New Mexico. The Sierra Blanca Ski Enterprises, owned and operated by the -Tribe, is adjacent to the reservation and was developed under the auspices of the Indian Reorganization Act of 1934, 48 Stat. 984, as amended, 25 U. S. C. § 461 et seq, After a feasibility study by the Bureau of Indian Affairs, equipment and construction money was provided by a loan from the Federal Government under § 10 of the Act, 25 U. S. C. § 470, and the necessary land was leased from the United States Forest Service for a term of 30 years. The ski area borders on the Tribe’s reservation but, with the exception of some cross-country ski trails, no part of the enterprise, its buildings, or equipment is located within the existing boundaries of the reservation.

The Tribe has paid under protest $26,086.47 in taxes to the State, pursuant to the sales tax law, N. M. Stat. Ann. § 72-16-1 et seq. (1953), based on the gross receipts of the ski resort from the sale of services and tangible property. In addition, in 1968 the State assessed compensating use taxes against the Tribe in the amount of $5,887.19 (plus penalties and interest), based on the purchase price of materials used to construct two ski lifts at the resort. N. M. Stat. Ann. § 72-17-1 et seq. (1953). The Tribe duly protested the use tax assessment and sought a refund of the sales taxes 'paid. The State Commissioner of Revenue denied both the claim for refund and the protest of assessment and the Court of Appeals of the State affirmed. The court held, essentially, that the State had authority to apply its nondiscriminatory taxes to the Tribe’s enterprise and property involved in the dispute, and that the Indian Reorganization Act did not render the Tribe’s enterprise a federal instrumentality, constitutionally immune from state taxation, nor did it, by its own terms, grant immunity from the taxes here involved. 83 N. M. 158, 489 P. 2d 666 (1971). The Supreme Court of New Mexico denied certiorari. 83 N. M. 151, 489 P. 2d 659 (1971). We granted the Tribe’s petition for a writ of certiorari, 406 U. S. 905, to consider its claim that the income and property of the ski resort are not properly subject to state taxation. We affirm in part and in part reverse.

I

At the outset, we reject — as did the state court — the broad assertion that the Federal Government has exclusive jurisdiction over the Tribe for all purposes and that the State is therefore prohibited from enforcing its revenue laws against any tribal enterprise, “[wjhether the enterprise is located on or off tribal land.” Generalizations on this subject have become particularly treacherous. The conceptual clarity of Mr. Chief Justice Marshall's view in Worcester v. Georgia, 6 Pet. 515, 556-561 (1832), has given way to more individualized treatment of particular treaties and specific federal statutes, including statehood enabling legislation, as they, taken together, affect the respective rights of States, Indians, and the Federal Government. See McClanahan v. Arizona State Tax Comm’n, post, p. 164; Organized Village of Kake v. Egan, 369 U. S. 60, 71-73 (1962). The upshot has been the repeated statements of this Court to the effect that, even on reservations, state laws may be applied unless such application would interfere with reservation self-government or would impair a right granted or reserved by federal law. Organized Village of Kake, supra, at 75; Williams v. Lee, 358 U. S. 217 (1959); New York ex rel. Ray v. Martin, 326 U. S. 496, 499 (1946); Draper v. United States, 164 U. S. 240 (1896). Even so, in the special area of state taxation, absent cession of jurisdiction or other federal statutes permitting it, there has been no satisfactory authority for taxing Indian reservation lands or Indian income from activities carried on within the boundaries of the reservation, and McClanahan v. Arizona State Tax Comm’n, supra, lays to rest any doubt in this respect by holding that such taxation is not permissible absent congressional consent.

But tribal activities conducted outside the reservation present different considerations. “State authority over Indians is yet more extensive over activities . . . not on any reservation.” Organized Village of Kake, supra, at 75. Absent express federal law to the contrary, Indians going beyond reservation boundaries have generally been held subject to nondiscriminatory state law otherwise applicable to all citizens of the State. See, e. g., Puyallup Tribe v. Department of Game, 391 U. S. 392, 398 (1968); Organized Village of Kake, supra, at 75-76; Tulee v. Washington, 315 U. S. 681, 683 (1942); Shaw v. Gibson-Zahniser Oil Corp., 276 U. S. 575 (1928) ; Ward v. Race Horse, 163 U. S. 504 (1896). That principle is as relevant to a State’s tax laws as it is to state criminal laws, see Ward v. Race Horse, supra, at 516, and applies as much to tribal ski resorts as it does to fishing enterprises. See Organized Village of Kake, supra.

The Enabling Act for New Mexico, 36 Stat. 557, reflects the distinction between on- and off-reservation activities. Section 2 of the Act provides that the people of the State disclaim “all right and title” to lands “owned or held by any Indian or Indian tribes the right or title to which shall have been acquired through or from the United States . . . and that . . . the same shall be and remain subject to the disposition and under the absolute jurisdiction and control of the Congress of the United States.” But the Act expressly provides, with respect to taxation, that “nothing herein . . . shall preclude the said State from taxing, as other lands and other property are taxed, any lands and other property outside of an Indian reservation owned or held by any Indian, save and except such lands as have been granted ... or as may be granted or confirmed to any Indian or Indians under any Act of Congress, but ... all such lands shall be exempt from taxation by said State [only] so long and to such extent as Congress has prescribed or may hereafter prescribe.” It is thus clear that in terms of general power New Mexico retained the right to tax, unless Congress forbade it, all Indian land and Indian activities located or occurring “outside of an Indian reservation.”

We also reject the broad claim that the Indian Reorganization Act of 1934 rendered the Tribe’s off-reservation ski resort a federal instrumentality constitutionally immune from state taxes of all sorts. M‘Culloch v. Maryland, 4 Wheat. 316 (1819). The intergovernmental-immunity doctrine was once much in vogue in a variety of contexts and, with respect to Indian affairs, was consistently held to bar a state tax on the lessees of, or the product or income from, restricted lands of tribes or individual Indians. The theory was that a federal instrumentality was involved and that the tax would interfere with the Government’s realizing the maximum return for its wards. This approach did not survive; its rise and decline in Indian affairs is described and reflected in Helvering v. Mountain Producers Corp., 303 U. S. 376 (1938); Oklahoma Tax Comm’n v. United States, 319 U. S. 598 (1943); and Oklahoma Tax Comm’n v. Texas Co., 336 U. S. 342 (1949), where the Court cut to the bone the proposition that restricted Indian lands and the próceeds from them were — as a matter of constitutional law- — automatically exempt from state taxation. Rather, the Court held that Congress has the power “to immunize these lessees from the taxes we think the Constitution permits Oklahoma to impose in the absence of such action” and that “[t]he question whether immunity shall be extended in situations like these is essentially legislative in character.” Oklahoma Tax Comm’n v. Texas Co., supra, at 365-366.

The Indian Reorganization Act of 1934 neither requires nor counsels us to recognize this tribal business venture as a federal instrumentality. Congress itself felt it necessary to address the immunity question and to provide tax immunity to the extent it deemed desirable. There is, therefore, no statutory invitation to consider projects undertaken pursuant to the Act as federal instrumentalities generally and automatically immune from state taxation. Unquestionably, the Act reflected a new policy of the Federal Government and aimed to put a halt to the loss of tribal lands through allotment. It gave the Secretary of the Interior power to create new reservations, and tribes were encouraged to revitalize their self-government through the adoption of constitutions and bylaws and through the creation of chartered corporations, with power to conduct the business and economic affairs of the tribe. As was true in the case before us, a tribe taking advantage of the Act might generate substantial revenues for the education and the social and economic welfare of its people. So viewed, an enterprise such as the ski resort in this case serves a federal function with respect to the Government's role in Indian affairs. But the “mere fact that property is used, among others, by the United States as an instrument for effecting its purpose does not relieve it from state taxation.” Choctaw, Oklahoma & Gulf R. Co. v. Mackey, 256 U. S. 531, 536 (1921). See also Henderson Bridge Co. v. Kentucky, 166 U. S. 150, 154 (1897).

The intent and purpose of the Reorganization Act was “to rehabilitate the Indian's economic life and to give him a chance to develop the initiative destroyed by a century of oppression and paternalism.” H. R. Rep. No. 1804, 73d Cong., 2d Sess., 6 (1934). See also S. Rep. No. 1080, 73d Cong., 2d Sess., 1 (1934). As Senator Wheeler, on the floor, put it:

“This bill . . . seeks to get away from the bureaucratic control of the Indian Department, and it seeks further to give the Indians the control of their own affairs and of their own property; to put it in the hands either of an Indian council or in the hands of a corporation to be organized by the Indians.” 78 Cong. Rec. 11125.

Representative Howard explained that:

“The program of self-support and of business and civic experience in the management of their own affairs, combined with the program of education, will permit increasing numbers of Indians to enter the white world on a footing of equal competition.” Id., at 11732.

The Reorganization Act did not strip Indian tribes and their reservation lands of their historic immunity from state and local control. But, in the context of the Reorganization Act, we think it unrealistic to conclude that Congress conceived of off-reservation tribal enterprises “virtually as an arm of the Government.” Department of Employment v. United States, 385 U. S. 355, 359-360 (1966). Cf. Clallam County v. United States, 263 U. S. 341 (1923). On the contrary, the aim was to disentangle the tribes from the official bureaucracy. The Court's decision in Organized Village of Kake, supra, which involved tribes organized under the Reorganization Act, demonstrates that off-reservation activities are within the reach of state law. See also Puyallup Tribe, 391 U. S., at 398. What was said in Shaw v. Gibson-Zahniser Oil Corp., 276 U. S. 575 (1928), is relevant here. At issue there was the taxability of off-reservation Indian land purchased with consent of the Secretary of the Interior with the accumulated royalties from the individual Indian’s restricted allotted lands. Alienation of the purchased land was federally restricted. In rejecting a claim that state taxation of the land was barred by the federal-instrumentality doctrine, the then Mr. Justice Stone wrote for a unanimous Court:

“What governmental instrumentalities will be held free from state taxation, though Congress has not expressly so provided, cannot be determined apart from the purpose and character of the legislation creating them. . . .
“The early legislation affecting the Indians had as its immediate object the closest control by the government of their lives and property. The first and principal need then was that they should be shielded alike from their own improvidence and the spoliation of others but the ultimate purpose was to give them the more independent and responsible status of citizens and property owners. . . .
“In a broad sense all lands which the Indians are permitted to purchase out of the taxable lands of the state in this process of their emancipation and assumption of the responsibility of citizenship, whether restricted or not, may be said to be instrumentalities in that process. But . . . [t]o hold them immune would be inconsistent with one of the very purposes of their creation, to educate the Indians in responsibility . . . Id., at 578-581.

We accordingly decline the invitation to resurrect the expansive version of the intergovernmental-immunity doctrine that has been so consistently rejected in modern times.

II

The Tribe’s broad claims of tax immunity must therefore be rejected. But there remains to be considered the scope of the immunity specifically afforded by § 5 of the Indian Reorganization Act. 25 U. S. C. § 465.

A

Section 465 provides, in part, that “any lands or rights acquired” pursuant to any provision of the Act “shall be taken in the name of the United States in trust for the Indian tribe or individual Indian for which the land is acquired, and such lands or rights shall be exempt from State and local taxation.” On its face, the statute exempts land and rights in land, not income derived from its use. It is true that a statutory tax exemption for “lands” may, in light of its context and purposes, be construed to support an exemption for taxation on income derived from the land. See Squire v. Capoeman, 351 U. S. 1 (1956); cf. Superior Bath House Co. v. McCarroll, 312 U. S. 176 (1941). But, absent clear statutory guidance, courts ordinarily will not imply tax exemptions and will not exempt off-reservation income from tax simply because the land from which it is derived, or its other source, is itself exempt from tax.

“This Court has repeatedly said that tax exemptions are not granted by implication. ... It has applied that rule to taxing acts affecting Indians as to all others. ... If Congress intends to prevent the State of Oklahoma from levying a general non-discriminatory estate tax applying alike to all its citizens, it should say so in plain words. Such a conclusion cannot rest on dubious inferences.” Oklahoma Tax Comm’n v. United States, 319 U. S., at 606-607. See Squire v. Capoeman, supra, at 6. Absent a “definitely expressed” exemption, an Indian’s royalty income from Indian oil lands is subject to the federal income tax although the source of the income may be exempt from tax. Choteau v. Burnet, 283 U. S. 691, 696-697 (1931). The Court has also held that a State, as well as the Federal Government, may tax an Indian’s pro rata share of income from a tribe’s restricted mineral resources. Leahy v. jState Treasurer, 297 U. S. 420 (1936). Lessees of otherwise exempt Indian lands are also subject to state taxation. Oklahoma Tax Comm’n v. Texas Co., 336 U. S. 342 (1949).

On the face of § 465, therefore, there is no reason to hold that it forbids income as well as property taxes. Nor does the legislative history support any other conclusion. As we have noted, several explicit provisions encompassing a broad tax immunity for chartered Indian communities were dropped from the bills that preceded the Wheeler-Howard bill. See n. 9, supra. Similarly, the predecessor to the exemption embodied in § 465 dealt only with lands acquired for new reservations or for additions to existing reservations. 1934 House Hearings 11. Here, the rights and land were acquired by the Tribe beyond its reservation borders for the purpose of carrying on a business enterprise as anticipated by § § 476 and 477 of the Act. These provisions were designed to encourage tribal enterprises “to enter the white world on a footing of equal competition.” 78 Cong. Rec. 11732. In this context, we will not imply an expansive immunity from ordinary income taxes that businesses throughout the State are subject to. We therefore hold that the exemption in § 465 does not encompass or bar the collection of New Mexico’s nondiscriminatory gross receipts tax and that the Tribe’s ski resort is subject to that tax.

B

We reach a different conclusion with respect to the compensating use tax imposed on the personalty installed in the construction of the ski lifts. According to the Stipulation of Facts, that personal property has been “permanently attached to the realty.” In view of § 465, these permanent improvements on the Tribe’s tax-exempt land would certainly be immune from the State’s ad valorem property tax. See United States v. Rickert, 188 U. S. 432, 441-443 (1903). We think the same immunity extends to the compensating use tax on the property. The jurisdictional basis for use taxes is the use of the property in the State. See Henneford v. Silas Mason Co,, 300 U. S. 577 (1937); McLeod v. J. E. Dilworth Co., 322 U. S. 327, 330 (1944). It has long been recognized that “use” is among the “bundle of privileges that make up property or ownership” of property and, in this sense at least, a tax upon “use” is a tax upon the property itself. Henneford v. Silas Mason Co., supra, at 582. This is not to say that use taxes are for all purposes to be deemed simple ad valorem property taxes. See, e. g., United States v. Detroit, 355 U. S. 466 (1958), and its companion cases; Sullivan v. United States, 395 U. S. 169 (1969). But use of permanent improvements upon land is so intimately connected with use of the land itself that an explicit provision relieving the latter of state tax burdens must be construed to encompass an exemption for the former. “Every reason that can be urged to show that the land was not subject to local taxation applies to the assessment and taxation of the permanent improvements.” United States v. Rickert, supra, at 442.

The judgment of the Court of Appeals is

Affirmed in part and reversed in part.

Mr. Justice Douglas,

with whom Mr. Justice Brennan and Mr. Justice Stewart concur,

dissenting in part.

The power of Congress granted by Art. I, § 8 “[t]o regulate Commerce . . . with the Indian Tribes” is an exceedingly broad one. In the liquor cases the Court held that it reached acts even off Indian reservations in areas normally subject to the police power of the States. Perrin v. United States, 232 U. S. 478. The power gained breadth by reason of historic experiences that induced Congress to treat Indians as wards of the Nation. See Gritts v. Fisher, 224 U. S. 640, 642-643; United States v. Thomas, 151 U. S. 577, 585; United States v. McGowan, 302 U. S. 535, 538. The laws enacted by Congress varied from decade to decade. See U. S. Dept, of the Interior, Federal Indian Law 94-138 (1958), which is a revision of the monumental work, Handbook of Federal Indian Law prepared by Felix S. Cohen and published in 1940.

The present Act, 48 Stat. 984, 25 U. S. C. § 461 et seg., was enacted in 1934 with various purposes in mind, the ones most relevant being, first, “[t]o permit Indian tribes to equip themselves with the devices of modern business organization, through forming themselves into business corporations,” and second, “[t]o establish a system of financial credit for Indians.” S. Rep. No. 1080, 73d Cong., 2d Sess., 1.

Loans had been made by the federal agency to individual Indians, but the experience had not been satisfactory. Id., at 3-4. The 1934 Act precluded such loans and set up a $10 million revolving-credit fund for loans to incorporated tribes. The industry established pursuant to that Act and involved here is a ski enterprise, adjacent to the reservation and located on lands leased from the U. S. Forest Service.

The Court makes much of the fact that the ski enterprise is not on the reservation. But that seems irrelevant to me by reason of § 5 of the Act, which provides in part that “any lands or rights acquired” pursuant to the 1934 Act “shall be taken in the name of the United States in trust for the Indian tribe ... for which the land is acquired, and such lands or rights shall be exempt from State and local taxation.” 25 U. S. C. § 465. While the lease of Forest Service lands was not technically “acquired ... in trust for the Indian tribe,” the Court concedes that the lease arrangement was sufficient to bring the Tribe’s interest in the land within the immunity afforded by § 465. And so the question respecting income taxes comes down to whether these taxes are within the scope of “such lands or rights” as used in § 5.

I start from the premise made explicit in the Senate Report on the 1934 Act. It set forth the endorsement by President Roosevelt of “a new standard of dealing between the Federal Government and its Indian wards.” S. Rep., supra, at 3. Article 10 of the 1852 Treaty with the Apaches described the role of the guardian as respects these wards: “For and in consideration of the faithful performance of all the stipulations herein contained, by the said Apache’s Indians, the government of the United States will grant to said Indians such donations, presents, and implements, and adopt such other liberal and humane, measures as said government may deem meet and proper.” 10 Stat. 980.

The 1934 Act obviously is an effort by Congress to extend its control to Indian economic activities outside the reservation for the benefit of its Indian wards. The philosophy permeating the present Act was articulated by Mr. Chief Justice Marshall in Worcester v. Georgia, 6 Pet. 515, 556:

“From the commencement of our government, Congress has passed acts to regulate trade and intercourse with the Indians; which treat them as nations, respect their rights, and manifest a firm purpose to afford that protection which treaties stipulate.”

As noted in Warren Trading Post v. Tax Comm’n, 380 U. S. 685, most tax immunities of Indians have related to activities in reservations. But, as we stated in that case, the fact that the activities occurred on a reservation was not the controlling reason, “but rather because Congress in the exercise of its power granted in Art. I, § 8, has undertaken to regulate reservation trading in such a comprehensive way that there is no room for the States to legislate on the subject.” Id., at 691 n. 18.

The powers of Congress “over Indian affairs are as wide as State powers over non-Indians,” subject, of course, to the limitations of the Bill of Rights. Federal Indian Law 24. One illustration of its extent is shown by the liquor cases already cited. We deal here, however, with “tribal property” — a leasehold interest in federal lands adjoining the reservation. “The term tribal property . . . does not designate a single and definite legal institution, but rather a broad range within which important variations exist.” Federal Indian Law 590-591. There is no magic in the word “reservation.” United States v. McGowan, supra, held that land purchased by Congress for a tribe but outside a “reservation” was nonetheless “Indian country.” While that case involved application of liquor laws, the Court stated that “Congress alone has the right to determine the manner in which this country’s guardianship over the Indians shall be carried out,” id., at 538, and that it was immaterial what the tract of the land was called. Id., at 539.

In the present case, Congress has attempted to give this tribe an economic base which offers job opportunities, a higher standard of living, community stability, preservation of Indian culture, and the orientation of the tribe to commercial maturity. We deal only with a tribal-developed enterprise. State taxation of that enterprise interferes with the federal project. The ski resort, being a federal tool to aid the tribe, may not be taxed by the State without the consent of Congress. Congress by § 5 of the Act has made the “lands or rights” acquired for the tribe exempt from state and local taxation. Section 5, indeed, states that “lands or rights” acquired under the 1934 Act shall be held “in trust for the Indian tribe or individual Indian for which the land is acquired.” There is no more convincing way to tax “rights” in land than to impose an income tax on the gross or net income from those rights. If § 5 be thought to be ambiguous, we should resolve the ambiguity in favor of the tribe. As stated in Carpenter v. Shaw, 280 U. S. 363, 367, “Doubtful expressions are to be resolved in favor of the weak and defenseless people who are the wards of the nation, dependent upon its protection and good faith.” In Squire v. Capoeman, 351 U. S. 1, we resolved doubts respecting the federal income tax in favor of the Indian. There is the same reason for taking that course here.

The tribal ski enterprise, unlike the private entrepreneur in Helvering v. Mountain Producers Corp., 303 U. S. 376, on which the Court relies, is plainly a federal instrumentality — authorized and financed by Congress with the aim of starting the tribe on commercial ventures. This case has no relation to Oklahoma Tax Comm’n v. United States, 319 U. S. 598, which raised the question whether state inheritance taxes could be levied on restricted property. The Court only held that restricted property, as created by Congress, carried no implication of estate tax exemption. Oklahoma Tax Comm’n v. Texas Co., 336 U. S. 342, also relied on by the Court, merely held that a lessee of mineral rights in Indian lands was not immunized from paying state gross production taxes and state excise taxes on petroleum produced from the lands. Those cases would be relevant here if the tribe had leased the ski resort to an outsider who sought the tribal tax immunity. We deal only with an income tax levied on a tribal corporate enterprise conducted by the tribe with federal funds on federal lands leased to the tribe. Federal Indian Law distinguished the Helvering and like cases relied on by the Court from an enterprise “organized solely to carry out governmental objectives, such as the tribal corporations organized” under the 1934 Act with which we now deal, id., at 852-853.

In my view, this state income tax is barred by § 5 through which Congress has given tax immunity to these new tribal enterprises.

       In 1936, the Tribe adopted a constitution, pursuant to § 16 of the Act, 25 U. S. C. § 476.

       The Tribe asserts that “no sales tax (gross receipts tax) is being . . . charged for any ski rentals, lift tickets, food or beverages.”

       Brief for Petitioner 16.

       A corresponding provision appears in the Constitution of the State of New Mexico, Art. XXI, § 2.

       The Tribe’s treaty with the United States, 10 Stat. 979, which acknowledges that the Tribe is “exclusively under the laws, jurisdiction, and government of the United States . . . does not alter the obvious effect of the State’s admission legislation. See, e. g., Organized Village of Kake v. Egan, 369 U. S. 60, 67-68 (1962), and cases cited therein.

       See generally U. S. Dept, of the Interior, Federal Indian Law 129-132 (1958), a revision of Handbook of Federal Indian Law, prepared under the editorial direction of Felix S. Cohen, first printed in 1940 (hereinafter Federal Indian Law); Comment, Tribal Self-Government and the Indian Reorganization Act of 1934, 70 Mich. L. Rev. 955 (1972).

       For other examples see Comment, n. 6, supra, at 983-985. See also J. Collier, On the Gleaming Way 149, 129-149 (1962).

       See also id., at 11727, 11731-11732 (remarks of Rep. Howard); the statements of Mr. John Collier, the Commissioner of Indian Affairs, in Hearings on H. R. 7902, before the House Committee on Indian Affairs, 73d Cong., 2d Sess., 37, 60, 65-67 (1934) (hereinafter 1934 House Hearings).

       The predecessor bills to the Wheeler-Howard Act, H. R. 7902 and S. 2755 (respectively 78 Cong. Rec. 2437 and 2440), expressly provided that the chartered Indian communities may act “as a Federal agency in the administration of Indian Affairs,” and, correspondingly, that the United States would not “be liable for any act done ... by a chartered Indian community.” Title I, §4 (i). 1934 House Hearings 3. The bills further provided that: "Nothing in this Act shall be construed as rendering the property of any Indian community . . . subject to taxation by any State or subdivision thereof . . . .” Tit. I, § 11. Id., at 5. The memorandum of John Collier, which accompanied the bills, stated that “[a]s a Federal agency, the property of a chartered community is constitutionally exempt from State taxation . . . .” Id., at 25. These extensive provisions for tax immunity were discarded in the Wheeler-Howard Act, along with the accompanying provisions for more extensive governmental powers on the part of the chartered communities. See H. R. Rep. No. 1804, supra, at 6. We do not read this legislative history, however, as suggesting that Congress intended to remove the traditional tax immunity that Indian tribes enjoyed on their reservations. This reading finds support in Felix S. Cohen’s treatise, see Federal Indian Law 852-853, although we believe that the broader thrust of his statement — that any “attempt by a State to impose income or other types of taxes” upon “tribal corporations organized under the Indian Reorganization Act . . . would still be held a direct burden on a Federal instrumentality” — is not supported by the modern cases and should be read with and in the light of other discussions of the immunity doctrine in particularized contexts. See id., at 872-873, 864-873.

       The claim of tax immunity was made by a non-Indian lessee, under the rule of Gillespie v. Oklahoma, 257 U. S. 501 (1922), which was itself overruled in Oklahoma Tax Comm’n v. Texas Co., 336 U. S. 342 (1949), over two decades after Shaw. As a decision with respect to constitutionally mandated intergovernmental immunity, Shaw remains good law, although its result was altered by statute, as Congress was free to do. See generally Board of County Comm’rs v. Seber, 318 U. S. 705 (1943).

       The ski resort land was not technically “acquired” “in trust for the Indian tribe.” But, as the Solicitor General has pointed out, “it would have been meaningless for the United States, which already had title to the forest, to convey title to itself for the use of the Tribe.” Brief for the United States as amicus curiae 13. We think the lease arrangement here in question was sufficient to bring the Tribe’s interest in the land within the immunity afforded by § 465. It should perhaps be noted that the Tribe has not suggested that it is immune from taxation by virtue of its status as a lessee of land owned by the Federal Government. See, e. g., United States v. Detroit, 355 U. S. 466 (1958); James v. Dravo Contracting Co., 302 U. S. 134 (1937); cf. Helvering v. Mountain Producers Corp., 303 U. S. 376 (1938); Oklahoma Tax Comm’n v. Texas Co., supra.

        Squire v. Capoeman involved the attempted imposition of federal capital gains taxes on the sale price of timber logged off allotted Indian timberland (located within a reservation). The timber constituted “the major value” — if not the only practical value — of the Indian’s allotted land and it was clear that if the capital gains tax was to apply, the purposes and intent of the General Allotment Act of 1887 would in large measure have been frustrated. 351 U. S., at 10. The Court, relying in part on “relatively contemporaneous official and unofficial writings” on the intended scope of the income tax laws, id., at 9, declined to so interpret those later enacted laws and to find that the Government intended to tax its own ward in this particular manner. In contrast to Squire, we find nothing fundamentally inconsistent with the intent of the Indian Reorganization Act in permitting the gross receipts of the Tribe’s off-reservation enterprise to be subject to nondiscriminatory state taxes.

       It is unclear from the record whether the Tribe has actually incorporated itself as an Indian chartered corporation pursuant to § 477. But see Charters, Constitutions and By-Laws of the Indian Tribes of North America, pt. III, pp. 13-15 (G. Fay ed. 1967). The Tribe’s constitution, however, adopted under 25 U. S. C. §476, gives its Tribal Council the powers that would ordinarily be held by such a corporation, Art. XI, and by both practice and regulations, the two entities have apparently merged in important respects. See 25 CFR §91.2; Comment, n. 6, supra, at 973. In any event, the question of tax immunity cannot be made to turn on the particular form in which the Tribe chooses to conduct its business.


author: Mr. Justice Marshall

text:
    McCLANAHAN v. ARIZONA STATE TAX COMMISSION
    No. 71-834.
    Argued December 12, 1972
    Decided March 27, 1973
    Marshall, J., delivered the opinion for a unanimous Court.

      Richard B. Collins argued the cause for appellant. With him on the briefs were Donald Juneau and Theodore R. Mitchell.

      James D. Winter, Assistant Attorney General of Arizona, argued the cause for appellee. With him on the brief was Gary K. Nelson, Attorney General.

      Harry R. Sachse argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Griswold, Assistant Attorney General Frizzell, Deputy Solicitor General Wallace, Edmund B. Clarke, and Carl Strass.

       Briefs of amici curiae urging reversal were filed by Charles A. Hobbs for the National Congress of American Indians; by David H. Getches for the Native American Rights Fund; and by Samuel W. Murphy, Jr., and William C. Pelster for Montana Inter-Tribal Policy Board.

        William D. Dexter, Assistant Attorney General of Washington, and Eugene F. Corrigan filed a brief for Multistate Tax Commission as amicus curiae urging affirmance.

        Mr. Hobbs, Pierre J. LaForce, and R. Don Mahan filed a brief for the Estate of Rose Mason as amicus curiae.

   Mr. Justice Marshall

delivered the opinion of the Court.

This case requires us once again to reconcile the plenary-power of the States over residents within their borders with the semi-autonomous status of Indians living on tribal reservations. In this instance, the problem arises in the context of Arizona’s efforts to impose its personal income tax on a reservation Indian whose entire income derives from reservation sources. Although we have repeatedly addressed the question of state taxation of reservation Indians, the problems posed by a state income tax are apparently of first impression in this Court. The Arizona courts have held that such state taxation is permissible. 14 Ariz. App. 452, 484 P. 2d 221 (1971). We noted probable jurisdiction, 406 U. S. 916 (1972), and now reverse. We hold that by imposing the tax in question on this appellant, the State has interfered with matters which the relevant treaty and statutes leave to the exclusive province of the Federal Government and the Indians themselves. The tax is therefore unlawful as applied to reservation Indians with income derived wholly from reservation sources.

I

Appellant is an enrolled member of the Navajo tribe who lives on that, portion of the Navajo Reservation located within the State of Arizona. Her complaint alleges that all her income earned during 1967 was derived from within the Navajo Reservation. Pursuant to Ariz. Rev. Stat. Ann. §43-188 (f) (Supp. 1972-1973), $16.20 was withheld from her wages for that year to cover her state income tax liability. At the conclusion of the tax year, appellant filed a protest against the collection of any taxes on her income and a claim for a refund of the entire amount withheld from her wages. When no action was taken on her claim, she instituted this action in Arizona Superior Court on behalf of herself and those similarly situated, demanding a return of the money withheld and a declaration that the state tax was unlawful as applied to reservation Indians.

The trial court dismissed the action for failure to state a claim, and the Arizona Court of Appeals affirmed. Citing this Court’s decision in Williams v. Lee, 358 U. S. 217 (1959), the Court of Appeals held that the test “is not whether the Arizona state income tax infringes on plaintiff’s rights as an individual Navajo Indian, but whether such a tax infringes on the rights of the Navajo tribe of Indians to be self-governing.” 14 Ariz. App., at 454, 484 P. 2d, at 223. The court thus distinguished cases dealing with state taxes on Indian real property on the ground that these taxes, unlike the personal income tax, infringed tribal autonomy.

The court .then pointed to cases holding that state employees could be required to pay federal income taxes and that the State had a concomitant right to tax federal employees. See Helvering v. Gerhardt, 304 U. S. 405 (1938); Graves v. New York ex rel. O’Keefe, 306 U. S. 466 (1939). Reasoning by analogy from these cases, the court argued that Arizona’s income tax on individual Navajo Indians did not “[cause] an impairment of the right of the Navajo tribe to be self governing.” 14 Ariz. App., at 455, 484 P. 2d, at 224.

Nor did the court find anything in the Arizona Enabling Act, 36 Stat. 557, to prevent the State from taxing reservation Indians. That Act, the relevant language of which is duplicated in the Arizona Constitution, disclaims state title over Indian lands and requires that such lands shall remain “under the absolute jurisdiction and control of the Congress of the United States.” 36 Stat. 569. But the Arizona court, relying on this Court’s decision in Organized Village of Kake v. Egan, 369 U. S. 60 (1962), held that the Enabling Act nonetheless permitted concurrent state jurisdiction so long as tribal self-government remained intact. Since an individual income tax did not interfere with tribal self-government, it followed that appellant had failed to state a claim. The Arizona Supreme Court denied a petition for review of this decision, and the case came here on appeal. See 28 U. S. C. § 1257 (2).

II

It may be helpful to begin our discussion of the law applicable to this complex area with a brief statement of what this case does not involve. We are not here dealing with Indians who have left or never inhabited reservations set aside for their exclusive use or who do not possess the usual accoutrements of tribal self-government. See, e. g., Organized Village of Kake v. Egan, supra; Metlakatla Indian Community v. Egan, 369 U. S. 45 (1962); Oklahoma Tax Comm’n v. United States, 319 U. S. 598 (1943). Nor are we concerned with exertions of state sovereignty over non-Indians who undertake activity on Indian reservations. See, e. g., Thomas v. Gay, 169 U. S. 264 (1898); Utah & Northern R. Co. v. Fisher, 116 U. S. 28 (1885). Cf. Surplus Trading Co. v. Cook, 281 U. S. 647, 651 (1930). Nor, finally, is this a case where the State seeks to reach activity undertaken by reservation Indians on nonreservation lands. See, e. g., Mescalero Apache Tribe v. Jones, ante, p. 145. Rather, this case involves the narrow question whether the State may tax a reservation Indian for income earned exclusively on the reservation.

The principles governing the resolution of this question are not new. On the contrary, “[t]he policy of leaving Indians free from state jurisdiction and control is deeply rooted in the Nation’s history.” Rice v. Olson, 324 U. S. 786, 789 (1945). This policy was first articulated by this Court 141 years ago when Mr. Chief Justice Marshall held that Indian nations were “distinct political coriimunities, having territorial boundaries, within which their authority is exclusive, and having a right to all the lands within those boundaries, which is not only acknowledged, but guarantied by the United States.” Worcester v. Georgia, 6 Pet. 515, 557 (1832). It followed from this concept of Indian reservations as separate, although dependent nations, that state law could have no role to plav within the reservation boundaries, “The Cherokee nation ... is a distinct community, occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force, and which the citizens of Georgia have no right to enter, but with the assent of the Cherokees themselves, or in conformity with treaties, and with the acts of Congress. The whole intercourse between the United States and this nation, is, by our Constitution and laws, vested in the government of the United States.” Id., at 561. See also United States v. Kagama, 118 U. S. 375 (1886); Ex parte Crow Dog, 109 U. S. 556 (1883).

Although Worcester on its facts dealt with a State’s efforts to extend its criminal jurisdiction to reservation lands, the rationale of the case plainly extended to state taxation within the reservation as well. Thus, in The Kansas Indians, 5 Wall. 737 (1867), the Court unambiguously rejected state efforts to impose a land tax on reservation Indians. “If the tribal organization of the Shawnees is preserved intact, and recognized by the political department of the government as existing, then they are a 'people distinct from others,’ capable of making treaties, separated from the jurisdiction of Kansas, and to be governed exclusively by the government of the Union. If under the control of Congress, from necessity there can be no divided authority.” Id., at 755. See also The New York Indians, 5 Wall. 761 (1867).

It is true, as the State asserts, that some of the later Indian tax cases turn, not on the Indian sovereignty doctrine, but on whether or not the State can be said to have imposed a forbidden tax on a federal instrumentality. See, e. g., Leahy v. State Treasurer of Oklahoma, 297 U. S. 420 (1936); United States v. Rickert, 188 U. S. 432 (1903). To the extent that the tax exemption rests on federal immunity from state taxation, it may well be inapplicable in a case such as this involving an individual income tax. But it would vastly oversimplify the problem to say that nothing remains of the notion that reservation Indians are a separate people to whom state jurisdiction, and therefore state tax legislation, may not extend. Thus, only a few years ago, this Court struck down Arizona’s attempt to tax the proceeds of a trading company doing business within the confines of the very reservation involved in this case. See Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S. 685 (1965). The tax in no way interfered with federal land or with the National Government’s proprietary interests. But it was invalidated nonetheless because “from the very first days of our Government, the Federal Government had been permitting the Indians largely to govern themselves, free from state interference.” Id., at 686-687. As a leading text on Indian problems summarizes the relevant law: “State laws generally are not applicable to tribal Indians on an Indian reservation except where Congress has expressly provided that State laws shall apply. It follows that Indians and Indian property on an Indian reservation are not subject to State taxation except by virtue of express authority conferred upon the State by act of Congress.” U. S. Dept, of the Interior, Federal Indian Law 845 (1958) (hereafter Federal Indian Law).

This is not to say that the Indian sovereignty doctrine, with its concomitant jurisdictional limit on the reach of state law, has remained static during the 141 years since Worcester was decided. Not surprisingly, the doctrine has undergone considerable evolution in response to changed circumstances. As noted above, the doctrine has not been rigidly applied in cases where Indians have left the reservation and become assimilated into the general community. See, e. g., Oklahoma Tax Comm’n v. United States, 319 U. S. 598 (1943). Similarly, notions of Indian sovereignty have been adjusted to take account of the State’s legitimate interests in regulating the affairs of non-Indians. See, e. g., New York ex rel. Ray v. Martin, 326 U. S. 496 (1946); Draper v. United States, 164 U. S. 240 (1896); Utah & Northern R. Co. v. Fisher, 116 U. S. 28 (1885). This line of cases was summarized in this Court’s landmark decision in Williams v. Lee, 358 U. S. 217 (1959): “Over the years this Court has modified [the Worcester principle] in cases where essential tribal relations were not involved and where the rights of Indians would not be jeopardized .... Thus, suits by Indians against outsiders in state courts have been sanctioned. . . . And state courts have been allowed to try non-Indians who committed crimes against each other on a reservation. . . . But if the crime was by or against an Indian, tribal jurisdiction or that expressly conferred on other courts by Congress has remained exclusive. . . . Essentially, absent governing Acts of Congress, the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them.” Id., at 219-220 (footnote omitted).

Finally, the trend has been away from the idea of inherent Indian sovereignty as a bar to state jurisdiction and toward reliance on federal pre-emption. See Mescolero Apache Tribe v. Jones, ante, p. 145. The modern cases thus tend to avoid reliance on platonic notions of Indian sovereignty and to look instead to the applicable treaties and statutes which define the limits of state power. Compare, e. g., United States v. Kagama, 118 U. S. 375 (1886), with Kennedy v. District Court, 400 U. S. 423 (1971).

The Indian sovereignty doctrine is relevant, then, not because it provides a definitive resolution of the issues in this suit, but because it provides a backdrop against which the applicable treaties and federal statutes must be read. It must always be remembered that the various Indian tribes were once independent and sovereign nations, and that their claim to sovereignty long predates that of our own Government. Indians today are American citizens. They have the right to vote, ’ to use state courts, and they receive some state services. But it is nonetheless still true, as it was in the last century, that “[t]he relation of the Indian tribes living within the borders of the United States ... [is] an anomalous one and of a complex character. . . . They were, and always have been, regarded as having a semi-independent position when they preserved their tribal relations; not as States, not as nations, not as possessed of the full attributes of sovereignty, but as a separate people, with the power of regulating their internal and social relations, and thus far not brought under the laws of the Union or of the State within whose limits they resided.” United States v. Kagama, 118 U. S., at 381-382.

III

When the relevant treaty and statutes are read with this tradition of sovereignty in mind, we think it clear that Arizona has exceeded its lawful authority by attempting to tax appellant. The beginning of our analysis must be with the treaty which the United States Gov-eminent entered with the Navajo Nation in 1868. The agreement provided, in relevant part, that a prescribed reservation would be set aside “for the use and occupation of the Navajo tribe of Indians” and that “no persons except those herein so authorized to do, and except such officers, soldiers, agents, and employes of the government, or of the Indians, as may be authorized to enter upon Indian reservations in discharge of duties imposed by law, or the orders of the President, shall ever be permitted to pass over, settle upon, or reside in, the territory described in this article.” 15 Stat. 668.

The treaty nowhere explicitly states that the Navajos were to be free from state law or exempt from state taxes. But the document is not to be read as an ordinary contract agreed upon by parties dealing at arm’s length with equal bargaining positions. We have had occasion in the past to describe the circumstances under which the agreement was reached. “At the time this document was signed the Navajos were an exiled people, forced by the United States to live crowded together on a small piece of land on the Pecos River in eastern New Mexico, some 300 miles east of the area they had occupied before the coming of the white man. In return for their promises to keep peace, this treaty 'set apart’ for 'their permanent home’ a portion of what had been their native country.” Williams v. Lee, 358 U. S., at 221.

It is circumstances such as these which have led this Court in interpreting Indian treaties, to adopt the general rule that “[djoubtful expressions are to be resolved in favor of the weak and defenseless people who are the wards of the nation, dependent upon its protection and good faith.” Carpenter v. Shaw, 280 U. S. 363, 367 (1930). When this canon of construction is taken together with the tradition of Indian independence described above, it cannot be doubted that the reservation of certain lands for the exclusive use and occupancy of the Navajos and the exclusion of non-Navajos from the prescribed area was meant to establish the lands as within the exclusive sovereignty of the Navajos under general federal supervision. It is thus unsurprising that this Court has interpreted the Navajo treaty to preclude extension of state law- — including state tax law — to Indians on the Navajo Reservation. See Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S., at 687, 690; Williams v. Lee, supra, at 221-222.

Moreover, since the signing of the Navajo treaty, Congress has consistently acted upon the assumption that the States lacked jurisdiction over Navajos living on the reservation. Thus, when Arizona entered the Union, its entry was expressly conditioned on the promise that the State would “forever disclaim all right and title to . . . all lands lying within said boundaries owned or held by any Indian or Indian tribes, the right or title to which shall have been acquired through or from the United States or any prior sovereignty, and that until the title of such Indian or Indian tribes shall have been extinguished the same shall be and remain subject to the disposition and under the absolute jurisdiction and control of the Congress of the United States.” Arizona Enabling Act, 36 Stat. 569.

Nor is the Arizona Enabling Act silent on the specific question of tax immunity. The Act expressly provides that “nothing herein, or in the ordinance herein provided for, shall preclude the said State from taxing as other lands and other property are taxed any lands and other property outside of an Indian reservation owned or held by any Indian.” Id., at 570 (emphasis added). It is true, of course, that exemptions from tax laws should, as a general rule, be clearly expressed. But we have in the past construed language far more ambiguous than this as providing a tax exemption for Indians. See, e. g., Squire v. Capoeman, 351 U. S. 1, 6 (1956), and we see no reason to give this language an especially crabbed or restrictive meaning.

Indeed, Congress’ intent to maintain the tax-exempt status of reservation Indians is especially clear in light of the Buck Act, 4 U. S. C. § 105 et seq., which provides comprehensive federal guidance for state taxation of those living within federal areas. Section 106 (a) of Title 4 U. S. C. grants to the States general authority to impose an income tax on residents of federal areas, but § 109 expressly provides that “[n]othing in sections 105 and 106 of this title shall be deemed to authorize the levy or collection of any tax on or from any Indian not otherwise taxed.” To be sure, the language of the statute itself does not make clear whether the reference to “any Indian not otherwise taxed” was intended to apply to reservation Indians earning their income on the reservation. But the legislative history makes plain that this proviso was meant to except reservation Indians from coverage of the Buck Act, see S. Rep. No. 1625, 76th Cong., 3d Sess., 2, 4 (1940); 84 Cong. Rec. 10685, and this Court has so interpreted it. See Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S., at 691 n. 18. While the Buck Act itself cannot be read as an affirmative grant of tax-exempt status to reservation Indians, it should be obvious that Congress would not have jealously protected the immunity of reservation Indians from state income taxes had it thought that the States had residual power to impose such taxes in any event. Similarly, narrower statutes authorizing States to assert tax jurisdiction over reservations in special situations are explicable only if Congress assumed that the States lacked the power to impose the taxes without special authorization.

Finally, it should be noted that Congress has now provided a method whereby States may assume jurisdiction over reservation Indians. Title 25 U. S. C. § 1322 (a) grants the consent of the United States to States wishing to assume criminal and civil jurisdiction over reservation Indians, and 25 U. S. C. § 1324 confers upon the States the right to disregard enabling acts which limit their authority over such Indians. But the Act expressly provides that the State must act “with the consent of the tribe occupying the particular Indian country,” 25 U. S. C. § 1322 (a), and must “appropriately [amend its] constitution or statutes.” 25 U. S. C. § 1324. Once again, the Act cannot be read as expressly conferring tax immunity upon Indians. But we cannot believe that Congress would have required the consent of the Indians affected and the amendment of those state constitutions which prohibit the assumption of jurisdiction if the States were free to accomplish the same goal unilaterally by simple legislative enactment. See Kennedy v. District Court, 400 U. S. 423 (1971).

Arizona, of course, has neither amended its constitution to permit taxation of the Navajos nor secured the consent of the Indians affected. Indeed, a startling aspect of this case is that appellee apparently concedes that, in the absence of compliance with 25 U. S. C. § 1322 (a), the Arizona courts can exercise neither civil nor criminal jurisdiction over reservation Indians. See Brief for Appellee 24-26. But the appellee nowhere explains how, without such jurisdiction, the State’s tax may either be imposed or collected. Cf. Tr. of Oral Arg. 38-39. Unless the State is willing to defend the position that it may constitutionally administer its tax system altogether without judicial intervention, cf. Ward v. Board of County Comm’rs, 253 U. S. 17 (1920), the admitted absence of either civil or criminal jurisdiction would seem to dispose of the case.

IV

When Arizona’s contentions are measured against these statutory imperatives, they are simply untenable. The State relies primarily upon language in Williams v. Lee stating that the test for determining the validity of state action is “whether [it] infringed on the right of reservation Indians to make their own laws and be ruled by them.” 358 U. S., at 220. Since Arizona has attempted to tax individual Indians and not the tribe or reservation as such, it argues that it has not infringed on Indian rights of self-government.

In fact, we are far from convinced that when a State imposes taxes upon reservation members without their consent, its action can be reconciled with tribal self-determination. But even if the State’s premise were accepted, we reject the suggestion that the Williams test was meant to apply in this situation. It must be remembered that cases applying the Williams test have dealt principally with situations involving non-Indians. See also Organized Village of Kake v. Egan, 369 U. S., at 75-76. In these situations, both the tribe and the State could fairly claim an interest in asserting their respective jurisdictions. The Williams test was designed to resolve this conflict by providing that the State could protect its interest up to the point where tribal self-government would be affected.

The problem posed by this case is completely different. Since appellant is an Indian and since her income is derived wholly from reservation sources, her activity is totally within the sphere which the relevant treaty and statutes leave for the Federal Government and for the Indians themselves. Appellee cites us to no cases holding that this legislation may be ignored simply because tribal self-government has not been infringed. On the contrary, this Court expressly rejected such a position only two years ago. In Kennerly v. District Court, 400 U. S. 423 (1971), the Blackfoot Indian Tribe had voted to make state jurisdiction concurrent within the reservation. Although the State had not complied with the procedural prerequisites for the assumption of jurisdiction, it argued that it was nonetheless entitled to extend its laws to the reservation since such action was obviously consistent with the wishes of the Tribe and, therefore, with tribal self-government. But we'held that the Williams rule was inapplicable and that “[t]he unilateral action of the Tribal Council was insufficient to vest Montana with jurisdiction.” Id., at 427. If Montana may not assume jurisdiction over the Blackfeet by simple legislation even when the Tribe itself agrees to be bound by state law, it surely follows that Arizona may not assume such jurisdiction in the absence of tribal agreement.

Nor is the State’s attempted distinction between taxes on land and on income availing. Indeed, it is somewhat surprising that the State adheres to this distinction in light of our decision in Warren Trading Post Co. v. Arizona Tax Comm’n, supra, wherein we invalidated an income tax which Arizona had attempted to impose within the Navajo Reservation. However relevant the land-income distinction may be in other contexts, it is plainly irrelevant when, as here, the tax is resisted because the State is totally lacking in jurisdiction over both the people and the lands it seeks to tax. In such a situation, the State has no more jurisdiction to reach income generated on reservation lands than to tax the land itself.

Finally, we cannot accept the notion that it is irrelevant “whether the . . . state income tax infringes on [appellant’s] rights as an individual Navajo Indian,” as the State Court of Appeals maintained. 14 Ariz. App., at 454, 484 P. 2d, at 223. To be sure, when Congress has legislated on Indian matters, it has, most often, dealt with the tribes as collective entities. But those entities are, after all, composed of individual Indians, and the legislation confers individual rights. This Court has therefore held that “the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them.” Williams v. Lee, supra, at 220 (emphasis added). In this case, appellant’s rights as a reservation Indian were violated when the state collected a tax from her which it had no jurisdiction to impose. Accordingly, the judgment of the court below must be

Reversed.

       See, e. g., Oklahoma Tax Comm’n v. United States, 319 U. S. 598 (1943); Childers v. Beaver, 270 U. S. 555 (1926); United States v. Rickert, 188 U. S. 432 (1903); The Kansas Indians, 5 Wall. 737 (1867). Cf. Squire v. Capoeman, 351 U. S. 1 (1956).

       State courts have disagreed on the question. Compare Ghahate v. Bureau of Revenue, 80 N. M. 98, 451 P. 2d 1002 (1969), with Commissioner of Taxation v. Brun, 286 Minn. 43, 174 N. W. 2d 120 (1970). See Powless v. State Tax Comm’n, 22 App. Div. 2d 746, 253 N. Y. S. 2d 438 (1964); State Tax Comm’n v. Barnes, 14 Misc. 2d 311, 178 N. Y. S. 2d 932 (1958).

       The liability was created by Ariz. Rev. Stat. Ann. § 43-102 (a) (Supp. 1972-1973) which, in relevant part, provides: “There shall be levied, collected, and paid for each taxable year upon the entire net income of every estate or trust taxable under this title and of every resident of this state and upon the entire net income of every nonresident which is derived from sources within this state, taxes in the following amounts and at the following rates upon the amount of net income in excess of credits against net income provided in §§ 43-127 and 43-128.” Appellant conceded below that she was a “resident” within the meaning of the statute, and that question, which in any event poses an issue of state law, is not now before us.

         See also Williams v. United States, 327 U. S. 711 (1946); United States v. Chavez, 290 U. S. 357 (1933); United States v. Ramsey, 271 U. S. 467 (1926).

       The federal-instrumentality doctrine does not prohibit state taxation of individuals deriving their income from federal sources. See Graves v. New York ex rel. O’Keefe, 306 U. S. 466 (1939). Cf. Leahy v. State Treasurer of Oklahoma, 297 U. S. 420 (1936). The doctrine has, in any event, been sharply limited with respect to Indians. See Oklahoma Tax Comm’n v. United States, 319 U. S. 598 (1943).

       The court below distinguished Warren Trading Post as limited to cases where the Federal Government has pre-empted state law by regulating Indian traders in a manner inconsistent with state taxation. 14 Ariz. App. 452, 455, 484 P. 2d 221, 224. But although the Court was, no doubt, influenced by the federal licensing requirements, the reasoning of Warren Trading Post cannot be so restricted. The Court invalidated Arizona’s tax in part because “Congress has, since the creation of the Navajo Reservation nearly a century ago, left the Indians on it largely free to run the reservation and its affairs without state control, a policy which has automatically relieved Arizona of all burdens for carrying on those same responsibilities.” Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S. 685, 690 (1965).

       The source of federal authority over Indian matters has been the subject of some confusion, but it is now generally recognized that the power derives from federal responsibility for regulating commerce with Indian tribes and for treaty making. See U. S. Const. Art. I, §8, cl. 3; Art. II, §2, cl. 2. See also Williams v. Lee, 358 U. S. 217, 219 n. 4 (1959); Perrin v. United States, 232 U. S. 478, 482 (1914); Federal Indian Law 3.

       The extent of federal pre-emption and residual Indian sovereignty in the total absence of federal treaty obligations or legislation is therefore now something of a moot question. Cf. Organized Village of Kake v. Egan, 369 U. S. 60, 62 (1962); Federal Indian Law 846. The question is generally of little more than theoretical importance, however, since in almost all cases federal treaties and statutes define the boundaries of federal and state jurisdiction.

       See 8 U. S. C. § 1401 (a)(2).

       See, e. g., Harrison v. Laveen, 67 Ariz. 337, 196 P. 2d 456 (1948).

       See, e. g., Felix v. Patrick, 145 U. S. 317, 332 (1892).

       The court below pointed out that Arizona was expending tax monies for education and welfare within the confines of the Navajo Reservation. 14 Ariz, App., at 456-457, 484 P. 2d, at 225-226. It should be noted, however, that the Federal Government defrays 80% of Arizona’s ordinary social security payments to reservation Indians, see 25 U. S. C. § 639, and has authorized the expenditure of more than $88 million for rehabilitation programs for Navajos and Hopis living on reservations. See also 25 U. S. C. §§ 13, 309, 309a. Moreover, “[c]onferring rights and privileges on these Indians cannot affect their situation, which can only be changed by treaty stipulation, or a voluntary abandonment of their tribal organization.” The Kansas Indians, 5 Wall., at 757.

       “Congress has . . . acted consistently upon the assumption that the States have no power to regulate the affairs of Indians on a reservation. . . . Significantly, when Congress has wished the States to exercise this power it has expressly granted them the jurisdiction which Worcester v. Georgia has denied.” Williams v. Lee, 358 U. S., at 220-221 (footnote omitted).

       This language is duplicated in Arizona’s own constitution. See Ariz. Const., Art. 20, ¶ 4. It is also contained in the Enabling Acts of New Mexico and Utah, the other States in which the Navajo Reservation is located. See New Mexico Enabling Act, 36 Stat. 558-559; Utah Enabling Act, 28 Stat. 108.

       There is nothing in Organized Village of Kake v. Egan, 369 U. S. 60 (1962), to the contrary. In Egan, we held that “‘absolute’ federal jurisdiction is not invariably exclusive jurisdiction,” and that this language in federal legislation did not preclude the exercise of residual state authority. See id., at 68. But that holding came in the context of a decision concerning the fishing rights of non-reservation Indians. See id., at 62. It did not purport to provide guidelines for the exercise of state authority in areas set aside by treaty for the exclusive use and control of Indians.

       See, e. g., 25 U. S. C. § 398 (congressional authorization for States to tax mineral production on unallotted tribal lahds). Cf. 18 U. S. C. § 1161 (state liquor laws may be applicable within reservations) ; 25 U. S. C. § 231 (state health and education laws may be applicable within reservations).

       As passed in 1953, Pub. L. 280, 67 Stat. 588, delegated civil and criminal jurisdiction over Indian reservations to certain States, although not to Arizona. 18 U. S. C. § 1162; 28 U. S. C. § 1360. The original Act also provided a means whereby other States could assume jurisdiction over Indian reservations without the consent of the tribe affected. 67 Stat. 590. However, in 1968, Congress passed the Indian Civil Rights Act which changed the prior procedure to require the consent of the Indians involved before a State was permitted to assume jurisdiction. 25 U. S. C. § 1322 (a). Thus, had it wished to do so, Arizona could have unilaterally assumed jurisdiction over its portion of the Navajo Reservation at any point during the 15 years between 1953 and 1968. But although the State did pass narrow legislation purporting to require the enforcement of air and water pollution standards within reservations, Ariz. Rev. Stat. Ann. §§ 36-1801, 36-1865 (Supp. 1972), it declined to assume full responsibility for the Indians during the period when it had the opportunity to do so.

       We do not suggest that Arizona would necessarily be empowered to impose this tax had it followed the procedures outlined in 25 U. S. C. § 1322 et seq. Cf. 25 U. S. C. § 1322 (b). That question is not presently before us, and we express no views on it.

       In light of our prior cases, appellee has no choice but to make this concession. See, e. g., Kennedy v. District Court, 400 U. S. 423 (1971); States v. Kagama, 118 U. S. 375 (1886).

        Organized, Village of Kake v. Egan, 369 U. S. 60 (1962), is not such a case. See n. 15, supra.

       Indeed, the position was expressly rejected in Williams itself, upon which appellee so heavily relies. Williams held that “absent governing Acts of Congress, the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them.” 358 U. S., at 220 (emphasis added).


author: Mr. Justice Brennan Mr. Justice Stewart,

text:
    BUTZ, SECRETARY OF AGRICULTURE, et al. v. GLOVER LIVESTOCK COMMISSION CO., INC.
    No. 71-1545.
    Argued February 27, 1973
    Decided March 28, 1973
    Brennan, J., delivered the opinion of the Court, in which Burger, C. J., and White, Marshall, Blackmun, Powell, and Rehnquist, JJ., joined. Stewart, J., filed a dissenting opinion, in which Douglas, J., joined, post, p. 189.

      Keith A. Jones argued the cause for petitioners. With him on the brief were Solicitor General Griswold, Assistant Attorney General Wood, Morton Hollander, and William Kanter.

      R. A. Eilbott, Jr., argued the cause for respondent. With him on the brief was Edward I. Staten.

   Mr. Justice Brennan

delivered the opinion of the Court.

The Judicial Officer of the Department of Agriculture, acting for the Secretary of Agriculture, found that respondent, a registrant under the Packers and Stockyards Act, 1921, 42 Stat. 159, 7 U. S. C. § 181 et seq., wilfully violated §§ 307 (a) and 312 (a) of the Act, 7 U. S. C. §§ 208 (a) and 213 (a), by incorrect weighing of livestock, and also breached § 401, 7 U. S. C. § 221, by entries of false weights. An order was entered directing that respondent cease and desist from the violations and keep correct accounts, and also suspending respondent as a registrant under the Act for 20 days. Upon review of the decision and order, the Court of Appeals for the Eighth Circuit upheld, as supported by substantial evidence, the findings that respondent violated the Act by short-weighting cattle, and also sustained the cease-and-desist order and the order to keep correct accounts. The Court of Appeals, however, set aside the 20-day suspension. 454 F. 2d 109 (1972). We granted certiorari to consider whether, in doing so, the Court of Appeals exceeded the scope of proper judicial review of administrative sanctions. 409 U. S. 947 (1972). We conclude that the setting aside of the suspension was an impermissible judicial intrusion into the administrative domain under the circumstances of this case, and reverse.

Respondent operates a stockyard in Pine Bluff, Arkansas. As a registered “market agency” under § 303 of the Act, 7 U. S. C. § 203, respondent is authorized to sell consigned livestock on commission, subject to the regulatory provisions of the Act and the Secretary’s implementing regulations. Investigations of respondent’s operations in 1964, 1966, and 1967 uncovered instances of underweighing of consigned livestock. Respondent was informally warned to correct the situation, but when a 1969 investigation revealed more underweighing, the present proceeding was instituted by the Administrator of the Packers and Stockyards Administration.

Following a hearing and the submission of briefs, the Department of Agriculture hearing examiner found that respondent had “intentionally weighed the livestock at less than their true weights, issued scale tickets and accountings to the consignors on the basis of the false weights, and paid the consignors on the basis of the false weights.” The hearing examiner recommended, in addition to a cease-and-desist order and an order to keep correct records, a 30-day suspension of respondent’s registration under the Act.

The matter was then referred to the Judicial Officer.After hearing oral argument, the Judicial Officer filed a decision and order accepting the hearing examiner’s findings and adopting his recommendations of a cease-and-desist order and an order to keep correct records. The recommended suspension was also imposed but was reduced to 20 days. The Judicial Officer stated:

“It is not a pleasant task to impose sanctions but in view of the previous warnings given respondent we conclude that we should not only issue a cease and desist order but also a suspension of respondent as a registrant under the act but for a lesser period than recommended by complainant and the hearing examiner.” 30 Agri. Dec. 179, 186 (1971).

The Court of Appeals agreed that 7 U. S. C. § 204 authorized the Secretary to suspend “any registrant found in violation of the Act,” 454 F. 2d, at 113, that the suspension procedure here satisfied the relevant requirements of the Administrative Procedure Act, 5 U. S. C. § 558, and that “the evidence indicates that [respondent] acted with careless disregard of the statutory requirements and thus meets the test of wilfulness.’ ” 454 F. 2d, at 115. The court nevertheless concluded that the suspension order was “unconscionable” under the circumstances of this case. The court gave two reasons. The first, relying on four previous suspension decisions, was that the Secretary’s practice was not to impose suspensions for negligent or careless violations but only for violations found to be “intentional and flagrant,” and therefore that the suspension in respondent’s case was contrary to a policy of “ ‘achieving] . . . uniformity of sanctions for similar violations.’ ” The second reason given was that “[t]he cease and desist order coupled with the damaging publicity surrounding these proceedings would certainly seem appropriate and reasonable with respect to the practice the Department seeks to eliminate.” Id., at 114, 115.

The applicable standard of judicial review in such cases required review of the Secretary’s order according to the “fundamental principle . . . that where Congress has entrusted an administrative agency with the responsibility of selecting the means of achieving the statutory policy 'the relation of remedy to policy is peculiarly a matter for administrative competence.’ ” American Power Co. v. SEC, 329 U. S. 90, 112 (1946). Thus, the Secretary’s choice of sanction was not to be overturned unless the Court of Appeals might find it “unwarranted in law or . . . without justification in fact . . . Id., at 112-113; Phelps Dodge Corp. v. NLRB, 313 U. S. 177, 194 (1941); Moog Industries, Inc. v. FTC, 355 U. S. 411, 413-414 (1958); FTC v. Universal-Rundle Corp., 387 U. S. 244, 250 (1967); 4 K. Davis, Administrative Law §30.10, pp. 250-251 (1958). The Court of Appeals acknowledged this definition of the permissible scope of judicial review but apparently regarded respondent’s suspension as “unwarranted in law” or “without justification in fact.” We cannot agree that the Secretary’s action can be faulted in either respect on this record.

We read the Court of Appeals’ opinion to suggest that the sanction was “unwarranted in law” because “uniformity of sanctions for similar violations” is somehow mandated by the Act. We search in vain for that requirement in the statute. The Secretary may suspend “for a reasonable specified period” any registrant who has violated any provision of the Act. 7 U. S. C. § 204. Nothing whatever in that provision confines its application to cases of “intentional and flagrant conduct” or denies its application in cases of negligent or careless violations. Rather, the breadth of the grant of authority to impose the sanction strongly implies a congressional purpose to permit the Secretary to impose it to deter repeated violations of the Act, whether intentional or negligent. Hyatt v. United States, 276 F. 2d 308, 313 (CA10 1960) ; G. H. Miller & Co. v. United States, 260 F. 2d 286 (CA7 1958); In re Silver, 21 Agri. Dec. 1438, 1452 (1962). The employment of a sanction within the authority of an administrative agency is thus not rendered invalid in a particular case because it is more severe than sanctions imposed in other cases. FCC v. WOKO, 329 U. S. 223, 227-228 (1946); FTC v. Universal-Rundle Corp., 387 U. S., at 250, 251; G. H. Miller & Co. v. United States, supra, at 296; Hiller v. SEC, 429 F. 2d 856, 858-859 (CA2 1970); Dlugash v. SEC, 373 F. 2d 107, 110 (CA2 1967) ; Kent v. Hardin, 425 F. 2d 1346, 1349 (CA5 1970).

Moreover, the Court of Appeals may have been in error in acting on the premise that the Secretary’s practice was to impose suspensions only in cases of “intentional and flagrant conduct.” The Secretary’s practice, rather, apparently is to employ that sanction as in his judgment best serves to deter violations and achieve the objectives of that statute. Congress plainly intended in its broad grant to give the Secretary that breadth of discretion. Therefore, mere unevenness in the application of the sanction does not render its application in a particular case “unwarranted in law.”

Nor can we perceive any basis on this record for a conclusion that the suspension of respondent was so “without justification in fact” “as to constitute an abuse of [the Secretary’s] discretion.” American Power Co. v. SEC, 329 U. S., at 115; Moog Industries, Inc. v. FTC, 355 U. S., at 414; Barsky v. Board of Regents, 347 U. S. 442, 455 (1954). The Judicial Officer rested the suspension on his view of its necessity in light of respondent’s disregard of previous warnings. The facts found concerning the previous warnings and respondent’s disregard of these warnings were sustained by the Court of Appeals as based on ample evidence. In that circumstance, the overturning of the suspension authorized by the statute was an impermissible intrusion into the administrative domain.

Similarly, insofar as the Court of Appeals rested its action on its view that, in light of damaging publicity about the charges, the cease-and-desist order sufficiently redressed respondent’s violations, the court clearly exceeded its function of judicial review. The fashioning of an appropriate and reasonable remedy is for the Secretary, not the court. The court may decide only whether, under the pertinent statute and relevant facts, the Secretary made “an allowable judgment in [his] choice of the remedy.” Jacob Siegel Co. v. FTC, 327 U. S. 608, 612 (1946).

Reversed.

Mr. Justice Stewart,

with whom Mr. Justice Douglas joins,

dissenting.

The only remarkable thing about this case is its presence in this Court. For the case involves no more than the application of well-settled principles to a familiar situation, and has little significance except for the respondent. Why certiorari was granted is a mystery to me — particularly at a time when the Court is thought by many to be burdened by too heavy a caseload. See Rule 19, Rules of the Supreme Court of the United States.

The Court of Appeals did nothing more than review a penalty imposed by the Secretary of Agriculture that was alleged by the respondent to be discriminatory and arbitrary. In approaching its task, the appellate court displayed an impeccable understanding of the permissible scope of review:

“The scope of our review is limited to the correction of errors of law and to an examination of the sufficiency of the evidence supporting the factual conclusions. The findings and order of the Judicial Officer must be sustained if not contrary to law and if supported by substantial evidence. Also, this Court may not substitute its judgment for that of the Judicial Officer’s as to which of the various inferences may be drawn from the evidence.” 454 F. 2d 109, 110-111.
“Ordinarily it is not for the courts to modify ancillary features of agency orders which are supported by substantial evidence. The shaping of remedies is peculiarly within the special competence of the regulatory agency vested by Congress with authority to deal with these matters, and so long as the remedy selected does not exceed the agency’s statutory power to impose and it bears a reasonable relation to the practice sought to be eliminated, a reviewing court may not interfere.” Id., at 114.

Had the Court of Appeals used the talismanic language of the Administrative Procedure Act, and found the penalty to be either “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” 5 U. S. C. § 706 (2) (A), I have no doubt that certiorari would have been denied. But the Court of Appeals made the mistake of using the wrong words, saying that the penalty was “unconscionable,” because it was “unwarranted and without justification in fact.”

Today the Court holds that the penalty was not “unwarranted in law,” because it was within permissible statutory limits. But this ignores the valid principle of law that motivated the Court of Appeals — the principle that like cases are to be treated alike. As Professor Jaffe has put the matter:

“The scope of judicial review is ultimately conditioned and determined by the major proposition that the constitutional courts of this country are the acknowledged architects and guarantors of the integrity of the legal system. . . . An agency is not an island entire of itself. It is one of the many rooms in the magnificent mansion of the law. The very subordination of the agency to judicial jurisdiction is intended to proclaim the premise that each agency is to be brought into harmony with the totality of the law; the law as it is found in the statute at hand, the statute book at large, the principles and conceptions of the 'common law/ and the ultimate guarantees associated with the Constitution.”

The reversal today of a wholly defensible Court of Appeals judgment accomplishes two unfortunate results. First, the Court moves administrative decisionmaking one step closer to unreviewability, an odd result at a time when serious concern is being expressed about the fairness of agency justice. Second, the Court serves notice upon the federal judiciary to be wary indeed of venturing to correct administrative arbitrariness.

Because I think the Court of Appeals followed the correct principles of judicial review of administrative conduct, I would affirm its judgment.

       7 U. S. C. §§ 201-217a. Specifically, registrants are prohibited from engaging in or using “any unfair, unjustly discriminatory, or deceptive practice or device in connection with . . . receiving, marketing, buying, or selling on a commission basis or otherwise, feeding, watering, holding, delivery, shipment, weighing, or handling ... of livestock,” 7 U. S. C. §213 (a), and are required to “keep such accounts, records, and memoranda as fully and correctly disclose all transactions involved in his business 7 U. S. C. §221.
      The Secretary’s regulations may be found in 9 CFR pt. 201.

       App. 35.

       The Court of Appeals stated:
      “Ordinarily it is not for the courts to modify ancillary features of agency orders which are supported by substantial evidence. The shaping of remedies is peculiarly within the special competence of the regulatory agency vested by Congress with authority to deal with these matters, and so long as the remedy selected does not exceed the agency’s statutory power to impose and it bears a reasonable relation to the practice sought to be eliminated, a reviewing court may not interfere. . . . [A]ppellate courts [may not] enter the more spacious domain of public policy which Congress has entrusted in the various regulatory agencies.” 454 F. 2d 109, 114.

       The Court of Appeals cited a 1962 decision by the Secretary in which appears a reference to “uniformity of sanctions for similar violations.” In re Silver, 21 Agri. Dec. 1438 (1962). That reference is no support for the Court of Appeals’ decision, however, for the Secretary said expressly in that decision:
      “False and incorrect weighing of livestock by registrants under the act is a flagrant and serious violation thereof ...” and “even if respondent did not give instructions for the false weighings, his negligence in allowing the false weighings over an extended period brings such situation unthin the reach of the cited cases [sustaining sanctions] and we would still order the sanctions below.” Id., at 1452 (emphasis added).

       It is by no means clear that respondent’s violations were merely negligent. The hearing examiner found that respondent had “intentionally” underweighed livestock, and the Judicial Officer stated: “We conclude then, as did the hearing examiner, that respondent wilfully violated . . . the act.” (Emphasis added.) “Wilfully” could refer to either intentional conduct or conduct that was merely careless or negligent. It seems clear, however, that the Judicial Officer sustained the hearing examiner’s finding that the violations were “intentional.”

       See, e. g., In re Martella, 30 Agri. Dec. 1479 (1971); In re Meggs, 30 Agri. Dec. 1314 (1971); In re Producers Livestock Mar

        keting Assn., 30 Agri. Dec. 796 (1971); In re Trimble, 29 Agri. Dec. 936 (1970); In re Anson, 28 Agri. Dec. 1127 (1969); In re Williamstown Stockyards, 27 Agri. Dec. 252 (1968); In re Middle Georgia Livestock Sales Co., 23 Agri. Dec. 1361 (1964). These cases involve suspension of registrants under the Packers and Stockyards Act for false weighing of producers’ livestock and in none was there a finding that the violation was intentional or flagrant. There are also many cases of suspension for diverse other violations without a finding that the conduct was intentional or flagrant. See, e. g., In re Wallis, 29 Agri. Dec. 37 (1970).

       The Court of Appeals borrowed this phrasing of the test from this Court’s opinion in American Power Co. v. SEC, 329 U. S. 90 112-113.

       L. Jaffe, Judicial Control of Administrative Action 589-590 (1965).

       See generally K. Davis, Discretionary Justice: A Preliminary Inquiry (1969), reviewed by Wright, Beyond Discretionary Justice, 81 Yale L. J. 575.