Washington v. Confederated Tribes of the Colville Indian Reservation

Mr. Justice Brennan,

with whom Mr. Justice Marshall joins, concurring in part and dissenting in part.

I agree with the Court’s analysis of the jurisdictional questions posed in these cases, as well as with its treatment of the *165 Washington motor vehicle, mobile home, camper and travel trailer taxes and its disposition of the assumption-of-jurisdiction issue. Accordingly, I join in their entirety Parts I, II, III, Y, and VI of the Court’s opinion. I also agree with.' Part IV insofar as it holds that the Colville, Makah, and Lummi Tribes have the power to impose their cigarette taxes on nontribal purchasers (Part IY-B (1)). As the Court points out, the power to tax on-reservation transactions that involve a tribe or its members is a “fundamental attribute of sovereignty which the tribes retain unless divested of it by federal law or necessary implication . . . .” Ante, at 152. Recognition of that fundamental attribute, however, leads me to disagree with much of the balance of the Court’s Part IY. In my view, the State of Washington’s cigarette taxing scheme should be invalidated both because it undermines the Tribes’ sovereign authority to regulate and tax the distribution of cigarettes on trust lands and because it conflicts with tribal activities and functions that have been expressly approved by the Federal Government.

I

I begin with a somewhat general overview. While they are sovereign for some purposes, it is now clear that Indian reservations do not partake of the full territorial sovereignty of States or foreign countries. 1 The result has been to blur the *166 boundary between state and tribal authority. A few guideposts do exist, however. First, in the absence of tribal consent state law does not reach on-reservation conduct involving only Indians. Thus we have held that tribal courts have exclusive jurisdiction over adoption proceedings involving the on-reservation conduct of tribal members, Fisher v. District Court, 424 U. S. 382 (1976); that States cannot apply their income taxes to the receipts derived by reservation Indians from reservation sources, McClanahan v. Arizona State Tax Comm’n, 411 U. S. 164 (1973); and that States may not levy cigarette taxes on on-reservation sales to reservation Indians or impose personal property taxes on property owned by such Indians, Moe v. Salish & Kootenai Tribes, 425 U. S. 463, 480-481 (1976).

Second, there is a significant territorial component to tribal power. Thus state taxes on the off-reservation activities of Indians are permissible, Mescalero Apache Tribe v. Jones, 411 U. S. 145 (1973), and tribal laws will often govern the on-reservation conduct of non-Indians. Williams v. Lee, 358 *167 U. S. 217 (1959). See also United States v. Mazurie, 419 U. S. 544, 557-558 (1975). 2

Third, where it is necessary to resolve a conflict between state and tribal authority over on-reservation conduct involving Indians and non-Indians, a relatively particularistic look at the interests of State and tribe and the federal policies that govern relations with Indian tribes is appropriate. We have concluded, for example, that a tribe lacks jurisdiction to try a non-Indian for a crime, Oliphant v. Suquamish Indian Tribe, 435 U. S. 191, 208 (1978), but that a State may not resolve a dispute arising out of on-reservation transactions between an Indian purchaser and a non-Indian seller, Williams v. Lee, supra, at 219 , or tax the gross receipts of a federally licensed retail trading post that deals on the reservation with reservation Indians, Warren Trading Post Co. v. Arizona State Tax Comm’n, 380 U. S. 685 (1965).

And fourth, the preceding results flow from an intricate web of sources including federal treaties and statutes, the broad policies that underlie those federal enactments, and a presumption of sovereignty or autonomy that has roots deep in aboriginal independence. The prevalent mode of analysis is one of pre-emption. It takes as its starting point the exclusive power of the Federal Government to regulate Indian tribes and proceeds to bound state power where necessary to give vitality to the federal concerns at stake. Bryan v. *168 Itasca County, 426 U. S. 373, 376, n. 2 (1976). Only rarely does the talismanic invocation of constitutional language or rigid conceptions of state and tribal sovereignty shed light on difficult problems. Moe, supra, at 481, n. 17 ; McClanahan v. Arizona State Tax Comm’n, supra, at 172.

For present purposes, two federal concerns seem especially important. One is the strong and oft-cited policy of encouraging tribal self-government. United States v. Wheeler, 435 U. S. 313, 322-326 (1978); Fisher v. District Court, supra, at 386-388 ; McClanahan v. Arizona State Tax Comm’n, supra, at 179; Williams v. Lee, supra, at 219-220 . And the other is a complementary interest in stimulating Indian economic and commercial development. Both found expression in the Indian Reorganization Act of 1934, 25 U. S. C. § 461 et seq., 3 and are manifest in more recent statutes as well. 4 They are, *169 I believe, of central importance in analyzing any conflict of state and tribal law.

II

With this as background, I turn to the particular problem at hand. Like the Court, I begin with Moe, supra, which considered a state cigarette tax similar to the one at issue here. There we started with the observation that the tax itself was “concededly lawful” — it neither fell upon tribal members nor impinged on tribal functions. 425 U. S., at 483 . The key problem, as we saw it, was one of enforcement: Could the State of Montana require the Indian seller to collect a tax validly imposed on the non-Indian purchaser? We determined that the burden of collection was minimal and noted that it would in no sense “frustrate] tribal self-government.” 5 Accordingly, we held that it could be imposed to prevent wholesale tax avoidance by non-Indian purchasers.

As the Court points out, Moe does suggest a number of limits upon Indian sovereignty in general and the federal interests in tribal self-government and economic growth in particular: It permits state law to come on the reservation in the form of a tax and collection requirement, and it upholds the imposition of a tax that will undoubtedly hurt Indian retailing activities by depriving tribal smokeshops of a competitive edge.

But while in Moe the cigarette business was largely a private operation, the Tribes involved in these cases have adopted comprehensive ordinances regulating and taxing the distribution of cigarettes by on-reservation shops. Phrased differently, these Tribes are acting in federally sanctioned and *170 encouraged ways — they are raising governmental revenues, establishing commercial enterprises, and struggling to escape from “ 'a century of oppression and paternalism.’ ” Mescalero Apache Tribe v. Jones, 411 U. S., at 152 , quoting H. R. Rep. No. 1804, 73d Cong., 2d Sess., 6 (1934). As I see it, that difference has three important consequences. First, it means that in this case the sharp drop in cigarette sales that would result from imposition of the state tax will reduce revenues not only of individual Indian retailers, but also of the Tribes themselves as governmental units. Second, it means that a decision permitting application of the state tax would place Indian goods at an actual competitive disadvantage as compared to non-Indian ones because the former would have to bear two tax burdens while the latter bore but one. And third, it leads to an actual conflict of jurisdiction and sovereignty because imposition of the Washington tax would inject state law into an on-reservation transaction which the Indians have chosen to subject to their own laws.

The Court in effect concludes that these consequences are insignificant. The first, it suggests, is undercut by Moe , which made clear that Indian retailers have no absolute right to market their tax-exempt status. The second is too speculative — “the Tribes have failed to demonstrate that business at the smokeshops would be significantly reduced by a state tax without a credit as compared to a state tax with a credit.” Ante, at 157. And the third “need not detain us” because “[t]here is no direct conflict between the state and tribal schemes. . . .” Ante, at 158.

I do not agree. Whatever their individual force, I think that in combination these three consequences bring the Washington taxes into sharp conflict with important federal policies. Perhaps most striking is the fact that a rule permitting imposition of the state taxes would have the curious effect of making the federal concerns with tribal self-government and commercial development inconsistent with one another. In essence, tribes are put to an unsatisfactory choice. They are *171 free to tax sales to non-Indians, but doing so will place a burden upon such sales which may well make it profitable for non-Indian buyers who are located on the reservation to journey to surrounding communities to purchase cigarettes. 6 Or they can decide to remain competitive by not taxing such sales, and in the process forgo revenues urgently needed to fill governmental coffers. Commercial growth, in short, can be had only at the expense of tax dollars. And having to make that choice seriously intrudes on the Indians’ right “to make their own laws and be ruled by them,” Williams v. Lee, 358 U. S., at 219-220 . 7

*172 The Court provides no satisfactory explanation of why the State is free to put the Tribes to such a choice. Rather, it characterizes the tribal business as an effort to market a tax exemption and proceeds to label that effort illegitimate and beyond the reasonable bounds of any federally protected tribal right. Yet that line of argument could at most justify a state tax which through some sort of credit mechanism ensures that the location of cigarette purchases is independent of state and tribal taxing schemes — it does not support a rule that the State may tax all on-reservation sales to non-Indians regardless of tribal taxes. 8 Nor is the Court’s argument saved by the contention that the Tribes have failed to prove that the combination of these particular tribal and state taxes will cause Indian smokeshops to lose volume that would otherwise be theirs. The fact is that the Court today permits the State to enact a tax without risking any attendant loss of business for its retailers while the Tribes must court economic harms when they enact taxes of their own. That result erodes the Tribes’ sovereign authority and stands the special federal solicitude for Indian commerce and governmental autonomy on its head.

The conflict with federal law is particularly evident on the present facts because the Secretary of the Interior — acting pursuant to lawful regulations — has approved the tribal taxing and regulatory schemes at issue here. That approval, and the federal policies which underlie it, both enhances tribal authority and ousts inconsistent state lav/. Cf. Fisher v. *173 District Court, 424 U. S. 382 (1976); United States v. Mazurie, 419 U. S. 544 (1975).

The Court draws support for its result from the suggestion that a decision invalidating these taxes would give the Tribes carte blanche to establish vast tax-exempt shopping centers dealing in every imaginable good. I think these fears are substantially overdrawn. Moe made clear that Indians do not have an absolute entitlement to achieve some particular sales volume by passing their tax-exempt status to non-Indian customers, and I do not question that conclusion today. I would simply hold that the State may not impose a tax that forces the Tribes to choose between federally sanctioned goals and places their goods at an actual competitive disadvantage. Nothing in such a holding would emasculate state taxing authority or bring the specter of enormous tribal tax havens closer to reality. On the contrary, I am confident that the State could devise a taxing scheme without the flaws which mar the present one.

In sum, I would hold these taxes impermissible and save for another day the question of what sorts of less intrusive measures a State may take to protect its tax base and avoid the parade of horribles alluded to by the Court.

Ill

Because I would hold the state cigarette taxes invalid, I would not reach the bulk of the recordkeeping and enforcement issues addressed by the Court in Parts IY-C and IV-E of its opinion. Indeed, since the District Court failed to discuss most of those issues, I am startled that the majority proceeds to address and decide them rather than remanding for the views of that court. In my judgment, only one relatively narrow recordkeeping issue ought be addressed at this time, and that concerns the District Court’s holding that the State could not require the Tribes to keep records of exempt sales to facilitate collection of valid taxes on nonexempt sales. 446 P. Supp. 1339, 1358-1359, 1373. The District Court *174 found the record in this case inadequate to show any need for such documentation. The Court, however, sees this as no obstacle to upholding the requirement. I disagree. The State has no direct power over exempt sales, and I see no reason why it should be permitted to require Indians to keep records of such sales absent some showing of necessity or utility. In consequence, I would either affirm the District Court in this regard or remand so that the record may be supplemented.

For the foregoing reason, I dissent as to Parts IV-B (2), IV-C, and IV-E.

The starkest territorial conception of Indian sovereignty was sketched by Mr. Chief Justice Marshall in Worcester v. Georgia, 6 Pet. 515, *166 557-561 (1832). An Indian reservation, he stated, was “a distinct community, occupying its own territory ... in which the laws of Georgia can have no force . . . See F. Cohen, Handbook of Federal Indian Law 122 (1942). Williams v. Lee, 358 U. S. 217, 219 (1959), noted that this view had been “modified ... in cases where essential tribal relations were not involved.” Kake Village v. Egan, 369 U. S. 60, 71-75 (1962), noted a shift as well. And McClanahan v. Arizona State Tax Comm’n, 411 U. S. 164, 172 (1973), observed that “the trend has been away from the idea of inherent Indian sovereignty as a bar to state jurisdiction.” Rather, McClanahan concluded, sovereignty is better seen as a “backdrop against which the applicable treaties and federal statutes must be read.” Ibid. In a similar vein, Oliphant v. Suquamish Indian Tribe, 435 U. S. 191, 208 (1978), recognized that Indian tribes are “prohibited from exercising both those powers of autonomous States that are expressly terminated by Congress and those powers ‘inconsistent with their status.’ ” (Emphasis and citations omitted.) Still, United States v. Wheeler, 435 U. S. 313, 322-326 (1978), emphasized the sovereign nature of tribal authority over Indians. See also Mescalero Apache Tribe v. Jones, 411 U. S. 145, 148 (1973); Antoine v. Washington, 420 U. S. 194, 201-203 (1975).

This territorial component is also suggested by recent statutes like the Clean Air Act Amendments of 1977, 91 Stat. 685 , 735, which provide that “[l]ands within the exterior boundaries of reservations of federally recognized Indian tribes” may be redesignated for air quality purposes “only by the appropriate Indian governing body.” A similar note is sounded in the Surface Mining Control and Reclamation Act of 1977, 91 Stat. 445 , 523. In addition, a geographical or territorial source for Indian authority may be found in the Washington Enabling Act, 25 Stat. 676 , § 4, by which the State was required to disclaim “all right and title” to lands “owned'or held by any Indian or Indian tribes” and to agree that such lands “shall remain under the absolute jurisdiction and control of the Congress. . . .”

See Mescalero Apache Tribe v. Jones, 411 U. S., at 151-152 . There we noted that 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.’ ” Id., at 152 , quoting H. R. Rep. No. 1804, 73d Cong., 2d Sess., 6 (1934). • The Reorganization Act itself contains a number of provisions that demonstrate Congress’ concern with encouraging Indian economic development. See 25 U. S. C. §§ 469 , 470, and 477. See also Santa Clara Pueblo v. Martinez, 436 U. S. 49, 59-60 (1978).

See the Indian Self-Determination and Education Assistance Act of 1975, 25 U. S. C. § 450 et seq., and the Indian Financing Act of 1974, 25 U. S. C. § 1451 et seq. Section 2 of the latter statute states as follows:

“It is hereby declared to be the policy of Congress to provide capital .. . to help develop and utilize Indian resources, both physical and human, to a point where the Indians will fully exercise responsibility for the utilization and management of their own resources and where they will enjoy a standard of living from their own productive efforts comparable to that enjoyed by non-Indians in neighboring communities.” 88 Stat. 77 .

Adherence to the policies underlying the Reorganization Act has not been without some interruption. The Termination Acts of the 1950’s, see, e. g., 25 U. S. C. §§ 564 , 721-728, 741-760, and 891-901 (1958 ed.) seem to have signalled a congressional urge to pursue an assimilationist policy somewhat *169 akin to the approach that was dominant prior to the Reorganization Act. See generally Menominee Tribe v. United States, 391 U. S. 404 (1968). But present policy “appears to be returning to a 'focus upon strengthening tribal self-government.” Bryan v. Itasca County, 426 U. S. 373, 389, n. 14 (1976).

Moe, 425 U. S., at 483 , citing Williams v. Lee, 358 U. S., at 219-220 .

This problem was entirely absent in Moe . Nothing in the result there disfavored the purchase of Indian goods. Rather, imposition of the state tax on non-Indians simply created a situation in which persons were encouraged to buy cigarettes on the basis of factors other than tax benefits and avoidance — factors like geographical location and convenience. In the present situation, the state tax actually tips the balance against the Indians.

It might be argued that the choice I describe is entirely commonplace — that in making its taxing decisions every governmental unit is required to balance its revenue needs against the economic impact of the taxes it considers. In one sense, this is quite true: If one State has a very low sales tax, a neighboring State’s ability to impose a higher one may as a practical matter be impaired. In some circumstances, it can cope with this situation by imposing a complementary tax on the in-state use of goods purchased elsewhere. National Geographic Society v. California Bd. of Equalization, 430 U. S. 551, 555 (1977). And in others there will exist no efficacious way of collecting such a tax. Whatever the case, however, the two States will face each other across their common border with equal arsenals.

I think the present situation is readily distinguishable for the simple reason that Indian reservations are not States. This has two sorts of consequences. First, it means the equality noted in the preceding paragraph is absent. Moe holds that sellers on an Indian reservation may be required to collect state taxes on sales to non-Indians that occur entirely on the reservation. Yet it is highly unlikely that the Tribes in these cases could require sellers elsewhere in Washington to collect tribal taxes. And second, Indian Tribes, while less autonomous than States in important respects, are the special beneficiaries of certain federal concerns and policies. As a result, *172 the tradeoffs and frictions that may be inevitable in the state-state context demand special scrutiny in the state-reservation context. Tribes may lack the tools needed to protect themselves, and protecting them is an important federal concern. Cf. Morton v. Mancari, 417 U. S. 535, 551-555 (1974).

See Mescalero Apache Tribe v. Jones, 411 U. S., at 152 (quoting legislative history to the effect that Indians should be able to “enter the white world on a footing of equal competition”).