Appendix — Rice v. Rehner

Appendix A

[Filed June 8, 1982]

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EVA REHNER, )

)No. 77-2409

Plaintiff-Appellee,

Vv.

BAXTER RICE, Individually and

as Director of the Department

of Alcoholic Beverage Control

of the State of California,

Defendant~Appellee.

MUCKLESHOOT INDIAN TRIBE,

No. 79-4403

Plaintiff-Appellees,

Vv.

STATE OF WASHINGTON, et al.,

Defendants-Appellant.

THE TULALIP TRIBES OF WASHINGTON,)No. 79-4404

an Indian Tribe,

Plaintiffs-Appellees,

Vv.

OPINION

STATE OF WASHINGTON, et al.,

De fendants~Appellants.

i ee ee ee ee

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Before: BROWNING, CHOY, GOODWIN, WALLACE,

KENNEDY, TANG, FARRIS, PREGERSON,

POOLE, CANBY, REINHARDT, Circuit

Judges

TANG, Circuit Judge:

The three cases involved in this

decision arise under different facts, but

the issue common to all is whether under 18

U.S.C. § 11612/ the states or the Indian

tribes have licensing and distribution

jurisdiction over Indian country liquor

transactions. We conclude that under

section 1161 the tribes have exclusive

jurisdiction to license and distribute

liquor on the reservation.

In No. 77-2409 (Rehner), Eva Rehner,

a federally licensed Indian trader who owns

and operates a small general store on the

Pala Reservation in California, sought

exemption from California law requiring a

state license for retail sale of distilled

spirits for of f-premises consumption.

-2-A-

The Pala Band of Mission Indians had

adopted an ordinance permitting the sale of

intoxicating beverages provided that such

sales were in conformity with the laws of

California. The Secretary of the Interior

certified the ordinance as required under

section 1161. When the California

Department of Alcoholic Beverage Control

rejected Mrs. Rehner's request for an

exemption, she brought an action in

district court for declaratory and injunc-

tive relief. The district court dismissed

her action for failure to state a claim.

It concluded that Mrs. Rehner was required

to obtain a’ license from the State of

California before she could lawfully engage

in the sale of distilled spirits. She

appeals.

In Nos. 79-4403 and 79-4404

(Muckleshoot and Tulalip), the State of

Washington seized liquor in interstate

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commerce destined for the Muckleshoot and

Tulalip Indian reservations in Washington

where the two tribes maintain retail liquor

stores. Washington had assumed criminal

and civil jurisdiction pursuant to Public

Law 2802/ (Pub. L. 280) over the

Muckleshoot and Tulalip Indian Tribes in

1957 and 1958, respectively.2/ ‘The tribal

liquor stores are operated pursuant to

tribal ordinances enacted under authority

granted by 18 U.S.C. § 1161 (1976), which

permits reservation sales of liquor by

Indian tribeé when such sales do not other-

wise contravene state or tribal law. Both

ordinances were approved by the Bureau of

Indian Affairs and certified by the

Secretary of the Interior as required under

section 1161.4/

Under these ordinances, no sales

of liquor are permitted on the reservations

except through stores owned and operated by

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the tribal governments. The principal

objectives of the ordinances are to regulate

the sale of liquor on the reservations

and to generate revenue for the tribes.

The distribution of liquor in the tribal

stores is consistent with state standards

of conduct applicable to liquor transac-

tions but the tribes have never applied for

licensing from the Washington State Liquor

Control Board [the Board]. Consistent with

their authority under section 1161, the

tribes contracted with the Central Liquor

Company, a federally licensed distributor

located in Oklahoma City, Oklahoma, for the

sale of liquor to the tribes. In November

and December of 1978, however, agents of

the Board seized liquor moving in

interstate commerce from the Central Liquor

Company to the Muckleshoot and Tulalip

Tribes.

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Washington seized the liquor

contending that its monopoly on the sale of

liquor extended to Indian Country .2/ Aside

from tribal liquor stores. Washington,

through the Board, maintains an absolute

monopoly on the sale of liquor within the

state. Revenue earned through this state

monopoly is distributed to local

governments; none is distributed to the

tribes.

The tribes brought actions in

federal district court seeking injunctive

relief and Washington counterclaimed,

seeking injunctive and monetary relief.

The district court held: (1) the tribes —

exercise exclusive regulatory jurisdiction

under 18 U.S.C. § 1161 over liquor sales

on the reservation; (2) the twenty-first

amendment did not expand the States’

jurisdiction over liquor sales on Indian

reservations; and (3) Washington's

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counterclaim was without merit. Washington

appeals all three rulings.

II

Two canons of construction have

been applied to statutes affecting Indian

immunities. First, ambiguities in statutes

relating to Indians are to be resolved in

favor of the Indians. Oliphant v.

Suquamish Indian Tribe, 435 U.S. 191, 208 n.

17 (1978); Bryan v. Itasca County, 426 U.S.

373, 392 (1976); DeCoteau v. District

County Court, 420 U.S. 425, 444 (1975).

Second, state jurisdiction over reservations,

historically, is strongly disfavored. The

Supreme Court has emphasized that the

policy of leaving Indians free from state

jurisdiction is deeply rooted in the

nation's history. Bryan, 426 U.S. at 376

n. 2; McClanahan v. Arizona State Tax Comm'n,

411 U.S. 164, 168 (1973). Moreover, the

Supreme Court has stated that "[s]tate laws

-JoAo

generally are not applicable to tribal

Indians on an Indian reservation except

where Congress has expressly provided that

State laws shall apply." Bryan, 426 U.S.

at 376 n. 2, quoting McClanahan, 411 U.S.

at 170-171. In view of this, we conclude

that there is insufficient evidence to show

that Congress intended section 1161 to

confer on the states regulatory jurisdic-

tion over on-reservation liquor traffic.

The federal government has long

exercised pervasive and exclusive control

over Indian liquor transactions®/ through

its authority under the Indian commerce

clause ,2/ and Article II, section 2 of the

United States Const itut ion.2/ See

McClanahan, 4li U.S. at p. 173.

In consideration of the history of

exclusive federal control, the district

court in Muckleshoot and Tulalip observed

that unless section 1161 expressly authorizes

-§-2-

state jurisdiction over liquor transactions

in Indian country, there could be no ground

for concluding that Congress has removed its

veil of preemption. It did not find such

an authorization.

Our review of section 1161 and its

legislative history together with an

appraisal of other relevant statutes and

administrative and judicial constructions

of section 1161, confirms that conclusion.

A.

Washington and California argue

that 18 U.S.C. § 1161 does not preempt the

imposition of state distributive and

licensing jurisdiction in Indian country.

In reviewing this contention, we turn first

to the language of the statute. See Reiter

v. Sonotone Corp., 442 U.S. 330 332

(1979). Section 1161 provides:

The provisions of sections

1154, 1156, 3113, 3488, and 3618,

{federal statutes establishing

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criminal sanctions and procedures

for Indian country liquor violations]

of this title, shall not apply within

any area that is not Indian country,

nor to any act or transaction within

any area of Indian country provided

such act or transaction is in conformity

both with the laws of the State in

which such act or transaction occurs

and with an ordinance duly adopted

by the tribe having jurisdiction over

such area of Indian country, certified

by the Secretary of the Interior, and

published in the Federal Register.

18 U.S.C. § 1161 (1976) (emphasis added).

Washington and California contend

that, through section 1161, Congress dele-

gated regulatory authority over reservation

liquor transactions to the states. They

argue that the language delegating such

power is identical with respect to the tribes

and to the state: Liquor transactions must

be ". . . in conformity both with the laws

of the state in which such act or transaction

occurs and with an ordinance duly adopted

by the tribe having jurisdiction over such

area of Indian country .. . " (emphasis

-10-A-

added). According to Washington and

California, section 1161 requires the tribes

not only to conform with substantive

standards such as hours of operation and

legal age for consumption, but also to

observe and respect state requirements

relating to the distribution and licensing

of liquor.

Quite plainly an ambiguity in

construction exists for the language of

section 1161 suggests a contrary result to

us. We agree with Washington that the

statute's key clause requires liquor tran-

sactions to be "in conformity with both the

laws of the state in which such act or

transaction occurs and with an ordinance

duly adopted by the tribe having jurisdiction

over such area of Indian country... "

Our agreement ends here, however.

Washington places an inordinate emphasis on

the isolated phrase “laws of the State",

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and concludes that state “law” includes

exclusive jurisdiction to license and

distribute.

Even if such a narrow focus on the

phrase “laws of the State” apart from its

context were justified, we would reach the

opposite conclusion. Because the adjective

"both" is distributive with regard to the

phrases "laws of the State” and “ordinance

duly adopted by the tribe", each phrase is

equivalent and coextensive within the

structure of the sentence. If we were to

assume, as Washington does, that the phrase

"laws of the State” implicitly permits

exclusive state licensing and distribution

jurisdiction, the grammatical logic of the

statute would likewise require the implicit

inclusion of a similar jurisdictional com-

ponent in the phrase “ordinance duly

adopted by the tribe ... ." Washington's

reading thus yields the unlikely result

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that a licensing and distribution monopoly

could vest in both the state and the tribes.

There is no basis in the statute's structure

for assuming that Sacress intended courts

to read a jurisdictional component into the

phrase “laws of the State” and simulta-

neously to ignore the similar opportunity

presented by the phrase “ordinance duly

adopted by the tribe." Moreover, the

finding of an implicit recognition of

jurisdiction in the phrase "ordinance duly

adopted by the tribe", is more tenable than

the finding of an implicit grant of juris-

diction in the phrase “laws of the State,”

because grants of state jurisdiction over

reservation Indians must be express, not

implied. Bryan, 426 U.S. at 390. Tribal

power over internal affairs, on the other

hand, is inherent and may exist without a

grant from Congress. United States v.

Wheeler, 435 U.S. 313 (1978); see

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Washington v. Confederated Tribes of the

Colville Reservation, 447 U.S. 134, 152-54

(1980).

In any event, Washington's focus is

too restricted. The phrases "laws of the

State" and “ordinance duly adopted by the

tribe" must be read in light of the clauses

modifying them. We note first that section

1161 is not cast in the form of a jurisdic-

tional grant to anyone; it simply provides

for the inapplicability of certain federal

criminal statutes under specified conditions.

Moreover, the specific clauses relied upon

by the state do not support the implications

the state would draw from them. The relevant

language in section 1161 includes “laws of

the State in which such act or transaction

occurs" and “ordinance duly adopted by the

tribe having jurisdiction over such area

of Indian country". When presensted in

full, the clauses in section 1161 distri-

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buted by the word “both” yield a content

inconsistent with Washington's thesis.

Although the phrase “ordinance duly adopted

by the tribe" is specifically modified by

the word "jurisdiction", there is no

corresponding jurisdictional adjective in

section 1161 defining the scope of the

"laws of the State". On the contrary, the

phrase directly modifying “laws of the

State" - "in which such act or transaction

occurs” - contains no jurisdictional

inference. Had Congress so intended, it

could have captured the meaning of the

clause modifying “laws of the State", while

at the same time ceding jurisdiction to the

states, by substituting the phrase “having

jurisdiction over such act", for the phrase

"in which such act or transaction occurs",

and deleting the present reference to

tribal jurisdiction. If Congress intended

to confer jurisdiction over Indian liquor

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buted by the word “both” yield a content

inconsistent with Washington's thesis.

Although the phrase “ordinance duly adopted

by the tribe" is specifically modified by

the word "jurisdiction", there is no

corresponding jurisdictional adjective in

section 1161 defining the scope of the

"laws of the State". On the contrary, the

phrase directly modifying “laws of the

State” - "in which such act or transaction

occurs" - contains no jurisdictional

inference. Had Congress so intended, it

could have captured the meaning of the

clause modifying “laws of the State", while

at the same time ceding jurisdiction to the

states, by substituting the phrase “having

jurisdiction over such act", for the phrase

"in which such act or transaction occurs",

and deleting the present reference to

tribal jurisdiction. If Congress intended

to confer jurisdiction over Indian liquor

~15-A-

transaction to the states, it could have

expressly so stated. See Bryan, 426 U.S.

at 390.

A close reading of the statute then,

reveals that Congress recognized the tribes’

jurisdiction over liquor transactions, with

the state functioning only as the source of

law to be applied by the tribal government.

This meaning is supported by the statute's

syntax as well as the language modifying

the references to state law and tribal

ordinances.

i, “ii Se

/

B.

A comparison of section 1161 with

statutes that are related to or in pari

9/

materia with it also supports our conclusion

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that the tribes have distribution and licen-

sing jurisdiction. We first compare section

1161 with Pub. L. 280 and The Termination

=o eS both sets of legislation are

in pari materia with section 1161. We then

review the legislative history of section

1161 and Pub. L. 280, as well as related

statutes - the Assimilative Crimes and Major

Crimes Acts.

The Termination Acts are replete with

language expressly conferring jurisdiction

upon the states. Vague reference to the

"laws of the State", as found in section 1161,

was never assumed to suffice as a grant of

sebeateanten.” stabhante. a congressional

intent simply to apply state standards or

"laws of the State” in section 1161, standing

alone, is insufficient to confer jurisdiction.

Like the Termination Acts, Pub. L. 280

illustrates clearly that Congress knew how to

employ precise language when it wished to

-17-A-

transfer jurisdiction over Indian country to

the states. Although Pub. L. 280 and section

1161 are related in subject matter, there is

a conspicuous disparity in language between

the two snanietn.” be contrast to section

1161, Pub. L. 280 expressly grants civil and

Criminal jurisdiction to the states. In so

doing, Congress expressed its intent with

words similar to those employed in its refer-

ence to jurisdiction of the tribes in section

1161. Compare 18 U.S.C. § 1162(a) ("Each of

the states . .. shall have jurisdiction over

offenses ... .") (emphasis added), and 28

U.S.C. § 1360(a) ("Each of the states...

shall have jurisdiction over civil causes of

action ... .") (emphasis added) with 18

U.S.C. §1161 ("ordinance duly adopted by the

Tribe having jurisdiction ... .") (emphasis

added). There is no language in section 116l

indicating that the states were granted

jurisdiction over Indian country liquor

transactions.

-18-A-

In light of this repeated choice of

terminology, Washington cannot merely point

to the phrase “laws of the State" in section

1161 and infer that Congress intended a

wholesale conferral of jurisdiction upon the

states. When Congress extended jurisdiction

to the states in Pub. L.. 280, it not only

expressly granted jurisdiction, but also

classified and defined its grant as either

criminal or civil jurisdiction. In contrast,

section 1161 contains neither an express

grant of jurisdiction to the State nor any

definition of such jurisdiction as either

civil, criminal or regulatory. See Bryan,

426 U.S. at 383-93.

It is helpful to contrast the phrase

“shall have jurisdiction" of Pub. L. 280, with

the phrase “laws of the State” of section

1161. The conclusion that “laws of the State"

refers to state standards of conduct, and not

to jurisdiction, is compelled. In enacting

Pub. L. 280, Congress carefully and explicitly

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differentiated between "jurisdiction" and

substantive “laws" because it intended to

incorporate state substantive law and state

jurisdiction. See 18 U.S.C. § 1162(a) ("Each

of the states ... shall have jurisdiction

over offenses . . . and the criminal laws of

such state . . . shall have the same force

and effect within . . . Indian country as

- « « @lsewhere .. . .") (emphasis added);

28 U.S.C. § 1360(a) ("Each of the states

. « « Shall have jurisdiction over civil

causes of action . . . and those civil laws

- « « Of general application .. . shall have

the same force and effect within . . . Indian

country as .. . elsewhere . .. .") (emphasis

added).

A close examination of Pub. L. 280 re-

veals, then, that when Congress has extended

state jurisdiction over Indian country it has

done so affirmatively by using precise lan-

guage, not by oblique reference to state

law. Accordingly, we find that Congress did

-20-A-

not grant licensing and distribution juris-

diction in section 1161 when it spoke with

language that would have been inadequate to

confer jurisdiction under Pub. L. 280. This

distinction between substantive and regula-

tory law is at the heart of the Court's

holding in Bryan. The Court found that al-

though Congress ceded civil and criminal

jurisdiction to the states through Pub. L.

280, it did not express an intent to grant

the state regulatory jurisdiction to tax.

Bryan, 426 U.S. at 379-93.

Perhaps the most compelling feature of

section 1161's legislative history is the

complete absence of any discussion concerning

state licensing and distribution jurisdiction

over liquor. In Bryan, the Supreme Court

found the absence of legislative history fatal

to the claim that Pub. L. 280 conferred upon

the states regulatory jurisdiction to tax.

Bryan, 426 U.S. at 380; see Kennerly v. Dis-

trict Court of Ninth Judicial Dist. of Mont.

-21-A-

400 U.S. 423, 426-27 (1971) (Congress consis-

tently gives proposed extensions of state

jurisdiction over reservation Indians “com-

prehensive and detailed ... scrutiny");

Santa Rosa Band of Indians v. King's County,

532 F.2d 655, 661 (9th Cir. 1975), cert.

denied, 429 U.S. 1038 (1977).

The proposition that section 1161 in-

corporates only state substantive standards

and not state licensing and distribution

jurisdiction is also supported by comparing

section 1161 with the Assimilative Crimes

Act, 18 U.S.C. § 13 (1976), and the Major

Crimes Act, 18 U.S.C. § 1153 (1976). Under

the Assimilative Crimes Act, federal prose-

cutions of interracial offenses are effected

by assimilating substantive state law to fill

the gaps of federal law, but no state juris-

14/

diction is involved. See United States v.

Brown, 608 F.2d 551, 553 (5th Cir. 1979).

The act provides:

-22-A-

Whoever within or upon any of

the places now existing or hereafter

reserved or acquired as provided in

section 7 of this title, is guilt

of any act or omission which, al-

though not made punishable by any

enactment of Congress, would be

punishable if committed or omitted

within the jurisdiction of the

State, Territory or Possession, or

District in which such place is

Situated, by the laws thereof in

force at the time of such act or

omission, shall be guilty of a like

offense and subject to a like punish-

ment.

18 U.S.C. § 13 (1976) (emphasis added).

Under the Major Crimes Act, the federal

courts have jurisdiction over certain

offenses committed by Indians against

Indians and non-Indians in Indian territory.

The laws of the state in which the Indian

country is situated are incorporated for

the crimes of burglary and incest, as well

as other state laws which have no federal

counterparts. No state jurisdiction, how-

ever, is involved. See Youngbear v. Brewer,

549 F.2d 74, 75-76 (8th Cir. 1977). The act

provides in part:

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As used in this section, the

offenses of burglary and incest

shall be defined and punished in

accordance with the laws of the

State in which such offense was

committed as are in force at the

time of such offense.

In addition to the offenses

of burglary and incest, any other

of the above offenses which are

not defined and punished by Federal

law in force within the exclusive

jurisdiction of the United States

shall be defined and punished in

accordance with the laws of the

State in which such offense was

committed as are in force at the

time of such offense.

18 U.S.C. § 1153 (1976) (emphasis added).

The Assimilative Crimes Act and the

Major Crimes Act illuminate the function we

believe Congress meant state law to perform

in section 1161. Although both Crimes Acts

require the incorporation of state law in ad-

judicating certain criminal offenses, this

express requirement of incorporation clearly

does not compel the incorporation as well of

cain sama PY enforce and administer those

state laws. Rather than create a new body

of federal criminal law, Congress decided

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under these Acts to incorpcrate state sub-

stantive law. Federal courts, however,

retain jurisdiction over the offenses.

Nothing in section 1161 indicates that its

language is to be differentiated substan-

tively from that used in either of these

Acts. Although the purpose behind incorpo-

rating substantive state law might vary

among these eileen deatiieiien in enacting

section 116l appears to have adopted the

convenient technique it had employed in

drafting the Assimilative Crimes Act and

the Major Crimes Act.

Having reviewed the relevant statutes

and legislative history, we find no reason

to depart from the view we expressed upon

first reading the statute: section 1161

grants the states no jurisdiction to license

or distribute liquor in Indian country.

We next turn to the applicable precedents

and administrative constructions.

-~25-A-

c.

We have kept in mind the canons wf

construction, mentioned earlier in the

opinion, to be applied to statutes affecting

Indian immunities. Ambiguities are resolved

in Bryan, supra. There, the Court held that

although Pub. L. 280 conferred civil and

criminal jurisidction to the states, it did

not confer jurisdiction to tax.

The Court summarized its determina-

tion in Bryan by observing that "if Congress

in enacting Pub. L. 280 had intended to con-

fer upon the States general civil regulatory

powers, including taxation, over reservation

Indians, it would have expressly said so."

426 U.S. at 390. Although this identical

principle motivates our conclusion that sec-

tion 1161 does not confer licensing and

distribution jurisdiction upon the states,

we are also persuaded by what Congress did

express in section 1161 about regulatory

authority. No tribal ordinance is effective

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unless “certified by the Secretary of the

Interior, and published in the Federal

Register." 18 U.S.C. § 1161. Through this

language, Congress indicated that the regula-

tory authority of the tribes which was the

subject of § 1161 was safeguarded by federal

supervision. We are therefore presented with

a congressional scheme in which comprehensive

tribal ordinances and Department of Interior

certification procedures are "in themselves

sufficient to show that Congress has taken

- « « business . . . so fully in hand that

no room remains for state laws imposing

additional burdens. . . ." Warren Trading

Post v. Arizona Tax Commission, 380 u.s.

685, 691 (1965).

In United States v. New Mexico,

590 F.2d 323, 327-29 (10th Cir. 1978), cert.

denied, 444 U. S. 832 (1979), the Tenth Cir-

cuit faced the issue we decice today:

Whether section 1161 delegates to the states

authority to regulate Indian country liquor

-27-A-

transactions. After tracing the Supreme

Court's recent decisions, including Bryan,

Moe v. Confederated Salish and Kootenai

Tribes of Flathead Indian Reservation, 425

U.S. 463 (1976), McClanahan v. Arizona State

Tax Commission, supra, and Warren Trading

Post, supra, the Tenth Circuit concluded

that "Congress may delegate [regulatory]

authority to the state, but when it does

so it must be in specific terms. Section

1161 . . . does not delegate this authority

either expressly or impliedly.” 590 F.2d

at 328,

We agree with the Tenth Circuit

that the Supreme Court's recent precedents

require a conclusion that section 1161

sicteiad™” onaee licensing and distribution

jurisdiction in Indian country.

II!

Although we have concluded that

neither Washington nor California has regula-

tory jurisdiction to license liquor trans-

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actions or distribute liquor in Indian

country, the district court must determine

in Muckleshoot and Tulalip whether Washington

can impose a sales tax on Indian country

liquor transactions. Because the Court

below did not have available the Supreme

Court's opinion in Washington v. Confederated

Tribes of the Colville Indian Reservation,

447 U.S. 134, (1980) we reverse and remand

for proceedings consistent with that opinion.

Although Washington concedes that,

under Moe v. Salish & Kootenai Tribes, 425

U.S. at 475-481, it has no power to tax

sales to tribal members, it argues that

Colville permits state taxation of retail

sales to non-tribal members, even though the

class of non-tribal members includes Indians.

The district court apparently sought

to avoid resolution of the state sales tax

issue; nevertheless, it granted an injunction

against further off-reservation state liquor

seizures. Colville indicates, however, that

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an injunction against state off-reservation

seizures is improper without a determination

that the state tax is invalid. Colville,

447 U.S. at 161-62. Two other issues were

resolved in Colville. First, the Court found

that state taxation of sales to non-tribal

members, whether Indian or non-Indian, was

neither preempted nor contrary to principles

of tribal self-government. Colville, 447

U.S. at 154-59. Second, the Court held that

a state's interest in enforcing its valid

sales tax was sufficient to justify its

seizure of cigarette shipments travelling to

the reservation from out-of-state wholesalers

if the tribes failed to comply with state

collection procedures. Id. at 161-62. Con-

sequently, although the court below did not

directly address the tax issue, its grant of

injunctive relief implicitly presumed the

invalidity of the state sales tax. Because

the district court did not conduct the inquiry

mandated by Colville prior to granting the

-30-A-

injunction, we must reverse. Without an

initial determination whether the sales

tax is invalid, a grant of permanent injunc-

tive relief is premature.

Beyond reversing the district

court's grant of permanent injunctive relief,

we are unable to intimate any opinion on the

merits of the following questions: (1)

whether Washington's sales tax on sales to

non-tribal members, with or without credit

given to tribal sales taxes, is preempted or

violative of tribal self-government; or (2)

whether Washington may impose recordkeeping

requirements upon the tribes pursuant to the

valid state taxing power, if any. Resolu-

tion of these and related questions will

await full hearing on remand.

IV

Washington also contends that the

twenty-first amendment to the United States

Constitution enlarges its jurisdiction over

reservation liquor transactions. That amend-

-31-A-

ment provides in part:

The transportation or importa-

tion into any State, Territory, or

possession of the United States for

delivery or use therein of intoxi-

cating liquors, in violation of the

laws thereof, is hereby prohibited.

U.S. Const. amend. XXI, § 2.

There is little to commend the

State's contention. See United States v. New

Mexico, 590 F.2d 323, 329 (10th Cir. 1978),

cert. denied, 444 U.S. 832 (1979), (summarily

dismissing New Mexico's contention that the

twenty-first amendment permits state liquor

licensing on Indian reservations). As we

have indicated, section 1161 does not expand

a state's regulatory jurisdiction over tribal

liquor sales in Iné@ian country. Even if

jurisdiction over reservation liquor trans-

actions could be characterized as “concur-

rent", the Supreme Court has flatly held that

neither “exclusive” nor "concurrent" juris-

diction federal enclaves are subject to state

regulation by force of the twenty-first

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amendment. United States v. State Tax

Commission of Mississippi, 421 U.S. 599, 613-

14 (1975).

The state's argument is also

susceptible to a more fundamental criticism.

Washington's Pub. L. 280 jurisdiction over

the tribes is criminal and civil: Pub. L.

280 does not grant regulatory jurisdiction

over the tribes. Bryan, 426 U.S. at 389.

Even if the distinction between “concurrent”

and “exclusive” jurisdiction were valid in

this context, the state could not claim that

its jurisdiction is concurrent because Pub.

L. 280 is not a grant of regulatory juris-

diction to the states, and it is reguiatory

jurisdiction that is at issue in this case.

V

In Muckleshoot and Tulalip,

Washington asserts that its counterclaims for

injunctive relief and damages are not barred

by the doctrine of tribal sovereign immunity

-33-A-

and argues that because its claim was com-

pulsory, it needs no independent jurisdic-

tional basis to sue the tribes. Washington

also claims that jurisdiction for the

counterclaim could be grounded on section

1161 and the twenty-first amendment. It

further contends that the tribes waived

their sovereign immunity by bringing an ac-

tion for injunctive relief and that injunc-

tive relief against a sovereign is not

affirmative relief of the type barred by

sovereign immunity when such relief is the

-~Ogical concomitant of the court's power to

issue declaratory relief. It is also sug-

gested that the monetary relief Washington

seeks can be justified on a similar basis.

Pinally, Washington argues that under Land

v. Dollar, 330 U.S. 731 (1947), traditional

concepts of sovereign immunity do not apply

when the sovereign is in unlawful possession

of another's property; because the tribes may

be viewed as the constructive trustee for

-34-A-

Washington of all money received from the

sale of liquor, traditional principles of

sovereign immunity are inapplicable in this

case.

The district court ruled in favor

of the tribes on their motion for summary

judgment. It did not, however, reach the

issue of tribal sovereign immunity. Never-

theless, because the question of sovereign

immunity is jurisdictional in nature we are

obligated to resolve it irrespective of the

merits of Washington's counterclaim. See

People of the State of California ex rel.

California Department of Fish and Game v.

Quechan Tribe of Indians, 595 F.2d 1153,

1154 (9th Cir. 1979).

The immunity of the tribes is

coextensive with that of the United States.

Neither can be sued without congressional

Or tribal consent and such consent must be

unequivocaliy indicated. See Santa Clara

Pueblo v. Martinez, 436 U.S. 49, 59-60 (1978);

-35-A-

Quechan Tribe of Indians, 595 F.2d at 1155;

Sekaquaptewa v. MacDonald, 591 F.2d 1289,

1291 (9th Cir. 1979); United States v.

Oregon, 657 F.2d 1009, 1012-13 (9th Cir.

1981). Nothing on the face of section 1161

purports to subject the tribes to suits for

declaratory or injunctive relief. See

Martinez, 436 U.S. at 59-60. These

principles also preclude counterclaims. See

United States v. United States Fidelity &

Guaranty Co., 309 U.S. 506, 512-13 (1940);

United States v. City of Los Angeles, 595

F.2d 1386, 1389 (9th Cir. 1979). The present

case does not fall within the Land v. Dollar

exception to sovereign immunity, which is

only activated when the claim is to property

the sovereign wrongfully holds without any

title. 330 U.S. at 737-738. The tribes are

not agents or officers of the United States.

We therefore find Washington's counterclaim

barred by the doctrine of tribal sovereign

19/

immunity.

-36-A-

vi

In summary, we conclude that 18

U.S.C. § 1161 preempts state licensing and

distribution jurisdiction over tribal liquor

sales in Indian country. The effect of our

holding in 77-2409 is that so long as Mrs.

Rehner complies with the certified tribal

Ordinance authorized by 18 U.S.C. § 1161, she

need not obtain a California license to sell

liquor in Indian country. The judgment in

77-2409 is reversed.

In Muckleshoot and Tulalip, however,

we must remand to the district court for a

determination whether, and under what circum-

stances, Washington may impose a tax on tribal

liquor sales to non-tribal members. We there-

fore reverse the district court's grant of in-

junctive relief to the tribes. We affirm,

however, the trial court's conclusion that

the twenty-first amendment does not expand

the state's regulatory jurisdiction over

reservation liquor transactions. We also

-37-A-

find that Washington's counterclaims are

barred by the doctrine of tribal sovereign

immunity. The judgments in 79-4403 and 79-

4404 are affirmed in part and reversed in

part and remanded for proceedings not in-

consistent with this opinion.

-38-A-

FOOTNOTES

1/ 18 U.S.C. § 1161 Application of Indian

Liquor Laws

The provisions of sections

3113, 3488, and 3618, of this

title shall not apply within

any area that is not Indian

country, nor t© any act or

transaction is in conformity

both with the laws of the

State in which such act or

transaction occurs and with

an ordinance duly adopted by

the tribe having jurisdiction

over such area of Indian

country, certified by the

Secretary of the Interior, and

published in the Federal

Register.

Added Aug. 15, 1953, c. 502,

§ 2, 67 Stat. 586.

2/ Public Law 280 is the name commonly

Given to the Act of August 15, 1953, ch. 505,

67 Stat. 588.

3/ See Wash. Rev. Code Ann. § 37.12 (1962).

4/ The Muckleshoot ordinance provides:

Tribally authorized liquor trans-

actions shall comply with Washington

State liquor law standards to the

extent required by 18 U.S.C. 1161.

Muckleshoot Liquor Ordinance, § 7. 43 Fed.

Reg— 26, S16 (1578). . - Saale

The Tulalip ordinance provides:

-39-A-

Nothing herein contained shall be

construed to supercede the sub-

stantive laws of the State of

Washington effective within the

exterior boundaries of the Tulalip

Indian Reservation and, where not

inconsistent herewith, the sub-

stantive standards of the criminal

laws of the State of Washington re-

garding sale, consumption and use

of liquor shall apply.

Teta Ordinance No. 43, § 12, 42 Fed. Reg.

’ .

5/ Both the Muckleshoot and Tulalip reserva-

tions are within Indian country as defined

in 18 U.S.C. § 1154 and 1161.

6/ Congress has manifested its intent to

preempt this subject matter through a long

sequence of statutes regulating Indian liquor

transactions. In 1802, the President was

authorized to prevent the sale or distribu-

tion of liquor among the Indian tribes. Act

of March 30, 1802, § 21, 2 Stat. 139, 146.

In 1832, Congress made the introduction or

sale of liquor on the reservation a federal

crime. Act of July 9, 1832, § 4, 4 Stat.

564. To aid in the enforcement of Indian

liquor laws, Congress made possession of

liquor in Indian country an independent

federal offense in 1818, and subsequently has

limited liquor in areas adjacent to reserva-

tions and within territory ordinarily con-

sidered to be outside Indian country. See

Act of May 25, 1818, 40 Stat. 561 563; see

generally F. Cohen, Handbook of Federal Indian

aw (1942). Congress has also prohibited

distilleries in Indian country. 25 U.S.C.

§ 251 (1976). Until 1953, Congress continued

its absolute prohibition on the introduction,

possession and sale of liquor in Indian

-40-A-

6/ (cont.) country. See 18 U.S.C. §§ 1154,

I156 (1976). Although these prohibitions

remain in effect, they are inapplicable to

congressionally authorized liquor trans-

actions in Indian country under 18 U.S.C.

§ 1161 (1976).

7/ The Indian commerce clause provides:

*The Congress shall have power to regulate

commerce . . . with the Indian Tribes."

U.S. Const. Art. I, § 8, cl. 3.

8/ That provision provides in part: "(The

President] shall have power, by and with the

advice and consent of the Senate, to make

treaties, providing two thirds of the Sena-

tors present concur... .- U.S. Const.

Art. II, § 2, cl. l.

9/ "Statutes are considered to be in pari

Materia - to pertain to the same subject

matter - when they relate to the same person

or thing, or to the same class of persons or

things, or have the same purpose or object."

See J. Sutherland, supra, § 51.03 at 298.

The Termination Acts, Pub. L. 280 and section

1161 are statutes regarding the applicability

of state law in Indian country and must

therefore be considered in pari materia and

construed together. See Bryan, 426 U.S. at

389-390.

10/ In 1953, Congress adopted the goal of

termination of the special relationship be-

tween the federal government and the Indian

tribes. Over the following 15 years, the

relationship with over 100 tribes was termi-

nated.

11/ See, e.g., 25 U.S.C. § 726 (1976) ("[ojn

and after the date of the proclamation to be

issued in accordance with the provisions of

section 722 of this title, all statutes of

-41-A-

ll/ (cont.) the United States which affect

Indians because. of their status as Indians

shall no longer be applicable to the Alabama

and Coushatta Tribes of Texas or the members

thereof, except as provided in said section

and the laws of the several states shall

a to e tribe an ts members in

Same manner as they a ; tizens

Or persons within tere Ys ction”)

(emphasis added); see also language identical

to that emphasized here in 25 U.S.C. §§ 757

(a) and 899.

12/ At trial, Washington argued that Pub. L.

280 conferred licensing and distribution

jurisdiction to the state. Washington has

apparently abandoned the issue on appeal.

See Bryan, 426 U.S. at 390-93 (Pub. L. 280

does not confer regulatory jurisdiction upon

the States).

13/ See Bryan, 426 U.S. at 383-93 (Court

refuses to read Pub. L. 280 as a grant of

regulatory jurisdiction to the states because

Congress did not expressly extend “regulatory”

as opposed to “criminal” or “civil” juris-

diction).

14/ 18 U.S.C. § 1152 makes the Assimilative

Crimes Act applicable to crimes committed by

non-Indians against Indians and non-major

crimes of Indians against non-Indians.

15/ Although Washington failed to raise the

TSsue at trial, it argues on appeal that its

liquor monopoly is itself a substantive stan-

dard of conduct designed to discourage liquor

consumption. Because the issue is primarily

one of fact, we refuse to entertain it for

the first time on appeal. See ro v. United

States, 609 F.2d 1259, 1264 n.8 Cir.

; Seymour v. Coughlin Co., 609 F.2d 346,

348-49 Toth Cir. 1 , cert. denied 446 U.S.

-42-A-

15/ (cont.) 957 (1980). In any event, sec-

tion 1161 would not countenance such a cir-

cuitous scheme. Under section 116l, the

states are free to legislate restrictions on

Indian country liquor transactions directly

by promulgating substantive restrictions.

Extension of state licensing and distribution

jurisdiction would be unnecessary to effec

these restrictions. sy i.

16/ Incorporation of state law under section

T3 and section 1153 was a convenient method

of filling the gaps in federal law. See

enerally D. Getches, D. Rosenfelt and C.

aTkinsos, Federal Indian Law 370, 375 (1979).

A more substantive concern may have metivated

Congress to adopt the same method in section

1161: An intent to ensure that dry States

would be able to remain dry by entirely “re-

stricting” liquor sales within and without

Inaian country. See S. Rep. No. 722, 83rd

Cong., lst Sess. reprinted in [1953] U.S. Code

Cong. & Ad. News 3359-2400. consi sten w

sections 13 and 1153, however, this possible

purpose behind incorporating state law under

section 1161 - to allow states to "restrict"

Indian and non-Indian liquor sales - could be

achieved by merely incorporating state stan-

dards. There would hardly be a need to extend

state licensing and distribution jurisdiction

over Indian country liquor transactions if

such traffic was proscribed by the state law.

17/ Although New Mexico, unlike Washington,

TS not a Pub. L. 280 state, no distinction

relevant to this case can be derived from

that difference since only regulatory juris-

diction is implicated in this appeal. See

Bryan, 426 U.S. at 383-393 (Congress did not

confer regulatory jurisdiction on the states

through Pub. L. 280). As we have indicated,

the legislative history of Pub. L. 280 demon-

strates that Congress contemplated extending

-43-A-

17/ (cont.) liquor jurisdiction to the states

under Pub. L. 280 but rejected the provision

that would have done so. See discussion at

pp. 18-20, supra.

18/ A state's exercise of jurisdiction over

Teservation Indians is invalid not only if

it conflicts with federal preemption but also

if it infringes on Indian self-government. .

These are independent (although related) bar-

riers to state authority. White Mountain

Sp Tribe v. Bracker, 448 U.S. 136, 142-43

° n view of our determination that

section 1161 has preemptive effect, and be-

cause neither Washington nor the tribes have

directly addressed the question whether state

licensing or distribution jurisdiction in~

fringes on tribal self-government, we do not

piace the infringement issue.

19/ We further reject Washington's contention

that, by suing for injunctive relief, the

tribes waived their sovereign immunity and

consented to suit. In United States v. Ore-

on, 657 F.2d 1009 (9th Cir. 1981), we held

that an Indian tribe had manifested its con-

sent to suit by intervening as a party plain-

tiff in a suit by the United States against

Oregon to establish the fishing rights of all

Indian tribes occupying the Columbia River

basin. The Indian tribe voluntarily inter-

vened in the original action, which resembled

an equitable action in rem, to establish and

to protect its treaty fishing rights. In

this posture the court necessarily had author-

ity to issue orders directed to the tribes,

so that it could retain control over the

subject litigation. The tribes’ suit here

does not manifest such broad, voiuntary con-

sent. The Muckleshoot and Tulalip tribes

were forced to seek injunctive relief in

court after Washington had seized liquor

bound for the reservations. This cannot

-44-A-

19/ (cont.) constitute a waiver of the

tribes’ sovereign immunity against counter-

claims for injunctive or monetary relief.

A state cannot compel a waiver of tribal

sovereign immunity simply by seizing goods

owned by the tribes.

-45-A-

Rehner v. Rice, No. 77-2409

Muckleshoot Indian Tribe v. State of

Washington - No. 79-4403 Tulali Tribe of

Washington v. State of Washington - No. 79-

GOODWIN, Circuit Judge, dissenting

The result reached by the majority

appears to be equitable. It evidences a

scholarly approach to some complex issues of

divided sovereignty, but the decision seems

not to be consistent with either the text

of the relevant law or legislative history.

When the Twenty-First Amendment

repealed the federal criminal penalties for

the sale of liquor the amendment took care

to protect the regulatory interests of the

several states. United States Constitution,

Amendment XXI, section 2 (1933). Some states

chose to remain “dry.”

All Indian country remained dry by

federal law; and for the next twenty year

it remained a crime for anyone to sell liquor

in Indian country. See 18 U.S.C. § 1154.

When Congress, in 1953, conditionally

-46- -

lifted the criminal penalties which had been

imposed upon the liquor traffic among Indians

it gave Indians some kind of parity with the

nation's citizens who are not Indians.

Congress indicated no intent to give Indians

greater rights than other citizens enjoy

with regard to liquor.

Congress took care to lift the

criminal penalty only so long as the newly

legalized “transactions” would be in con-

formity with all state laws. 18 U.S.C.

§ 1161. All the discussion in the majority

opinion about “conferring” or "not confer-

ring" jurisdiction upon the states is

interesting but seems unresponsive to the

purpose of the statute.

The statutory language is the most

troublesome in four states within this cir-

cuit: Washington, Oregon, Idaho, and

Montana, so-called monopoly states.

Washington since 1933 has made contraband

all liquor that is not in conformity with

-47-A-

1/

RCWA 66.32.010.

Under the majority decision, Indians

whose reservations lie within the boundaries

of the State of Washington will have the

status of super citizens. They, and they

alone, can buy and import at free market

prices any liquor they desire. All other

citizens of the State of Washington who de-

sire to purchase liquor must join the queue

at the government store and select from a

monopoly inventory at a monopoly price.

Washington shares with Oregon some of the

nation's highest retail liquor prices.

(Alaska enjoys the highest prices.)

Washington has a special 5l percent state

sales tax on liquor sold in state stores.

Other monopoly states simply take their

monopoly profit in lieu of taxes. The Dis-

tilled Spirits Council of the Unites States

publishes periodic price information for the

trade. According to the Council's report for

the last half of 1981, a popular blended

-~48-A-

American whiskey which sells for an average

retail price of $5.50 per ml. in Arkansas

and $6.25 in California sells for $7.20 in

a I doubt that Congress in-

tended by § 1161 to pave the way for one

favored group of citizens to break the state

monopolies that are so cherished by money

hungry legislatures.

On the merits, this policy may be

an idea whose time has come, but I would

leave its implementation to the legislative

branch. I would affirm No. 77-2409 and

vacate No. 79-4403 and No. 79-4404.

lf RCWA 66.32.0109:

“Except as permitted by the nennte.

no liquor shall be kept or had by any

person within this state unless the

package in which the liquor was contained

had, while containing that liquor, been

sealed with the official seal adopted

by the board, except in the case of:

(1) Liquor imported by the board;

or

(2) Liquor manufactured in the

state for sale to the board or for ex-

port; or

(3) Beer, purchased in accordance

with the provisions of law; or

-49-A-

(4) Wine or beer exempted in RCW

66.12.0110.

2/ Distilled Spirits Council of the United

States, Incorporation, Economics and

Statistics Division, December 17, 1981.

~50-A-

APPENDIX B

UNITED STATES CODE, TITLE 18

§ 1154:

"(a) Whoever sells, gives away,

disposes of, exchanges, or barters any

malt, spirituous, or vinous liquor,

including beer, ale, and wine, or any

ardent or other intoxicating liquor of

any kind whatsoever, except for

scientific, sacramental, medicinal or

mechanical purposes, or any essence,

extract, bitters, preparation,

compound, composition, or any article

whatsoever, under any names, label, or

brand, which produces intoxication, to

any Indian to whom an allotment of land

has been made while the title to the

same shall be held in trust by the

Government, or to any Indian who is a

ward of the Government, through its

departments, exercises guardianship,

and whoever introduces or attempts to

introduce any malt, spirituous, or

vinous liquor, including beer, ale, and

wine, or any ardent or intoxicating

liquor or any kind whatsoever into the

Indian country, shall, for the first

offense, be fined not more than $500 or

imprisoned not more than one year, or

both; and, for each subsequent offense,

be fined not more than $2,000 or

imprisoned not more than five years, or

both.

"(b) It shall be a sufficient

defense to any charge of introducing

or attempting to introduce ardent

spirits, ale, beer, wine, or

-51-aA-

intoxicating liquors into the Indian

country that the acts charged were

done under authority, in writing, from

the Department of the Army or any

officer duly authorized thereunto by

the Department of the Army, but this

subsection shall not bar the

prosecution of any officer, soldier,

sutler or storekeeper, attache, or

employee of the Army of the United

States who barters, donates, or

furnishes in any manner whatsoever

liquors, beer, or any intoxicating

beverage whatsoever to any Indian.

"(c) The term °Indian country® as

used in this section does not include

fee-patented lands in non-Indian

communities or rights-of-way through

Indian reservations, and this section

does not apply to such lands or rights-

of-way in the absence of a treaty or

statute extending the Indian liquor

laws thereto. June 25, 1948, c. 645,

62 Stat. 758; May 24, 1949, c. 139,

§ 27. 63 Stat. 94."