# Amicus Curiae Brief — Department of Taxation and Finance of NY v. Milhelm Attea & Bros.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1994
- **Citation:** 512 U.S. 61

## Text

No. 93-377 DEC 15 1993

In The

Supreme Court Of The United States
October Term, 1993

4

DEPARTMENT OF TAXATION AND
FINANCE OF THE STATE OF NEW YORK, et al,

Petitioner

against

MILHELM ATTEA & BROS,., INC., et ail,
Respondent

~~~ —

On Writ Of Certiorari To The Court Of
Appeals Of The State Of New York

>

Amicus Curiae Brief Of The State Of Connecticut In
Support Of Petitioners New York Department Of Taxation
And Finance, Commissioner Of Taxation And Finance, And

Tax Appeals Tribunal Of The State Of New York.

@

RICHARD BLUMENTHAL
ATTORNEY GENERAL
OF CONNECTICUT

* DAVID H. WRINN
Assistant Attorney General
55 Elm Street
PO. Box 120
Hartford, CT 06141-0120
(203) 566-2090

*Counsel of Record

i
‘i

QUESTION PRESENTED

Whether, in order to prevent the avoidance of
tax by non-Indian purchasers of cigarettes from Indian
retailers, the State of New York may require the
retailers’ cigarette suppliers to comply with regulations
limiting the quanticy of tax exempt cigarettes which can
be purchased for resale at reservation outlets to an
amount no greater than the maximum legitimate Indian
consumption of the reservation, and imposing upon the

suppliers minimal burdens relating to record keeping
and reporting.

(1)

. Even lf ment Is Restricted To
TAS CP Ceaen I The Application Of The Federal
Page Indian Trader Statutes Within
Their Proper Sphere, The bony
TABLE OF AUTHORITIES .scsssssssssssssssssssssseseenee iv Score hoatyele Of The
INTEREST OF THE AMICUS CURIAE ,......cccccesseesees 2 Preemptive Effect . ad ae
0
INTRODUCTION & SUMMARY OF ARGUMENT... 3 Sleurette Soles To Now indians On
ABISURGENT .ccccccccsscescssevescusnssessannnenssnnnsniiniiisiaaiiiias 7 Indian Reservations, ........sssseesereeereeeees 17
I. Neither The Existence Nor The SURROGD DINGS _______......cssssssssnnsssnnssssssnssnsnsossososssoqsesssssocees 23
Administration Of The Indian CONCLUSION ToT TTT
Trader Statutes Preempts State
Jurisdiction Over Transactions
Involving Indians And Non-Indians
When Indian Country Or Federally
Supervised Reservations Are Not
FIRVOEVOG, casecsccesssssessesnenennesnnsssisinteinienaniaaaiaaias 7
A. A legal distinction exists
between Indian tribes
recognized by the Federal
Government and_ those
NOL SO TECOMMIZEM, ....sceeseseeseeesereeeeeseees 7
B. The Indian trader
Statutes apply exclusively
to licensing by the
Commissioner of Indian
Affairs within “Indian
country,’ or upon federal
"Tndian reservations,” ........seeseeees 10
C. Preemption analysis in
federal Indian law
necessitates
consideration of the
geographical factOr. ........ccscceeseeees 13
(ii) (inl)

ees

TABLE OF AUTHORITIES

CASES: Page

Catholic Missions v. Missoula County,
gE Ee eee 4n

Central Machinery Co. v. Arizona

Tax Commission, 448 U.S. 160 (1980) .ooccccccccccccce 11, 12
Confederated Tribes of Colville

v. Washington, 446 F.Supp. 1339

5 ER Enna a 21
Cotton Petroleum Corp. v. New Mexico,

ee m0
DeCoteau v. District County Court.

LR 0). ) aa ES 12, l2n
Donnelly v. United States,

Pk ee 12
LaPier v. McCormick. 986 F.2d

ss Ss eee 8. Sn, 15
McClanahan v. Arizona State

Tax Commission, 411 U.S. 164

_ A Ff © £ 19n, 20
Mescalero Apache Tribe v. Jones,

i | SER 1S, 15n, l6n, 19
Milhelm Attea & Bros.,

Inc. v. Department of Taxation

and Finance, 81 N.Y .2d 417, 615

| ___ RRTT e e 17, 17n, 18
Moe v. Confederated Salish

and Kootenai Tribes, 425 U.S.

ee iadattinienbiitiat 6, 14, 19, 20, 20n, 21n

Montana v. Blackfeet Tribe of Indians,

hb) |, lin
Morton v. Mancan,

pS RD lin, 13
Oklahoma Tax Commission v. Citizen

Band Potawatomi Indian Tribe of

Oklahoma, 498 U.S. 505 (1991) ......ccccccccseeeeeeeeeeeeees 17, 19

Oklahoma Tax Commission v. Sac
and Fox Nation, U.S. 113

| __ a nence O Sn, 13, 15n
Organized Village of Kake v. Egan,

ee ek Oe Oe itiittinteernterrnnnnnensesceinceenianel 4, 15, 15n
Ramah Navajo School Board of

New Mexico, Inc. v. Bureau Af

Revenue, 458 U.S. 832 (1982 )........-...c.c:ssesscesssessseesseeeneesneesneenes 20
Thomas v. Gay, 165 U.S. 264 (1898) .......cccccccceeeeeeeeeeeeees 4n

United States v. Antelope,
GBD UD, GO8 CODD ccccnccscscssesscsercescssnssscecscensscscssssnssnssenses 13

United States v. Celestine,
I yy ————————— 12

United States v. Cook, 922 F.2d
1026 (2d Cir.), cert. denied,
(ibis ® 0) a_i 8

United States v. Forty-eight Pounds
of Rising Star Tea, 38 F.400

EE ]3n
United States v. Heath,
Pe OE 8, 15
United States v. John, 437 U.S. 634 (1978). ...ccccccecceeeeeees 8n
(v)

' a
BF Tie © BUG ccccsesccstntenscnnegessornsncsensscsscemscsstonncseaniccsetuion 12
United States v. Martin, 9
RRR LEIS AAR H rae 12n ie Te as UF ITI sniicisenencdennsnnentacseciinnnrnniessdsiastniensensveappadiiidsmadenaith
United States v. McGowan, (LL! atl 5 nae 6, 10, 17
EE 12, 14
RS ok eee eee 11
United States v. Pelican, 1
8 ET a ere TTS 12 | PE oh
United States v. Porter, yk een 11
| ____—EE a R ee aNE ee a ee lon
RED ol Gy | Sy Ene 10
United States v. Sandoval, (
I UI ss ciiiniavricicrninnieonnieanlinn 8, 12, 15 25 U.S.C. § 1758 vesesssssseesseeseenserseensenneensennsennennsenses ”
Warren Trading Post v. i I Bi ii eistiicessitisteestssntinits 13n
Tax Commission, 380 U.S. 8
_ ERR eee 9n, 11, 18, 19n, 20, 20n CF te CIS GB vscictcscenestecnncnenctnsenssssanseansncereesmnenneceins 8, 8n
Washington v. Confederated ge 2 1 ARE Fess anew nn es ne ennE en sr aues 18
Tribes of the Colville 10
Indian Reservation, 447 U.S. 134 ee n
Sanat cinscecittetchitialacmentoaasilniiekteee 6, 19, 20, 21, 21n, 22, 22n
Conn. Gen. Stat. § 47-S9a(D)......cccccccceceeeeeneneenenenenanneens 10
White Mountain Apache 0
Tribe v. Bracker. 448 US. 136 Conn. Gen. Stat. § 47-G6N(D) .........ccceceeceeeseneteneneenenenens 10n
Sara ibisiinkdeacieeininicnnscciinbn Sn, 11, 13, 14, 19, 20, 20n
Conn. Gen. Stat. § 47-65 .............cscsrcerssseccsesersesersesssessesees 10
Williams v. Lee, 7
eee 9n, 11, 19n 20 N.Y.C.R.R. § 335.6(1)(2) ...esceccecseessessessnssneenessnenneeneennen
Worcester v. Georgia, 6 Pet. S15 (1832) coccccccccccccccsscceseese. 9n
OTHER AUTHORITIES
CONSTITUTION, STATUTES AND REGULATIONS Supreme Court Rule 37.5.............0.0.0csscsrerecsserssesssrsessesssese 2
U.S. Const. art. 1, § 8, C1. 3 ccccccssscssssssssssssseesesnssessesssese 3n $3 Fed. Reg. 52,829 (1988) ....csesssssseesssseesnssssennsssesnsee on
PY TT iieeeiaditiniehiiciadtaintihimiarcetieeminnisientinaasiata cc 3n F. Cohen, Handbook of Federal Indian Law,
yy l4n
oe eT 12
(vi) (vii)
| r

No. 93-377

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1993

DEPARTMENT OF TAXATION AND
FINANCE OF THE STATE OF NEW YORK, et ai.
Petitioner

against

MILHELM ATTEA & BROS., INC., et al.
Respondent

On Writ Of Certiorari To The Court Of
Appeals Of The State Of New York

Amicus Curiae Brief Of The State Of
Connecticut In Support Of Petitioners
New York Department Of Taxation And
Finance, Commissioner Of Taxation And
Finance, And Tax Appeals Tribunal Of
The State Of New York.

INTEREST OF THE AMICUS CURIAE

Amicus State of Connecticut by Richard
Blumenthal, its Attorney General, and pursuant to
Supreme Court Rule 37.5, as a state having within its
borders Indian tribes and reservation lands, has an
interest in the outcome of the legal issues presented by
Petitioners in seeking reversal of the decision of the
State of New York's Court of Appeals in this
proceeding. The State of Connecticut has by statute
recognized the existence of five Indian tribes. The
government of the United States has recognized only
one of them. The remaining four have not been
recognized by treaty, statute, or act of the executive
branch through the Department of the Interior's
Bureau of Indian Affairs.

The decision of this Court may directly affect
only the understanding of the reach of the federal
Indian trader statutes regarding state taxing authority
over Indian tribes with whom the federal government
has formal and explicit dealings. Because there are four
tribes which are not federally recognized — in
Connecticut, Connecticut asks this Court to clarify that
the federal Indian trader statutes and this Court's
decision in this case, do not apply to tribes without
federal recognition.

In addition, the regulatory issues arising from the
legal controversy presented by the Petitioners directly
affect the ability of states to ensure that tax exemptions

of whatever legal source that apply to federally
recognized Indian tribes are not applied beyond their
intended scope. Because of the importance of a state's
ability to regulate meaningfully in areas which the
federal government has not chosen to preempt, the
State of Connecticut supports the general view of other
amici states that the decision below must be reversed.

“TION AND SUMMARY OF ARGUMENT

A. Introduction:

The relation of state jurisdiction to the plenary
power of the Congress to legislate on behalf of those
tribes of Indians with which it has entered into a trust
relationship, and to the Indian tribes themselves and
their lands, is a complex legal inquiry.

The Indian nations for the most part once
resided somewhere beyond the farthest reaches of
settlement at the time when Congress first enacted a
series of trade and intercourse acts in furtherance of its
constitutional prerogatives. '/ The once clear lines
demarcating notions of virtually absolute Indian
sovereignty with respect to the jurisdiction of the several
states have evolved over time and in response to
specific circumstances. As Justice Frankfurter wrote in

1/ U.S. Const. art. 1, § 8, cl. 3, authorizes Congress "to regulate
Commerce with foreign Nations, and among the several
States, and with the Indian tribes.” The first trade and
intercourse act passed by the Congress was that of July 22,
1790. 1 Stat. 137.

the case Organized Village of Kake v. Egan,”/ "[t}he
relation between the Indians and the States has by no
means remained constant since the days of John
Marshall.”

One of the changed circumstances, in the
modern era, as newly-founded states surrounded the
Indian country, has been the increased frequency of
contacts between Indians and non-Indians, and the
concomitant legitimacy of state interests in regulating
the affairs of non-Indians in those contacts. And in
respect to such regulation, the taxing power of the State
has-very-often-been the agency of control. Nearly a
century ago, the ability of a territorial government to tax
the personalty of non-Indians within Indian country was
tested in this Court.*/ The analysis of the issue at that
time centered upon whether the assertion of state
jurisdiction was so proximate and direct as to be in
effect the equivalent of a levy upon either the lands or
privileges of the Indians themselves. The modern cases

turn upon principles of federal preemption especially

2/ 369 U.S. 61, 71 (1962).

3/ Thomas v. Gay, 165 U.S. 264 (1898) (tax on personalty
imposed by territorial government of Oklahoma upon cattle
which were grazed by non-Indians on the Osage Indian
reservation); see also Catholic Missions v. Missoula County,
200 U.S. 118 (1906) (tax liability of personalty of non-Indian
missionaries on reservation lands).

adapted to federal Indian law,*/ but continue to address
the same core issue respecting the extent and not
whether state jurisdiction may extend to matters
involving the on-reservation activities of non-Indians.
Finally, it cannot be emphasized too strongly that
the context in which federal preemptive principles
operate in this area is solely in respect to those Indian
tribes for which the federal government affirmatively
has chosen to exercise its plenary constitutional
authority. Federal recognition of Indian tribes and the
government-to-government relationship arising
therefrom is the backdrop against which the prior taxing
cases of this Court have been decided.*/ The instant
case is important because it tests the allowable extent of
the state taxing authority over certain activities of
Indian traders and non-Indians. The question whether
and to what extent that authority may reach tribal
entities having a relationship with the state but not with
the federal government is a collateral issue in this case,
but one of signal importance to states like Connecticut,

4/ White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 143
(1980) ("The unique historical origins of tribal sovereignty
make it generally unhelpful to apply to federal enactments
regulating Indian tribes those standards of preemption that
have emerged in other areas of the law.”)

5/ Most of those cases involved state efforts to tax Indians on
tribal reservations. See McClanahan v. Anzona State Tax
Commission, 411 U.S. 164, 165 n.1 (1973); see also
Oklahoma Tax Commission v. Sac and Fox Nation, __ US.
__, 113 S.Ct. 1985 (1993).

which hosts both tribal categories, federally recognized
and not, within its borders.

B. Summary of Argument:

l. Indian trader statutes are restricted to
activities conducted by Indian traders with the
permission of the federal government within Indian
country upon reservations created by treaty or some
other expression of the federal government such as
Statute or executive order. Accordingly, state cigarette
sales regulation outside of Indian country or in relation
to Indians otherwise unrecognized by the federal
government is presumptively valid.

2. The general preemptive effect of the
Indian trader statutes, 25 U.S.C. § 261 et seq., is not
controlling in the specific area of state cigarette tax
regulation of on-reservation sales. Washington v.
Confederated Tribes of the Colville Indian Reservation,
447 U.S. 134 (1980); Moe v. Confederated Salish and
Kootenai Tribes, 425 U.S. 463 (1976).

3. Other precedent of this Court in the tax
field confirms that a particularized examination of
relevant state, tribal and federal interests must be
undertaken prior to making any determination of the
preemptive effect of the Indian Trader statutes upon

State on-reservation cigarette sales tax regulation.

ARGUMENT

I. Neither The Existence Nor The
Administration Of The Indian Trader
Statutes Preempts State Jurisdiction
Over Transactions Involving Indians And
Non-Indians When Indian Country Or
Federally Supervised Reservations Are
Not Involved.

A. A legal distinction exists
between Indian tribes
recognized by the Federal
Government and those not
so recognized.

The instant case is presented in a fashion which
presumes that the tax regulations of New York's
Department of Taxation and Finance impinge upon
federal prerogatives with respect to relations with all
the Indian tribes in New York; hence, the focus in the
case throughout has been upon federal preemption
generally and the operation of the Indian trader statutes
in particular. Indeed, the regulations at issue embrace
all nine tribal groups extant in New York. See 20
N.Y.C.R.R. § 335.6(b)(2); Pet. App. at A63.°/

Two of these New York tribes are not federally
recognized. That is, there exists no acknowledgment by

6/ "(2) Exempt Indian nation or tribe tor the purpose of this
section means one of the following New York State Indian
nations or tribes: Cayuga, Oneida Indian Nation, Onondage
Nation of Indians, Poospatuck, St. Regis Mohawk, Seneca
Nation of Indians, Shinnecock, Tonawanda Band of Senecas
and Tuscarora Nation of Indians.”

the federal government of any special relationship

Wf Such a

between it and the tribes in question.
determination is, in the ordinary course, made by the
executive branch of the government, and specifically by
the Bureau of Indian Affairs within the Department of
Interior. See 25 C.F.R. Part 83; see also United States v.
Sandoval, 231 U.S. 28, 46-47 (1913): La Pier, 986 F.2d at
305; United States v. Cook, 922 F.2d 1026, 1031
(2d Cir.), cert. denied, 111 S.Ct. 2235 (1991). This
distinction is of no immediate consequence if this Court
concludes that the New York regulations do not
impinge upon an area where federal interests and
legislation leave no room for assertions of any state
jurisdiction. Clearly, if these regulations pose no
significant regulatory burden upon Respondents as
federally licensed Indian traders in their dealings with
and on any federally recognized Indian reservation or
lands, they pose no burden at all from the standpoint of
preemption analysis in dealing with Indians or with
reservations not subject to federal supervision. Cf.
LaPier, 986 F.2d at 305-306, quoting United States v.
Heath, 509 F.2d 16, 19 (9th Cir. 1974) (member of tribe
unrecognized by federal government is outside federal

1/ The two tribes, the Poospatuck and Shinnecock, are not on
the comprehensive list of Indian tribes prepared by the
federal Bureau of Indian Affairs and published most
recently in 1988 at 53 Fed. Reg. 52,829 (1988) and updated.
25 C.F.R. Part 83. See LaPier v. McCormick, 986 F.2d 303,
305 (9th Cir. 1993); see generally United States v. John, 437
U.S. 634 (1978).

criminal jurisdiction in Indian Country, 18 U.S.C.
§ 1153, just as member of “terminated tribe” no longer
considered an “Indian” for the purposes of the exercise
of federal criminal jurisdiction). But if this Court
determines that the Court of Appeals is correct in its
reading of the preemptive effect of the Indian trader
Statues, then the result should be limited to those
geographical areas where Indian traders carry out their
licensed activities, that is, in “Indian country.” Either
outcome needs clarification concerning the relevance of
federal recognition to the present controversy.
Connecticut is sensitive to the reach of the term

, f

” . ” y ” : : oe,
Indian country” or references to “reservation Indians,

8/ The Court in McClanahan stated that its use of the term
“reservation Indians,” see Williams v. Lee, 358 U.S. 217, 220,
(1959), was in recognition of the fact that, although the
Congress most often legislates on Indian matters dealing
with Indian tribes as “collective entities,” these entitics were
comprised of individuals, and that such legislation confers
rights upon individuals. McClanahan, 411 U.S. 164 at 181.
Thus, the (..m “reservation Indians” as employed in this and
other decisions of this Court, see e.g. Warren Trading Post v.
Tax Commission, 380 U.S. 685, 691-92 (1965), is firmly
within the ambit of federal and not state Indian laws. In
Williams, the term “reservation Indians” is discussed with
reference to Chief Justice Marshall's opinion in Worcester v.
Georgia, © Pet. SIS (1832), in which he described Indian
nations as “distinct political communitics, having territorial
boundaries, .. which is not only acknowledged, but
guaranticd by the United States.” Worcester, 6 Pet. SIS at
S57. Therefore, Indians residing upon reservations not
supervised by the United States are not. “reservation
Indians” as that term has been utilized in the decisions of
this Court.

10

because only one of five indigenous Connecticut tribes
has been recognized by the federal government. See 25
U.S.C. §§ 1751-1760 (Mashantucket Pequot Indian
Land Claims Settlement) and § 1758 (extension of
federal recognition); Conn. Gen. Stat § 47-59a(b). The
remaining four tribal groups are “state-recognized”
only,” and three of them have reservation lands
identified by state statute. Conn. Gen. Stat. § 47-63.

In applying these principles, Connecticut must
distinguish between the effect of its revenue laws !”/
upon tribal groups recognized and not recognized by the
federal government. Only in the former case would
preemption analysis be available, and not in the latter.

B. The Indian trader statutes

apply exclusively to licensing

the Commissioner of

Indian Affairs within “Indian

country,” or upon federal
"Indian reservations.”

The Indian trader statutes, 25 U.S.C. § 261 ef
seq., assign to the federal Commissioner of Indian
Affairs "the sole power and authority to appoint traders
to the Indian tribes ....". 25 U.S.C. § 261. Permission
from the commissioner is required of anyone “desiring

9/ Section 47-66h(b) of Connecticut's General Statutes states
that nothing in the state law chapter dealing with Indians
"shall be construed to confer tribal status under federal law
on the indigenous tribes named in section 47-59%a ....”

10/ Connecticut revenue laws include the regulation of cigarette
sales. See Conn. Gen. Stat. § 12-285 et seq.

to trade with the Indians on any Indian reservation ....”
25 U.S.C. § 262; see Williams v. Lee, 358 U.S. 217 at 218.
The President of the United States is authorized to
proscribe trade or the introduction of goods “into the
country belonging to any Indian tribe ...." 25 U.S.C.
§ 263. Trading without a license by any non-Indian
residing “in the Indian country, or on any Indian
reservation as a trader ...” is subject to the assessment of
a penalty. 25 U.S.C. § 264; see Central Machinery Co. v.
Anzona Tax Commission, 448 U.S. 160, 163 (1980);
White Mountain Apache, 448 U.S. 136 at 152; Warren
Trading Post, 380 U.S. 685 at 688-90. The close
regulation of Indian trading is designed by the federal
government to be protective of the Indians. 25 U.S.C.
§ 262; Central Machinery, 448 U.S. at 165; Warren
Trading Post, 380 U.S. at 691. Protection was afforded
by limiting the contacts of non-Indians with the tribes,
something only possible when the federal government
had undertaken supervision of the lands upon which the
Indians were located.

The term “reservation” in the Indian trader
Statutes refers to Indian reservations belonging to
federally recognized tribes enjoying the special status

11/

afforded them under federal law In Central

11/ See Morton v. Mancan, 417 US. 535, SS1 (1974), speaking of
“the unique legal status of Indian tribes under federal laws
and upon the plenary power of Congress, based on a history

(footnote cont d)

12

Machinery, this Court began its discussion by noting that
the Gila River Farms Indian Tribe “is federally
recognized and is governed by a constitution adopted
pursuant to the Indian Reorganization Act [and] ...
conducts farming operations on tribal and individual
trust land within the Gila River Reservation, which was
established in Arizona by the Act of Feb. 28, 1859, ch.
66, 11 Stat. 333, 401." Central Machinery, 448 U.S. at
161.

Although historically an Indian “reservation”
might not have been synonymous with the term Indian
country as employed in the earliest pronouncements of
the Congress, United States v. Celestine, 215 U.S. 278,
284-87 (1909), nevertheless, the present statutory
definition of Indian country, 18 U.S.C. § 1151,'7/is
inclusive. DeCoteau, 42 U.S. 425 at 427; see also United
States v. McGowan, 302 U.S. 535, 538-39 (1938); United
States v. Pelican, 232 U.S. 442, 449 (1914); United States
v. Sandoval, 231 U.S. 28 at 37, 37n. and 46; Donnelly v.

(footnote cont'd from previous page)

of treaties and the assumption of a ‘guardian-ward’ status,
to legislate on behalf of federally recognized Indian tribes.”
See also Montana v. Blackfeet Tribe of Indians, 471 U.S. 759,
764-65 (1985).

12/ The statute defines the federal government's criminal
jurisdiction over Indians. The decisional law has made the
definition applicable to discussions of the reach of state civil
jurisdiction over federally recognized Indian reservations.
DeCoteau v. District County Court, 420 U.S. 425, 427 n.2
(1975).

13

United States, 228 U.S. 243, 269 (1913).'°/ This Court
has continued to construe that definition broadly.
Oklahoma Tax Commission, 113 S.Ct. at 1991.
Therefore, the terms "reservation" and "Indian country”
are bound up with each other and with the Indian trader
Statutes in a context that is exclusively federal in

character. I4/

C, Preemption analysis in
federal Indian law
necessitates consideration
of the geographical factor.

Federal Indian law is largely territorial in nature.
Thus, the discussion of state, tribal and federal interests
in the context of state assertions of authority has always
considered the geographical nexus posed by the
existence of terms like “Indian country,” since these
terms arise exclusively out of Congress’ plenary power
to regulate affairs with Indian tribes and the tribes’
Status as a “separate people with their own political
institutions.” See Morton v. Mancari, 417 U.S. 535;
United States v. Antelope, 430 U.S. 641, 646 (1977). In

13/ Of. United States v. Martin, 14 F. 817, 822-23 (1883) ("Ever
since the phrase “Indian Country” found its way into the
federal legislation, it has been used to signify not only a
place or tract of country actually occupied by Indians, but
also a tract so occupied by the, and set apart or designated
as exclusively for their use, under and by the authority of the
United States.”)

14/ See e.g. United States v. Forty-eight Pounds of Rising Star

Tea, 38 F. 400, 401 (C-C_N_D. Cal. 1889), construing RS.

§ 2133 (25 U.S.C. § 264).

14

White Mountain Apache, this Court has remarked that
"there is a significant geographical component to tribal
sovereignty, a component which remains highly relevant
to the preemption inquiry; though the reservation
boundary is not absolute, it remains an important factor
to weigh in determining whether state authority has
exceeded the permissible limits.” White Mountain
Apache, 448 U.S. 136 at 151 and at 143, citing Moe, 425
U.S. 463 at 475. This factor, as well as canons of
construction unique to preemption analysis and
favorable to the tribes, see McClanahan v. Arizona State
Tax Commission, 411 U.S. 164 at 174-75, relate solely to
the assertion of jurisdiction by a state on the one hand,
and federally recognized tribes and the federal
government on the other. In cases where no similar
conflict arises the geographical factor is not a bar to
state jurisdiction. See McGowan, 302 U.S. 535 at
§39,!/

Different considerations apply to tribal groups
outside the recognition of the federal government and,
hence, outside Indian country by definition, or outside
the scope of the term “reservation Indians,” in the usage
of this Court. These entities are fully within state

1S/ "The mere fact that the locus of an event is on an Indian
reservation docs not prevent the exercise of state
jurisdiction where the parties involved are not Indians and
the subject matter of the transaction is not of federal
concern.” F. Cohen, Handbook of Federal Indian Law, 121
(ist ed. 1942).

1S

jurisdiction, notwithstanding the fact that their members
may be Indians in an anthropological or ethnohistorical
sense. LaPier, 986 F.2d 303 at 306; Heath, 509 F.2d 16
at 19; see also Sandoval, 231 U.S. 28. Similarly, the
activities of non-reservation Indians or those not
dwelling in Indian country have been held by this Court
to fall within state jurisdiction. Organized Village of
Kake v. Egan, 369 U.S. 60 at 62.'°/ Also, the activities
of reservation Indians outside of Indian country are
largely within the jurisdiction of the states. Mescalero
Apache Tribe v. Jones, 411 U.S. 145, 148 (1973): Kake.
369 U.S. 60 at 75,17/

16/ See Oklahoma Tax Commission, 113 S.Ct. at 1992
(McClanahan presumption against state taxing authority
applics to all Indian country, and not just’ formal
reservations.”) This Court in McClanahan described this
situation - “the extent of federal pre-emption and residual
Indian sovereignty in the total absence of federal treaty
obligations or legislation” - as “something of a moot
question,” “since in almost all cases federal treaties and
statutes define the boundaries of federal and state
jurisdiction.” McClanahan, 411 U.S. 164 at 172 n&. The
question may be moot when viewed from the federal
perspective, but it is otherwise from the state perspective,
when formalized dealings exist or are possible with tribal
groups and their lands which are altogether outside the
federal sphere.

17/ “State authority over Indians is yet more extensive over

activities ... not on any reservation.” Kake, 369 US. at 75.

In Mescalero Apache, this Court stated that “Jalbsent

express federal law to the contrary, Indians going beyond

reservation boundarics have generally been held subject to

(footnote cont d)

16

Accordingly, since any preemption challenge to
New York's cigarette law regulations implicating the
Indian trader statutes must be limited to Indian country,
or, reservation Indians officially under the supervision
of the federal government, the validity of those
regulations vis-a-vis any non-recognized tribal groups or
reservation lands remains unaffected and presumptively
assured. The ability of such states as Connecticut,
therefore, to control the commercial activities of
non-Indians on the reservation lands of state
acknowledged tribes is a fortiori not subject to

preemption by the Indian trader statutes.

(footnote cont'd from previous page)

non-discriminatory state law otherwise applicable to all
citizens of the State.” 411 U.S. at 148-49 and cases cited.
Importantly, the Court in Mescalero Apache stated that this
principle was “as relevant to a State's tax laws as It Is to Its
criminal laws ....". /d. at 149. In Mescalero Apache this
Court upheld New Mexico's nondiscriminatory gross
receipts tax as applied to an off-reservation ski resort
operated by the Mescalero Apache Tribe. See also United
States v. Porter, 22 F.2d 365 (1927) (personalty owned by an
Indian and held outside the reservation subject to taxation
by the state).

17

Il. Even If Argument Is Restricted To The
Application Of The Federal Indian
Trader Statutes Within Their Proper
Sphere, The Court Of Appeal’s Decision
Is Flawed By A Superficial Analysis Of
The Preemptive Effect Of Those Statutes
Upon State Regulation Of Cigarette Sales
To Non-Indians On Indian Reservations.

The Court of Appeals conducted a preemption
analysis of the validity of the New York cigarette tax
regulations in relation to the existence of the federal
Indian trader statutes, 25 U.S.C. § 261 et seq., following
this Court's remand of this case to New York's
Appellate Division “for further consideration in light of
Oklahoma Tax Commission v. Citizen Band Potawatomi
Indian Tribe of Oklahoma, 498 U.S. [505, 111 S.Ct. 905,
112 L.Ed.2d 1112)" Milhelm Attea & Bros., Inc. v.
Department of Taxation and Finance, 81 N.Y .2d 417, 599
N.Y.S.2d 510, 615 N.E.2d 994, 996 (1993). The
resulting decision misapplies Potawatomi and reads
overbroadly the preemptive effect of the Indian trader
Statutes upon the particular object and means of
regulation at issue.

The plaintiffs in the Attea case argued that New
York's cigarette tax regulations / as applied to them
were invalid, because they impinged upon an area of the

law relegated solely to regulation by the government of

1X/ The mechanics of New York's regulations were summarized
by the Court of Appeals in Section I of its opinion. Attea &
Bros., 8) N.Y.2d 417, 615 N.E.2d 994 at 995-96.

18

the United States. For this proposition they raised the
federal Indian trader statutes as a bar to state
regulation of their cigarette sales on New York's Indian
reservations. Significantly, the regulations at issue
would not have affected sales by wholesalers of

unstamped cigarettes to Indians for consumption by

Indians on their reservations. They were designed to —

effect collection of the excise tax from wholesalers for
cigarettes sold on the reservations to non-Indians.
Nevertheless, the Court of Appeals agreed that the
Indian trader statutes acted as an absolute bar to New
York's attempt to prevent the circumvention of the tax
by non-Indians who made cigarette purchases from
retail outlets located on the reservations.

The Court of Appeals cited this Court's decision
in Warren Trading Post v. Tax Commission, 380 U.S. 685,
as support for its conclusion that the Indian trader
statutes and regulations of the Commissioner of Indian
Affairs duly promulgated thereunder, 25 C.F.R. § 140,
were, in the words of the Warren Trading Post court,
“all-inclusive” and provided “no room" for the
imposition of additional burdens upon such traders by
state laws. Attea & Bros., 615 N.E.2d 994 at 996, quoting
Warren Trading Post, 380 U.S. 685 at 690.

The State of Connecticut agrees with the
Petitioners that the Court of Appeals has interpreted
overbroadly the preemptive effect of the Indian trader
statutes as articulated in Warren Trading Post. The
position that the New York court has taken assumes

19

that Indian traders are entirely exempt from state
revenue regulation. Not only is that position
considerably undercut by the decisions in Potawatomi.
Washington vy. Confederated Tribes o f Colville
Reservation, 447 US. 134 ( 1980), and Moe vy.
Confederated Salish and Kootenai Tribes, 425 U.S. 463
(1976), for the reasons which the Petitioners have
advanced, see Petition for Writ of Certiorari, No.
93-377, at 14-20, but it also does not heed the sound
counsel of this Court that in the area of state revenue
laws and federal Indian tribes "[g]eneralizations on this
subject have become particularly treacherous.”
Mescalero Apache Tribe v. Jones, 411 U.S. 145 at 147.
This Court has stated that preemption analysis in the
context of legislation affecting federally recognized
Indian tribes of its nature has to take into account the
‘Tespective rights of States, Indians, and the Federal
Government.” /d. at 148; see also White Mountain
Apache Tribe v. Bracker, 448 U.S. 136 at 141-143 and
cases cited therein.!”/

19/ . . .
This means that the assertion of a state regulatory interest

within reservation boundaries is not in and of itself flatly
interdicted, id. at 141 and n.9, and is, further, subject to "no
rigid rule by which to resolve the question whether a
particular state law may be applicd to an Indian reservation
or to tribal members.” /d. at 142. On the contrary, such
assertions are measured against’ theories of federal
preemption or infringement of the rights of reservation
Indians to self-rule. /d., citing Warren Trading Post, 380
U.S. O85 and McClanahan, 411 US. 164 (1973), and
Williams, 358 U.S. 217 (1959). )

20

When the state's regulatory interest involves the
on-reservation conduct of Indians, this Court has held
state revenue regulation to be preempted. E.g.
McClanahan, 411 U.S. 164. But when the conduct of
non-Indians has been at issue, the analysis has turned
upon the competing interests noted above. Cotton
Petroleum Corp. v. New Mexico, 490 U.S. 163, 176
(1989); Ramah Navajo School Board of New Mexico,
Inc. v. Bureau of Revenue, 458 U.S. 832, 838 (1982);
White Mountain Apache, 448 U.S. 136 at 145.2” Thus,
while a state levy on gross proceeds of sale or gross
income was held in Warren Trading Post to have
infringed upon the federal government's comprehensive
regulation of commerce with reservation Indians as
applied to a licensed non-Indian trader doing business
on a federal reservation, a state sales tax upon
non-Indian on-reservation purchasers of cigarettes did
not so infringe, even when the state regulatory scheme
required an Indian retailer to collect the tax. Moe, 425
U.S. 463 at 482-83; Washington v. Confederated Tribes of
Colville, 447 US. 134 at 150-62.2!/ In making. its

20/ This Court, in setting out the framework of analysis on this
point in White Mountain Apache, specifically compared the
results obtaining in Warren Trading Post with Moe. White
Mountain Apache, 448 U.S. 136 at 145.

21/ The legitimate state interest in preventing the avoidance of

the sales tax posed only a minimal burden upon the Indian
traders in Moe, and Warren Trading Post was distinguished

(footnote cont'd)

ee

21

preemption analysis, this Court in Colville took into
account the potentially competing regulatory scheme of
the Indian trader statutes and concluded that these
sought “to regulate businesses selling goods to reservation
Indians for cash or exchange ... but no similar intent is
evident with respect to sales by Indians to nonmembers
of the Tribe.” id. at 155-56 (emphasis added). Thus, any
distinction raised by the Court of Appeals between
Indian trader wholesalers and Indian retailers collapses,
especially in light of the fact, as Petitioners point out,
that the Indian retailers in Colville were federally
licensed Indian traders. Confederated Tribes of Colville
v. Washington, 446 F.Supp. 1339, 1347 (E.D. Wash.
1978).

Apart from its analysis of the Indian trader
statutes, on no other federal preemptive ground did this
Court in Colville find the state tax interest inapplicable

ee aie —
to the cigarette sales in question. / Furthermore this

(footnote cont'd from previous page)

on this point. Moe, 447 U.S. 463 at 482-83. The State of
Washington's amicus bricf aptly discusses how regulations
such as New York's represent a considered policy choice to
avoid collection mechanisms which gencrate friction in
State-tribal relations by focusing upon suppliers, who are
further up the distribution chain from the Indian setallore
and on activities which are off the reservations. -
”
«e Colville, 447 US. 134 at 155-56 and 157. This Court
determined that the state specifically was not infringing

(footnote cont'd)

22

Court stated in Colville that state seizures of cigarette
shipments in-route to the reservation were a proper
response to the non-collection of the tax from sales to
nonmembers on the reservation notwithstanding the
fact that the sales were exempt from the tax in question
while in transit. Colville, 447 U.S. at 161-62. If the
Indian trader wholesalers may legitimately be subjected
to such remedies, then the regulatory scheme under
which this recourse may be taken has not been
summarily preempted by federal law. Accordingly, it is
not sufficient, as the Court of Appeals has done, to
interpose the Indian trader statutes between the New
York regulations and their objective without further

analysis.

(footnote cont'd from previous page)

upon Indian self-rule: "While the tribes do have an interest
in raising revenues for essential governmental programs,
that interest is strongest when the revenues are derived
from value generated on the reservation by activities
involving the Tribes and when the taxpayer is the recipient
of tribal services. The State also has a_ legitimate
governmental interest in raising revenues, and that interest
is likewise strongest when the tax is directed at
off-reservation value and when the taxpayer is the recipient
of state services.” /d. at 156-57. What was at stake with
respect to cigarette sales to nonmembers of the tribes was
the marketability vel non of the tribe's own tax exemption to
nonmembers. As Petitioners justly emphasize, Petition for
Writ of Certiorari at 17, this Court remarked broadly that
no principles of federal Indian law made marketable such
an exemption “to persons who would normally do their
business elsewhere.” Colville, 447 U.S. 134 at 155.

i ll et ly ll ages,

CONCLUSION

The judgment of the New York Court of Appeals

should be reversed.

Dated this 14th day of December. 1993, at

Hartford, Connecticut.

* Counsel of Record

RICHARD BLUMENTHAL
ATTORNEY GENERAL
OF CONNECTICUT

David H. Wrinn

Assistant Attorney General
Office of the Attorney General
55 Elm Street

P.O. Box 120

Hartford, CT 06141-0120
(203) 566-2090

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0452%3A16. Public record. Not legal advice.