Subject: \,  OKLAHOMA TAX COMM'N v. POTAWATOMI TRIBE

 


Syllabus


 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus



OKLAHOMA TAX COMMISSION v. CITIZEN BAND
POTAWATOMI INDIAN TRIBE OF OKLAHOMA


certiorari to the united states court of appeals for the tenth circuit

No. 89-1322.  Argued January 7, 1991 -- Decided February 26, 1991

Although, for many years, respondent Indian Tribe has sold cigarettes at a
convenience store that it owns and operates in Oklahoma on land held in
trust for it by the Federal Government, it has never collected Oklahoma's
cigarette tax on these sales.  In 1987, petitioner, the Oklahoma Tax
Commission (Oklahoma or Commission), served the Tribe with an assessment
letter, demanding that it pay taxes on cigarette sales occurring between
1982 and 1986.  The Tribe filed suit in the District Court to enjoin the
assessment, and Oklahoma counterclaimed to enforce the assessment and to
enjoin the Tribe from making future sales without collecting and remitting
state taxes.  The court refused to dismiss the counterclaims on the Tribe's
motion, which was based on the assertion that the Tribe had not waived its
sovereign immunity from suit.  The court held on the merits that the
Commission lacked authority to tax onreservation sales to tribal members or
to tax the Tribe directly, and therefore that the Tribe was immune from
Oklahoma's suit to collect past unpaid taxes directly, but that the Tribe
could be required to collect taxes prospectively for on-reservation sales
to nonmembers.  The Court of Appeals reversed, holding, inter alia, that
the lower court erred in entertaining Oklahoma's counterclaims because the
Tribe enjoys absolute sovereign immunity from suit and had not waived that
immunity by filing its action for injunctive relief, and that Oklahoma
lacked authority to tax any on-reservation sales, whether to tribesmen or
nonmembers.

Held: Under the doctrine of tribal sovereign immunity, a State that has not
asserted jurisdiction over Indian lands under Public Law 280 may not tax
sales of goods to tribesmen occurring on land held in trust for a federally
recognized Indian tribe, but is free to collect taxes on such sales to
nonmembers of the tribe.  Pp. 3-8.

    (a) The Tribe did not waive its inherent sovereign immunity from suit
merely by seeking an injunction against the Commission's proposed tax
assessment.  United States v. United States Fidelity and Guaranty Co., 309
U. S. 506, 511-512, 513.  In light of this Court's reaffirmation, in a
number of cases, of its longstanding doctrine of tribal sovereign immunity,
and Congress' consistent reiteration of its approval of the doctrine in
order to promote Indian self-government, self-sufficiency, and economic
development, the Court is not disposed to modify or abandon the doctrine at
this time.  Nor is there merit to Oklahoma's contention that immunity
should not apply because the Tribe's cigarette sales do not occur on a
formally designated "reservation."  Trust land qualifies as a reservation
for tribal immunity purposes where, as here, it has been "validly set apart
for the use of the Indians as such, under the superintendence of the
Government."  United States v. John, 437 U. S. 634, 648-649.  Mescalero
Apache Tribe v. Jones, 411 U. S. 145, 148-149, which approved
nondiscriminatory state taxation of activities on non reservation, nontrust
Government land leased by Indians, is not to the contrary.  Pp. 3-5.

    (b) Nevertheless, the Tribe's sovereign immunity does not deprive
Oklahoma of the authority to tax cigarette sales to nonmembers of the Tribe
at the Tribe's store, and the Tribe has an obligation to assist in the
collection of validly imposed state taxes on such sales.  Moe v.
Confederated Salish and Kootenai Tribes, 425 U. S. 463, 482, 483;
Washington v. Confederated Tribes of Colville Reservation, 447 U. S. 134.
This case is not distinguishable from Moe and Colville on the ground that
Oklahoma disclaimed jurisdiction over Indian lands upon entering the Union
and did not reassert jurisdiction over civil causes of action in such lands
as permitted by Public Law 280.  Neither of those cases depended on the
assertion of such jurisdiction by the State in question, and it is simply
incorrect to conclude that the Public Law was the essential (yet unspoken)
basis for the Court's decision in Colville.  Although the Tribe's sovereign
immunity bars Oklahoma from pursuing its most efficient remedy -- a lawsuit
-- to enforce its rights, adequate alternatives may exist, since individual
Indians employed in "smoke-shops" may not share tribal immunity, and since
States are free to collect their sales taxes from cigarette wholesalers or
to enter into mutually satisfactory agreements with tribes for the
collection of taxes.  If these alternatives prove to be unsatisfactory,
States may seek appropriate legislation from Congress.  Pp. 6-8.

888 F. 2d 1303, affirmed in part and reversed in part.

Rehnquist, C. J., delivered the opinion for a unanimous Court.  Stevens,
J., filed a concurring opinion.
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Subject: 89-1322 -- OPINION, OKLAHOMA TAX COMM'N v. POTAWATOMI TRIBE

 


NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 89-1322



OKLAHOMA TAX COMMISSION, PETITIONER v.
CITIZEN BAND POTAWATOMI INDIAN TRIBE
OF OKLAHOMA


on writ of certiorari to the united states court of appeals for the tenth
circuit

[February 26, 1991]



    Chief Justice Rehnquist delivered the opinion of the Court.
    The issue presented in this case is whether a State that has not
asserted jurisdiction over Indian lands under Public Law 280 may validly
tax sales of goods to tribesmen and nontribal members occurring on land
held in trust for a federally recognized Indian tribe.  We conclude that
under the doctrine of tribal sovereign immunity, the State may not tax such
sales to Indians, but remains free to collect taxes on sales to non tribal
members.
    Respondent, the Citizen Band Potawatomi Indian Tribe of Oklahoma
(Potawatomis or Tribe), owns and operates a convenience store in Oklahoma
on land held in trust for it by the Federal Government.  For many years,
the Potawatomis have sold cigarettes at the convenience store without
collecting Oklahoma's state cigarette tax on these sales.  In 1987,
petitioner, the Oklahoma Tax Commission (Oklahoma or Commission), served
the Potawatomis with an assessment letter, demanding that they pay $2.7
million for taxes on cigarette sales occurring between 1982 and 1986.  The
Potawato mis filed suit to enjoin the assessment in the United States
District Court for the Western District of Oklahoma.
    Oklahoma counterclaimed, asking the District Court to enforce its $2.7
million claim against the Tribe and to enjoin the Potawatomis from selling
cigarettes in the future without collecting and remitting state taxes on
those sales.  The Pota watomis moved to dismiss the counterclaim on the
ground that the Tribe had not waived its sovereign immunity, and therefore
could not be sued by the State.  The District Court denied the Potawatomis'
motion to dismiss and proceeded to trial.  On the merits, the District
Court concluded that the Commission lacked the authority to tax the
on-reservation cigarette sales to tribal members or to tax the Tribe
directly.  It held, therefore, that the Tribe was immune from Oklahoma's
suit to collect past unpaid taxes directly from the Tribe.  Nonetheless,
the District Court held that Oklahoma could require the Tribe to collect
taxes prospectively for onreservation sales to nontribal members.
Accordingly, the court ordered the Tribe to collect taxes on sales to
nontribal members, and to comply with all statutory recordkeeping
requirements.
    The Tribe appealed the District Court's denial of its motion to
dismiss, and the court's order requiring it to collect and remit taxes on
sales to nontribal members.  The United States Court of Appeals for the
Tenth Circuit reversed.  888 F. 2d 1303 (1989).  That court held that the
District Court erred in entertaining Oklahoma's counterclaims because the
Potawatomis enjoy absolute sovereign immunity from suit, and had not waived
that immunity by filing an action for injunctive relief.  The Court of
Appeals further held that Oklahoma lacked the authority to impose a tax on
any sales that occur on the reservation, regardless of whether they are to
tribesmen or nontribal members.  It concluded that "because the convenience
store is located on land over which the Potawatomis retain sovereign
powers, Oklahoma has no authority to tax the store's transactions unless
Oklahoma has received an independent jurisdictional grant of authority from
Congress."  Id., at 1306.  Finding no independent jurisdictional grant of
authority to tax the Potawatomis, the Court of Appeals ordered the District
Court to grant the Potawatomis' request for an injunction.
    We granted certiorari to resolve an apparent conflict with this Court's
precedents and to clarify the law of sovereign immunity with respect to the
collection of sales taxes on Indian lands.  498 U. S. --- (1990).  We now
affirm in part and reverse in part.

I
    Indian tribes are "domestic dependent nations," which exercise inherent
sovereign authority over their members and territories.  Cherokee Nation v.
Georgia, 5 Pet. 1, 17 (1831).  Suits against Indian tribes are thus barred
by sovereign immunity absent a clear waiver by the tribe or congressional
abrogation.  Santa Clara Pueblo v. Martinez, 436 U. S. 49, 58 (1978).
Petitioner acknowledges that Indian tribes generally enjoy sovereign
immunity, but argues that the Potawato mis waived their sovereign immunity
by seeking an injunction against the Commission's proposed tax assessment.
It argues that, to the extent that the Commission's counterclaims were
"compulsory" under Federal Rule of Civil Procedure 13(a), the District
Court did not need any independent jurisdictional basis to hear those
claims.
    We rejected an identical contention over a half-century ago in United
States v. United States Fidelty & Guaranty Co., 309 U. S. 506, 511-512
(1940).  In that case, a surety bondholder claimed that a federal court had
jurisdiction to hear its state-law counterclaim against an Indian tribe
because the tribe's initial action to enforce the bond constituted a waiver
of sovereign immunity.  We held that a tribe does not waive its sovereign
immunity from actions that could not otherwise be brought against it merely
because those actions were pleaded in a counterclaim to an action filed by
the tribe.  Id., at 513.  "Possessing . . . immunity from direct suit, we
are of the opinion [the Indian nations] possess a similar immunity from
cross-suits."  Ibid.  Petitioner does not argue that it received
congressional authorization to adjudicate a counterclaim against the Tribe,
and the case is therefore controlled by Fidelity & Guaranty.  We uphold the
Court of Appeals' determination that the Tribe did not waive its sovereign
immunity merely by filing an action for declaratory relief.
    Oklahoma offers an alternative, and more far-reaching, basis for
reversing the Court of Appeals' dismissal of its counterclaims.  It urges
this Court to construe more narrowly, or abandon entirely, the doctrine of
tribal sovereign immunity.  Oklahoma contends that the tribal sovereign
immunity doctrine impermissibly burdens the administration of state tax
laws.  At the very least, petitioner proposes that the Court modify
Fidelity & Guaranty, because tribal business activities such as cigarette
sales are now so detached from traditional tribal interests that the
tribal-sovereignty doctrine no longer makes sense in this context.  The
sovereignty doctrine, it maintains, should be limited to the tribal courts
and the internal affairs of tribal government, because no purpose is served
by insulating tribal business ventures from the authority of the States to
administer their laws.
    A doctrine of Indian tribal sovereign immunity was originally
enunciated by this Court, and has been reaffirmed in a number of cases.
Turner v. United States, 248 U. S. 354, 358 (1919); Santa Clara Pueblo v.
Martinez, supra, at 58.  Congress has always been at liberty to dispense
with such tribal immunity or to limit it.  Although Congress has
occasionally authorized limited classes of suits against Indian tribes, it
has never authorized suits to enforce tax assessments.  Instead, Congress
has consistently reiterated its approval of the immunity doctrine.  See e.
g., Indian Financing Act of 1974, 88 Stat. 77, 25 U. S. C. MDRV 1451 et
seq., and the Indian Self-Determination and Education Assistance Act, 88
Stat. 2203, 25 U. S. C. MDRV 450 et seq.  These Acts reflect Congress'
desire to promote the "goal of Indian self-government, including its
`overriding goal' of encouraging tribal self-sufficiency and economic
development."  California v. Cabazon Band of Mission Indians, 480 U. S.
202, 216 (1987).  Under these circumstances, we are not disposed to modify
the longestablished principle of tribal sovereign immunity.
    Finally, Oklahoma asserts that even if sovereign immunity applies to
direct actions against tribes arising from activities on the reservation,
that immunity should not apply to the facts of this case.  The State
contends that the Potawatomis' cigarette sales do not, in fact, occur on a
"reservation."  Relying upon our decision in Mescalero Apache Tribe v.
Jones, 411 U. S. 145 (1973), Oklahoma argues that the tribal convenience
store should be held subject to State tax laws because it does not operate
on a formally designated "reservation," but on land held in trust for the
Potawatomis.  Neither Mescalero nor any other precedent of this Court has
ever drawn the distinction between tribal trust land and reservations that
Oklahoma urges.  In United States v. John, 437 U. S. 634 (1978), we stated
that the test for determining whether land is Indian country does not turn
upon whether that land is denominated "trust land" or "reservation."
Rather, we ask whether the area has been "validly set apart for the use of
the Indians as such, under the superintendence of the Government."  Id., at
648-649; see also United States v. McGowan, 302 U. S. 535, 539 (1938).
    Mescalero is not to the contrary; that case involved a ski resort
outside of the reservation boundaries operated by the tribe under a 30-year
lease from the Forest Service.  We said that "[a]bsent express federal law
to the contrary, Indians going beyond reservation boundaries have generally
been held subject to nondiscriminatory state law otherwise applicable to
all citizens of the State."  411 U. S., at 148-149.  Here, by contrast, the
property in question is held by the Federal Government in trust for the
benefit of the Potawa tomis.  As in John, we find that this trust land is
"validly set apart" and thus qualifies as a reservation for tribal immunity
purposes.  437 U. S., at 649.

II
    Oklahoma attacks the conclusion of the Court of Appeals that the
sovereign immunity of the Tribe prevents it from being liable for the
collection of state taxes on the sale of cigarettes to nonmembers of the
Tribe.  The Tribe, in turn, argues that this issue is not properly before
us.  It observes that the only issue presented in its prayer for an
injunction was whether Oklahoma could require it to pay the challenged
assessment for previously uncollected taxes.  The complaint did not
challenge Oklahoma's authority to require the Tribe to collect the sales
tax prospectively, and thus, the Tribe argues, that question was never put
in issue.
    We do not agree.  The Tribe's complaint alleged that Oklahoma lacked
authority to impose a sales tax directly upon the Tribe.  The District
Court held that the Tribe could be required to collect the tax on sales to
nonmembers.  The Court of Appeals reversed the decision of the District
Court on this point.  While neither of these courts need have reached that
question, they both did.  The question is fairly subsumed in the "questions
presented" in the petition for certiorari, and both parties have briefed
it.  We have the authority to decide it, and proceed to do so.  See Vance
v. Terrazas, 444 U. S. 252, 258-59, n. 5 (1980).
    Although the doctrine of tribal sovereign immunity applies to the
Potawatomis, that doctrine does not excuse a tribe from all obligations to
assist in the collection of validly imposed state sales taxes.  Washington
v. Confederated Tribes of Colville Reservation, 447 U. S. 134 (1980).
Oklahoma argues that the Potawatomis' tribal immunity notwithstanding, it
has the authority to tax sales of cigarettes to nontribal members at the
Tribe's convenience store.  We agree.  In Moe v. Confederated Salish and
Kootenai Tribes, 425 U. S. 463 (1976), this Court held that Indian
retailers on an Indian reservation may be required to collect all state
taxes applicable to sales to non-Indians.  We determined that requiring the
tribal seller to collect these taxes was a minimal burden justified by the
State's interest in assuring the payment of these concededly lawful taxes.
Id., at 483.  "Without the simple expedient of having the retailer collect
the sales tax from non-Indian purchasers, it is clear that wholesale
violations of the law by the latter class will go virtually unchecked."
Id., at 482.  Only four years later we reiterated this view, ruling that
tribal sellers are obliged to collect and remit state taxes on sales to
nontribal members at Indian smoke-shops on reservation lands.  Colville,
supra.
    The Court of Appeals thought this case was distinguishable from Moe and
Colville.  It observed the State of Washington had asserted jursdiction
over civil causes of action in Indian country as permitted by Public Law
280.  Pub. L. 83-280, 67 Stat. 588.  The court contrasted Colville to this
case, in which Oklahoma disclaimed jurisdiction over Indian lands upon
entering the Union and did not reassert jurisdiction over these lands
pursuant to Public Law 280.  The Court of Appeals concluded that because
Oklahoma did not elect to assert jurisdiction under Public Law 280, the
Potawatomis were immune from any requirement of Oklahoma state tax law.
    Neither Moe nor Colville depended upon the State's assertion of
jurisdiction under Public Law 280.  Those cases stand for the proposition
that the doctrine of tribal sovereign immunity does not prevent a State
from requiring Indian retailers doing business on tribal reservations to
collect a stateimposed cigarette tax on their sales to nonmembers of the
Tribe.  Colville's only reference to Public Law 280 relates to a concession
that the statute did not furnish a basis for taxing sales to tribe members.
447 U. S., at 142, n. 8.  Public Law 280 merely permits a State to assume
jurisdiction over "civil causes of action" in Indian country.  We have
never held that Public Law 280 is independently sufficient to confer
authority on a State to extend the full range of its regulatory authority,
including taxation, over Indians and Indian reservations.  Bryan v. Itasca
County, 426 U. S. 373 (1976); see also Rice v. Rehner, 463 U. S. 713, 734,
n. 18 (1983); Cabazon, 480 U. S. at 208-210, and n. 8.  Thus, it is simply
incorrect to conclude that Public Law 280 was the essential (yet unspoken)
basis for this Court's decision in Colville.
    In view of our conclusion with respect to sovereign immunity of the
Tribe from suit by the State, Oklahoma complains that, in effect, decisions
such as Moe and Colville give them a right without any remedy.  There is no
doubt that sovereign immunity bars the State from pursuing the most
efficient remedy, but we are not persuaded that it lacks any adequate
alternatives.  We have never held that individual agents or officers of a
tribe are not liable for damages in actions brought by the State.  See Ex
parte Young, 209 U. S. 123 (1908).  And under today's decision, States may
of course collect the sales tax from cigarette wholesalers, either by
seizing unstamped cigarettes off the reservation, Colville, supra, at
161-162, or by assessing wholesalers who supplied unstamped cigarettes to
the tribal stores, City Vending of Muskogee, Inc. v. Oklahoma Tax Comm'n,
898 F. 2d 122 (CA10 1990).  States may also enter into agreements with the
tribes to adopt a mutually satisfactory regime for the collection of this
sort of tax.  See 48 Stat. 987, as amended, 25 U. S. C. MDRV 476.  And if
Oklahoma and other States similarly situated find that none of these
alternatives produce the revenues to which they are entitled, they may of
course seek appropriate legislation from Congress.
    The judgment of the Court of Appeals is accordingly

Affirmed in part and reversed in part.


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Subject: 89-1322 -- CONCUR, OKLAHOMA TAX COMM'N v. POTAWATOMI TRIBE

 


    SUPREME COURT OF THE UNITED STATES


No. 89-1322



OKLAHOMA TAX COMMISSION, PETITIONER v.
CITIZEN BAND POTAWATOMI INDIAN
TRIBE OF OKLAHOMA


on writ of certiorari to the united states court of appeals for the tenth
circuit

[February 26, 1991]



    Justice Stevens, concurring.
    The doctrine of sovereign immunity is founded upon an anachronistic
fiction.  See Nevada v. Hall, 440 U. S. 410, 414-416 (1979).  In my opinion
all Governments -- federal, state, and tribal -- should generally be
accountable for their illegal conduct.  The rule that an Indian tribe is
immune from an action for damages absent its consent is, however, an
established part of our law.  See United States v. United States Fidelity &
Guaranty Co., 309 U. S. 506, 512-513 (1940).  Nevertheless, I am not sure
that the rule of tribal sovereign immunity extends to cases arising from a
tribe's conduct of commercial activity outside its own territory, cf. 28 U.
S. C. MDRV 1605(a) ("A foreign state shall not be immune from the
jurisdiction of courts of the United States or of the States in any case .
. . (2) in which the action is based upon a commercial activity carried on
in the United States by a foreign state . . . ."), or that it applies to
claims for prospective equitable relief against a tribe, cf. Edelman v.
Jordan, 415 U. S. 651, 664-665 (1974) (Eleventh Amendment bars suits
against States for retroactive monetary relief, but not for prospective
injunctive relief).
    In analyzing whether the Citizens Band Potawatomi Indian Tribe can be
held prospectively liable for taxes on the sale of cigarettes, the Court
today in effect acknowledges limits to a tribe's sovereign immunity,
although it does not do so explicitly.  The Court affirms the Court of
Appeals' holding that the Oklahoma Tax Commission's counterclaim against
the Tribe was properly dismissed on grounds of the Tribe's sovereign
immunity, but then proceeds to address the precise question raised in the
counterclaim -- whether the Tribe in the future can be assessed for taxes
on its sales of cigarettes.  The Court indulges in this anomaly by
reasoning that the issue of the Tribe's prospective liability "is fairly
subsumed" in the Tribe's main action seeking to have the Tax Commission
enjoined from collecting back taxes.  See ante, at 6.
    In my opinion, however, the issue of prospective liability is properly
presented only in the Tax Commission's counterclaim.  It is quite possible
to decide that the Tribe cannot be liable for past sales taxes which it
never collected without going on to decide whether the Tax Commission may
require the Tribe to collect state taxes on its sales in the first place.
In my opinion the Court correctly reaches the issue of the Tribe's
prospective liability and correctly holds that the State may collect taxes
on tribal sales to non-Indians.  My purpose in writing separately is to
emphasize that the Court's holding in effect rejects the argument that this
governmental entity -- the Tribe -- is completely immune from legal
process.  By addressing the substance of the Tax Commission's claim for
prospective injunctive relief against the Tribe, the Court today recognizes
that a tribe's sovereign immunity from actions seeking money damages does
not necessarily extend to actions seeking equitable relief.


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