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Tribal-state taxation case goes before Supreme Court
Monday, October 3, 2005

A classic tribal-state feud will be aired today as the U.S. Supreme Court opens its new term with a new leader.

Chief Justice John G. Roberts Jr., who was confirmed and sworn in last week, takes the helm this morning as the court hears its first arguments of the October 2005-2006 term. The second case on the docket is Wagnon v. Prairie Band Potawatomi Nation, a battle pitting tribal sovereignty against state sovereignty.

The Prairie Band Potawatomi Nation won a ruling from the 10th Circuit Court of Appeals that blocked the state of Kansas from imposing a distribution tax on gasoline sold on the reservation. Although the tax wasn't directly imposed on the tribe, a unanimous panel of judges said it infringed on the tribe's rights.

"The nation's interests are particularly strong," Judge Monroe G. McKay wrote for the majority. "Tribes have a recognized 'interest in raising revenues for essential governmental programs, [and] 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 of Kansas disagrees. It argues that the tribe's rights are not at issue because the tax is imposed on non-Indian distributors who operate off the reservation. The state says its sovereignty prevails.

Siding with the tribe is the United States. The Department of Justice filed a brief arguing that tribal and federal interests in promoting Indian self-sufficiency weigh in favor of invalidating the tax.

The National Congress of American Indians and the Native American Rights Fund, through their joint Supreme Court project, the National Intertribal Tax Alliance, the Intertribal Transportation Association and a host of other tribes have also joined the controversy in favor of the Prairie Band. They too cite the strong need to protect tribal sovereignty.

More than a dozen states, the Multi-State Tax Commission and the National Association of Convenience Stores are backing Kansas. They say state sovereignty should be favored in cases where off-reservation activity is involved.

The case centers on the interpretation of legal precedents that involve attempts by states to impose taxes on Indian Country economic activity. At issue is how the courts should resolve competing tribal and state sovereign rights.

The 10th Circuit resolved the matter by relying on White Mountain Apache Tribe v. Bracker, a Supreme Court case from 1980. That decision laid out a balancing test that weighs federal, tribal and state interests.

"Bracker recognizes two 'independent but related barriers' to state regulation," the tribe argues in its brief. "State regulation may be 'preempted by federal law' or it may unlawfully infringe a tribe's right to 'make [its] own laws and be ruled by them.'"

Kansas says the balancing test isn't appropriate because the state isn't trying to regulate reservation activity. At the same time, the state is calling on the Supreme Court to abandon the Bracker as "ill-fitted to coherent, reasonably predictable decision-making."

"The balance-of-interests test should be replaced with a standard analogous to that applicable to federal contractors i.e. states may tax nontribal members, even if the tax may have an economic effect on a tribe, unless Congress has expressly provided otherwise," the state argues in its brief.

One hour is set aside for the arguments. Kansas is up first and will be represented by Ted Olson, the former Solicitor General for the Bush administration.

Olson and Roberts know each other from an earlier Indian law case: Rice v. Cayetano from 2000. Olson won the case on behalf of a non-Native rancher who challenged a Native Hawaiian-only election. Roberts defended the state's Hawaiian programs.

Arguing on behalf of the Prairie Band Potawatomi Nation will be Ian Heath Gershengorn, a Washington attorney who was worked on a number of Indian law cases. Like Olson, he is a former Department of Justice official.

Edwin S. Kneedler, the deputy solicitor general, will present the Bush administration's side. He has previously argued US v. Lara, a tribal sovereign case, and US v. Navajo Nation, a trust relationship case.

Before oral arguments, the court will hold its own swearing-in for Roberts. After the ceremony, the court will hear IBP, Inc. v. Alvarez and Tum v. Barber Foods , a pair of labor-related cases, before turning to the Prairie Band case.

Supreme Court Documents:
Day Call | Docket Sheet | Questions Presented

Court Briefs:
Richard v. Prairie Band Potawatomi Nation (NCAI-NARF Supreme Court Project)

Lower Court Decision:
Prairie Band Potawatomi Nation v. Richards (10th Circuit August 2004)

Relevant Links:
Prairie Band Potawatomi Nation -
NARF-NCAI Tribal Supreme Court Project -
Multistate Tax Commission -

Related Stories:
Roberts confirmed and sworn in as chief justice (9/30)
Roberts mentions Indian law work on final day (9/19)
Supreme Court nominee Roberts promises 'no agenda' (9/13)
Roberts tapped for chief justice position (9/6)
Bush names John G. Roberts to Supreme Court (7/20)
O'Connor resigns from nation's highest court (7/5)
Justice's tenure filled with key Indian law cases (7/5)
Supreme Court wraps up October 2004 term (06/28)
U.S. Supreme Court vacancy impacts tribal rights (06/20)
Supreme Court takes on tribal-state tax dispute (03/01)
Supreme Court agrees to hear tribal gas tax case (2/28)
U.S. Supreme Court asked to rule on state taxation (12/02)
Hearing set for Oneida Nation treaty rights case (11/12)
Court bars state from imposing gas tax on tribe (08/13)
U.S. Supreme Court won't touch Indian tax ruling (05/25)
Judge blocks state from interfering with tribe (8/3)
Supreme Court to hear dispute over Oneida Nation land (06/29)
Oneida Nation sees support in Bush administration brief (06/08)
N.D. judge rules gas tax on Indians illegal (01/28)
S.D. Supreme Court limits refunds for illegal gas tax (01/09)
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