Facts
- The Citizen Band Potawatomi Indian Tribe of Oklahoma operated a convenience store on land held in trust for the Tribe by the United States.
- The Tribe sold cigarettes at the store without collecting or remitting Oklahoma’s cigarette tax on sales to either tribal members or nonmembers.
- In 1987, the Oklahoma Tax Commission assessed approximately $2.7 million in allegedly unpaid cigarette taxes for sales from 1982–1986.
- The Tribe sued in federal district court to enjoin the assessment.
- Oklahoma counterclaimed to (1) enforce the assessment against the Tribe for past taxes and (2) enjoin future cigarette sales unless the Tribe collected and remitted state taxes.
Issues
- Whether the Tribe waived tribal sovereign immunity from Oklahoma’s counterclaims by filing suit to enjoin the tax assessment.
- Whether Oklahoma could (a) tax on-trust-land cigarette sales to tribal members and (b) tax sales to nonmembers and require the Tribe to collect those taxes.
- Whether the use of tribal trust land, rather than a formally designated reservation, changed the immunity and taxation analysis.
Decision
- The Court held that the Tribe did not waive sovereign immunity merely by suing for injunctive relief; Oklahoma’s counterclaim seeking to collect past taxes from the Tribe was barred.
- The Court held Oklahoma lacked authority to tax cigarette sales to tribal members occurring on tribal trust land.
- The Court held Oklahoma could impose a nondiscriminatory cigarette tax on sales to nonmembers on tribal trust land and could require the Tribe to assist with collection, though sovereign immunity limited enforcement against the Tribe itself.
- The judgment was affirmed in part and reversed in part, and the case was remanded.
Legal Principles
- Federally recognized tribes possess inherent sovereign immunity from suit unless Congress clearly abrogates immunity or the tribe clearly waives it; waiver cannot be implied.
- A tribe does not waive sovereign immunity from money or tax-collection counterclaims solely by bringing an action for injunctive or declaratory relief.
- Absent congressional authorization, a state may not tax on-tribal-land sales to tribal members.
- A state may tax sales to nonmembers on tribal lands when the tax is nondiscriminatory and the legal incidence falls on nonmembers, and it may structure collection measures that do not depend on obtaining a judgment against an immune tribe.
- Tribal trust land set aside for tribal use under federal superintendence is treated as reservation land for these purposes.
Conclusion
The Court preserved tribal sovereign immunity against Oklahoma’s attempt to collect past cigarette taxes directly from the Tribe, while confirming that Oklahoma could tax cigarette sales to nonmembers on tribal trust land and require collection measures consistent with immunity limits.