Central Machinery Company v. Arizona State Tax Commission

PETITIONER:Central Machinery Company
RESPONDENT:Arizona State Tax Commission
LOCATION:United States District Court for the Northern District of Illinois, Eastern Division

DOCKET NO.: 78-1604
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: Arizona Supreme Court

CITATION: 448 US 160 (1980)
ARGUED: Jan 14, 1980
DECIDED: Jun 27, 1980

ADVOCATES:
Ian A. Macpherson – for appellee
Louis F. Claiborne – for the United States, as amicus curiae, by special leave of Court
Rodney B. Lewis – for appellant

Facts of the case

Question

Audio Transcription for Oral Argument – January 14, 1980 in Central Machinery Company v. Arizona State Tax Commission

Warren E. Burger:

We’ll hear arguments first this morning in Central Machinery Company against Arizona State Tax Commission.

Mr. Lewis, you may proceed whenever you are ready.

Rodney B. Lewis:

Mr. Chief Justice Burger and may it please the Court.

This case is here on appeal from the Supreme Court of the State of Arizona.

It involves a question of whether the State of Arizona can impose a transaction privilege tax on the sale of 11 tractors to the Gila River Indian Community.

In 1973, representatives of Central Machinery went upon the Gila River Indian Reservation for the purpose of selling farm machinery to Gila River Farms.

Gila River Farms is a subsidiary and business enterprise of the Gila River Indian Community, a recognized Indian Tribe, organized pursuant to Section 16 of the Indian Reorganization Act.

After negotiations which occurred on the reservation, Gila River Farms agreed to purchase 11 John Deere tractors.

Subsequently, delivery and payment for the tractors was made on the reservation.

Central Machinery added to the purchase price the amount of $2916.62 which was paid by Gila River Farms to Central Machinery.

Central Machinery remitted these funds to the State of Arizona as payment for the transaction privilege tax.

Central Machinery paid this tax under protest.

The sale was approved by the Superintendent of Pima agency, the Secretary’s representative on the Gila River Indian Reservation.

The Pima agency Superintendent allowed Central Machinery to come onto the reservation and transact this business without securing a trader’s license.

The Superintendent, prior to the sale, had also approved the Farms’ budget which had set aside moneys for the purchase of the tractors.

Administrative appeals and court action in the Arizona courts followed, culminating in this appeal before this Court.

The trader statute, U.S.C. 261-264, and federal regulations preempt Arizona’s jurisdiction to levy this tax on this sale.

It is our position that Warren Trading Post governs this case, thereby, preventing application or imposition of the transaction privilege tax, a tax which is measured by sales to this sales transaction.

William H. Rehnquist:

Mr. Lewis, would you agree that if, instead of the transaction taking place on the Gila River Reservation, it had taken place in New Mexico and Arizona had sought to levy its privilege tax, it would be taxable?

Rodney B. Lewis:

I am not sure whether or not there would be a sufficient connection to the State of Arizona, allowing Arizona to impose that tax.

And of course, it’s not the situation here before us.

William H. Rehnquist:

But if there had been a — do you — do you think the same standard would govern or do you think that it’s the licensing by the Secretary of Interior and the other peculiarly Indian aspects of this case that govern?

Rodney B. Lewis:

I don’t think the licensing by the Interior is dispositive in this case nor do I think it would be handled the same way regarding a transaction in New Mexico.

We’re — our position is that Warren Trading Post, which held that federal statutes and accompanying regulations preempted the field, did not allow the — did not allow the imposition of this tax to this transaction.

Warren Trading Post held that — that Congress has undertaken to regulate reservation trading in such a comprehensive way that there’s no room for the States to legislate the subject.

Any assessment and collection of a tax involved here was held in Warren to frustrate the evident congressional purpose of ensuring that no burden be imposed upon Indian traders, trading with Indians or reservations, except as authorized by Acts of Congress or by valid regulations promulgated under those Acts.

Congress enacted the trader statute to deter fraud and prevent exploitation of Indians engaged in commercial transaction with an Indian country.

John Paul Stevens:

Mr. Lewis, could I ask you a question.

Was this transaction approved by the Federal Government?

Rodney B. Lewis:

The transaction was approved by the Federal Government.

Rodney B. Lewis:

It’s approved by the Secretary’s —

John Paul Stevens:

And —

Rodney B. Lewis:

— representatives and the Superintendent.

John Paul Stevens:

— when — when it was approved, did the person who granted the approval know the terms of the transaction?

Rodney B. Lewis:

He knew the terms of the transaction.

He had approved the moneys which had — which had been set aside by Gila River Farms, specifically for the purchase of the tractors.

John Paul Stevens:

Can it be inferred that the approval carried with it approval of the transaction tax?

Rodney B. Lewis:

No, it cannot.

First of all, I — I think our position is that the Agency Superintendent simply recognized that there was a — a problem involved here.

He only approved the transaction realizing that Gila River Farms and Central Machinery had paid this tax under protest.

Second of —

John Paul Stevens:

Was — was there any objection made on behalf of the Federal Government to the payment of the tax?

Rodney B. Lewis:

There is no objection, at that time, made under — made by the Federal Government to the imposition of the tax.

He was aware, of course, that the tax had been paid under protest.

The power of Congress to legislate in this area stems from the Indian Commerce Clause, Article III, Section 8, Clause 3 of the United States Constitution.

On their face, these statutes indicate that exclusive power to regulate trading rest with the Federal Government.

For instance, 25 U.S.C. 261 says that the Commissioner of Indian Affairs has sole power and authority to appoint Indian traders.

25 U.S.C. 262 specifies that any person must first satisfy the Commissioner that he is a proper person to deal with — to trade with Indians.

Byron R. White:

Well, does that — do you mean to argue that if the — if the Indian purchasers had left the reservation and gone into the city or gone into a town or some neighborhood — neighboring community and negotiated the purchase of a tractor, paid for it there and took — and delivery taken there that — that the seller would have had to qualify as an Indian trader?

Rodney B. Lewis:

If we went off the reservation to buy these tractors, we would be subject to the Arizona transaction privilege tax.

Byron R. White:

And the — and whoever — and the seller wouldn’t have to — wouldn’t have to be recognized as an Indian trader.

Rodney B. Lewis:

The seller would not have to be recognized as an Indian trader.

When he comes onto the —

Byron R. White:

Well, what if you — what if he went off to the reservation and took — and bought — bought and paid for the tractor in the adjoining community and asked that it be delivered on the reservation?

Rodney B. Lewis:

That’s — that would not be our case.

Byron R. White:

I know it isn’t your case, but —

Rodney B. Lewis:

That — that’s a different situation.

It’s a little difficult to answer that but it’s — in that case, I think that — that the transaction could be taxed.

Byron R. White:

Yes.

Rodney B. Lewis:

The Federal Government has traditionally and historically regulated trading involving Indians.

Rodney B. Lewis:

Beginning in 1790, it enacted the trader statutes, and throughout the 19th century, the trader statutes were amended from time to time.

Because of this predominant federal interest, state regulation has often been precluded.

The sale by Central Machinery to Gila River Farms falls within the scope of the trader statute and the holding of Warren Trading Post, 25 U.S.C. for instance, 264 penalizes any person conducting unauthorized trading with Indians or Indian tribes and the Commissioner has issued comprehensive regulations to carry out the objectives of the statute.

The attempt to attack this — the sale of these tractors to Gila River Farms which occurred on the reservation must follow since the trader statutes preempt Arizona’s jurisdiction to enact this tax and because of the holding — the interpretation of the trader statutes by Warren Trading Post.

Our second argument deals with the fact that the tax interferes with the federal purposes of the Gila River Indian Reservation.

The reservation was established in 1859 to provide Pimas and Maricopas a sound economic base.

Gila River Farms is pursuing this objective.

Pimas and Maricopas have farmed along the Gila River for hundreds and even thousands of years, certainly before the establishment of the American Republic.

Imposition of the Arizona transaction privilege — privilege tax burdens the economic purpose of the reservation.

Second of all, the tax interferes with tribal self-government.

Warren invalidated the same tax in 1965, this tax which — which is measured by sales, because it — in part because it interfered with tribal self-government.

And McClanahan invalidate Arizona’s income tax because of its interference with tribal self-government.

The Gila River Indian — Indian Community’s ability to govern itself will likewise be interfered with.

I would like to now address two arguments raised by the State of Arizona.

First — and — and the Arizona Supreme Court thought it important that because of the lack of trader’s license, this transaction did not come within the trader statutes or the holding in Warren.

First of all, there is not a statutory requirement that Central Machinery have a trader’s license to engage in trading on a reservation.

The purpose of these statutes, as I mentioned before, is to supervise trading with Indians and Indian tribes to prevent unfair prices and practices.

Issuance of a trader’s license is not the exclusive way in which or method in which the Federal Government uses to accomplish the purpose of the statutes.

For instance, the Code of Federal Regulations allows peddlers to go onto the reservations to trade for limited purposes.

Therefore, they need correspondingly less supervision.

Here, there was extensive supervision which met the objectives of the statutes, that is, to deter fraud and prevent exploitation of Indians.

There is a specific approval of the sale.

There was approval of the Tribe — of the Farms’ budget which included money set aside for the tractors, and there was approval of the tribal budget, the parent of the tribal — of the Gila River Indian Community, the parent organization of Gila River Farms, as is required by Article 15 of the Constitution and bylaws of the Gila River Indian Community which was approved by the Secretary of the Interior.

A determination was made by the Agency Superintendent in this single transaction that a license not be issued because there had been — probably, because there had been adequate supervision of this transaction, and the purposes of the statute had been met and accomplished.

A second argument raised by — by the State of Arizona, and which was discussed in the Supreme Court’s opinion in Arizona, was that it did not come in within the trader statutes, this transaction did not come within the trader statutes or Warren Trading Post because it lacked a permanent place of business on the reservation.

Again, the trader statutes don’t require that persons engaged in the commercial transactions with Indians within Indian country have a — have a permanent place of business on that reservation.

Byron R. White:

Well, shouldn’t — should — should Central had a license.

Rodney B. Lewis:

Central did not need a license in this case.

The purposes of the statute had been met.

There was direct supervision of the entire transaction by the Secretary of the Interior’s representative.

Byron R. White:

You’re saying that the trading statute did apply, the only — except for the licensing provision, is that it?

Rodney B. Lewis:

The trader statutes apply.

The licensing is not required by the statute.

The force of the Federal Government in — in supervising the sale was, in effect, the full force.

The sale was comprehensively regulated by the Agency Superintendent.

Warren E. Burger:

You’re suggesting that the licensing would be a — is merely a matter of form of formality?

Rodney B. Lewis:

In this case, it was a mere formality.

The — the actual supervision had taken place.

Byron R. White:

Was the extent of the economic burden any factor in your argument or is it just a straight preemption argument?

Rodney B. Lewis:

Well, that’s basically our argument.

But, certainly, the economic burden of the Tribe on a group of Indians with limited resources certainly is a — has a strong effect.

This $2916 adds up when you count the tremendous amount of similar transactions which occur.

These are funds which ordinarily would go to the support of the tribal government which is — which has as its purpose to maintain government on the reservation and to attempt to establish a sound economic base for Pimas and Maricopas who have lived there since time immemorial.

In summary, the trader statutes preempt Arizona’s authority to tax a sale.

Warren Trading Post, interpreting the — the trader statutes governs and controls this case, preventing imposition of this transaction privilege tax which is measured by sales.

Imposition of the tax will interfere with the federal purposes of the reservation to provide a sound economic base for Pima and Maricopa Indians and interferes with the right of the Gila River Indian Community, a tribe, to govern itself.

John Paul Stevens:

Mr. Lewis, let me just be sure I understood you correctly.

Did you respond to Mr. Justice White by saying that if the contract had been signed off the reservation that then the tax could be imposed?

Rodney B. Lewis:

No.

I think the — the question was if we at the — if the Farms had gone off the reservation, bought the tractors, then that would be a different situation, probably the Arizona’s tax would apply in that situation.

But in this case —

John Paul Stevens:

This cannot be applied if they go off the reservation, negotiate the whole transaction and go back on the reservation and sign the papers.

Rodney B. Lewis:

Well, I think if delivery was made on the reservation —

John Paul Stevens:

Well, it’s always going to be made on the — the delivery was made on the reservation —

Rodney B. Lewis:

Yes, it was.

John Paul Stevens:

— here and in — I think, in Mr. Justice White’s example too.

Rodney B. Lewis:

I think it’s the mere fact that some negotiations took place off the reservation, I still think, would prevent imposition of this tax, but —

John Paul Stevens:

The key is where they sign the contract.

Rodney B. Lewis:

No.

The key is that you have a — a trader dealing with Indian tribes and — and the —

John Paul Stevens:

Yes, but in one case, he —

Rodney B. Lewis:

— statutes regulate —

John Paul Stevens:

— signs it in —

Rodney B. Lewis:

— this trade.

John Paul Stevens:

I mean, if the only difference is where you sign the contract, is that the difference between taxation and no taxation?

Rodney B. Lewis:

No, that’s not the difference between taxation and — and no taxation.

When —

John Paul Stevens:

What is it then?

Rodney B. Lewis:

Well, the taxable event in this case was the — this — the transaction or the sale of the — the sale of the tractors to the Gila River Indian Community.

Some of the — that was a taxable event.

The elements of the sale involved negotiation, signing a contract, making payment and delivery.

These took place, in this case, on the reservation.

Now, if in a situation, negotiations took place off the reservation, that would not make any difference.

The trader statutes still govern that transaction.

If the contract was signed off the reservation, I still don’t think that the — I still think the trader statutes would govern — govern the situation and preempt the State’s authority to levy the tax.

John Paul Stevens:

Well, then, is it delivery any time merchandise is delivered on the reservation?

You — I think you’ve changed your position now.

You said even if it was signed off the reservation, it would be preemption.

Rodney B. Lewis:

The — in this case, these events — these events took —

John Paul Stevens:

Well, I understand.

What I’m trying to understand what is — what is your view of the line between the taxable transaction and a non-taxable transaction?

Rodney B. Lewis:

The — the line — the line is — is drawn when you’re dealing with an Indian tribe with an Indian country.

That’s one line.

Dealing with a — a business, an important part, important function of the tribal government, that’s a second major — major fact.

And the — finally, you’re talking about — in this case, we’re talking about a series of events which constitute the sale which also took place in the reservation.

When you’re dealing with an Indian tribe within an — with an Indian country for the sale, that — this comes within the trader statutes.

It comes within the meaning of Warren.

Warren E. Burger:

But then, are you saying that it’s the status of the Indian tribe that is the dispositive factor and that all these other factors are unimportant and irrelevant?

Rodney B. Lewis:

Well, the — the status of the Indian tribe, the fact that it occurred within Indian country, it was a commercial transaction, yes, those are the factors which preempt the Arizona State sales tax.

William H. Rehnquist:

Well, certainly, Mescalero, the decision in our Court in — several years ago, rejected the idea that the mere fact that it was — it was an Indian tribe automatically meant federal preemption, did it not?

Rodney B. Lewis:

Did it not?

It did.

The — the ski lodge in issue there was off the reservation.

William H. Rehnquist:

But, I mean, so far as the — but if the status of the Indian tribe wasn’t endowed so the status, by itself, wouldn’t be given exemption here, would it, under — under Mescalero.

Rodney B. Lewis:

Under Mescalero, that, of course, involved a different situation.

It involved Indian property located off the reservation.

That’s not the situation here.

That’s the fact that it’s an Indian tribe is — is not dispositive of — of the situation.

It’s a fact that there was business, occurred or performed with an Indian country, the fact that it was an Indian tribe, the fact in this case that the events of the sale took place on the reservation.

Lewis F. Powell, Jr.:

If the Tribe had sent a representative into Phoenix to buy a truck and it bought the truck off of an automobile dealer’s light, taking the truck back to the reservation, would that be covered by the — by your — your submission here today?

Rodney B. Lewis:

By the submission today, it would not be covered.

Lewis F. Powell, Jr.:

That would — you wouldn’t be making the claim that you are making here today.

Rodney B. Lewis:

We would not be making the claim.

Lewis F. Powell, Jr.:

Suppose that the agreement to purchase the truck, having been made in Phoenix, also provided that the truck would be delivered to the reservation.

Rodney B. Lewis:

I think simple delivery of that — of the truck on the reservation probably would not bring this — this —

Lewis F. Powell, Jr.:

Would not be quite enough.

Rodney B. Lewis:

Would not be quite enough.

Warren E. Burger:

Very well.

I think you have yielded part of your time to Mr. Claiborne.

Louis F. Claiborne:

Mr. Chief Justice, may it —

Warren E. Burger:

Mr. Claiborne.

Louis F. Claiborne:

— may it please the Court.

Let me begin by saying that we wholly endorse and have in our brief, primarily relied on the statutory preemption argument.

And with respect to that, in answer to some of the questions from the bench, I would put the matter this way.

The purpose of the Indian trader statutes was to protect Indian tribes against the abuses of those who came on to that Indian territory, who came within Indian country and tried to sell them goods or services.

It, therefore, does matter whether it’s the Tribe that goes outside to purchase equipment or whether it’s the dealer who comes onto the reservation to sell to the Tribe.

Whether some part of the negotiation is subsequently conducted on or off the reservation may be less critical than whether the approach comes from the outside or whether, rather, it’s —

Byron R. White:

Well, was it (Voice Overlap) —

Louis F. Claiborne:

— Indian tribe —

Byron R. White:

— nothing an approach from the outside if a farm machinery dealer simply advertises on local television?

Louis F. Claiborne:

Perhaps —

Byron R. White:

Or on local radio and advertises John Deere tractors at a very low price?

Louis F. Claiborne:

Perhaps not, Mr. Justice.

Byron R. White:

And off the — off — off the Indian goes to buy a tractor.

Louis F. Claiborne:

Perhaps not.

Perhaps that’s not an intrusion —

Byron R. White:

Well, perhaps.

How about — is it perhaps so and perhaps not or — or —

Louis F. Claiborne:

I would have thought not.

I would have thought that when the dealer either by mail, by telephone or by personal entry onto the reservation, approaches the Tribe with the view to selling machinery or any other —

Byron R. White:

Well, what about a —

Louis F. Claiborne:

— goods or —

Byron R. White:

— flyer in the mail to all residents of the reservation?

Louis F. Claiborne:

That, I think, would be an invitation from outside and that would and should be —

Byron R. White:

And even if the even —

Louis F. Claiborne:

— subject to federal supervision.

Byron R. White:

— if the Indian then leaves the reservation, signs the contract, takes delivery off the reservation?

Louis F. Claiborne:

Well, Mr. Justice White, of course, there are gradations and I’m — I’m not clear as to each of the —

Byron R. White:

But you’re clear about this one.

Louis F. Claiborne:

This one, because we’ve got an approach from the outside, we’ve got the transaction conducted wholly within the reservation, we’ve got the contract signed there, and we’ve got delivery effected there.

Potter Stewart:

Do I understand correctly, Mr. Claiborne, that your — your alliance is primarily, if not exclusively, on the doctrine of Warren Trading Post?

Louis F. Claiborne:

Insofar as we rely on statutory preemption.

Potter Stewart:

And don’t you do primarily rely on statutory preemption?

Louis F. Claiborne:

We do primarily rely but we have, as Your Honor may know from our brief, also suggested that there is a constitutional dimension to the case.

Appreciate that that matter was not urged below.

We felt it, at the court’s invitation as amicus curiae, our duty to put forward —

Potter Stewart:

Right.

Louis F. Claiborne:

— what we think is a constitutional preemption argument which is —

Potter Stewart:

As an Indian Commerce Clause?

Louis F. Claiborne:

An Indian Commerce Clause argument.

Louis F. Claiborne:

We — as to that, we begin with the proposition which has been endorsed by this Court starting in the Worcester case and most recently reaffirmed in Bryan versus Itasca County that the power to deal with Indian tribes is exclusively a federal power.

Warren E. Burger:

Do you not or do you — I’ll put it this way, do you agree with Judge O’Connor’s statement in her opinion that it is the existence, the existence of the federal laws accompanying regulations and not their enforcement which preempts the State’s ability to tax the transaction?

Louis F. Claiborne:

Mr. Chief Justice, we endorse that statement entirely.

It seems to us irrelevant if, and we don’t suggest that it is the case, but if it were the case, that the Department of the Interior had defaulted by failing to apply the Indian trader statutes here to this transaction, that ought not give leave to the State of Arizona to impose its tax.

Preemption in this area, an area committed by the Constitution exclusively to the Federal Government, is one in which the doctrine of preemption depends on existence rather than the exercise of federal statutory power.

William H. Rehnquist:

Well, how do you distinguish your answer to the Chief Justice’s question on the statement in Mescalero, on page 147 of the U.S. reports, “At the outset, we reject as to the state court the broad assertion that the Federal Government has exclusive jurisdiction over the Tribe for all purposes and that the State is therefore prohibited from enforcing its revenue — revenue laws against any tribal enterprises”?

Louis F. Claiborne:

Mr. Justice Rehnquist, I take that statement to address the broad proposition they put forward that the relation with Indians and with Indian tribes, even off reservation, was exclusively a matter of federal concern.

William H. Rehnquist:

But if it’s Indian commerce, certainly, Indian commerce can take place off reservation as well as on reservation.

Louis F. Claiborne:

Mr. Justice Rehnquist, we assume, and I think with some justification in history, that the Indian Commerce Clause was written against the background of two kinds of Indians for the most part then, on their own territory within Indian country.

That was the Indian commerce spoken of.

When Indians had assimilated, had joined the general population, were no longer on their reservation, that was not Indian commerce.

The Indians had lost their character as a tribe, and we’re talking about the tribal commerce, not an individual Indian who goes off to buy a car or any other product.

We’re talking about, as the Constitution does, commerce with the Indian tribes within their territory, as now defined by reservations.

Potter Stewart:

Well, in the original, they were not reservations, they were just tribes that were considered in the era of the Worcester case, a little short of sovereign nations like England or France or Germany.

And those weren’t reservation Indians, they were tribal nations.

Louis F. Claiborne:

Mr. Justice Stewart, because they were more independent then than now, but the Cherokees in the Worcester case were on their reserved lands, those which they had not seated and the reservations —

Potter Stewart:

But unlike today where Indian reservations are federal lands, federal — in those days, they were Indian lands.

Louis F. Claiborne:

Well, how — in some cases, of course, they’re simply federal lands set aside for Indians.

Potter Stewart:

And Indian sovereign nations or quasi-sovereign nations.

Louis F. Claiborne:

But they’re all, and most reservations today are simply the residual of aboriginal Indian lands which are now more restricted in area and more subject to both federal and to some degree, state regulation.

Warren E. Burger:

But those boundaries were fixed up by the Indians put by treaties and by Acts of Congress, as Justice Stewart suggested.

Before that, the Indians merely claimed sovereignty over rather indefinite and vaguely defined lands.

Wasn’t that so?

Louis F. Claiborne:

To some degree, Mr. Chief Justice.

But, of course, there were a number of treaties long before the decision in Worcester which had defined the area which could remain, which was not seated and which was recognized as that pertaining to the Indian tribes.

And indeed, the Worcester case involved the Cherokee area which had been defined, at least twice by treaty by then and was very much less than the aboriginal area roamed by the Cherokee tribes.

John Paul Stevens:

None of those reservations had been created when the constitutional language was drafted.

Potter Stewart:

That’s the point.

Louis F. Claiborne:

Well, that is not quite true, Mr. Justice Stevens.

There’d been a number of treaties before the Constitution which had a fixed boundaries between the White-man’s land and the Indian land.

Louis F. Claiborne:

Now, the — the — it’s true that — and of course, they were Indians within the States even then with this —

William H. Rehnquist:

Were — were there States before the Constitution?

Louis F. Claiborne:

There were — the United —

William H. Rehnquist:

I mean you —

Louis F. Claiborne:

— States before the Constitution and continental Congress.

William H. Rehnquist:

— you have to go back to the proclamation line of Lord Jeffery Amherst and King George III or —

Louis F. Claiborne:

Well, Mr. Justice Rehnquist, the period between the declaration of independence and the Constitution and the period of the continental Congress was a period of the United States, although not governed by the confederation rather than the Constitution.

And those States, the State of New York, the State of Massachusetts, had Indian enclaves within them.

Witness Article I of the Constitution which excludes the Indians within States from being counted in the enumeration of representatives.

Those are only the Indians within the States that are spoken of.

The question in this case, it seems to us, is whether the exclusive constitutional power of Congress to deal with Indian tribes includes, as the constitutional language itself suggests, commercial relations between the White world and the Indian world.

It seems to us that that was a matter that was confined by the Constitution to the Congress duly exercised in the Non-Intercourse Acts but not entirely dependent on that exercise.

Just as a State cannot authorize the session of Indian land today regardless of the Intercourse Acts, so today, the States cannot tax or regulate commerce in chattels between the Indian tribes and the White world.

Warren E. Burger:

Mr. Macpherson.

Ian A. Macpherson:

Mr. Chief Justice and may it please the Court.

My name is Ian Macpherson and I represent the appellees in this case.

I think, at the outset, what I’d like to do is point out a couple of facts that were raised in the opening remarks by both counsel for the taxpayer and the United States as amicus curiae.

Mr. Lewis, on behalf of the taxpayer, has stated in — in his opening remarks that there was an extensive regulation and supervision of the purchase of these tractors.

A further examination of the facts will reveal, and the record supports this, as a matter of fact, it was stipulated in the agreed statement of facts upon which the matter was submitted to the Superior Court on cross-motion for summary judgment, that, in addition to the visible economic burden of the Arizona transaction privilege tax, Central Machinery Company included as well, as an undifferentiated cost component the economic burdens of many of its other state taxes, that is, Central Machinery Company, it being a non-Indian Arizona corporation engaged in business within the State of Arizona at Casa Grande, Arizona, which this Court may take note of and it’s stipulated in the facts, is not located within any reservation whatsoever, is subject itself to a number of other state taxes, state income taxes, state property taxes, so on and so forth.

The economic burdens of those taxes, to be distinguished of course from the legal incidence of the taxes, were blended in to the purchase price of all of the tractors.

Those undifferentiated cost burdens were approved in the purchase order.

And I think at this point, it’s important to note that the purchase order itself was approved on February 22nd of 1974.

The purchase order listed not only the individual tractors with an individual price for each tractor, but also a grand total for the total of the 11 tractors, some $97,000 plus the visible economic burden of some $2900 for the Arizona transaction privilege tax.

That purchase order was submitted to the Superintendent of the Pima agency, that agent who has authority over this particular reservation.

If the argument be made that there was an — an extensive supervision of the purchase, the fact is, the record is barren of any indication other than that, the Commissioner of Indian Affairs or his delegate, the Superintendent of the Pima agency approved it, simply rubberstamped the purchase order that was put in front of him.

William H. Rehnquist:

Is there no superintendent of the Gila River Indian Tribe?

Ian A. Macpherson:

Mr. Justice Rehnquist, I — that — that’s my understanding.

The Gila River — Gila River Indian Reservation is within the jurisdiction of the Pima agent, I believe, out of Tucson.

In any event, with respect to the argument that 25 U.S.C. 81 governs the result in this case, notwithstanding the fact that Central Machinery had neither an Indian trader’s license nor an itinerant peddler’s permit, that Section 81 applies, that is the general power to approve contracts.

The fact of the matter is that the Pima agent did not reject that cost that was included with the purchase order.

Ian A. Macpherson:

He specifically approved it.

Now, with respect to the Warren Trading Post case, that fact situation fits precisely into the opinion rendered by Assistant Solicitor Harper in 58 I.D. 562, upon which this Court relied and cited with approval in the Warren Trading Post case.

In that particular Interior Department opinion, it was specifically provided that, where a purchase order is issued to a merchant doing business off the reservation, they are subject to state taxes including, if the Court please, those purchases which relate to items, goods, whatever for a specific program of Indian development.

In doing so, Assistant Solicitor Harper overruled a prior provision in 57 I.D. 124.

Previously, the opinion of the Interior Department had been that these purchases, being for Indian development and in view of the “confused state of the law at the time”, were felt at that time not by Solicitor Harper but, rather, Mr. Corgis, Assistant Solicitor Corgis, to be except from state taxation.

In 58 I.D. 562, on the other hand, Solicitor Harper specifically points out that, based upon this Court’s decision in cases, among others, James v. Dravo, the Penn Dairies case, these are all included within the Interior Department opinion.

That, in fact, it now, that is in 1943, some-three years after the rendition of a prior opinion, it appeared that based on this Court’s rulings in interstate commerce cases, James v. — or federal immunity cases that the mere fact that the economic burdens of some state taxes might be borne by the Federal Government was not in itself enough to infringe upon the immunity of the ultimate sovereign in this nation, the United States Government itself.

William H. Rehnquist:

Mr. Macpherson, isn’t there a body of law to the effect that the representatives of the United States Government cannot estop it, that is, that just because a representative of the — of the Government makes a statement or a decision that a federal statute is to be applied in a perfect way — particular way some time ago does not necessarily conclude the Government on that point?

Ian A. Macpherson:

That’s correct, Your Honor.

I’m — I’m not arguing estoppel.

I’m arguing that 58 I.D. 562 articulates a rule even under Warren Trading Post as it stands right now, that where the purchase order is issued to a merchant off the reservation, it is subject to taxation.

This in fact is consistent, at least in Arizona’s view, with the subsequent decisions of this Court in cases including Gurley v. Rhoden and various other of this Court’s decisions relating to the Federal Government’s immunity from taxation.

Warren E. Burger:

Would there be tax exemption if it was a COD transaction?

Ian A. Macpherson:

Mr. Justice Burger —

Warren E. Burger:

After it delivered —

Ian A. Macpherson:

— Mr. Chief Justice —

Warren E. Burger:

— on the reservation on a cash-on-delivery at that time.

Ian A. Macpherson:

Mr. Chief Justice, in — in that regard, and I will apologize to the Court, I do not have a transcript of the oral argument which was held in the Arizona Supreme Court with respect to this, but with due respect to Mr. Lewis’ recollection of that argument, it is my recollection that the position was taken at that time that where a COD delivery was made on the reservation that that indeed, would also be exempt.

Now, Mr. Lewis made — wish to correct me on that, but that is my recollection.

It is the State of Arizona’s position in this case that if there were a COD delivery on the reservation with respect — well, in point of fact, that’s essentially what we have here.

The taxable activity in Arizona’s estimation, contrary and distinct from the taxpayer’s assertion, as well as the United States, is not the sale.

Arizona does not have a sales tax.

Many other States have sales taxes, Maryland, Virginia, indeed, the District of Columbia has a sales tax.

It is an excise tax placed upon the actual transfer event.

And in general, indeed, all three of those named jurisdictions have a requirement that the legal obligation for that tax, although there may be a collection requirement from the vendor, ultimately rests by mandate of the organic law of those jurisdictions upon the vendee.

Arizona does not have that kind of a law.

It is the transaction privilege tax.

William H. Rehnquist:

But Arizona doesn’t prevent the vendor from passing along a tax to the vendee, does it?

Ian A. Macpherson:

That is correct, Your Honor.

It neither prevents it nor does it require it.

Ian A. Macpherson:

It is of no moment to the State.

How the vendor goes about collecting this cost from his customer is separate and apart from whether or not he has a liability for it.

Potter Stewart:

But the general practice is to — the general practice is to pass it along, isn’t it?

Ian A. Macpherson:

Mr. Justice —

Potter Stewart:

And you’ve already told us that was done in this case.

Ian A. Macpherson:

That’s correct.

That arises, however, by virtue of contractual negotiation and no mandate of state law whatsoever.

Potter Stewart:

Oh, I understand.

You told us that but the —

Ian A. Macpherson:

But —

Potter Stewart:

— but the general practice and I suppose therefore, the expectation is that it will be passed along to the retail customer.

Ian A. Macpherson:

Your Honor, if — if the term “expectation” is used in the context of a requirement of state law, I would respectfully —

Potter Stewart:

Oh, no.

You told us it’s not required by state law but I asked you simply —

Ian A. Macpherson:

As a —

Potter Stewart:

— about the general practice.

Ian A. Macpherson:

Yes.

Potter Stewart:

And it is to pass it along, isn’t it?

Ian A. Macpherson:

Your Honor is quite correct.

As a business practice, the economic burden of the tax is passed along, along with the burden of all the other costs the vendor —

Potter Stewart:

Is there —

Ian A. Macpherson:

— has including his other —

Potter Stewart:

— is there —

Ian A. Macpherson:

— economic burdens of taxes, his costs of acquisition, his labor expenses, his fuel and electricity expenses.

Those are all matters of contract.

In this regard, I would submit to the Court that the fact that the economic burden of these taxes may be born by an Indian tribe or an Indian on the reservation.

Indeed, might constitute nothing more than a manifestation of the right — the exercise of the right of self-government.

One of the attributes of the exercise of self-government surely, must be the right to contract.

They have the right to contract and negotiate as to the price, which indeed they did as to the price of the tractors including, they have stipulated, the concealed economic burdens of these other taxes.

It appears that the argument boils down to nothing more than an objection not to the species of the cost, i.e. state tax, but rather, the visibility of the tax.

Ian A. Macpherson:

For example, if Central Machinery Company had attempted to conceal the economic burden of this $2900 charge within the purchase price and submitted that without a separate statement, the State of Arizona would submit that if consistency is to be brought to the taxpayer’s and United States’ position, that it would have been approved because they did the same thing with respect to the other burdens which were concealed.

Returning, if I may, to the point that Arizona does not have a transaction privilege — I — I’d to strike that, a sales tax.

Arizona indeed has a business excise tax.

It is denominated the Arizona transaction privilege tax.

It has, as its taxable event, not the sale transaction, it has, as its taxable event, engaging in business within Arizona.

Lewis F. Powell, Jr.:

Does state law require that the amount of the tax be disclosed at the time of the transaction?

Ian A. Macpherson:

Mr. Justice Powell, it does not.

Lewis F. Powell, Jr.:

And is it uniformly disclosed as a matter of practice?

Ian A. Macpherson:

Your Honor, I — I can’t speak for the some-100,000 vendors in the State of Arizona, but the — in — as a general practice, yes, it is separately stated.

Lewis F. Powell, Jr.:

If you bought an item out of a department store, would the sales ticket reflect the tax?

Ian A. Macpherson:

It does, indeed.

Warren E. Burger:

What if — what if the Tribe had contracted for these tractors in Oklahoma and delivered them themselves on over-the-road trucks to their reservation, can Arizona tax something?

Ian A. Macpherson:

Mr. Chief Justice, in the hypo is the — are all of the negotiations done through the — the out-of-state vendor?

Warren E. Burger:

Suppose the Indians go over to Oklahoma or any other nearby States —

Ian A. Macpherson:

Yes.

Warren E. Burger:

— and say, “We want to buy these tractors.

Deliver them any way you want, railroads —

Ian A. Macpherson:

Yes.

Warren E. Burger:

— railroad trucks or whatever.”

Ian A. Macpherson:

Delivery on the reservation?

Warren E. Burger:

No.

Ian A. Macpherson:

Non-taxable.

John Paul Stevens:

Is there a different tax imposed on that transaction?

Ian A. Macpherson:

Yes.

Normally, there would be a used tax imposed upon that.

However, as distinguished from the Arizona transaction privilege tax which has, as its legal incidence, the engaging of business, the liability being upon the vendor.

John Paul Stevens:

That would be on the vendee.

Ian A. Macpherson:

That’s correct.

John Paul Stevens:

And in that case, would you say you could or could not collect the tax?

Ian A. Macpherson:

From the vendee, Gila River Tribe — the — the Gila River Farms?

John Paul Stevens:

Yes.

Ian A. Macpherson:

We could not collect it.

We would not make any attempt to do that.

John Paul Stevens:

And why not?

Why do you concede that?

Ian A. Macpherson:

Because they are an Indian tribe located on an Indian reservation.

This Court’s decisions in Bryan v. Itasca County and McClanahan preclude that.

John Paul Stevens:

Apart from our Court’s decision, just to get the theoretical basis for it, what is the reason that there cannot be a tax in that, other than that the Court has said so?

Is there a legal reason for those cases?

Ian A. Macpherson:

Apart from the Court’s decisions?

John Paul Stevens:

Yes.

What — what is — what is the underlying rationale of the Court’s decisions as you understand them?

Ian A. Macpherson:

As I understand the rationale of both Bryan and McClanahan, the state taxes, in both of those cases, which were being attempted to be imposed, were sought to be imposed directly upon an Indian on an Indian reservation.

John Paul Stevens:

Let me ask you, what’s wrong with that?

Ian A. Macpherson:

I beg your pardon, Your Honor?

John Paul Stevens:

And I’m asking you, why cannot that be done?

Is it a constitutional reason or a statutory reason or just some general reason of judicial policy?

Ian A. Macpherson:

Mr. Justice Stevens, it’s my — it’s my understanding that under the Commerce Clause as well as, perhaps, the Supremacy Clause, the States are without power to impose the direct legal obligation for state taxes upon Indians on Indian reservations.

This traces back to this Court’s decision in Worcester.

Byron R. White:

It’s a sovereign, an Indian sovereign, it’s got some relationship to Indian’s tribal sovereignty, I take it, doesn’t it?

Ian A. Macpherson:

That is correct, Your Honor.

Again, be — it’s — it’s some —

John Paul Stevens:

Why doesn’t that rationale apply here?

What — I’m trying to identify the rationale, then my next question would be why does not that rationale apply here?

That’s — that’s pretty obvious.

That’s why I’m asking these questions, I suppose.

Ian A. Macpherson:

Well, if I may, Your Honor.

There’d been no mandate of state law to transfer the obligation for the tax, that is the legal liability for the tax to the vendee in Arizona, the legal liability remaining by mandate of state law upon the non-Indian Central Machinery Company off the reservation.

And again, the taxable event being not the sale but engaging in business within Arizona.

Upon that basis, it is Arizona’s position that the tax can apply.

Ian A. Macpherson:

This is consistent, we would submit, with numerous decisions, most recent of which is the opinion authored by Mr. Justice Rehnquist in part four of the Moe decision.

The — the mere fact that the economic burdens, as opposed to the legal obligation for taxes, may be visited by contract rather than state law upon Indians, does not per se result in a violation —

John Paul Stevens:

Do you think it makes any —

Ian A. Macpherson:

— of the Indian’s immunity from taxation.

John Paul Stevens:

Do you think it makes any difference whether it’s a tribe or — or individual Indians that’s involved?

Ian A. Macpherson:

Your Honor, it may but it escapes me why.

In both Bryan v. Itasca County and McClanahan, we had individual Indians involved.

However, in McClanahan, part of the rationale for the decision was that the imposition of the tax upon Rosalind McClanahan would interfere with the Navajo Tribe’s right of self-government.

So, there is a relationship.

I’m not sure if that’s a satisfactory answer for Your Honor, but —

John Paul Stevens:

I just find this a very confusing area and I’m asking questions because I’m trying to understand it.

I don’t know if it’s a satisfactory answer or not.

Ian A. Macpherson:

Well, if I may, by way of further explanation, the fact of the matter is that Arizona believes, after an examination not only of the Warren Trading Post decision but the Warren Trading Post briefs and indeed, the tape of the oral argument in the Warren Trading Post decision, maintains that these taxes are not preempted.

They are not preempted.

Indeed, some 40 or 50 minutes into the tape, counsel for Warren Trading Post at oral argument conceded, and this again gets into the question of the Buck Act, that if the Buck Act applied to Indian reservations, he would have no case.

He would have no case.

I mean, that admission is made.

That aside, the point is that Warren Trading Post, as it stands right now is distinguishable from the facts that we have here.

In Warren Trading Post, both the taxable event, i.e. engaging in business, as well as the measure of the taxable event, a distinct entity under Arizona law as confirmed by this Court’s decisions in Gurley and Rhoden and American — Gurley v. Rhoden and American Oil v. Neill, the measure of the event also occurred on the Indian reservation.

We had both things occurring on the Indian reservation.

Byron R. White:

Well, suppose — suppose we agreed with you in this case and then Central decided that “Well, we — we’ve read that opinion and we’ve — so, we’re going to open a branch on the reservation.”

They had an office on the reservation.

They either were licensed or they weren’t but, I gather, you don’t think it makes any difference.

Could you collect from them then if they’d — if they’d made exactly the same kind of sale, the only thing is they had an office on the reservation and made the sale over there.

Ian A. Macpherson:

Of the office on the reservation?

Your Honor, I believe that that would fall within Warren Trading Post as a condition precedent —

Byron R. White:

Well, it may — it may but, I take it on your rationale, I would take you would want to cut into Warren Trading Post.

Ian A. Macpherson:

We’ve done something like that, Your Honor [Laughs] in the briefs.

At least, we are suggesting that a re-examination of the rationale of Warren —

Byron R. White:

Exactly, yes.

Byron R. White:

So, I would think you would say that under your current rationale, you should — you would be able to collect even if they moved into an office on the reservation and made —

Ian A. Macpherson:

Well —

Byron R. White:

— the sale over there.

Ian A. Macpherson:

— Your Honor is correct.

If indeed the Court is willing to at least re-examine the Warren Trading Post decision, that might be true.

As —

Potter Stewart:

And you certainly ask us to, in both this case and the next one, as I understand it, to re-examine what it said in that footnote in Warren Trading Post about the Buck Act.

Ian A. Macpherson:

That’s correct, Your Honor.

But in — in further response —

Potter Stewart:

But you — but you submit that in at least — in this case at least, that even if we don’t do that, you, nonetheless, must prevail.

Ian A. Macpherson:

That’s correct, Your Honor.

The fact of the matter is that, under Warren Post, as it stands right now, a condition precedent to Central Machinery Company’s opening a branch office as it were on the reservation is the application for and acquisition of a federal Indian trader’s license.

There’s no exception in the statute that I can see that says that “Well, we don’t need a license because, somehow, we are otherwise regulated.”

There’s no exception like that.

As a matter of fact, the dissenting opinion of Justice Lockwood in the Arizona Supreme Court’s decision in the Warren Trading Post case which this course — Court, of course, overruled.

Justice Lockwood specifically said that the reason that this is preempted is because Warren Trading Post had acquired a federal Indian trader’s license, was in compliance with the federal statutes, was extensively and pervasively regulated and therefore, preemption must apply.

Indeed, that same rationale is advanced by Warren Trading Post in the oral argument.

As a matter of fact and of note, at least interest to the State of Arizona, is the fact that Central Machinery Company, in their reply brief, makes reference to Complete Auto Transit v. Brady, this Court’s decision in Complete Auto.

Fact of the matter is that one of the rulings, perhaps the major ruling in Complete Auto Transit, is the overruling of Spector Motor Service v. O’Connor.

Spector Motor Service v.O’Connor was the cornerstone case in Warren Trading Post’s position.

Warren Trading Post did not initially advance, as its primary argument, preemption.

What it argued was that, under Spector, there is a prohibition upon state taxes, upon the privilege of engaging in interstate commerce and because of that prohibition in Spector, the State of Arizona did not have jurisdiction to impose the tax.

That’s the same rationale, at least to that point, that the New Mexico Supreme Court went through in Your Food Stores v. Espanola.

Well, we have attempted in our brief to trace the history and underlying facts surrounding the Your Food Stores decision.

We also point out that the — the question of whether or not a State may impose a privilege tax on the business of engaging in interstate commerce, this Court has resolved.

That’s what Complete Auto Transit does.

Now, if the argument is being made that somehow, Complete Auto Transit is relevant for purposes of saying that we can’t do this, that a State’s determination, as to the nature of its tax, are not binding upon this Court.

The fact remains that this Court has held that a state court’s determination as to the nature of its tax, as opposed to where the legal incidence falls, at least in federal contexts, and we have footnoted this Court’s prior decisions in First Agricultural Bank and most recently, Diamond National.

That’s a distinct consideration from the question of the state — the highest state court’s determination as to the nature of its tax.

Arizona’s Supreme Court has consistently, since 1935, when the transaction privilege tax was initially enacted, has construed it to be a transaction privilege tax.

Ian A. Macpherson:

It is not a sales tax.

Furthermore, the Warren Trading Post case is distinguishable because the area that has been preempted under Warren Trading Post is not commerce with Indian tribes.

Moe establishes that.

The area that has been preempted is engaging in the business of Indian trading on an Indian reservation.

Again, an examination of the oral argument in Warren Trading Post, it does not appear from the record, it doesn’t appear in the Warren Trading Post briefs, but an examination of the tape will reveal that some 95%, 95% of the sales of Warren Trading Post Company were with Indians.

This is the only transaction, so far as we know, that transpired between Central Machinery Company and the Gila River Farms.

Based upon those facts, if it please the Court, it strikes Arizona as being somewhat curious to characterize Central Machinery Company as being engaged in the business of Indian trading on an Indian reservation.

They’re not Indian traders.

Furthermore, they’re not itinerant peddlers.

They’re not — they don’t fall within the class that is entitled to hold either an itinerant peddler’s permit or an Indian trader’s license.

We, furthermore, maintain that with respect to these arguments of infringement with tribal self-government, the decisions of this — well, state court decisions in which this Court has denied or dismissed the appeal for lack of substantial federal question, the Kahn case and the Makah case are both highly relevant, particularly Makah.

In Makah, the Washington cigarette tax was involved and the taxable activity, taxable event took place off the reservation.

There was an increase in the price to the Indians.

Nevertheless, the tax was upheld.

The Court decided the decision in the Minot case in support of that result, and this Court dismissed.

William H. Rehnquist:

Is there any contention, as you understand it, Mr. Macpherson, made by the Government or by the Tribe that the Central Machinery Company was in violation of federal law or regulations because it had not obtained a license and nonetheless, done business with the Indians?

Ian A. Macpherson:

Mr. Justice Rehnquist, quite the contrary.

The position appears to be that, under Section — 25 U.S.C. Section 81, they were in full compliance.

They didn’t need to get a — a trader’s license, they didn’t get — need to get a — an itinerant peddler’s permit because the contract itself had been approved and there’d had been this apparent pervasive regulation that authorized it.

There’s no suggestion, so far as I can tell, that they — that the Federal Government was doing anything other than what it should be doing.

And what did it do?

It approved the purchase order.

It approved the economic burdens of the concealed state taxes within the purchase price.

It also approved the visible economic burden.

Warren E. Burger:

Because — because an Indian tribe might be subject to some indirect taxes doesn’t mean that they’re automatically subject to all other more visible taxes, does it?

Ian A. Macpherson:

Well, that’s — that’s — Mr. Chief Justice, that — that’s correct.

In the circumstances and facts of this case, however, the City of Arizona would respectfully submit that even under the taxpayer’s argument supported by the amicus curiae that they did everything they had to do.

They approved the purchase price.

That is consistent with 58 I.D. 562, even if the Court is unwilling to re-examine the Footnote 18 in —

Thurgood Marshall:

Didn’t they also — weren’t they also told that it was paid under protest?Isn’t that what they approved?

Ian A. Macpherson:

Mr. Justice Marshall, the purchase order, which is located in the record at, as I recall, item 15, pages 15A.

And there’s been a stipulation dispensing to the printing of the appendix.

The purchase order has nothing on it suggesting that it’s paid under protest.

Thurgood Marshall:

Well —

Ian A. Macpherson:

The check that subsequently —

Thurgood Marshall:

— doesn’t the record show that the government agent was told by Central that this had been paid under protest?

Ian A. Macpherson:

Your Honor, I find nothing in the record that specifically states that.

Thurgood Marshall:

Well, then, they’re misleading us.

Ian A. Macpherson:

Excuse me.

I’m not suggesting that they are misleading us, perhaps, or misleading the Court or counsel for Arizona.

I simply don’t remember that.

Perhaps, they can elaborate on that in their reply, but I simply don’t remember anything like that.

The first instance of a protest with respect to that separately stated charge shows up some three days later, three or four days later, when the check from Gila River Farms was remitted to Central Machinery Company.

There, there is a protest noted at the bottom of the check, but there’s nothing on the purchase order, it’s a sales tax and that is what was paid.

The amount of the check — the full amount of the check, $100,000 plus was remitted to Central Machinery Company.

Byron R. White:

Where did it say sales tax?

Ian A. Macpherson:

Sales tax was located on the purchase order.

Byron R. White:

Well, was there a sales tax?

Ian A. Macpherson:

If it please the Court, I think I see where the Court is going.[Laughter]

There’s no —

Byron R. White:

Well, I don’t — no, I’m not — you went there.[Laughter]

Ian A. Macpherson:

The fact is that simply because the merchant may mischaracterized the nature —

Byron R. White:

(Voice Overlap) —

Ian A. Macpherson:

— of that expense does not bind the State.

I mean, he can’t, by contract or statement, transform as it were, the transaction privilege tax.

Byron R. White:

May I ask you, Mr. Macpherson, was Warren Trading Post before we started transcribing oral arguments?

Ian A. Macpherson:

Indeed, it was, Your Honor.

Byron R. White:

And where did you listen to the tape?

Ian A. Macpherson:

In my office in Phoenix.

Byron R. White:

Where did you get it?

Ian A. Macpherson:

I obtained it from — I have the — a cassette of the tape right here.

Byron R. White:

Where did you — where did you get it?

Ian A. Macpherson:

National archives.

Byron R. White:

And they — they — you can get a copy from them anytime just by asking?

Ian A. Macpherson:

Yes, you — yes, you can.

Warren E. Burger:

You can’t anymore because our tapes are not delivered to them any longer.

Ian A. Macpherson:

I stand corrected, Your Honor.

Byron R. White:

But thanks very much.

Ian A. Macpherson:

In summary, if I may, it is the State of Arizona’s position that there is no constitutional prohibition as advocated by the amicus curiae in order to arrive at that conclusion, what you’d have to do, and we say that you should not do that, has overruled the decision in Moe.

There’s nothing to suggest that that is required.

There’s been a misanalysis, a fundamental misanalysis of the Arizona transaction privilege tax which should dispose of the question at the outset.

We again feel that Warren Trading Post is distinguishable.

If this Court feels that it is not distinguishable, then Arizona would respectfully submit that a re-examination of the question, including an examination of the legislative history of the Buck Act, an examination of, for example, certain citations in the Solicitor’s opinions is required.

Thank you, Your Honor.

Warren E. Burger:

Thank you, gentlemen.

The case is submitted.

We’ll hear arguments next —