White Mountain Apache Tribe v. Bracker

PETITIONER:White Mountain Apache Tribe
RESPONDENT:Bracker
LOCATION:Supreme Court of Virginia

DOCKET NO.: 78-1177
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: State appellate court

CITATION: 448 US 136 (1980)
ARGUED: Jan 14, 1980
DECIDED: Jun 27, 1980

ADVOCATES:
Elinor Hadley Stillman – on behalf of the United States as amicus curiae
Ian A. Macpherson – on behalf of the Respondents
Michael J. Brown – on behalf of Petitioner White Mountain Apache Tribe
Neil Vincent Wake – on behalf of Petitioner Pinetop Logging Company

Facts of the case

Question

  • Oral Argument – January 14, 1980 (Part 2)
  • Audio Transcription for Oral Argument – January 14, 1980 (Part 2) in White Mountain Apache Tribe v. Bracker

    Audio Transcription for Oral Argument – January 14, 1980 (Part 1) in White Mountain Apache Tribe v. Bracker

    Warren E. Burger:

    We’ll hear arguments next in White Mountain Apache Tribe against Tucson.

    Mr. Wake, I think you may proceed whenever you are ready now.

    Neil Vincent Wake:

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

    This case deals with the permissibility of certain State taxation concerning use of tribal and Bureau of Indian Affairs roads on the reservation when use is made by a non-Indian logger as a part of a tribal forestry enterprise.

    The White Mountain Apache Tribe and its logger Pinetop Logging Company, actually one of its loggers, submits that the State taxes are barred by two separate principles of Federal law.

    The first ground for a claim of defense to these taxes is that they are preempted by comprehensive Federal regulation of the fields of managing and harvesting Indian reservation timber.

    Our second defense is the doctrine that State laws may not be applied even to non-Indians with respect to their dealings with Indians on the reservation where to do so would infringe on the tribal self-government.

    William H. Rehnquist:

    I am not saying it is entirely immaterial, but it isn’t in the case.

    Neil Vincent Wake:

    Yes, it is, Your Honor.

    William J. Brennan, Jr.:

    Is there any reason why you didn’t take it as an appeal?

    Neil Vincent Wake:

    I considered either option available, and was not entirely sure, and filed to serve petition.

    William J. Brennan, Jr.:

    Well —

    Neil Vincent Wake:

    My co-counsel Mr. Michael Brown will address himself to the claim of infringement of tribal self-government.

    The facts upon which this case arised can be stated summarily as follows.

    Over a hundred years ago President Grant set aside a reservation for the White Mountain Apaches in a remote and mountainous part of Arizona.

    Virtually the only significant resource on that reservation is the timber that grows in the mountains.

    Fortunately for this tribe, that resource holds out the potential for a perpetually renewable resource if wisely managed.

    And, indeed, the tribal timber enterprise is the principal financial support for the entire tribal government in all other tribal programs.

    In addition, the tribal timber enterprise is a major on-reservation employer of members of the tribe.

    Obviously an essential part of the program of harvesting this timber is getting the trees from off the mountain down to the tribal mill in White River, Arizona.

    That process requires the building and the maintenance of an extensive road system throughout the reservation and, indeed, there are literally thousands of miles of roads throughout this reservation.

    Most of these roads, almost all of these roads are built and maintained by the tribe itself either directly or through its loggers.

    I have brought with me and intend to submit to the Clerk’s Office for illustrative purposes only, the most recent U.S. Geological Survey map of the reservation which gives some indication of the extent of the road system that is to be found thereon.

    William J. Brennan, Jr.:

    But do they use the State road to some degree?

    Neil Vincent Wake:

    Your Honor, the loggers have occasion to cross the State roads and to use them from time to time and, indeed, the Pinetop Logging Company keeps precise records of all of its use of State roads and it pays taxes with respect to those uses.

    This lawsuit does not involve an attempt by the State of Arizona to obtain tax payments with respect to the use of its own roads that it owns or builds or maintains or polices.

    Rather, this lawsuit has to do with intent by the State of Arizona to derive windfall profits for the benefit of its State road system, not from the use of those roads but from the use of wholly different roads which are built and maintained and owned solely by the tribe and by the Bureau of Indian Affairs.

    William H. Rehnquist:

    Well, you don’t contend, do you, as a matter of general tax apportionment law that a State could not exact a license fee for the use of a vehicle and devote the proceeds of that tax to maintenance of roads and base it on the value of the vehicle; and that the owner of a vehicle could nonetheless say, well, I only drive my car to church on Sunday, so although your tax would come out to be computed $100 I am paying you $3, which I think is the value that I use your road.

    Neil Vincent Wake:

    Your Honor, we certainly do not make that contention and the principles to which you refer are general principles of municipal and public law with respect to taxing authorities of various taxing entities.

    What we are discussing in this case is a different body of law which is a body of Federal law which has to do with when a specific congressional regulatory scheme dealing with specific subject matters preempts interfering State laws.

    Neil Vincent Wake:

    So the answer to your question is “No,” but I submit that does not answer the question before the Court.

    William H. Rehnquist:

    Well, then why does Pinetop keep specific records of its use on Arizona State highways?

    Neil Vincent Wake:

    Your Honor, the reason for that is very simple.

    First, our client as a practical matter thought it fair to pay those taxes, and as a practical matter we choose not to bring that lawsuit.

    William H. Rehnquist:

    So, in effect, you say that you might be able to challenge those laws but you are electing to pay a part of the tax that is levied.

    Neil Vincent Wake:

    Your Honor, we do not choose to challenge the State’s collection of taxes with respect to the use of its own roads.

    We do not admit liability, we simply have no case or controversy before the Court with respect to that question.

    William J. Brennan, Jr.:

    How about the licenses on the trucks?

    Neil Vincent Wake:

    The trucks are licensed, Your Honor.

    William J. Brennan, Jr.:

    And they pay license fees?

    Neil Vincent Wake:

    I believe that those license fees are paid and I would point out that they are de minimis in amount so far as my understanding.

    That again is another lawsuit not —

    Lewis F. Powell, Jr.:

    Mr. Wake, can I ask you another question.

    With respect to the 8-cent-per-gallon fuel tax, the statute says “For the purpose of partially compensating the State for the use of its highways,” and so forth, the 8-cent tax is imposed.

    Supposing the statute said in order to generate general revenues for the State, the tax in this amount is imposed and went into the general funds.

    Would your case be the same?

    Neil Vincent Wake:

    Your Honor, that would be a slightly different case.

    I submit that the answer would probably be the same.

    And let me elaborate on that answer for a moment.

    Again, the fundamental concern which we submit the Court must address itself to is what the subject matter and the purposes of the Federal regulation is and whether those purposes require the exclusion of these State taxes.

    Now, in this case the Federal Government has regulated the entire field, we submit, of managing and harvesting Indian timber.

    These particular State taxes are offensive not because of what they are used for but because of how they bear upon the Federal scheme.

    We submit that the fact that these State taxes are used for the building of unrelated State roads is part of what makes these taxes worse, it is not necessarily what makes them bad.

    What makes them bad is the fact that the attempt of the State of Arizona to derive tax revenues out of the tribal forestry program runs at cross purposes to the specifically identified and articulated Federal purposes of the management and harvesting of tribal timber.

    Therefore, whether the State uses these taxes for other purposes or not, is not necessarily controlling.

    Potter Stewart:

    How is that different from charging a tax say — sales taxes or something like that on the purchase of the vehicles which are used exclusively in the logging business?

    Neil Vincent Wake:

    Your Honor, I would submit that in order to draw the boundaries of the reach of the preemptive force which we submit must be recognized here, one would have to look to a number of considerations.

    And there is no bright line test but there are a number of overlapping considerations that are adequate for purposes of identifying the specific needs to protect against specific State instructions into the regulatory scheme.

    I may list a few of them.

    One is the nexus of the State assertion of jurisdiction with the direct subject matter of the Federal regulation.

    Neil Vincent Wake:

    Here Federal regulation deals specifically and directly with the process of getting the trees off the mountain down to the mill.

    That is the core of the entire statutory and regulatory scheme.

    And these taxes are an attempt to derive revenues off of that very subject matter.

    Now —

    Potter Stewart:

    Except that the taxes imposed on the gas is pumped into the tank, I suppose.

    Neil Vincent Wake:

    Your Honor, the tax is imposed under State law on the conjunction of two incidents.

    One is the burning of fuel to move a motor vehicle; and the other is the moving of it on a highway or road, as it is defined.

    Potter Stewart:

    But isn’t the tax just added to the price per gallon of gasoline?

    Neil Vincent Wake:

    Not in this case, Your Honor.

    Our client Pinetop Logging Company purchases its diesel fuel in.

    Potter Stewart:

    Diesel fuel.

    Neil Vincent Wake:

    — in interstate commerce and does not pay taxes to its seller in interstate commerce.

    It brings the fuel on the reservation where it is stored and ultimately used.

    Potter Stewart:

    Would this tax be imposed — and maybe I am echoing my brother Stevens’ question — on the operator of a timber company, say Weyerhauesur Company or something that used its fuel and used its vehicles exclusively on its own private property?

    Neil Vincent Wake:

    Off of an Indian reservation?

    Potter Stewart:

    Yes, but never on State or tax-supported roads.

    Neil Vincent Wake:

    In that particular situation I believe the State tax would be properly collectible because there are no implications of Federal Indian laws or policies in that situation.

    There would be no due process objection to the State’s right to tax that.

    Potter Stewart:

    Well, I would think that there might well be.

    You don’t represent that client, but —

    Neil Vincent Wake:

    Well —

    Potter Stewart:

    Mr. Wake, just to go back for a second, and I think it is the same point Justice Stewart asked you, you point out that here the fuel is bought in large quantities and actually pumped on the reservation.

    I take it your case would be precisely the same if it were bought at retail from local gas stations off the reservations.

    Neil Vincent Wake:

    That would be our position, Your Honor, precisely.

    If it please the Court, I do anticipate the need for some rebuttal today and therefore I would like to yield to my co-counsel, Mr. Brown.

    Warren E. Burger:

    Mr. Brown.

    Michael J. Brown:

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

    The taxation which the State seeks to reimpose in this case is an infringement upon the sovereignty of the White Mountain Apache Tribe and its right of tribal self-government.

    It interferes with a fundamental purpose, as well as the basic nature of the reservation.

    One of the most basic principles of Indian law is that those powers vested in an Indian tribe are not delegated but are rather inherent powers of limited sovereignty.

    Michael J. Brown:

    They are inherent in that that sovereignty preexisted both the sovereignty of the State of Arizona as well as United States of America itself.

    Williams v. Lee has said that the test of sovereignty when you are dealing with the affairs of non-Indians on reservations is that the tribe and the State law, that each have legitimate interests but that the right of reservation Indians to make their own laws and be ruled by them shall remain inviolate.

    Congress has —

    William H. Rehnquist:

    Has violated — if it so chooses, can it not under —

    Michael J. Brown:

    Yes, sir, Congress has the power of defeasance to take away the sovereignty which the Indian tribes retain, but it has not yet done so.

    And the indications from Congress of course are quite to the contrary.

    The Congress has given, for example, in 1953 five States the right to extend both their civil and criminal jurisdiction to Indian reservations, and to allow those States to accept the benefits of that as well as the responsibilities for the tribes in Public Law 280.

    Arizona, while not one of the five delegated States, had the right and the power by several means to ascribe to Public Law 280 and accept the responsibilities for the White Mountain Apache Tribe and the other tribes with reservations within the State of Arizona and refused to do so.

    This lawsuit is essentially about roads and trees.

    The State would like to say that it is about taxes.

    But it is about the fact that the White Mountain Apache Tribe’s reservation, which is the Fort Apache Reservation, — it is in northeastern Arizona and it is 1,600,000 acres, it is rural and it is mountainous and it is widespread and with people all over that reservation.

    It is not an urban area and the major rural or urban area is White River and it has maybe 1,000 to 1,500 people living in it.

    One of the designed secondary purposes of the tribal timber industry is the creation of roads.

    The timber industry must in fact create roads to get to the trees so that they can be logged, the forests can be logged.

    But also it is necessary to create adequate roads into those rural and remote areas so that we can have the ability to deliver food and essential services to remote areas of the reservation and to maintain communications with those areas.

    And that is a direct and design product of the roadbuilding and the maintenance program of the tribe and the Fort Apache Timber Company and the loggers who are agents to create a good number of the roads and by contract of course maintain the roads pursuant to the Bureau of Indian Affairs criteria and regulations of the Federal Government.

    In Moe this Court said that States in dealing with actions on reservations involving Indians and non-Indians that the State would be allowed to tax those kinds of transactions.

    If there was a significant interest that the State had in some real economic benefit was going not to the Indian party involved in the transaction but to a non-Indian.

    And that essentially what was happening was that this transaction, or attempt to cloak this transaction in immunity was merely an end run by the non-Indian around legitimate taxing interests of the State.

    We would submit to the Court that that is a valid test and that there ought to be some way that this Court can draw a line quite apart from the preemption argument made in Warren Trading Post along the infringement of tribal sovereignty and the infringement of tribal self-government.

    William H. Rehnquist:

    Mr. Brown, I notice from the outlet that State Highway 73 itself goes through White River.

    What is the source of the State’s authority to build a highway on an Indian reservation?

    Was that —

    Michael J. Brown:

    An easement from the Federal Government and the tribe.

    We believe that the tax infringement test ought to consider at least four things.

    Number one, the location.

    Obviously the Indian reservation itself is historically the locus where Federal Indian policy is effectuated.

    Historically all of this, and actually in this litigation all of the activities involved take place within the confines of the Fort Apache Reservation on the White Mountain Apache’s land held in trust for them by the Federal Government.

    Another issue is Does it interfere with the fundamental purpose or nature of the reservation.

    And it is inconceivable to me that with the geographical make-up of the reservation that Congress and the President in making up the reservation could not have anticipated that a tribal timber industry was going to be necessary.

    Michael J. Brown:

    Number three, where does the burden truly fall, on the Indian or the non-Indian.

    Clearly it doesn’t make any difference what you call a tax.

    You can call it a sales tax, a privilege tax, an excise tax, a motor carrier tax.

    The question is where does the burden fall.

    That is just what the State wants to do with the taxing scheme.

    In this case it is admitted that the economic — the total economic burden and direct economic burden falls on the tribe and the tribal timber industry in that dollar for dollar the tribe must pay to planter all the money the money they expend for the tax.

    In this case, another issue and thing that I think that the Court ought to look at in formulating a test is the legitimate interests of the State in the tribe.

    William H. Rehnquist:

    What about the tax on the purchase of the trucks.

    Suppose that Pinetop buys some trucks off the reservation and a tax is added to the purchase price and Pinetop says, we are only going to use these on the reservation.

    Michael J. Brown:

    Yes, sir.

    I know that clearly that is not a case of —

    Potter Stewart:

    Well, it is clearly a case there that the burden — where the burden, the ultimate burden would fall —

    Michael J. Brown:

    I think that is not a direct burden.

    I think that is an indirect burden because whether they pay the tax on the purchase of —

    Potter Stewart:

    Well, it may be a little larger shell in the sense that that — in the sense that that —

    Michael J. Brown:

    Well, that —

    Potter Stewart:

    The Indians are going to pick up the tab, aren’t they?

    Michael J. Brown:

    Not necessarily.

    Potter Stewart:

    What do you mean?

    Michael J. Brown:

    I mean it is speculative that they will pick up the tab.

    The purchase of the trucks doesn’t mean that it is going to cost us, that the tribe less —

    Potter Stewart:

    Well, Pinetop doesn’t do any business except on the reservation, I am told, I read in the brief.

    Michael J. Brown:

    That is true.

    Potter Stewart:

    And so sooner or later they are going to have to got their money back from somebody.

    Michael J. Brown:

    Well, the fact that they may amortize the price of the trucks as an indirect cost, if at all, and the fact that they must pay a tax on the use of tribal roads is a direct cost.

    Potter Stewart:

    And you make the same argument about repairs to the trucks?

    Michael J. Brown:

    Yes, sir, I do.

    Potter Stewart:

    Tune-ups at the garage?

    Michael J. Brown:

    Yes, sir, I do.

    The other thing that I think the Court is interested in and I think —

    Potter Stewart:

    Call it a tax on the use of the roads or is it a tax on the gross receipts of their entire business?

    Michael J. Brown:

    It is a tax that is measured by use of our roads.

    Potter Stewart:

    Miles traveled, or —

    Michael J. Brown:

    Yes, sir, it is.

    And therefore you have to have two things come together.

    You have to have the use of the roads as to a vehicle and the use of the roads.

    The roads are — you can’t separate them from the tax.

    If you don’t have the roads, they don’t have a tax.

    Potter Stewart:

    We are not talking about the motor fuel tax, we are talking about the other one now.

    What is the tax?

    Michael J. Brown:

    It is 8 cents a gallon.

    Potter Stewart:

    Well, that is not —

    Michael J. Brown:

    That is —

    Potter Stewart:

    That would be 8 cents a gallon wherever the gas was burned.

    Michael J. Brown:

    Right.

    Potter Stewart:

    Yes.

    But now what about the other tax?

    Michael J. Brown:

    It is 2-1/2 percent of the gross proceeds measured by the —

    Potter Stewart:

    But that is not per mile.

    Michael J. Brown:

    No.

    Potter Stewart:

    That would depend on how much logs they carried and how much money they made, and so forth.

    Michael J. Brown:

    Yes, it is 2-1/2 —

    Potter Stewart:

    It is really not a tax on the use of the road.

    Michael J. Brown:

    That is right.

    We have to give them 2-1/2 logs out of every hundred that we cut.

    That is what that tax is.

    Potter Stewart:

    And that is no matter how far they have to haul the logs?

    Michael J. Brown:

    Yes.

    Potter Stewart:

    So it is not really a tax on the use of the roads or tax —

    Michael J. Brown:

    If they don’t haul the logs, they don’t get the tax.

    Potter Stewart:

    Yes.

    Well, I understand that but it is the same I am buying a truck and all the other elements of doing business.

    Michael J. Brown:

    I understand.

    The other thing that I think that the Court wants to look at is the potential for abuse of the tax.

    And because this tax and the transaction that you are dealing with is wholly on the reservation that there is no potential for abuse.

    We are not dealing with Montana chain smokers or any of that sort of thing.

    This tax is wholly on the reservation and it is directly on a tribal enterprise.

    Warren E. Burger:

    Mrs. Stillman.

    Elinor Hadley Stillman:

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

    It is the position of the United States that the State of Arizona may not impose its motor carrier license tax or its use fuel tax on the logging and hauling activities of petitioner Pinetop Logging Company on the reservation of the White Mountain Apache Tribe.

    That position rests we believe on a number of mutually reinforcing considerations and it is no answer to our argument to examine anyone in particular and to say that it is insufficient to validate the taxes.

    Before discussing those particular considerations in this case, however, I would like to examine or identify the barter principles that underly our analysis, hoping to show the Court that in fact it rests securely on principles that this Court has recognized in recent Indian tax decisions.

    Potter Stewart:

    May I ask you just one preliminary question and then I won’t interrupt any more.

    Assume that the logging companies did half their business on the reservation.

    Would they be entitled to a 50 percent exemption from both taxes?

    Elinor Hadley Stillman:

    Yes.

    I assume that this is very much tied to the reservation locus and I will explain —

    Potter Stewart:

    It is apportioned on the basis of how much of their business —

    Elinor Hadley Stillman:

    Yes.

    Before discussing those considerations here, however, I wish to identify these broader principles.

    These principles have been summarized in this Court’s decisions in Warren Trading Post, in McClanahan, in Mescalero Apache Tribe and in Moe v. Confederated Salish and Kootenai Tribes.

    First, as Moe and Mescalero made quite clear, Federal instrumentality doctrine no longer answers questions in this area and we do not rely on Federal instrumentality doctrine at all, which is to say we don’t say simply because a burden falls on a tribe which has a connection with the Federal Government that that alone invalidates a tax.

    Potter Stewart:

    You are saying this is true of commerce, I suppose.

    Elinor Hadley Stillman:

    Excuse me?

    Potter Stewart:

    And the same is true on the Indian commerce argument.

    Elinor Hadley Stillman:

    The Indian — I —

    Potter Stewart:

    I mean just as such, unimplemented by any statutes.

    Elinor Hadley Stillman:

    No, I don’t concede that, Your Honor.

    Potter Stewart:

    Well, you go ahead then anyway.

    Elinor Hadley Stillman:

    I wish to adopt and rely on the remarks by Mr. Claiborne with respect to the Indian commerce clause.

    Elinor Hadley Stillman:

    Our position does not rely on that doctrine.

    Second, although the concept of tribal sovereignty is still relevant it is now defined to a large extent by treaties and by Federal law.

    And as the Court noted in McClanahan and in the year since Wooster v. Georgia notions of Indian sovereignty have been adjusted to take account of the State’s legitimate interest in regulating the affairs of non-Indians.

    But to adjust something is not to eliminate it.

    And when you are talking about State regulation of affairs of non-Indians that take place upon a reservation you simply cannot automatically assume that they have impunity to do what they wish to the non-Indians.

    The Court considering whether a particular exercise of State power on a reservation must take account of the claims of tribal sovereignty as well as the customary powers of the State in dealing with its residents.

    Two tests for making this determination have been suggested by the Court’s decisions in Warren Trading Post and in Williams v. Lee.

    The first test is Does the exercise of State power in some way — is in some way preempted by Federal scheme.

    And the second test is does it in some way infringe on tribal self-government.

    The two tests are independent and the State’s power may be defeated by either one.

    Nevertheless, the two are not necessarily unconnected and we believe that is in the circumstance of the present case Federal law may reflect a judgment of Congress concerning what conditions are essential to the continuing existence of tribal self-government.

    Potter Stewart:

    You say they are independent.

    Elinor Hadley Stillman:

    They are independent but they may at sometimes —

    Potter Stewart:

    That is clear enough.

    But you say they are interrelated.

    It seems to me —

    Elinor Hadley Stillman:

    Sometimes.

    Potter Stewart:

    — they are rather inconsistent with each other.

    Elinor Hadley Stillman:

    No.

    No, I can understand that might be a superficial analysis.

    Potter Stewart:

    Well, maybe that is very superficial but superficially it sounds they seem inconsistent.

    If we are talking about tribal independence, that means independence from anything and everything.

    Elinor Hadley Stillman:

    No.

    We are —

    Potter Stewart:

    Including Federal control.

    Elinor Hadley Stillman:

    No, I believe this Court has always talked about a quasi-sovereignty, a dependent sovereignty.

    Potter Stewart:

    Quasi-independence.

    Elinor Hadley Stillman:

    Quasi-independence.

    Potter Stewart:

    Independence from State but not from Federal controls, is that it?

    Elinor Hadley Stillman:

    That is correct; yes.

    Elinor Hadley Stillman:

    And what I mentioned — when I talk about tribal self-government and tribal sovereignty I am referring to that concept.

    Potter Stewart:

    Right.

    Elinor Hadley Stillman:

    State actions likely to undermine the conditions which would — which Congress in its scheme has defined as essential to preserving the tribal government of its own relation within its reservation would fail both tests.

    Of course as the Court observed in Bryan v. Itaska County the Government can also authorize the State in derogation of this sovereignty And if it does, you might have a situation in which the State fails the infringement test and then is saved by some sort of congressional authorization.

    We believe that the taxes at issue in the present case fail both of the first two tests and are not saved by the third.

    First, as we have explained in our brief, a comprehensive network of laws and regulations governs the operation of tribal timber enterprises which are conceived of as a means of securing a secure economic base for the continued self-government of tribes having extensive timber lands on their reservations and for providing a source of employment for tribal members within their reservations.

    In other words, as we conceive the Federal scheme here it is not just a scheme for cutting down timber and supervising roads.

    It is a scheme for making these tribal timber enterprises a basis for making the tribe self-sufficient within their reservation for their members within their reservation and make it a going concern.

    Now, the Arizona taxes at issue —

    Potter Stewart:

    The tribal scheme totally self-sufficient so the tribes operated the logging enterprise themselves, then they would be tax exempt.

    Elinor Hadley Stillman:

    Yes, except that the tribe has found, and I believe this is in the record in one of the affidavits, that it is not economical for them to try it.

    They did try it at one place in the reservation and found that it cost them more than —

    Potter Stewart:

    If we sustain the State here, they have a competitive advantage in doing it themselves.

    It would be an additional incentive, wouldn’t it?

    Elinor Hadley Stillman:

    Speculative.

    I am not sure what —

    Potter Stewart:

    Well, they save the taxes.

    Elinor Hadley Stillman:

    I don’t know —

    Potter Stewart:

    To the extent that that is either a burden or a benefit.

    Elinor Hadley Stillman:

    Yes; right.

    I am not sure as to what extent that would be the case.

    The Arizona taxes at issue here would fall upon all of the logging contractors, not just Pinetop; and can reasonably be assumed as a practical matter to be passed on to the tribe.

    I don’t think that is really contested.

    The State argues instead that legal incidence is what makes a difference.

    The record does not show what all of those taxes have amounted to in any given year.

    But the important point is this.

    The tax rate is determined by the State quite independently of what the tribe’s balance sheet might show in any given year.

    It is just an uncontrollable financial burden that could be quite substantial and is inconsistent with what we think is the thrust of the Federal scheme.

    Second, the taxes infringe on tribal sovereignty and they do so in two ways.

    As we have argued, they interfere with scheme that Congress has devised to foster and assure a viable tribal self-government.

    Elinor Hadley Stillman:

    And they also represent an intrusion into the geographical territory of the tribe without the warrant of any strong State interest other than the desire to augment its general revenues.

    Now, the argument here is almost somewhat metaphysical.

    I think that is something of what makes Indian law a little difficult and complicated.

    It is a notion of what it means for a sovereign or a quasi-sovereign to have authority over its territory.

    And although the tribes clearly do not have absolute authority of their territory, cannot block the State at the boundaries of the reservation, nevertheless it says something in derogation, in serious derogation of its powers over its territory for the State to come onto the reservation and tax some activity with no interest, no legitimate interest, no regulatory interest other than just a desire for more money.

    It is just a treatment of the boundaries as if they can be casually passed over without any seriousness to do so.

    William H. Rehnquist:

    Isn’t that wholly consistent with Moe?

    Elinor Hadley Stillman:

    Well, in Moe, yes, I think it is, because in Moe what you had on the sale of the Indian trader to the non-Indians was a serious State interest in having —

    William H. Rehnquist:

    Here they come onto the reservation, collect money, make the Indians collect it, and return it to the State.

    Elinor Hadley Stillman:

    Yes, but what was happening there I believe the State there was losing revenue that had otherwise people would be coming onto the reservation to buy things that they otherwise would have bought —

    William H. Rehnquist:

    But the geographical matter is not —

    Elinor Hadley Stillman:

    No.

    William H. Rehnquist:

    — of talismatic significance.

    Elinor Hadley Stillman:

    It is not talismatic but I am saying that the weight of the State’s interest has some significance here.

    William H. Rehnquist:

    Well, you haven’t made a commerce argument yet; I guess you aren’t.

    Elinor Hadley Stillman:

    Your Honor, we would rest upon — I would assume that the argument made in our brief in Central Arizona Machinery would apply here as well.

    We thought that in this case that regulatory scheme required somewhat longer examination and we didn’t make that argument here.

    The taxes here, third, we do not think have been authorized by Congress either in the Buck Act or in the Hayden-Cartwright Act.

    For reasons that this Court found convincing in the Warren Trading Post case it found that the Buck Act does not apply to a tax on someone on an Indian reservation who is selling to Indians.

    And that is what the gross receipts tax, the motor carrier license tax here is absolutely in many ways identical to the tax here.

    I see my time is up.

    Thank you.

    Warren E. Burger:

    Mr. Macpherson.

    Ian A. Macpherson:

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

    At the outset I think what I would like to do is address a couple of questions that were raised by the Court during Mr. Wake’s opening remarks, Mr. Brown’s opening remarks and the United States’ remarks.

    Specifically, it is my recollection that Justice Stevens was inquiring as to the question of whether or not we were talking about the same principles, were we talking about a general gross receipts tax.

    What about Weyerhauesur or some other company operating on the reservation, would they be subject to a gross receipts tax if in fact we weren’t talking about either the use fuel tax or the motor carrier tax.

    The answer to that question is “Yes.”

    In Footnote 13 of the petitioner’s opening brief we find a discussion of Arizona Revised Statutes Section 42-1309 and 1312.

    Now, those were the statutes that were under consideration by this Court in Warren Trading Post.

    Ian A. Macpherson:

    An examination of the transaction privilege tax code will reveal in ARS Section 42-1321 an exemption for the transportation of tangible personal property from Point A to Point B within the State of Arizona if the outfit being purportedly otherwise subject to the transaction privilege tax pays a tax under 40-641.

    The point is under 40-641 they are subjected to the motor carrier tax which has a relationship to State roads at a rate of 2-1/2 percent.

    Under section 42-1310, which is under the transaction privilege tax code, they would otherwise be subject to the transaction privilege tax with respect to hauling within the State of Arizona.

    They are exempted by virtue of State law under section 42-1321.

    So the answer to Mr. Justice Stevens’ question is yes, a transaction privilege tax would apply to that transportation.

    Again, that is not the case that we have here this morning but if that case were to come up, then the question becomes would it be permissible as a matter of Indian law.

    Again, it would remain the State of Arizona’s position, yes, we are dealing with a non-Indian entity on an Indian reservation.

    Any economic burden of either the Arizona transaction privilege tax, the motor carrier tax or the use fuel tax which may be visited upon the Indian reservation arises solely by virtue of contractual negotiation, nothing else.

    There is absolutely no requirement of the State law under any of those three taxes that these costs be passed on or that the legal incidents be shifted over.

    John Paul Stevens:

    You then would just draw the empirical line I take it that if — between a tribal transportation operation and a non-tribal transportation operation.

    I suppose if you win this case and then the tribe liquidates Pinetop and operates itself, the transportation owns the trucks and operates, that you wouldn’t tax them.

    Ian A. Macpherson:

    We would not tax them?

    That is correct, Your Honor.

    Thurgood Marshall:

    Mr. Macpherson —

    Ian A. Macpherson:

    Yes, Justice Marshall.

    Thurgood Marshall:

    Take a big farm.

    Could you tax the transportation of the farm material from one end of the farm to the other?

    Ian A. Macpherson:

    On the theory — well, does your hypo —

    Thurgood Marshall:

    Any theory.

    Ian A. Macpherson:

    Does your hypothetical perceive those roads to be private roads?

    Thurgood Marshall:

    Yes, sir.

    Ian A. Macpherson:

    No, sir, we would not.

    Thurgood Marshall:

    Well, what is the difference?

    Ian A. Macpherson:

    Well, at this point, Your Honor, I think it would be appropriate, and I have discussed this with the Court’s leave, with Mr. Wake, by way of explanation as to the record in this case —

    Thurgood Marshall:

    Yes.

    Ian A. Macpherson:

    There apparently was some misunderstanding with respect to exactly what issues were before the Arizona courts with respect to what roads and what taxes we were being — we were taxing the use with respect thereto.

    Thurgood Marshall:

    Well, I am thoroughly confused, because you said that some State roads are used, some local roads are used, and I guess some are hybrid.

    I didn’t get it from either one the two, so why don’t you tell me what roads are involved.

    Ian A. Macpherson:

    Well, very good, Your Honor.

    It is my understanding that the Pinetop operation occurs totally within the confines of the Fort Apache Indian Reservation.

    Ian A. Macpherson:

    There are several types of roads on that reservation, including State highways.

    And this gets to the question that one of Your other Honors asked What about this fact that they use State highways?

    With respect to the travel on those State highways, they have paid the taxes without protest.

    It is my recollection Mr. Wake indicated that they choose not to challenge that.

    Certain other travel occurring on BIA-designated roads, tribal roads and other types of roads on the reservation are the subject of the lawsuit here.

    With respect to travel on the BIA roads, it is the State of Arizona’s position that the assessment in question relates to those — the use of those highways and pursuant to Federal law, even without regard to the Hayden-Cartwright Act, travel on those roads is specifically authorized by virtue of the Code of Federal Regulations.

    Thurgood Marshall:

    Well, what is the difference between BIA roads and farmer Brown’s roads, in my hypothetical?

    Ian A. Macpherson:

    In your hypothetical, Your Honor, farmer Brown’s roads are private roads.

    By virtue of Federal regulations BIA roads are “open to free public use,” by mandate of the regulation.

    And that is the distinction.

    Thurgood Marshall:

    Well, then, if farmer Brown says anybody wants to use those roads, if he used it he would be in trouble.

    Ian A. Macpherson:

    Mr. Justice Marshall, trouble — he would perhaps travel on those roads would be subjected to the tax.

    But so long as the road remained a private thoroughfare they would not be so traveled and use of those road would not be subject to the State tax.

    With respect to the argument that this entire area has been preempted, it is the State of Arizona’s position that quite the contrary, the Federal regulatory scheme speaks in terms of sound management of the forest resource.

    The Federal objective is to protect the forest resource, to protect it from disease, fire, various other plagues and famines that might occur that would destroy or harm the forest resource.

    The State of Arizona respectfully submits that that preempts Area A, and we are talking about Area B.

    There is nothing in either the Federal statutes or the Code of Federal Regulations upon which Pinetop and the tribe rely to indicate a congressional intent or, indeed, an intent on behalf of the Commissioner of Indian Affairs to preempt costs.

    Indeed, the Code of Federal regulations specifically provides with respect to the Bureau of Indian Affairs that administrative costs up to the extent of some 10 percent of the gross receipts of the tribal enterprise might be subjected to a charge to cover these administrative expenses.

    So the congressional objective, while it may be to protect the forest resource, there is nothing in the regulations as was present in Warren Trading Post with respect to the prices that a trader could charge.

    There is nothing in these regulations to suggest that the cost that Pinetop incurs in pursuing its activities on the reservation are similarly preempted.

    We are talking about two different things.

    Mr. Brown mentioned that Public Law 280 was passed for purposes of permitting States to assume criminal jurisdiction and civil jurisdiction over civil positive action.

    Well, in fact this Court’s decision in Bryan v. Itasca County establishes that that grant of authority by Congress does not extend to States if they desire to impose the direct legal obligation of State taxes upon reservation Indians.

    Quite the contrary, Public Law 280 was construed by this Court to extend to civil causes of action, tort cases, contract cases, access to the State courts.

    So if the suggestion be that had Arizona adopted Public Law 280 this would be a different case, Arizona would submit it is just not so.

    This Court would have to ignore Bryan v. Itasca County.

    John Paul Stevens:

    I am not interrupting at a good time.

    I am not sure I understood everything, your entire response to Justice Marshall.

    You said there were different kinds of roads on the reservation.

    One was the State roads, and everybody agrees taxes are paid on the use of those.

    John Paul Stevens:

    The other was the BIA roads.

    Are there also roads that are not public highways at all that are involved, such as roads going into the depth of the forest or anything like that?

    Ian A. Macpherson:

    Mr. Justice Stevens, yes, there are.

    John Paul Stevens:

    And you are asserting the right to tax on those two.

    Ian A. Macpherson:

    Yes.

    That puts the issue right before us and I — this relates again to the discussions that Mr. Wake and I have had since arriving in Washington.

    The Arizona Court of Appeals opinion, which is before this Court, does not differentiate between BIA roads and tribal roads.

    The fact is however that the assessment that was made by the Arizona taxing authorities related only to the taxes attributable to Pinetop’s operation upon BIA roads.

    Use on tribal roads was extracted, that was not subjected to taxation.

    Now, it is true, I must confess, that that position was not specifically or clearly advocated in the appellate briefs, nor does the Court of Appeals opinion make that distinction.

    However, the fact of the matter is that under current State law, under the legislative scheme that exists in Arizona right now, Arizona has no intention of going forward on some purported theory that because the Court of Appeals decision says we can, that we can go ahead and tax use on these tribal roads.

    I have been assured of that by my client by telephone last night.

    And other than that we would put that before the Court to apprise the court of what the true facts are.

    The fact of the matter is however that that goes to the question of magnitude of what the burden is.

    By that I mean Mr. Wake’s argument presumably will be — and I don’t mean to put words in his mouth — but it is my understanding that if we were talking about use on tribal roads too there would be a lot more —

    John Paul Stevens:

    Let me just interrupt you again, if I may.

    The fight is over the use of tribal roads.

    That is where you are really in dispute, is that right?

    Ian A. Macpherson:

    Well —

    John Paul Stevens:

    The BIA roads — I mean BIA roads.

    I am sorry.

    Ian A. Macpherson:

    That is correct, Your Honor, BIA roads.

    John Paul Stevens:

    You say are public roads but under the Arizona Supreme Court’s opinion it is broad enough to cover those roads even if they weren’t public roads?

    Ian A. Macpherson:

    Mr. Justice —

    John Paul Stevens:

    Pardon me?

    Ian A. Macpherson:

    No, if I may correct —

    John Paul Stevens:

    I mean you don’t defend that position.

    I thought reading the opinion, I thought it would apply to that.

    Ian A. Macpherson:

    Well, the Court of Appeals opinion states that with respect to all the roads, private roads, BIA roads, all of the roads, go ahead and impose these taxes.

    John Paul Stevens:

    And you don’t defend that position.

    Ian A. Macpherson:

    I don’t defend that position.

    I defend it to the extent that the term “tribal roads” includes BIA roads.

    John Paul Stevens:

    Right.

    Ian A. Macpherson:

    Because there was no differentiation.

    John Paul Stevens:

    What I meant to say is your real fight is over the right to tax on BIA roads.

    Does the record tell us much about those roads, for example does it tell us whether the State police are on those roads or whether they have speed limits or things like that?

    Ian A. Macpherson:

    Your Honor, the record does not specifically go into that much detail.

    John Paul Stevens:

    However, it presents us with a hypothetical case quite different from the one you asked us to decide.

    Ian A. Macpherson:

    Well, Mr. Justice Stevens, the case is — we felt it necessary as an ethical consideration to apprise the Court of what the actual situation is.

    But, having said that, the issue, the legal issue, if it please the Court, may still be decided with respect to the BIA road use.

    The fact of the matter is that BIA roads pursuant to Federal — the Code of Federal Regulations are required to be open to free public use, as a matter of Federal law.

    John Paul Stevens:

    Yes, but does that tell us whether the State spends any money in their maintenance and protection and policing, and so forth?

    You know, the case would be different depending on what the facts are.

    Ian A. Macpherson:

    The record does not specifically present us with those facts.

    However, there are facts in the record to indicate that the posting of speed limits, for example, are done by other than — at least with respect to the tribal roads are done by jurisdictions other than the State of Arizona.

    John Paul Stevens:

    Well, what about the BIA roads?

    Ian A. Macpherson:

    My recollection, Your Honor, is that we do not take the position that we may establish speed limits on BIA roads.

    Perhaps Mr. Wake can fill me in on that.

    The only roads that we exercise jurisdiction over — and, again, only with respect to non-Indians — the law in Arizona is that even if we have a State highway through a reservation we cannot assert direct jurisdiction over Indians on those roads.

    John Paul Stevens:

    Yes, but these people are not Indians.

    Ian A. Macpherson:

    That is quite correct.

    John Paul Stevens:

    Well, I don’t know what we are supposed to decide here, frankly.

    Ian A. Macpherson:

    Well, if it please the Court, Arizona’s position is this.

    The legal question as to whether or not these State taxes may be applied under notions of this exists in an area other than a preempted area or under notions of the application of the Hayden-Cartwright Act can be decided on the BIA road issue alone.

    The fact of the matter is that if we talk about the tribal roads, as I was attempting to explain, Mr. Wake’s argument probably will be — and, again, I don’t mean to put words in his mouth — but if we are talking about the authority of the State to impose these taxes on tribal roads as well, then the amount, the economic burden of these taxes is going to be much greater.

    And therefore Mr. Macpherson’s argument that the magnitude of these taxes is of some relevance goes out the window because the footnote that we have in our brief based upon the record attempts to establish a percentage of what the true economic burden is with respect to a particular time period.

    That percentage would change by going up if the State were taxing tribal roads as well.

    But that is a consideration apart from the question of BIA road use and whether or not the Hayden-Cartwright Act applies.

    John Paul Stevens:

    Mr. Macpherson, quite apart from the question in this case which involves Indian tribes, what about a private owner of land — whether it is the Weyerhauseur Company or a rancher who owns many square miles of ranch land, does Arizona impose a tax upon his fuel if the vehicle that he owns is used exclusively on his own private property 365 days a year, or this year 366, and never on the public roads of Arizona?

    Ian A. Macpherson:

    It does not, Your Honor.

    John Paul Stevens:

    It does not?

    Ian A. Macpherson:

    That is correct.

    John Paul Stevens:

    Could it?

    Ian A. Macpherson:

    Presumably it could, but it has not.

    And that is the basis upon which the tribal roads were taken out of the exemption.

    They were not — or, excuse me, taken out of the assessment.

    But they were not taken out by virtue of the fact that they were Indian roads.

    John Paul Stevens:

    That is what I thought.

    Ian A. Macpherson:

    They were taken out by virtue of the fact that they were private roads.

    John Paul Stevens:

    Yes.

    Ian A. Macpherson:

    And that is the current state of the law.

    John Paul Stevens:

    Does Arizona also allow a taxpayer to allocate on the basis of mileage driven in say New Mexico and subtract that in some way from the amount of the tax due to Arizona?

    Ian A. Macpherson:

    Your Honor, yes, it does.

    John Paul Stevens:

    Is the same privilege accorded to a taxpayer with respect to mileage driven on Indian reservation roads?

    Ian A. Macpherson:

    Your Honor, it is not; and that is the question that we have here.

    At least the argument is being advanced — my understanding of the argument being advanced by Pinetop is that that is the vice in the Arizona statute.

    It does not allocate between use of State roads within the reservation and roads other than State roads on the reservation.

    William H. Rehnquist:

    Well, I have not understood Pinetop’s argument to be a question of discrimination.

    I have understood it to be an argument of preemption and it seems to me that perhaps a narrower ground might exist here where the Arizona tax is faulty in that if it allows such a deduction for travel in New Mexico but not on the White River Reservation roads is it entitled to make that sort of discrimination under the Constitution.

    Ian A. Macpherson:

    Mr. Justice Rehnquist, I would submit that it is not, for this reason.

    In the first instance, the tribal outside the State of Arizona occurs in a jurisdiction beyond the jurisdictional reach of Arizona.

    Now, having said that, the question becomes.

    Is the Fort Apache Indian Reservation beyond the jurisdiction of the tax reach, if you will, of Arizona?

    Arizona would submit that, no, it is not.

    Number one, this is based on this Court’s decision in Surplus Trading v. Cook.

    It would also presuppose the existence of a State within a State or a nation within a State.

    William H. Rehnquist:

    My question was phrased I believe, is Arizona allowed to make this distinction?

    You answered “It is not.”

    Ian A. Macpherson:

    Excuse me.

    William H. Rehnquist:

    The follow up indicates to me that you meant it is allowed to make that assumption.

    Ian A. Macpherson:

    I am sorry, Your Honor.

    Yes, it is allowed to make that distinction.

    It has not made that distinction.

    That would present a different case and I am sure that — you know, that there would be — well, I am not sure but there would likely be litigation on that point as well.

    William J. Brennan, Jr.:

    Did I understand you to say that Arizona has no responsibility for maintaining the BIA roads?

    Ian A. Macpherson:

    That is correct, Your Honor.

    William J. Brennan, Jr.:

    And did it contribute to the construction of those roads?

    Ian A. Macpherson:

    So far as the record shows, it did not, Your Honor.

    William J. Brennan, Jr.:

    And no police responsibility, either?

    Ian A. Macpherson:

    That is correct, Your Honor, however we haven’t really discussed this Court’s decision in Oliphant with respect to jurisdiction over non-Indians.

    For example, a non-indian robs a bank — that is a bad example, that is Federal — robs a convenience market in White River and goes running off to a tribal road.

    Question Can the State DPS officers chase him?

    That is a separate question.

    But —

    Warren E. Burger:

    What about the tribal roads; can you respond as to that, maintenance of tribal roads?

    Ian A. Macpherson:

    The State does not contribute to the maintenance of tribal roads.

    However, if it please the Court, we have attempted in Footnote 35 of our brief to explain that that is a State law question that has been specifically decided against the position advanced by Pinetop Logging.

    The fact of the matter is that under this Court’s decisions in Thomas v. Gay and Kelly v. Pittsburgh, which is cited in Thomas v. Gay, there is no ironclad requirement of benefits burdens for purposes of determining whether the tax is applicable or not.

    Surely it is one of the considerations and it is one of the considerations that Pinetop is making — they are basing their argument upon.

    But the fact of the matter is as a matter of State law it is Arizona’s position that that question has been resolved against them.

    The thrust of their position is based upon notions of preemption in Indian sovereignty.

    And with respect to the discussion of both, or all three of the counsel this question of self-government which continues to be discussed, Arizona would submit should not be considered in a vacuum.

    The fact of the matter is that an attribute sovereignty is the negotiation of contracts.

    There is no requirement of State law that these taxes be borne by them.

    If they want them away, that is fine.

    With respect to a final question asked by Justice Stevens in the opening remarks, the competitive advantage of the tribe that would be enjoyed if the decision of the Court of Appeals were reversed, merits a little closer examination.

    The fact of the matter is that there is nothing in the statutes or the Code of Federal Regulations that Arizona can see, at least, that suggests that as a matter of economic principle and in connection with the Federal objective of providing or permitting the generation by the forest resource of the — whatever profit —

    Warren E. Burger:

    We will resume there at 1:00 o’clock, Counsel.

    Ian A. Macpherson:

    Thank you.