APPLICABILITY OF CIGARETTE EXCISE TAX TO SALES OF CIGARETTES ON INDIAN RESERVATIONS

TAXATION - INDIANS - CIGARETTES - APPLICABILITY OF CIGARETTE EXCISE TAX TO SALES OF CIGARETTES ON INDIAN RESERVATIONS

(1) Any retailer or purchaser of cigarettes, whether Indian or non-Indian, within the reservation boundaries of an Indian tribe over which the state has assumed full jurisdiction under the provisions of RCW 37.12.021 (codifying § 5, chapter 36, Laws of 1963), is subject to all of the duties and liabilities imposed by the statutes relating to the state's cigarette excise tax under chapter 82.24 RCW.

(2) A non-Indian retail purchaser or seller of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is limited to that provided for in RCW 37.12.010 (§ 1, chapter 36, Laws of 1963) is, likewise, subject to all of the duties and liabilities imposed by the cigarette excise tax statutes.

(3) An Indian retailer or purchaser of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is, likewise, limited to that provided for in RCW 37.12.010, is also fully subject to the duties and liabilities imposed upon a retailer or purchaser under chapter 82.24 RCW where said Indian is not a member of or affiliated with the Indian tribe on whose reservation he is selling or purchasing cigarettes.

(4)  An Indian selling or purchasing cigarettes within his own reservation boundaries on tribal or allotted lands which are held in trust by the United States or subject to a restriction against alienation imposed by the United States is not, himself, subject to the state's cigarette excise tax laws.

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                                                              September 22, 1970

Honorable Hal Wolf
State Representative, 22nd District
Clark Road
Yelm, Washington 98597

                                                                                                                 Cite as:  AGO 1970 No. 20

Dear Sir:

            By letter previously acknowledged you have requested an opinion of this office on several questions relating to the state's jurisdiction to enforce the cigarette excise tax (chapter 82.24 RCW) in the case of sales of cigarettes on Indian reservations.  We believe that the issues raised  [[Orig. Op. Page 2]] by your questions may best be resolved by considering the matter from the standpoint of whether the duties and liabilities imposed by the statutes relating to this tax are enforceable against the following categories of individuals:

            (1) Any retailer or purchaser of cigarettes, whether Indian or non-Indian, within the reservation boundaries of an Indian tribe over which the state has assumed full jurisdiction under the provisions of RCW 37.12.021 (§ 5, chapter 36, Laws of 1963);

            (2) A non-Indian retail purchaser or seller of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is limited to that provided for in RCW 37.12.010 (§ 1, chapter 36, Laws of 1963);

            (3) An Indian retailer or purchaser of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is limited to that provided for in RCW 37.12.010 (§ 1, chapter 36, Laws of 1963) where said Indian is not a member of or affiliated with the Indian tribe on whose reservation he is selling or purchasing cigarettes; and

            (4) An Indian retailer or purchaser within his own reservation boundaries on tribal or allotted lands which are held in trust by the United States or subject to a restriction against alienation imposed by the United States.

            We answer parts (1), (2) and (3) of your question in the affirmative, and part (4) in the negative.

                                                                     ANALYSIS

            By way of a preliminary qualification as to the scope of this opinion, we do not intend herein to pass upon the question of whether an "Indian trader," i.e., a person licensed by the United States Commissioner of Indian Affairs pursuant to 25 U.S.C. 261, would be subject to the duties and liabilities imposed by chapter 82.24 RCW with respect to sales of cigarettes to reservation Indians.  InWarren Trading Post v. Arizona Tax Com., 380 U.S. 685, 14 L.Ed. 2d 165 (1965) the United States Supreme Court held that such a licensed Indian trader was not subject to the Arizona two percent gross receipts tax with respect to business done on the Navajo reservation with Navajo Indians.  However, we are informed by attorneys for the Bureau of Indian Affairs that the federal government has not undertaken to regulate trading on any Indian reservation in the state of Washington; accordingly, that case  [[Orig. Op. Page 3]] would appear to be inapplicable to transactions occurring in this state.  In addition, it appears from that case that Arizona hadnot accepted any jurisdiction over the Navajo reservation pursuant to Public Law 83-280, discussed below, even though § 6 thereof is applicable to Arizona as well as to Washington.

            With this qualification, we now proceed to consider the questions which you have raised.

            A. The Cigarette Excise Tax:

            RCW 82.24.020 provides as follows:

            "There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling or distribution of all cigarettes, in an amount equal to the rate of four mills per cigarette."1/

             RCW 82.24.080 contains the following expression of legislative intent with respect to the scope of this tax:

            "It is the intent and purpose of this chapter to levy a tax on all of the articles taxed herein, sold, used, consumed, handled, or distributed within this state and to collect the tax from the person who first sells, uses, consumes, handles, or distributes them in the state. . . ."

            These two statutory provisions set forth the basic structure and intended scope of the cigarette excise tax, and the other provisions of chapter 82.24 RCW simply fill out this structure and intent.  Thus, RCW 82.24.030 provides that in order to enforce collection of the tax, the Department of Revenue shall design and have printed stamps to be affixed

            ". . . on the smallest container or package that will be handled, sold, used, consumed, or distributed, to permit the  [[Orig. Op. Page 4]] . . . [department] to readily ascertain by inspection, whether or not such tax has been paid. . . ."

            This statute then goes on to provide that:

            ". . .  Every person shall cause to be affixed on every package of cigarettes on which a tax is due, stamps of an amount equaling the tax due thereon before he sells, offers for sale, uses, consumes, handles, removes, or otherwise disturbs and distributes the same: . . ."

            RCW 82.24.040 and 82.24.050 establish certain obligations upon cigarette wholesalers and retailers, respectively; and under 82.24.050 the retailer is specifically required to pay for and affix the cigarette stamps to all packages or containers which he holds for sale, unless the cigarettes have already been stamped by the wholesaler under RCW 82.24.040.

            Lastly, a key enforcement provision to be noted is RCW 82.24.130, which states:

            "Any articles taxed herein found at any point within this state, which articles shall be held, owned, possessed, or in the control of any person for a period of time longer than the time necessary to affix the stamps, and not having the stamps affixed to the packages or containers are hereby declared to be contraband goods, and may be seized by the commission or its duly authorized agent, or by any peace officer of the state, when directed by the commission so to do, . . ."

            B. Analysis of Public Law 83-280:

            In AGO 1970 No. 11 [[to Bill Kiskaddon, State Representative on June 4, 1970]], copy enclosed, we recently had occasion to trace in some detail the developmental history of this state's assumption of criminal and civil jurisdiction over Indian tribes and reservations.  In this regard, we made reference to the enactment of Public Law 83-280 by the federal congress in 1953, as follows:

            "In 1953, the Federal Congress enacted Public Law 83-280 (67 Stat. 588, 18 U.S.C. 1162, 28 U.S.C. 1360) which conferred  [[Orig. Op. Page 5]] upon the states of California, Minnesota, Nebraska, Oregon and Wisconsin civil and criminal jurisdiction over all Indian tribes and reservations within those states with the exception of the Red Lake Reservation in Minnesota and the Warm Springs Reservation in Oregon.  In addition, the Congress included in this act the following two sections which were applicable to states other than those specifically enumerated in the act:

            "'SEC. 6. Notwithstanding the provisions of any Enabling Act for the admission of a State, the consent of the United States is hereby given to the people of any State to amend, where necessary, their State constitution or existing statutes, as the case may be, to remove any legal impediment to the assumption of civil and criminal jurisdiction in accordance with the provisions of this Act:  Provided, That the provisions of this Act shall not become effective with respect to such assumption of jurisdiction by any such State until the people thereof have appropriately amended their State constitution or statutes as the case may be.

            "'SEC. 7. The consent of the United States is hereby given to any other State not having jurisdiction with respect to criminal offenses or civil causes of action, or with respect to both, as provided for in this Act, to assume jurisdiction at such time and in such manner as the people of the State shall, by affirmative legislative action, obligate and bind the State to assumption thereof.'"

            This act, taken in its entirety, represented a basic policy change by the federal government in so far as state jurisdiction over Indians and Indian land was concerned.  In the House report on Public Law 83-280, the following statement regarding the act and certain companion legislation appears:

            "* * *  This legislation, whether before the House or presently under committee consideration, has two coordinate aims:  First, withdrawal of Federal responsibility  [[Orig. Op. Page 6]] for Indian affairs wherever practicable; and second, termination of the subjection of Indians to Federal laws applicable to Indians as such."  U.S. Code Cong. & Ad. News, Vol. 2, p. 2409.

            With respect, specifically, to the question of state civil jurisdiction under the act, the house committee report stated that:

            "Similarly, the Indians of several States have reached a stage of acculturation and development that makes desirable extension of State civil jurisdiction to the Indian country within their borders.  Permitting the State courts to adjudicate civil controversies arising on Indian reservations, and to extend to those reservations the substantive civil laws of the respective States insofar as those laws are of general application to private persons or private property, is deemed desirable.

            "After consideration of the proposed legislation, the committee concluded that:  any legislation in this area should be on a general basis, making provision for all affected States to come within its terms; that the attitude of the various States and the Indian groups within those States on the jurisdiction transfer question should be heavily weighed before effecting transfer; and that any recommended legislation should retain application of Indian tribal customs and ordinances to civil transactions among the Indians, insofar as these customs or ordinances are not inconsistent with applicable State laws."  Ibid. p. 2412.

            Apparently, the five states expressly designated in Public Law 83-280 were those which had, as of the time of its enactment in 1953, already expressed their willingness to assume jurisdiction over Indian tribes which were located therein.  However, under §§ 6 and 7,supra, full authority was granted to all other states to respond, at later dates, by the enactment of appropriate legislation assuming similar jurisdiction.  Section 6 was designed for those states, including Washington, which had disclaimers of jurisdiction over Indians and Indian territory in their enabling acts, while § 7 was designed for those states which had no such obstacles to an assumption of civil and criminal jurisdiction but had not yet expressed  [[Orig. Op. Page 7]] their willingness to assume such jurisdiction.2/

             From the standpoint of its substantive breadth Public Law 83-280 opened the way for all state civil and criminal laws to be made applicable to Indians, subject only to the provision that nothing in the act:

            "'(b) . . . shall authorize the alienation, encumbrance, or taxation of any real or personal property, including water rights, belonging to any Indian or any Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States; or shall authorize regulation of the use of such property in a manner inconsistent with any Federal treaty, agreement, or statute or with any regulation made pursuant thereto; or shall deprive any Indian or any Indian tribe, band, or community of any right, privilege, or immunity afforded under Federal treaty, agreement, or statute with respect to hunting, trapping, or fishing or the control, licensing, or regulation thereof.3/

            "'. . .'"

            These exceptions simply highlight the breadth of the act's substantive scope as a whole.  In terms of the subject matter of your immediate questions, the act constituted an open invitation for all of the states to extend their tax laws to Indians and Indian lands, with the one exception relating to taxation of trust property and property which is subject to a federal restraint against alienation.

            C. Washington's Response:

            We next turn to the manner in which the state of Washington  [[Orig. Op. Page 8]] responded to the authority which was granted to it by Public Law 83-280.  This state's initial response came in 1957, with the enactment of chapter 240, Laws of 1957, § 1 of which provided as follows:

            "The state of Washington hereby obligates and binds itself to assume, as hereinafter provided, criminal and civil jurisdiction over Indians and Indian territory, reservation, country, and lands within this state in accordance with the consent of the United States given by the act of August 15, 1953 (Public Law 280, 83rd Congress, 1st Session)."

            Section 2 of this 1957 state act provided that:

            "Whenever the governor of this state shall receive from the tribal council or other governing body of any Indian tribe, community, band, or group in this state a resolution expressing its desire that its people and lands be subject to the criminal and civil jurisdiction of the state of Washington to the extent authorized by federal law, he shall issue within sixty days a proclamation to the effect that such jurisdiction shall apply to all Indians and all Indian territory, reservation, country, and lands of the Indian body involved in accordance with the provisions of this act:  Provided, That with respect to the Colville, Spokane, or Yakima tribes or reservations, he shall not issue such proclamation unless the resolution of the tribal council has been ratified by a two-thirds majority of the adult enrolled members of the tribe voting in a referendum called for that purpose."

            Under these 1957 provisions, this state thus obligated itself to exercise the jurisdiction provided for in Public Law 83-280 only upon request of each particular Indian tribe.  However, six years later, our state legislature through its enactment of chapter 36, Laws of 1963, made significant changes in this initial 1957 approach.  By § 1 of this 1963 act, now codified as RCW 37.12.010, the legislature amended § 1, chapter 240, Laws of 1957, to read as follows:

             [[Orig. Op. Page 9]]

            "The state of Washington hereby obligates and binds itself to assume criminal and civil jurisdiction over Indians and Indian territory, reservations, country, and lands within this state in accordance with the consent of the United States given by the act of August 15, 1953 (Public Law 280, 83rd Congress, 1st Session), but such assumption of jurisdiction shall not apply to Indians when on their tribal lands or allotted lands within an established Indian reservation and held in trust by the United States or subject to a restriction against alienation imposed by the United States, unless the provisions of section 5 of this amendatory act have been invoked, except for the following:

            "(1) Compulsory school attendance; "(2) Public assistance; "(3) Domestic relations; "(4) Mental illness; "(5) Juvenile delinquency; "(6) Adoption proceedings; "(7) Dependent children; and "(8) Operation of motor vehicles upon the public streets, alleys, roads and highways:  Provided Further, That Indian tribes that petitioned for, were granted and became subject to state jurisdiction pursuant to this chapter on or before the effective date of this amendatory act shall remain subject to state civil and criminal jurisdiction as if this amendatory act had not been enacted."

            Section 2 of chapter 240, Laws of 1957, supra, was repealed by § 6 of the 1963 act and, was in effect, replaced by § 5, chapter 236, Laws of 1963 (RCW 37.12.021) which reads as follows:

            "Whenever the governor of this state shall receive from the majority of any tribe or the tribal council or other governing body, duly recognized by the Bureau of Indian Affairs, of any Indian tribe, community, band or group in this state a resolution expressing its desire that its people and lands be subject to the criminal or civil jurisdiction of the state of Washington to the full extent authorized by federal law, he shall issue within sixty days a proclamation to the effect  [[Orig. Op. Page 10]] that such jurisdiction shall apply to all Indians and all Indian territory, reservations, country, and lands of the Indian body involved to the same extent that this state exercises civil and criminal jurisdiction or both elsewhere within the state:  Provided, That jurisdiction assumed pursuant to this section shall nevertheless be subject to the limitations set forth in RCW 37.12.060."

            The most significant difference between the 1957 and 1963 state acts was summarized by the court inQuinault Tribe of Indians v. Gallagher, 368 F.2d 648 (1966), as follows:

            "The scope of chapter 36 is summarized in our earlier opinion, opposite note 2.  We do not read that act as constituting only a partial assumption of jurisdiction.  The state therein indicates its willingness to extend criminal and civil jurisdiction over all Indians and Indian territory, reservations, country and lands within the state, it being provided, however, that as to some matters concerning some Indians, there must first be a tribal resolution and a gubernatorial proclamation.  In chapter 240, Laws of 1957, this Indian resolution and governor's proclamation procedure applied to all exertions of state jurisdiction."

            D.Application With Respect to Taxation of Cigarette Sales on Indian Reservation:

            This reference by the court in the Quinault case to ". . . some matters concerning some Indians . . ." with respect to which a tribal resolution must precede the assumption of state jurisdiction leads us into the heart of the problem involved in your questions.  InMakah Indian Tribe v. State, 76 W.D. 2d 645, 457 P.2d 590 (1969) our own state supreme court addressed itself more specifically to this matter, when it said:

            "The Makah Indian Tribe has not adopted a resolution asking the Governor to proclaim total state civil and criminal jurisdiction over its members and territory.  As to that tribe then, such total state jurisdiction over its members exists only when the tribal members are on nontrust property or on property held in trust for them by the United  [[Orig. Op. Page 11]] States, and when the incident involves a matter of law within one of the eight enumerated exceptions."  (Emphasis supplied.)

            Again, the key language in § 1, chapter 36, Laws of 1963 (RCW 37.12.010),supra, states that (unless the tribe has requested the assumption of full jurisdiction, or unless the matter comes within one of the eight enumerated subjects with respect to which a tribal request is unnecessary)4/

            ". . . such assumption of jurisdiction shall not apply toIndians when on their tribal lands or allotted lands within an established Indian reservation and held in trust by the United States or subject to a restriction against alienation imposed by the United States, . . ."  (Emphasis supplied.)

            Thus, clearly, the court in Makah recognized that the phrase ". . . Indians when on their tribal or allotted lands within an established Indian reservation . . ." refers to, e.g., Makah Indians on the Makah reservation or Yakima Indians on the Yakima reservation but not, e.g., to Makah Indians on the Yakima reservation or vice versa.  And obviously, under this provision of the act, non-Indians are subject to complete state jurisdiction in the same manner as non-tribal Indians, even though they are operating within the boundaries of an established Indian reservation over which the state's jurisdiction is limited to that provided for under § 1 of the 1963 act (as distinguished from that which the state may assume upon petition by the tribe under § 5 (RCW 37.12.021), supra).

            Any other construction of RCW 37.12.010 would result in absurd consequences.  Consider the following two examples:

            (1) Assume that an Indian of the X tribe were to leave his own reservation without severing his relationship with that tribe, and were subsequently to engage in a retail sale of cigarettes while on trust property located in the reservation of Y tribe.  Assume further that the X tribe has subjected itself to complete jurisdiction from the state under § 5 (RCW 37.12.021), while the Y tribe has not.  Because of the state's assumption of jurisdiction over the X tribe, upon its petition therefor, the statutes pertaining to the cigarette excise tax (noted above) would clearly be applicable to all transactions taking place on the X tribe's reservation.  Would it be sensible, then, for the legislature to have said that the X Indian is no longer subject to state jurisdiction when he leaves his own reservation and enters on to the reservation of the Y tribe?  We think not.

             [[Orig. Op. Page 12]]

            (2) The only way to enlarge state jurisdiction is by a tribal resolution pursuant to RCW 37.12.021.  The resolution within that statute must contain the tribe's express "desire thatits people and lands be subject to the criminal or civil jurisdiction of the state."  (Emphasis supplied.)  Assume the facts in situation (1), and assume further that Y tribe adopts a resolution under RCW 37.12.021.  The Y tribe cannot enlarge state jurisdiction to include the X Indian; for (based upon the assumed facts) he is not one of its people.  Unless jurisdiction over X Indian on Y tribe's reservation is provided for in RCW 37.12.010, it would never be provided at all.  Yet, it would hardly be sensible to impute to the legislature any intent to leave X Indian in a perpetual jurisdictional limbo.

            We believe that this second example illustrates the pattern established by §§ 1 and 5, chapter 36, Laws of 1963, (RCW 37.12.010 and 37.12.021) taken together.  Full jurisdiction over tribal members on trust lands on their own reservation is conditioned upon a tribal request pursuant to § 5; however, as to all other persons, Indians or non-Indians, full jurisdiction is provided for in RCW 37.12.010, and no tribal request is necessary.

            E. Conclusions:

            From the foregoing, it follows, in specific answer to the four sub parts of your question as we have paraphrased it, that:

            (1) Any retailer or purchaser of cigarettes, whether Indian or non-Indian, within the reservation boundaries of an Indian tribe over which the state has assumed full jurisdiction under the provisions of RCW 37.12.021 (codifying § 5, chapter 36, Laws of 1963), is subject to all of the duties and liabilities imposed by the statutes relating to the state's cigarette excise tax under chapter 82.24 RCW.

            (2) A non-Indian retail purchaser or seller of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is limited to that provided for in RCW 37.12.010 (§ 1, chapter 36, Laws of 1963) is, likewise, subject to all of these duties and liabilities; and, similarly,

            (3) An Indian retailer or purchaser of cigarettes within the reservation boundaries of an Indian tribe over which the state's jurisdiction is, likewise, so limited, is also fully subject to the duties and liabilities imposed upon a retailer or purchaser under chapter 82.24 RCW where said  [[Orig. Op. Page 13]] Indian is not a member of or affiliated with the Indian tribe on whose reservation he is selling or purchasing cigarettes; however,