No. 94-771

In the Supreme Court of the United States

OCTOBER TERM, 1994

OKLAHOMA TAX COMMISSION, PETITIONER

v.

CHICKASAW NATION

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

BRIEF FOR THE
UNITED STATES AS AMICUS CURIAE
SUPPORTING RESPONDENT

DREW S. DAYS, III
Solicitor General

Lois J. Schiffer
Assistant Attorney General

EDWIN S. KNEEDLER
Deputy Solicitor General

PAUL A. ENGELMAYER
Assistant to the Solicitor General

ELIZABETH ANN PETERSON
Attorney

Department of Justice
Washington, D.C. 20530
(202)514-2217 

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QUESTIONS PRESENTED

1. Whether Oklahomans motor fuels excise tax may be
imposed upon fuel sold by Chickasaw Nation retail stores
on tribal trust land.
2. Whether Oklahomans income tax may be imposed
upon members of the Chickasaw Nation who are employed
by the National but who reside outside of Indian country.

(I)

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TABLE OF CONTENTS		

Page

Interest of the United States  . . . . 1
Statement  . . . . 1
Summary of argument  . . . .6 
Argument:
I. Oklahoma may not apply its excise tax on motor fuel
  to fuel sold by the Chickasaw Nation's retail
  stores  . . . . 7
II. Oklahoma may not apply its income tax to members
  of the Chickasaw Nation who work for the Tribe
  but who live outside of Indian country  . . . .24 
Conclusion  . . . . 31

      TABLE OF AUTHORITIES

Cases:

Berkemer v. McCarty, 468 U.S. 420 (1984)  . . . .21 
Bryan v. Itasca County, 426 U.S. 373 (1976)  . . . . 8
Butner v. United States, 440 U.S. 48 (1979)  . . . . 16
California Bd. of Equalization v. Chemehuevi Tribe,
474 U.S. 9 (1985) . . . .  3,  9, 16, 17, 18
California v. Cabazon Band of Mission Indians,
480 U.S. 202 (1987)  . . . .  7-8,  9, 13, 14, 21
Carpentr v. Shaw, 280 U.S. 363 (1930)  . . . . 24
Central Machinery Co. v. Arizona Tax Comm'n,
448 U.S. 160 (1980)  . . . . 9
Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (l831)  . . . . 12 
Choctaw Nation v. Oklahoma, 397 U.S. 620 (1970)  . . . . 27
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274
(1977)  . . . . 15
Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163
(1989)  . . . . 8
County of Oneida v. Oneida Indian Nation, 470 U.S. 226
(1985)  . . . . 12,  26

(III)

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IV

Cases-Continued:                

Page

County of Yakima v. Confederated Tribes and Bands of
the Yakima Indian Nation, 502 U.S. 251 (1992) . . . .  7,  8, 13,
                                                                      14, 16, 21,  23,  24
Department of Taxation & Finance v. Milhelm Attea
& Sons., 114 S. Ct. 2028 (1994)  . . . . 8, 9, 15
Detroit v. Murray Corp. 355 U.S. 489 (1958)  . . . .  15
Dobbins v. Commissioners of Erie County, 41 U.S.
(16 Pet.) 435 (1842)  . . . .  27
Gurley v. Rhoden, 421 U.S. 200 (1975)  . . . . 18, 19
Haring v. Prosise, 462 U.S. 306 (1983)  . . . .  16
Indian Country, U.S.A., Inc. v. Oklahoma, 829 F.2d 967
(lOth Cir. 1987). cert. denied, 487 U.S. 1218 (1988)  . . . . 9, 17
Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Phillips
Corp., 114 S. Ct. 425 (1993)  . . . .  21
McClanahan v. Arizona State Tax Comm'n, 411 U.S.
164 (1973)  . . . . 4,  8,  24,  25,  27
McLeod v. J.E. Dilworth Co., 322 U.S. 327 (1944)  . . . .  10
Memphis Bank & Trust Co. v. Garner, 459 U.S. 392
(1983)  . . . .  4
Merrion v. Jicarilla Apache Tribe, 455 U.S. 130
(1982) . . . .  12
Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973) . . . . 8, 13, 29
Moe v. Confederated Salish & Kootenai Tribes,
425 U.S. 463 (1976) . . . .  8, 9
Montana v. Blackfeet Tribe, 471 U.S. 759 (1985) . . . .  8, 14, 24
New Mexico v. Mescalero Apache Tribe, 462 U.S. 324
(1983) . . . .  8, 13, 29
Oklahoma Tax (Comm'n v. Citizen Band Potawatomi
Indian Tribe, 498 U.S. 505 (1991)  . . . . 14, 28
Oklahoma Tax Comm'n v. Sac and Fox Nation,
113 S. Ct. 1985 (1993)  . . . .  4, 14, 24, 25, 29
Organized Village of Kake v. Egan, 369 U.S. 60 (1962) . . . . 13
Propper v. Clark, 337 U.S. 472 (1949)  . . . .  16
Ramah Navajo School Bd. v. Bureau of Revenue,
458 U.S. 832 (1982)  . . . .  8

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V

Cases-Continued:

Page

Sac and Fox Nation v. Oklahoma  Tax Comm'n,
967 F.2d 1425 (l0th Cir.), cert. denied, 113 S. Ct.
466 (1992), vacated in part, 113 S. Ct. 1985
(1993) . . . .  3, 4, 5, 14, 24, 25, 29
South Dakota v. Bourland, 113 S. Ct. 2309 (1993) . . . .  24
United States v. Dion, 476 U.S. 734 (1986)  . . . .  28
United States v. Kagama, 118 U.S. 375 (1886)  . . . .  10
Wardair Canada Inc. v. Florida Dep't of Revenue,
477 U.S. 1 (1986)  . . . .  10
Warren Trading Post Co. v. Arizona Tax Comm'n,
380 U.S. 685 (1965)  . . . .  9
Washington v. Confederated Tribes of the Colville
Indian Reservation, 447 U.S. 134 (1980)  . . . .  3, 8, 9, 15
White Mountain Apache Tribe v. Bracker, 448 U.S. 136
(1980)  . . . .   4, 21, 29
Williams v. Lee, 358 U.S. 217 (1959)  . . . . 10, 29
Worcester v. Georgia, 31 U.S. (6 Pet.) 515 (1832)  . . . . 11, 12, 13

Constitution, treaties, and statutes:

Articles of Confed. Art. IX  . . . . 11
U.S. Const.
Art. I:
   2, C1.3  . . . . 13
   8, Cl. 3 . . . . 10, 12
   Foreign Commerce Clause  . . . . 12 
   Indian Commerce Clause  . . . . 12
Art. II,2, Cl. 2  . . . . 11-12
Art. VI, Cl. 2  . . . . 12
Amend. XIV,  2  . . . . 13
Treaty of Dancing Rabbit Creek, Sept. 27, 1830, Art. IV,
7 Stat. 333  . . . . 5, 25
Treaty of Oct. 18, 1820, 7 Stat. 210  . . . . 26 
Treaty of Jan. 17, 1837, Art. I, 11 Stat. 573  . . . . 25 
Treaty of Apr. 28, 1866, 14 Stat. 769:
Art. X, 14 Stat. 774  . . . . 25
Art. XLV, 14 Stat. 779-780  . . . . 25 

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VI

Statues-Continued:

Page

Act of June 16, 1936, ch. 582, 49 Stat. 1519:
1-10,49 Stat. 1519-1522  . . . . 22 
3, 49 Stat. 1520  . . . . 22
6, 49 Stat. 1521  . . . . 22,  23
10, 49 Stat. 1521-1522  . . . . 22  
Act of Aug. 15, 1953, ch. 505, 67 Stat. 588 (Public Law 280)
(25 U.S.C. 1321 et seq. )  . . . . 28 
Hayden-Cartwright Act, 4 U.S.C. 104 et seq.:
4 U.S.C. 104  . . . . 7, 20
4 U.S.C. 104(a)  . . . . 21
Oklahoma Enabling Act of 1906, ch. 3335, 34 Stat. 267:
1, 34 Stat. 267-268  . . . . 28 
16 (U.S.C. 261  . . . . 23
18 U.S.C. 1151  . . . . 4
25 U.S.C. 71  . . . . 25
Ariz. Rev. Stat. Ann. (West Supp. 1993):
28-1501  . . . . 19
28-1520 . . . . 19
Cal. Rev. & Tax. Code Ann. (West Supp. 1994):
7351  . . . . 19
7401  . . . . 19
Mont. Code Ann. (1993):
 15-70-204  . . . . 19
 15-70-221  . . . . 19
N.Y. Tax Law (McKinney 1986):
284  . . . . 19 
289-c  . . . . 19
N.C. Gen Stat. (1994):
105-434(a)  . . . . 19 
105-439  . . . . 19

Statutes-Continued:

Okla. Stat. Ann. tit. 68 (West 1992):
203  . . . .  19
302  . . . .  18
306  . . . .  18
501-531  . . . .  2
501(B)  . . . . 19,20
501(C) . . . .  20

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VII

Statutes-(Continued:

Page

 502  . . . . 17, 18 
 502.2(B)  . . . . 19
 502.3(B)  . . . . 19
 502.4(B)  . . . . 19
 502.5(B)  . . . . 19
 502.6(B)  . . . . 19
 502.7(B)  . . . . 19
 505  . . . . 4
505(B)-(C)  . . . . 3, 7 
 505(C )  . . . . 17, 18
505(E) . . . . 17
506(A)  . . . . 17
507  . . . . 17
508(a)  . . . . 19, 20 
509(e)-(f)  . . . . 19-20
509(j)  . . . . 20
509(A)  . . . . 20
509(B)  . . . . 19
 509.2((C)  . . . . 20 
 509.2(E)  . . . . 19
527  . . . . 19
2355  . . . . 2
2358[A)(1)  . . . . 30
 
Miscellaneous:

Abel, The Commerce Clause in the Constitutional Con-
vent ion and the Contemporary Comment, 25 Minn. L.
Rev. 432 (1941)  . . . . 12 
Application of Federal and State Taxes to Activities of
Menominee Indian Mills, 57 Interior Dec. 129
(1940)  . . . . 23 
F. Cohen, Handbook of Federal Indian Law (1942)  . . . . 23 
33 J. (continental Cong. 460 (Libr. Cong. ed. 1936)  . . . . 11
80 Cong. Rec. (1936):
pp. 6907-6914  . . . . 22
P. 6908  . . . . 22
P. 6913  . . . . 22
pp. 8698-8705  . . . . 22 

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VIII

Miscellaneous-Continued:              

Page

Arthur H. DeRosier, Jr., The Removal of the Choctaw
Indians (1970)  . . . . 26, 27
The Federalist No. 42 (J. Madison) (C. Rossiter ed.
1961)  . . . .  11
2 J. Hellerstein & W. Hellerstein, State Taxation
(1992) . . . .  30
R. Strickland, et al., Felix Cohen's Handbook of Federal
Indian Law (1982)  . . . .  23

  

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In the Supreme Court of the United States

      OCTOBER TERM, 1994

No. 94-771

OKLAHOMA TAX COMMISSION, PETITIONER

v.

CHICKASAW NATION

    ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE TENTH CIRCUIT

    BRIEF FOR THE
UNITED STATES AS AMICUS CURIAE
  SUPPORTING RESPONDENT

INTEREST OF THE UNITED STATES

This case concerns the taxing authority of Oklahoma
over the Chickasaw Nation and its members. Because the
United States has a special relationship with the Chicka-
saw Nation and other Indian Tribes and holds the land at
issue in trust, it has an interest in the development of
sound principles of taxation in this setting.

        STATEMENT

1. Respondent Chickasaw Nation (Tribe) is a federally
recognized Indian Tribe on whose behalf the United States
holds lands in Oklahoma in trust. The Tribe commenced
this suit in 1991 seeking an injunction barring petitioner

           (1)

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2

Oklahoma Tax Commission from enforcing six state taxes
against the Tribe and its members. Pet. App. 2a. Two
taxes remain at issue at this stage of the litigation.
First, Oklahoma imposes a 16-cents-per-gallon excise
tax on motor fuels. See Okla. Stat. Ann. tit. 68, $$501-531
(West 1992). The Tribe owns and operates, on tribal trust
land, two retail convenience stores that sell such fuel. The
Commission generally exempts from the tax fuel sold by
the Tribe's stores to its members, but not sales to other
persons. Pet. App. 12a-13a. The Tribe argued that the
legal incidence of the fuel tax falls on the retailer, and that
it is therefore unlawful to impose that tax on fuel sold by
the Tribe. Second, Oklahoma imposes a tax "upon the
Oklahoma taxable income of every resident or nonresident
individual" (Okla. Stat. Ann. tit. 68,  2355 (West 1992)).
The Tribe argued that it is unlawful to impose the income
tax on the wages of' its 275 employees, who work on tribal
trust land. Pet. App. 33a.
2. The district court upheld imposition of the fuel tax
to fuel sold by the Tribe's stores, holding that the State's
interests out weigh those of the Tribe. Pet. App. 35a-37a.
The court noted that States have an interest in raising
revenues, and that that interest is strongest when the tax
is directed at goods whose value derives from off-
reservation activity, and when the taxpayer benefits from
state services. Id. at 36a. Those factors are present here,
the court reasoned, because the Tribe's stores are engaged
solely in resale, because revenues from the tax finance
construction of roads outside Indian country, and because
the fuel is mostly used on roads outside Indian country.
Id. at 36a-37a. The court also observed that, in practice,
fuel taxes are "included in the retail price at the pump," id.
at 35a, and that exempting the Tribe's stores from the tax
would allow the Tribe "to market an exemption from state
taxation to persons who would normally do their business

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3

elsewhere. " Id. at 37a (quoting Washington v. Con-
federated Tribes of the Colville Indian Reservation
(Colville), 447 U.S. 134, 155 (1980)).  Finally, the court held
(Pet. App. 38a) that the Tribe's challenge to the income tax
had been mooted by a recent decision of the Tenth Circuit
holding that, absent congressional authorization, a State
may not tax the income of tribal members who work on a
reservation, but it may tax the wages of employees who are
not members of the Tribe. Sac and Fox Nation v.
Oklahoma Tax Comm'n, 967 F.2d 1425, 1428-1430 (1992),
vacated in part, 113 S. Ct. 1985 (1993).
3. on appeal by the Chickasaw Nation, the court of
appeals held that the Commission cannot apply the motor
fuel tax to fuel sold by the Tribe's stores. The district
court had erred, the court of appeals explained, in applying
a balancing inquiry based on the "economic assumption[]"
that the tax is passed along to fuel purchasers. Pet. App.
13a, 16a. Instead, the pertinent issue is whether the legal
incidence of the fuel tax falls upon the tribal retailers, as
determined by a "fair interpretation of the taxing statute
as written and applied." Id. at 9a (quoting California Bd.
of Equalization v. Chemehuevi Tribe, 474 U.S. 9, 11 (1985)
(per curian)); Pet. App. 13a.
The court of appeals found "the clear import" of the
Oklahoma a tax code to be that the fuel tax falls on the
 retailer and that a distributor is a mere "transmittal agent
for the taxes imposed on the retailer." Pet. App. 13a-14a.
The distributor is required to remit to the State, "on
behalf of a licensed retailer," the amount of fuel taxes due,
id. at 13a (quoting okla. Stat. Ann. tit. 68,  505(B)-(C)
(emphasis added)), and, if a distributor is unable to recover
taxes clue from a retailer, it may receive a credit against
its tax liability in the unpaid amount of those taxes. Pet.
App. 13a. By contrast, the court observed, state law
requires the retailer to pay the tax to the distributor, and

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4

thus the retailer is legally "responsible for paying the
tax." Id. at 14a (citing Okla. Stat. Ann. tit. 68,  505).
Similarly, the court of appeals concluded that, as
between the retailer and the retail purchaser, the tax falls
on the retailer. Oklahoma's fuel tax law (unlike its
cigarette tax law) does not require the tax to be included
in the retail price charged to customers. Pet. App. 13a.
And while the tax imposed on the retailer may in fact
"ultimately [be] passed on to the consumer at the pump,
* * * [t]he question of who bears the ultimate economic
burden of the tax is distinct from the question of on whom
the tax has been imposed." Id. at 14a (citing White
Mountain Apache Tribe v. Bracker, 448 U.S. 136, 151 n.15
(1980), and Memphis Bank & Trust Co. v. Garner, 459 U.S.
392, 397 (1983)). Because the fuel tax is directly imposed
on the Tribe's stores, the court of appeals concluded that
"preemption is presumed absent an explicit statement
from Congress that state law shall apply," and here
Congress has made no such statement. Pet. App. 15a-16a.
The validity of the income tax was largely resolved by
Oklahoma Tax Comm'n  v. Sac and Fox Nation, 113 S. Ct.
1985 (1993), handed down while this case was pending on
appeal. Pet. App. 20a. In Sac and Fox, this Court held
that the principle of McClanahan v. Arizona State Tax
Comm'n, 411 U.S. 164 (1973), that a State may not tax
Indians who reside on a formal reservation applies as well
to Indians who live elsewhere within Indian country. 113
S. Ct. at 1992.1 Based on that decision, the court of appeals
held that Oklahoma may not tax the income of members of
the Chickasaw Nation who live and work on trust lands.

___________________(footnotes)

1  Indian country includes "formal and informal reservations,
dependent Indian communities, and Indian allotments, whether
restricted or held in trust by the United States." Sac and FOX, 113 S.
Ct. at 1991 (citing 18  U.S.C. 11.51).

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5

Pet. App. 23a. This Court, however, had declined to review
the Tenth Circuit's ruling in Sac and Fox that a Tribe's
employees who are not tribal members do not enjoy an
immunity from state taxation. 113 S. Ct. 466 (1992).
Accordingly v. the court of appeals held in this case that
Oklahoma may tax the income of a Tribe's nonmember
employees unless doing so conflicts with a treaty or
statute or " impermissibly interferer[s] with a tribe's
ability to govern itself," and that taxing the income of the
Chickasaw Nation's nonmember employees does neither.
Pet. App. 21a. That ruling is not at issue here.
The Court of appeals held, however, that Oklahoma may
not tax the wages of members of the Chickasaw Nation
who work for the Tribe itself, even if they reside outside
Indian country. It reasoned that those members do not
enjoy the " McClanahan presumption" that bars state
taxation absent congressional authorization, because
residence in Indian country is an important component of
that presumption. Pet. App. 25a. However, the court held
that such a tax is invalid if it either interferes with tribal
self-government  or impairs a right granted or reserved by
federal law, id at 27a, and that the Chickasaw Nation's
treaty with t] the United States establishes such a right. In
the court's view, that treaty confers broader rights upon
Indians than does the United States' treaties with other
Tribes. id. at 27a-30a, because it provides that "no
territory or state shall ever have [a] right to pass laws for
the government of the [Chickasaw Nation] and their
descendants," and that "the U.S. shall forever secure said
[Chickasaw] Nation from, and against all laws"
inconsistent with that treaty. Id. at 28a-29a (quoting 7
Stat. 333). The court concluded that the treaty makes
"abundantly clear" that Oklahoma may not apply its
income tax to I present-day tribal members who work for

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6

the Tribe, and that "[r]esidency is simply not relevant to
this determination." Pet. App. 29a-30a.

SUMMARY OF ARGUMENT

1. In the area of state taxation of Indian Tribes and
tribal members, this Court has long applied a per se rule,
under which such taxation is prohibited except where
expressly authorized by Congress. The court of appeals,
having determined that under state law the legal incidence
of Oklahoma's motor fuels tax falls on the Indian retailers,
correctly recognized that the per se rule applies, and that,
absent congressional authorization, Oklahoma lacks juris -
diction to impose that tax on Indian retailers.
The Commission's claim that the per se rule should be
replaced with a broad-ranging balancing inquiry should be
rejected. The immunity that Tribes have long enjoyed
from state taxation is rooted in the Constitution itself,
which recognizes the retained sovereignty of Tribes vis-a-
vis the States and the immunity from taxation as a
hallmark of their distinct sovereign status. The
continuing immunity from state taxation also reflects the
fact that a State's power to tax Indians directly could
disrupt the Tribe's ability to govern itself, and that a State
can usually achieve its legitimate fiscal and regulatory
objectives by imposing the tax upon the non-Indian
participants in a transaction. In this case, to render fuel
sold by tribal retailers to non-Indians taxable, Oklahoma
need only amend its fuel tax law to place the legal in-
cidence of the tax either on the non-Indian fuel distri-
butors or purchasers. That is the approach taken by other
States with large Indian populations, including the Com-
mission's amici. The per se rule also has the advantages
of practicality and clarity, as these amici recognize.
The court of appeals reasonably concluded that the legal
incidence of the fuel tax falls on the retailer, based on the

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7

structure of Oklahomans fuel-tax code. The Commission's
claim that the Hayden-Cartwright Act, 4 U.S.C. 104,
authorizes direct state taxation of Indians was not raised
below or in the petition for certiorari. In any event, that
Act does not make it "unmistakably clear" that States may
tax Tribes or individual Indians, County of Yakima v.
Confederated Tribes and Bands of the Yakima Indian
Nation, 502 U.S. 251, 258 (1992), because it does not
specifically refer to Indian reservations or to Indians who
sell or buy motor fuel.
II. The Chickasaw Nation's treaty with the United
States precludes Oklahoma from taxing the income of
members of the Tribe who work for the Tribe. That
treaty, which resulted from unique historical factors,
confers upon the Tribe unusually explicit immunity from
state regulation: It protects tribal descendants against
any state laws "for the government of the [Chickasaw]
Nation." Income taxation of tribal-member employees is
clearly such a law, and any ambiguity in the construction
of the treaty must be resolved in favor of the Tribe.

ARGUMENT

I. OKLAHOMA MAY NOT APPLY ITS EXCISE TAX
ON MOTOR FUEL TO FUEL SOLD BY THE
CHICKASAW NATION'S RETAIL STORES

1. In many areas involving the application of state law
to matters involving Indians in Indian country-especially
in the relations of non-Indians with Indians-this Court
has engaged in a particularized inquiry into the federal,
tribal, and state interests at stake. "The inquiry is to
proceed in light of traditional notions of Indian
sovereignty and the congressional goal of Indian self-
government, including its `overriding goal' of encouraging
tribal self-sufficiency and economic development."
California v. Cabazon Band of Mission Indians, 480 U.S.

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8

202, 216 (1987) (quoting New Mexico v. Mescalero Apache
Tribe, 462 U.S. 324, 334-335 (1983)); see also cotton
Petroleum Corp. v. New Mexico, 490 U.S. 163, 176-177
(1989); Ramah Navago School Bd. v. Bureau of Revenue,
458 U.S. 832,838-8:39 ( 1982).
However, "[i]n the special area of state taxation of
Indian tribes and tribal members, [the Court] ha[s] adopted
a per se rule." Cabazon, 480 U.S. at 215 n.17; see also
Yakima, 502 U.S. at 258, 267 (noting this "categorical
approach"); Mescalero Apache Tribe v. Jones, 411 U.S. 145,
148 (1973). Under that rule, state taxation of Tribes and
individual Indians is permitted only where authorized by
Congress. Congress "has not done so often, and the Court
consistently has held that it will find the Indians'
exemption from state taxes lifted only when Congress has
made its intention to do so unmistakably clear." Cabazon,
480 U.S. at 215 n. 17 (quoting Montana v. Blackfeet Tribe,
471 U.S. 759, 765 (1985)); Yakima, 502 U.S. at 258. The
Court has applied this principle in holding that States may
not tax income earned by Indians on their reservation,
McClanahan, supra, Indian-owned personal property
situated on the reservation, Moe v. Confederated Salish &
Kootenai Tribes, 425 U.S. 463,480-481 (1976); Colville, 447
U.S. at 163-164; Bryan v. Itasca County, 426 U.S. 373
(1976), or on-reservation sales and purchases by tribal
members. Department of Taxation & Finance v. Milhelm
Attea & Sons, 114 S. Ct. 2028, 2031 (1994); Yakima, 502
U.S. at 258; Moe, 425 U.S. at 475-481; Colville, 447 U.S. at
160.
Accordingly, in analyzing the application of a state tax
to goods purchased by non-Indians from Indian retailers
within Indian country, the critical determination is which
party bears the legal incidence of the tax. If the tax falls
upon the retailer, it is subject to the per se rule barring
state taxation of Indians absent an "unmistakably clear"

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9

showing of congressional authorization. However, if the
tax falls upon the purchaser, then the State may ordinarily
impose the tax, Chemehuevi, 474 U.S. at 12; Colville, 447
U.S. at 150-151; Moe, 425 U.S. at 482, and it may also
impose upon the Indian retailer the "minimal burden" of
collecting the tax from the purchasers. Milhelm Attea,
114 S. Ct. at 2035; Colville, 447 U.S. at 151; Moe, 425 U.S.
at 482, 483. 2 The determination of the party on whom the
legal incidence of a state tax falls is to be based upon "a
fair interpretation of the taxing statute as written and
applied." Chemehuevi, 474 U.S. at 11.
2. a. In  holding that the Commission could not apply
Oklahoma's excise tax on motor fuels to sales by tribal
retailers to non-Indian consumers, the court of appeals
applied those familiar principles. It first held that a fair
interpretation of Oklahoma's motor fuels tax statute is
that the legal incidence of that tax falls upon the Indian
retailer, not the consumer. Pet. App. 13a-14a. It next held

___________________(footnotes)

2 Even where the legal incidence of a tax falls on the non-Indian
purchaser, a State's authority is not unlimited, for it remains subject to
the Court's particularized balancing inquiry. The basis for state
taxation is strongest when Indians "impor[t] a product onto the
reservations for immediate resale to non-Indians," and thus are merely
marketing an exemption from state tax. Cabazon, 480 U.S. at 219; see
Colville, 447 U.S. at 155. But when Indians sell items or services that
have value generated in Indian country by activities in which Indians
have a significant interest, state taxation is preempted. Cabazon, 480
U.S. at 219-222; Indian Country, U. S. A., Inc. v. Oklahoma, 829 F.2d
967, 983-987 (10th Cir. 1987), cert. denied, 487 U.S. 1218 (1988).
Analogously when the legal incidence of a tax falls on a non-Indian
retailer who sells to Indian purchasers, that tax may not be imposed if
it implicates significant Indian interests or value generated in Indian
country and the commerce in question is subject to pervasive federal
regulation. See Warren Trading Post Co. v. Arizona Tax Comm'n, 380
U.S. 685, 688-691 (1965); Central Machinery Co. v. Arizona Tax
Comm'n, 448 U.S. 160, 163 (1980).

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10

that, because there is no "explicit grant of congressional
approval" to impose such a tax on Indian retailers,
Oklahoma lacks jurisdiction to do so. Id. at 16a.
[n light of the straightforward application of precedent
below, the Commission's principal argument is nothing
less than an attack on the per se rule itself, which the
Commission asks the Court to discard as an empty
"formalism." Br. 13, 14. The Commission urges that the
inquiry should instead be whether the state interests
served by imposition of such a tax on Indians outweigh the
tribal interests at stake. Br. 14-33. But the per se rule in
this area has deep constitutional and historical roots and
is supported by sound policy considerations. Congress has
not altered that rule, and the Commission offers no valid
reason for this Court to replace it with a broadranging
balancing inquiry.
b. The Federal Government's power over Indian affairs
derives from the Commerce Clause of the Constitution,
Art. 1, 8, Cl. 3, and "from the necessity of giving uniform
protection to a dependent people." Williams v. Lee, 358
U.S. 217, 219 n.4 (1959) (citing United States v. Kagama,
118 U.S. 375 (1886)). The Commerce Clause grants to
Congress the power "[t]o regulate Commerce with foreign
Nations, and among the several States, and with the Indian
Tribes." Art. I, 8, Cl. 3. The vesting of power in
Congress over these three aspects of commerce reflects
the Framers' firm determination to supply a check against
actions by any one State that might be inconsistent with
the interests of the Nation as a whole. See, e.g., Wardair
Canada, Inc. v. Florida Dep`t of Revenue, 477 U.S. 1, 7-8
(1986); McLeod v. J.E. Dilworth CO., 322 U.S. 327, 330
(1944). Of particular relevance here, the decision to vest
Congress with exclusive power over Indian affairs
constituted a deliberate departure from the arrangement
under the Articles of Confederation, which had sought to
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11

divide authority over that subject between Congress and
the States.
The Articles of Confederation had granted Congress
"the sole and exclusive right and power * * * of
regulating the trade and managing all affairs with the
lndians"; but that grant of authority excepted Indians who
were "members of any of the States," and it was subject to
a proviso "that, the legislative right of any State within its
own limits be not infringed or violated." Art. IX. James
Madison explained that that ambiguous reservation of
authority to the States was an "endeavor to accomplish
impossibilities." because it sought "to reconcile a partial
sovereignty in the Union, with complete sovereignty in
the States." The Federalist No. 42, at 269 (C. Rossiter ed.
1961 ). The division of authority also proved unsatisfactory
in practical operation, because the proviso was relied upon
by Georgia and North Carolina as authority for them to
make treaties with the Indians regarding their land and
other objects, and thereby "to annul the power itself."
Worcester v. Georgia, 31 U.S. (6 Pet.) 515, 559 (1832).
In response to those difficulties-and to the resulting
potential for individual States to undermine the security of
the United States and their collective commitments to the
Indians  -a committee of the Continental Congress
submitted a report in August 1787, while the Con-
stitutional Convention was sitting. The committee
recommended that if the States did not cede the Indian
territory within their borders to the United States, they
should "accede to Congress's managing, exclusively, all
affairs with the Cherokees, Creeks, and other independent
tribes within the limits of said States, so that Congress in
either case may have the acknowledged power of
regulating trade, and making treaties with those tribes,
and of preventing on their lands, the intrusions of the
white people." 33 J. Continental Cong. 460 (1936); see

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12

Worcester, 31 U.S. (6 Pet.) at 559. The Framers embraced
the latter solution, and, "[w]ith the adoption of the
Constitution, Indian relations became the exclusive
province of federal law. " County of Oneida v. Oneida
Indian Nation, 470 U.S. 226, 234 (1985) (Oneida II).
Accordingly, the Constitution gives the President, with
the advice and consent of the Senate, the power to make
Treaties, including Treaties with the Indians (Art. II, 2,
Cl. 2); declares those Treaties to be "the supreme Law of
the Land" (Art. VI, Cl. 2); and vests in Congress, un-
encumbered by the reservations of state authority under
the Articles of Confederation, the power to regulate
commerce "with the Indian Tribes." 3  Moreover, the
parallel phrasing of the Indian and Foreign Commerce
Clauses-both referring to commerce "with" the Tribe or
Nation-confirms that the Framers contemplated the
continuation, through the national government, of
bilateral relations between the United States and the
Indian Tribes as distinct sovereign entities. Merrion v.
Jicarilla Apache Tribe, 455 U.S. 130, 159 & n.19 (1982).4
                        
___________________(footnotes)

3 See Oneida II, 470 U.S. at 234-235 n.4 ("Madison cited the
National Government's inability to control trade with the Indians as
one of the key deficiencies of the Articles of Confederation, and urged
adoption of the Indian Commerce Clause, Art. 1, 8, Cl. 3, that granted
Congress the power to regulate trade with the Indians."); Abel, The
Commerce Clause in the Constitutional Convention and the
Contemporary Comment, 25 Minn. L. Rev. 432,467-468 (1941).

4 See Worcester, 31 U.S. (6 Pet.) at 559 ("The constitution, by
declaring treaties already made, as well as those to be made, to be the
supreme law of the land, has adopted and sanctioned the previous
treaties with the Indian nations, and consequently, admits their rank
among those powers who are capable of making treaties."); see also
Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831) (Tribes are
"domestic dependent nations").

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13

     This Court's early decisions reflected the under-
     standing "that Indian tribes were wholly distinct nations
     within whose boundaries `the laws of [a State] can have no
     force,' " and with whom all intercourse was to be conducted
     by the United States. Mescalero Apache, 462 U.S. at 331
    (quoting Worcester, 31 U.S. (6 Pet.) at 560); see also
    Yakima, 502 U.S. at 257. Over time, that conception of
    exclusive  Indian sovereignty has given way to a
    recognition that, in light of the increasing interaction
    between and economic interdependence of) non-Indians
    and Indians, States should have some latitude to protect
    their valid interests when affected by activities in Indian
    country  Yakima, 502 U.S. at 257-258. Thus, the Court
     has recognized "the rights of States, absent a
     congressional prohibition, to exercise criminal (and,
    implicitly, civil) jurisdiction over non-Indians located on
    reservation lands," and to regulate their relations with
    Indians "unless the application of state laws `would
    interfere with reservation self-government or impair a
    right granted or reserved by federal law.' " Ibid. (quoting
    Organized Village of Kake v. Egan, 369 U.S. 60, 75
    (1962)).
     At the same time, this Court has adhered to the per se
    rule in the area of state taxation of Tribes and their
    members. Yakima, 502 U.S. at 258, 267; Cabazon, 480 U.S.
    at 215 n.17; Mescalero Apache, 411 U.S. at 148. The
    continuing immunity of Indians from state taxation in
    Indian country is rooted in the Constitution itself and in
    the tradition of relations with the Indian Tribes. Most
     significantly, the power to tax members of a political
    community is a core hallmark of sovereign authority.
    Direct state taxation of a Tribe or its members would
    impinge the Tribe's historic sovereignty, as reflected in
    the Constitution's grant of authority to Congress to
    regulate commerce "with the Indian Tribes," and in the

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14

exclusion of "Indians not taxed" from the enumeration
upon which the apportionment of Representatives and
direct taxes is based. Art.. I, 2, Cl. 3; id. Amend. XIV, 2.
Second, a State's power to tax could be abused to disrupt
the Indian sovereign's ability to govern itself:

In the area of state taxation, * * *, Chief Justice
Marshall's observation that "the power to tax involves
the power to destroy," McCulloch v. Maryland, 17
U.S. (4 Wheat. ) 316, 431 (1819), has counseled a more
categorical approach: "[A]bsent cession of jurisdiction
or other federal statutes permitting it," we have held,
a State is without. power to tax reservation lands and
reservation Indians.

Yakima, 502 U.S. at 258. Third, it is unnecessary for a
State to tax a Tribe or its members directly, because a
State can typically achieve its legitimate regulatory
objectives by imposing the tax upon the non-Indian
participants in the transaction, such as the non-Indian
purchasers of goods from reservation Indians. Thus, "the
federal tradition of' Indian immunity from state taxation is
very strong and * * * the state interest in taxation is
correspondingly weak. Accordingly, it is unnecessary to
rebalance these interests in every case. " Cabazon, 480
U.S. at .215 n.17.5 In the rare case where a sound reason

___________________(footnotes)

5 Claiming that the decision below imposes "a dramatic restriction
on state taxing authority" (Br. 14), the Commission argues that this
Court has abandoned the per se rule in favor of a "presumption" (Br. 19)
against state jurisdiction to impose direct taxes on Indians that may be
overcome by a "compelling" state interest (Br. 22). However, the cases
on which the Commission relies do not support that proposition, but
instead indicate that the per Se rule is "categorical," Yakima, 502 U.S.
at 258, and that the "presumption" against direct taxation of Indians in
Indian country may be overcome only by a showing of express
congressional authorization. See, e.g., Sac and Fox, 113 S. Ct. at 1989,
1990, 1993; Blackfeet Tribe, 471 U.S. at 765.

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15

exists for taxing a Tribe or its members directly, it is
reasonable to expect Congress to authorize such taxation.
See Oklahoma Tax Comm'n v. Citizen Band Potawatomi
Indian Tribe, 498 U.S. 505,514 (1991).
c. The (commission argues (Br. 14, 26) that the
application of the per se rule in this case "disregard[s]
economic realities" and allows the Chickasaw Nation to
exploit "an exemption from state taxation" (quoting
Colville, 447 U.S. at 155) by selling fuel tax-free to non-
Indian consumers, thereby drawing business from non-
Indian retailers and depriving Oklahoma of revenue.
However, to render fuel sold by Indian retailers to non-
Indians fully taxable, the State need only amend its fuel
tax law to place the legal incidence of its fuel tax not on
retailers, but on the ultimate purchasers. 6 Such a tax
would be analyzed under this Court's particularized
balancing inquiry, and, under Moe and Colville, there is
little doubt that it would be sustained. 7
The Commission also contends (Br. 30-31) that the per
se rule fosters ambiguity and invites "gamesmanship and

___________________(footnotes)

6 It is true that, in other contexts, the "practical operation" (Pet. Br.
31) of a tax is decisive. But the cases on which the Commission relies
did not involve the special considerations implicated by direct state
taxation of an Indian Tribe or its members. See Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274, 278-279 (1977) (tax on doing
business in State claimed to interfere with interstate commerce);
Detroit v. Murray Corp., 355 U.S. 489, 492-493 (1958) (tax on
government subcontractor claimed to infringe United States's
immunity from state taxation). Of course, where a tax does not fall
directly on Indians but instead is claimed to interfere indirectly with
tribal self-determination, the practical consequences of the tax are
highly pertinent. See, e.g., Milhelm Attea, 114 S. Ct. at 2035.
7 To comply with the per se rule, however, the Commission would
have to expand its exemption for Indian purchasers (which is now
limited to those who drive tribally owned vehicles (Pet. App. 12a) to
cover all tribal members.

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16

manipulation. " On the contrary, as this Court has
observed, that rule has the advantage of "practicality,"
because, by establishing categorically that congressional
authorization is necessary before a State may tax a Tribe
or its members, the rule sets a clear standard on which
both States and Tribes can rely. See Yakima, 502 U.S. at
267 (without a per se rule, "litigation would surely engulf
the States' annual assessment and taxation process, with
the validity of each levy dependent upon a multiplicity of
factors that vary from year to year, and from parcel to
parcel"). Indeed, the Commission's amici, who are eleven
States with large Indian populations, ask this Court to
reaffirm the per se rule, because it "provide[s] a
reasonably bright-line standard which * * * responds to
the need for substantial certainty as to the permissible
scope of state taxation authority." S.D. Amici Br. at 1-2.
Those eleven States have each taxed fuel sold by Indian
retailers to non-Indians, by placing the legal incidence of
those taxes either upstream (on the distributor) or
(Downstream (on the consumer) of the retailer. See Br. in
Opp. 5-6 & n.6.
3. The Commission also contends (Br. 33-39) that the
court of appeals erred in holding that the legal incidence of
Oklahomans fuel tax falls on the Indian retailer. Instead, it
claims that the tax falls either on the consumer (Br. 33),
or, as it argued in the lower courts, on the distributor (Br.
39). The court of appeals evaluated the State's fuel-tax
laws under the correct legal standard-the "fair inter-
pretation" standard of Chemehuevi-and the pertinent
issue therefore is whether that interpretation was
unreasonable. Haring v. Prosise, 462 U.S. 306, 314 n.8
( 1983); Butner v. United States, 440 U.S. 48, 58 (1979);
Propper v. Clark, 337 U.S. 472, 486-487 (1949). Although
Oklahoma's tax laws do not explicitly identify the party
who hears the legal incidence of the fuel tax, the court of

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17

appeals' holding that it falls on the retailer is the fairer
interpretation of those laws, and, in any event, is plainly
reasonable. 8
As the court of appeals recognized (Pet. App. 9a), the
fact that the Oklahoma tax code contains no explicit "pass-
through provision [] or collection requirement[]" does not
alone establish that the fuel tax falls on the retailer, as
opposed to the purchaser. Chemehuevi, 474 U.S. at 11.
However, the structure of that code confirms that the tax
is meant to fall on the retailer. The code requires that the
distributor remit to the State the amount of fuel taxes due.
Okla. Stat. Ann. tit. 68,  505(B)-(C). However, the code
requires the retailer to pay to the distributor all taxes
due, id.  505(E), and provides that fuel taxes "remitted by
a distributor on behalf of a licensed retailer * * * that
are subsequently determined to be uncollectible by the
distributor may be credited against subsequent motor fuel
tax liability imposed by law upon such distributor." Id.
505(C) (emphasis added). Thus, as the court of appeals
noted, the State makes the distributor a mere "transmittal
agent for the taxes imposed on the retailer." Pet. App.
14a.9 The tax code contains, however, no comparable

___________________(footnotes)

8 The court of appeals nuanced analysis of legal incidence is
evidenced by the fact that, in the same opinion, it rejected the
Chickasaw Nation's argument that Oklahoma's beer tax falls by law on
the Indian retailers, holding instead that the beer tax falls on the
distributor. Pet. App. 7a-12a. See also Indian Country, U. S. A., 829
F.2d at 984 (holding that legal incidence of Oklahoma's sales tax falls
on consumer, and not, as Tribe claimed, on retailer).
9 Further evidence that, as between the distributor and the retailer,
the fuel tax is imposed at the retail level is supplied by (1) the fact that
sales between distributors are exempt from taxation (Okla. Stat. Ann.
tit. 68, 507) but sales from a distributor to a retailer are subject to
taxation ( id.  505 (E)); and (2) the fact that, for his services as a
collection agent, the distributor is authorized to retain 2.5% of the fuel

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18

provisions requiring the purchaser to pay to the retailer
all taxes due, or shielding retailers from liability where
payments due from an ultimate purchaser proved
uncollectable. The absence of such provisions strongly
indicates, as the court of appeals concluded, that the
legislature intended that the fuel tax be imposed at the
retail level. Compare Chemehuevi, 474 U.S. at 11-12
(noting that in Colville, legal incidence was on the
baser because "the statutory scheme required
consumers to pay the tax whenever the vendor was
untaxable," and that the California cigarette-tax scheme
at issue likewise "clearly seems to place on consumers the
obligation to pay the tax for all previously untaxed
cigarettes").
       That understanding is confirmed by contrasting Okla-
homa's motor-fuel tax laws to its cigarette-tax laws. The
cigarette tax is clearly imposed on the ultimate purchaser:
the tax code states that that tax is "levied upon the sale,
use, gift, possession, or consumption of cigarettes" within
the State. Okla. Stat. Ann. tit. 68,  302 (West 1992)
(emphasis added); see Pet. App. 13a. No comparable
language appears in the fuel-tax code, which instead im-
 poses an excise tax on the fuel at the time that it is first
sold by the distributor, whether or not it is ever sold to a
consumer. Id. 502 ("There is hereby levied an excise tax
* * * upon the sale of each and every gallon of gasoline
sold, or stored and distributed."). Furthermore, unlike the
cigarette-tax laws, which impose criminal liability on the
ultimate purchaser for possessing cigarettes on which the
tax has not been paid, id. 306, the fuel-tax laws impose no
liability of any kind on a consumer for the purchase,
possession, or use of untaxed fuel. However, the fuel-tax

___________________(footnotes)

taxes he collects (id.  502, 506A) but the code authorizes no such
recompense for the retailer.

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19

laws do make it unlawful for the distributor or the retailer
"to sell or offer for sale in this state, motor fuel or diesel
fuel while delinquent in the payment of any excise tax due
the state" Id.  505(C). The court of appeals thus
reasonably concluded that the incidence of the fuel tax
falls upon the retailer. Compare Gurley v. Rhoden, 421
U.S. 200, 205 (1975) (legal incidence of federal gasoline tax
falls on producer because "if the producer does not pay the
tax, the Government cannot collect it from his vendees'').10
The commission argues (Br. 36) that the tax code's
exempt ions for sales to various classes of fuel purchasers 11
establish that the tax is imposed on the purchaser.
However, the existence of such exemptions does not
establish the incidence of that tax. Exemptions routinely
exist in tax codes in which the incidence of the tax falls
earlier in the distribution chain, including the codes of
States that impose a fuel tax on the distributor. See Br. in
Opp. 5-6 n.5; e.g., Ariz. Rev. Stat. Ann. $$28-1501, 28-1520
(West Supp. 1993); Cal. Rev. & Tax. Code Ann. $$7351,7401
(West Supp. 1994); Mont. Code Ann. $$15-70-204, 15-70-221
(1993); N.Y. Tax Law 284, 289-c (McKinney 1986); N.C.
Gen. Stat.  105-434(a), 105-439 (1994); see also Gurley, 421
U.S. at 205-.206 (existence of exemptions for certain
purchasers in federal gasoline tax statute "is not proof
that Congress laid the tax upon the purchaser-consumer").
Such exemptions ensure that persons earlier in the

___________________(footnotes)

10 Contrary to the Commission's claim that the retailer's duty to pay
taxes is unenforceable (Br. 38 n.20), the tax code confers upon the
Commission itself the power "to enforce the provisions of this Code and
to promulgate any reasonable rules and regulations with respect
thereto." Okla. Stat. Ann. tit. 68, 203 (West 1992).
11 Exempt purchasers include the United States (Okla. Stat. Ann.
tit. 68,  501(B), 502.2(B),, 502.3(B),, 502.4(B),, 502.5(B),, 502.6(B),,
502.7(B), farmers (id.  509(B)), specified aircraft (id.  508(a), passenger
buses or coaches ( id.  509.2(E)), and fire departments (id.  527).

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distribution chain do not need to charge the protected
purchasers a price that includes a premium reflecting all
or some of the State's fuel tax. See, e.g., Okla. Stat. Ann.
tit. 68,  509(e)-(f) and (j) ((distributor may deduct amount of
fuel sold to exempted agricultural purchasers from amount
upon which it must remit tax to State).12
     4. The Commission's final claim (Br. 23-24) is that the
Hayden-Cartwright Act, 4 U.S.C. 104, authorizes direct
state taxation of retail sales of fuel by Indian Tribes and
tribal members in Indian country. See also S.D. Amici Br.
4-23. The Commission did not raise that claim below, see
Pet. App. 16a n.4, or present it in the petition for
certiorari, which instead posed the question whether
imposition of the State's motor fuel tax on fuel sold by a
Tribe is "precluded" by "principles of federal pre-emption

___________________(footnotes)

12 The phrasing of two code provisions could be read to imply that
the consumer will bear the fuel tax. See Okla. Stat. Ann. tit. 68, 
501 (C) ("Nothing in this section shall require a distributor, dealer or
retailer to collect taxes levied by this act or remit taxes to the state.");
id. 509(A) ("Every person actually engaged in farming * * * who
has obtained an agricultural exemption permit * * * may purchase
such motor fuel without paying the tax."). But no other provision is
phrased in that fashion, and another carries the contrary implication by
describing an exemption for aircraft fuel as one to which the distributor
is "entitled." Id.  508(a). In any event, the fact that the code obliges

the retailer to pay the tax, and protects the distributor from a
nonpaying retailer while containing no like provisions governing the
retailer-to-purchaser step in the distribution chain, is far more powerful
evidence of the state legislature's intent regarding legal incidence than
the wording of those two provisions. The Commission also relies upon
two  provisions (id.  501(B), 509.2(C)) that render liable a fuel user who
fraudulently buys diesel fuel claiming a use exemption and then uses
the fuel for a nonexempt purpose. Br. 36. But the imposition of liability
on a person who fraudulently claims an exemption does not speak to the
issue of whether consumers in general bear the tax, but, rather, merely
reflects that the party responsible for defrauding the State of that tax is
properly responsible for reimbursing the State for the lost revenue.

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21

or Indian sovereignty." Pet. I. Review is therefore
unwarranted. See Izumi Seimitsu Kogyo Kabushiki
Kaisha v. U.S. Philips Corp., 114 S. Ct. 425,427 (1993) (per
curiam ) (Court will consider issues first raised in a merits
brief "only in the most exceptional cases"); Berkemer v.
McCarty, V, 468 U.S. 420,443 n.38 (1984).
In any event, the Hayden-Cartwright Act does not make
it "unmistakably clear," Yakima, 502 U.S. at 258;
Cabazon, 480 U.S. at 215 n.17, that Congress intended to
abrogate the traditional immunity of tribal retailers from
state taxation. The Act provides, in pertinent part:

All taxes levied by any State, Territory, or the
District of Columbia upon, with respect to, or
measured by, sales, purchases, storage, or use of
gasoline or other motor vehicle fuels may be levied, in
the same manner and to the same extent, with respect
to such fuels when sold by or through post exchanges,
ship stores, ship service stores, commissaries, filling
stations, licensed traders, and other similar agencies,
located on United States military or other
reservations, when such fuels are not for the exclusive
use of the? United States. Such taxes, so levied, shall
be paid to the proper taxing authority of the State,
Territory, or the District of Columbia, within whose
borders the reservation affected may be located.

4 U.S.C. 104(a). The Act does not mention Indians. As a
result, it does not make clear whether the expression
"other reservations" applies to Indian reservations, or
merely to other reserved land (e.g., national parks or
national forests) in the control of the federal government.
See White Mountain Apache, 448 U.S. at 151-152 n.16
(leaving this question open). The absence of any express
reference to Indian reservations is notable, because the
Act was added as a floor amendment in the Senate in 1936

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22

to An Act to Amend the Federal Aid Highway Act, 49 Stat.
1519-1522, and the highway statute specifically refers
elsewhere to "Indian reservations]" and "Indian lands."
See  6, 49 Stat. 1521 (providing for construction and
improvement of "Indian reservation roads");  3, 49 Stat.
1520 (providing for construction and maintenance of roads
"through unappropriated or unreserved public lands,
nontaxable Indian lands, or other Federal reservations
other than forest reservations'').13 Moreover, even if we
assume, arguendo, that the Act applies to sales on Indian
reservations (and thus implicitly elsewhere within Indian
country), the Act does not clearly state that it applies to
sales on reservations by Indian retailers, or distinguished
from non-Indian "licensed traders" and "filling stations."
Application of the Hayden-Cartwright Act to fuel sold
by Indian retailers on Indian reservations does not
necessarily follow from the purpose of the highway statute
in which it was enacted. That statute was passed in 1936
to assist States in highway building programs by
providing matching funds. The Hayden-Cartwright Act
was added to the legislation to respond to the practice of
motorists who purchased gas on federal reservations,
thereby escaping state gas taxes. See 80 Cong. Rec. 6913
(1936) (Sen. Hayden). But there was no evidence before
Congress, and there were no assertions by legislators,
that tax-exempt sales by Indians on Indian reservations
had lured customers from non-Indian retailers. Nor does
the legislative history contain any discussion of Indians'
traditional immunity from direct state taxation. See id. at
6907-6914, 8698-8705. 1 t is thus most likely that, in passing

___________________(footnotes)

13 Compare 80 Cong. Rec. 6908 ( 1936) (Sen. Hayden, sponsor of bill,
describes Section 6 as relating to "Indian reservation roads") with id. at
6913 (1936) (Sen. Hayden describes Section 10 as relating to
"Government reservations not for governmental use").

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23

the Act, Congress did not consider at all its effect on that
immunity.14  Because it is not "unmistakably clear"
(Yakima, 502 U.S. at 258) that Congress intended to
abrogate that immunity by passing the Hayden-Cart-
wright Act, the Commission's reliance on the Act as a
basis for taxing Indian retailers is misplaced. See also

___________________(footnotes)

14 The Commission (Br. 23-24) and its amici (S.D. Amici Br. 5-6.)
rely on a 1940 opinion of Solicitor of the Interior Margold taking the
position that the Act authorizes a State to tax sales of gasoline through
commissaries on an Indian reservation. See Application of Federal and
State Taxes to Activities of Menominee Indian Mills, 57 Interior Dec.
129, 138-140 (1940). That opinion was noted, with neither approval nor
disapproval, by Felix Cohen in his treatise on Indian law. See F.
Cohen, Handbook of Federal Indian Law 264 (1942); see also R.
Strickland, et al., Felix Cohen's Handbook of Federal Indian Law 412
n.62 (1982); compare S.D. Amici Br. 6 n.2 (claiming that Cohen treatise
"agreed" with Solicitor Margold's conclusion). But Solicitor Margold's
opinion began by noting that "[i]t is not clear * * * whether the
reference to reservations includes Indian reservations. " 57 Interior
Dec. at 138-139, His conclusion that it did was based on "indications" in
the legislative history that, "while slight," suggested that the Act did
so apply. Id. at 139. Those "indications" were that Section 6 of the
highway statute discusses roadways on Indian reservations, suggesting
that "attention was called in the consideration of the act to Indian
reservations," and that the Act's "reference to `licensed traders' is
particularly suggestive of Indian reservations." Ibid. But as we have
noted, the absence of a specific reference to Indian reservations in
Section 10 (the Hayden-Cartwright Act), in light of the express
references to "Indian reservation[s]" and to "Indian lands" elsewhere in
the highway statute, may alternatively be viewed as negatively
implying that Section 10 does not include Indian reservations. And the
term "licensed traders," a term historically associated with non-Indians
who trade with Indians, see 16 U.S.C. 261, begs the question of whether
the Act was meant to apply to Indian retailers of motor fuel. Given
Solicitor Margold's view that the Act was not "clear" and his reliance
on "slight" indications in legislative history, it is unlikely that he
would have concluded that the Act made it "unmistakably clear" that it
abrogated Indian immunity from direct state taxation.

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24

South Dakota v. Bourland, 113 S. Ct. 2309, 2316 (1993)
("statutes are to be construed liberally in favor of the
Indians, with ambiguous provisions interpreted to their
benefit") (quoting Yakima, 502 U.S. at 269); Blackfeet
Tribe, 471 U.S. at 766; McClanahan, 411 U.S. at 174;
Carpenter v. Shaw, 280 U.S. 363,367 (1930). 15

II. OKLAHOMA MAY NOT APPLY ITS INCOME TAX
TO MEMBERS OF THE CHICKASAW NATION
WHO WORK FOR THE NATION BUT WHO LIVE
OUTSIDE OF INDIAN COUNTRY

1. Petitioner also argues (Br. 39-47) that the court of
appeals erred in holding that the Chickasaw Nation's
treaty with the United States bars Oklahoma from taxing
the income of tribal members who work for the Tribe but
live outside Indian country. That treaty provides in
pertinent part:

The Government and the people of the United States
are hereby obliged to secure to the said [Chickasaw]
Nation of Red People the jurisdiction and government
of all the persons and property that may be within
their limits west, so that no Territory or State shall
ever have a right to pass laws for the government of
the [Chickasaw] Nation of Red People and their
descendants; and that no part of the land granted them

___________________(footnotes)

15 Because Congress has not granted authorization, the
Commission's additional claim (Br. 32-33) that it is authorized to tax
Indian consumers directly for purchasing fuel lacks merit. The
Commission relies (Br. 33) on this Court's statement that an automobile
registration tax tailored to capture the proportion of automobile use
occurring off-reservation "might be a different case" from those in
which a direct tax was improperly applied to Indians' on-reservation
activity, see Sac and Fox, 113 S. Ct. at 1993. However, as in Sac and
Fox, Oklahoma has not undertaken such tailoring, and it is therefore
appropriate, as in that case, to "decline to treat the case as if it had."
Ibid .

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shall ever be embraced in any Territory or State; but
the U.S. shall forever secure said [Chickasaw] Nation
from, and against, all laws except such as from time to
time may be enacted in their own National Councils,
not inconsistent with the Constitution, Treaties, and
Laws of the United States; and except such as may,
and which have been enacted by Congress, to the
extent that Congress under the Constitution are
required to exercise a legislation over Indian Affairs.

Treaty of Dancing Rabbit Creek, Sept. 27, 1830, Art. IV, 7
Stat. 333. The treaty was entered into with the Choctaw
Indians, but in 1837, the Choctaw consented to the
formation of a district within their reservation for the
Chickasaw, "to be held on the same terms that the
Choctaws now hold it," Treaty of Jan. 17, 1837, Art. I, 11
Stat. 573, thereby making the Chickasaw beneficiaries of
the treaty. See ibid. The treaty was reaffirmed in 1866,
see Treaty of Apr. 28, 1866, Arts. X, XLV, 14 Stat. 774,
779-780, and again in 1871, see 25 U.S.C. 71. Pet. App. 29a
& n.l0.
The court of appeals correctly read the Treaty of
Dancing Rabbit Creek to preclude Oklahoma from taxing
the income of member-employees of the Chickasaw Nation,
regardless whether they reside in Indian country. As the
court of appeals observed (Pet. App. 29a-30a), that treaty
confers upon the Chickasaw Nation unusually explicit and
broad immunity from the operation of state laws. Compare
Sac and Fox, 113 S. Ct. at 1988 (terms of Sac and Fox
Treaty); McClanahan., 411 U.S. at 174 (terms of Navajo
Treaty); see Pet. App. 27a-28a. In particular, unlike most
other Indian treaties, the Treaty of Dancing Rabbit Creek
provides unqualified protection against enactment of state
"laws for the government of the [Chickasaw] Nation," and
provides that that protection extends to the "descendants"

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of the Nation. As the Chickasaw Nation has noted (Br. in
Opp. 28), only the Creek Nation and the Seminole Nation-
two other of the Five Civilized Tribes-have similarly
capacious treaty guarantees.
The provisions of the Treaty of Dancing Rabbit Creek
reflect the unusual alliance between the Choctaw and the
United States in the early 19th century, and the political
importance to the United States of inducing the Choctaw
to assent to their removal westward. The Choctaw had
fought with distinction alongside the United States in
battles against the Creek Indians in 1813 and 1814, and
with General Andrew Jackson in the Battle of New
Orleans in 1814. See Arthur H. DeRosier, Jr., The
Removal of the Choctaw Indians 35-36 (1970) [hereinafter
DeRosier]; compare Oneida II, 470 U.S. at 231. Moreover,
peaceful removal of the Choctaw west had long been sought
by political figures who viewed such removal as a critical
impetus to "force other Indian groups to consider their
own removal to the West." DeRosier at 46 (because the
Choctaw were "a large tribe that was known for its high
level of economic, social, and political development, [its]
successful removal * * * would be prestigious and would
force other Indian groups to consider their own removal to
the West"). The Choctaw had assented to one earlier
removal from some of their lands in Mississippi to what is
now western Arkansas. See Treaty of Oct. 18, 1820, 7 Stat.
210. However, in 1828, a bill forcibly to remove the
Choctaw further west had failed in Congress, and, in 1830,
now-President Jackson authorized negotiations with the
Choctaw for their removal to lands west of the Mississippi
River. DeRosier at 97-112. President Jackson told
Congress in 1829 that he would "guarantee[]" land for the
Choctaw "for as long as they occupied the land," that the
land would be "free of white men except for a few soldiers,"
and that "removal to such a Utopia would be voluntary, but

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if the Indians remained east of the Mississippi River, they
would be subject, to the laws of the several states." Id. at
104. The ensuing negotiations resulted in the Treaty of
Dancing Rabbit Creek. Id. at 119.
In light of the treaty's broad language and the events
preceding it, a state law that taxes the wages the Tribe
pays to a member-employee (a "descendant" of the Tribe) is
properly regarded as a prohibited "law[] for the
government of the [Chickasaw] Nation." That under-
standing is reinforced by the precept that a treaty is to be
read as the Indian signatories would have understood it,
with "[ d ]oubtful expressions * * * resolved in favor of the
weak and defenseless people who are the wards of the
nation, dependent upon its protection and good faith."
McClanahan, 411 U.S. at 174. The Commission argues
(Br. 42) that an income tax law would not have been
perceived as a law "for the government" of the Chickasaw
Nation, because imposition of such a tax "displaces [no]
mechanisms of tribal government." But the treaty does
not bar only those state laws that disrupt or rearrange
tribal government; it bars all laws "for the government of"
the Tribe's members. Given the absence of any role for the
State over tribal members at the time of the treaty, a law
that taxed a member for wages paid by the Tribe on tribal
land undoubtedly would have been so regarded. See
Choctaw Nation v. Oklahoma, 397 U.S. 620,635 (1970).]'

___________________(footnotes)

16 In any event, even if the Commission were correct that the treaty
protected members only from laws that "displace[] the mechanisms of
tribal government" (Br. 42), and even if the tribal signatories are
assumed to have shared in that view, state tax laws at the time were
understood to have just that effect. See Dobbins v. Commissioners of
Erie County, 41 U.S. (16 Pet.) 434, 447-449 (1842) (holding, under then-
extant federal instrumentality doctrine, that salaries of federal
employees were exempt from state taxation, because such taxation
constituted interference with federal government).

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The Commission also argues (Br. 45-47) that
Oklahoma's admission into the Union-which overrode the
treaty guarantee that "no part of the land granted [to the
Chickasaw] shall ever be embraced in any * * * State"-
necessarily also overrode the separate guarantee that "no
* * * State shall ever have a right to pass laws for the
government" of the Chickasaw Nation.  But when
Congress admitted Oklahoma, it explicitly provided that
"[n]othing contained in [the Oklahoma Constitution] shall
be construed to limit or impair the rights of any person or
property pertaining to the Indians of said Territories."
Oklahoma Enabling Act, ch. 3335, 1,34 Stat. 267-268; Pet.
App. 29a. See United States v. Dion, 476 U.S. 734, 738-739
(1986) ("We have required that Congress' intention to
abrogate Indian treaty rights be clear and plain," and
"[a]bsent explicit statutory language, we have been
extremely reluctant to find congressional abrogation.").
The broad language of the treaty does not, of course,
deprive Oklahoma of all power over the activities of
Chickasaw Indians in the State. Where the conduct of the
Indians occurs outside of Indian country, Oklahoma of
course remains free to regulate that conduct. 17 It may be
that a State would have some authority to act with respect
to conduct occurring within Indian country but having
substantial effects outside, perhaps subject to the
particularized balancing inquiry utilized by this Court.
But a tribal member's receipt of wages from the
Chickasaw Nation for work performed for the Tribe within
its trust lands does not have any such effect. While
Oklahoma may assess its residents for the privilege of

___________________(footnotes)

17 Oklahoma has not, acquired general civil or criminal jurisdiction
over matters involving Indians in Indian country under Public Law 280
(Pub. L. No. 83-280),67 Stat. 588, codified as amended at 25 U.S.C. 1321
et seq. Potawatomi Tribe, 498 U.S. at 513.

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enjoying the services the State provides to them, a tax
upon the wages of a Chickasaw Nation member-employee
(whatever the amount of those wages) is in no way tailored
to reflect the costs imposed upon Oklahoma by the fact
that that tribal member resides within the State. Cf. Sac
and For, 113 S. Ct. at 1993 (state car registration tax
tailored to capture the off-reservation effects of automobile
use might be permissible, but a blanket tax is not).
Oklahoma may therefore not assert that, solely by living
outside Indian country, a Chickasaw Nation descendant
who works for the Tribe categorically waives his right
under the treaty to be free from state income tax laws.
2. Apart from the distinct immunity from state law
conferred on the Chickasaw Nation by the treaty, tribal
members have the right to "make their own laws and be
ruled by them." See, e.g., White Mountain Apache, 448
U.S. at 142 (quoting Williams v. Lee, 358 U.S. 217, 220
(1959)). This Court has left open the question whether a
Tribe's right to self-governance operates "independently
of its territorial jurisdiction to pre-empt the State's
ability to tax income earned from work performed for the
Tribe itself when the employee does not reside in Indian
country," Sac and Fox, 113 S. Ct. at 1992, and, if so,
whether such preemption exists in all cases, or depends
upon a "particularized inquiry into the nature of the state,
federal, and tribal interests at stake." Mescalero Apache
Tribe, 462 U.S. at 333. The court of appeals took the
position that a particularized showing would be necessary
to establish tax immunity, but, because of its reliance on
the treaty, it did not consider the various factors germane
to that inquiry. Nor does the record in this case contain
the facts necessary for such an inquiry. Should the Court
hold that the treaty does not resolve the issue of whether
the State may tax the income of nonresident member-
employees of the Tribe, a remand would be appropriate to

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determine whether imposition of that tax would infringe
on tribal self-government.]*

___________________(footnotes)

18 The circumstances of this case suggest the basis for a substantial
argument that the tax infringes on the Tribe's interest in self-
government. The income in question is paid by the Tribe to its members
as compensation for work performed for the Tribe itself, and it appears
that much of that income is received in return for services rendered at
tribal headquarters or in connection with tribal administration. See
Resp. First Amended Compl. Par. 36 (tribal employees work, inter alia, at
tribal headquarters, health center, office of environmental health,
central business services office, utility authority, and gaming
commission office). Hence, it seems likely that the tax burdens tribal
administration by increasing the cost to the Tribe of administering its
affairs, in areas subject to tribal jurisdiction. The tax may also impede
the Tribe's ability to collect taxes from its employee-members on the
income it has paid them, or, alternatively, to compete for employees.
That is because Oklahoma, in calculating a resident's income taxes
due, does not credit the resident for income taxes paid to a sovereign
Tribe, even though the State in other contexts takes steps to avoid
double-taxation. See, e.g., Okla. Stat. Ann. tit. 68,  2358(A)(4) (1992)
(resident's income earned in other States is not included in resident's
income tax base); see also 2 J. Hellerstein & W. Hellerstein, State
Taxation Par. 20.04[2], at 20-14 (1992) ("To avoid double taxation of their
residents' income that is attributable to and taxed in other States, all
States with broad-based income taxes provide a credit for taxes paid by
their residents to other States.").

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       CONCLUSION

The judgment of the court of appeals should be affirmed

Respectfully submitted.

DREW S. DAYS, III
Solicitor General

LOIS J. SCHIFFER
Assistant Attorney

EDWIN S. KNEEDLER
General
Deputy Solicitor General

PAUL A. ENGELMAYER
Assistant to the Solicitor General

ELIZABETH ANN PETERSON
Attorney

MARCH  1995