useful to st set out a road map of where i plan to go st we'll look at the state cigarette excise tax issues and see the big sandy doesn't engage in a single taxable transaction because big fan the only purchases items on its reservation and sells them to indian tribes and tribal members on their reservations and supreme court has repeatedly held but none of these transactions are taxable and that's to look at whether certain state regulations apply the big sandy's transaction and show that the state doesn't have the authority to regulate big sandy as an indian trader partly because big sandy's transactions are taxed by the state and partly because even if the cigarettes were violently taxed the regulations dictate the price of the goods purchased reservation indians and because they aren't the right the regulations are reasonably tailored to help collect any valid tax and then finally will look at the jurisdictional issue and show that big fa from the tax injunction act because it's an indian tribe chartered under section seventeen of the indian reorganization act so the st subject is cigarette tax preemption and tax preemptions important to start with not just because it's a claim in this case and big sandy needs to know what it has to do is to comply with state and federal law but also because the state authority to tax on law its authority to regulate in these circumstances the authority to tax is key under federal law because the supreme court in mill helm allowed states to regulate indian traders and that's what big sandy is only where the state regulation is reasonably tailored to assist with the collection of violent taxes from non indians so the question of whether there are any valid taxes connected with the person being regulated is a key part of judging whether the state regulations are preempted and then under state law taxability is key to the directory statute in particular which according to the attorney general doesn't apply to tax exempt cigarettes so it's important to see if any cigarettes big sandy deals with our tax the bill and the basic preemption rules that we're dealing with here are these two rules st tax is preempted by per se rule that categorically bars taxes imposed on trying to control their reservations and nd the indian trader statutes preempt any tax imposed on indian traders for trading with indians on the reservation state tax is imposed on anyone except the consumer and then only if the consumers taxable only the retailer is required to collect and remit any tax that's imposed on the consumer there's no preconception before the final retail sale so what's the demonstrates to us is that the state system allows the products to reach tax exempt consumers on the reservation without having been taxed already and generally without having been blocked for breaching the reservation altogether in other words the kind of tax system that california has as colleville put it cigarettes in transit to a reservation are as exempt from state taxation and for big sandy what the system means is that under state law within the limits of the state's authority in indian country wholesale distributors like big sandy are able to distribute products for the reservation without incurring any tax obligation which is all shifted to the retailer and the consumer but because of its status as an indian trader an indian trader is anybody whether indian or non indian who makes sales to indians or indian tribes on their own reservations right so big  so its product to indian tribes and tribal member owned entities on the reservations of those tribes and those tribal members and that makes it an indian trader and that's what exams and a big fancy from any tax on those sales there is also a rule that exempts those buyers from tax when they purchase those cigarettes and that's the per se rule that says that states can't tax indians and indian tribes and tribal members when they're on those reservations from both sides the buyer and the seller those transactions  the significance is that your argument it's irrelevant that the supreme court in the central machinery case said that the fact that a person who is an indian trader does or the statutes are still on the books this is what the central machinery case says as long as those statutes are on the books they have preemptive force just as much as they ever  state's directory of approved brands it's meant to enforce manufacturers compliance with m s a and escrow fees the rule in california according to the attorney general in its briefs is that cigarettes the state cannot tax are excluded from the escrow on directory statutes so if big sandy handles only on tax egress then it's handling only cigarettes that aren't subject to the directory statute none of our cigarettes while they are in big sandy's possession therefore they don't have to be on the state's directory and what that means is that it's the retailers responsibility to make sure that they stock some tax stamped directory listed cigarettes if they want to make that kind of sale but big sandy is strictly in the business of supplying the other kind of cigarettes for people who are allowed under federal law to buy them you're operating outside the reservation she is still subject to nondiscriminatory rule you can see that in no home where all the cigarette wholesalers were operating off reservations and yet the supreme court still held the the state laws but applied to them made sure that those state don't think it addressed the idea from from ill health that an indian trader even when it's off the reservation is still protected by this preemptive federal law  i confess i didn't hear completely what you're saying but yes it's the fact that they're making sales to indians on their own reservations that makes them an indian trader and during the course of making that sale state laws preempted under the indian trade turn to the jurisdiction issue because i am just eleven quick thing about it and that's i guess that a tribe like big sandy that reorganizes under section seventeen charter section seventeen corporation i think i think i can answer it this way section seventeen corporation is the only corporation in the world that is formed under a federal law designed to reorganize indian tribes part of my answer to that is no that the tribal government isn't the same as the section seventeen tribe but they're but neither of them is separate from the tribe the tribe it's like the tribe has has these two faces it has two structures two forms section seventeen corp is the face of the tribe the tribe in its governmental capacity is another face of the tribe both of them are the held that for purposes of immunity from the state taxes it doesn't matter what form the tribe operates in it's governmental capacity or a section seven hundred corporation a sabbatical or a decision ok now you can hear anyone else hear me i can hear you ok i guess i should talk so that we can see if you can hear me again i can hear everyone i was saying but sure she looks frozen now too might be  all right sure well i'll be addressing in the twelve b six claims co counsel will address that twelve to one in tax injunction act claims a look to hand off to him in about five minutes may have please the court they've reached the real purchasing tribes reservation then you've just got what is effectively a bad version of mel you have an indian trader selling on a reservation question  is whether or not the state has the power to regulate the transaction the court says yes it's allowed to regulate the tribal wholesaler because of the state's interest in the underlying transaction but the relationship between the on reservation seller and it's a vengeful customer is sufficiently strong that the state can regulate up and down the distribution chain including at the wholesale level so and that's specifically addressing the question of you've got a federally licensed indian trader selling to a tribe here you've got a much weaker case because wall mister hennessy refers to them as it is an indian trader this is not a federally licensed indian trader they don't have any permanent relationship with the reservations that they're selling and i think it goes to the question of how narrow it is the premise on which vs series claim is based because effectively we're seeing here is operating on the very reservation the conduct that is occurring on the receiving reservation is that when b s ari makes the sale loads it onto a truck instead of writing origin it writes f o b destination and according to big sandy that becomes an reservation sale on the distant reservation and that it somehow able to move those cigarettes all the way there without being subject to state laws at all which is the other piece of the of your question that i want to speak to which is we've got a whole slew of cases that speak to the state's power to regulate these what happens when the cigarettes arrive on that distant reservation we think we win under mill home or colleville or muskogee creek which is almost exactly the same case a decided of the same procedural posture but we also say that the question that they're asking is far too narrow a question of whether or not the state loses right or should be enjoying from being able to enforce its laws  looking only on the receiving purchasing tribe's reservation and it naturally and unnecessarily limits the state's power of the state's seizure power is extremely strong when the cigarettes aren't anywhere aren't in indian country aren't b s areas indian country aren't in the receiving purchasing tribes indian country when they're just on the highways you've got a very local tribal interest in a very exempt from tax like the state doesn't take a position on the tax ability of any of sarees sales we agree that under check us a state can't tax cigarettes sold indian reservation to tribes or tribal members for their use and we say that under the state's scheme a license distributor would be able to complete the transaction the big sandy is describing to a on reservation indians in an exam to transaction but the states argument is we we have regulatory power over this transaction the fact that if they were a license distributor and they were selling within the lawful chain that they would then be able to distribute these cigarettes and exam to transaction tells us nothing about whether or not big c n d owes a tax on the transaction it's not a license distributor it's not sourcing that cigarettes from a licensed manufacturer it's not selling to licensed individuals so whether or not big c n d the tax the manufacturer owes the tax the tax owed on the big c and a reservation requires a particular fact as to that transaction the state's main request is you need to be licensed you need to be participating in the lawful chain so that we can see who you are see who you're selling to see what those sales look like and then only if the sales are taxable to collect the tax so let me also briefly speak to the statement that the state doesn't enforce the complementary act if the cigarettes are exempt that is incorrect the complimentary act attaches based on the promise made by the manufacturer if the manufacturer agrees that whatever i owe in ask ro i will pay the state that's the promise that is provided to the state if that manufacturer can't make even that promise then the cigarettes are contraband for sale to anyone not just to indian traders to there is no license to manufacture a license distributor who can distribute t he cigarettes in the chain just like if someone has it you know it's full of black market cigarettes that it wants to sell it's not able to bring those into the california market and the purpose of the complimentary statute is to extract the escrow fees when they're due just like the state regulatory scheme is built around collecting escrow excise tax any of the shipments that b s sorry is shipping trucking across the state all of those are subject to see a seizure under revenue code thirty thousand four hundred and thirty six thank you all right as your honor what it is to allow the tribe to create a normal business corporation take advantage of the same corporate structures but other entities can take advantage of and what does that mean that means separation from the govern tribe that means limits of what ability that means you know a separate juridical person the corporations it's own emergency it's not the same as the other methods and the basic reason why is that indian tribes could not get credit at the time and i think that logically follows your honor but i don't i'm not aware of a specific case addressing that point frankly there are very few cases even discussing section seventeen at all but what is clear i think is the cited a case like that in our brief might be the lineen case and i know to the extent that there are cases that say well i guess just like mister von lone felt  allowing the section seventeen corporation to be separate from the tribal government so that they could each separately waive their sovereign immunity i mean that inherently requires the it tells you district court brief you can find this in the record at page eighty three that the escrow statute and the complimentary statute both make clear that tax exempt transactions are beyond the intended reach of both statutes or phrasing there  because they use different they call the statutes by different names but that is what they're saying and they need to be bound to that position at this point having taken that position in the lower court and using it to convince the court to dismiss our complaint and then muskogee and for an illustration of that you can look at the indian nation versus cool case where that was in new york and a few years after mill hell new york abolished the regulation that was approved and no help for whatever reason and and and local officials trying to enforce cigarette sales regulations against wholesalers as if the law had stayed the same in new york and the new york court said no because the law is different because those specialized restrictions specialized regulations that were approved the mill home are no longer in place your attempt to enforce regulations against the wholesale are are now preempted by federal law because of the difference in in state law and california now is in the position that new york was for a brief time in the gould case  at there is no connection between a wholesaler like big sandy and the transaction that might ultimately be talks about and it's that lack of a direct connection that means there is no that th regulation on a wholesaler like big sandy is can't be it's impossible to tailor that to satisfy the mill home standard thank you counsel thank you thank you all for your arguments in your briefing and very helpful to the court and the case just argue will be submitted for decision and we will be in recess for five min