b'Payment of Back Wages to Alien Physicians\nHired Under the H-1B Visa Program\nThe statute authorizing the H-1B visa program does not waive the federal government\xe2\x80\x99s sovereign\nimmunity. Therefore, an administrative award of back wages to alien physicians hired by the\nDepartment of Veterans Affairs under the program is barred by sovereign immunity.\n\nFebruary 11, 2008\n\nMEMORANDUM OPINION FOR THE GENERAL COUNSEL\nDEPARTMENT OF VETERANS AFFAIRS\nAND THE SOLICITOR\nDEPARTMENT OF LABOR\nThe Department of Labor (\xe2\x80\x9cDOL\xe2\x80\x9d) has determined that the Department of\nVeterans Affairs (\xe2\x80\x9cVA\xe2\x80\x9d) failed to pay the required prevailing wage to eleven alien\nphysicians employed by VA hospitals pursuant to the H-1B visa program. VA\nrequested our opinion regarding its statutory authority to pay back wages pursuant\nto the DOL order. DOL also provided its views on this issue. Before resolving the\nmerits of this dispute, we requested additional views from both agencies regarding\nwhether sovereign immunity bars the award of such monetary relief in an administrative proceeding. We now conclude that the statute authorizing the H-1B\nprogram does not waive the federal government\xe2\x80\x99s sovereign immunity, and the\naward of back wages is therefore barred.\nI.\nThe H-1B visa program (which takes its name from the paragraph of the Immigration and Nationality Act (\xe2\x80\x9cINA\xe2\x80\x9d) in which it is codified) allows aliens to enter the\nUnited States on a temporary basis to perform certain specialty occupations,\nincluding the practice of medicine. See 8 U.S.C. \xc2\xa7 1101(a)(15)(H)(i)(b) (2000). In\norder to obtain an H-1B visa, the alien\xe2\x80\x99s prospective \xe2\x80\x9cemployer\xe2\x80\x9d (a term not defined\nin the Act) must submit a \xe2\x80\x9clabor condition application\xe2\x80\x9d to the Secretary of Labor. As\npart of that application, the employer must agree to pay wages that are at least \xe2\x80\x9cthe\nactual wage level paid by the employer\xe2\x80\x9d to similarly situated employees or \xe2\x80\x9cthe\nprevailing wage level\xe2\x80\x9d in the area, whichever is greater. Id. \xc2\xa7 1182(n)(1)(A) (2000).\nThe INA charges the Secretary of Labor with investigating and resolving any\ncomplaints over the employer\xe2\x80\x99s compliance with those conditions. See id.\n\xc2\xa7 1182(n)(2)(A). Should the Secretary find, after a hearing, that \xe2\x80\x9can employer has\nnot paid wages at the wage level specified under the application,\xe2\x80\x9d then the Secretary\n\xe2\x80\x9cshall order the employer to provide for payment of such amounts of back pay as\nmay be required to comply.\xe2\x80\x9d Id. \xc2\xa7 1182(n)(2)(D).\nTwo VA hospitals submitted labor condition applications and hired eleven\nphysicians under the H-1B program. The hospitals set the physicians\xe2\x80\x99 pay based\n\n47\n\n\x0cOpinions of the Office of Legal Counsel in Volume 32\n\non VA\xe2\x80\x99s government pay scale. See 38 U.S.C. \xc2\xa7 7404(b) (Supp. V 2005). Most of\nthe physicians also received additional pay pursuant to VA\xe2\x80\x99s special pay authorities. See id. \xc2\xa7\xc2\xa7 7431\xe2\x80\x937433 (Supp. V 2005). Several years later, the physicians filed\nadministrative complaints asserting that the hospitals had failed to pay them the\nprevailing wages for the areas in which they were employed. The DOL Administrative Review Board ruled in the complainants\xe2\x80\x99 favor and ordered the VA to pay\napproximately $230,000 in back wages.\nII.\nThe principles governing sovereign immunity are well-established. As the\nSupreme Court has recognized, \xe2\x80\x9c[a]bsent a waiver, sovereign immunity shields the\nFederal Government and its agencies from suit.\xe2\x80\x9d FDIC v. Meyer, 510 U.S. 471,\n475 (1994); see also United States v. Mitchell, 463 U.S. 206, 212 (1983) (\xe2\x80\x9cIt is\naxiomatic that the United States may not be sued without its consent.\xe2\x80\x9d). Sovereign\nimmunity bars any action against the United States if \xe2\x80\x9cthe judgment sought would\nexpend itself on the public treasury or domain, or interfere with the public\nadministration, or if the effect of the judgment would be to restrain the Government from acting, or to compel it to act.\xe2\x80\x9d Dugan v. Rank, 372 U.S. 609, 620\n(1963) (internal quotation marks and citation omitted). The Executive Branch has\nno authority to waive the federal government\xe2\x80\x99s sovereign immunity; rather, that\nauthority rests solely with Congress. See, e.g., United States v. Shaw, 309 U.S.\n495, 500\xe2\x80\x9301 (1940) (explaining \xe2\x80\x9cthat without specific statutory consent, no suit\nmay be brought against the United States. No officer by his action can confer\njurisdiction.\xe2\x80\x9d); United States v. N.Y. Rayon Importing Co., 329 U.S. 654, 660\n(1947) (\xe2\x80\x9cIt has long been settled that officers of the United States possess no\npower through their actions to waive an immunity of the United States.\xe2\x80\x9d). And the\nterms of any statutory waiver must be unambiguous, both as to the nature of relief\nthat may be ordered and the forum in which the relief may be sought. See, e.g.,\nLane v. Pena, 518 U.S. 187, 192 (1996).\nBecause Congress has the sole authority to set the terms of any waiver, an\nadministrative agency has no more authority to prosecute or adjudicate a claim\nagainst the federal government than does a federal court. The federal courts\naccordingly have applied the same sovereign immunity principles in reviewing\nadministrative adjudications as they have in federal court suits. See, e.g., United\nStates v. Nordic Village, Inc., 503 U.S. 30, 37 (1992) (applying sovereign\nimmunity principles to bankruptcy proceedings); Ardestani v. INS, 502 U.S. 129,\n137 (1991) (holding that sovereign immunity bars fee award to prevailing party in\nINS proceeding); Foreman v. Dep\xe2\x80\x99t of Army, 241 F.3d 1349, 1352 (Fed. Cir. 2001)\n(applying sovereign immunity principles to conclude that the Merit Systems\nProtection Board lacks authority to impose monetary damages); cf. Fed. Mar.\n\n48\n\n\x0cPayment of Back Wages to Alien Physicians Hired Under the H-1B Visa Program\n\nComm\xe2\x80\x99n v. S.C. State Ports Auth., 535 U.S. 743, 76061 (2002) (state sovereign\nimmunity applies in federal administrative proceeding). 1\nThis Office likewise has recognized that sovereign immunity principles \xe2\x80\x9capply\nwith equal force to agency adjudications.\xe2\x80\x9d Authority of the Equal Employment\nOpportunity Commission to Impose Monetary Sanctions Against Federal Agencies\nfor Failure to Comply With Orders Issued by EEOC Administrative Judges, 27\nOp. O.L.C. 24, 27 (2003) (\xe2\x80\x9cEEOC Opinion\xe2\x80\x9d). For instance, we recently concluded\nthat sovereign immunity prevents the EEOC from imposing an attorney\xe2\x80\x99s fee\naward against the federal government during an administrative adjudication. Id. at\n33. We also found that the USDA generally lacks the authority to award monetary\nrelief to individuals whom it finds to have been discriminated against in USDA\nprograms. See Authority of USDA to Award Monetary Relief for Discrimination,\n18 Op. O.L.C. 52 (1994) (\xe2\x80\x9cUSDA Opinion\xe2\x80\x9d). And we found that the Special\nCounsel for Immigration Related Unfair Employment Practices may not bring\nadministrative employment claims against a federal agency because the antidiscrimination statute in question did not expressly include the federal government\nwithin its ambit. See Enforcement Jurisdiction of the Special Counsel for Immigration Related Unfair Employment Practices, 16 Op. O.L.C. 121 (1992) (\xe2\x80\x9cSpecial\nCounsel Opinion\xe2\x80\x9d); see also Waiver of Sovereign Immunity With Respect to\nWhistleblower Provisions of Environmental Statutes, 29 Op. O.L.C. 171, 174\n(2005) (concluding that Clean Water Act whistleblower provision does not waive\nfederal government\xe2\x80\x99s sovereign immunity).\nNotwithstanding these decisions, DOL contends that sovereign immunity\nshould not apply to enforcement actions between two federal agencies. In support,\nDOL relies principally upon our opinion in EPA Assessment of Penalties Against\nFederal Agencies for Violation of the Underground Storage Tank Requirements of\nthe Resource Conservation and Recovery Act, 24 Op. O.L.C. 84 (2000) (\xe2\x80\x9cEPA\nOpinion\xe2\x80\x9d), where, in concluding that the statute at issue clearly granted the EPA\nthe authority to assess administrative penalties against federal agencies, we\nobserved that \xe2\x80\x9cthe doctrine of sovereign immunity does not apply to enforcement\nactions by one federal government agency against another.\xe2\x80\x9d Id. at 88. In another\nopinion, we observed that with respect to a dispute between two agencies, a\nsovereign immunity issue \xe2\x80\x9cwould only arise if the judicial enforcement aspect of\nthe enforcement scheme were found applicable.\xe2\x80\x9d Authority of Department of\nHousing and Urban Development to Initiate Enforcement Actions Under the Fair\nHousing Act Against Other Executive Branch Agencies, 18 Op. O.L.C. 101, 104\nn.4 (1994) (\xe2\x80\x9cHUD Opinion\xe2\x80\x9d).\n\n1\n\nCases addressing state sovereign immunity may provide some guidance, as the Supreme Court has\napplied similar principles in the state and federal sovereign immunity contexts. See, e.g., Nordic\nVillage, 503 U.S. at 37.\n\n49\n\n\x0cOpinions of the Office of Legal Counsel in Volume 32\n\nThese opinions suggest that an administrative action, consisting of a dispute\nbetween two federal agencies, and resolved entirely within the Executive Branch,\nwould not constitute a \xe2\x80\x9csuit\xe2\x80\x9d against the United States. See Special Counsel\nOpinion, 16 Op. O.L.C. at 124 n.3 (\xe2\x80\x9cWe assume for purposes of this opinion that\nsovereign immunity would not bar administrative proceedings in which one\nexecutive agency would press charges against another executive agency and final\ndecisional authority would be vested in the Executive.\xe2\x80\x9d) (emphasis added). In such\na context, the resulting administrative penalty would neither \xe2\x80\x9cexpend itself on the\npublic treasury or domain,\xe2\x80\x9d Dugan, 372 U.S. at 620, nor result in a judicial order\nrequiring or prohibiting agency action. Instead, the administrative penalty would\namount simply to the transfer of money from one part of the federal government to\nanother. See Special Counsel Opinion, 16 Op. O.L.C. at 124 n.4 (\xe2\x80\x9cThe assessment\nof a civil penalty against a federal agency in a sense would not expend itself upon\nthe fisc, because it would not have any net effect on the Treasury balance.\xe2\x80\x9d).\nAlthough some language in the EPA and HUD Opinions may be in tension with\nour subsequent recognition that sovereign immunity principles \xe2\x80\x9capply with equal\nforce to agency adjudications,\xe2\x80\x9d EEOC Opinion, 27 Op. O.L.C. at 27, we need not\nresolve that tension here, because the dispute between DOL and VA does not fall\nwholly within the Executive Branch. Rather, DOL\xe2\x80\x99s order follows an administrative adjudication brought at the behest, and on behalf, of private parties\xe2\x80\x94namely,\nthe H-1B physicians. In the VA cases, DOL has ordered the payment of back pay\nawards that would go directly to the physicians in question\xe2\x80\x94relief that clearly\nwould \xe2\x80\x9cexpend itself on the public treasury,\xe2\x80\x9d Dugan, 372 U.S. at 620. As the D.C.\nCircuit has recognized, sovereign immunity applies to actions like these, which are\n\xe2\x80\x9cbrought by a government official acting for the benefit of private parties.\xe2\x80\x9d Dep\xe2\x80\x99t\nof Army v. FLRA, 56 F.3d 273, 276 (D.C. Cir. 1995); see also Hubbard v. MSPB,\n205 F.3d 1315, 1317 (Fed. Cir. 2000) (affirming MSPB\xe2\x80\x99s holding that sovereign\nimmunity barred its award of back pay against EPA).\nDOL disagrees with this characterization and maintains that it should not be\nregarded as \xe2\x80\x9cacting for the benefit of private parties,\xe2\x80\x9d but rather should be seen as\nrepresenting the public interest in enforcing the conditions on the H-1B program.\nDOL points out that the prevailing wage provisions of the H-1B program are not\nprimarily intended to reward alien physicians, but rather to protect the wages of\nAmerican workers from cheaper foreign competition. This may be so, but the\nargument does not bear on the sovereign immunity question. Federal agencies may\nrepresent the public interest through a wide variety of actions, but they do not have\nthe authority to permit private parties to bring judicial or administrative suits\nagainst the government, or to order another federal agency to pay money judgments to private parties, unless Congress has unambiguously waived sovereign\nimmunity.\n\n50\n\n\x0cPayment of Back Wages to Alien Physicians Hired Under the H-1B Visa Program\n\nIII.\nWe consider then whether Congress waived sovereign immunity for DOL\nadministrative proceedings brought against federal employers under section\n212(n)(2) of the INA. See 8 U.S.C. \xc2\xa7 1182(n)(2). The Supreme Court has made\nclear that any waiver of the federal government\xe2\x80\x99s sovereign immunity \xe2\x80\x9cmust be\nunequivocally expressed in statutory text . . . and will not be implied.\xe2\x80\x9d Lane, 518\nU.S. at 192 (citations omitted); see also Nordic Village, 503 U.S. at 37 (a reading\nof a statute that imposes monetary liability on the government will not be adopted\nunless it is \xe2\x80\x9cunambiguous\xe2\x80\x9d). Waivers of immunity are \xe2\x80\x9cconstrued strictly in favor\nof the sovereign and not enlarged beyond what the language requires.\xe2\x80\x9d Dep\xe2\x80\x99t of\nEnergy v. Ohio, 503 U.S. 607, 615 (1992) (internal quotation marks, citations, and\nalterations omitted). If an alternative reading of a statutory provision is available,\nthen Congress has not waived sovereign immunity. See Nordic Village, 503 U.S.\nat 37.\nIn this regard, we take it as a given that the fact that a VA hospital may qualify\nas an employer under the H-1B visa program does not conclusively establish that\nCongress waived sovereign immunity. Federal agencies may well be subject to\nsubstantive obligations when participating in a particular statutory program\nwithout falling subject to the statute\xe2\x80\x99s remedial provisions. See, e.g., Dep\xe2\x80\x99t of\nEnergy, 503 U.S. at 623 (distinguishing among \xe2\x80\x9csubstantive and procedural\nrequirements\xe2\x80\x9d of statute, \xe2\x80\x9cadministrative authority,\xe2\x80\x9d and \xe2\x80\x9cprocess and sanctions\xe2\x80\x9d);\nsee also USDA Opinion, 18 Op. O.L.C. at 72 (concluding that although antidiscrimination provisions of both Fair Housing Act and Rehabilitation Act expressly\napply to the federal government, these statutes do not waive sovereign immunity\nfor monetary relief); Shaw, 309 U.S. at 500\xe2\x80\x9301 (sovereign immunity may be\nwaived only by Congress through statute, not by actions of Executive Branch\nofficers). In the Eleventh Amendment context, the Supreme Court has held that\nstates do not waive their constitutional immunity merely by participating in a\nfederal program, even though the relevant statutes expressly contemplate that\nstates fall within the class of beneficiaries. See, e.g., Atascadero State Hosp. v.\nScanlon, 473 U.S. 234, 245\xe2\x80\x9347 (1985) (although Rehabilitation Act applies to\nstates, state does not waive Eleventh Amendment immunity by participating in\nprogram); Edelman v. Jordan, 415 U.S. 651, 673\xe2\x80\x9374 (1974) (mere fact that state\nparticipated in federal aid program does not waive Eleventh Amendment immunity, which bars retroactive award of benefits). Accordingly, the question is not\nwhether federal agencies, such as VA, may hire workers through the H-1B visa\nprogram, but whether Congress has unambiguously determined that those agencies\nshall be subject to DOL\xe2\x80\x99s remedial authority to adjudicate administrative complaints under the H-1B program and to award back pay.\nWe are unable to find such an unambiguous waiver in this case. Congress did\nnot expressly address the federal government\xe2\x80\x99s sovereign immunity anywhere in\nthe H-1B program. Nor did Congress clearly provide that a federal employer\n\n51\n\n\x0cOpinions of the Office of Legal Counsel in Volume 32\n\nwould be subject to DOL\xe2\x80\x99s remedial authority under section 212(n)(2) of the INA.\nSee 8 U.S.C. \xc2\xa7 1182(n)(2). Section 212(n)(2) does not contain a definition of\n\xe2\x80\x9cemployer,\xe2\x80\x9d nor is the term otherwise defined for purposes of the H-1B program.\nWe have recognized that general terms such as \xe2\x80\x9cemployer\xe2\x80\x9d or \xe2\x80\x9cperson\xe2\x80\x9d \xe2\x80\x9cshould\nnot be read to include federal agencies in the absence of affirmative evidence that\nCongress intended that they be included.\xe2\x80\x9d Special Counsel Opinion, 16 Op. O.L.C.\nat 124; see also United States v. United Mine Workers, 330 U.S. 258, 270 (1947)\n(declining to construe \xe2\x80\x9cemployer\xe2\x80\x9d under the Norris-LaGuardia Act to include the\nUnited States \xe2\x80\x9cwhere there is no express reference to the United States and no\nevident affirmative grounds for believing that Congress intended to withhold an\notherwise available remedy [obtaining a restraining order] from the Government\xe2\x80\x9d). 2 That rule of construction would preclude the finding of an \xe2\x80\x9cunambiguous\xe2\x80\x9d waiver of sovereign immunity, unless some other provision of the INA made\nclear that federal agencies must be included under the back pay provisions of\nsection 212(n)(2). 3\nSeeking to identify such provisions, DOL points to several that it asserts show\nCongress\xe2\x80\x99s expectation that federal agencies would fall within the scope of the\nterm \xe2\x80\x9cemployer\xe2\x80\x9d for purposes of section 212(n)(2). The first provision, 8 U.S.C.\n\xc2\xa7 1184(l)(1) (2000), allows an \xe2\x80\x9cinterested Federal agency\xe2\x80\x9d to request the waiver of\na foreign residence requirement for alien graduate students who, following their\neducation, seek to remain in the United States for employment at a health care\nfacility. The statute specifically addresses \xe2\x80\x9cthe case of a request by the Department\nof Veterans Affairs\xe2\x80\x9d for a waiver on behalf of an alien who \xe2\x80\x9cagrees to practice\nprimary care or specialty medicine.\xe2\x80\x9d Id. \xc2\xa7 1184(l)(1)(D)(i) (Supp. V 2005). This\nprovision, however, does not apply only to applicants for H-1B visas, but also to\naliens seeking other types of immigration benefits. The provision likewise does\nnot directly refer to DOL\xe2\x80\x99s remedial authority under section 212(n)(2). According2\n\nThe Secretary of Labor has defined \xe2\x80\x9cemployer\xe2\x80\x9d by regulation to mean \xe2\x80\x9ca person, firm, corporation, contractor, or other association or organization in the United States that has an employment\nrelationship with H-1B . . . nonimmigrants and/or U.S. worker(s).\xe2\x80\x9d 20 C.F.R. \xc2\xa7 655.715 (2007); see\nalso 8 C.F.R. \xc2\xa7 214.2(h)(4)(ii) (2007) (similar definition in Department of Homeland Security regulations). This regulatory definition could not waive the federal government\xe2\x80\x99s sovereign immunity, because the waiver \xe2\x80\x9cmust be unequivocally expressed in statutory text.\xe2\x80\x9d Lane, 518 U.S. at 192. We note,\nhowever, that like the statute, this regulatory definition is ambiguous as to whether federal agencies fall\nwithin its ambit, because neither \xe2\x80\x9cperson\xe2\x80\x9d nor \xe2\x80\x9cother association or organization in the United States\xe2\x80\x9d\nclearly includes federal agencies. See, e.g., Vt. Agency of Natural Res. v. United States, 529 U.S. 765,\n780 (2000) (noting \xe2\x80\x9clongstanding interpretive presumption that \xe2\x80\x98person\xe2\x80\x99 does not include the sovereign\xe2\x80\x9d).\n3\nThe lack of an explicit waiver in the H-1B statute contrasts sharply with other statutes expressly\nauthorizing one federal agency to enforce the statute\xe2\x80\x99s requirements against another federal agency.\nSee, e.g., 42 U.S.C. \xc2\xa7 2000e-16(b) (2000) (authorizing EEOC to enforce antidiscrimination provisions\nof Title VII against federal agencies in administrative proceedings, including through award of back\npay); id. \xc2\xa7 6903(15) (2000) (defining \xe2\x80\x9cperson\xe2\x80\x9d to \xe2\x80\x9cinclude each department, agency, and instrumentality of the United States\xe2\x80\x9d for purposes of DOL\xe2\x80\x99s administrative enforcement of whistleblower provisions\nof Solid Waste Disposal Act).\n\n52\n\n\x0cPayment of Back Wages to Alien Physicians Hired Under the H-1B Visa Program\n\nly, we cannot regard this provision as an unequivocal waiver of sovereign\nimmunity for the award of back pay.\nDOL also points to a 1998 amendment to the INA prescribing special rules for\nan H-1B employer that is \xe2\x80\x9can institution of higher education . . . or a related or\naffiliated nonprofit entity; or . . . a nonprofit research organization, or a Governmental research organization,\xe2\x80\x9d 8 U.S.C. \xc2\xa7 1182(p)(1) (2000). With respect to\ninstitutions and organizations covered by this provision, \xe2\x80\x9cthe prevailing wage level\nshall only take into account employees at such institutions and organizations in the\narea of employment.\xe2\x80\x9d Id. In addition, such employers are exempt from paying the\nH-1B filing fee, id. \xc2\xa7 1184(c)(9)(A) (Supp. V 2005), and from the annual numerical limitations on H-1B visas, id. \xc2\xa7 1184(g)(5). DOL reasons that Congress\xe2\x80\x99s\nefforts to prescribe special rules for \xe2\x80\x9cGovernmental research organizations\xe2\x80\x9d\ndemonstrates an understanding that federal agencies as a class would be H-1B\nemployers. The statute does not define the term \xe2\x80\x9cGovernmental research organization,\xe2\x80\x9d however. 4 Even assuming that this term includes certain federal government\nentities such as the National Institutes of Health, it could not be read unambiguously to waive sovereign immunity for all federal agencies under section\n212(n)(2). The 1998 amendment demonstrates that Congress did address one way\nin which the prevailing wage requirement might impact universities, nonprofit\norganizations, and some government research entities. 5 Congress spoke with no\nsuch clarity, however, as to whether federal agencies generally could be subject to\nadministrative complaints and the award of monetary relief.\nFinally, section 212(j)(2) of the INA permits an H-1B nonimmigrant who is a\nmedical school graduate, but who has not fulfilled certain licensing requirements,\nto teach or conduct research for \xe2\x80\x9ca public or nonprofit private educational or\nresearch institution or agency in the United States.\xe2\x80\x9d 8 U.S.C. \xc2\xa7 1182(j)(2) (2000).\nOnce again, this phrase is ambiguous. An \xe2\x80\x9ceducational or research institution or\nagency in the United States\xe2\x80\x9d does not clearly include federal agencies. Even if this\nphrase does signal that a federal agency may be an employer under the H-1B\nprogram, the phrase neither appears in the definition portion of the statute, nor in\nthe remedial provisions. Insofar as a waiver of sovereign immunity \xe2\x80\x9cmust be\nunequivocally expressed in statutory text . . . and will not be implied,\xe2\x80\x9d Lane, 518\n\n4\nDOL regulations define this term to mean \xe2\x80\x9ca United States Government entity whose primary\nmission is the performance or promotion of basic research and/or applied research.\xe2\x80\x9d 20 C.F.R.\n\xc2\xa7 656.40(e)(1) (2007).\n5\nThe legislative history of this provision indicates that Congress recognized a distinction between\nprivate entities and the nonprofit or government entities in question. The Senate Report on a bill\ncontaining an earlier version of this provision noted that it \xe2\x80\x9cseparates the prevailing wage calculations\nbetween academic and research institutions and other nonprofit entities and those for for-profit\nbusinesses. . . . The bill establishes in statute that wages for employees at colleges, universities,\nnonprofit research institutes, and other nonprofit entities must be calculated separately from industry.\xe2\x80\x9d\nS. Rep. No. 105-186, at 29\xe2\x80\x9330 (1998).\n\n53\n\n\x0cOpinions of the Office of Legal Counsel in Volume 32\n\nU.S. at 192, we cannot read this provision as an express waiver of sovereign\nimmunity.\nWe agree with DOL that these provisions, taken together, suggest that Congress\ncontemplated that certain federal entities may file applications as employers under\nthe H-1B program, but we do not regard these suggestions as the unambiguous\ntext required to subject the United States to liability for back pay judgments. The\nSupreme Court has demanded a \xe2\x80\x9cclear statement\xe2\x80\x9d of waiver so as to ensure that\nCongress directly considers the consequences of exposing the federal government\nto suit and potential financial liability. As the initial dispute between DOL and VA\ndemonstrates, it is hardly clear that Congress gave such consideration in enacting\nthe INA provisions governing the H-1B program. Indeed, the INA makes no\nprovision for the potential conflict between the INA\xe2\x80\x99s \xe2\x80\x9cprevailing wage\xe2\x80\x9d requirement and the pay scales established by the federal civil service laws. Nor did\nCongress address this conflict in 1998, when it created certain exceptions to the H1B rules for educational and research entities, but made no express provision for\nfederal agencies other than \xe2\x80\x9cGovernmental research organizations.\xe2\x80\x9d\nThe present dispute between VA and DOL itself constitutes evidence that\nCongress did not directly consider the consequences of applying the H-1B\nprogram to federal employers, much less that it considered the consequences of\nwaiving sovereign immunity and exposing the VA hospitals to financial liability.\nVA originally requested our advice as to whether it had the statutory authority to\ndepart from civil service pay scales and pay a prevailing wage. The uncertainty\nover that question reflects the fact that in contrast to other federal laws, here,\nCongress did not clearly address the impact of the H-1B program on federal pay\nstatutes. See, e.g., 10 U.S.C. \xc2\xa7 2164(e) (2000) (authorizing Secretary of Defense to\nappoint school staff \xe2\x80\x9cwithout regard to the provisions of any other law relating to\nthe number, classification, or compensation of employees\xe2\x80\x9d based on consideration\nof compensation paid to comparable employees by local educational agencies in\nthe State in which the military installation is located); 42 U.S.C. \xc2\xa7 288-4(c)(3)\n(2000) (authorizing Director of National Institutes of Health to appoint certain\nindividuals \xe2\x80\x9cwithout regard to the provisions of title 5 relating to appointment and\ncompensation\xe2\x80\x9d). Congress\xe2\x80\x99s silence on this issue demonstrates why a clear\nstatement of a waiver is required and further supports the conclusion that the INA\ndoes not constitute an \xe2\x80\x9cunambiguous\xe2\x80\x9d waiver of sovereign immunity.\nIV.\nDOL requests that if we find that the administrative awards of back pay are\nbarred by sovereign immunity, we nonetheless clarify that VA must comply with\nthe prevailing wage requirements in future cases. We agree that VA should not file\na labor condition application seeking DOL approval under the H-1B program\nunless VA is able, under its statutory pay authorities, to honor the prevailing wage\nrequirements of that application. Although VA has no authority to pay an H-1B\n\n54\n\n\x0cPayment of Back Wages to Alien Physicians Hired Under the H-1B Visa Program\n\nemployee compensation beyond what is authorized by its pay statutes, see, e.g.,\nKizas v. Webster, 707 F.2d 524, 535\xe2\x80\x9337 (D.C. Cir. 1983), VA\xe2\x80\x99s special pay\nauthorities do appear to provide it with sufficient flexibility to enable the Department to pay the prevailing wage in many instances. Should VA determine that it\nunderpaid employees wages to which they were entitled under the law, we agree\nwith DOL that VA may correct that error to the extent that it could have paid the\nhigher wage in the first instance. See, e.g., 3 General Accounting Office, Principles of Federal Appropriations Law 12-5 (2d ed. 1994) (recognizing that an\nagency has authority to pay an employee money erroneously not paid). In the\nabsence of a clear waiver of sovereign immunity, however, VA may neither be\nrequired to defend itself in an administrative proceeding nor compelled to pay\nback wages as a result of that administrative proceeding. 6\nCongress, of course, provided an additional mechanism for ensuring compliance\nwith these requirements by granting DOL the authority to review labor condition\napplications in advance and to deny any that do not meet the statutory requirements.\nCf. In re Hunter Holmes McGuire Veterans Affairs Med. Ctr., No. 94-INA-00210,\n1996 WL 616606, at *1 (Bd. Alien Labor Cert. App. Oct. 7, 1996) (affirming denial\nof labor certification where VA hospital was unable under federal law to offer\nprevailing wage to anesthesiologist; finding \xe2\x80\x9cthat the labor certification regulations\ndo not provide an exception, either express or implied, for a Federal wage schedule\xe2\x80\x9d). It is true that the statute permits DOL to review applications \xe2\x80\x9conly for\ncompleteness and obvious inaccuracies.\xe2\x80\x9d 8 U.S.C. \xc2\xa7 1182(n). Still, an employer\xe2\x80\x99s\nfailure to list an acceptable source of prevailing wage data, as we understand\noccurred with respect to the applications submitted by some of the VA hospitals in\nquestion, would seem to fall within the scope of that review. Congress\xe2\x80\x99s failure to\nwaive sovereign immunity may limit DOL\xe2\x80\x99s ability to enforce the H-1B requirements retrospectively, but DOL retains authority to ensure compliance at the frontend through its review of these applications before an alien may receive an H-1B\nvisa.\nSTEVEN A. ENGEL\nDeputy Assistant Attorney General\nOffice of Legal Counsel\n\n6\n\nWe note in this regard that sovereign immunity does not apply simply to awards of retrospective\nrelief, such as back pay. Rather, sovereign immunity also would prevent a private party from bringing an\nadministrative action against VA under the INA\xe2\x80\x99s retaliation provision, 8 U.S.C. \xc2\xa7 1182(n)(2)(C)(iv), or\nrequiring VA to reinstate an employee after such a proceeding. See, e.g., Dugan, 372 U.S. at 620\n(sovereign immunity bars an action against the United States \xe2\x80\x9cif the effect of the judgment would be to\nrestrain the Government from acting, or to compel it to act\xe2\x80\x9d).\n\n55\n\n\x0c'


b'State Taxation of Income of Native American Armed Forces\nMembers\nT he S o ld iers\xe2\x80\x99 and S ailors\xe2\x80\x99 C ivil Relief A c t prohibits S tates from taxing the m ilitary com pensation\no f N ativ e A m erican arm ed forces m em bers who are residents or dom icilianes o f tribal reservations\nfro m w hich they are absent by reason o f th eir m ilitary service.\n\nNovember 22, 2000\nm em orandum\n\nO p in io n f o r t h e G e n e r a l C o u n s e l\n\nD epa r tm en t o f D efen se\n\nThis memorandum responds to your letter to the Acting Associate Attorney\nGeneral requesting advice as to whether States may tax the military compensation\nearned by Native American service members who are residents or domiciliaries\nof federally recognized tribal reservations. As we explain more fully below, we\nconclude that the Soldiers\xe2\x80\x99 and Sailors\xe2\x80\x99 Civil Relief Act, construed in light of\ngeneral principles of federal Indian law, prohibits States from taxing the military\ncompensation of Native American service members who are residents or domicil\xc2\xad\niaries of tribal reservations, and who are absent from those reservations by virtue\nof their military service.\nBACKGROUND\nPursuant to agreements between the States and the Department of Treasury\nentered into under 5 U.S.C. \xc2\xa75517 (1994 & Supp. IV 1998),1 the Department\nof Defense generally withholds state income tax from the military compensation\nof service members, including Native American service members, unless the\nmember appropriately claims exemption. Several members of Congress recently\nwrote to the Secretary of Defense, the Attorney General, and the Secretary of\nthe Interior, asking for their personal intervention to ensure that Native American\nservice members who claim a federally recognized Indian reservation as their legal\n15 U S C \xc2\xa7 5517 provides, in pertinent part:\n(a) W hen a State statute\xe2\x80\x94\n(1) provides for the collection of a tax eith er by imposing on employers generally the duty of withholding\nsums from the pay o f employees and making returns o f the sums to the Slate, or by granting to employers\ngenerally the authority to withhold sums from the pay o f employees if any employee voluntarily elects\nto have such sums withheld; and\n(2) imposes the duty or grants the authonty to withhold generally with respect to the pay of employees\nwho are residents o f the State; the Secretary o f the Treasury, under regulations prescribed by the President,\nshall enter into an agreement with the State within 120 days o f a request for agreement from the proper\nState official The agreement shall provide that the head o f each agency o f the United States shall comply\nwith the requirements o f the State withholding statute in the case of employees of the agency who are\nsubject to the tax and w hose regular place o f Federal employment is within the State with which the\nagreem ent is made. In the case of pay for service as a member o f the armed forces, the preceding sentence\nshall be applied by substituting \xe2\x80\x9c who are residents o f the State with which the agreement is m ade\xe2\x80\x9d for\n\xe2\x80\x9c w hose regular place o f Federal employment is within the State with which the agreement is made.\xe2\x80\x9d\n\n294\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\ndomicile are not subject to such withholding. See Letter for Hon. William S.\nCohen, Secretary of Defense, Hon. Janet Reno, Attorney General, and Hon. Bruce\nBabbitt, Secretary of the Interior, from Hon. George Miller, Senior Democratic\nMember, House Committee on Resources, et al. (July 18, 2000) (\xe2\x80\x9c Miller letter\xe2\x80\x9d ).\nThe letter stated that under section 514 of the Soldiers\xe2\x80\x99 and Sailors\xe2\x80\x99 Civil Relief\nAct (\xe2\x80\x9c SSCRA\xe2\x80\x9d ), ch. 581, 56 Stat. 769, 777 (codified as amended at 50 U.S.C.\napp. \xc2\xa7574 (1994)), a military service member \xe2\x80\x9c does not lose his permanent resi\xc2\xad\ndence or domicile solely because of [his] absence [from the place of residence\nor domicile] in compliance with military orders,\xe2\x80\x9d and it maintained that the\nSSCRA \xe2\x80\x9c applies to Native Americans as it does to all other Americans residing\nin lands under the jurisdiction of the United States.\xe2\x80\x9d Miller letter at 2. Accord\xc2\xad\ningly, the letter asserted, \xe2\x80\x9c [a] Native American\xe2\x80\x99s domicile should therefore remain\nunchanged by military service, and a tribal member who resides on a reservation\nwould enjoy the same tax status (i.e. immunity) he had enjoyed in his home state.\xe2\x80\x9d\nId. The letter concluded by stating that \xe2\x80\x9c [t]he Department [of Defense] should\nchange these [Native American] service members\xe2\x80\x99 [income tax] withholding forms\nto reflect an exemption from state withholding as authorized in the Treasury\nFinancial Manual instructing federal agencies on deductions and withholding\nissues,\xe2\x80\x9d and it urged that \xe2\x80\x9c no greater burden of proof should be placed on tribal\nmembers to establish residency than on any other member of the military.\xe2\x80\x9d Id.\nat 3.\nAfter receiving the Miller letter, you wrote to the Acting Associate Attorney\nGeneral requesting an opinion from the Department of Justice as to the applica\xc2\xad\nbility of the SSCRA to Native American service members who claim a federally\nrecognized tribal reservation as their residence or domicile. See Letter for Dan\nMarcus, Acting Associate Attorney General, from Douglas A. Dworkin, General\nCounsel, Department of Defense (Aug. 9, 2000) ( \xe2\x80\x9c Dworkin letter\xe2\x80\x9d ). Your letter\nnoted that while no federal court has yet addressed this question, three state tribu\xc2\xad\nnals have concluded that they lacked the authority to impose an income tax on\nthe military compensation of Native Americans domiciled on tribal reservations\nwithin their respective States. Id. at 1,2 In order to determine whether to continue\nwithholding state income tax from the military pay of those Native American\nservice members who claim a tribal reservation as their residence or domicile,\nyou asked the Department of Justice to provide its opinion on the matter.3\n2See Fait v. Utah State Tax Comm\'n, 884 P.2d 1233 (Utah 1994); Turner v. Wisconsin D ep\'t o f Revenue, Wl\nSt Tax Rep (CCH) P 202-744 (1986), Letter for Emil B. Beck, from Gregory B Radford, Assistant Director,\nPersonal Taxes Division, North Carolina Department o f Revenue, Re: Docket No. 99-386 (Jan. 25, 2000)\n3 Your letter asked the Department to address three sets o f questions\'\n1\nIs a tnbal reservation a residence or domicile in a \xe2\x80\x9c State, Territory, possession, or political subdivision\nof any of the foregoing\xe2\x80\x9d such that the provisions of 50 U S C app. \xc2\xa7574 preserve it as the exclusive\nresidence or domicile of a person who is away from such residence or domicile pursuant to military orders?\nIs the member not also a resident or domiciliary o f the state in which the reservation is located9\n2.\nIs the military compensation earned by a Native Amencan while away from his or her domicile\non a tnbal reservation pursuant to military orders deemed to have been earned exclusively on the reservaContinued\n\n295\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 24\n\nDISCUSSION\nDetermining whether States may, consistent with the SSCRA, tax the military\ncompensation of Native American service members who claim a federally recog\xc2\xad\nnized tribal reservation as their place o f domicile or residence requires interpreting\nrelevant provisions of the SSCRA against the backdrop of general principles of\nfederal Indian law. We therefore outline some relevant aspects of those general\nprinciples before proceeding to discuss the SSCRA and its application here.\nGeneral Principles o f Federal Indian Law\n\nHistorically, the Supreme Court has applied two related principles to States\xe2\x80\x99\nattempts to exercise jurisdiction over Indian tribes, their reservations, and their\nmembers. The first is that of Indian sovereignty. This principle is generally associ\xc2\xad\nated with Chief Justice Marshall\xe2\x80\x99s explanation that Indian nations are \xe2\x80\x9c distinct\npolitical communities, having territorial boundaries, within which their authority\nis exclusive, and having a right to all the lands within those boundaries, which\nis not only acknowledged, but guarantied by the United States.\xe2\x80\x9d Worcester v.\nGeorgia, 31 U.S. (6 Pet.) 515, 557 (1832). Building on Worcester, subsequent\nSupreme Court decisions held that \xe2\x80\x9c [i]t followed from this concept of Indian res\xc2\xad\nervations as separate, although dependent nations, that state law could have no\nrole to play within the reservation boundaries.\xe2\x80\x9d McClanahan v. Ariz. State Tax\nC om m \xe2\x80\x99n, 411 U.S. 164, 168 (1973); see County o f Yakima v. Confederated Tribes\nand Bands o f Yakima Indian Nation, 502 U.S. 251, 257 (1992) (describing the\nCourt\xe2\x80\x99s decision in Worcester as concluding that \xe2\x80\x9c within reservations state juris\xc2\xad\ndiction would generally not lie\xe2\x80\x9d ).\nMore recently, however, the Indian sovereignty doctrine has lost some of its\n\xe2\x80\x9c independent sway,\xe2\x80\x9d County o f Yakima, 502 U.S. at 257, and has given way\nto a second principle: federal preemption. See McClanahan, 411 U.S. at 172\n(\xe2\x80\x9c [T]he trend has been away from the idea of inherent Indian sovereignty as a\nbar to state jurisdiction and toward reliance on federal preemption.\xe2\x80\x9d ). The source\nof this principle is the Constitution, which assigns to the federal government the\nresponsibility for regulating commerce with Indian tribes and for treaty-making.\nSee U.S. Const, art. I, \xc2\xa78, cl. 3; id. art. II, \xc2\xa72, cl. 2; see also McClanahan, 411\nU.S. at 172 n.7; Williams v. Lee, 358 U.S. 217, 219 n.4 (1959). In light of that\ngrant of federal authority, cases raising questions about the boundaries of permis\xc2\xad\ntion, so as to exem pt it from income taxation by the state in which the reservation is located under the\nrule set forth in M cClanahan [v. Ariz Stale Tax Com m \xe2\x80\x99n, 411 U.S 164 (1973),] and subsequent cases7\nIf so, does this apply to all tnbal reservations o f federally recognized tnbes?\n3.\nIf it is the opinion o f the Department o f Justice that Native Amencans who claim a tnbal reservation\nas their dom icile are not subject to state incom e tax with respect to their military compensation, will that\nopinion serve as the basis for us to terminate state tax withholding if a member certifies that he or she\nmeets the stated cnteria9\nDworkin letter at 2.\n\n296\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\nsible state jurisdiction over Indian tribes, their members, and their lands are now\ntypically resolved by giving \xe2\x80\x9c individualized treatment\xe2\x80\x9d to the \xe2\x80\x9c particular treaties\nand specific federal statutes, including statehood enabling legislation, as they,\ntaken together, affect the respective rights of States, Indians, and the Federal\nGovernment.\xe2\x80\x9d M escalero Apache Tribe v. Jones , 411 U.S. 145, 148 (1973). The\nIndian sovereignty doctrine remains relevant, however, as \xe2\x80\x9c a backdrop against\nwhich the applicable treaties and federal statutes must be read.\xe2\x80\x9d McClanahan,\n411 U.S. at 172.1n the area of state taxation, the Supreme Court\xe2\x80\x99s application\nof the federal preemption and Indian sovereignty principles has yielded certain\nspecific rules, two of which are relevant to the matter before us. First, \xe2\x80\x9c absent\ncession of jurisdiction or other federal statutes permitting it,\xe2\x80\x9d States may not tax\n\xe2\x80\x9c Indian reservation lands or Indian income from activities carried on within the\nboundaries of the reservation.\xe2\x80\x9d Mescalero, 411 U.S. at 148 (describing the rule\nannounced in McClanahan, 411 U.S. at 164); County o f Yakima, 502 U.S. at 258\n( \xe2\x80\x9c [0]ur cases reveal a consistent practice of declining to find that Congress has\nauthorized state taxation [in this area] unless it has \xe2\x80\x98made its intention to do so\nunmistakably clear.\xe2\x80\x99 \xe2\x80\x9d ) (quoting Montana v. Blackfeet Tribe, 471 U.S. 759, 765\n(1985)).4 Second, \xe2\x80\x9c [ajbsent express federal law to the contrary, Indians going\nbeyond reservation boundaries have generally been held subject to nondiscriminatory state law otherwise applicable to all citizens of the State.\xe2\x80\x9d M escalero,\n411 U.S. at 148\xe2\x80\x9449. In the state taxation context, this second rule means that\nif a Native American resident of a tribal reservation earns income outside that\nreservation but within the State in which the reservation is located, then, absent\nfederal law to the contrary, the State may tax that income. Id.5\nIn cases not squarely controlled by these two rules, the Court applies the federal\npreemption principle against the backdrop of the Indian sovereignty principle.\nPreemption analysis asks whether the state law or action at issue \xe2\x80\x9c stands as an\nobstacle to the accomplishment and execution of the full purposes and objectives\n4 Before announcing this rule, the McClanahan Court analyzed, inter alia, the particular nineteenth century treaty\nthat the federal government had entered into with the Navajo Nation, and the Arizona Enabling Act, both of which\ncontained language indicating that the federal government\xe2\x80\x99s authonty over Navajo reservations was exclusive. See\n411 U.S. at 173-75. Thus, McClanahan might be read as having turned on a case-specific preemption holding \xe2\x80\x94\na determination that the treaty, enabling act, and other federal legislation relevant to the case preempted the stale\ntaxation at issue But the Court did not, in fact, find any specific federal preemption. As then\xe2\x80\x94 Associate Justice\nRehnquist later explained, \xe2\x80\x9c [although no legislation directly provided that Indians were to be immune from state\ntaxation under these circumstances, the enactments reviewed were certainly suggestive o f that interpretation\nThe [McClanahan] Court therefore declined to infer a congressional departure from the prior tradition of Indian\nimmunity absent an express provision otherwise.\xe2\x80\x9d Washington v Confederated Tribes, 447 U.S. 134, 179 (1980)\n(Rehnquist, J , concurring in part and dissenting in part); see Felix Cohen, Handbook o f Federal Indian Law 26970 (1982 e d ) (noting that McClanahan held the state tax at issue to intrude on a sphere of activities subject only\nto federal and tribal authonty, \xe2\x80\x98\xe2\x80\x98despite the lack o f any specific conflict with tnbal law\xe2\x80\x9d ) That is, McClanahan\nannounced a generally applicable default rule that prohibits slate taxation of \xe2\x80\x9c reservation lands and reservation\nIndians\xe2\x80\x9d except where authonzed by Congress, County o f Yakima, 502 U S at 258, and it analyzed the relevant\ntreaty, enabling act, and other legislation simply to confirm that Congress had not given such authorization in that\ncase See Thomas C Mundell, The Tribal Sovereignty Limitation on State Taxation o f Indians: From Worcester\nto Confederated Tnbes and Beyond, 15 Loy. L.A L. Rev 195, 216-17 (1982)\n5 It is not clear whether this rule also extends to off-reservation income generated outside the State where the\nreservation is located See infra note 11\n\n297\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 24\n\nof Congress.\xe2\x80\x9d G eier v. Am. Honda M otor Co., 529 U.S. 861, 873 (2000) (quoting\nHines v. D avidow itz, 312 U.S. 52, 67 (1941)); see Freightliner Corp. v. Myrick,\n514 U.S. 280, 287 (1995); Jones v. Rath Packing Co., 430 U.S. 519, 526 (1977).\nTo the extent the analysis involves the interpretation of a federal statute, the Court\nhas emphasized that statutes affecting Indians \xe2\x80\x9c are to be construed liberally in\nfavor of the Indians, with ambiguous provisions interpreted to their benefit.\xe2\x80\x9d Mon\xc2\xad\ntana v. Blackfeet Tribe, 471 U.S. at 766; see Bryan v. Itasca County, 426 U.S.\n373 (1976); Choate v. Trapp, 224 U.S. 665 (1912). \xe2\x80\x9c [I]n examining the pre\xc2\xad\nemptive force of the relevant federal legislation,\xe2\x80\x9d courts \xe2\x80\x9c are cognizant of both\nthe broad policies that underlie the legislation and the history of tribal independ\xc2\xad\nence in the field at issue.\xe2\x80\x9d Cotton Petroleum Corp. v. New Mexico, 490 U.S.\n163, 176 (1989).\nThe Soldiers \xe2\x80\x99 and Sailors \xe2\x80\x99 Civil R elief Act\n\nThe SSCRA was enacted in 1940. See Act of Oct. 17, 1940, ch. 888, 54 Stat.\n1178 (codified as amended at 50 U.S.C. app. \xc2\xa7\xc2\xa7501-593 (1994)). It was \xe2\x80\x9c [i]n\nmany respects . . . a reenactment\xe2\x80\x9d of legislation that had been passed in 1918\nand had expired at the end of World War I. Conroy v. Aniskoff, 507 U.S. 511,\n516 (1993); see Act of Mar. 8, 1918, ch. 20, 40 Stat. 440 ( \xe2\x80\x9c Act of Mar. 8,\n1918\xe2\x80\x9d ).6 Noting the substantial similarities between the 1918 and 1940 statutes,\nthe Supreme Court observed that the legislative history of the former could pro\xc2\xad\nvide useful indications of congressional intent with respect to the latter. See Boone\nv. Lightner, 319 U.S. 561, 565 (1943). That earlier legislative history indicates\nthat Congress intended to \xe2\x80\x9c protect[ ] . . . persons in military service of the United\nStates in order to prevent prejudice or injury to their civil rights during their term\nof service and to enable them to devote their entire energy to the military needs\nof the Nation.\xe2\x80\x9d Act of Mar. 8,1918, \xc2\xa7 100.\nCongress amended the SSCRA in 1942, in part in order to \xe2\x80\x9c make available\nadditional and further relief and benefits to persons in the military and naval\nforces.\xe2\x80\x9d S. Rep. No. 77-1558, at 2 (1942). The 1942 amendments added section\n514, ch. 581, 56 Stat. 769, 777 (codified as amended at 50 U.S.C. app. \xc2\xa7574\n(1994)). The first two sentences o f the current version of that provision are\nreproduced below:\nFor the purposes of taxation in respect of any person, or of his\npersonal property, income, o r gross income, by any State, Territory,\npossession, or political subdivision of any of the foregoing, or by\nthe District of Columbia, such person shall not be deemed to have\nlost a residence or domicile in any State, Territory, possession, or\n6 Both the House and Senate Reports accompanying the SSCRA\xe2\x80\x99s passage in 1940 described it as \xe2\x80\x9c in substance,\nidentical with the [1918 A ct].\xe2\x80\x9d H.R. Rep No 76-3001, at 3 (1940), S Rep. No 76-2109, at 4 (1940).\n\n298\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\npolitical subdivision of any of the foregoing, or in the District of\nColumbia, solely by reason of being absent therefrom in compliance\nwith military or naval orders, or to have acquired a residence or\ndomicile in, or to have become resident in or a resident of, any\nother State, Territory, possession, or political subdivision of any\nof the foregoing, or the District of Columbia, while, and solely by\nreason of being, so absent. For the purposes of taxation in respect\nof the personal property, income, or gross income of any such per\xc2\xad\nson by any State, Territory, possession, or political subdivision of\nany o f the foregoing, or the District of Columbia, of which such\nperson is not a resident or in which he is not domiciled, compensa\xc2\xad\ntion for military or naval service shall not be deemed income for\nservices performed within, or from sources within, such State,\nTerritory, possession, political subdivision, or District, and personal\nproperty shall not be deemed to be located or present in or to have\na situs for taxation in such State, Territory, possession, or political\nsubdivision, or district.\n50 U.S.C. app. \xc2\xa7574(1).7 Section 514\xe2\x80\x99s first sentence generally provides that, for\npurposes of state and local income and property taxation, a military service mem\xc2\xad\nber\xe2\x80\x99s residence in a \xe2\x80\x9c State, Territory, possession, or political subdivision of any\nof the foregoing, or in the District of Columbia,\xe2\x80\x9d shall not change solely because\nthe service member is absent from his place of residence in compliance with mili\xc2\xad\ntary orders. Id. The second sentence generally provides that, for purposes of\nincome and property taxation imposed by any \xe2\x80\x9c State, Territory, possession, or\npolitical subdivision of any of the foregoing, or the District of Columbia,\xe2\x80\x9d military\ncompensation earned within such a jurisdiction by a service member who does\nnot reside there shall not be deemed income earned within the jurisdiction. Id.\nTaken together, these provisions have the effect, inter alia, of \xe2\x80\x9c prevent[ing] mul\xc2\xad\ntiple State taxation of the property and income of military personnel serving within\nvarious taxing jurisdictions through no choice of their own.\xe2\x80\x9d H.R. Rep. No. 772198, at 6 (1942); S. Rep. No. 77-1558, at 11.\nIn the legislative history to the SSCRA\xe2\x80\x99s 1942 amendments, Congress made\nclear that \xe2\x80\x9c [a]ny doubts that may arise as to the scope and application of the\nact should be resolved in favor of the person in military service involved.\xe2\x80\x9d H.R.\nRep. No. 77-2198, at 2; S. Rep. No. 77-1558, at 2. The Supreme Court, in turn,\nhas emphasized that the SSCRA \xe2\x80\x9c is always to be liberally construed,\xe2\x80\x9d Boone,\n319 U.S. at 575, and should be read \xe2\x80\x9c with an eye friendly to those who dropped\n7 Allhough the concepts of \xe2\x80\x9c residence\xe2\x80\x9d and \xe2\x80\x9c domicile\xe2\x80\x9d may in some settings have slightly different legal con\xc2\xad\nsequences, see B lack\'s Law Dictionary 1309 (6th ed 1990) (comparing and distinguishing the two terms), section\n514 uses them together without distinguishing them. For purposes o f state taxation, therefore, section 514 preserves\nmilitary service mem bers\xe2\x80\x99 pre-service domicile and residence in precisely the same manner Because the tw o concepts\nare not distinguished for these purposes, the balance of this ^memorandum generally uses the term \xe2\x80\x9c residence.\xe2\x80\x9d\n\n299\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 24\n\ntheir affairs to answer their country\xe2\x80\x99s call,\xe2\x80\x9d California v. Buzard, 382 U.S. 386,\n395 (1966) (quoting Le M aistre v. Leffers , 333 U.S. 1, 6 (1948)). Of course, the\nprotections afforded by section 514 are not without limits. As the Supreme Court\nhas explained, \xe2\x80\x9c [sjection 514 does not relieve servicemen stationed away from\nhome from all taxes of the host State.\xe2\x80\x9d Sullivan v. United States, 395 U.S. 169,\n180 (1969) (holding that section 514\xe2\x80\x99s provisions do not extend to sales and use\ntaxes in the host state). With respect to income and property taxes, however, the\ncaselaw emphasizes the need for a liberal construction. See Buzard, 382 U.S. at\n395. Thus, although section 514\xe2\x80\x99s \xe2\x80\x9c predominant legislative purpose\xe2\x80\x9d is to protect\nmilitary personnel from \xe2\x80\x9c multiple State taxation\xe2\x80\x9d of their income and property,\nSullivan, 395 U.S. at 180, the Court has not limited the scope of section 514\nto this one problem:\n[TJhough the evils of potential multiple taxation may have given\nrise to this provision, Congress appears to have chosen the broader\ntechnique of the statute carefully, freeing servicemen from both\nincome and property taxes imposed by any state by virtue of their\npresence there as a result of military orders. It saved the sole right\nof taxation to the state of original residence whether or not that\nstate exercised the right. Congress, manifestly, thought that\ncompulsory presence in a state should not alter the benefits and\nburdens of our system of dual federalism during service with the\narmed forces.\nDameron v. Brodhead, 345 U.S. 322, 326 (1953) (emphasis added).8 This broad\n\nstatutory purpose and presumption in favor of the military service member nec\xc2\xad\nessarily informs our application of section 514 to the instant matter.\nSection 514 and the M ilitary Income o f Native American Service Members\n\nIn order to determine whether section 514 of the SSCRA permits States to tax\nthe military income of Native American service members whose residence is on\na tribal reservation, it is useful first to distinguish among the States that might\nattempt to impose such taxation. They fall into three general categories: States\nwhere the service member works but only because of his military service; States\nwhere the service member lives but only because of his military service; and States\ncontaining the tribal reservation on which the service member lived until com\xc2\xad\nmencing his military service. We address these categories in turn.\n8 In Sullivan, the C ourt explained that, although it had previously described secuon 514\xe2\x80\x99s purpose broadly in\nDameron, the provision\xe2\x80\x99s \xe2\x80\x9c predominant legislative purpose\xe2\x80\x9d is \xe2\x80\x9c to prevent multiple State tax atio n \xe2\x80\x9d 395 U S . at\n180. Because \xe2\x80\x9c the substantial nsk o f double taxation under multi-state ad valorem property taxes does not exist\nwith respect to sales and use taxes,\xe2\x80\x9d the Court concluded that section 514\xe2\x80\x99s protections do not cover host States\xe2\x80\x99\nsales and use taxes Id.\n\n300\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\nSection 514 explicitly addresses both the first and second categories. As to the\nfirst, the second sentence of section 514 provides, in pertinent part:\nFor the purposes of taxation in respect of the personal property,\nincome, or gross income of any such person by any State, Territory,\npossession, or political subdivision of any of the foregoing, or the\nDistrict of Columbia, of which such person is not a resident or\nin which he is not domiciled, compensation for military or naval\nservice shall not be deemed income for services performed within,\nor from sources within, such State, Territory, possession, political\nsubdivision, or District.\n50 U.S.C. app. \xc2\xa7574(1). This provision prevents a State from taxing military com\xc2\xad\npensation earned in its jurisdiction by service members who are not otherwise\nresidents of the State. See Dameron, 345 U.S. at 326 (section 514 \xe2\x80\x9c saved the\nsole right of taxation to the state of original residence whether or not that state\nexercised the right\xe2\x80\x9d ). As to the second category, the first sentence of section 514\nprovides that no person shall be deemed \xe2\x80\x9c to have acquired a residence or domicile\nin, or to have become resident in or a resident of, any other State, Territory,\npossession, or political subdivision of any of the foregoing, or the District of\nColumbia, while and solely by reason of being . . . absent\xe2\x80\x99 \xe2\x80\x99 from his pre-military\nservice residence. 50 U.S.C. app. \xc2\xa7574(1). This provision clearly prohibits a State\nfrom taxing the military income of a service member who lives in that State solely\nin order to comply with his service obligations. See Buzard, 382 U.S. at 393 ( \xe2\x80\x9c The\nvery purpose of \xc2\xa7514 in broadly freeing the nonresident serviceman from the\nobligation to pay property and income taxes was to relieve him of the burden\nof supporting the governments of the States where he was present solely in\ncompliance with military orders.\xe2\x80\x9d ). For Native Americans, like other military\nservice members, neither the State where a service member works due only to\nmilitary orders nor a state in which a service member lives due only to such\norders may tax the service members\xe2\x80\x99 military income.\nThe third category presents a somewhat more complex case. In order to deter\xc2\xad\nmine whether the SSCRA permits the State containing a service member\xe2\x80\x99s reserva\xc2\xad\ntion residence to tax his military income, we look initially to the first sentence\nof section 514. That sentence provides that a military service member \xe2\x80\x9c shall not\nbe deemed to have lost a residence or domicile in any State, Territory, possession,\nor political subdivision of any of the foregoing, or in the District of Columbia,\nsolely by reason of being absent therefrom in compliance with military or naval\norders.\xe2\x80\x9d 50 U.S.C. app. \xc2\xa7574(1). A threshold question is whether this provision\npreserves the tribal residence of Native Americans. For three reasons, we conclude\nthat it does.\n301\n\n\x0cOpinions o f Ihe Office o f Legal Counsel\n\nin\n\nVolume 24\n\nFirst, an Indian reservation is arguably a \xe2\x80\x9c residence . . . in [a] State.\xe2\x80\x9d That\nis, since an Indian reservation is located within the geographical boundaries of\na State or States, a Native American who resides on a reservation has a residence\nin a State just as, for example, one who resides in a particular city has a residence\nin the State containing that city. See Cohen, supra note 4, at 649 (\xe2\x80\x9c [TJribal lands\nwithin the boundaries of state or organized territories have always been considered\nto be geographically part of the respective state or territory.\xe2\x80\x9d ). Thus, the first\nsentence of section 514 arguably provides that a Native American service member\nshall not be deemed to have lost her residence on a reservation located within\na State \xe2\x80\x9c solely by reason of being absent therefrom in compliance with military\nor naval orders.\xe2\x80\x9d 50 U.S.C. app. \xc2\xa7574(1).\nSecond, and alternatively, while neither the text of the SSCRA nor its legislative\nhistory defines the terms \xe2\x80\x9c State, Territory, possession, or political subdivision,\xe2\x80\x9d\nan Indian reservation might itself be regarded as a \xe2\x80\x9c Territory\xe2\x80\x9d for purposes of\nsection 514. Although territories are not generally understood to be subsumed\nwithin State boundaries, \xe2\x80\x9c when Congress uses the term \xe2\x80\x98territory\xe2\x80\x99, this may be\nmeant to be synonymous with \xe2\x80\x98place\xe2\x80\x99 or \xe2\x80\x98area\xe2\x80\x99, and not necessarily to indicate\nthat Congress has in mind the niceties of language of a political scientist.\xe2\x80\x9d Moreno\nRios v. United States, 256 F.2d 68, 71 (1st Cir. 1958). Accordingly, the precise\nscope of the term \xe2\x80\x9c Territory\xe2\x80\x9d depends on the purpose and nature of the particular\nstatute in which it is used. See D istrict o f Columbia v. Carter, 409 U.S. 418,\n420 (1973) ( \xe2\x80\x9c Whether the District of Columbia constitutes a \xe2\x80\x98State or Territory\xe2\x80\x99\nwithin the meaning of any particular statutory or constitutional provision depends\nupon the character and aim of the specific provision involved.\xe2\x80\x9d ).9 There is no\n9 In U nited States ex rel M ackey v Coxe, 59 U S . (18 How ) 100 (1855), for example, the Court held that for\npurposes o f a federal full faith and credit statute covering \xe2\x80\x9c letters testamentary or of administration\n. granted,\nby the proper authority in any o f the United States or the territories thereof,\xe2\x80\x9d a Cherokee Indian reservation \xe2\x80\x9c may\nbe considered a territory o f the United Slates.\xe2\x80\x9d Id. at 103-04; see id. at 103 (explaining that the Indian reservation\nwas \xe2\x80\x9c not a foreign, but a domestic territory\xe2\x80\x94 a territory which originated under our constitution and laws\xe2\x80\x9d ), see\nalso, e .g , In re Larch, 872 F 2d 66, 68 (4th Cir. 1989) (holding that \xe2\x80\x9c the Cherokee tribe is a \xe2\x80\x98state\xe2\x80\x99 \xe2\x80\x9d under the\nParental Kidnapping Prevention Act, which defines \xe2\x80\x9c State\xe2\x80\x9d as \xe2\x80\x9c a State o f the United States, the District o f Columbia,\nthe Commonw ealth o f Puerto Rico, or a territory or possession o f the United States,\xe2\x80\x9d 28 U S.C. \xc2\xa7 1738A(b)(8));\nJim i\xe2\x80\x99. C IT Fin. Servs C o rp , 87 N M. 362, 363 (1975) (citing Mackey and holding that \xe2\x80\x9c the Navajo Nation is\na \xe2\x80\x98territory\xe2\x80\x99 within the meaning o f [28 U S.C \xc2\xa7 1738]\xe2\x80\x9d ); Cohen, supra note 4, at 383, 385, 649 n.42 (noting that\n\xe2\x80\x9c territory\xe2\x80\x9d has been held to encompass tribal reservations in some contexts). Similar results have been reached\nin interpreting state statutes. In Tracy v. Super. C t., 168 A n z 23 (1991) (en banc), for example, the Supreme Court\nof Arizona considered w hether a Native American tnbe could be considered a \xe2\x80\x9c territory\xe2\x80\x9d under A nzona\xe2\x80\x99s Uniform\nAct to Secure the Attendance o f Witnesses From Without a State in Criminal Proceedings, Ariz. Rev. Stat \xc2\xa7\xc2\xa7 134091 to 13-4096 (1989) The court noted that \xe2\x80\x9c Indian tribes .\nhave often been regarded as territories for purposes\nof various statutory enactm ents,\xe2\x80\x9d Tracy, 168 Ariz. at 32 (collecting cases), and explained that \xe2\x80\x9c [t]he proper approach\nis to analyze each statute, in terms o f its purpose and policy, to determine whether Indian tribes may be regarded\nas territories within the statute\xe2\x80\x99s in te n t\xe2\x80\x9d Id. at 33. After undertaking that approach, the court conctuded that \xe2\x80\x9c a\ntribe may be considered a territory for purposes o f statutory enactments such as the one now before us \xe2\x80\x9d Id. at\n44\nThe Supreme C ourt has, however, indicated its support for the opposite conclusion m other statutory contexts.\nSee, e.g., N ew York ex rel. Kopel v. Bingham, 211 U S 468, 474\xe2\x80\x9475 (1909) (citing with approval Ex Parte Morgan,\n20 F. 298, 305 (W D Ark. 1883), in which a district court held that the Cherokee nation was not a \xe2\x80\x9c territory\xe2\x80\x9d\nunder the federal extradition statute). And at least one lower federal court has concluded that a tribal reservation\ndoes not constitute a \xe2\x80\x9c Territory\xe2\x80\x9d under 28 U S.C . \xc2\xa7 1738 (1994), the general full faith and credit statute. See Wilson\nv. M archington, 127 F 3 d 805, 808-09 (9th C ir 1997), cert, denied, 523 U S 1074 (1998) But in Wilson, the\n\n302\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\nindication in either the text of section 514 or its legislative history that Congress\nintended to define \xe2\x80\x9c Territory\xe2\x80\x9d narrowly so as to exclude Native American service\nmembers from the statute\xe2\x80\x99s protections. Thus, it is arguable that the term as\nemployed in section 514 should be read to include Indian reservations.\nThird, even assuming an Indian reservation is not a \xe2\x80\x9c Territory\xe2\x80\x9d or a \xe2\x80\x9c residence\n. . . in [a] State\xe2\x80\x9d within the meaning of section 514, we think it is clear that\nthe statute\xe2\x80\x99s recitation of jurisdictions is not intended and should not operate as\na limitation on the protection the SSCRA affords to all service members. By its\nterms, the first sentence of section 514 covers military compensation earned by\n\xe2\x80\x9c any person.\xe2\x80\x9d 50 U.S.C. app. \xc2\xa7574(1). As the Supreme Court has explained,\nin the absence of a clear expression to the contrary, \xe2\x80\x9c a general statute in terms\napplying to all persons includes Indians and their property interests.\xe2\x80\x9d Fed. Power\nCom m \xe2\x80\x99n v. Tuscarora Indian Nation , 362 U.S. 99, 116 (1960). Here, there is\nno indication that Congress intended to exclude Native American residents of\ntribal reservations from section 514\xe2\x80\x99s coverage. Any residual ambiguity on this\npoint is settled by Congress\xe2\x80\x99s specific guidance to resolve \xe2\x80\x9c [a]ny doubts that may\narise as to the scope and application of the [SSCRA] . . . in favor of the person\nin military service involved,\xe2\x80\x9d H.R. Rep. No. 77-2198, at 2, by the Supreme\nCourt\xe2\x80\x99s holding that the SSCRA is \xe2\x80\x9c always to be liberally construed,\xe2\x80\x9d Boone,\n319 U.S. at 575, and by the Court\xe2\x80\x99s similar directive that \xe2\x80\x9c statutes are to be\nconstrued liberally in favor of the Indians, with ambiguous provisions to be inter\xc2\xad\npreted to their benefit,\xe2\x80\x9d Blackfeet Tribe, 471 U.S. at 766. In light of these direc\xc2\xad\ntives, we conclude that section 514 should be read to preserve the reservation\nresidence of Native American service members.10\nNext, we consider what consequences flow from section 514\xe2\x80\x99s preservation of\nNative Americans\xe2\x80\x99 reservation residence. It might be argued that, even though\nsection 514 preserves a service member\xe2\x80\x99s pre-service residence, the State con\xc2\xad\nNinth Circuit based its holding not on a general finding that tribal reservations are not territones, but on the fact\nthat, after 28 U.S C \xc2\xa7 1738 was enacted, Congress passed a number of other statutes expressly extending full faith\nand credit to certain tnbal proceedings See 127 F 3d at 809 (citing 25 U S.C. \xc2\xa7\xc2\xa72201-2211 (1983), 25 U.S.C.\n\xc2\xa7 1725(g) (1980), and 25 U.S.C \xc2\xa7\xc2\xa7 1901 et s e q ) The court observed that \xe2\x80\x9c [ijf full faith and credit had already\nbeen extended to Indian tnbes, enactment of [the later statutes] would not have been necessary \xe2\x80\x9d Id Here, in contrast,\nthere is no post-section 514 legislation to undermine the argument lhat section 514\xe2\x80\x99s use o f the word \xe2\x80\x9c T em tory\xe2\x80\x9d\nshould be read to encompass tnbal reservations\nl0 lt is true that the Supreme Court has \xe2\x80\x9c repeatedly said that tax exemptions are not granted by implication,\xe2\x80\x9d\nand \xe2\x80\x9c fi]t has applied that rule to taxing acts affecting Indians as to all others \xe2\x80\x9d Okla. Tax Comm\'n v United States,\n319 U.S 598, 606 (1943). Accordingly, in Oklahoma Tax Commission the Court held that \xe2\x80\x9c [i]f Congress intends\nto prevent the State o f OkJahoma from levying a general non-discnminatory estate tax applying alike to all its\ncitizens, it should say so in plain words Such a conclusion can not rest on dubious inferences.\xe2\x80\x9d Id at 607; see\nM escalero, 411 U S at 156\xe2\x80\x9457 Here, however, it is clear lhat by passing section 514 Congress did indeed intend\nto grant a tax exemption to military service members. That is, the statute satisfies the requirement that Congress\nstate its intent to grant a tax exemption \xe2\x80\x9c in plain words.\xe2\x80\x9d Okla Tax C om m \'n, 319 U S at 607 The question\nis how that exemption applies to Native Amencans who reside on tribal reservations. In such circumstances, courts\nfollow the rule that \xe2\x80\x9c ambiguous statutes . . . are to be construed in favor of Indians, and this canon o f statutory\nconstruction applies to tax exemptions \xe2\x80\x9d Confederated Tribes v. Kurtz, 691 F 2 d 878, 881 (9th Cir 1982), see Black\xc2\xad\nfe e t Tribe, 471 U S at 766, see also Cotton Petroleum C orp, 490 U.S. at 176-77 ( \xe2\x80\x9c [F]ederal pre-emption [of\nstate taxing authonty] is not limited to cases in which Congress has expressly \xe2\x80\x94 as compared to impliedly \xe2\x80\x94 pre\xc2\xad\nempted the state activity.\xe2\x80\x99\xe2\x80\x99).\n\n303\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 24\n\ntaining a Native American service member\xe2\x80\x99s reservation may still tax his military\ncompensation to the same extent as it may tax the military compensation of other\nservice members whose pre-service residence is in that State. That argument is\npremised on the theory that Native Americans who live on their reservation are\nresidents o f both their reservation and the State in which it is located, and that\nsection 514 preserves both those residences for income tax purposes. Absent fed\xc2\xad\neral law to the contrary, a State m ay tax off-reservation, in-state income earned\nby reservation Indians whose reservation is in that State. See M escalero, 411 U.S.\nat 148-49 (\xe2\x80\x9c Absent express federal law to the contrary, Indians going beyond\nreservation boundaries have generally been held subject to nondiscriminatory state\nlaw otherwise applicable to all citizens of the State.\xe2\x80\x9d ). Arguably, Mescalero\nimplicitly recognizes that Native Americans who live on a reservation are residents\nof both their reservation and the State containing it, and that once they leave\nthe reservation to work they are subject to the generally applicable tax laws to\nwhich all other residents of the State are subject, including tax liability for both\nin-state and out-of-state income. The validity of this view is unclear.11 We need\nnot attempt to resolve the issue here, however, because we conclude the SSCRA,\nespecially when read in light of general principles of federal Indian law, preempts\nany authority a State containing a Native American\xe2\x80\x99s tribal residence may other\xc2\xad\nwise have to tax that Native American\xe2\x80\x99s military income.\n11 This uncertainty is due in part to the fact that while Mescalero made clear that a State may tax the off-reservation\nincome o f a Native American resident of a reservation within that State, it did not specify the precise source of\nthat taxing power. As a general matter, a Slate m ay \xe2\x80\x9c tax all the income o f its residents, even income earned outside\nthe taxing jurisdiction.\xe2\x80\x9d Okla. Tax Comm\'n v Chickasaw Nation, 515 U S . 450, 462-63 (1995). But for nonresidents,\na State generally may tax only income earned within the jurisdiction. Id. at 463 n i l It is unclear which head\nof taxing authonty supports the decision in M escalero If it is the former, then the State may also tax the outof-state income o f Native Americans who reside on reservations within the State; if it is the latter, the State may\nnot.\nAt bottom, the question here concerns the precise relationship between Native Amencans residing on reservations\nand the States in which those reservations are located The question is not easily answered. On the one hand, there\nmay be some basis for States to treat reservation Indians working off the reservation as full state residents. Indeed,\nit is clear that Native A mericans are deemed state residents for certain purposes. See Goodluck v Apache County,\n417 F Supp 13 (D. Ariz. 1975), a j f d , 429 U.S 876 (1976). \xe2\x80\x9c They have the right to vote, to use state courts,\nand they receive some state services.\xe2\x80\x9d McClanahan, 411 U.S. at 173 (footnotes omitted). At least one court has\nrelied on these facts to conclude that \xe2\x80\x9c [a]n enrolled member of a tn b e living on a reservation is subject to three\nlevels o f governmental junsdiction: the tnbe, the state, and the federal government Being a resident o f one does\nnot remove the person from the junsdiction of the others. An enrolled member of a tnbe living on the tn b e \xe2\x80\x99s reserva\xc2\xad\ntion remains dom iciled in the state and is a resident of the state for limited purposes.\xe2\x80\x9d Esquiro v Dept o f Revenue,\n14 Or. Tax 130, 134 (Or. Tax 1997), a ff\xe2\x80\x99d, 328 O r 37 (Or. 1998). On the other hand, a leading treatise on federal\nIndian law suggests that reservation Indians working off the reservation are, for taxation purposes at least, in the\nsame position as nonresidents working in the State. \xe2\x80\x9c [A]n Indian residing within a reservation but earning some\nincome off the reservation can be taxed to the extent o f the off-reservation income, provided that the State bases\nits income tax on place o f earning.\xe2\x80\x9d Cohen, supra note 4, at 417 (emphasis added). A federal distnct court recently\ntook a sim ilar approach. See Lac du Flambeau B a n d o f Lake Superior Chippewa Indians v. Zeuske, 145 F. Supp.2d\n969 (W D Wis. 2000). In that case, the court held that Wisconsin lacked the authonty to lax income earned outside\nWisconsin by a Native American resident of a tn b al reservation located within Wisconsin According to the court,\n\xe2\x80\x9c (t]he state may tax persons resident within its borders who do not live on reservations because it has conferred\nupon these persons the benefit o f domicile and its accompanying privileges and advantages. It has not conferred\nthe same benefit upon tnbal members residing on reservations, however. The nght of tnbal members to reside on\nthe reservation derives from treaties entered into by the tribe in the nineteenth century.\xe2\x80\x9d Id at 976\n\n304\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\nAs noted above, preemption analysis asks whether \xe2\x80\x9c under the circumstances\nof th[e] particular case, [the State\xe2\x80\x99s] law stands as anobstacle to the accomplish\xc2\xad\nment and execution of the full purposes and objectives of Congress.\xe2\x80\x9d Geier, 529\nU.S. at 873 (quoting Hines , 312 U.S. at 67); see Freightliner , 514 U.S. at 287.\nDetermining what constitutes a \xe2\x80\x9c sufficient obstacle\xe2\x80\x9d in this sense is \xe2\x80\x9c informed\nby examining the federal statute as a whole and identifying its purpose and\nintended effects.\xe2\x80\x9d Crosby v. N a t\xe2\x80\x99l Foreign Trade Council, 530 U.S. 363, 373\n(2000).\n\n[W]hen the question is whether a Federal act overrides a state law,\nthe entire scheme of the statute must of course be considered and\nthat which needs must be implied is of no less force than that which\nis expressed. If the purpose of the act cannot otherwise be accom\xc2\xad\nplished\xe2\x80\x94 if its operation within its chosen field else must be frus\xc2\xad\ntrated and its provisions be refused their natural effect \xe2\x80\x94 the state\nlaw must yield to the regulation of Congress within the sphere of\nits delegated power.\nId. (quoting Savage v. Jones, 225 U.S. 501, 533 (1912)).\n\nThe Supreme Court has explained that \xe2\x80\x9c [t]he very purpose of \xc2\xa7514 in broadly\nfreeing the nonresident serviceman from the obligation to pay property and income\ntaxes was to relieve him of the burden of supporting the governments of the States\nwhere he was present solely in compliance with military orders.\xe2\x80\x9d Buzard, 382\nU.S. at 393; see also Dameron, 345 U.S. at 326. As this passage suggests, section\n514 is intended to provide that if an individual works in a certain jurisdiction\nbecause his military service requires him to be there, he should not be subject\nto any different burdens by virtue of that compulsory presence.12 More specifi\xc2\xad\ncally, compulsory presence in a particular place may not subject the service\nmember to taxing authorities to which he was not already subject prior to his\nmilitary service.\nBefore beginning military service, a Native American resident of a tribal res\xc2\xad\nervation who does not work outside the reservation is not subject to taxation by\nthe State in which the reservation is located. See McClanahan, 411 U.S. at 164.\nIf that State were to tax that individual\xe2\x80\x99s military income on the theory that it\nis income earned off-reservation, it would subject him to an income tax to which\nhe was not previously subject, and it would do so by virtue of his compulsory\npresence in a particular jurisdiction. Section 514\xe2\x80\x99s broad, generous purpose is to\nprevent precisely that eventuality.\nl2The legislative history to the SSCRA\xe2\x80\x99s predecessor supports this reading See Act of Mar. 8, 1918, \xc2\xa7 100 (Con\xc2\xad\ngress intended to \xe2\x80\x9c protect[]\npersons in military service of the United States in order to prevent prejudice\nor injury to their civil rights during their term o f service and to enable them to devote their entire energy to the\nmilitary needs of the Nation \xe2\x80\x9d ) (emphasis added).\n\n305\n\n\x0cOpinions o f the Office o f Legal Counsel in Volume 24\n\nWe recognize, of course, that some Native American service members could\nhave been subjected to state income tax prior to joining one of the armed services.\nUnder M escalero, a State containing a Native American\xe2\x80\x99s tribal residence may,\nabsent federal law to the contrary, subject that tribal member to income tax for\nincome earned outside the reservation. See 411 U.S. at 148\xe2\x80\x9449.13 Prior to enlisting\nin the military, however, such an individual was not subject to state income tax\nin a general sense; rather, she was subject to such tax only to the extent that\nher income was earned outside a reservation. When a reservation Indian enters\nmilitary service and is directed to perform that service outside her reservation,\nany income she earns for that service is earned off the reservation because of\nmilitary orders. Thus, were a State to impose a tax on that military compensation,\nthe tax would be incident to the service member\xe2\x80\x99s compulsory presence and work\noutside her tribal reservation. That is, the tax would result from the individual\xe2\x80\x99s\ncompliance with military orders. Such a tax would run afoul of what the Dameron\nCourt identified as section 514\xe2\x80\x99s core purpose: to protect military service members\nfrom being subjected to taxing authorities that rely solely on the members\xe2\x80\x99\ncompulsory presence in a particular jurisdiction as the basis for taxing them. See\n345 U.S. at 326.14\nWe presume that section 514 was not designed to afford less protection to\nNative Americans than to other members of the military. See Fed. Pow er Comm \xe2\x80\x99n,\n362 U.S. at 120 (\xe2\x80\x9c [GJeneral Acts of Congress apply to Indians as well as to\nall others in the absence of a clear expression to the contrary.\xe2\x80\x9d ). Indeed, we are\nobliged under both federal Indian law and the SSCRA to construe any textual\nambiguity on this point in favor of more, rather than less, protection. See Blackfeet\n13As discussed above, see supra note 1), it is unclear whether a State\xe2\x80\x99s authonty to tax income earned m the\nState by a Native A merican resident o f a reservation who is working off the reservation is based on the Slate\xe2\x80\x99s\nauthonty to tax all residents o f the State or the State\xe2\x80\x99s authority to tax income earned within the Slate by nonresidents\nworking there. To the extent that a State\xe2\x80\x99s authonty to tax such tribal members is based, not on the individual\xe2\x80\x99s\nresidence in that State, bgt on the place where the income is generated, then, wholly apart from any lax exemption\nconferred by the SSCRA, the only tribal residents whose military income could possibly be subject to state taxation\nwould be those who perform military service w ithin the Stale in which their reservation residence is located In\nlight o f our analysis o f the SSCRA \xe2\x80\x99s preemptive force, we need not, and do not, reach that issue here. See supra\np 11\n14 W e have found one case. U nited States v. K ansas, 810 F 2 d 935 (10th Cir. 1987), that is arguably in tension\nwith this analysis, but ihe outcome reached in lhat case is not contrary to the conclusion we reach here. In Kansas,\nthe Tenth C ircuit held that Kansas dtd not violate section 514 o f the SSCRA by taking the military income of\nnonresident service members into account when determining the rate o f income tax lo be levied on their nonmihiary\nincome earned in K ansas (typically by the service m ember\xe2\x80\x99s spouse). See id. at 936-38 & n.2. Although the court\nnoted that \xe2\x80\x9c higher tax rates and, consequently, higher taxes on nonmilitary Kansas source income can result from\nincluding military pay in the state\xe2\x80\x99s rate-setting form ula,\xe2\x80\x99\xe2\x80\x99 id at 936, it concluded that \xe2\x80\x9c [n]either the legislative\nhistory nor the plain language o f the SSCRA prohibits the use o f the described military income in formulas which\nset rates o f taxation on other income " I d at 938. The court specifically rejected the federal government\xe2\x80\x99s contention\nthat \xe2\x80\x9c the potentially higher rates on Kansas source income consutute \xe2\x80\x98an indirect tax on the military compensation\nof nonresident military personnel,\xe2\x80\x99 \xe2\x80\x9d and held that \xe2\x80\x9c [t]here is here a potentially higher tax on Kansas source income,\nnothing m ore.\xe2\x80\x99\xe2\x80\x99 Id (citation om itted) Kansas d o es not bear directly on the precise question at issue here, since\nin that case the service member was already subject to some host state income tax for nonmililary income. But\ninsofar as it may stand for the proposition that a military service member may be forced to shoulder a greater\nstate income tax burden as a direct consequence o f his compulsory presence in a particular jurisdiction in compliance\nwith military orders, we find the Tenth Circuit\xe2\x80\x99s reasoning to conflict with section 514\xe2\x80\x99s broad, generous purpose\nas identified by the Supreme Court in Dameron, 345 U S at 326, Buzard, 382 U S at 393, and elsewhere.\n\n306\n\n\x0cState Taxation o f Income o f Native American Armed Forces Members\n\nTribe, 471 U.S. at 766 (statutes affecting Indians \xe2\x80\x9c are to be construed liberally\nin favor of Indians, with ambiguous provisions to be interpreted to their benefit\xe2\x80\x9d );\nH.R. Rep. No. 77-2198, at 2 (\xe2\x80\x9c Any doubts that may arise as to the scope and\napplication of the act should be resolved in favor of the person in military service\ninvolved.\xe2\x80\x9d ); Boone, 319 U.S. at 575 (SSCRA \xe2\x80\x9c is always to be liberally con\xc2\xad\nstrued\xe2\x80\x9d ); Le M aistre, 333 U.S. at 6 (SSCRA is to be read \xe2\x80\x9c with an eye friendly\nto those who dropped their affairs to answer their country\xe2\x80\x99s call.\xe2\x80\x9d ). Accordingly,\nwe conclude that where a Native American service member who claims a tribal\nreservation as her residence earns military compensation outside that reservation\nby virtue of her compliance with military orders, section 514 prohibits the State\ncontaining the service member\xe2\x80\x99s reservation residence from taxing that military\ncompensation.15\nFinally, you have asked whether our opinion constitutes an adequate legal basis\nfor the Department of Defense to terminate state income tax withholding for\nNative American service members who certify that they have met the specified\ncriteria. Pursuant to statute, the Attorney General is responsible for providing legal\nadvice to the heads of departments within the Executive Branch. See 28 U.S.C.\n\xc2\xa7512 (1994) ( \xe2\x80\x9c The head of an executive department may require the opinion\nof the Attorney General on questions of law arising in the administration of his\ndepartment.\xe2\x80\x9d ). The Attorney General has delegated that responsibility to the\nOffice of Legal Counsel. See 28 C.F.R. \xc2\xa7 0.25(a) (2000) (assigning to the Assistant\nAttorney General, Office of Legal Counsel, the responsibility for \xe2\x80\x9c [preparing\nthe formal opinions of the Attorney General\xe2\x80\x9d and for \xe2\x80\x9c rendering informal opin\xc2\xad\nions and legal advice to the various agencies of the Government\xe2\x80\x9d ). In that regard,\nthe legal advice of the Office of Legal Counsel constitutes the legal position of\nthe Executive Branch, unless overruled by the President or the Attorney General.\nSee H. Jefferson Powell, The Constitution and the Attorneys General xv (1999)\n( \xe2\x80\x9c The published opinions of the Attorneys General and, since 1977, of the Office\nof Legal Counsel, . . . constitute the formal legal views of that branch o f the\nfederal government charged with the faithful execution of the laws.\xe2\x80\x9d ). Accord\xc2\xad\ningly, to the extent that a Native American service member can demonstrate resi\xc2\xad\ndence on a federally recognized tribal reservation in a manner that satisfies the\nDefense Department\xe2\x80\x99s current standards for establishing entitlement to an exemp\xc2\xad\ntion from state income tax withholding under section 514 of the SSCRA, the\n15 As discussed above, see supra note 4, the McClanahan rule bam ng slate taxation of income earned on a reserva\xc2\xad\ntion is a \xe2\x80\x9c categorical\xe2\x80\x9d one, County o f Yakima, 502 U.S al 258, and prohibiis state taxation o f Indian lands and\nreservation Indians except where authonzed by Congress But the rule would not apply \xe2\x80\x94 and our conclusion\nregarding the effect o f the SSCRA could well be different\xe2\x80\x94 in a situation where Congress had separately authonzed\na State or States to tax the reservation income of a reservation Indian. We are aware of no such authonzation.\nThe McClanahan Court surveyed a number of federal statutes in this area, and concluded that they manifest \xe2\x80\x9c Con\xc2\xad\ngress\xe2\x80\x99 intent to maintain the tax-exempt status of reservation Indians." 411 U S . at 176. Similarly, in Bryan v\nItasca County, the Court held that although 28 U S C \xc2\xa7 1360 grants certain States junsdiction over pnvate civil\nhugation involving reservation Indians in state court, it does not grant those States general civil regulatory authonty\nover reservation Indians See 426 U.S. at 385, 388-90. The Court therefore held that the statute does not empower\nStates to tax property on a reservation\n\n307\n\n\x0cOpinions o f Ihe Office o f Legal Counsel in Volume 24\n\nDefense Department may rely on the advice provided in this opinion and not with\xc2\xad\nhold state income tax from such a service member\xe2\x80\x99s military compensation. Cf.\nSmith v. Jackson , 246 U.S. 388, 390-91 (1918) (concluding that the Auditor of\nthe Panama Canal Zone should have followed the ruling of the Attorney General\non a question of federal statutory law ).16\n\nCONCLUSION\nFor the foregoing reasons, we conclude that section 514 of the SSCRA prohibits\nStates from taxing the military compensation of Native American service members\nwho are residents of tribal reservations.\nRANDOLPH D. MOSS\nAssistant Attorney General\nOffice o f Legal Counsel\n\n16 M oreover, we are informed by the Department\xe2\x80\x99s Tax Division that to the extent that Native American service\nmembers properly claiming a tnbal reservation as their residence become involved in legal proceedings concerning\ntheir possible liability for state income tax on their military compensation, the Tax Division will, upon request from\nthe Defense Department, provide legal representation to such service members where appropnate\n\n308\n\n\x0c'