Court Opinion

ID: 8211618
Source: CourtListenerOpinion
Date Created: 2022-10-04 16:00:22.472465+00
Date Added: 2024-06-11T16:42:04.664558
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 20-3441
                         ___________________________

          Flandreau Santee Sioux Tribe, a federally recognized Indian tribe

                                       Plaintiff - Appellee

                                         v.

Michael Houdyshell, Secretary of the Department of Revenue of the State of South
  Dakota, in his official capacity 1; Kristi Noem, Governor of the State of South
                           Dakota, in her official capacity

                                     Defendants - Appellants
                                   ____________

                      Appeal from United States District Court
                     for the District of South Dakota - Southern
                                    ____________

                            Submitted: October 20, 2021
                              Filed: October 4, 2022
                                  ____________

Before COLLOTON, SHEPHERD, and KELLY, Circuit Judges.
                         ____________

SHEPHERD, Circuit Judge.

     This case returns to us for the second time, presenting the same issue:
“whether a South Dakota tax on nonmember activity on the Flandreau Indian

      1
       Michael Houdyshell is automatically substituted for his predecessor under
Federal Rule of Appellate Procedure 43(c)(2).
Reservation [(the Reservation)] in Moody County, South Dakota is preempted by
federal law.” Flandreau Santee Sioux Tribe v. Haeder, 938 F.3d 941, 942 (8th Cir.
2019) (opinion of Loken, J.). We previously vacated the district court’s grant of
summary judgment in favor of the Flandreau Santee Sioux Tribe (the Tribe) on the
basis that the tax is preempted, concluding “on the summary judgment record that
the tax is not preempted.” Id. On remand, and after a six-day video bench trial, the
district court entered judgment in favor of the Tribe, concluding again that federal
law preempts the imposition of the tax. Having jurisdiction under 28 U.S.C. § 1291,
we reverse and remand.

                                            I.

        This dispute centers on the State of South Dakota’s (the State) imposition of
an excise tax on work performed by a nonmember contractor hired by the Tribe in
relation to a $24 million renovation and expansion of the Royal River Casino &
Hotel, which the Tribe operates on the Reservation. Under South Dakota law, a 2%
excise tax is applied to the gross receipts of a contractor if its services are enumerated
in division c (construction) of the Standard Industrial Classification Manual of 1987
or if its services “entail the construction, building, installation, or repair of a fixture
to realty” within the State. S.D. Codified Laws §§ 10-46A-1, -2, -2.2. While the tax
is levied upon the contractor, the contractor may pass along the tax to its customers,
here, the Tribe. S.D. Codified Laws § 10-46A-12. The Tribe asserts that this tax—
totaling $384,436—cannot be imposed on the renovation and expansion project
because the tax is preempted by federal law, specifically the Indian Gaming
Regulatory Act (IGRA) and the Indian Trader Statutes.

     In the earlier iteration of this case, the lead opinion recited the following facts,
which are equally relevant to this appeal:

            The Tribe owns and operates the Royal River Casino & Hotel . . .
      on the Reservation, where it conducts “Class III gaming” such as table
      games and slot machines. As required by [IGRA], the Tribe and the
      State entered into a gaming compact that provides the terms under
                                       -2-
      which the Tribe is authorized to conduct Class III gaming at the Casino.
      See 25 U.S.C. § 2710(d). The Casino, opened in 1990 and relocated in
      1997, operates in a building that houses a gaming floor, a hotel, a
      restaurant, a bar, a gift shop, a snack bar, and a live entertainment
      venue.

             The Tribe planned and has partially implemented a $ 24 million
      renovation and expansion of the Casino, in part to compete with a
      newer, larger casino that opened nearby in 2011. To this end, the Tribe
      and the State agreed to double the number of slot machines allowed
      under the gaming compact. In October 2015, the Tribe contracted with
      a nonmember construction company, Henry Carlson Company, to carry
      out the planned renovation. It is undisputed that . . . Henry Carlson
      Company’s construction services under this contract would be subject
      to the 2% excise tax if not performed on an Indian reservation. Cf.
      Valley Power Sys. v. S.D. Dep’t of Revenue, 905 N.W.2d 328, 331
      (S.D. 2017). The compact between the Tribe and the State is silent as
      to whether the State may impose the excise tax on a nonmember
      contractor performing construction services on the Casino’s realty.

            Construction on the Casino project began in December 2016.
      Certain construction projects within Indian country, such as
      construction of schools and tribal government buildings, are exempt
      from the excise tax, based on a project-by-project analysis by the South
      Dakota Department of Revenue using criteria developed by the State
      from federal preemption decisions. Henry Carlson Company twice
      requested an exemption for the Casino renovation project. Both
      requests were denied by the Department of Revenue, which does not
      grant exemptions for nonmember contractor work on “commercial”
      projects such as a casino. Henry Carlson Company then remitted the
      excise tax under protest and requested that the State refund the tax to
      the Tribe. See S.D. C[odified] L[aws §] 10-27-2. When the State
      denied the request, the Tribe filed this action in April 2017, seeking
      declaratory relief, an injunction, and a refund of the tax paid under
      protest.

Haeder, 938 F.3d at 943 (opinion of Loken, J.). After both parties moved for
summary judgment, the district court granted the Tribe’s motion in part, holding that
IGRA preempts the imposition of the tax, either expressly or based on the balancing
                                         -3-
test set forth in White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980). The
district court dismissed, however, the Tribe’s claim for a refund for lack of
jurisdiction. The State appealed, and this Court reversed, holding that, on the
summary judgment record, IGRA does not expressly preempt the tax and the
Bracker balancing test does not demand preemption. Haeder, 938 F.3d at 945-47
(opinion of Loken, J.); id. at 947 (Colloton, J., concurring in the judgment). On
remand, the district court held a six-day bench trial, after which it issued an order
finding in favor of the Tribe. The district court determined that, while IGRA does
not expressly preempt the tax, it preempts the tax under the Bracker balancing test,
and, in the alternative, the Indian Trader Statutes preempt the tax both expressly and
under the Bracker test. The State again appeals.

                                            II.

       The State asserts that the district court erred in concluding that, under the
Bracker balancing test, IGRA preempts the excise tax. The State also argues that
the district court erred in alternatively concluding that the Indian Trader Statutes
preempt the excise tax expressly and under Bracker. Following a bench trial, we
review a district court’s “legal conclusions de novo and factual findings for clear
error.” Howard v. United States, 964 F.3d 712, 716 (8th Cir. 2020) (citation
omitted). In reviewing factual findings for clear error, “we will overturn a factual
finding only if it is not supported by substantial evidence in the record, if it is based
on an erroneous view of the law, or if we are left with the definite and firm conviction
that an error was made.” Id. (citation omitted).

       “‘[A]bsent cession of jurisdiction or other federal statutes permitting it,’ . . . a
State is without power to tax reservation lands and reservation Indians.” Okla. Tax
Comm’n v. Chickasaw Nation, 515 U.S. 450, 458 (1995) (first alteration in original)
(citation omitted). “If the legal incidence of a state tax falls on a Tribe or its members
for sales made within Indian country, . . . the tax is categorically unenforceable,
without regard to its ‘economic realities.’” Flandreau Santee Sioux Tribe v. Noem,
938 F.3d 928, 932 (8th Cir. 2019) (citation omitted). However, “[m]ore difficult
                                           -4-
questions arise where . . . a State asserts authority over the conduct of non-Indians
engaging in activity on the reservation.” Bracker, 448 U.S. at 144. “The Supreme
Court in [Bracker] laid out a mode of analysis for courts to use” in this latter scenario.
Mashantucket Pequot Tribe v. Town of Ledyard, 722 F.3d 457, 467 (2d Cir. 2013).

        “[T]wo ‘independent but related’ barriers” exist that can bar a state’s
imposition of a tax on a nonmember engaged in on-reservation activity: “state
authority may be pre-empted by federal law, or it may interfere with the tribe’s
ability to exercise its sovereign functions.” See Ramah Navajo Sch. Bd., Inc. v.
Bureau of Revenue, 458 U.S. 832, 837 (1982) (citation omitted). In other words,
while a state tax may be expressly preempted by federal law, “[f]ederal preemption
is not limited to cases in which Congress has expressly preempted the state tax.”
Noem, 938 F.3d at 932. In cases where express preemption is not present, a state
tax may nevertheless be preempted “because it ‘unlawfully infringe[s] on the right
of reservation Indians to make their own laws and be ruled by them.’” Ledyard, 722
F.3d at 467 (alteration in original) (citation omitted). “Such a tax is impermissible
if ‘the imposition of the tax fails to satisfy the Bracker interest-balancing test.’” Id.
at 471 (citation omitted). Under Bracker, we “appl[y] a flexible analysis to
determine whether state taxation of non-members on Indian land is proper.” Noem,
938 F.3d at 932.

      Each case “requires a particularized examination of the relevant state,
      federal, and tribal interests.” . . . [B]ecause of the long-recognized
      importance of tribal sovereignty, “questions of pre-emption in this area
      are not resolved by reference to standards of pre-emption that have
      developed in other areas of the law, and are not controlled by
      ‘mechanical or absolute conceptions of state or tribal sovereignty.’”
      Instead, Indian tax immunity jurisprudence relies heavily on the
      “significant geographical component[”] of tribal sovereignty,[] which
      “provides a backdrop against which the applicable treaties and federal
      statutes must be read.”

Id. (citations omitted). “In conducting [the Bracker] analysis, we focus on ‘the
extent of federal regulation and control, the regulatory and revenue-raising interests

                                           -5-
of states and tribes, and the provision of state or tribal services.’” Haeder, 938 F.3d
at 945 (opinion of Loken, J.) (citation omitted). “State jurisdiction is preempted by
the operation of federal law if it interferes or is incompatible with federal and tribal
interests reflected in federal law, unless the state interests at stake are sufficient to
justify the assertion of state authority.” Noem, 938 F.3d at 935-36 (quoting New
Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 334 (1983)). “Generally, ‘a State
seeking to impose a tax on a transaction between a tribe and nonmembers must point
to more than its general interest in raising revenues.’” Id. at 932 (citation omitted).

        As this Court has previously stated, the Supreme Court has used the Bracker
balancing test to uphold some state taxes on nonmember commercial activities on
tribal lands and has used the test to determine that some state taxes were preempted.
See id.

      In Bracker, for example, the Court held that a State’s use fuel tax on a
      nonmember’s logging activity on tribal land was preempted by federal
      statutes and programs comprehensively encouraging and regulating
      logging on federal lands held in trust for Indians. In Ramah, the Court
      held that a State’s gross receipts tax on a nonmember’s activity in
      building a reservation school was preempted by the comprehensive
      federal regulation and financing of Indian education—the tax was
      based on a general desire to increase state revenues and provided no
      specific offsetting benefit to Indian education. By contrast, in Cotton
      [Petroleum Corp. v. New Mexico, 490 U.S. 163 (1989)], the Court
      upheld a State’s severance tax on oil and gas produced by nonmember
      lessees from wells on reservation land because state regulation
      provided substantial services to the tribe and the lessees, no economic
      burden fell on the tribe, federal regulation was extensive but not
      exclusive, and there was no evidence the tax affected the tribe’s ability
      to attract lessees. And in Washington v. Confederated Tribes of
      Colville Indian Reservation, 447 U.S. 134 (1980), the Court upheld
      both the tribe’s sovereign power to tax cigarette sales to nonmembers
      on the reservation, and a state excise tax on vendors who provided
      cigarettes for on-reservation sales to nonmembers. The value of Indian
      sales to nonmembers was not generated by tribal activities, the Court
      explained, only by the exemption of such sales from state tax; neither

                                          -6-
      principles of federal Indian law nor any federal statute preempted the
      State from taxing this “artificial competitive advantage over all other
      businesses in a State.”

Id. at 932-33 (citation omitted). With this framework in mind, we now turn to the
question of whether IGRA or the Indian Trader Statutes preempt the excise tax.

                                          A.

        We first consider whether the district court erred in concluding that IGRA
preempts the imposition of the excise tax. As an initial matter, in its opinion, the
district court correctly noted that, “[b]ased on the Eighth Circuit’s opinion in this
case on appeal and in Noem, . . . the contractor’s excise tax is not expressly
preempted by federal law.” R. Doc. 186, at 23-24. Thus, the only issue relevant on
appeal regarding IGRA is whether the tax is preempted under the Bracker balancing
test, that is, “whether the State’s interests in imposing the tax outweigh the relevant
federal and Tribal interests.” Noem, 938 F.3d at 935. The State asserts that the
district court erred in concluding that the Bracker balancing test weighed in favor of
preemption because (1) the extent of federal regulation and control through IGRA is
minimal; (2) the tribal interests at stake here are minimal; and (3) the State has a
significant interest in levying taxes, which are used for the benefit of its citizens,
including tribal members.

                                           i.

       First, we consider the extent of federal regulation and control of casino
construction in IGRA. The district court noted that, in Haeder, we “held that the
summary judgment record did not establish the State contractor’s excise tax
‘implicate[d] the relevant federal . . . interests’” because the provisions of IGRA that
involved “the construction and maintenance of gaming facilities were not
‘comprehensive and pervasive’ federal regulation or control.” R. Doc. 186, at 39-40
(alterations in original) (quoting Haeder, 938 F.3d at 945-46 (opinion of Loken, J.)).
Nonetheless, the district court concluded that, while the lack of comprehensive and
                                             -7-
pervasive federal regulation was insufficient for IGRA to expressly preempt the tax,
“evidence at trial established that federal regulation under IGRA is extensive,
illustrating the federal interest in the regulation and construction of Indian gaming
facilities, as well as the federal interest in simultaneously promoting tribal
self-sufficiency and tribal governance.” R. Doc. 186, at 40. This conclusion is in
error.

       The district court’s conclusion was based in part on its reliance on a specific
IGRA provision, 25 U.S.C. § 2710, which, in subsections (b)(2)(E), (d)(2)(A), and
(d)(2)(B), provides that a tribe must adopt, and the National Indian Gaming
Commission Chairman must approve, absent specified exceptions, an ordinance or
resolution stating that “the construction and maintenance of the gaming facility, and
the operation of that gaming is conducted in a manner which adequately protects the
environment and the public health and safety.” The district court concluded that
§ 2710(b)(2)(E) “is evidence of a strong federal interest in the adequate and safe
construction of tribal gaming facilities, including the construction and renovation
here of the Royal River Casino.” R. Doc. 186, at 40. As the State notes, a single
sentence regarding the construction and maintenance of a gaming facility can hardly
be said to constitute extensive regulation over casino construction. Indeed, the Ninth
Circuit has similarly concluded that “IGRA is a gambling regulation statute, not a
code governing construction contractors, the legalities of which are of paramount
state and local concern.” Barona Band of Mission Indians v. Yee, 528 F.3d 1184,
1192 (9th Cir. 2008).

      This single provision is unlike other federal regulatory schemes, like those
governing Indian educational institutions, which are “comprehensive and
pervasive.” See Ramah, 458 U.S. at 839 (“Federal regulation of the construction
and financing of Indian educational institutions is both comprehensive and
pervasive.”). Section 2710(b)(2)(E), when considered against the extensive
regulation that governs Indian educational institutions, simply does not evidence
extensive federal regulation of casino construction. See Ramah, 458 U.S. at 839-41
(“The Federal Government’s concern with the education of Indian children can be
                                         -8-
traced back to the first treaties between the United States and the Navajo Tribe.
Since that time, Congress has enacted numerous statutes empowering the [Bureau
of Indian Affairs (BIA)] to provide for Indian education both on and off the
reservation. . . . [25 U.S.C. § 450k] empowers the Secretary to promulgate
regulations to accomplish the purposes of the [Indian Self-Determination and
Education Assistance] Act. Pursuant to this authority, the Secretary has promulgated
detailed and comprehensive regulations respecting ‘school construction for
previously private schools now controlled and operated by tribes or tribally approved
Indian organizations.’” (footnote omitted) (citation omitted)).

       The district court also discussed “the federal interests at issue in this
case[, which] are articulated within the text of IGRA.” R. Doc. 186, at 38. Section
2702 provides that the purpose of IGRA is:

      (1) to provide a statutory basis for the operation of gaming by Indian
      tribes as a means of promoting tribal economic development,
      self-sufficiency, and strong tribal governments;

      (2) to provide a statutory basis for the regulation of gaming by an Indian
      tribe adequate to shield it from organized crime and other corrupting
      influences, to ensure that the Indian tribe is the primary beneficiary of
      the gaming operation, and to assure that gaming is conducted fairly and
      honestly by both the operator and players; and

      (3) to declare that the establishment of independent Federal regulatory
      authority for gaming on Indian lands, the establishment of Federal
      standards for gaming on Indian lands, and the establishment of a
      National Indian Gaming Commission are necessary to meet
      congressional concerns regarding gaming and to protect such gaming
      as a means of generating tribal revenue.

(emphases added). Although § 2702 undoubtedly describes the federal interests
advanced by IGRA, the district court ignored the fact that the stated purposes are
“for the operation of gaming,” “for the regulation of gaming,” and “for gaming,” not
for all activities tangentially related to gaming. Id. § 2702; see also Casino Res.
                                         -9-
Corp. v. Harrah’s Ent., Inc., 243 F.3d 435, 439 (8th Cir. 2001) (“Not every contract
that is merely peripherally associated with tribal gaming is subject to IGRA’s
constraints.”). Standing alone, or even in combination with § 2710(b)(2)(E), § 2702
does not demonstrate that federal regulation of tribal casino construction is pervasive
or extensive.

        The evidence that the district court heard at trial does not change the fact that
there is no extensive federal regulation governing the construction of casinos on
tribal land. In its opinion, the district court described at great length the involvement
(or lack thereof) of the Tribe, the State, and federal agencies in the renovation
project. Specifically, the district court noted that the evidence demonstrated that:
there was no State inspection or maintenance of the Casino; federal and tribal
agencies conducted all inspections; all regulatory involvement in the Casino
renovation came from federal or tribal agencies; “[b]oth IGRA and the Tribe’s
[gaming] Ordinances require the Tribe’s gaming regulators and Casino management
to certify that the Casino is built and maintained in a manner that protects the safety
and health of the public and patrons and the environment”; the Tribal Gaming
Commission, which is the tribal agency charged with oversight of all gaming
activities, did not submit construction plans to the National Indian Gaming
Commission (NIGC) for approval, but nevertheless submitted a copy of the facility
license to the NIGC attesting that the facility construction, maintenance, and
operation adequately protected the public health and safety; the State did not provide
any “help, funds, training, or inspections”; the Tribe provided “the daily supervision
and security” for the project; tribal and federal agencies issued all the licenses or
permits, with the exception of one electrical permit; renovations “were essential to
benefit the health and safety of Indian gaming patrons and workers”; roughly $6
million of project financing came through Tribal Economic Development Bonds;
and the State’s only regulatory authority under the gaming compact between the
Tribe and the State is to inspect the “slot machines for compliance with state and
tribal gaming laws.” R. Doc. 186, at 41-48. After discussing this evidence, the
district court concluded that

                                          -10-
      both federal regulation under IGRA and tribal regulation under the
      Tribe’s laws of the Casino renovation were substantial and extensive,
      especially when compared to the lack of State regulation. The evidence
      showed a scheme of federal and tribal regulation of Indian gaming
      facilities that leaves a minimal role for State oversight of the renovation
      project.

R. Doc. 186, at 49.

       Although this detailed description of the level of tribe, state, and federal
involvement in the renovation project is certainly illustrative as to how the
renovation project proceeded, the fact remains that, even if § 2710(b)(2)(E) may
tangentially touch the construction and renovation project, IGRA is not designed to,
nor does it aim to, control construction of tribal casinos. The level of federal
involvement in this renovation project does not demonstrate that it occurred due to
the dictates of IGRA; 2 the use or involvement of federal entities throughout the
project does not mean that IGRA provides extensive regulatory control. Submission
to general federal oversight or involvement in the renovation process stands in stark
contrast to instances where the Supreme Court has deemed that a specific statutory
or regulatory scheme imposes specific obligations on the construction of specific
institutions or on contractual agreements. In Ramah, the Supreme Court detailed the
factors underlying its determination that “[f]ederal regulation of the construction and
financing of Indian educational institutions is both comprehensive and pervasive,”
specifically, the BIA’s “wide-ranging authority [under the Indian
Self-Determination and Education Assistance Act and associated regulations
regarding school construction] to monitor and review the subcontracting agreements
between the Indian organization, which is viewed as the general contractor, and the

      2
       By way of example, the district court discussed the testimony of Stephen
Nelson, Compliance Officer for the Casino. Nelson testified about the inspections
conducted by Indian Health Services during the course of and upon completion of
the project. R. Doc. 189, at 234-236. Although these inspections demonstrate
federal oversight of the project, there is no suggestion that they were mandated by
IGRA.

                                         -11-
non-Indian firm that actually constructs the facilities.” 458 U.S. at 839-41. The
Supreme Court went on to detail the applicable regulatory requirements, including
that

      the BIA must conduct preliminary on-site inspections, and prepare cost
      estimates for the project in cooperation with the tribal organization[,]
      . . . must approve any architectural or engineering agreements executed
      in connection with the project[,] . . . [and may] require that all
      subcontracting agreements contain certain terms . . . . Finally, to ensure
      that the Tribe is fulfilling its statutory obligations, the regulations
      require the tribal organization to maintain records for the Secretary’s
      inspection.

Id. at 841. Relatedly, in Bracker, the Supreme Court held that federal law preempted
a state motor carrier license and fuel tax on a nonmember logging company engaged
in activity on tribal land because the BIA was involved in nearly every aspect of
harvesting Indian timber. 448 U.S. at 145-48. Specifically, the Secretary of the
Interior had “broad authority over the sale of timber on the reservation,” and the
Secretary and BIA extensively regulated contracts between tribal members and
nonmembers performing work on the reservation in the form of a detailed bidding
procedure, mandatory terms to be included in each contract, and overall approval of
all contracts by the Secretary. Id. at 145-47. There is simply no such statutory or
regulatory scheme dictating federal involvement over casino construction here.
Given these guideposts from the Supreme Court, even with the evidence that the
district court heard at trial, we cannot conclude that the federal regulation in IGRA
regarding casino construction is extensive.

      We are similarly unconvinced by the district court’s conclusions regarding the
federal interest in “[p]romoting [t]ribal [e]conomic [d]evelopment, [e]nsuring that
the Tribe is the [p]rimary [b]eneficiary of [g]aming, and [p]rotecting [g]aming as a
[m]eans of [g]eneral [t]ribal [r]evenue.” R. Doc. 186, at 52. We agree with the
observation in Haeder that, with respect to these interests, “the generally applicable
excise tax is a one-time tax on nonmember contractor construction services in
expanding and renovating the Casino’s realty, some of which are performed off the
                                         -12-
reservation. This tax hardly implicates the relevant federal and tribal interests.” 938
F.3d at 946 (opinion of Loken, J.). Nothing in the district court’s detailed
explanation of these interests counters this point: the excise tax is a one-time tax that
is not aimed at regulating tribal gaming. The district court determined that the
evidence at trial “established that the effects of the excise tax are not ‘a one-time
tax’” because, if the Tribe were not required to pay the excise tax, it could have
purchased additional slot machines, which would have had a continuous effect of
increasing tribal revenue. However, the connection between the tax and an increase
in revenue from additional slot machines is too attenuated to conclude that the excise
tax is not a one-time tax or that it “substantially undermines the Tribe’s ability to
generate revenues from . . . gaming.” R. Doc. 186 at 52-54; see also Cotton, 490
U.S. at 187 (“Any impairment to the federal policy . . . that might be caused by these
effects, however, is simply too indirect and too insubstantial to support Cotton’s
claim of pre-emption.”). As “[n]othing within IGRA reveals congressional intent to
exempt” nonmember construction contractors “from generally applicable state taxes
that would apply in the absence of the legislation,” see Ledyard, 722 F.3d at 473,
these stated federal interests are not implicated by the excise tax.

                                           ii.

       Second, as we concluded in Haeder, the tribal interests are minimal, and the
State has a significant interest in raising revenues for essential government services.
We agree with the lead opinion’s recitation of the stated purpose of IGRA in § 2702
and its statement that

      [b]ecause the Tribe has failed to show that the tax has more than a de
      minimis financial impact on federal and tribal interests, as in Ledyard,
      722 F.3d at 476-77, the State’s legitimate interests in raising revenues
      for essential government programs that benefit the nonmember
      contractor-taxpayer in this case, as well as its interest in being able to
      apply its generally applicable contractor excise tax throughout the
      State, are sufficient to justify imposing the excise tax on Henry Carlson
      Company’s construction services performed on the Casino’s realty.

                                          -13-
Haeder, 938 F.3d at 946-47 (opinion of Loken, J.). In reaching this conclusion, it is
“[m]ost significant[]” that “the Tribe ha[d] presented no evidence that imposition of
the contractor excise tax for Henry Carlson Company’s work on the Casino project
will impede the Tribe’s ability to conduct its Class III gaming activities to generate
gaming revenue.” Id. at 946. On the summary judgment record, the amount of the
excise “tax pale[d] in comparison” to the Casino’s annual revenues. “Absent a
showing that the effect of this one-time tax on construction would be to reduce the
demand for the Casino’s commercial activities, this indirect financial burden was
‘simply too indirect and too insubstantial to support [the Tribe’s] claim of
preemption.’” Id. (third alteration in original) (citation omitted). Even considering
the entire trial record, this conclusion remains in full force.

                                          a.

       Regarding the tribal interests, we first consider the financial burden that the
excise tax imposes on the Tribe. On remand, the district court determined that the
Tribe had shown more than a de minimis financial burden, concluding that “the Tribe
was deprived of at least $1.24 million . . . in gaming revenue.” R. Doc. 186, at 65.
However, this lost revenue amount is based on speculation that, had the Tribe not
been forced to pay the $384,436 excise tax to the State, it would have used its funds
to purchase 19 additional slot machines, and the additional machines would have
brought in revenue of approximately $1.24 million annually, representing a 10%
increase in the Casino’s earnings. See R. Doc. 189, at 168 (“[I]t’s about [$]1.245
million for the year. . . . That would just be based on the 19 machines that we
speculate we would have purchased.”); R. Doc. 189, at 185 (“We’ve already
identified some slot machines that we would like to purchase . . . .”). More
significantly, even if it were a certainty that the Tribe would have used the amount
of the excise tax to purchase 19 new slot machines, resulting in a $1.24 million
revenue increase, this financial impact of the tax remains “too indirect” and “too
insubstantial” to weigh in favor of preemption. See Cotton, 490 U.S. at 186-87 &
n.17 (concluding that impact of tax was “too indirect” and “too insubstantial” to
warrant preemption where state tax had “a marginal effect” on the demand for and
                                        -14-
value of on-reservation leases as well as the Tribe’s ability to increase its tax rate
and did not involve “extraordinarily high” or “unusually large state tax” or generate
“enormous revenues” (citation omitted)). Just like the tax impacts in Cotton, any
projected lost revenue is an indirect consequence of the tax, and there is no evidence
that the tax amount is “extraordinarily high” or is used by the state to collect
“enormous revenues.” See id. at 186 n.7 (citation omitted).

       In addition to concluding that the $1.24 million figure constituted a financial
burden on the Tribe weighing in favor of preemption, the district court concluded
that this lost revenue amount demonstrated that the excise tax interfered with the
Tribe’s interest in its economic development because

      [t]he funds that the Tribe would use to pay the State tax and the
      significant gaming revenue of at least $1.24 million dollars that the
      Tribe loses as a result of the State excise tax impacts the Tribe’s ability
      to economically develop and provide essential government services
      both on and off-reservation.

R. Doc. 186, at 72. Just as this purportedly lost revenue amount is too indirect and
too insubstantial to constitute a financial burden weighing in favor of preemption, it
is also too indirect and too insubstantial to constitute interference with the Tribe’s
interest in economic development. Given the foregoing, we conclude that “the Tribe
has failed to show that the tax has more than a de minimis financial impact on . . .
tribal interests.” 938 F.3d at 947 (opinion of Loken, J.). In the absence of more
concrete evidence, we find that the district court erred in concluding that these tribal
interests weighed in favor of preemption.

       As to the other tribal interests that the district court found weighed in favor of
preemption—the tax’s interference with the Tribe’s right to self-determination,
self-governance, and sovereignty—we conclude that the district court erroneously
found that these interests weighed in favor of preemption. First, the district court
concluded that the tax impedes the Tribe’s interest in self-determination by
hampering its ability to fully realize its gaming revenue and allocate funds from such
                                          -15-
revenue where the Tribe so desired. But as the State notes, a reduction in tribal
revenue cannot alone serve to invalidate the tax. See Wagnon v. Prairie Band
Potawatomi Nation, 546 U.S. 95, 114 (2005) (explaining that “downstream
economic consequences,” such as “a decrease in [a tribe’s] revenues,” are
insufficient to invalidate a tax); Crow Tribe of Indians v. Montana, 650 F.2d 1104,
1116 (9th Cir. 1981), opinion amended on denial of reh’g, 665 F.2d 1390 (9th Cir.
1982) (“It is clear that a state tax is not invalid merely because it erodes a tribe’s
revenues, even when the tax substantially impairs the tribal government’s ability to
sustain itself and its programs.”).

       Second, the district court concluded that the excise tax interferes with the
Tribe’s Tax Act 3 and thus the Tribe’s right to self-governance. According to the
Tribe, the only way that it can obtain relief from the excise tax is to impose its own
excise tax on construction within the Reservation and then enter into a tax collection
agreement 4 with the State, allowing the Tribe to retain some or all of the collected
excise tax in the same manner as it does with respect to taxes collected on cigarettes
sold on the Reservation. See R. Doc. 191, at 41. The district court concluded that

      3
          As the district court noted, “The Tribe has an extensive civil and criminal
code that governs conduct within the Tribe’s jurisdiction, including a tribal Tax Act
. . . . The Tribe’s Tax Act regulates taxation within tribal jurisdiction, imposing tribal
sales and use tax, motor vehicle fuel tax, and taxes on cigarettes, utilities,
communication, and other products.” R. Doc. 186, at 67-68.
      4
        Under South Dakota law, the Tribe may enter into a tax collection agreement
with the State, which allows the Tribe and State to negotiate which party retains
which portions of a collected tax, provided that the Tribe imposes the same type of
tax under its Tax Act as the State does under its tax code. See S.D. Codified Laws
§ 10-12A-5 (“A tax collection agreement between the [D]epartment [of Revenue]
and an Indian tribe may provide, if agreed upon by the parties, that a fixed percentage
of the total annual state and tribal tax proceeds from an area of Indian country shall
be remitted to the Indian tribe in lieu of the exact amount of the revenue collected as
a result of the imposition of tribal taxes.”); see also S.D. Codified Laws § 10-12A-
4. (“These agreements may provide for the collection of any of the following state
taxes and any tribal taxes imposed by a tribe that are identical . . . .”).
                                           -16-
this dilemma—requiring the Tribe to impose a tax on itself or forego a tax agreement
with the State—amounts to interference with the Tribe’s right to self-governance.
We disagree. The existence of a financial incentive for the Tribe to choose to enact
an excise tax under its Tax Act does not interfere with the Tribe’s interest in
self-governance because the ultimate decision of whether to impose an excise tax,
or any other tax, or refrain from imposing of a particular tax, belongs to the Tribe.

       Third, the district court further concluded that the tax interfered with the
Tribe’s interest in self-governance because it impacted the Tribe’s ability to operate
at the full capacity authorized under the gaming compact, which authorized up to
1,000 slot machines. The district court reasoned that the tax hindered the Tribe’s
ability to purchase additional slot machines and, thus, impeded the Tribe’s interests
as negotiated in the gaming compact. However, as previously stated, this impact is
indirect, see Cotton, 490 U.S. at 187, and is also speculative, particularly where
evidence suggests other reasons that the Tribe is not operating at the full level of slot
machines allowed under the compact, see R. Doc. 189, at 188 (“We’re sitting around
the same number [of slot machines as before the expansion project]. We brought
some new machines in, taken some machines out. We have a plan to increase the
machines moving forward. Unfortunately, COVID got in the way of those plans and
the necessary resources of the 384,000 that the State is seeking.”).

        Finally, the district court concluded that the tax interfered with the Tribe’s
ability to self-govern by impeding the Tribe’s performance of essential government
functions because, due to other tribal buildings’ state of disrepair, the Tribe needed
to use the Casino administration building for tribal government meetings. According
to the district court, the tax impacted construction of the administrative building at
the Casino, which the Tribe needs to conduct government meetings. This
consequence of the tax is another indirect and downstream effect that cannot provide
a basis for preemption. Cf. Cotton, 490 U.S. at 187 (rejecting impairment to federal
interests as “too indirect and too insubstantial to support . . . pre-emption”). The
tribal interests thus do not weigh in favor of preemption, and the district court erred
in concluding that they did.
                                          -17-
                                          b.

       As to the State’s interests, “[t]he exercise of State authority which imposes
additional burdens on a tribal enterprise must ordinarily be justified by functions or
services performed by the State in connection with the on-reservation activity.”
Mescalero, 462 U.S. at 336. The district court concluded that the State’s interests in
levying the excise tax—reimbursement for State-provided services, raising revenue
for the State’s general fund via the excise tax, and uniform application of South
Dakota tax law—were insufficient to justify the excise tax because the State could
“only demonstrate a general interest in raising revenue.” R. Doc. 186, at 99. This
was in error.

       The district court first determined that the State’s interest in being reimbursed
for the services it provided was minimal because the State failed to establish that
sufficient State services, funded through the general fund, were used in connection
with the construction project. We disagree with the district court to the extent that
it concluded that the State was required to demonstrate that the excise tax would be
used directly for the benefit of the Tribe, its members, or Henry Carlson Company
and its employees in connection with the renovation project.                    “[F]or a
generally-applicable tax, a court may credit the services provided by the State to the
Tribe more generally as ‘related’ to the tax,” Ledyard, 722 F.3d at 475, and the
evidence at trial demonstrated that the State’s general fund provides various services
throughout South Dakota, including Moody County where the Casino is located, that
generally benefit the Tribe, its members, and Henry Carlson Company and its
employees. Among these services is the funding of general operations of school
districts, funding of nutritional programs for school breakfasts and lunches, and
maintenance of the State’s colleges and special schools. More significantly, the
State uses money from the general fund to provide matching state aid for federal
social services like health insurance for children and the administration of federal
programs like Medicaid. These services are generally available to tribal members
and employees of Henry Carlson Company, and while they are not directly related
to the construction project, they nevertheless represent a strong state interest in
                                         -18-
implementing the tax. See id. (stating that the Supreme Court has permitted tax
levied against reservation lessees that exceeded the value of services provided
generally to the reservation, while noting the state’s interest in “[t]he intangible
value of citizenship in an organized society [that] is not easily measured in dollars
and cents” and cautioning against the “‘nightmarish administrative burdens’ that
would arise from requiring parity between state taxes and state services” (alterations
in original) (quoting Cotton, 490 U.S. at 185 n.15, 189)).

       Next, as to the State’s interest in raising revenue for the general revenue fund,
the parties acknowledge that raising revenue is a legitimate state interest. Yee, 528
F.3d at 1192-93. However, “the state interest strengthens where there is a nexus
between the taxed activity and the government function provided.” Id. at 1193. We
do not disagree with the district court that there was no clear nexus between the taxed
activity and the government functions provided. But we disagree with the district
court that the State provided nothing of value in return for the tax because the State
provided generally available benefits to its residents, which includes tribal members
and employees of Henry Carlson Company. Given the provision of government
services that we have just detailed, we conclude that “the absence of a more specific
nexus, while relevant, is not a controlling factor.” Haeder, 938 F.3d at 947 (opinion
of Loken, J.).

       The district court also determined that the State’s interest in raising revenue
for the general fund through the excise tax was minimal because the loss of the
amount of tax imposed—$384,436—would have had a small impact on the State’s
overall budget. But in reaching this conclusion, the district court appears to have
ignored the fact that we have already concluded that the State has a “significant
interest in raising revenue for its general fund to provide services to residents
including . . . Henry Carlson Company.” Id. at 946. “The State . . . has a legitimate
governmental interest in raising revenues,” Colville, 447 U.S. at 157, regardless of
the amount collected on a specific application of a generally applicable tax. While
this interest may be stronger if the tax in question comprised a more significant

                                         -19-
portion of the budget, the interest is not completely undermined solely because the
tax forms a small portion of the overall general fund.

       Finally, as to the State’s interest in uniformly applying its tax laws across the
State, the district court concluded that this interest did not weigh against preemption
because evidence of differing tax agreements between the State and various tribes
demonstrated that the excise tax was not applied uniformly across those tribes that
requested tax exemptions. Trial testimony from Bobi Adams, Deputy Director in
Administration with the South Dakota Department of Revenue, established that the
State grants “very few exceptions” to the imposition of the excise tax. R. Doc. 190,
at 185. Adams explained that, in determining whether the excise tax applies, the
State considers whether “the project occur[s] within the State of South Dakota . . . [.]
And if it d[oes], then the contractor’s excise tax applies,” before noting that tribal
projects may impose some unique considerations due to tribes’ abilities to levy their
own taxes. R. Doc. 190, at 172, 185. While this testimony establishes that the State
grants limited exceptions to the tax in the unique circumstances presented by projects
in Indian country, it nonetheless does not undermine the State’s interest in
administering its tax code and applying taxes without additional case-by-case
exceptions. See Ledyard, 722 F.3d at 475-76 (“The State has an interest in the
uniform application of its tax code. Requiring the State to consider additional factors
to determine the code’s applicability would make it less predictable and more
difficult to administer.”). The district court’s failure to recognize this as a significant
state interest was thus in error. Given the foregoing, it was erroneous for the district
court to conclude that the State’s interests were minimal and weighed in favor of
preemption.

                                            iii.

      In sum, even with a more factually developed record than we considered on
summary judgment, the Bracker balancing test does not weigh in favor of
preemption under IGRA because the extent of federal regulation over casino
construction on tribal land is minimal, the impact of the excise tax on the tribal
                                           -20-
interests is minimal, and the State has a strong interest in raising revenue to provide
essential government services to its citizens, including tribal members. The district
court thus erroneously entered judgment in favor of the Tribe based on IGRA’s
preemption of the excise tax.

                                          B.

       We next consider whether the district court erred in concluding that the Indian
Trader Statutes preempt the imposition of the excise tax. The State asserts that the
district court erred in concluding that they do because, first, the Indian Trader
Statutes do not apply to the contract between the Tribe and Henry Carlson Company
because the contract was for services, not goods, and Henry Carlson Company is not
a licensed Indian trader. The State next asserts that, even if the statutes apply, the
district court erroneously concluded that the statutes preempt the tax either expressly
or under Bracker because the statutes do not evince any congressional intent for
preemption and do not provide the requisite comprehensive and pervasive federal
regulation.

       The Indian Trader Statutes, first enacted in 1790, Central Machine Co. v.
Arizona State Tax Commission, 448 U.S. 160, 163 (1980), were designed to
“prevent fraud and other abuses by persons trading with Indians,” Department of
Taxation & Finance of N.Y. v. Milhelm Attea & Bros., 512 U.S 61, 70 (1994). “The
statutes give the Commissioner of Indian Affairs seemingly broad power to regulate
trade with Indian tribes.” Sac & Fox Nation of Mo. v. Pierce, 213 F.3d 566, 581
(10th Cir. 2000). Under the statutes, the Commissioner has the power to appoint
traders with Indian tribes and to implement rules governing the quantity and prices
of goods sold to Indians; individuals approved by the Commissioner are permitted
to trade with Indians on an Indian reservation, pursuant to the rules set by the
Commissioner; the President is vested with the power to revoke an individual’s
status as an Indian trader; and a penalty scheme is implemented for any traders who
engage in trade with Indians without obtaining the requisite license, 25 U.S.C.
§§ 261-264.
                                         -21-
      We need not resolve the State’s argument about the applicability of the Indian
Trader Statutes to the contract between the Tribe and Henry Carlson Company
because, even assuming that they apply, we conclude that they do not preempt the
excise tax, either expressly or under the Bracker balancing test.

                                          i.

       As to express preemption, the Supreme Court has previously held that the
Indian Trader Statutes broadly preempt a state’s attempt to levy a tax on Indian
traders. In Warren Trading Post Co. v. Arizona State Tax Commission, the Supreme
Court held that the statutes barred a state tax on federally licensed retail Indian
traders “on their sales to reservation Indians on a reservation.” 380 U.S. 685, 690
(1965). However, in more recent examinations of the Indian Trader Statutes, the
Supreme Court has “backed away” from its previous broad interpretations. See
Ledyard, 722 F.3d at 468. Indeed, in Milhelm, the Supreme Court explicitly stated
that “[a]lthough language in Warren Trading Post suggests that no state regulation
of Indian traders can be valid, our subsequent decisions have ‘undermine[d]’ that
proposition” and held that “Indian traders are not wholly immune from state
regulation that is reasonably necessary to the assessment or collection of lawful state
taxes.” 512 U.S. at 71, 75 (second alteration in original) (citation omitted).

       Post-Milhelm, the Tenth Circuit, in Pierce, held that a generally applicable
motor fuel tax that Kansas imposed on motor fuel sold by a distributor to a tribe’s
retail gas stations was not expressly preempted by the Indian Trader Statutes. 213
F.3d at 583. In reaching this conclusion, and recognizing that “in Milhelm Attea,
the [Supreme] Court narrowed its interpretation of the trader statutes,” the Tenth
Circuit stated:

      Unlike Warren Trading and its progeny, the Kansas motor fuel tax law
      does not impose a tax upon retail traders for trading with Indians. . . .
      [And] no comprehensive federal regulatory scheme governs the
      wholesale distribution of motor fuel to Indian tribes. Rather, the Kansas
      motor fuel tax law imposes a non-discriminatory tax on all wholesale
                                         -22-
      fuel distributors for fuel distributions to retailers within the State of
      Kansas—Indian or otherwise. Nothing in the record indicates the
      Tribes’ distributors distribute all their fuel, or even a significant portion
      of it, to the Tribes. Thus, the threat of the distributors perpetrating fraud
      or abuse upon the Tribes appears negligible. Based upon the foregoing
      authorities, we conclude that the Indian Trader Statutes do not so
      pervade the field that they preempt the Kansas motor fuel tax, the legal
      incidence of which falls upon the distributors and which imposes only
      an indirect burden on the Tribes.

Id. at 581-83 (citations omitted). We find Pierce persuasive and conclude that the
excise tax is similar in kind to the one the Tenth Circuit upheld in Pierce. First, there
is simply no comprehensive and pervasive regulatory scheme governing casino
construction projects that can be found in the Indian Trader Statutes. It is immaterial
to this analysis whether the Indian Trader Statutes impose any obligations on
contractors because the fact remains that the Indian Trader Statutes are not a
comprehensive federal regulatory authority on casino construction projects.
Further, just like the motor fuel tax in Pierce, the excise tax is a non-discriminatory
tax that is applied on all gross receipts of contractors who perform construction work
across South Dakota, and there is no evidence in the record suggesting that Henry
Carlson Company performs its work only for the Tribe. And, while the financial
burden of the tax can fall on the Tribe, it is assessed against the contractor, and then
passed on to the Tribe, which constitutes an indirect burden, similar to the tax in
Pierce. Finally, although Henry Carlson Company performed the work on the
Reservation, so that the transaction was an on-reservation transaction, we find that
the other factors we have identified make this tax akin to the one in Pierce,
particularly when we consider that the Supreme Court has seemingly moved away
from a more rigid application of the Indian Trader Statutes. See Milhelm, 512 U.S.
at 75. Based on the foregoing, “we conclude that the Indian Trader Statutes do not
so pervade the field that they preempt” the excise tax. See Pierce, 213 F.3d at 583.
The district court thus erred in concluding that the Indian Trader Statutes expressly
preempt the excise tax.

                                          -23-
                                          ii.

       Moving to whether the Indian Trader Statutes preempt the excise tax under
the Bracker balancing test, we conclude that the district court erroneously
determined that they do. First, the statutes evince minimal, if any, federal regulation
or control of casino construction. The Indian Trader Statutes provide extensive
regulation and control over just that: trading. That the Indian Trader Statutes may in
some way touch upon casino construction by imposing certain licensing
requirements on those who perform work on the project hardly demonstrates an
extensive federal regulatory scheme to regulate casino construction. Cf. Harrah’s,
243 F.3d at 439 (“Not every contract that is merely peripherally associated with
tribal gaming is subject to IGRA’s constraints.”). Further, as we concluded with
respect to IGRA, the involvement of federal entities in the project, by performing
inspections, for example, does not turn the Indian Trader Statutes into an extensive
mechanism of federal regulation over casino construction.

       As to the federal and tribal interests, our aforementioned conclusions
regarding the relevant federal and tribal interests with respect to IGRA are relevant
to the same inquiry with respect to the Indian Trader Statutes. The statutes
specifically reference “the protection of said Indians,” § 262, and the Supreme Court
has discussed “the evident congressional purpose of ensuring that no burden shall be
imposed upon Indian traders for trading with Indians on reservations except as
authorized by Acts of Congress or by valid regulations promulgated under those
Acts.” Warren Trading Post, 380 U.S. at 691. Just as we concluded with respect to
IGRA, we again conclude that “the generally applicable excise tax is a one-time tax
on nonmember contractor construction services in expanding and renovating the
Casino’s realty, some of which are performed off the reservation. This tax hardly
implicates the relevant federal . . . interests.” Haeder, 938 F.3d at 946 (opinion of
Loken, J.). Without any congressional intent evincing that a nonmember contractor
should be exempt from the generally applicable excise tax, which would apply in the
absence of the Indian Trader Statutes, the federal interest here of protecting Indians
engaged in trading on reservations are simply not implicated.
                                         -24-
       Specifically as to the tribal interests, the district court concluded that the tribal
interests in economic development and fair dealing, as well as monitoring and
regulating its commercial partners, weighed in favor of preemption. Again, this was
in error. As to the interest in economic development and fair dealing, just as with
its IGRA claim, here the Tribe has failed to show that “the tax has more than a de
minimis financial impact on . . . tribal interests,” because “[a]bsent a showing that
the effect of this one-time tax on construction would be to reduce the demand for the
Casino’s commercial activities, this indirect financial burden is ‘simply too indirect
and too insubstantial to support [the Tribe’s] claim of preemption.’” Id. at 946-47
(third alteration in original) (quoting Cotton, 490 U.S. at 187). And while the Tribe
has an interest in monitoring and regulating its commercial partners, we disagree
with the district court that “the purpose and objectives of the Indian Trader Statutes
are frustrated by the State excise tax” because it puts a financial burden on the Tribe,
which “could thereby disturb and disarrange the statutory plan Congress set up in
order to protect Indians against prices deemed unfair or unreasonable.” R. Doc. 186,
at 115 (citation omitted). Because the Tribe has failed to show that the financial
burden of the excise tax is more than de minimis, we cannot conclude that the tribal
interest in monitoring and regulating its commercial partners based on the financial
burden to the Tribe weighs in favor of preemption.

      Finally, the State’s interests in levying the excise tax are the same as they are
with respect to IGRA. For the reasons stated in Part II.A.ii.b., we conclude that

       the State’s legitimate interests in raising revenues for essential
       government programs that benefit the nonmember contractor-taxpayer
       in this case, as well as its interest in being able to apply its generally
       applicable contractor excise tax throughout the State, are sufficient to
       justify imposing the excise tax on Henry Carlson Company’s
       construction services performed on the Casino’s realty.

Haeder, 938 F.3d at 947 (opinion of Loken, J.). Given the foregoing, the Bracker
analysis guides us to conclude that preemption of the excise tax by the Indian Trader

                                           -25-
Statutes is inappropriate. The district court thus erred in granting judgment to the
Tribe on this basis.

                                          III.

     For the foregoing reasons, we reverse and remand with instructions to enter
judgment in favor of the State.

KELLY, Circuit Judge, dissenting.

                                           I.

       A state tax may be preempted if it “interfere[s] with the tribe’s ability to
exercise its sovereign functions.” Ramah, 458 U.S. at 837. To assess whether a tax
unlawfully interferes with the tribe’s ability, the Bracker balancing test requires a
“flexible analysis” and a “particularized examination of the relevant state, federal,
and tribal interests” in each case. Noem, 938 F.3d at 932 (quoting Ramah, 458 U.S
at 838); see also Cotton, 490 U.S. at 176 (discussing that preemption analysis must
be “sensitive to the particular facts and legislation involved”). The district court
carefully undertook that particularized examination, hearing evidence from the Tribe
and the State during a six-day bench trial. I see no clear error in the district court’s
factual findings or error in its legal conclusions. I would affirm.

                                 A. Federal Interests

       Based on the evidence at trial, the district court determined there was
extensive federal involvement under IGRA. The district court found that all
regulatory involvement and inspections during the project were conducted by federal
and tribal agencies, that $6 million of project financing was funded by federal bonds,
and that many of the renovations were essential to the public health and safety of
Indian gaming patrons and workers. In light of these findings, the district court
concluded there was “a strong federal interest in the construction and maintenance
                                         -26-
of the Casino in a manner that adequately protects” the public and “promot[es] tribal
self-sufficiency.”

        On appeal, the court acknowledges the evidence of extensive federal
involvement but dismisses it as merely showing “how the renovation project
proceeded,” rather than showing that the involvement “occurred due to the dictates
of IGRA.” The point of the Bracker analysis, however, is to assess whether the state
tax is implicitly preempted as indicated by the strength of federal and tribal interest
in the matter. See Noem, 938 F.3d at 935 (“Of great relevance are the broad policies
that underlie IGRA and the history of tribal independence in the operation of gaming
and gaming facilities.”). Even if IGRA did not dictate federal involvement, it
allowed for that involvement by requiring federal oversight through resolution
approvals, while also conferring discretion to the Tribe as to how the project was
managed. See 25 U.S.C. §§ 2710(b)(2)(E), (d)(1). By facilitating federal
involvement and encouraging tribal management, IGRA’s statutory scheme
promotes federal interests in both public safety as well as tribal self-sufficiency. The
district court emphasized the extent of federal involvement in this particular project,
including federal inspections under federal health and safety standards, federal
permitting, and federal financing. In stark contrast, there was minimal state
involvement in the project. The practical realities here are illustrative of the federal
interests in IGRA. I would weigh the federal interests in favor of preemption.

                                  B. Tribal Interests

       When this case was first before us, the court determined there was insufficient
evidence in the summary judgment record to establish the Tribe’s interests. “Most
significantly,” the court reasoned, the Tribe “presented no evidence that imposition
of the contractor excise tax . . . will impede the Tribe’s ability to conduct its Class
III gaming activities to generate gaming revenue.” Haeder, 938 F.3d at 946.

     The Tribe presented that evidence on remand, submitting financial documents
and witness testimony to establish how it would have used the $384,436 taxed
                                         -27-
amount. The district court found that the Tribe “would have purchased 19-20
additional gaming slot machines” because slot machines produce 80% of the
casino’s revenue, have a high return with low costs, and are “the most profitable use
of the funds.” The Tribe’s funds were also restricted to certain uses because of bond
financing limitations, further supporting that the funds would have been used for slot
machines. Testimony established that the 19-20 slot machines “alone would have
generated over $1.24 million dollars in revenue” in a single year, and that additional
gaming revenue “represents at least a 10% increase in the Casino’s earnings.” And
$1.24 million dollars was more than 25% of the Casino’s net income transfer to the
Tribe in 2019. Crediting this evidence, the district court found that the Tribe’s
revenue loss of $1.24 million dollars was substantial and concluded that the tax
directly impaired the Tribe’s ability to generate gaming revenue. Further, because
the Tribe needed the additional slot machines to successfully compete with a newer,
larger casino in the area, the district court found that the tax impaired the Tribe’s
ability to remain competitive.

       The district court’s findings were supported by substantial evidence in the
record. The revenue loss and the reduction in demand for the Casino’s offerings
were not speculative findings, as the court suggests, but rather based on the
testimony of multiple witnesses with direct knowledge of the project and the
Casino’s operations. Nor is the $1.24 million revenue loss “too indirect” or “too
insubstantial” to weigh in favor of preemption. In Cotton, the tribe argued that the
state tax on its oil and gas wells, which was imposed only on lessees and not passed
onto the tribe, would interfere with its ability to raise its own taxes on lessees. 490
U.S. at 168–70, 176. But the tribe presented no evidence of that financial impact;
indeed, the district court in Cotton “found that ‘no economic burden f[ell] on the
tribe by virtue of the state taxes,’ and that the Tribe could, in fact, increase its taxes
without adversely affecting on-reservation oil and gas development.” Id. at 185–86
(cleaned up). In contrast, the district court here found a substantial economic burden
on the Tribe: because of the tax, the Tribe could not purchase the additional slot
machines it intended to, could not compete as successfully with the larger casino
nearby, and lost sizeable gaming revenues that would have been generated from the
                                          -28-
machines. And even setting aside the revenue loss from the additional slot machines,
the district court found the $384,436 tax was passed onto the Tribe and was itself a
substantial burden on the Tribe’s budget. Because the district court’s findings that
the tax directly and substantially burdened the Tribe are not clearly erroneous, I
would weigh the Tribe’s interests in favor of preemption.

                                 C. State Interests

       “Generally, a State seeking to impose a tax on a transaction between a tribe
and nonmembers must point to more than its general interest in raising revenues.”
Noem, 938 F.3d at 932 (cleaned up). The district court found that the State failed to
make that showing: the record evidenced “complete abdication or noninvolvement
of the State in the on-reservation activity.” The State played no role in regulating
the project, and it did not provide services used in connection with the project.
Further, the district court found that the tax amount was only a “miniscule”
percentage of the State’s overall budget. The district court carefully examined the
State’s asserted interests in being reimbursed for services provided to the Tribe and
the Henry Carlson Company, in raising revenue, and in applying the excise tax
uniformly and equitably, and found them insufficient. These findings, too, are
supported by substantial trial evidence, and weigh in favor of preemption.

                                         II.

       On remand, the Tribe presented evidence demonstrating extensive federal
involvement in the project and a substantial financial burden on the Tribe. The
district court made sound findings based on that evidence in a thorough, lengthy
opinion, and I would affirm its conclusion that the excise tax at issue is preempted
by federal law. 5

      5
      Because I would conclude that the excise tax is preempted by IGRA, I
would not reach the question of preemption under the Indian Trader Statutes.
                                      -29-
I respectfully dissent.
                  _____________________________

                             -30-