Oneida Nation of New York v. Cuomo
2011 U.S. App. LEXIS 9497
| 2d Cir. | 2011Background
- Five Indian Nations challenge New York's 2010 amendments taxing non-member cigarette sales on reservations and seek preliminary injunctions.
- Amendments implement precollection, tax stamping, and two allocation methods (coupon and prior approval) to limit tax-free cigarettes to tribal members for personal use.
- Precollection makes wholesalers prepay taxes and pass through to consumers; legal incidence is on consumers, not tribal retailers.
- Allocation limits tax-free quotas per tribe based on probable demand; two pathways exist: coupon system (tribal election) and prior-approval system (default).
- Courts split: Western District denied preliminary injunctions; Northern District granted injunction for Oneida Nation; on appeal, Second Circuit vacates the injunctions and remands.
- Court holds plaintiffs fail to show likelihood of success on merits; affirm Western District orders, vacate Northern District order and stays, remand for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does precollection impermissibly tax tribal retailers or burden sovereignty? | Oneida argues precollection tax burden harms tribes and self-government. | Cuomo argues legal incidence is on consumers; precollection is a minimal, lawful collection burden. | Precollection does not violate sovereignty; burden is minimal and lawful. |
| Do coupon and prior‑approval allocations unduly burden tribal self-government or access to tax-free cigarettes? | Seneca/Unkechauge/Mohawk contend allocation burdens self-government and harms member access. | State maintains allocations are reasonable and consistent with Milhelm Attea; systems are optional or off-reservation. | Coupon system not unduly burdensome; prior-approval system remains workable and adjustable; no undue burden. |
| Are the allocation mechanisms consistent with Milhelm Attea's framework for state regulation of Indian traders? | Plaintiffs argue Milhelm Attea only addressed preemption and not sovereignty, suggesting potential overreach. | Milhelm Attea's reasoning applies to both preemption and sovereignty concerns; mechanisms are reasonably tailored. | Milhelm Attea reasoning applies; allocation features are not likely to violate sovereignty or be unduly burdensome. |
| Does the record show likelihood of success on the merits regarding overall validity of the amended tax law as written? | Plaintiffs claim the regime would disrupt tribal economies and sovereignty and fail to ensure tax-free access. | Court should defer to the statute as written and assess probable actual operation later; anticipate Department responses. | Plaintiffs fail to show likelihood of success on merits; injunctions inappropriate. |
Key Cases Cited
- Milhelm Attea & Bros., Inc. v. United States, 512 U.S. 61 (U.S. 1994) (precollection, probable demand, and prior-approval features upheld as reasonably tailored)
- Colville Confederated Tribes v. Washington, 447 U.S. 141 (U.S. 1980) (precollection and minimal regulatory burden on tribal retailers upheld)
- Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463 (U.S. 1976) (precollection as minimal burden to aid state tax collection)
- Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95 (U.S. 2005) (distinguishes legal incidence from economic burden in state excise taxes)
- White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (U.S. 1980) (sovereignty and balancing test for state regulation on tribal land)
- Okla. Tax Comm'n v. Chickasaw Nation, 515 U.S. 450 (U.S. 1995) (state tax on non-members on reservations held under balancing framework)
- United States v. Baker, 63 F.3d 1478 (9th Cir. 1995) (prior approval system analyzed as off-reservation regulation)