WAGNON, SECRETARY, KANSAS DEPARTMENT OF REVENUE v. PRAIRIE BAND POTAWATOMI NATION
No. 04-631
Supreme Court of the United States
Argued October 3, 2005—Decided December 6, 2005
546 U.S. 95
No. 04-631. Argued October 3, 2005—Decided December 6, 2005
Theodore B. Olson argued the cause for petitioner. On the briefs were Phillip Kline, Attorney General of Kansas, and John Michael Hale, Special Assistant Attorney General.
Ian Heath Gershengorn argued the cause for respondent. With him on the brief was David Prager III.
Deputy Solicitor General Kneedler argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Solicitor General Clement, Acting Assistant Attorney General Johnson, Jeffrey P. Minear, M. Alice Thurston, and David C. Shilton.*
*Briefs of amici curiae urging reversal were filed for the State of South Dakota et al. by Lawrence E. Long, Attorney General of South Dakota, and John P. Guhin, Assistant Attorney General, and by the Attorneys General for their respective States as follows: David W. Márquez of Alaska, Bill Lockyer of California, Richard Blumenthal of Connecticut, Lawrence Wasden of Idaho, Michael A. Cox of Michigan, Jeremiah W. Nixon of Missouri, Brian Sandoval of Nevada, Patricia A. Madrid of New Mexico, Wayne Stenehjem of North Dakota, W. A. Drew Edmondson of Oklahoma, Thomas W. Corbett, Jr., of Pennsylvania, Mark Shurtleff of Utah, and Pat Crank of Wyoming, for the Multistate Tax Commission by Frank D. Katz; and for the National Association of Convenience Stores et al. by William Perry Pendley and J. Scott Detamore.
Briefs of amici curiae urging affirmance were filed for the Hoopa Valley Tribe et al. by Thomas P. Schlosser and Rob Roy Smith; for the Inter-Tribal Transportation Association by Geoffrey D. Strommer, F. Michael Willis, and Charles A. Hobbs; for the National Intertribal Tax Alliance et al. by Richard A. Guest, Marcelino Gomez, Thomas Van Norman, Paul W. Shagen, Marjorie B. Gell, Gary S. Pitchlynn, and O. Joseph Williams; for NCAI et al. by Carter G. Phillips, Virginia A. Seitz, Reid Peyton Chambers, and Riyaz A. Kanji; and for the Sac and Fox Nation of Missouri in Kansas and Nebraska et al. by Thomas Weathers.
The State of Kansas imposes a tax on the receipt of motor fuel by fuel distributors within its boundaries. Kansas applies that tax to motor fuel received by non-Indian fuel distributors who subsequently deliver that fuel to a gas station owned by, and located on, the Reservation of the Prairie Band Potawatomi Nation (Nation). The Nation maintains that this application of the Kansas motor fuel tax is an impermissible affront to its sovereignty. The Court of Appeals agreed, holding that the application of the Kansas tax to fuel received by a non-Indian distributor, but subsequently delivered to the Nation, was invalid under the intеrest-balancing test set forth in White Mountain Apache Tribe v. Bracker, 448 U. S. 136 (1980). But the Bracker interest-balancing test applies only where “a State asserts authority over the conduct of non-Indians engaging in activity on the reservation.” Id., at 144. It does not apply where, as here, a state tax is imposed on a non-Indian and arises as a result of a transaction that occurs off the reservation. Accordingly, we reverse.
I
The Nation is a federally recognized Indian Tribe whose reservation is on United States trust land in Jackson County, Kansas. The Nation owns and operates a casino on its reservation. In order to accommodate casino patrons and other reservation-related traffic, the Nation constructed, and now owns and operates, a gas station on its reservation next to the casino. Seventy-three percent of the station‘s fuel sales are made to casino patrons, while 11 percent of the station‘s fuel sales are made to persons who live or work on the reservation. The Nation purchases fuel for its gas station from non-Indian distributors located off its reservation. Those distributors pay a state fuel tax on their initial receipt of
The Nation sells its fuel within 2 cents per gallon of the prevailing market price. Prairie Band Potawatomi Nation v. Richards, 379 F. 3d 979, 982 (CA10 2004). It does so notwithstanding the distributor‘s decision to pass along the cost of the State‘s fuel tax to the Nation, and the Nation‘s decision to impose its own tax on the station‘s fuel sales in the amount of 16 cents per gallon of gasoline and 18 cents per gallon of diesel (increased to 20 cents for gasoline and 22 cents for diesel in January 2003). Ibid. The Nation‘s fuel tax generates approximately $300,000 annually, funds that the Nation uses for “‘constructing and maintaining roads, bridges and rights-of-way located on or near the Reservation,‘” including the access road between the state-funded highway and the casino. Ibid.
The Nation brought an action in Federal District Court for declaratory judgment and injunctive relief from the State‘s collection of motor fuel tax from distributors who deliver fuel to the reservation. The District Court granted summary judgment in favor of the State. Applying the Bracker interest-balancing test, it determined that the balance of state, federal, and tribal interests tilted in favor of the State. The court reached this determination because “it is undisputed that the legal incidence of the tax is directed off-reservation at the fuel distributors,” Prairie Band Potawatomi Nation v. Richards, 241 F. Supp. 2d 1295, 1311 (Kan. 2003), and because the ultimate purchasers of the fuel, non-Indian casino patrons, receive the bulk of their governmental services from the State, id., at 1309. The court held that the State‘s tax did not interfere with the Nation‘s right of self-government, adding that “a tribe cannot oust a state from any power to tax on-reservation purchases by nonmembers of the tribe by simply imposing its own tax on the transactions or by otherwise earning its revenues from the tribal business.” Id., at 1311.
The Court of Appeals for the Tenth Circuit reversed. 379 F. 3d 979 (2004). It determined that, under Bracker, the balance of state, federal, and tribal interests favored the Tribe. The Tenth Circuit reasoned that the Nation‘s fuel revenues were “derived from value generated primarily on its reservation,” 379 F. 3d, at 984—namely, the creation of a new fuel market by virtue of the presence of the casino—and that the Nation‘s interests in taxing this reservation-created value to raise revenue for reservation infrastructure outweighed the State‘s “general interest in raising revenues,” id., at 986. We granted certiorari, 543 U. S. 1186 (2005), and now reverse.
II
Although we granted certiorari to determine whether Kansas may tax a non-Indian distributor‘s off-reservation receipt of fuel without being subject to the Bracker interest-balancing test, Pet. for Cert. i, the Nation maintains that Kansas’ “tax is imposed not on the off-reservation receipt of fuel, but on its on-reservation sale and delivery,” Brief for Respondent 11 (emphasis in original). As the Nation recognizes, under our Indian tax immunity cases, the “who” and the “where” of the challenged tax have significant consequences. We have determined that “[t]he initial and frequently dispositive question in Indian tax cases . . . is who bears the legal incidence of [the] tax,” Oklahoma Tax Comm‘n v. Chickasaw Nation, 515 U. S. 450, 458 (1995) (emphasis added), and that the States are categorically barred
The Nation maintains that it is entitled to prevail under the categorical bar articulated in Chickasaw because “[t]he fairest reading of the statute is that the legal incidence of the tax actually falls on the Tribe [on the reservation].” Brief for Respondent 17, n. 5. The Nation alternatively maintains it is entitlеd to prevail even if the legal incidence of the tax is on the non-Indian distributor because, according to the Nation, the tax arises out of a distributor‘s on-reservation transaction with the Tribe and is therefore subject to the Bracker balancing test. Brief for Respondent 15. We address the “who” and the “where” of Kansas’ motor fuel tax in turn.
A
Kansas law specifies that “the incidence of [the motor fuel] tax is imposed on the distributor of the first receipt of the motor fuel.”
Kansas law makes clear that it is the distributor, rather than the retailer, that is liable to pay the motor fuel tax.
The United States, as amicus, contends that this conclusion is foreclosed by the Kansas Supreme Court‘s decision in Kaul v. State Dept. of Revenue, 266 Kan. 464, 970 P. 2d 60 (1998). The United States reads Kaul as holding that the legal incidence of Kansas’ motor fuel tax rests on the Indian retailers, rather than on the non-Indian distributors. And, under the United States’ view, so long as the Kansas Supreme Court‘s “‘definitive determination as to the operating incidence‘” of its fuel tax is “‘consistent with the statute‘s reasonable interpretation,‘” it should be “deemed conclusive.” Brief for United States as Amicus Curiae 10 (quoting Gurley v. Rhoden, 421 U. S. 200, 208 (1975)).
We disagree with the United States’ interpretation of Kaul. In Kaul, two members of the Citizen Band Potawatomi Tribe of Oklahoma sought to enjoin the enforcement of Kansas’ fuel tax on fuel delivered to their gas station located on the Prairie Band Potawatomi Tribe of Kansas’ Reservation. The Kansas Supreme Court determined that the station owners had standing to challenge the tax because the statute provided that the distributor was entitled to “‘charge and collect such tax . . . as a part of the selling price.‘” Kaul, supra, at 474, 970 P. 2d, at 67 (quoting
B
The Nation maintains that we must apply the Bracker interest-balancing test, irrespective of the identity of the taxpayer (i. e., the party bearing the legal incidence), because the Kansas fuel tax arises as a result of the on-reservation sale and delivery of the motor fuel. See Brief for Respondent 15. Notably, however, the Nation presented a starkly different interpretation of the statute in the proceedings before the Court of Appeals, arguing that “[t]he balancing test is appropriate even though the legal incidence of the tax is imposed on the Nation‘s non-Indian distributor and is triggered by the distributor‘s receipt of fuel outside the reservation.” Appellant‘s Reply Brief in No. 03-3218 (CA10), p. 3 (emphasis added); see also 241 F. Supp. 2d, at 1311 (District Court observing that “it is undisputed that the legal incidence of the tax is directed off-reservation at the fuel distributors“). A “fair interpretation of the taxing statute as written and applied,” Chemehuevi Tribe, 474 U. S., at
As written, the Kansas fuel tax provisions state that “the incidence of this tax is imposed on the distributor of the first receipt of the motor fuel and such taxes shall be paid but once. Such tax shall be computed on all motor-vehicle fuels or special fuels received by each distributor, manufacturer or importer in this state and paid in the manner provided for herein . . . .”
“[E]very distributor, manufacturer, importer, exporter or retailer of motor-vehicle fuels or special fuels, on or before the 25th day of each month, shall render to the director . . . a report certified to be true and correct showing the number of gallons of motor-vehicle fuels or special fuels received by such distributor, manufacturer, importer, exporter or retailer during the preceding calendar month. . . . Every distributor, manufacturer or importer within the time herein fixed for the rendering of such reports, shall compute and shall pay to the director at the director‘s office the amount of taxes due to the state on all motor-vehicle fuels or special fuels received by such distributor, manufacturer or importer during the preceding calendar month.”
Thus, Kansas law expressly provides that a distributor‘s monthly tax obligations are determined by the amount of fuel received by the distributor during the preceding month. See Kline, 297 F. Supp. 2d, at 1294 (“The distributor must
The Nation disagrees. It contends that what is taxed is not the distributors’ (off-reservation) receipt of the fuel, but rather the distributors’ use, sale, or delivery of the motor fuel—in this case, the distributors’ (on-reservation) sale or delivery to the Nation. The Nation grounds support for this proposition in
The Nation claims further support for its interpretation of the statute in
The Nation‘s theory suffers from a number of conceptual defects. First, under Kansas law, a distributor must pay the tax even for fuel that sits in its inventory—fuel that is not (or at least has not yet been) used, sold, or delivered by the distributor.3 But the Nation‘s interpretation presumes that the tax is owed only on a distributor‘s postreceiрt use, sale, or delivery of fuel. As this interpretation cannot be reconciled with the manner in which the Kansas motor fuel tax is
Finally, the Nation contends that its interpretation of the statute is supported by
III
Although Kansas’ fuel tax is imposed on non-Indian distributors based upon those distributors’ off-reservation receipt of motor fuel, the Tenth Circuit concluded that the tax was nevertheless still subject to the interest-balancing test this Court set forth in Bracker, 448 U. S. 136. As Bracker itself explained, however, we formulated the balancing test to address the “difficult questio[n]” that arises when “a State asserts authority over the conduct of non-Indians engaging in activity on the reservation.” Id., at 144–145 (emphasis added). The Bracker interest-balancing test has never been applied where, as here, the State asserts its taxing authority over non-Indians off the reservation. And although we have never addressed this precise issue, our Indian tax immunity cases counsel against such an application.
A
We have applied the balancing test articulated in Bracker only where “the legal incidence of the tax fell on a nontribal entity engaged in a transaction with tribes or tribal members,” Arizona Dept. of Revenue v. Blaze Constr. Co., 526 U. S. 32, 37 (1999), on the reservation. See Bracker, supra (motor carrier license and use fuel taxes imposed on on-reservation logging аnd hauling operations by non-Indian contractor); Department of Taxation and Finance of N. Y. v. Milhelm Attea & Bros., 512 U. S. 61 (1994) (various taxes imposed on non-Indian purchasers of goods retailed on-reservation); Cotton Petroleum Corp. v. New Mexico, 490 U. S. 163 (1989) (state severance tax imposed on non-Indian lessee‘s on-reservation production of oil and gas); Ramah Navajo School Bd., Inc. v. Bureau of Revenue of N. M., 458 U. S. 832 (1982) (state gross receipts tax imposed on private contractor‘s proceeds from the construction of a school on the reservation); Washington v. Confederated Tribes of Colville Reservation, 447 U. S. 134 (1980) (cigarette and sales taxes imposed on on-reservation purchases by nonmembers); Central Machinery Co., 448 U. S. 160 (tax imposed on on-reservation sale of farm machinery to Tribe). Similarly, the cases identified in Bracker as supportive of the balancing test were exclusively concerned with the on-reservation conduct of non-Indians. See Warren Trading Post Co. v. Arizona Tax Comm‘n, 380 U. S. 685 (1965) (gross proceeds tax imposed on non-Indian retailer on Navajo Indian Reservation); Thomas v. Gay, 169 U. S. 264 (1898) (state property tax imposed on cattle owned by non-Indian lessees of tribal land); Williams v. Lee, 358 U. S. 217 (1959) (holding the state courts lacked jurisdiction over dispute between non-Indian, on-reservation retailer and Indian debtors).5
We have taken an altogether different course, by contrast, when a State asserts its taxing authority outside of Indian country. Without applying the interest-balancing test, we
The application of the interest-balancing test to the Kansas motor fuel tax is not only inconsistent with the special geographic sovereignty concerns that gave rise to that test, but also with our efforts to establish “bright-line standard[s]” in the context of tax administration. 526 U. S., at 37 (“The need to avoid litigation and to ensure efficient tax administration counsels in favor of a bright-line standard for taxation of federal contracts, regardless of whether the contracted-for activity takes place on Indian reservations“); cf. Chickasaw, supra, at 460 (noting that the legal incidence test “‘provide[s] a reasonably bright-line standard’ “); County of Yakima v. Confederated Tribes and Bands of Yakima Nation, 502 U. S. 251, 267–268 (1992). Indeed, we have recognized that the Bracker interest-balancing test
Nor is the Nation entitled to interest balancing by virtue of its claim that the Kansas motor fuel tax interferes with its own motor fuel tax. As an initial matter, this is ultimately a complaint about the downstream economic consequences of the Kansas tax. As the owner of the station, the Nation will keep every dollar it collects above its operating costs. Given that the Nation sells gas at prevailing market rates, its decision to impose a tax should have no effect on its net revenues from the operation of the station; it should not matter whether those revenues are labeled “profits” or “tax proceeds.” The Nation merely seeks to increase thosе revenues by purchasing untaxed fuel. But the Nation cannot invalidate the Kansas tax by complaining about a decrease in revenues. See Colville, 447 U. S., at 156 (“Washington does not infringe the right of reservation Indians to ‘make their own laws and be ruled by them,’ Williams v. Lee, 358 U. S. 217, 220 (1959), merely because the result of imposing its taxes will be to deprive the Tribes of revenues which they currently are receiving“). Nor would our analysis change if we accorded legal significance to the Nation‘s decision to label a portion of the station‘s revenues as tax proceeds. See id., at 184, n. 9 (Rehnquist, J., concurring in part, concurring in result in part, and dissenting in part) (“When two sovereigns have legitimate authority to tax the same transaction, exercise of that authority by one sovereign does not oust the jurisdiction of the other. If it were otherwise, we would not be obligated to pay federal as well as state taxes on our income or gasoline purchases. Economic burdens on
B
Finally, the Nation contends that the Kansas motor fuel tax is invalid notwithstanding the inapplicability of the interest-balancing test, because it “exempts from taxation fuel sold or delivered to all other sovereigns,” and is therefore impermissibly discriminatory. Brief for Respondent 17-20 (emphasis deleted);
* * *
For the foregoing reasons, we hold that the Kansas motor fuel tax is a nondiscriminatory tax imposed on an off-reservation transaction between non-Indians. Accordingly, the tax is valid and poses no affront to the Nation‘s sovereignty. The judgment of the Court of Appeals is reversed.
It is so ordered.
The Kansas fuel tax at issue is imposed on distributors, passed on to retailers, and ultimately paid by gas station customers. Out-of-state sales are exempt, as are sales to othеr distributors, the United States, and U. S. Government contractors. Fuel lost or destroyed, and thus not sold, is also exempt. But no statutory exception attends sales to Indian tribes or their members.
The Prairie Band Potawatomi Nation (hereinafter Nation) maintains a casino and related facilities on its reservation. On nearby tribal land, as an adjunct to its casino, the Nation built, owns, and operates a gas station known as the Nation Station. Some 73% of the Nation Station‘s customers are casino patrons or employees. Prairie Band Potawatomi Nation v. Richards, 379 F. 3d 979, 982 (CA10 2004). The Nation imposes its own tax on fuel sold at the Nation Station, pennies per gallon less than Kansas’ tax. Ibid.1
Both the Nation and the State have authority to tax fuel sales at the Nation Station. See Merrion v. Jicarilla Apache Tribe, 455 U. S. 130, 137 (1982) (describing “[t]he power to tax [as] an essential attribute of Indian sovereignty[,] . . . a necessary instrument of self-government and territorial management,” which “enables a tribal government to raise revenues for its essential services“). As a practical matter, however, the two tolls cannot coexist. 379 F. 3d, at 986. If the Nation imposes its tax on top of Kansas’ tax, then unless the Nation operates the Nation Station at a substantial loss, scarcely anyone will fill up at its pumps. Effectively double-taxed, the Nation Station must operate as an unprofitable venture, or not at all. In these circum
I
Understanding Bracker is key to the inquiry here. Bracker addressed the question whether a State should be preempted from collecting otherwise lawful taxes from non-Indians in view of the burden consequently imposed upon a tribe or its members. In that case, Arizona sought to enforce its fuel-use and vehicle-license taxes against a non-Indian enterprise that contracted with the White Mountain Apache Tribe to harvest timber from reservation forests. 448 U. S., at 138-140. The Court recognized that Arizona‘s levies raised difficult questions concerning “the boundaries between state regulatory authority and tribal self-government.” Id., at 141. Determining whether taxes formally imposed on non-Indians are preempted, the Court instructed, should not turn “on mechanical or absolute conceptions of state or tribal sovereignty, but [calls] for a particularized inquiry into the nature of the state, federal, and tribal interests at stake.” Id., at 145. This inquiry is “designed tо determine whether, in the specific context, the exercise of state authority would violate federal law,” ibid., or “unlawfully infringe ‘on the right of reservation Indians to make their own laws and be ruled by them,‘” id., at 142 (quoting Williams v. Lee, 358 U. S. 217, 220 (1959)). Applying the interest-balancing approach, the Court concluded that “the proposed exercise of state authority [was] impermissible” because “it [was] undisputed that the economic burden of the asserted taxes will ultimately fall on the Tribe,”
The Court has repeatedly applied the interest-balancing approach described in Bracker in evaluating claims that state taxes levied on non-Indians should be preempted because they undermine tribal and federal interests.2 In many cases, both pre- and post-Bracker, a balancing analysis has yielded a decision upholding application of the state tax in question. See, e. g., Cotton Petroleum Corp. v. New Mexico, 490 U. S. 163, 183-187 (1989) (State permitted to impose a severance tax on a non-Indian company that leased tribal land for oil and gas production); Washington v. Confederated Tribes of Colville Reservation, 447 U. S. 134, 154-159 (1980) (State permitted to tax non-Indians’ purchases of cigarettes from on-reservation tribal retailers); Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U. S. 463, 481-483 (1976) (same). Sometimes, however, particularized inquiry has resulted in a holding that federal or tribal interests are superior. See, e. g., Ramah Navajo School Bd., Inc. v. Bureau of Revenue of N. M., 458 U. S. 832, 843-846 (1982) (State prohibited from imposing gross-receipts tax on a non-Indian contractor constructing an on-reservation tribal school).
Kansas contends that the interest-balancing approach is not suitably employed to assess its fuel tax for these reasons: (1) The Kansas Legislature imposed the legal incidence of
I note first that Kansas’ placement of the legal incidence of the fuel tax is not as clear and certain as the State suggests and the Court holds. True, the statute states that “the incidence of this tax is imposed on the distributor of the first receipt of the motor fuel.”
When all the exclusions are netted out, the Kansas tax is imposed not on all the distributor‘s receipts, but effectively only on fuel actually resold by the distributor to an in-state nonexempt purchaser. To illustrate: Suppose in January a distributor acquires 100,000 gallons of fuel and promptly sells
Kansas’ attribution of controlling effect to the formal legal incidence of the tax rests in part on the State‘s misreading of Oklahoma Tax Comm‘n v. Chickasaw Nation, 515 U. S. 450 (1995). See Brief for Petitioner 8, 16-20. The Court in that case distinguished instances in which the legal incidence of a State‘s excise tax rests on a tribe or tribal members, from instances in which the legal incidence rests on non-Indians. When “the legal incidence . . . rests on a tribe or on tribal members for sales made inside Indian country,” the Court said, “the tax cannot be enforced absent clear congres-
When a Statе places the legal incidence of its tax on non-Indians, however, no similarly overt disrespect for a tribe‘s independence and dignity is displayed. In cases of this genre, Chickasaw Nation recognized, the Court has resisted adoption of a categorical rule. In lieu of attributing dispositive significance to the legal incidence, the Court has focused on the particular levy, and has evaluated the federal, state, and tribal interests at stake. 515 U. S., at 459; see Cotton Petroleum, 490 U. S., at 176 (Instead of a “mechanical or absolute” test, the Court has “applied a flexible pre-emption analysis sensitive to the particular facts and legislation involved. Each case ‘requires a particularized examination of the relevant state, federal, and tribal interests.‘” (quoting Ramah, 458 U. S., at 838)).
Chickasaw Nation did observe that “if a State is unable to enforce a tax because the legal incidence of the impost is on Indians or Indian tribes, the State generally is free to amend its law to shift the tax‘s legal incidence.” 515 U. S., at 460. Kansas took the cue. After our decision in Chickasaw Nation, Kansas amended its fuel tax statute to state that “the incidence of this tax is imposed on the distributor.”
Kansas is mistaken, however, regarding the legal significance of this shift. Chickasaw Nation clarified only that a State could shift the legal incidence to non-Indiаns so as to avoid the categorical bar applicable when a state excise tax is imposed directly on a tribe or tribal members for on-reservation activity. 515 U. S., at 460. At the same time, Chickasaw Nation indicated that a shift in the legal incidence of the kind Kansas has legislated would trigger—not foreclose—interest balancing. Ibid.7
Kansas and the Court heavily rely upon Mescalero Apache Tribe v. Jones, 411 U. S. 145 (1973) (Mescalero I). That case involved a ski resort operated by the Mescalero Apache Tribe on off-reservation land leased from the Federal Government. This Court upheld New Mexico‘s imposition of a tax on the gross receipts of the resort. Balancing was not in order, the Court explained, because the Tribe had ventured outside its own domain, and was fairly treated, for gross receipts purposes, just as a non-Indian enterprise would be. In such cases, the Court observed, an express-preemption standard is appropriately applied. As the Court put it: “Absent express federal law to the contrary, Indians going
Conceding that “we have never addressed th[e] precise issue” this case poses, the Court asserts that “our Indian tax immunity cases counsel against” application of the Bracker interest-balancing test to Kansas’ fuel tax as it impacts on the Nation Station. Ante, at 110. The Court so maintains on the ground that the Kansas fuel tax is imposed on a non-Indian and is unrelated to activity “on the reservation.” Ante, at 110-113. As earlier explained, see supra, at 121, one can demur to the assertion that the legal incidence of the tax falls on the distributor, a nontribal entity. With respect to sales and deliveries to the Nation Station, however, the nontribal entity can indeed be described as “engaged in [an on-reservation] transaction with [a tribe].” Arizona Dept. of Revenue v. Blaze Constr. Co., 526 U. S. 32, 37 (1999).
The reservation destination of fuel purchased by the Nation Station does not show the requisite engagement, in the Court‘s view, but I do not comprehend why. The destination of the fuel counts not only under
Balancing tests have been criticized as rudderless, affording insufficient guidance to decisionmakers. See Colville, 447 U. S., at 176 (Rehnquist, J., concurring in part, concurring in result in part, and dissenting in part) (criticizing the “case-by-case litigation which has plagued this area of the law“); Brief for Petitioner 30-32. Pointed as the criticism may be, one must ask, as in life‘s choices generally, what is the alternative. “The principle of tribal self-government, grounded in notions of inherent sovereignty and in congressional policies, seeks an accommodation between the interests of the Tribes and the Federal Government, on the one hand, and those of the State, on the other.” Colville, 447 U. S., at 156. No “bright-line” test is capable of achieving such an accommodation with respect to state taxes formally
II
I turn to the question whether the Court of Appeals correctly balanced the competing interests in this case. Kansas and the Nation both assert a substantial interest in using their respective fuel taxes to raise revenue for road maintenance. Weighing competing state and tribal interests in raising revenue for public works, Colville observed:
“While the Tribes do have an interest in raising revenues for essential governmental programs, that interest is strongest when the revenues are derived from value generated on the reservation by activities involving the Tribes and when the taxpayer is the recipient of tribal services. The State also has a legitimate governmental interest in raising revenues, and that interest is likewise strongest when the tax is directed at off-reservation value and when the taxpayer is the recipient of state services.” 447 U. S., at 156-157.
In Colville, it was “painfully apparent” that outsiders had no reason to travel to Indian reservations to buy cigarettes other than the bargain prices tribal smokeshops charged by virtue of their claimed exemption from state taxation. Id., at 154-155. The Court upheld the State of Washington‘s taxes on cigarette purchases by nonmembers at tribal smokeshops. No “principl[e] of federal Indian law,” the Court said, “authorize[s] Indian tribes to market an exemption from state taxation to persons who would normally do their business elewhere.” Id., at 155.
The Tenth Circuit regarded as valuable to its assessment the opinion of the Nation‘s expert, which concluded: “‘[T]he Tribal and State taxes are mutually exclusive and only one can be collected without reducing the [Nation Station‘s] fuel business to virtually zero.‘” 379 F. 3d, at 986. Kansas “submitted [no] contradictory evidence” and did not argue that the expert opinion offеred by the Nation was “either incorrect or exaggerated.” Ibid.11 In this respect, the case
The Court of Appeals considered instructive this Court‘s decision in California v. Cabazon Band of Mission Indians, 480 U. S. 202 (1987). See 379 F. 3d, at 985. The Court there held that tribal and federal interests outweighed state interests in regulating tribe-operated facilities for bingo and other games. Cabazon, 480 U. S., at 219-220. Distinguishing Colville, the Court pointed out that the Tribes in Cabazon “[were] not merely importing a product onto the reservatio[n] for immediate resale to non-Indians“; they had “built modern facilities” and provided “ancillary services” so that customers would come in increasing numbers and “spend extended periods of time” playing their “well-run games.” Id., at 219; see also New Mexico v. Mescalero Apache Tribe, 462 U. S. 324, 327, 341 (1983) (Mescalero II) (State barred from regulating hunting and fishing on-reservation where the Tribe had constructed a “resort complex” and developed wildlife and land resources).
As in Cabazon, so here, the Nation Station is not “merely importing a product onto the reservatio[n] for immediate resale to non-Indians” at a stand-alone retail outlet. 480 U. S., at 219. Fuel sales at the Nation Station arе “an integral and essential part of the [Tribe‘s] on-reservation gaming enterprise.” 379 F. 3d, at 984. The Nation built the Nation Station as a convenience for its casino patrons and, but for the casino, there would be no market for fuel in this otherwise remote area. Id., at 982.
The Court of Appeals further emphasized that the Nation‘s “interests here are strengthened because of its need to raise fuel revenues to construct and maintain reservation
The Nation‘s interests coincide with “strong federal interests in promoting tribal economic development, tribal self-sufficiency, and strong tribal governments.” Id., at 986. The United States points to the poor condition of Indian reservation roads, documented in federal reports, conditions that affect not only driving safety, but also the ability to furnish emergency medical, fire, and police services on an expedited basis, transportation to schools and jobs, and the advancement of economic activity critical to tribal self-sufficiency. Brief for United States as Amicus Curiae 26; see, e. g., Dept. of Interior, Bureau of Indian Affairs, TEA-21 Reauthorization Resource Paper: Transportation Serving Native American Lands (May 2003). The shared interest of the Federal Government and the Nation in improving reservation roads is reflected in Department of the Interior regulations implementing the Indian Reservation Roads Program. See 69 Fed. Reg. 43090 (2004);
Against these strong tribal and federal interests, Kansas asserts only its “general interest in raising revenues.” 379 F. 3d, at 986. “Kansas’ interest,” as the Court of Appeals observed, “is not at its strongest.” Id., at 987. By effectively taxing the Nation Station, Kansas would be deriving revenue “primarily from value generated on the reservation” by the Nation‘s casino. Ibid. Moreover, the revenue Kansas would gain from applying its tax to fuel destined for the Nation Station appears insubstantial when compared with the total revenue ($6.1 billion in 2004) the State annually collects through the tax. See id., at 982; Brief for Respondent 12 (observing that “[t]he tax revenues at issue—roughly $300,000 annually—are less than one-tenth of one percent of the total state fuel tax revenues“).
The Court asserts that “Kansas uses the proceeds from its fuel tax to pay for a significant portion of the costs of maintaining the roads and bridges on the Nation‘s reservation.” Ante, at 115. The record reveals a different reality. According to the affidavit of the Director of the Nation‘s Road and Bridge Department, Kansas and its subdivisions have failed to provide proper maintenance even on their own roads running through the reservation. App. 79. As a result, the Nation has had to assume responsibility for a steadily growing number of road miles within the reservation (roughly 118 of the 212 total miles in 2000). Ibid.; see also Brief for Respondent 3, 40, 44-45. Of greater significance, Kansas expends none of its fuel tax revenue on the upkeep or improvement of tribally owned reservation roads. 379 F. 3d, at 986-987; cf. Ramah, 458 U. S., at 843, n. 7 (“This case would be different if the State were actively seeking tax revenues for the purpose of constructing, or assisting in the effоrt to provide, adequate [tribal services].“). In contrast, Kansas sets aside a significant percentage of its fuel tax revenues (over 40% in 1999) for counties and localities.
Kansas argues that, were the Nation to prevail in this case, nothing would stop the Nation from reducing its tax in order to sell gas below the market price. Brief for Petitioner 30. Colville should quell the State‘s fears in this regard. Were the Nation to pursue such a course, it would be marketing an exemption, much as the smokeshops did in Colville, and hence, interest balancing would likely yield a judgment for the State. See 447 U. S., at 155-157. In any event, as the Nation points out, the State could guard against the risk that “Tribes will impose a ‘nominal tax’ and sell goods at a deep discount on the reservation.” Brief for Respondent 34-35. The State could provide a credit for any tribal tax imposed or enact a state tax that applies only to the extent that the Nation fails to impose an equivalent tribal tax. Id., at 35.
Today‘s decision is particularly troubling because of the cloud it casts over the most beneficial means to resolve conflicts of this order. In Oklahoma Tax Comm‘n v. Citizen Band Potawatomi Tribe of Okla., 498 U. S. 505 (1991), the Court counseled that States and tribes may enter into agreements establishing “a mutually satisfactory regime for the collection of this sort of tax.” Id., at 514; see also Nevada v. Hicks, 533 U. S. 353, 393 (2001) (O‘CONNOR, J., concurring in part and concurring in judgment) (describing various state-tribal agreements); Brief for United States as Amicus Curiae 28-29, and n. 12; Brief for National Intertribal Tax Alliance et al. as Amici Curiae; Ansson, State Taxation of Non-Indians Who Do Business With Indian Tribes: Why Sev-
In sum, the Nation operates the Nation Station in order to provide a service for patrons at its casino without, in any way, seeking to attract bargain hunters on the lookout for cheap gas. Kansas’ collection of its tax on fuel destined for the Nation Station will effectively nullify the Nation‘s tax, which funds critical reservation road-building programs, endeavors not aided by state funds. I resist that unbalanced judgment.
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For the reasons stated, I would affirm the judgment of the Court of Appeals for the Tenth Circuit.