Rehner v. Rice

• Decision Date: 08 June 1982
• Docket Number: Nos. 77-2409,79-4403 and 79-4404,s. 77-2409
• Citation: 678 F.2d 1340
• Parties: Eva REHNER, Plaintiff-Appellee, v. Baxter RICE, Individually and as Director of the Department of Alcoholic Beverage Control of the State of California, Defendant-Appellee. MUCKLESHOOT INDIAN TRIBE, Plaintiffs-Appellees, v. STATE of WASHINGTON, et al., Defendants-Appellants. The TULALIP TRIBES OF WASHINGTON, an Indian Tribe, Plaintiffs-Appellees, v. STATE of WASHINGTON, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1340

678 F.2d 1340

Eva REHNER, Plaintiff-Appellee, v. Baxter RICE, Individually and as Director of the Department

of Alcoholic Beverage Control of the State of

California, Defendant-Appellee.

MUCKLESHOOT INDIAN TRIBE, Plaintiffs-Appellees, v. STATE of WASHINGTON, et al., Defendants-Appellants.

The TULALIP TRIBES OF WASHINGTON, an Indian Tribe, Plaintiffs-Appellees, v. STATE of WASHINGTON, et al., Defendants-Appellants.

Nos. 77-2409, 79-4403 and 79-4404.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 10, 1982.

Decided June 8, 1982.

Stephan V. Quesenberry, Seattle, Wash., for Rehner.

Matthew J. Coyle, Asst. Atty. Gen., Olympia, Wash., argued, for State of Wash.; Slade Gorton, Atty. Gen., Malachy R. Murphy, Deputy Atty. Gen., Olympia, Wash., on brief.

William R. Winship, Jr., Alan S. Meth, San Diego, Cal., argued, for Rice; Evelle J. Younger, Atty. Gen., Sacramento, Cal., on brief.

Richard Reich, Auburn, Wash., for Muckleshoot Tribe.

Douglas L. Bell, Everett, Wash., for Tulalip Tribe.

Before BROWNING, Chief Judge, CHOY, GOODWIN, WALLACE, KENNEDY, TANG, FARRIS, PREGERSON, POOLE, CANBY, REINHARDT, Circuit Judges.

TANG, Circuit Judge:

The three cases involved in this decision arise under different facts, but the issue common to all is whether under 18 U.S.C. § 1161 ¹ the states or the Indian tribes have licensing and distribution jurisdiction over Indian country liquor transactions. We conclude that under section 1161 the tribes have exclusive jurisdiction to license and distribute liquor on the reservation.

In No. 77-2409 (Rehner ), Eva Rehner, a federally licensed Indian trader who owns and operates a small general store on the Pala Reservation in California, sought exemption from California law requiring a state license for retail sale of distilled spirits for off-premises consumption. The Pala Band of Mission Indians had adopted an ordinance permitting the sale of intoxicating beverages provided that such sales were in conformity with the laws of California. The Secretary of the Interior certified the ordinance as required under section 1161. When the California Department of Alcoholic Beverage Control rejected Mrs. Rehner's request for an exemption, she brought an action in district court for declaratory and injunctive relief. The district court dismissed her action for failure to state a claim. It concluded that Mrs. Rehner was required to obtain a license from the State of California before she could lawfully engage in the sale of distilled spirits. She appeals.

In Nos. 79-4403 and 79-4404 (Muckleshoot and Tulalip ), the State of Washington seized liquor in interstate commerce destined for the Muckleshoot and Tulalip Indian reservations in Washington where the two tribes maintain retail liquor stores. Washington had assumed criminal and civil jurisdiction pursuant to Public Law 280 ² (Pub.L.280) over the Muckleshoot and Tulalip Indian Tribes in 1957 and 1958, respectively. ³ The tribal liquor stores are operated pursuant to tribal ordinances enacted under authority granted by 18 U.S.C. § 1161 (1976), which permits reservation sales of liquor by Indian tribes when such sales do not otherwise contravene state or tribal law. Both ordinances were approved by the Bureau of Indian Affairs and certified by the Secretary of the Interior as required under section 1161. ⁴

Under these ordinances, no sales of liquor are permitted on the reservations except through stores owned and operated by the tribal governments. The principal objectives of the ordinances are to regulate the sale of liquor on the reservations and to generate revenue for the tribes. The distribution of liquor in the tribal stores is consistent with state standards of conduct applicable to liquor transactions but the tribes have never applied for licensing from the Washington State Liquor Control Board (the Board). Consistent with their authority under section 1161, the tribes contracted with the Central Liquor Company, a federally licensed distributor located in Oklahoma City, Oklahoma, for the sale of liquor to the tribes. In November and December of 1978, however, agents of the Board seized liquor moving in interstate commerce from the Central Liquor Company to the Muckleshoot and Tulalip Tribes.

Washington seized the liquor contending that its monopoly on the sale of liquor extended to Indian country. ⁵ Aside from tribal liquor stores, Washington, through the Board, maintains an absolute monopoly on the sale of liquor within the state. Revenue earned through this state monopoly is distributed to local governments; none is distributed to the tribes.

The tribes brought actions in federal district court seeking injunctive relief and Washington counterclaimed, seeking injunctive and monetary relief. The district court held: (1) the tribes exercise exclusive regulatory jurisdiction under 18 U.S.C. § 1161 over liquor sales on the reservation; (2) the twenty-first amendment did not expand the States' jurisdiction over liquor sales on Indian reservations; and (3) Washington's counterclaim was without merit. Washington appeals all three rulings.

I

Two canons of construction have been applied to statutes affecting Indian immunities. First, ambiguities in statutes relating to Indians are to be resolved in favor of the Indians. Oliphant v. Suquamish Indian Tribe, 435 U.S. 191, 208 n.17, 98 S.Ct. 1011, 1020 n.17, 55 L.Ed.2d 209 (1978); Bryan v. Itasca County, 426 U.S. 373, 392, 96 S.Ct. 2102, 2112, 48 L.Ed.2d 710 (1976); DeCoteau v. District County Court, 420 U.S. 425, 444, 95 S.Ct. 1082, 1092, 43 L.Ed.2d 300 (1975). Second, state jurisdiction over reservations, historically, is strongly disfavored. The Supreme Court has emphasized that the policy of leaving Indians free from state jurisdiction is deeply rooted in the nation's history. Bryan, 426 U.S. at 376 n.2, 96 S.Ct. at 2105 n.2; McClanahan v. Arizona State Tax Comm'n, 411 U.S. 164, 168, 93 S.Ct. 1257, 1260, 36 L.Ed.2d 129 (1973). Moreover, the Supreme Court has stated that "(s)tate laws generally are not applicable to tribal Indians on an Indian reservation except where Congress has expressly provided that State laws shall apply." Bryan, 426 U.S. at 376 n.2, 96 S.Ct. at 2105, n.2, quoting McClanahan, 411 U.S. at 170-71, 93 S.Ct. at 1261-62. In view of this, we conclude that there is insufficient evidence to show that Congress intended section 1161 to confer on the states regulatory jurisdiction over on-reservation liquor traffic.

The federal government has long exercised pervasive and exclusive control over Indian liquor transactions ⁶ through its authority under the Indian commerce clause, ⁷ and Article II, section 2 of the United States Constitution. ⁸ See McClanahan, 411 U.S. at 173, 93 S.Ct. at 1262-63.

In consideration of the history of exclusive federal control, the district court in Muckleshoot and Tulalip observed that unless section 1161 expressly authorizes state jurisdiction over liquor transactions in Indian country, there could be no ground for concluding that Congress has removed its veil of preemption. It did not find such an authorization.

Our review of section 1161 and its legislative history, together with an appraisal of other relevant statutes and administrative and judicial constructions of section 1161, confirms that conclusion.

A.

Washington and California argue that 18 U.S.C. § 1161 does not preempt the imposition of state distributive and licensing jurisdiction in Indian country. In reviewing this contention, we turn first to the language of the statute. See Reiter v. Sonotone Corp., 442 U.S. 330, 337, 99 S.Ct. 2326, 2330, 60 L.Ed.2d 931 (1979). Section 1161 provides:

The provisions of sections 1154, 1156, 3113, 3488, and 3618, (federal statutes establishing criminal sanctions and procedures for Indian country liquor violations) of this title, shall not apply within any area that is not Indian country, nor to any act or transaction within any area of Indian country provided such act or transaction is in conformity both with the laws of the State in which such act or transaction occurs and with an ordinance duly adopted by the tribe having jurisdiction over such area of Indian country, certified by the Secretary of the Interior, and published in the Federal Register.

18 U.S.C. § 1161 (1976) (emphasis added).

Washington and California contend that, through section 1161, Congress delegated regulatory authority over reservation liquor transactions to the states. They argue that the language delegating such power is identical with respect to the tribes and to the state: Liquor transactions must be "... in conformity both with the laws of the state in which such act or transaction occurs and with an ordinance duly adopted by the tribe having jurisdiction over such area of Indian country ...." (emphasis added). According to Washington and California, section 1161 requires the tribes not only to conform with substantive standards such as hours of operation and legal age for consumption, but also to observe and respect state requirements relating to the distribution and licensing of liquor.

Quite plainly an ambiguity in construction exists, for the language of section 1161 suggests a contrary result to us. We agree with Washington that the statute's key clause requires liquor transactions to be "in conformity with both the laws of the state in which such act or transaction occurs and with an ordinance duly adopted by the tribe having jurisdiction over such area of Indian country ...." Our agreement ends here, however. Washington places an inordinate emphasis on the isolated phrase "laws of the State", and concludes that state "law" includes exclusive jurisdiction to license and distribute.

Even if such a narrow focus on the phrase "laws of the State" apart from its context were justified, we would reach the opposite conclusion. Because the adjective "both" is distributive with regard to the phrases "laws of the State" and ...