Prairie Band Potawatomi Nation v. Richards, 99-4071-JAR.

• Decision Date: 15 January 2003
• Docket Number: No. 99-4071-JAR.,99-4071-JAR.
• Citation: 241 F.Supp.2d 1295
• Parties: PRAIRIE BAND POTAWATOMI NATION, Plaintiff, v. Stephen RICHARDS, Secretary of the Kansas Department of Revenue, State of Kansas, Defendant.
• Court: U.S. District Court — District of Kansas

241 F.Supp.2d 1295

PRAIRIE BAND POTAWATOMI NATION, Plaintiff, v. Stephen RICHARDS, Secretary of the Kansas Department of Revenue, State of Kansas, Defendant.

No. 99-4071-JAR.

United States District Court, D. Kansas.

January 15, 2003.

COPYRIGHT MATERIAL OMITTED

David Prager, III, Mayetta, KS, for Plaintiff.

John Michael Hale, Kansas Department of Revenue, Topeka, KS, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

ROBINSON, District Judge.

This action is before the Court on defendant's Motion for Summary Judgment (Doc. 49). Plaintiff has filed a Response (Doc. 59) and defendant has filed a Reply (Doc. 68). The Court has reviewed the parties' filings and is now prepared to rule.

I. FACTS

The following facts are taken from the record and are either stipulated, uncontroverted or viewed in the light most favorable to plaintiffs case. The Court ignores factual assertions that are immaterial, or unsupported by affidavits and/or authenticated and admissible documents. The Court also disregards conclusory statements.

Plaintiff, the Prairie Band Potawatomi Nation ("Tribe"), is a federally recognized Indian tribe whose reservation is in Jackson County, Kansas. Pursuant to the Indian Gaming Regulatory Act,¹ the Tribe owns and operates a casino complex on its reservation land near Mayetta, Kansas. In addition to the casino, the Tribe owns and operates a convenience store and gas station, ("Nation Station"), located near the casino. Gasoline and diesel fuel are imported from outside the reservation for re-sale at the Nation Station. Once the fuel arrives on the reservation, the Nation Station unloads, stores, monitors and dispenses the fuel. Fuel sales made to casino patrons and employees account for approximately seventy-three percent of the total fuel sales. An additional eleven percent of fuel sales are made to people who work on the reservation but not for the casino, tribal government employees, and reservation residents. Seventy-one percent of the Nation Station's proceeds are generated by fuel sales.

The Tribe imposes a tax of $.16 per gallon of gasoline and $.18 per gallon of diesel fuel. The Nation Station is subject to $300,000 in tribal fuel taxes per year. The Tribe spends revenue from the fuel tax to construct and maintain roads, including the road leading from U.S. Highway 75 to the Tribe's casino and other roads on and near the reservation. The Tribe also provides government services including law enforcement, fire protection, emergency services, education services, urban planning, court services and other miscellaneous services.

Prior to May of 1995, the Kansas Department of Revenue did not collect motor fuel tax on fuel distributed to Indian lands. Then, in 1995, the Kansas legislature amended the Kansas Motor Fuel Tax Act² and the Department of Revenue began to impose fuel tax on fuel distributed to Indian tribes on tribal land. The structure of the fuel tax statute places the legal incidence of the tax on the fuel distributors, but permits the distributors to pass the tax directly to the fuel retailers.³

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.⁴ A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law."⁵ A "genuine" factual dispute requires more than a mere scintilla of evidence.⁶

The moving party bears the initial burden of showing that there is an absence of any genuine issue of material fact.⁷ Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof."⁸ The nonmoving party may not rest on its pleadings but must set forth specific facts.⁹

"[The court] must view the record in a light most favorable to the parties opposing the motion for summary judgment." ¹⁰ Summary judgment may be granted if the non-moving party's evidence is merely colorable or is not significantly probative.¹¹ Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." ¹²

III. DISCUSSION

The Tribe brought suit seeking injunctive and declaratory relief, asking the Court to issue an order prohibiting the State from collecting motor fuel tax from fuel distributors who deliver fuel to the Nation Station. The Tribe claims that the Indian Commerce Clause,¹³ the Tribe's sovereign right to self-government and self-determination, the Act for Admission of Kansas¹⁴ or other federal law prohibits imposition of the Kansas fuel tax laws on distributors distributing fuel to the Tribe. Defendant asserts that summary judgment should be granted because the State is entitled to Eleventh Amendment immunity,¹⁵ the Tribe lacks standing, and the Hayden-Cartwright Act provides congressional consent for imposition of the State's fuel tax.¹⁶ Defendant also asserts that there is no material issue of fact concerning whether the state fuel tax is preempted by federal law, whether the state fuel tax improperly infringes upon the Tribe's sovereign right to self-government, or whether the Kansas Act for Admissions bars imposition of the tax. The Court will take each of defendant's contentions in turn.

A. Jurisdiction and the Eleventh Amendment

The Tribe asserts that this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1362,¹⁷ which grants district courts original jurisdiction over civil actions brought by federally-recognized Indian tribes wherein the matter in controversy arises under the Constitution, laws or treaties of the United States. Defendant argues that despite the grant of jurisdiction in § 1362, the Eleventh Amendment bars the Tribe's claims. Defendant also asserts that Ex parte Young,¹⁸ a legal fiction created to overcome the Eleventh Amendment's bar under certain circumstances, is inapplicable in this case. As discussed below, defendant's arguments are unfounded.

The Eleventh Amendment grants states sovereign immunity from suits in federal court brought by the state's own citizens, citizens of another state, citizens of a foreign state, suits by other sovereigns and suits by an Indian tribe.¹⁹ In Ex parte Young, the Supreme Court created a legal fiction, circumventing Eleventh Amendment immunity for suits seeking injunctive and declaratory relief against state officers, sued in their official capacity, to enjoin an alleged ongoing violation of federal law.²⁰ Defendant contends that the Ex Parte Young exception is inapplicable in this case because the relief being sought by the Tribe implicates special sovereignty interests.

Defendant points to the Supreme Court case Idaho v. Coeur d'Alene Tribe of Idaho,²¹ wherein the Court ruled that the Ex parte Young exception could not be entertained when the relief requested would be as much of an intrusion on state sovereignty as an award of money damages. In Coeur d'Alene, the tribe sought a declaratory judgment against the state establishing its right to quiet enjoyment to submerged lands located within the boundaries of the Coeur d'Alene Reservation.²² The tribe also sought injunctive relief against various state officials to prevent them from exercising regulatory jurisdiction over the submerged land. The Court determined that the tribe's claims were the functional equivalent to a quiet title action and if relief was granted, it would have divested the state of substantially all regulatory power over the land at issue.²³ Thus, the Court found that the requested relief would affect Idaho's sovereign interests "in a degree fully as intrusive as almost any conceivable retroactive levy upon funds in its Treasury," defeating plaintiffs Ex parte Young action.²⁴

Soon after the Supreme Court's Coeur d'Alene decision, the Tenth Circuit decided ANR Pipeline Co. v. Lafaver²⁵ where it held that the states' power to assess and levy personal property taxes on property located within its borders implicated special sovereignty interests, defeating an Ex parte Young action. In so holding, the Tenth Circuit interpreted Coeur d'Alene as requiring a new two-step analysis for determining whether Ex parte Young applies in any given case. According to ANR Pipeline, federal courts are to first "examine whether the relief being sought against a state official implicates special sovereignty interests."²⁶ If the answer to the first inquiry is affirmative, the court "must then determine whether that requested relief is the functional equivalent to a form of legal relief against the state that would otherwise be barred by the Eleventh Amendment."

²⁷

Relying on Coeur d'Alene and the ANR Pipeline, defendant asserts that an Ex parte Young action does not apply in this case because the relief sought by the Tribe implicates special sovereignty interests in the State's system of taxation and the requested relief would be the functional equivalent to money damages against the State. The Court finds defendant's reliance on these cases is misplaced. To rule otherwise would be to ignore the long line of cases decided in federal court relating to state taxation on tribal affairs.²⁸ As the Ninth Circuit pointed out in Agua Caliente Band of Cahuilla Indians v. Hardin,²⁹ "in the context of state taxation of tribes, there are preemption considerations and competing sovereignty interest, the merits of which are governed by a long line of cases." The issues presented by state taxation of tribal interests were not present in either ANR Pipeline or Coeur d'Alene, both of which have been limited to their particular facts.³⁰ Thus, the Court finds that an Ex parte Young act...