Sac and Fox Nation of Missouri v. LaFaver, Civil Action No. 95-4152-DES.
| Decision Date | 30 October 1996 |
| Docket Number | Civil Action No. 95-4152-DES. |
| Citation | 946 F.Supp. 884 |
| Parties | SAC AND FOX NATION OF MISSOURI, Iowa Tribe of Kansas and Nebraska, Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas, Plaintiffs, v. John D. LAFAVER, Secretary Kansas Department of Revenue, Defendant. |
| Court | U.S. District Court — District of Kansas |
Mark S. Gunnison, Stephen D. McGiffert, Payne & Jones, Chtd., Overland Park, KS, John R. Shordike, Patricia Prochaska, Berkeley, CA, Paul Alexander, Alexander & Karshmer, Washington, DC, for Sac and Fox Nation of Missouri.
Mark S. Gunnison, Stephen D. McGiffert, Payne & Jones, Chtd., Overland Park, KS, Iowa Tribe of Kansas & Nebraska.
Pedro L. Irigonegaray, Robert V. Eye, Irigonegaray & Associates, Topeka, KS, Mario Gonzalez, Horton, KS, for The Kickapoo Tribe of Indians, of the Kickapoo Reservation in Kansas.
Lester N. Collier, Legal Services Bureau, Kansas Department of Revenue, John Michael Hale, Amy Weller Liebau, Kansas Department of Revenue Bureau of Legal Services, Topeka, KS, for John D. Lafaver, Secretary Kansas Department of Revenue.
This matter is before the court on the plaintiffs' Motion for Issuance of Preliminary Injunction (Doc. 3). The plaintiffs challenge the Kansas Department of Revenue's ("DOR") imposition of a tax on motor fuel sales on Indian lands, including sales from distributors to the plaintiffs. On October 5, 1995, this court entered a temporary restraining order enjoining and restraining DOR from applying and enforcing the collection of any motor fuels tax on tribal retail motor fuel sales on Indian lands, including sales from distributors to the plaintiffs, as outlined in Senate Bill No. 88, signed on May 7, 1995, and House Bill No. 2161, signed on May 17, 1995, and implemented on September 6, 1995. The court further ordered that the temporary restraining order would be effective until such time as the court had ruled on the plaintiffs' motion for preliminary injunction.
After several requests for continuance from the parties, the court heard arguments on the preliminary injunction on September 30, 1996. At the conclusion of the hearing, the court took the matter under advisement. Having reviewed the pleadings and the arguments of counsel, the court is now prepared to rule.
The plaintiffs are three federally-recognized Indian Tribes: The Sac and Fox Nation of Missouri ("Sac and Fox"); the Iowa Tribe of Kansas and Nebraska ("Iowa"); and the Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas ("Kickapoo") (collectively the "Tribes"). Sac and Fox is the beneficial owner of and exercises jurisdiction over the Sac and Fox Indian Reservation, as well as land located at Reserve, Kansas, which land is held in trust for Sac and Fox by the United States of America. Iowa is the beneficial owner of and exercises jurisdiction over the Iowa Tribe of Kansas and Nebraska Indian Reservation. A part of the Iowa land is held in trust for Iowa by the United States of America. Kickapoo is the beneficial owner of and exercises jurisdiction over land within the Kickapoo Nation's federally recognized boundaries, which land is held in trust for Kickapoo by the United States of America. All three plaintiffs operate retail gasoline stations on their reservations, and assess tribal taxes on their motor fuel sales.
On May 7, 1995, the Kansas Legislature passed Senate Bill 88 ("SB 88"), which is codified at Kan.Stat.Ann. § 79-3408g(d)(2). Section 79-3408g(d)(2) provides as follows:
No tax is hereby imposed upon or with respect to the following transactions: ... (2) The sale or delivery of motor-vehicle fuel or special fuel to the United States of America and such of its agencies as are now or hereafter exempt by law from liability to state taxation, except that this exemption shall not be allowed if the sale or delivery of motor-vehicle fuel or special fuel is to a retail dealer located on an Indian reservation in the state and such motor-vehicle fuel or special fuel is sold or delivered to a nonmember of such reservation.
On May 17, 1995, the legislature passed House Bill 2161 ("HB 2161"), which is codified at Kan.Stat.Ann. § 79-3408(d)(2). Section 79-3408(d)(2) contains the exemption language of section 79-3408g(d)(2), but does not contain the exception for deliveries to nonmembers of Indian reservations. Section 79-3408(d)(2) reads as follows:
On September 6, 1995, DOR announced its intention to begin collecting tax on motor fuel sales on Indian lands. The plaintiffs allege that the Kansas statutes purporting to subject the Tribes to the State's motor fuels tax are unconstitutional and preempted by federal law.
To obtain a preliminary injunction, the movant must establish that:
(1) the moving party will suffer irreparable injury unless the injunction issues; (2) the threatened injury to the moving party outweighs whatever damage the proposed injunction may cause the opposing party; (3) the injunction, if issued, would not be adverse to the public interest; and (4) there is a substantial likelihood that the moving party will eventually prevail on the merits.
Resolution Trust Corp. v. Cruce, 972 F.2d 1195, 1198 (10th Cir.1992) (quoting Tri-State Generation & Transmission Ass'n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351, 355 (10th Cir.1986)). If the moving party satisfies the first three elements, the standard for meeting the fourth requirement, substantial likelihood of success on the merits, becomes more lenient. In such a case, the movant need only show "questions going to the merits so serious, substantial, difficult and doubtful as to make them a fair ground for litigation." Id. at 1199. Whether to issue a preliminary injunction is committed to the sound discretion of the trial court. Id. at 1198.
The court found in its October 5, 1995, memorandum and order that the plaintiffs satisfied all four elements. The defendant has failed to present any argument which would require the court to reconsider its finding as to the first three elements. DOR acknowledges that the plaintiffs may face economic hardship if the preliminary injunction does not issue, but maintains that the plaintiffs' claims of lost revenue are speculative. In order to issue a preliminary injunction, however, the court need not find that the claimed injury is certain to result — a likelihood of irreparable injury is sufficient. Bath Indus., Inc. v. Blot, 427 F.2d 97, 111 (7th Cir.1970). Furthermore, where, as here, the plaintiffs allege deprivation of a constitutional right, no further showing of irreparable injury is generally necessary. 11A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 2948.1, at 161 (1995); see also Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 2689-90, 49 L.Ed.2d 547 (1976); Community Communications Co. v. City of Boulder, Colo., 660 F.2d 1370, 1376 (10th Cir.1981).
Whether the Tribes have satisfied the fourth requirement for a preliminary injunction, though, requires further analysis. The court based its October 5, 1995, order, in part, on the existence of tax compacts between DOR and the Tribes. The compacts precluded the state of Kansas from taxing transactions occurring on the reservations which were subject to tribal tax. The compacts with Iowa and Kickapoo have now expired, however, and the compact with Sac and Fox will expire on January 3, 1997.
The Tribes argue that notwithstanding the expiration of the tax compacts, the State of Kansas cannot impose its motor fuels tax on Indian reservations. The plaintiffs maintain that the Kansas Legislature sought to eliminate the tax exemption for sale of motor fuels to retail dealers on Indian reservations by passing SB 88. According to the plaintiffs, the subsequent passage of HB 2161, which did not contain the exception for sales on Indian reservations, served to repeal SB 88. The Tribes also contend that the motor fuels tax is precluded by Kan.Stat.Ann. §§ 79-3408(d)(1) and 79-3408g(d)(1). Those sections provide that The Act for Admission of Kansas Into the Union, section 1, states that "all [Indian] territory shall be excepted out of the boundaries, and constitute no part of the state of Kansas."
The defendant counters that the legislature did not intend that HB 2161 repeal SB 88, but rather that the two bills were passed with different purposes in mind. DOR contends that the legislature passed SB 88 to clarify the fact that it did not consider Indian tribes to be agencies of the United States for purposes of the exemption, while HB 2161 was passed to curb fuel tax evasion by requiring retailers to maintain records of fuel deliveries.
The defendant argues, in the alternative, that even if HB 2161 did repeal SB 88, and even if the Tribes are considered territories under sections 79-3408(d)(1) and 79-3408g(d)(1), or agencies under sections 79-3408(d)(2) and 79-3408g(d)(2), the statutes still do not operate to exempt motor fuel sales to the Tribes. DOR maintains that sections 79-3408(a) and 79-3408g(a) tax distributors, not retailers such as the Tribes, and the exemptions thus do not apply to the plaintiffs. DOR asserts that its prior practice of exempting distributors which sold to the Tribes from the motor fuels tax was based on the existence of tax compacts between the Tribes and the State, not on any construction of section 79-3408(d)(2) that the Tribes were exempted as agencies of the United...
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