United States District Court, District of Columbia
CHRISTOPHER R. COOPER, United States District Judge
tribal-owned corporations engaged in the distribution of
cigarettes, seek a declaration clarifying whether certain
recordkeeping requirements of the Contraband Cigarettes
Trafficking Act apply to Indian tribal entities like them.
The Court concludes that the relevant requirements do so
apply, and will therefore grant summary judgment for
forty years ago, Congress enacted the Contraband Cigarettes
Trafficking Act (“CCTA”), 18 U.S.C. §§
2341-46, to remedy “the serious problem of organized
crime and other large scale operations of interstate
cigarette bootlegging”-i.e., untaxed cigarette
trafficking- and to “provide law enforcement assistance
and relief to cities and states” in support of that
effort. S. Rep. 95-962, at 3, reprinted in 1978
U.S.C.C.A.N. 5518, 5518; see also H.R. Conf. Rep.
95-1778, 8, reprinted in 1978 U.S.C.C.A.N. 5535,
5536. The Act makes it a crime for “any person
knowingly to ship, transport, receive, possess, sell,
distribute, or purchase contraband cigarettes or contraband
smokeless tobacco.” 18 U.S.C. § 2342(a).
“[C]ontraband cigarettes, ” in turn, are “a
quantity in excess of 10, 000 cigarettes, which bear no
evidence of the payment of applicable State or local
cigarette taxes in the State or locality where such
cigarettes are found, if the State or local government
requires a stamp, impression, or other indication . . . [of]
payment of cigarette taxes.” 18 U.S.C. § 2341(2).
The cigarettes must also be “in the possession of any
person other than” a person falling within one of four
exceptions, none of which apply to tribal entities.
also permits the Attorney General to establish recordkeeping
requirements: “Any person who ships, sells, or
distributes any quantity of cigarettes in excess of 10,
000” must “maintain . . . information about the
shipment, receipt, sale, and distribution of cigarettes,
” such as the “name, address, destination . . .
vehicle license number, driver's license number,
signature of the person receiving [the] cigarettes, and the
name of the purchaser.” 18 U.S.C. § 2343(a);
see also 27 C.F.R. §§ 646.141-143,
646.146-47, 646.150, 646.153-55 (Attorney General's
implementing regulations). To ensure compliance with these
recordkeeping requirements, and for the purpose of inspecting
cigarette distributors' inventory, the Act authorizes
officers of the Bureau of Alcohol, Tobacco, Firearms, and
Explosives (“ATF”) to enter distributors'
premises during normal business hours. 18 U.S.C. §
2343(c)(1). Denying access to ATF officers seeking to conduct
such inspections can result in civil penalties as high as
$10, 000. 18 U.S.C. § 2343(c)(3).
CCTA is silent as to whether the Act's original
enforcement provisions apply in Indian territory or as to
tribal entities. See generally Pub. L. No. 95-575,
§ 1, 92 Stat. 2463 (1978). A “State, ” for
instance, is defined as “a State of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, or
the Virgin Islands, ” but the definition does not
expressly include or exclude tribal reservations. 18 U.S.C.
§ 2343(4). However, reasoning that the statute was one
“of general applicability, ” courts have
unanimously held-beginning with a Ninth Circuit decision more
than two decades ago-that the Act “appl[ies] with equal
force to Indians, ” and is therefore enforceable on
Indian land and against tribal entities and individuals.
United States v. Baker, 63 F.3d 1478, 1484-86 (9th
Cir. 1995); see also United States v. Morrison, 686
F.3d 94, 96 (2d Cir. 2012) (affirming application of CCTA to
on-reservation cigarette seller in New York); Grey
Poplars, Inc. v. 1, 371, 100 Assorted Brands of
Cigarettes, 282 F.3d 1175, 1177 (9th Cir. 2002)
(“[T]he CCTA is a federal statute of general
applicability and it applies equally to Indians, even on the
reservation, as it does to others.”); United States
v. Gord, 77 F.3d 1192, 1194 (9th Cir. 1996) (applying
CCTA to manager of a tribal smoke shop); United States v.
Parry, No. 4:13-CR-00291-07-BCW, 2015 WL 631979, at *6
(W.D. Mo. Feb. 13, 2015) (“[T]he law is settled that
Indians are not exempt from the CCTA.”); United
States v. 1, 920, 000 Cigarettes, No. 02-CV-437A, 2003
WL 21730528, at *4 (W.D.N.Y. Mar. 31, 2003) (rejecting
argument that the CCTA exempts Indians as “without
2006, Congress amended the CCTA, primarily to add further
enforcement provisions. See Pub. L. 109-177, Title
I, sec. 121, Mar. 9, 2006, 120 Stat. 233. Two amendments are
material here. First, Congress added a new reporting
requirement-a subsection (b) inserted after the recordkeeping
requirements set forth at 18 U.S.C. § 2343(a).
See 18 U.S.C. § 2343(b). That provision
requires certain cigarette sellers and distributors to submit
a report to the U.S.
General, Treasury Secretary, and relevant state attorneys
general and tax administrators, including various types of
information about their cigarette and tobacco inventory.
Id. § 2343(b), (d). Notably, while the new
reporting provision specifically excluded “tribal
government[s]” from its reach, id. §
2343(b), the preceding recordkeeping provision
included no such exception-nor was one added, see
id. § 2343(a). The other relevant 2006 amendment
allowed states and local governments a share in enforcing the
Act: They were now permitted to “bring an action in the
United States district courts to prevent and restrain”
CCTA violations, id. § 2346(b)(1), and to
“obtain any other appropriate relief for [such]
violations . . . including civil penalties, money damages,
and injunctive or other equitable relief, ”
id. § 2346(b)(2). The new language specified,
however, that such state and local-government enforcement
actions, could not be brought “against an Indian tribe
or an Indian in Indian country.” Id. §
2346(b)(1). Similarly, the amendment provided that
“[n]othing in this chapter shall be deemed to abrogate
or constitute a waiver of any sovereign immunity of a State
or local government, or an Indian tribe against any
unconsented lawsuit under this chapter.” Id.
Factual Background and Procedural History
alleged in the complaint, Plaintiff Ho-Chunk, Inc.
(“HCI”) is a wholly tribal-owned entity
established by the Winnebago Tribe of Nebraska under its
tribal law, and “acts as the [tribe's] economic
development arm.” Compl. ¶ 9. Plaintiffs Rock
River Manufacturing Company (“Rock River”),
Woodlands Distribution Company (“Woodlands”), and
HCI Distribution Company (“HCI Distribution”),
are wholly owned subsidiaries of HCI. Id. All three
subsidiary companies are located on the Winnebago reservation
in Nebraska, and have a role in either purchasing,
manufacturing, distributing, or selling tobacco products.
Id. ¶¶ 10-12.
2016, pursuant to the CCTA's inspection provisions,
see 18 U.S.C. § 2343(c), ATF Chief Keith
Krolczyk sent letters to Rock River, Woodlands, and HCI
Distribution, stating the agency's intent to inspect and
copy relevant records and seeking to schedule a date for that
inspection. Def.'s Mem. Supp. Mot. Summ. J.
(“MSJ”), Declaration of Ellen V. Endrizzi
(“Endrizzi Decl.”), ¶ 3; Def.'s MSJ, Ex.
1. On August 3, ATF received a letter from Plaintiffs'
counsel, who outlined his view that “there is some
serious doubt surrounding the applicability of the CCTA and
its regulations.” Endrizzi Decl. ¶ 4; Def.'s
MSJ, Ex. 2, at 4. Counsel went on to explain that the
Winnebago Tribe would “provide . . . the requested
information regarding its off-reservation transactions,
” but urged ATF to “suspend any further demands
for the records of the inter-tribal trade transactions”
so that it could “initiate an appropriate action in
federal court . . . to clarify” its obligations under
the CCTA. Def.'s MSJ, Ex. 2, at 4. The following day, ATF
sent a letter reasserting its authority to inspect under the
CCTA, and responding point-by-point to the various legal
issues Plaintiffs' counsel had identified. See
Def.'s MSJ, Ex. 3. On August 9, 2016, ATF agents met with
counsel for HCI at an off-reservation facility, but were
provided only with records related to “non-native
sales.” Endrizzi Decl. ¶ 6.
week later, Plaintiffs filed a complaint in this Court under
the Administrative Procedure Act (“APA”) and the
Declaratory Judgment Act, seeking “a Declaration that
[the recordkeeping requirements of] the CCTA, 18 U.S.C.
§ 2243(a), as implemented by the Attorney General, [are]
not applicable to the Plaintiffs, ” and therefore
“cannot be used to compel ATF's access to the
business records . . . requested in [ATF's
above-described] letters.” Compl. ¶ 37. In light
of the suit, ATF has refrained from enforcing its inspection
authority under the CCTA “through in-person demand,
district court order, or search warrant.” Endrizzi
Decl. ¶ 17. The parties now cross-move for summary
judgment. The sole issue is the applicability of CCTA's
recordkeeping requirements to tribal entities, with the
lion's share of the briefing addressing Plaintiffs'
argument that “Indian country” does not fall
within the territorial scope of the Act's recordkeeping
provisions. In supplemental briefing, Plaintiffs advanced a
new line of argument: They claim to be instrumentalities of a
tribal government, and assert that such entities are not
“persons” covered by the Act.