Tuesday, May 25, 2010

Monteau Clarifies Why Tribes Don't Need State Liquor Licenses

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Harold Monteau, the former chairman of the National Indian Gaming Commission at the time the Mohegans opened their casino, explains why tribes don't need state liquor licenses in order to serve liquor on the reservation as long as they follow state restrictions on what hours liquor is to be served and age requirements.


I read in a recent news article that a tribe that has been a major fighter for upholding Tribal Sovereignty in many areas of the law had settled its differences with the state regarding liquor sales in its casino/resort and will do so under a state issued license. Several tribes in the State of California have sought and obtained California State Liquor Licenses in the last decade. I’m sure this same scenario has played out with other tribes in many states. Their attorneys may have counseled them that the Supreme Court in Rice v. Rehner opined that tribes must comply with State Liquor Control Laws, including obtaining a State Liquor License. This is an erroneous interpretation of Rice v. Rehner, a U. S. Supreme Court case that addressed the issuance of a Tribal Liquor License to an “individual” rather than to a “tribe”. Unfortunately, this erroneous interpretation is being taught in some law schools. Tribes can, and do, issue their own liquor licenses under Tribal Liquor Control Ordinances. Of course, you should consult your local attorneys, but make them do their homework as to whether the tribe can issue it’s own liquor license.

For decades the Secretary of Interior has had the authority to approve Tribal Liquor Control Ordinances and has done so as recently as April, 2010. The Choctaw Tribe of Oklahoma, the Prairie Band of Pottawatomi and the Colville Confederated Tribes have all recently had their Tribal Liquor Control Ordinances approved by the Secretary and printed in the Federal Register. Under these Ordinances the tribe’s can issue liquor licenses, including to themselves. Licensees must comply with state laws pertaining to the age of patrons and the hours of operations. The Ordinances do not deal with taxation issues that may arise and it is expected that each state and tribe will resolve such issues as between two sovereigns. The Federal Statute under which these Ordinances are authorized is 18 USC 1161, “Application of Indian Liquor Laws“. The statute neither requires a State Liquor License nor requires the collection of any tax. It does authorize the Secretary to approve Tribal Liquor Control Laws which include licensing procedures for licenses issued by the tribe. Typically these Ordinances are approved “ in accordance with 18 USC 1161 as interpreted by the U.S. Supreme Court in Rice v. Rehner”, a phase found in all of the recently printed Federal Register Notices. 18 USC 1161 has “supremacy” over any laws of the state with regard to liquor sales in Indian Country. The statute is neither a wholesale abrogation of tribal sovereign regulatory authority over liquor sales within its borders nor is it a wholesale adoption of state law, dicta in Rice v. Rehner, notwithstanding.

Rice v. Rehner is restricted to its facts. It did NOT involve a tribe selling liquor in a tribally owned business licensed by the tribe under a Secretarial Approved Tribal Liquor Control Ordinance. Such a case has never come before the U.S. Supreme Court. Rice v. Rehner involved the sale of liquor by an “individual tribal member under a Federal Indian Trader’s License”. Although, in her long drawn-out opinion Justice O’Connor goes way beyond the facts in the case, any language in the opinion that might be interpreted as to require a Tribal Government owned business on the reservation to secure a State Liquor License is dicta and it has been regarded as dicta by the Federal Administrative Branch (Department of Interior/BIA) of the U.S. Government. The Administrative Branch continues to approve Tribal Liquor Control Ordinances that include the issuance of Tribal Liquor Control Licenses as long as the sales comply with state law regarding such sales. Compliance with state law has been interpreted by the Feds to mean compliance with state law as regards age and hour limitations. The Department of Interior clearly is keeping step with the legal analysis of tribal regulatory authority over matters also regulated by the state. Only the U.S. Congress may make state law applicable to “Indian Country” and did so with regard to liquor sales in a very limited manner. The Secretary and Solicitors, in determining the power of tribes to pass their own Tribal Liquor Control Laws, have properly applied the “prohibitory versus regulatory” analysis that has been used in Federal Cases interpreting the Indian Gaming Regulatory Act (IGRA). Consequently, the BIA does not discourage tribes from obtaining state issued licenses and neither does it encourage it. A State Liquor License can be a valuable asset but, in most cases, it is unnecessary.

A careful reading of Rehner and its discussion of “substantive” state law versus “regulatory” state law is informative as to how the Federal Courts should resolve the issue not involved in Rehner. That is; Is a tribe that is engaged in the sale of alcoholic beverages under a tribally issued liquor license authorized under a Federally Approved Tribal Liquor Control Ordinance, required to obtain a State License under State Liquor Control Laws? The answer, is NO. The analysis of “substantive” versus “regulatory” law in Rice v. Rehner has gone through a major evolution and is now an analysis that differentiates between whether state law, as made applicable by Federal Law, is prohibitory or regulatory. Under that analysis state control of liquor is clearly not prohibitory because the state does not prohibit, but rather it regulates such sales. Tribes are free to issue themselves a Tribal Liquor License and regulate liquor sales under the Tribal Liquor Control Ordinances approved by the Secretary of Interior as long as the sales are in compliance with state law regarding age and hour limits. Compliance with state law does not mean a state issued liquor licensed in required. The “compliance with state law” language of 18 USC 1161 has not been interpreted by the Administrative Branch of the U.S. Government to require a state license. The Department of Interior’s interpretation is entitled to deference under the canons of statutory interpretation.

While I recognize that with some tribes, obtaining a State Liquor License may be the path of least resistance, consideration has to be given to dilution of tribal sovereign authority, especially when no Federal Law has taken it away. The tribe, itself, must give away this sovereign authority to regulate liquor sales and does so when unnecessarily seeking a State Liquor License. Federal Law no more requires a tribe to secure a state license for liquor sales than it requires a state license for gambling within Indian Country.

I am not an advocate of tribal liquor sales. I am an advocate of Tribal Sovereignty. I personally made the decision not to use alcohol about a decade ago. I also realize the struggles that tribes have with liquor control, especially as it pertains to the so-called “border towns” and non-Indian owned bars on some reservations. However, as an advocate for Tribal Sovereignty, I would encourage Tribal Attorneys to do the proper research before advising your tribal client to obtain a State Liquor License. Give the state an inch and it’ll take a mile.

Harold Monteau is a Chippewa Cree lawyer and former Chairman of The National Indian Gaming Commission. He resides on the Coeur d’Alene Reservation and can be reached at hamlaw@live.com or Facebook.