66
Opinion of the Court
taxed] cigarettes," in which case wholesalers must obtain the tribe's approval for each delivery of untaxed cigarettes to a reservation retailer. § 336.7(c)(1). In the absence of such an agreement—and apparently there have been none to date—the Department itself limits the permitted quantity of untaxed cigarettes based on the "probable demand" of tax-exempt Indian consumers. § 336.7(d)(1).
The Department calculates "probable demand" in either of two ways. If a tribe "regulates, licenses or controls the sale and distribution of cigarettes within its reservation," the Department will rely upon evidence submitted by that tribe concerning local demand for cigarettes. § 336.7(d)(2)(i).3 Otherwise, the Department fixes the untaxed cigarette limit for a tribe by multiplying the "New York average [cigarette] consumption per capita" by the number of enrolled members of the affected tribe. §§ 336.7(d)(1), (d)(2)(ii). Each sale of untaxed cigarettes by a wholesaler to a tribe or reservation retailer must be approved by the Department; approval is "based upon evidence of valid purchase orders received by the agent [i. e., wholesaler] of quantities of cigarettes reasonably related to the probable demand of qualified Indian consumers in the trade territory" of the tribe. Ibid.4 Retailers are sent "Tax Exemption Coupons" entitling them to their monthly allotment of tax-exempt cigarettes. The retailer gives copies of its coupons to the wholesaler upon delivery, and the wholesaler forwards one to the Department. See Brief for Petitioners 12-13; App. 44-45. The Department may withhold approval of deliveries to tribes or re-3 The regulation cites as examples of such evidence "records of previous sales to qualified Indian consumers, records relating to the average consumption of qualified Indian consumers on and near its reservation, tribal enrollment, or other statistical evidence, etc." 20 N. Y. C. R. R. § 336.7(d)(2)(i) (1992).
4 The Department determines the "trade territory" in consultation with the tribe if the tribe has undertaken to regulate the sale and distribution of cigarettes; otherwise, the Department determines the trade territory "based upon the information at its disposal." § 336.7(d)(3)(ii).
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