In 2023, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) placed Twenty-Nine Palms Band of Mission Indians (Twenty-Nine Palms), a federally recognized Indian tribe that sells cigarettes on sovereign reservations in California, on the Prevent All Cigarette Trafficking Act’s (PACT Act’s) noncompliant list (NCL). The PACT Act generally prohibits common carriers from shipping products to or from companies on the NCL. After ATF placed Twenty-Nine Palms on the NCL, the tribe sued ATF and its parent agency, the Department of Justice (DOJ), in federal court. This case is worth following because it involves key issues related to ATF’s authority to enforce the PACT Act against federally recognized Indian tribes and ATF’s interpretation of key sections of the PACT Act.
The PACT Act
Generally, the PACT Act requires any person who ships cigarettes or smokeless tobacco in interstate commerce to register with ATF and the tobacco tax administrators of each state and/or locality into which the shipments are made, file monthly reports with the tobacco tax administrators of each state and/or locality into which the shipments are made, and comply with state, local, and tribal cigarette or smokeless tobacco licensing, regulatory, and tax laws.
The PACT Act also imposes extensive requirements on “delivery sellers” who make remote sales or shipments of cigarettes or smokeless tobacco to “consumers,” including, for example, that the delivery seller comply with shipping and age verification requirements, record-keeping requirements, and all state, local, tribal, or other laws applicable to the sales of cigarettes or smokeless tobacco. “Consumers” may include any person unlawfully operating as a cigarette or smokeless tobacco manufacturer, distributor, wholesaler, or retailer.
The PACT Act authorizes ATF to place delivery sellers on the NCL if those delivery sellers fail to comply with the PACT Act.
The PACT Act also authorizes ATF to impose steep civil penalties on noncompliant delivery sellers including, for example, $5,000 for a first violation, $10,000 for any other violation, or two percent of the delivery sellers’ gross sales of the cigarettes or smokeless tobacco during the one-year period ending on the date of the violation, whichever is greater.
Case Dismissed
ATF and DOJ argued that Twenty-Nine Palms’ cigarette sales were “delivery sales” to “consumers” under the PACT Act because it sold its cigarettes to tribal customers who were unlawfully operating under California’s cigarette laws. ATF and DOJ further argued that Twenty-Nine Palms failed to comply with the PACT Act by failing to comply with California’s cigarette licensing, reporting, record keeping, and excise tax requirements.
Twenty-Nine Palms argued that ATF’s decision was contrary to law because the PACT Act preserves Native American rights under treaties and common law, and because ATF required Twenty-Nine Palms to adhere to California laws and regulations regulating cigarette distribution when on-reservation sales between sovereign tribes are not subject to California cigarette laws and regulations under U.S. Supreme Court precedent. Twenty-Nine Palms also argued that ATF’s decision was contrary to law because the decision included improper justifications that were not included in ATF’s decision letter such as, for example, allegations that Twenty-Nine Palms’ tribal customers were not lawfully operating under California law. Twenty-Nine Palms further argued that ATF’s claim that it was in violation of California law was contrary to the California DOJ’s view.
On February 27, a federal district court granted summary judgment to ATF and DOJ. The court agreed that Twenty-Nine Palms’ cigarette sales to another federally recognized tribe on its reservation in California were not subject to California cigarette taxes, but the court concluded that ATF had reason to believe Twenty-Nine Palms sold cigarettes to nontribal customers and ATF made its decision to place Twenty-Nine Palms on the noncompliant list on that basis. Thus, the court granted summary judgment to ATF and DOJ and dismissed the case.
Decision Appealed
On April 9, Twenty-Nine Palms appealed the federal district court’s decision to the Ninth Circuit Court of Appeals. In its June 20, 2025, opening brief, Twenty-Nine Palms argues that ATF took the position that the customers of its federally recognized Indian tribe customer were “consumers” under the PACT Act and, therefore, Twenty-Nine Palms was a “delivery seller” under the PACT Act. But, Twenty-Nine Palms argues, ATF’s decision to place it on the NCL is contrary to law because ATF’s decision is predicated on California’s authority to require federally recognized Indian tribes to obtain state retail licenses, and such authority does not exist. Thus, Twenty-Nine Palms argues, its federally recognized Indian tribe customer acted lawfully.
Twenty-Nine Palms further argues that the federal district court wrongfully concluded that it sold cigarettes to nontribal customers, which is not supported by the administrative record.
Twenty-Nine Palms also argues that ATF made several procedural errors including, for example, failing to provide Twenty-Nine Palms adequate notice of ATF’s legal theories prior to its final decision, to adequately explain its decision, and to support its conclusions with evidence in the administrative record.
Injunction Pending Appeal
In addition to appealing the federal district court’s decision, Twenty-Nine Palms has asked the federal district court to require ATF to remove it from the NCL and prevent ATF and DOJ from taking action against it pending its appeal. Twenty-Nine Palms argues that the court’s decision was predicated on ATF’s conclusion that it sells cigarettes to nontribal customers, but it does not, and that ATF’s erroneous decision will cause it irreparable harm. Briefing on this issue was completed on June 11 and the parties are awaiting a decision from the court.
Why It Matters
This case involves key issues of tribal sovereignty and interpretation of the PACT Act’s delivery sale provisions to entities that purchase tobacco products for resale. The latter issue impacts all businesses selling cigarettes and smokeless tobacco, not just federally recognized Indian tribes. Thus, this case is worth monitoring.
