Justices side with tribal firm over state fuel tax

By Ellen M. Gilmer | 03/19/2019 01:07 PM EDT

A treaty more than 150 years old shields tribal businesses from Washington state’s gas tax, the Supreme Court ruled today in a case with implications for other tribes and state laws.

The Cougar Den in White Swan, Wash.

The Cougar Den in White Swan, Wash. © 2018 Google

A treaty more than 150 years old shields tribal businesses from Washington state’s gas tax, the Supreme Court ruled today.

In a case with implications for other tribes and state laws, the high court issued a split opinion siding with tribal gas retailer Cougar Den Inc. over Washington officials.

The Evergreen State and the company have been locked in a dispute for years over whether Cougar Den, run by a member of the Yakama Nation, must pay the state’s per-gallon tax on motor fuel delivered from Oregon to the reservation in south-central Washington.


The tax applies to gas that crosses state lines, but the company argued that an 1855 treaty with the tribe prevents the state from restricting tribal members’ ability "to travel upon all public highways." Cougar Den ships the fuel on public highways and cannot be taxed for that activity, the company said.

State lawyers countered that the tax is permissible because it applies to Cougar Den’s possession, not transportation, of the fuel.

The Supreme Court agreed with the tribal company today, though the five justices on that side split in their reasoning.

"In a word, the treaty negotiations and the United States representatives’ statements to the Yakamas would have led the Yakamas to understand that the treaty’s protection of the right to travel on the public highways included the right to travel with goods for purposes of trade," Justice Stephen Breyer wrote in an opinion joined by Justices Elena Kagan and Sonia Sotomayor.

"[T]o impose a tax upon traveling with certain goods," they concluded, "burdens that travel. Therefore, our precedents tell us that the tax must be pre-empted."

Justices Neil Gorsuch and Ruth Bader Ginsburg sided with Cougar Den in a slightly narrower opinion that nonetheless stressed the Yakama Nation’s rights.

"Really, this case just tells an old and familiar story," Gorsuch wrote. "The State of Washington includes millions of acres that the Yakamas ceded to the United States under significant pressure. In return, the government supplied a handful of modest promises. The State is now dissatisfied with the consequences of one of those promises. It is a new day, and now it wants more.

"But today and to its credit, the Court holds the parties to the terms of their deal," he added. "It is the least we can do."

Some justices’ skepticism of Washington’s tax was on display during oral argument in October. Kagan remarked, for example, that from the tribe’s perspective, "this tax is burdening exactly what they bargained to get" (Greenwire, Oct. 30, 2018).

Dissent and broader impacts

In the dissent, Chief Justice John Roberts said the other justices interpreted the application of the treaty too broadly.

"Under our precedents, a state law violates a treaty right only if the law imposes liability upon the Yakamas ‘for exercising the very right their ancestors intended to reserve,’" he wrote. "Because Washington is taxing Cougar Den for possessing fuel, not for traveling on the highways, the State’s method of administering its fuel tax is consistent with the treaty."

Roberts was joined by Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh — all from the court’s conservative wing. Gorsuch’s alignment with the liberal wing in this case proved pivotal in Cougar Den’s victory.

The decision is a win for the tribal company, the Yakama Nation and other tribal advocates, who view the case as a broader statement on respect for tribal treaty rights.

Stokes Lawrence PS attorney Mathew Harrington, who represented Cougar Den in the case, called the decision a landmark protection of the Yakama Nation’s treaty rights.

"In this case the State of Washington attacked a Yakama Indian Nation member’s rights under the Treaty of 1855," he said in an email. "But the U.S. Supreme Court honored the solemn promises made by the U.S. government before Washington became a state."

Michigan State University law professor Matthew Fletcher, who leads the Indigenous Law and Policy Center, said "it’s probably the first time since the ’90s that a tribe has won a taxation case."

Washington state officials did not respond to a request for comment, but they’ve previously argued that Cougar Den’s approach amounted to a massive loophole allowing tribal members to duck millions of dollars in taxes.

The Cougar Den case is one of many American Indian law issues on the court’s docket this term. In January, the justices heard arguments in Herrera v. Wyoming, a dispute over whether a treaty allows tribal members to hunt on national forestland in Wyoming (Greenwire, Jan. 4).

"If Gorsuch is OK with limited treaty rights for Indian tribes, then that bodes very well for the Herrera opinion," Fletcher said.