Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

High Court Tribal Tax Fight Turns on 1855 Treaty

A 163-year-old treaty was the focus of Supreme Court oral arguments on Tuesday as lawyers sparred over attempts to tax a fuel distributor owned by a member of the Yakama Nation.

WASHINGTON (CN) – A 163-year-old treaty was the focus of Supreme Court oral arguments on Tuesday as lawyers sparred over attempts to tax a fuel distributor owned by a member of the Yakama Nation.

The dispute erupted in 2013 when Cougar Den Inc., a business owned by tribe member Kip Ramsey III, began going through Oregon to deliver gasoline to fuel stations on the Yakama reservation in Washington.

Though the tribe was guaranteed the right to freely travel and bring goods to market as part of a treaty in 1855 that ceded huge swaths of Yakama land to the United States, federal authorities now argue that Cougar Den became subject to all U.S. licensing and tax laws by doing business across state lines.

But Cougar Den says its activities on a 27-mile stretch of highway known as US-97 occur on land that is still considered a major trade route for the tribe.

Indeed US-97 is surrounded on all sides by 12 million acres of Yakama ancestral land.

Appearing to take the tribe’s side today at oral arguments, Justice Elena Kagan pressed Washington Solicitor General Noah Purcell to explain how the state’s position wasn’t ultimately a violation of the treaty or discriminatory.

“It seems to me from the Yakama’s point of view, and they’re after all, the people who entered into this treaty, this tax is burdening exactly what they bargained to get which is the ability to transport their goods without a tax,” Kagan said.

Purcell stressed that both Cougar Den and the Yakama Nation remain “free to use the highway and not pay the tax,” he offered.

“What they can’t do is possess fuel and bring it into the state or purchase it in the state without paying the tax,” Purcell said.

Justice Brett Kavanaugh challenged the notion.

“But [the Yakama Nation was told] at the time of the treaty that you could go on the roads to take your things to market,” he said, noting the Yakama gave up land the same size as the state of Maryland for the right to move freely and trade without interference.

Purcell shot back that no part of the fee turns on use of the highway.

“Even if the court decided that it guaranteed the Yakama some right beyond what it guaranteed others in terms of traveling without paying a fee for traveling, what we have here is  not a fee for traveling,” he said.

Simply, the attorney added, the Yakama owe the tax because they possess the fuel.

Justice Kagan expressed doubt about the state’s use of the word “possession.”

“So, if Jack says I’m taking my pigs to market, and somebody says, what are you doing, Jack? He says well, I’m taking my pigs to market,” Kagan said. “[What would they say, then?] No, I think you possess your pigs, Jack?”

Building off this, Cougar Den attorney Adam Unikowsky asked the court to consider the facts underlying the statute.

“I get the overall goal of the state is to ensure that all fuel sold at retail is subject to a tax,” said Unikowsky, an attorney with Jenner & Block, “but the thing is, for fuel like this, when you have an Indian distributor, hauling it from out of state to the Indian reservation, to sale at an Indian retailer, the only connection between his fuel and off-reservation activity is that you’re hauling it across this stretch of land. That’s it.”

To enforce tax liability on the Yakama now would be a “little bit of a bait and switch,” Unikowsky added.

On rebuttal Purcell disagreed, saying the tax could apply unless it was preempted by express federal law.

“And there’s nothing in the Yakama Treaty that preempts this tax,” he said. “There is no plausible way to read the right to travel by public highway in common with others preempts a tax on goods.”

Categories / Appeals, Government

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...