Public Road Use Won’t Open Tribal Business to State Tax Liability

WASHINGTON (CN) - In a vindication of tribal rights, the Supreme Court ruled Tuesday that Washington cannot tax a fuel distributor owned by the Yakama Indian Nation for using public roads to import its product.

The case arose when Washington levied more than $3 million in taxes against Cougar Den Inc. for importing fuel across Washington state lines to sell at Yakama-owned retail gas stations.

Rejecting assertions by Cougar Den that such taxes are barred by its 1855 treaty with the United States — in which the Yakama were granted the right to travel upon all public highways in exchange for a 10 million acre land concession — the state argued that it is taxing fuel possession not ground transportation with fuel.

The Washington Supreme Court sided with Cougar Den, however, and the Supreme Court affirmed Tuesday.

“To call the Washington statute a tax on ‘first possession’ would give the law an over-inclusive label,” Justice Stephen Beyer wrote for the majority. “As explained at length above, there are several ways in which a company could be a ‘first possessor’ of fuel without incurring the tax. For example, Cougar Den would not owe the tax had Cougar Den ‘first possessed’ fuel by piping fuel from out of state into a Washington refinery. First possession is not taxed if the fuel is brought into the State by pipeline and bound for a refinery. Similarly, Cougar Den would not owe the tax had Cougar Den ‘first possessed’ fuel by bringing fuel into Washington through its waterways rather than its highways. First possession is not taxed if the fuel is brought into the state by vessel. Thus, it seems rather clear that the tax cannot accurately be described as a tax on the first possession of fuel.”

The opinion goes on to specify why Cougar Den’s travel does not fall within the scope of the language: “Here, the Yakamas’ lone off-reservation act within the state is traveling along a public highway with fuel. The tax thus operates on the Yakamas exactly like a tax on transportation would: It falls upon them only because they happened to transport goods on a highway while en route to their reservation.”

Breyer also noted that the 1855 treaty both predates the tax law and “protects the Yakama’s right to travel on the public highway with goods for sale.” 

Mathew Harrington, an attorney for Cougar Den at the firm Stokes Lawrence, thanked the court for recognizing “that the Yakama people gave up millions of acres (90% of their land) to protect this the right to travel.”

“The state of Washington attacked a Yakama Indian Nation member’s rights under the Treaty of 1855,” Harrington said in an email. “But the U.S. Supreme Court honored the solemn promises made by the U.S. government.”

While the lead opinion was joined by Justices Sonia Sotomayor and Elena Kagan, Justice Neil Gorsuch issued an opinion concurring in judgment, joined by Justice Ruth Bader Ginsburg.

He said the "parade of horribles" that the state warns will follow today's ruling "isn’t really all that horrible."

Indeed, “no one before us has identified a single challenge to a state highway speed limit, reckless driving law, or other critical highway safety regulation in the entire life of the Yakama treaty,” the dissent states.

Gorsuch concluded that holding both parties to the original terms of the agreement is the “least we can do,” considering the state’s meager original promises in exchange for huge swaths of native land.

Joined in a dissent by Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh, Chief Justice John Roberts emphasized meanwhile that “the right to travel with goods is just an application of the Yakamas’ right to travel.”

“It is not an additional right to possess whatever goods they wish on the highway, immune from regulation and taxation,” he wrote.

Recalling three past cases where state laws were found to have violated Yakama rights under the treaty, he said each case involved a distinct violation through blockades or tolls that prevented the tribe from carrying out certain actions. 

“Nothing of the sort is at issue here,” he wrote. “The tax before us does not resemble a blockade or a toll. It is a tax on a product imported into the State, not a tax on highway travel.”

Roberts also warned that today’s ruling could actually harm tribal rights in the future by pre-empting the regulation of potentially hazardous or illegal goods on the highway “— such as a prohibition on the possession of potentially contaminated apples taken from a quarantined area (a matter of vital concern in Washington).”

Though Gorsuch’s concurring opinion touched on this issue as well, Roberts took issue with his advice “not to worry, the apples could be regulated and inspected where they are grown, or when they arrive at a market.”

“What the concurrence does not say is that the state could regulate the contraband apples on the highway,” the opinion states. “And there is no reason offered why other contraband should be treated any differently.”

Representatives for Washington Solicitor General Noah Purcell did not answer a request for comment.

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.

Email *

Submit