Tribe’s Treaty Doesn’t End Its State Obligations

(CN) - The Yakima Nation must contribute to a master settlement with tobacco manufacturers, the 9th Circuit ruled today, rejecting claims that its treaty releases it.

Washington and 45 other states entered into the agreement with big tobacco companies to settle smoking-related illness claims, but the Yakima said its 1855 treaty exempted its tribal-owned tobacco company from making escrow payments.

The Yakima Nation's King Mountain Tobacco Co. started operating in 2006 and sought a determination from its tribal council in 2010 on its escrow obligations.

Though the council deemed King Mountain exempt under the Yakima Treaty of 1855, Washington's attorney general refused to give the company a release so the Yakima filed suit.

Arguing that the 1855 treaty is an "express federal law," the Yakima said its people are exempt from the escrow statute. The state countered that the treaty cannot preclude it from regulating tobacco products sold nationally.

Washington cited Supreme Court precedent that says "Indians going beyond reservation boundaries have generally been held subject to nondiscriminatory state law otherwise applicable to all citizens of the state."

Siding with the state last year, U.S. District Judge Lonny Suko found that King Mountain had "not met its burden of showing express federal law exempting its business from state regulation."

Case law does not support invalidating the state's escrow statute based on an Indian treaty or any other federal law, the court found.

A three-judge panel of the 9th Circuit took less than a week after oral arguments to affirm for the state Friday, ruling the escrow statute is "a nondiscriminatory law that applies to off-reservation activity."

As King Mountain's tobacco-related activities "take place largely off-reservation," they are not exempt from economic regulation, the ruling states.

The Yakima failed to show that Article II of the treaty preserved "exclusive use and benefit" of the land, covering the growing and trading of tobacco without economic restrictions.

"There is no ambiguity in Article II requiring us to decide how the Treaty would be interpreted with regard to the rights of the Yakama to trade outside the reservation," Judge Morgan Christen wrote for the court. "Washington's escrow statute does not interfere with King Mountain's ability to grow tobacco on reservation lands and benefit from the sale of its tobacco products. Further, Supreme Court authority precludes interpreting the Yakama Treaty in the manner urged by Appellants; 'exclusive benefit' cannot mean that King Mountain is free to sell cigarettes to non-Indians and nonmembers without any regulation by the state."

The panel also said the escrow payment was less intrusive that a tax.

"We fail to see how a cigarette tax on tribal activity would not be preempted by the Yakama Treaty, but a less intrusive escrow requirement on a private business owned by one tribal member would be preempted," Christen wrote.

In granting the state summary judgment, the District Court properly declined to make findings about the historic meaning of the treaty to the Yakima people because it "cannot overcome the plain and unambiguous text," the ruling continues.

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