Supreme Court upholds Yakama exemption from state fuel tax

In a case involving treaty rights versus state taxation, the Supreme Court narrowly decided that the Yakama Treaty of 1855 creates a right for tribal members to avoid state taxes on off-reservation commercial activities that make use of public highways.

The 5-4 decision in the case, Washington State Department of Licensing v. Cougar Den, Inc., affirmed a Washington Supreme Court decision that upheld the tribe’s exemption.

The law in question taxes motor vehicle importers that bring large quantities of fuel into the state by ground transportation. Cougar Den is a wholesale fuel importer owned by a member of the Yakama Nation. It imports fuel from Oregon over Washington public highways to the Yakama Reservation to sell to Yakama-owned retail gas stations within the reservation. The Washington State Department of Licensing assessed Cougar Den $3.6 million in taxes, penalties and licensing fees in 2013 for importing motor vehicle fuel into the state.

The U.S. Supreme Court building on Capitol Hill in Washington, D.C.
The U.S. Supreme Court building stands on Capitol Hill in Washington, D.C., U.S., on Tuesday, April 10, 2018. Photographer: Al Drago/Bloomberg

Cougar Den appealed, arguing the 1855 treaty forbids the State of Washington from imposing such a tax. The Washington Superior Court held that the tax was pre-empted, and the Washington Supreme Court affirmed that decision.

Under the treaty, the Yakamas granted to the United States approximately 10 million acres of land (about one-fourth of what is now the Dtate of Washington) for $200,000. In addition to the sum of money, the U.S. made improvements on the remaining Yakama land, including construction of a hospital and schools, and agreed to certain reserved rights. The reserved rights include “the right, in common with citizens of the United States, to travel upon all public highways.”

Justice Stephen Breyer wrote the majority opinion Tuesday, joined by Justices Sonia Sotomayor and Elena Kagan. Justice Neil Gorsuch filed a concurring opinion, joined by Justice Ruth Bader Ginsburg. Chief Justice John Roberts filed a dissenting opinion, in which Justices Clarence Thomas, Samuel Alito and Brett Kavanaugh joined, while Kavanaugh filed a dissenting opinion in which Thomas joined.

The court stressed that the language of the treaty should be understood to have the same meaning that the Yakamas understood it to have in 1855: “Thus, although the words ‘in common with’ on their face could be read to permit application to the Yakamas of general legislation (like the legislation at issue here) that applies to all citizens, this court has refused to read ‘in common with’ in this way because that is not what the Yakamas understood the words to mean in 1855. The right to travel on public highways includes the right to travel with goods for purposes of trade. To impose a tax on traveling with certain goods places a burden on that travel and the right to travel on the public highways without such burdens is just what the treaty protects.”

The concurring opinion by Gorsuch and Ginsburg concluded that the 1855 treaty guarantees tribal members the right to move their goods to and from the market freely. The concurring opinion cited a number of factual findings in a previous case involving the same treaty, “which are binding here and sufficient to resolve this case.”

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