Supreme Court Rules Tribal Co. Doesn't Owe Wash. State Fuel Tax

The U.S. Supreme Court on March 19 upheld a Washington state court ruling that a Yakama Nation company does not have to pay a state fuel tax, saying the tribe's right to travel on public highways under its treaty makes the company exempt from the tax, Law360 reported.

Washington state was seeking to overturn a March 2017 Washington Supreme Court ruling that wholesale fuel distributor Cougar Den doesn't have to pay $3.6 million in fuel taxes because the motor fuel tax is barred by the tribe's right to travel on public highways under its 1855 federal treaty. (Cougar Den, which is owned by a tribe member, is formed under the laws of the Confederated Tribes and Bands of the Yakama Nation.) 

Washington state had assessed $3.6 million in unpaid taxes, interest and penalties against Cougar Den in 2013 after Cougar Den hauled millions of gallons of fuel over the state's borders over a seven-month period without paying the tax, according to the petition.

Supreme Court Justice Stephen Breyer wrote in the March 19 opinion that the tribe's treaty protects the Yakamas’ right to travel on the public highway with goods for sale, and the state’s statute taxes the Yakamas for traveling with fuel by public highway.

Justice Breyer wrote that treaties with federally recognized Indian tribes constitute federal law that pre-empts conflicting state law as applied to off-reservation activity by Indians.

The state had argued that its fuel tax is a generally applicable tax on fuel possession and not on highway travel and that a ruling against the state would impact tens of millions of dollars in taxes.

The Washington Supreme Court had voted 7-1 in favor of Cougar Den, ruling that the Washington State Department of Licensing couldn't assert fuel import licensing and taxation requirements against the company because that importation falls under the unfettered right to travel "upon all public highways" in the Yakama's 1855 treaty, Law360 reported.






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