In Washington State Department of Licensing v. Cougar Den, Inc., the U.S. Supreme Court on Tuesday affirmed the Washington Supreme Court. In 2017, the state Supreme Court ruled that a fuel distributor owned by a member of the Yakama Nation does not have to pay state fuel taxes on fuel it transports from Oregon to the Yakama Reservation. Under the Yakama Treaty of 1855, members of the Yakama Nation have “the right, in common with citizens of the United States, to travel upon all public highways.”

Regarding that language, the decision by Justice Breyer (joined by Justices Sotomayor and Kagan) states,

The words “in common with” on their face could be read to permit application to the Yakamas of general legislation (like the legislation before us) that applies to all citizens, Yakama and non-Yakama alike. But this Court concluded the contrary because that is not what the Yakamas understood the words to mean in 1855.

(Citations omitted throughout this post.)

As a concurring opinion by Justice Gorsuch (joined by Justice Ginsburg) notes, “Instead, the evidence suggests that the Yakamas understood the right-to-travel provision to provide them ‘with the right to travel on all public highways without being subject to any licensing and permitting fees related to the exercise of that right while engaged in the transportation of tribal goods.’”

Justice Breyer writes, “The only relevant question is whether the tax ‘act[ed] upon the Indians as a charge for exercising the very right their ancestors intended to reserve.’ And the State’s tax here acted upon Cougar Den in exactly that way.”

The decision determines that Washington’s law “taxes travel by ground transportation with fuel,” but that the treaty “protects the Yakamas’ right to travel on the public highway with goods for sale.” Thus, “Washington’s fuel tax cannot lawfully be assessed against Cougar Den.”

In a dissent, Chief Justice Roberts (joined by Justices Thomas, Alito, and Kavanaugh) writes,

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. . . . It is difficult to imagine how the legislature could more clearly identify the object of the tax. . . . Washington is taxing the fuel that Cougar Den imports, not Cougar Den’s travel on the highway; it is not charging the Yakamas “for exercising the very right their ancestors intended to reserve.”

Meanwhile, the decision also makes several limiting statements:

• “[W]e do not say or imply that the treaty grants protection to carry any and all goods. Nor do we hold that the treaty deprives the State of the power to regulate, say, when necessary for conservation.”
• “Nor do we here interpret the treaty as barring the State from collecting revenue through sales or use taxes (applied outside the reservation).
• “Nor do we hold that the treaty deprives the State of the power to regulate to prevent danger to health or safety occasioned by a tribe member’s exercise of treaty rights.”

On that last point, the dissent by Chief Justice Roberts notes, “This escape hatch ensures, the plurality suggests, that the treaty will not preempt essential regulations that burden highway travel. I am not so confident.” The Chief Justice points out a few possible consequences:

I do not see how, under the plurality’s rule or the concurrence’s, a Washington police officer could burden a Yakama’s travel by pulling him over on suspicion of carrying such contraband on the highway.

But the more fundamental problem is that this Court has never recognized a health and safety exception to reserved treaty rights, and the plurality today mentions the exception only in passing.

Also, the ruling “preempts the enforcement of any regulation of goods on the highway that does not concern travel safety—such as a prohibition on the possession of potentially contaminated apples taken from a quarantined area (a matter of vital concern in Washington).”

In a separate dissent, Justice Kavanaugh (joined by Justice Thomas) raises other concerns about the decision:

The Court’s newly created right will allow Yakama businesses not to pay state taxes that must be paid by other competing businesses, including by businesses run by members of the many other tribes in the State of Washington. As a result, the State of Washington (along with other States) stands to lose millions of dollars annually in tax revenue, which will necessarily mean fewer services or increased taxes for other citizens and tribes in the State.

According to the decision, the Department of Licensing had determined in 2013 that Cougar Den owed $3.6 million in taxes, penalties, and fees. So the immediate fiscal impact of the ruling is not seriously detrimental to the state budget.

UPDATE: Attorneys at K&L Gates note that the decision “could open the door to on-reservation economic growth and development opportunities. The Yakama Nation might, for example, purchase timber or lumber in Oregon or Idaho, then transport those goods on state highways to the Yakama Reservation, and not be subject to certain state taxes.”