The U.S. Supreme Court decided a case in March of this year regarding a conflict between treaty rights and state taxes. An 1855 treaty between the United Sates and the Yakama Nation forbid the State of Washington from imposing a tax on fuel importers. Cougar Den., a wholesale fuel importer owned by a member of the Yakama Nation, argued the state’s requirement to pay the tax infringed the Yakamas’ reserved treaty "right, in common with citizens of the United States, to travel upon all public highways.”
What Washington State Said
Washington State's Department of Licensing (DOL) however disagreed and imposed a $3.6 million cost on Cougar Den, Inc. for taxes,penalties, and licensing fees for importing motor vehicle fuel into the state. The Washington Superior Court held that the tax was preempted by the treaty. The Washington State Supreme Court also agreed with Cougar Den's position. DOL petitioned the U.S. Supreme Court to hear the case. Justice Breyer announced the Court's decision in favor of Cougar Den.
A Washington statute requires that “motor vehicle fuel importer[s]” obtain a license. Fuel importers are also subjected to pay a fuel tax for “each gallon of motor vehicle fuel” brought into the state. Fuel importers become liable to pay the tax once the fuel crosses the state line. The tax is limited to fuel importers who import fuel via ground transportation. Licensees who import fuel by way of railcar, pipeline or vessel are not subject to the tax.
The treaty in question was agreed to when the Confederated Tribes and Band of the Yakama Nation relinquished10 million acres of land, or one-fourth of the State of Washington, to the federal government in exchange for $200 million. The settlers made improvements to the remaining Yakama land, and agreed to respect the Yakamas reservation of certain rights among other things. Of these rights,the U.S. recognized in writing the inherent right of the Yakamas “...in common with citizens of the United States, to travel upon all public highways.”
In 1905, the U.S. Supreme Court stated that when interpreting the treaty, courts must focus on the historical context in which it was written and signed. As what is described in the Supreme Court case, Water Splash, Inc. v. Menon, 137 S. Ct. 1504, 197 L. Ed. 2d 826 (2017) courts, “may look beyond the written words to the history of the treaty, the negotiations, and the practical construction adopted by the parties.”
The importance of the historical context in treaty interpretation is due to the disadvantage the Yakama people had when the treaty was negotiated. The treaty was written in English, which the Yakamas were unfamiliar with. Also, much of what the United States negotiated to the Yakamas’ had no adequate translation in their language, leaving much room for error in the interpretation. Treaties are to be interpreted as the Indians would have understood them at the time.
Supreme Court Decision
The Supreme Court notes the historical record indicates the right to travel included a right to travel with goods for sale or distribution. During negotiations of the treaty, it was noted that the Yakamas required the freedom to travel because travel was necessary in order to fish on the Columbia River and its tributaries, hunt, gather their traditional foods and medicine, and to trade with others like they always have done. They traveled to hunt deer, elk, buffalo and other small game, gather berries and roots, and other items, especially salmon, that their culture was dependent on.
Understanding the importance of travel and trade, the United States assured the Yakamas they would be able to travel outside their reservation on the roads built by the federal government. The Supreme Court held that the treaty negotiations between the United States and Yakama Nation would have led them to believe the right to travel on public highways included the right to travel with goods for purposes of trade.
The Supreme Court's decision also held that a tax on traveling with certain goods would create a burden on that travel. It stated that the treaty protects the right to travel on public highways without such burdens, and “the tax must be preempted.” It noted a decision it previously made in Tulee v. State of Washington, 315 U.S. 681, 62 S. Ct. 862, 86 L. Ed. 1115 (1942) that held the “exaction of fees as a prerequisite to the enjoyment of” of a right reserved in the treaty “cannot be reconciled with a fair construction of the treaty.” The Court found Washington’s fuel tax “acts upon the Indians as a charge for exercising the very right their ancestors intended to reserve."
The fuel tax is preempted by the 1855 treaty between the U.S. and the Fourteen Tribes and Bands of the Confederated Yakama Nation. This case provides a unique situation where the acknowledgement of a 150 year-old treaty impacts and limits a state’s ability to tax and raise revenue. For more information on this case, or the importance of other American Indian treaties, contact Whitcomb, Selinsky Law PC at (303) 534-1958 or complete an online contact form.