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U.S. Supreme Court agrees to review gas tax case involving Yakama Nation

UPDATED: Tue., June 26, 2018, 11:23 a.m.

Cougar Den Inc. buys tax-free fuel from Oregon and then sells the gasoline to tribal member-owned gas stations on the Yakama Nation reservation, including Wheelers Kountry Korner. Whether the imported gasoline is exempt from state taxes or not is still subject to legal debate. (Gordon King / Yakima Herald-Republic)
Cougar Den Inc. buys tax-free fuel from Oregon and then sells the gasoline to tribal member-owned gas stations on the Yakama Nation reservation, including Wheelers Kountry Korner. Whether the imported gasoline is exempt from state taxes or not is still subject to legal debate. (Gordon King / Yakima Herald-Republic)

YAKIMA, Wash. — The nation’s highest court has agreed to consider whether Yakama gas station owners are exempt from state gas taxes on the reservation.

On Monday, the U.S. Supreme Court decided to review the case after being recommended to do so by the office of the U.S. Solicitor General last month.

At issue is whether Yakama tribal members operating gas stations on tribal land are subject to the state’s gas tax when bringing wholesale fuel onto the reservation.

The case focuses on the Cougar Den, a gas station and convenience store owned by tribal member Kip Ramsey in White Swan.

Ramsey purchased wholesale gas from an out-of-state distributor, prompting the state Department of Licensing to complain that the gas should be subject to the state’s fuel tax.

Previously, Yakima County Superior Court and the state Supreme Court ruled in favor of Ramsey, citing a provision in the Yakama Treaty of 1855 promising that tribal members would have free access to all roads and highways and also allowing them to freely bring goods to market.

Those rulings were based on an earlier unrelated case before the U.S. Ninth Circuit Court of Appeals involving cigarette taxes known as the Smiskin ruling.

“We expect the U.S. Supreme Court to agree with the Yakima County Superior Court, an Administrative Law Judge, and the Washington Supreme Court, who all recognized that the Treaty of 1855 preserved Yakama Nation members’ right to travel,” said Ramsey’s attorney, Mathew Harrington in Seattle. “After so many independent judges have agreed with Cougar Den’s view of the Treaty of 1855, it is unfortunate that the Washington Attorney General still refuses to respect the Treaty.”

But in a joint statement, the state Attorney General’s Office and the state Department of Licensing said the previous interpretations of the treaty are too broad and unfair.

“The Ninth Circuit has held that the Yakama Treaty exempts Yakama members from charges imposed specifically for using the highway, but not from taxes or charges like the ones at issue here, which would apply no matter how Cougar Den transported this fuel into Washington,” the joint statement said.

A sovereign government, the Yakama Nation and its members are exempt from retail, tobacco and gas taxes on the reservation.

But state authorities long have complained that non-tribal customers often flock to the reservation to buy those goods and escape state taxes.

The case was first leveled against Ramsey in 2013, when the Department of Licensing said he owed the state $3.6 million in unpaid fuel taxes. Ramsey challenged the matter, and the department’s administrative law judge ruled that the tribe’s treaty with the federal government exempts station owners from state fuel taxes.

Disagreeing, the department’s director overturned the ruling and the matter landed in Yakima County Superior Court, where a judge again ruled in favor of Ramsey and his tribe. The state’s high court then upheld the ruling in an appeal.

Those rulings are based on a provision in the Yakama Treaty of 1855, which says tribal members would have a right to freely travel all roads and highways.

That provision – Article 3 of the treaty – was the basis of the Smiskin ruling, which freed tribal members Harry Smiskin and his son, Kato, from prosecution when 4,000 cartons of untaxed wholesale cigarettes were seized from a trailer at their home.

State authorities said shipments that large of untaxed cigarettes must be reported to the state, but the Ninth Circuit Court of Appeals upheld a federal District Court ruling saying the reporting requirement was a mechanism to collect a state tax of which the tribe is exempt.

The state Attorney General’s Office expects the U.S. Supreme Court to hear the gas tax case sometime in October or November, the joint statement said.

The Supreme Court receives about 8,000 petitions to review decisions each year, but only agrees to hear a fraction of them – about 80 cases a year.


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