Supreme Court Decides Washington State Department of Licensing v. Cougar Den, Inc.

On March 19, 2019, the Supreme Court decided Washington State Department of Licensing v. Cougar Den, Inc., No. 16-1498, holding that an 1855 treaty between the U.S. and the Yakama Nation exempts a tribal-owned company from paying states taxes on motor fuel that the company imported into the state of Washington on public highways.

The State of Washington taxes fuel importers who bring large quantities of fuel into the state by ground transportation. Cougar Den, Inc. is a wholesale fuel importer owned by a member of the Yakama Nation. Cougar Den imports fuel into Washington from Oregon using Washington’s public highways and sells that fuel to Yakama Nation-owned retail gas stations within the reservation. In 2013, the Washington State Department of Licensing assessed Cougar Den $3.6 million in taxes and other fees for importing fuel into the state. Cougar Den sued, arguing that the Washington tax is preempted by an 1855 treaty between the U.S. and the Yakama Nation that reserves to the Yakama Nation “the right, in common with citizens of the United States, to travel upon all public highways.” A Washington state district court held that the tax was pre-empted, and the Washington Supreme Court affirmed.

The Supreme Court affirmed, holding that the treaty prevented the state from imposing tax on fuel importers who are members of the Yakama Nation. Five Justices agreed that the language of the treaty interpreted as the Yakamas understood the language in 1855. And the historical record shows that the Yakamas understood that the treaty’s protection of their right to travel on public highways in Washington included the right to travel with goods for purposes of trade without encumbrance by the state, including the encumbrance of taxation. To impose a tax on traveling on public highways for purposes of trade would burden the right reserved to the Yakamas in the treaty. The Washington statute imposing the tax was therefore preempted by the treaty.

Justice Breyer announced the judgment of the Court and delivered an opinion, in which Justices Sotomayor and Kagan joined. Justice Gorsuch filed an opinion concurring in the judgment, in which Justice Ginsburg joined. Chief Justice Roberts filed a dissenting opinion, in which Justice Thomas, Justice Alito, and Justice Kavanaugh joined. Justice Kavanaugh filed a dissenting opinion, in which Justice Thomas joined.