Argument analysis: Justices conflicted in clash between fuel tax and Yakama Treaty

The oral argument on Tuesday in Washington State Department of Licensing v. Cougar Den Inc. showed yet again that federal Indian law cases often diverge from familiar progressive-conservative divides. In fact, to the extent you can tell from the justices’ questions, age was a (somewhat) better predictor of leaning, with Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch and Brett Kavanaugh showing more sympathy with the tribe’s position, and Justices Stephen Breyer, Samuel Alito and perhaps Ruth Bader Ginsburg showing more sympathy with the state. Chief Justice John Roberts, younger than Sotomayor, may be an outlier in seeming to lean toward the state. (As usual, Justice Clarence Thomas did not ask any questions.)

The case asks whether an 1855 treaty guaranteeing the Yakama Tribe “the right, in common with citizens of the United States, to travel upon all public highways” pre-empts certain state fuel taxes. Cougar Den is a Yakama business that imports motor-vehicle fuel via highway from Oregon for on-reservation sale by tribal gas stations. The parties largely agree that the treaty guarantees the right to travel for trade. But they sharply disagree on whether the taxes at issue burden that treaty right.

Arguing for Washington, Solicitor General Noah Purcell argued that the taxes simply reach possession of fuel, not the treaty right to travel. But he faced tough questions from Sotomayor, Kagan, Gorsuch and Kavanaugh. Kagan, for example, opined that “it does seem to me that from the Yakama’s point of view, this tax is burdening exactly what they bargained to get, which is the ability to transport their goods without any burdens, without a tax.” Justice Kavanaugh stated that the Yakamas “were told at the time of the treaty that you could go on the roads to take your things to market, as if you would be treated off-reservation, as if you were still on the reservation.” “[A]s Justice Kagan said,” Kavanaugh continued, “this burdens substantially their ability to take goods to market.” After Purcell argued that finding for Cougar Den would allow Yakamas to avoid regulation of their activity on the highways, such as bans on importing fireworks or diseased apples, the justices pointed out that the Supreme Court had found off-reservation fishing rights to prohibit license fees, but to permit other regulations necessary for conservation. As Gorsuch noted, “we wouldn’t normally read the term ‘in common with’ to mean one thing when it’s fishing and another thing when it’s highways.”

The justices were equally tough on Assistant to the U.S. Solicitor General Anne O’Connell, arguing in support of the state, who began by stating that the treaty just guaranteed the Yakamas “the right in common with others to travel upon the public highways.” Gorsuch asked whether this wouldn’t have been just an “illusory promise,” while Sotomayor insisted “they didn’t sign a treaty and give away that much real estate to get nothing in return, to be treated equally like every other citizen in traveling the highway.” When O’Connell noted that the state drafted this tax in response to court losses when it tried to tax fuel on the reservation, Kagan commented, “But what the state has done is to tax exactly the activity that’s protected under the treaty … which is the transportation of goods to and from market.”

But attorney Adam Unikowsky also faced tough questions in his argument for Cougar Den. Roberts and Breyer worried about Yakama importation of diseased apples, while Breyer and Ginsburg asked about the impact of their holding on taxation of goods ordered online. Unikowsky responded that there is a difference between taxes and fees, which the treaty pre-empted, and regulations in the public interest, which it did not. Similarly, he argued, although the treaty did not pre-empt taxes on possession or sale of goods, the structure of this tax made it a tax on travel with goods, rather than a tax on possession or sale. Alito called that claim “very artificial,” because it raises “this metaphysical question of what they’re doing” — traveling with fuel or simply possessing fuel. Unikowsky responded that the Supreme Court’s own Indian taxation tests rely on such formalistic distinctions between the legal burdens posed by state taxes, rather than their effective burdens. Unikowsky still faced questions from most of the justices, including Kagan, Gorsuch and Sotomayor, on what exactly made this a tax on travel rather than on simple possession.

One thing largely missing from the arguments was the more far-reaching claim briefed by Washington and other states writing as amici that “express” pre-emption is necessary to confer Indian tax immunity off-reservation, meaning that the normally generous rules of treaty intepretation would not apply in this context. Purcell, perhaps sensing sympathy for Cougar Den’s treaty argument from some of the justices, briefly raised this point in rebuttal, but the oral argument suggested the justices are, at least for now, more interested in the specifics of the tax and treaty at hand.