Wash. SC allows suit over tribal gas disbursements to move forward

Jessica M. Karmasek Aug. 31, 2012, 1:00pm


OLYMPIA, Wash. (Legal Newsline) - The Washington Supreme Court ruled Thursday that a lawsuit brought against state officials over disbursements given to Indian tribes under fuel tax compacts can proceed.

Plaintiff Automotive United Trades Organization, a nonprofit trade association of Washington gasoline and automotive service retailers, sued the State challenging the disbursements.

The Grays Harbor County Superior Court dismissed Automotive United's amended complaint for failure to join indispensable parties -- namely, the Indian tribes party to the agreements.

Washington Attorney General Rob McKenna had argued the case couldn't proceed without the tribes and they were immune from a lawsuit.

In its 5-4 opinion this week, the state's high court reversed the lower court's decision.

The majority held that the tribes are not indispensable parties.

"Although the tribes are necessary parties under CR 19(a) whose joinder is not feasible due to tribal sovereign immunity, equitable considerations allow this action to proceed in their absence," wrote Justice Debra L. Stephens, who authored the majority opinion.

To avoid taxing Indian tribes or their members in Indian country, in 2007 the state Legislature amended and added laws relating to the administration of fuel taxes.

The legislation authorizes the governor, or his or her delegate, to enter into agreements with any federally recognized Indian tribe within the state "regarding motor vehicle fuel taxes included in the price of fuel delivered to a retail station wholly owned and operated by a tribe, tribal enterprise, or tribal member licensed by the tribe to operate a retail station located on reservation or trust property."

Such agreements "may provide mutually agreeable means to address any tribal immunities or any preemption of the state motor vehicle fuel tax."

Pursuant to this authorization, Washington has entered into fuel tax compacts with various tribes.

Under most of the compacts, the tribes have agreed to comply with certain statutory requirements in exchange for the State's refunding 75 percent of the state fuel taxes on fuel purchased by the tribes or tribal retailers.

But Automotive United believes the compacts give tribal retailers an unfair competitive advantage and enable tribal retailers to undercut non-tribal retailers' fuel prices.

So it filed a lawsuit in superior court, naming the State, Gov. Christine Gregoire and Liz Luce, the director of the state's licensing department, as defendants.

In its suit, Automotive United alleges the agreements violate the Washington Constitution.

In turn, the trade group is seeking a declaration that the disbursements from the motor vehicle fund are unconstitutional, an order enjoining these payments, and a writ of prohibition preventing Gregoire and Luce from authorizing disbursements from the motor vehicle fund to the tribes.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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