A state Court of Appeals sided this week with the Samish Indian Nation on a dispute over how the state taxes fuel sold on tribal lands, as well as what types of tribal lands meet the definition of “reservation.”
The tribe has been fighting for its right to negotiate a fuel tax agreement with the state Department of Licensing for years in advance of building a gas station on its lands.
Craig Dorsay, the lawyer representing the tribe, said he and the tribe hope the battle ends with the unanimous decision filed Monday by the three-judge appeals court panel.
“The tribe thinks this was a stupid case to begin with. It was pretty clear. The state has fuel tax compacts with (almost) every other tribe in the state, and the only tribe they were refusing to compact with was Samish, and we don’t know why,” Dorsay said. “We think they should give up.”
The state Court of Appeals ruling reverses a Feb. 28, 2019 ruling by Skagit County Superior Court Judge Dave Needy, who found no fault with the Department of Licensing’s denial of the tribe’s application to enter fuel tax negotiations.
“I think it’s a great victory for the tribe,” Samish Indian Nation Chairman Tom Wooten said. “There’s no need to continue litigating it, we want to sit down and negotiate.”
The Department of Licensing could appeal to the state Supreme Court, but whether that happens remains to be seen.
“I can’t really comment on that besides a very brief statement: ‘We just received and are reviewing the decision, and we are looking at all options as to how we will proceed,’” Department of Licensing spokesperson Rob Wieman said.
The Samish isn’t the first tribe to fight for fuel tax rights. A lawsuit filed by the Confederated Tribes of the Colville Nation and the Yakama Indian Nation led to the 1995 state law that exists today.
That law acknowledges that federal law restricts states from taxing activities on tribal lands, but proposes a compromise to provide benefits from would-be tax dollars to local communities.
“It gets really complicated. It’s a chess game,” Dorsay said. “It’s a constant battle where the state tries to find another way where they can tax and collect tax on Indian land.”
The law authorizes the Department of Licensing to negotiate fuel tax agreements with tribes. Most of the agreements involve refunding the tribe 75% of the state fuel tax revenue from gasoline and diesel sales on their lands with the stipulation that those funds are invested in local transportation infrastructure, programs and public safety.
The Samish tribe requested negotiations in 2012 and again in 2018. The Department of Licensing denied both on the basis that the tribe does not have a formal reservation.
“The tribe has already lost more than six years of fuel tax revenue that could have been used to improve transportation infrastructure in Skagit County, both on and off the tribe’s trust land,” chairman Wooten wrote in a statement submitted to Skagit County Superior Court in February 2019.
According to the most recent “Tribal Fuel Tax Agreement Report” from Department of Licensing, 25 of 29 federally recognized tribes in the state had fuel tax agreements in place in 2018. The Swinomish and Upper Skagit tribes are among them.
The Skagit County Prosecuting Attorney’s Office submitted a statement in 2019 in support of the Samish.
“From Skagit County’s perspective, the state should be required to treat all tribes in Skagit County with impartiality,” Skagit County civil prosecutor Will Honea wrote.
In various court documents, Dorsay and his team at Dorsay & Easton — a Portland-based firm specializing in Indian law — assert that the Department of Licensing is discriminating against the Samish.
The state’s lawyers counter that the Department of Licensing is simply following a clause in the law governing fuel taxes on tribal land that it applies to “any federally recognized Indian tribe located on a reservation.”
“Only federally-recognized tribes located on reservations are eligible to enter into fuel tax agreements with the state. Unfortunately, the tribe is not located on a reservation, as that term is contemplated by the state,” reads a Jan. 23, 2019 court document filed by the state Office of the Attorney General. “Therefore, ... the department currently lacks the statutory authorization to enter into an agreement with the tribe for fuel tax refunds.”
The state Court of Appeals determined that because federal law and the dictionary define “reservation” as including formal reservations and trust lands, the Department of Licensing’s distinction between the two is arbitrary.
The Samish tribe has land, called the Campbell Lake Property, that is held in trust by the federal Bureau of Indian Affairs.
“The Samish tribe’s Campbell Lake trust property is a ‘reservation’ under federal law precedent for purposes of immunity from state taxation,” states the original lawsuit, filed July 19, 2018, in Skagit County.
The Court of Appeals agrees. It says the state law authorizes fuel tax negotiations “with all federally recognized tribes with formal reservation or trust property operating retail fuel stations. It would be an absurd result to read the statute otherwise.”
Dorsay also said it’s likely the law, penned by the state Legislature 25 years ago, was written without a solid understanding of tribal operations and legal standing, including that there are federally recognized tribes that do not have formal reservations.
“I don’t think the state Legislature really understood the distinction between formal reservations and trust lands,” he said. “Tribal trust lands are informal reservations and have exactly the same legal status as a formal reservation has.”
With the ruling, the Samish tribe is hoping to move forward with plans for developing some of its property on Fidalgo Island and investing in area roads.
“They have a fuel station that has been in the planning stages for a while there. They’re actually hoping to break ground later this year, maybe get it open next year,” Dorsay said. “We hope the state will abide by the decision and notify Samish that they are ready to enter negotiations for a fuel tax compact.”