Tribal Compacts

On May 12, 2015, the Washington State Supreme Court heard oral arguments in AUTO's legal challenge to the payments made tribal station operators out of the motor fuel tax account. A decision is expected in the fall. (see UPDATE below).





Passed by a vote of the people in November of 1944, the 18th Amendment (Article II, Section 40) to Washington's Constitution requires that all motor vehicle excise taxes collected on the sale, distribution or use of motor vehicle fuel (including the gasoline tax) be deposited into a special fund dedicated solely highway purposes.

In 2007, the Legislature passed SB 5272 revising the gas tax collection system to insure the state could collect the motor fuel taxes on fuels sold at tribal stations. The legislation included a vague provision designed to generally authorize the Governor to negotiate with Native American Tribes regarding any sovereign rights the tribes had regarding the motor fuel tax. As a result, even though the tribes held no legal exemption to the tax under any state law, federal statute, or historical treaty right, Governor Gregoire instructed the Department of Licensing to meet with representatives of the tribes and enter into agreements providing payments to the tribes of 75% of the state tax rate or approximately 28 cents per gallon for every gallon sold out of a tribal station. Since 2007, those payments to the tribes out of the Motor Vehicle Fund (MVF) have exceeded $70 million (Read the 2010 Tribal Fuel Tax Agreements Report).

On May 11, 2010, AUTO filed suit on behalf of the citizens of the state and its members in Grays Harbor County Superior Court. The suit seeks injunctive and other relief to require the State to abide by the Washington Constitution (Read the suit here).

Casino Gas Sign

In defense of the Governor, state Attorney General Rob McKenna filed a motion to dismiss using what Judge Godfrey called a classic "Catch 22" . The AG argues the suit must name the tribes as an indispensible party or it must be dismissed. Then, if the suit does name the tribe it must be dismissed again due to tribal sovereignty. In essence, the AG argues that the protections granted the citizens by the state constitution are stood down any time the Governor enters into an agreement with a tribe, regardless of the impacts of that agreement on the citizens or the state treasury (Read the state's motion here).

Responding on behalf of AUTO, former Supreme Court Justice Phil Talmadge argued that the state sought to create a situation wherein "…. if the Governor signed a contract with an Indian tribe to convey state taxpayer funds in exchange for political contributions, that contract would be free from scrutiny because an action to challenge the Governor's action would "indirectly" threaten the contract…."(Read AUTO's response to the state's motion to dismiss here).

On January 3, 2011, Judge Godfrey dismissed the suit. In doing so, he stated his personal opinion regarding the effect of the Attorney General's legal maneuvering with: I do find one thing repugnant in this whole situation, and that in our system of government…that there is no judicial remedy. I do believe that there needs to be …that this is a issue that needs to be addressed by our [S]upreme Court.

The state Supreme Court accepted AUTO's appeal and heard oral arguments on May 1, 2012 in the Temple of Justice in Olympia, WA. On October 4, 2012 the Supreme Court issued a landmark ruling reinstating the case and remanding the suit back to the lower court for trial. To read the decision, click here.

Update

AUTO is pleased to report that the Washington State Supreme Court for a second time heard oral arguments in "Automotive United Trades Organization v- State of Washington". The suit, originally filed in Grays Harbor County in 2010, challenges the legality of controversial compact agreements between then Gov. Gregoire and tribal station operators that has sent approximately $250 million in payments out of the state's motor fuel tax account to the coffers of tribal station operators.

The latest action by the court is the end result of our appeal of a decision by now-retired Grays Harbor Judge Godfrey who dismissed the case the first time on January 3, 2011 under the notion that no citizen could contest an agreement between the Governor and a federally recognized treaty tribe. At that point, the first direct appeal was filed on behalf of AUTO members and the citizens of WA by former Supreme Court Justice Phil Talmadge. The Supreme Court accepted the direct appeal and subsequently reversed Godfrey's decision remanding the case back for trial on the merits. Godfrey then dismissed the case again setting the stage for the second trip back up to the Supreme Court for a hearing on the merits of the case. The Court heard oral arguments in Olympia on May 12, 2015. A decision is expected in the fall.

Organizations representing over 16,000 businesses in WA file Amicus Curiae motions supporting AUTO's request for a direct review by the Supreme Court.

AUTO is not the only group that is concerned by the Governor cutting secretive compact deals behind closed doors that is flowing hundreds of millions of dollars of the public's motor fuel taxes to a handful of tribal station operators. Business and public policy organizations representing over 16,000 businesses in WA have filed motions with the Supreme Court supporting AUTO's request for a direct review by the state's highest court.

    A total of 5 separate Amicus Curiae motions have been filed representing:

  • The Washington Oil Marketers Association (WOMA) whose members are petroleum marketers ( read here);
  • Representing small business and retailers, the National Federation of Independent Businesses (NFIB), Washington Association of Neighborhood Stores (WANS) and the Washington Food Industry Association (WFIA) filed jointly (read here);
  • The Association of Washington Business (AWB) representing over 7,500 companies with over 650,000 employees in WA (read here)
  • Representing the construction industry on a joint brief are the Association of General Contractors (AGC) and its affiliated chapters and national group, Washington Asphalt Pavement Association, Puget Sound Chapter of the National Electrical Contractors Association, Mechanical Contractors Association of Washington, National Utility Contractors Association of Washington, American Council of Engineering Companies of Washington, Associated Builders and contractors of Western Washington; and the Washington Aggregates And Concrete Association (read here); and
  • Representing citizens concerned about public policy issues is the Washington Policy Center (read here).

AUTO has experienced wide spread support from consumers, small businesses and nonprofit organizations. At this point, with the notable exception of the tribes and the Office of Attorney General Rob McKenna, no support for the compacts and Governor Gregoire's actions have surfaced during the legal process.