On October 4, 2012, the Washington State Supreme Court published its decision in AUTO's suit challenging the compacts issued by Governor Gregoire that are sending hundreds of millions of our motor fuel taxes to the operators of tribal service stations. The court reinstated the suit by rejecting the argument presented by Attorney General Rob McKenna's team that no citizen could challenge any deal cut between the state and tribe, regardless of the effect on the taxpayers or even if bribery was involved. The case is now headed back to Grays Harbor County for trial where action is expected before the end of the year.

The Supreme Court decision is featured in the Washington State Bar News (November 2012). To view "In Good Conscience", click here.

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).

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.