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Opening the door to questions about sovereignty and compacts in Indian Country, the Washington state Supreme Court said Thursday in a split verdict that a challenge to gas tax treaties with American Indian tribes may go forward even though the tribes are not party to the case.
Washington state officials have argued that federal law prevents them from collecting gas taxes on reservations. They've opted instead to sign agreements with tribes to mitigate those taxes.
Under most motor vehicle fuel compacts, the state reimburses 75 percent of such taxes, and the tribes agree to spend the money on roads.
The Automotive United Trades Organization, a trade group representing Washington gas station owners and auto repair shops, says such agreements give tribal retailers an unfair advantage, allowing them to undercut prices.
The group filed suit last year in Grays Harbor County Superior Court to have the compacts declared unconstitutional and to seek an order barring the state from making payments from its motor vehicle fund to the tribes.
The state argued that the station owners could not sue without including the tribes, and since the station owners could not sue the tribes, which are sovereign nations, they could not sue anyone. The judge agreed and dismissed the case.
In a 5-4 decision Thursday, however, the state high court overturned that ruling, saying that justice may not be served when a plaintiff can't sue because an absent party is a sovereign entity.
"In such an instance, the quest for 'complete justice' ironically leads to none at all," Justice Debra L. Stephens wrote for the majority. "Sovereign immunity is meant to be raised as a shield by the tribe, not wielded as a sword by the state."
The conclusion does not minimize the importance of tribal sovereign immunity, the majority said, but rather recognizes that dismissal would immunize the state, not the tribes, from judicial review.
In the dissenting opinion, Justice Mary E. Fairhurst wrote that a judgment rendered in the tribes' absence will prejudice their interest in the compacts. Such a judgment will weaken tribes' ability to negotiate future deals and impede their sovereign right to govern their reservations, she said.
"This case cannot proceed 'in equity and good conscience,' " Fairhurst wrote. "The tribes' substantial interests far outweigh AUTO's much weaker interest in litigating its claim."
The decision hinged on whether the plaintiffs had any other remedy if the case is dismissed. The dissenting justices argued that the plaintiffs could attempt to change the law through the state Legislature, but the majority called the idea of redressing potentially unconstitutional government conduct through the Legislature "astonishing."
For more than 100 years, courts have concluded that tribes can still be indispensable parties in a case even if they can't be sued as sovereign nations, said Rene Tomisser, senior counsel for the attorney general's office, who called the ruling "surprising."
Washington has signed more than 20 fuel tax compacts with tribes and dozens more governing cigarette taxes and gambling revenue.
Tomisser said the ruling could make those deals vulnerable and that the court's decision showed "disregard for the impact on tribal sovereignty."
He said it was too soon to determine whether the state would appeal.
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