Washington court refuses to halt tribe's utility tax

Non-Indians who are trying to escape the jurisdiction of a Yakama Nation must continue to pay a utility tax imposed by the tribe, the Washington Supreme Court ruled on Thursday.

In a unanimous decision, the court dismissed an appeal filed by the Citizens Standup Committee, a group of non-Indians who have repeatedly challenged the tribe's authority and are linked to national anti-Indian organizations. They argue that they shouldn't be subject to a government in which they have no say.

The decision didn't speak to the sovereignty issue, however. Rather than "analyze the complexities of federal Indian tax law," the court instead held that the utility tax is valid under state law because it is imposed on the utility companies who do business with the tribe.

Therefore, the court said the state Utilities and Transportation Commission was correct in concluding that the utility companies can pass on the fee to their customers -- regardless of race. "By keeping indepth federal Indian law analysis in the federal courts, the role of state administrative agencies is more clearly delineated," wrote Associate Chief Justice Charles W. Johnson for the majority.

But the court left open the possibility of a prolonged fight elsewhere. Johnson acknowledged that the non-Indians could "obtain a federal court disposition in their favor" and the state would be forced to remove the charge from their utility bills.

Non-Indians who live and do business on reservations have taken the federal court route many times. Going back to the early 1980s, and as recently as 2001, the U.S. Supreme Court has struck down taxes and fees imposed by tribes on non-members. The underlying principle is that such taxes are "presumptively invalid", although exceptions have been carved out.

In the case of the Yakama Nation, the tribe instituted a 3 percent fee on all utilities within reservation boundaries. The tribal council justified it by citing the exceptions from the Montana v. US Supreme Court decision of 1981.

"As a sovereign nation, the Yakama Nation retains the authority to regulate the activities of entities that have entered into consensual relationships with the Yakama Nation and to regulate activities that threaten the political or economic interests of the Yakama Nation," the August 2002 ordinance stated.

The decision prompted two companies, Cascade Natural Gas and Pacific Power, to ask the state Utilities and Transportation Commission for the permission to pass on the charge to customers on the reservation. The commission agreed that the charge is a "tax" rather than a "fee."

The distinction is important. A "tax" can be passed onto the customers in that jurisdiction only -- in this case, the Yakama Reservation. A fee, on the other hand, has to be imposed "systemwide" as noted by the court's decision.

The non-Indians subsequently filed suit against the commission, arguing that the determination of the tax was "arbitrary and capricious." A lower court judge rejected the group in July 2004, a decision that was upheld yesterday.

Throughout the dispute, the Yakama Nation has not been a party to the case. But the tribe could be forced to justify the fee in a federal court proceeding if the non-Indians go that route.

Despite the exceptions carved out by the Supreme Court, attorneys say it is extremely difficult for tribes to meet them. Tribes must either demonstrate that a consensual relationship exists with non-Indians, or that the activity of non-Indians threatens the political integrity, economic security, or health and welfare of the tribe.

"The court has changed the rules on us," C. Bryant Rogers, who represents several tribes, said at an Indian law conference in New Mexico recently. "They're going to keep changing the rules on us."

Fees are a common practice within the utility industry and are usually passed onto customers. In Washington, the Lummi Nation and the Swinomish Tribe impose similar charges.

The case yesterday was Willman v. Utilities and Transportation Commission, No. 75821-2. The question presented was "Whether the Washington Utilities and Transportation Commission properly allowed utilities to pass through to all customers living within the boundaries of the Yakima Indian Reservation a tax imposed on the utilities by the Yakama Indian Nation."

Elaine Willman, the lead plaintiff, is the executive director of the Citizens Standup Committee. The group has previously tried to challenge the Yakama Nation's ban on alcohol but lost in federal court due to sovereign immunity.

Willman previously served as president of the Citizens Equal Rights Alliance, a national group opposed to tribal sovereignty and federal Indian policy. The group is allied with One Nation, an anti-sovereignty group based in Oklahoma that tribal leaders describe as racist. At CERA's recent annual meeting in Washington, D.C., Willman debuted a book and video "expose" of tribal sovereignty.

Get the Decision:
Willman, et al v. Washington Utilities and Transportation Commission (August 11, 2005)

Relevant Links:
Citizens Equal Rights Alliance -
One Nation -
Washington Utilities and Transportation Commission -
Cascade Natural Gas and Pacific Power -
Pacific Power -