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Supreme Court allows lawsuit on state gas-tax deal with Indian tribes to proceed

Post by Jordan Schrader / The News Tribune on Aug. 30, 2012 at 9:22 am |
August 30, 2012 9:31 am

A challenge by gas stations to the state’s deals with Indian tribes on gas taxes can proceed, the state Supreme Court ruled today.

The state has a number of compacts with tribes that allows the tribes to keep much of the gas-tax revenue they collect at tribal gas stations. The most common arrangement is for the state to refund 75 percent of gas-tax revenue to a tribe. The tribes are supposed to use the money on transportation and police protection.

But the non-tribal gas stations argue that violates the state constitution, which requires gas taxes be spent for highway purposes.

And they say tribes are also using the money to undercut the prices of competitors off of reservations. Gas prices are lower at tribal retailers, they argue.

The tribes can’t be part of the lawsuit because of their status as sovereign nations. The question for the Supreme Court was whether the lawsuit could proceed anyway. Justices said, in a split 5-4 decision, that it can.

From the opinion written by Justice Debra Stephens:

We hold the tribes are not indispensable parties under CR 19(b). Although the tribes are necessary parties under CR 19(a) whose joinder is not feasible due to tribal sovereign immunity, equitable considerations allow this action to proceed in their absence. … Where no other forum is available to the plaintiff, the balance tips in favor of allowing this suit to proceed without the tribes. This conclusion does not minimize the importance of tribal sovereign immunity, but rather recognizes that dismissal would have the effect of immunizing the State, not the tribes, from judicial review.

Justice Mary Fairhurst wrote in dissent:

the majority effectively subjects the tribes to state court jurisdiction and undermines tribal sovereign immunity. This result is contrary to the basic principles of Indian law. … Courts have long understood that the consequence of recognizing any form of immunity is that some controversies are shielded from judicial review.

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