Washington State Supreme Court holds that tribes are not indispensable parties in challenge to state-tribal fuel tax compacts
In a 5-4 decision, the Washington State Supreme Court held that tribes are not indispensable parties in a lawsuit against Washington State challenging the constitutionality of disbursements the State gives to Indian tribes under fuel tax compacts.
The suit followed a 2007 Washington State legislative amendment that authorized the governor to enter into agreements with tribes within the state regarding fuel taxes at tribal gas stations. The legislation permitted the agreements to "provide mutually agreeable means to address any tribal immunities or any preemption of the state motor vehicle fuel tax." Washington State entered into fuel tax compacts with various tribes in which the tribes agreed to comply with certain statutory requirements in exchange for a refund of 75% of the state fuel taxes on fuel purchased by the tribes.
The plaintiff, Automotive United Trades Organization, challenged the compacts as unconstitutional, claiming that they gave tribal retailers an unfair competitive advantage and enabled tribes to undercut non-tribal retailers' fuel prices. The trial court dismissed the complaint for failure to join the tribes as indispensable parties. The Washington State Supreme Court granted direct review on the question of whether the tribes must be joined.
The majority found that although the tribes are "necessary" parties to the suit because the suit imperiled their interest in receiving payments under the compacts, they are not "indispensable." Although the court recognized that tribes may be significantly prejudiced if a judgment were issued in their absence, the majority held that "in the circumstances of this case," the public interest in resolving the issue of whether the government acted unconstitutionally outweighed the prejudice to the tribes. Therefore, the case could proceed without the tribes.