# Amicus Curiae Brief — Wash. State Dep't of Licensing v. Cougar Den, Inc., 138 S. Ct. 294 (2017) (No. 16-1498) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0758%3A05 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2017 ## Text No. 16-1498 —e——————————————— In the Supreme Court of the United States WASHINGTON STATE DEPARTMENT OF LICENSING, PETITIONER vz COUGAR DEN, INC. ON PETITION FOR A WRIT OF CERTIORARI TO THE WASHINGTON SUPREME COURT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE EDWIN S. KNEEDLER Deputy Solicitor ANN O'CONNELL Assistant to the Solicitor General ELIZABETH ANN PETERSON RACHEL HERON spaement yoy promt C. 20530-0001 gov (202) 514-2217 QUESTION PRESENTED Article III of the Treaty of June 9, 1855, between the United States and the Yakama Nation of Indians, 12 Stat. 952-953, secures to the Yakamas the “right, in common with citizens of the United States, to travel upon all pub- lie highways.” The question presented is: Whether Article III precludes application to Yakama tribal members of a tax imposed by the State of Wash- ington on fuel purchased out-of-state and imported into Washington, as part of a comprehensive state scheme that also imposes the tax on fuel removed from an in- state terminal or refinery. (1D) TABLE OF CONTENTS Interest of the United States. ...............ccccccccceeeceneeenes Statement Discussion A. Article III of the 1855 Treaty does not exempt respondent from paying Washington's motor-fuel tax B. The decision below is in significant tension with decisions of the Ninth Circuit interpreting Article III of the 1855 Treaty 14 C. This Court’s review is warranted to correct the TABLE OF AUTHORITIES ‘ /aBe8: Choctaw Nation v. Oklahoma, 397 U.S. 620 (1970) ......... 6,9 Choctaw Nation of Indians v. United States, 318 U.S. 423 (1943) 9 Cree v. Flores, 157 F 3d 762 (9th Cir. 1998)........ 6, 14, 15, 18 King Mountain Tobacco Co. v. McKenna, 768 F .3d 989 (9th Cir. 2014), cert. denied, 135 S. Ct. 1542 (2015) 6, 7, 17, 18 Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1978) .......9 Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172 (1999) 9, 16 Moe v. Confederated Salish & Kootenai Tribes of the Flathead Reservaticn, 425 U.S. 463 (1976) - Okdahoma Taz Comm'n v. Chickasaw Nation, 515 U.S. 450 (1995) . 8, 10, 11 (IIT) IV Cases—-Continued: Page Oregon v. Guzek, 546 U.S. 517 (2006) 2000......ccccccccccccecceceeneees 20 Ramsey v. United States, 302 F 3d 1074 (9th Cir. 2002), cert. denied, 540 U.S. 812 (2008)............. 18 Robinson v. Shell Oil Co., 519 U.S. 387 (1997) .........0c00 12 Squaazin Island Tribe v. Stephens, 400 F'. Supp. 2d 1250 (WD. Wath. 2008) .........ccccccccecseesenenesnerenennnennnnene 3, 11 Tulee v. Washington, 315 U.S. 681 (1942)... 1,9 United States v. Smiskin, 487 F 3d 1260 (9th Cir. 2007) passim United States v. Winans, 198 U.S. 371 (1905) 9 Utility Air Reg. Grp. v. EP A, 1348. Ct. 2427 (2014) ........ 12 Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 965 (2005) 4,9, 11 Washington v. Confederated Tribes of the Colville Reservation, 447 U.S. 134 (1980) » OF Yakama Indian Nation v. Flores, 955 F . Supp. 1229 (E.D. Wash. 1997), aff’d sub nom. Cree v. Flores, 157 F.3d 762 (9th Cir. 1998) ........cccccceccereereeenees 2, 14, 15, 16 Treaties and statutes: Treaty of June 9, 1855, between the United States and the Yakama Nation of Indians, art. III, 12 Stat. 962-953 passim Treaty of June 11, 1855, between the United States and the Nez Pereé Indians, art. 111, 12 Stat. 958............ 21 Treaty of July 16, 1855, between the United States and the Flathead, Kootenay, and Upper Pend d’ Oreilles Indians, art. ITI, 12 Stat. 976 .............0ccccce 21 Contraband Cigarette Trafficking Act, BD CR, Tp rcecnnnssesscsessrsnsesveseemessersenscsesssesnevssrenseee 15, 16 Statutes—Continued: Page Wash. Rev. Code Ann.: (West 2012): GSI nccenssocnsiscenssenscansneseansenseteensesnenvunnenninnis 10 TIT cicrsinsnessensenssnsnscesnsnsmnsssepeininessecinens 10 § 82.36.010010) 7 10 § 82.36.010(12)... 2 § 82.36.010(16) 4 OF etedeccescceseccresserecsceessneseesnesecen 2,3 PE ncosuninscccccnssenesenssccsessennesanesnmmnnenses 10, 18 § 82.36.020(2)(a)-(b) 3 § 82.36.020(2)(a)-(c) 10, 12 § 82.36.020(2)(c) 3, 10 Tn 4, 13, 19, 20 Se ctrtetentimnestmmenemenntennns 10 (West 2008): Ee 10 § 82.38.020(5) 10 § 82.38.020(12) 2, 10 § 82.38.0380 - 2, 3, 10 § 82.38.080(7) 3, 10, 12 § 82.38.080(7)(c) 3, 10 § 82.38.0381 ens 4, 13, 19, 20 In the Supreme Court of the Anited States No. 16-1498 WASHINGTON STATE DEPARTMENT OF LICENSING, PETITIONER v. COUGAR DEN, INC. ON PETITION FOR A WRIT OF CERTIORARI TO THE WASHINGTON SUPREME COURT BRIEF FOR THE UNITED STATES AS AMICUS CURIAE INTEREST OF THE UNITED STATES This brief is submitted in response to the Court’s or- der inviting the Solicitor General to express the views of the United States. In the view of the United States, the petition for a writ of certiorari should be granted. STATEMENT 1. In the mid-nineteenth century, the United States entered into a series of treaties with Indian tribes in what is now the State of Washington. Tulee v. Wash- ington, 315 U.S. 681, 682-683 (1942). A group of Indians now known as the Yakama Indian Nation (the Tribe) agreed in one of those treaties to cede vast tracts of land within that territory to the United States, reserving for itself a much smaller reservation. /bid. One of the United States’ major aims in entering into the treaty was to enable the construction of public highways and railroads in the region, including through the Tribe’s (1) 2 reservation. Yakama Indian Nation v. Flores, 955 F. Supp. 1229, 1240-1241 (E.D. Wash. 1997), aff'd sub nom. Cree v. Flores, 157 F.3d 762 (9th Cir. 1998). To secure from the Tribe the concession that roads could be built through the reservation, the United States made certain representations regarding the Tribe’s ac- cess to and use of public roads. Specifically, Article III of the Treaty provides: [I]f necessary for the public convenience, roads may be run through the said reservation; and on the other hand, the right of way, with free access from the same to the nearest public highway, is secured to them; as also the right, in common with citizens of the United States, to travel upon all public highways. Treaty of June 9, 1855, between the United States and the Yakama Nation of Indians (1855 Treaty), art. III, 12 Stat. 952-953. 2. a. The Washington state law at issue imposes a per-gallon motor-fuel tax on “licensees,” a category of persons that includes suppliers, exporters, blenders, distributors, and—as relevant here—importers of motor- vehicle fuel. Wash. Rev. Code Ann. §§ 82.36.010(12), 82.36.020 (West 2012), 82.38.020(12), 82.38.030 (West 2008).' The tax applies both to fuel originating in the State (for example, when a tanker truck is filled with fuel from a refinery or bulk storage facility) and to fuel brought into the State after being removed from a re- finery or bulk storage facility outside of Washington. For fuel removed from an in-state refinery or terminal, ' Citations are to the 2008 and 2012 Revised Code of Washington Annotated, which was in effect when the relevant conduct took place. The State has recodified the cited provisions without sub- stantive change. See Pet. 4 n.1; Br. in Opp. 7 n.3. 3 the State imposes the tax at the time of removal (with cer- tain exceptions not relevant here). Jd. §§ 82.36.020(2)(a)}(b) (West 2012), 82.38.030(7) (West 2008). For fuel that “en- ters into” Washington from another State, the tax is im- posed upon entry. /d. §§ 82.36.020(2)(c) (West 2012), 82.38.030(7)(c) (West 2008). Those who bring wholesale fuel into the State via the highways must pay the same per-gallon tax as those who bring fuel into the stream of commerce through other means. /d. §§ 82.36.020 (West 2012), 82.38.030 (West 2008). b. Before the current motor-fuel tax was enacted, a federal court had determined that a previous version of the tax placed the incidence of the tax on fuel retailers (ie., gas stations). See Squaxin Island Tribe v. Ste- phens, 400 F. Supp. 2d 1250, 1262 (W.D. Wash. 2005). That court had therefore held that the previous fuel-tax regime, as it pertained to Indian retailers operating on Indian lands, ran afoul of the rule that States generally may not tax Indian activities in Indian country absent congressional authorization. /d. at 1261-1262; see Ok- lahoma Tax Comm’n v. Chickasaw Nation, 515 U.S. 450, 458-459 (1995); Moe v. Confederated Salish & Koo- tenai Tribes of the Flathead Reservation, 425 U.S. 463, 475-480 (1976). In Chickasaw Nation, this Court held that a State could not apply its motor-fuel tax to fuel sold by a tribe to non-Indians in Indian country, but it noted that “if a State is unable to enforce a tax because the legal inci- dence of the impost is on Indians or Indian tribes, the State generally is free to amend its law to shift the tax’s legal incidence.” 515 U.S. at 460. Following that guid- ance, the Washington Legislature moved the incidence of its motor-fuel tax up the supply chain to entities that supply fuel to retailers, imposing the tax before the fuel 4 arrives on Indian reservations. See Pet. 5-6; see also Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95, 99, 115 (2005) (holding that Chickasaw Nation’s bar on imposing state excise tax on a tribe or tribal mem- bers for sales in Indian country did not apply to a state tax imposed on the off-reservation receipt of fuel by a non-Indian distributor who subsequently delivered the fuel to a tribally owned gas station on the reservation). The Washington Legislature’s intent and purpose set forth in the statute is to impose a per-gallon tax on mo- tor fuel “at the time and place of the first taxable event and upon the first taxable person within thie] state.” Wash. Rev. Code Ann. §§ 82.36.022 (West 2012), 82.38.03 1 (West 2008). 3. Respondent, Cougar Den, Inc., is a business in- corporated under Yakama Nation law. Its owner and president is an enrolled member of the Tribe. Pet. App. 2a. Beginning in 2013, respondent used public highways to transport fuel from Oregon to the Tribe’s reservation in Washington. /bid. Respondent contracted with a trucking company, KAG West, to have the fuel trans- ported over the Oregon-Washington border. [bid.* Re- spondent sold more than 90% of its fuel to Yakama- owned retail gas stations on the Tribe’s reservation, which in turn sold the fuel to customers. /d. at 50a-5la. Respondent did not obtain a fuel-importer license or pay the Washington motor-fuel tax when either it or KAG West brought fuel into Washington. /d. at 2a. In December 2013, petitioner, the Washington State De- * Under the Washington statute, where an entity importing fuel into the State is acting as an agent, “the person for whom the agent is acting is the importer.” Wash. Rev. Code Ann. § 82.36.010(16) (West 2012). 5 partment of Licensing (the Department), issued an as- sessment against respondent, demanding payment of $3.6 million in unpaid taxes, penalties, and licensing fees. Ibid. Respondent appealed the assessment to an adminis- trative law judge in the Department, who held that the assessment violated Article III of the 1855 Treaty, which secures to the Yakamas the “right, in common with citizens of the United States, to travel upon all pub- lie highways.” 12 Stat. 952-953; see Pet. App. 2a-3a. The Department’s director overturned the administra- tive law judge’s order. Pet. App. 44a-61a. The director reasoned that Article III did not exempt respondent from paying the state motor-fuel tax because respond- ent “is not being taxed for using public highways”; ra- ther, respondent “is being taxed for importing fuel.” /d. at 58a. The director concluded that respondent “needs a Washington fuel importer license to bring fuel into this state.” Jbid. 4. Respondent petitioned for review in Yakima County Superior Court, and the Superior Court set aside the director’s order. Pet. App. 30a-43a. The court concluded that respondent’s transport of fuel into Washington “falls within its [rlight to [t]ravel” under the 1855 Treaty, and that because the Washington tax “places a restriction on the [rjight to [t]ravel,” the “taxes, penalties, interest, and licensing requirements” imposed by the state law “are preempted and barred by the Treaty.” /d. at 34a. 5. The Washington Supreme Court granted direct review and affirmed. Pet. App. la-29a. a. The Washington Supreme Court rejected peti- tioner’s contention that Article III of the 1855 Treaty permits the State to restrict or regulate a specific good 6 that is incidentally brought over a highway. Pet. App. 6a. The court reasoned that petitioner’s interpretation of Article III “ignores the historical significance of travel to the Yakama Indians” and the established rule of treaty interpretation that “Indian treaties must be interpreted as the Indians would have understood them.” /d. at 5a-6a (citing Choctaw Nation v. Okla- homa, 397 U.S. 620, 630-631 (1970)). The Washington Supreme Court observed that when the Treaty was signed, the Tribe “exercised free and open access to transport goods as a central part of a trading network running from the western coastal tribes to the eastern plains tribes,” and it concluded that the Treaty was intended to preserve the Tribe’s ability to travel on the public highways to engage in trade. Pet. App. 7a-8a. The court found support for its conclusion in cases in which the Ninth Circuit had held that a Washington law imposing license and overweight- permit fees on persons who hauled logs from the Tribe’s reservation to off-reservation mills (see Cree, supra), and a Washington law that required individuals other than licensed wholesalers to give notice to the state liq- uor control board before transporting “unstamped” cig- arettes within the State (see United States v. Smiskin, 487 F.3d 1260, 1264 (9th Cir. 2007)), could not be en- forced against members of the Tribe. Pet. App. 9a-11a. The Washington Supreme Court distinguished the Ninth Circuit’s decision in King Mountain Tobacco Co. v. McKenna, 768 F.3d 989 (2014), cert. denied, 135 S. Ct. 1542 (2015), in which a business owned by an enrolled member of the Tribe claimed an exemption based on Ar- ticle III of the 1855 Treaty from a Washington statute that required the business to place money into escrow to reimburse the State for health care costs related to 7 the use of tobacco products. Pet. App. 12a-13a. In King Mountain, the Ninth Circuit concluded that the busi- ness was not exempt from making the escrow payments because the Treaty reserved to the Tribe the right “to travel upon all public highways,” not the “right to trade.” 768 F.3d 997-998. According to the Washington Supreme Court, King Mountain stands for the propo- sition that “|wlhere trade does not involve travel on public highways, the right to travel provision in the treaty is not implicated.” Pet. App. 13a. But here, the court concluded, “travel on public highways is directly at issue because the tax was an importation tax,” and it “was impossible for [respondent] to import fuel without using the highway.” /d. at 13a-14a; see id. at 16a. b. Chief Justice Fairhurst dissented. Pet. App. 17a- 29a. She explained that the Tribe’s “right to travel” protected by the treaty “is not a right to trade,” and the motor-fuel tax could therefore be applied to members of the Tribe because the tax “burdens trade[,|] *** not fuel transport.” /d. at 17a. In her view, the Legisla- ture’s clear intent was “to levy an excise tax on the first instance of wholesale possession of fuel not distributed through a refinery or importation terminal within the state,” and that “[w]hether that fuel is then brought to market within Washington is not necessary or relevant for purposes of assessing tax due.” /d. at 18a-19a. Chief Justice Fairhurst further concluded that the treaty right “applies to trade only if inextricably linked to travel,” which is not true of the Washington fuel tax. Pet. App. 25a; see id. at 23a. She explained that in King Mountain, the escrow payments required by state law “had nothing to do with travel, other than to impose a financial burden on the products King Mountain sought 8 to bring to market in Washington.” /d. at 26a. “Simi- larly,” she continued, “Washington’s fuel excise tax on importers, imposed on the first incidence of wholesale possession of fuel within Washington, has nothing to do with travel, other than to impose a financial burden on the products fuel importers seek to bring to market in Washington.” /bid. She acknowledged that in King Mountain and in this case, “travel is necessary for trade” and that “[wljithout travel, most goods have no market.” /bid. But she concluded that “necessity of transport, without an inextricable link between travel and trade, is not sufficient for preemption.” /bid. DISCUSSION The Washington Supreme Court erred in concluding that Article III of the 1855 Treaty exempted respond- ent from paying Washington’s motor-fuel tax. The “right, in common with citizens of the United States, to travel upon all public highways” protected by the 1855 Treaty, 12 Stat. 952-953, is not violated by the tax at is- sue here, which taxes the introduction of a good into the state stream of commerce, no matter where the good originates or how it enters the State. The Washington Supreme Court’s decision is also in tension with deci- sions of the Ninth Circuit interpreting the same treaty provision. The Washington Supreme Court’s decision will cause a significant loss of tax revenue for the State, and it is not immediately clear under that court’s interpretation that the Washington Legislature could revise the stat- ute in a way that would enable the State to collect an excise tax on motor fuel imported into Washington from another State before it arrives at the Tribe’s reserva- tion. And in light of long-running disputes about the scope of Article III of the 1855 Treaty, review by this 9 Court could also serve to bring needed clarity to the meaning of Article I11. This Court’s review is therefore warranted to correct the state court’s error. A. Article U1 Of The 1855 Treaty Does Not Exempt Respondent From Paying Washington’s Motor-Fuel Tax 1. “Absent express federal law to the contrary, Indi- ans going beyond reservation boundaries have gener- ally been held subject to nondiscriminatory state law.” Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148-149 (1973). The legal incidence of Washington’s motor-fuel tax occurs when wholesale fuel is brought into the stream of commerce in Washington, which occurs out- side of the Tribe’s reservation. See Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95, 99 (2005). Ac- cordingly, respondent is subject to the tax unless Arti- cle [Ll of the 1855 Treaty exempts members of the Tribe from complying with the state law. In determining the scope of an Indian treaty right, courts must construe the treaty “as the Indians would naturally have understood it at the time of the treaty,” United States v. Smiskin, 487 F.3d 1260, 1264 (9th Cir. 2007), looking “beyond the written words to the larger context that frames the [t}reaty, including ‘the history of the treaty, the negotiations, and the practical con- struction adopted by the parties.’” Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172, 196 (1999) (quoting Choctaw Nation of Indians v. United States, 318 U.S. 423, 432 (1943)); see Tulee v. Washing- ton, 315 U.S. 681, 684-685 (1942); United States v. Winans, 198 U.S. 371, 380-381 (1905). “[Djoubtful or ambiguous expressions” are to be “resolved in the Indi- ans’ favor.” Smiskin, 487 F.3d at 1264; see Choctaw Nation v. Oklahoma, 397 U.S. 620, 630-681 (1970). Courts may not, however, ignore “clear * * * limit{s]” 10 appearing in the treaty. Oklahoma Taz Comm'n v. Chickasaw Nation, 515 U.S. 450, 466 (1995). 2. Under these principles, respondent is not exempt from paying Washington’s motor-fuel tax. The tax is not properly viewed as a violation of respondent's “right, in common with citizens of the United States, to travel upon all public highways.” 1855 Treaty, art. III, 12 Stat. 952-953. The incidence of the tax is not on the use of public highways, and imposition of the tax does not depend upon a taxpayer's use of the highways. To the contrary, fuel licensees must pay the tax regardless of whether they remove the fuel from an in-state termi- nal or refinery or import fuel into the State—and, if they import, regardless of what means of transport they use. Wash. Rev. Code Ann. §§ 82.36.020(2)(a)-(c) (West 2012), 82.38.030(7) (West 2008).* The tax is assessed per gallon of fuel, at a set rate, without regard to how the fuel enters the stream of commerce. /d. §§ 82.36.020(1), 82.36.025 (West 2012), 82.38.030 (West 2008). The tax is thus appropriately viewed as an excise tax on “the first instance of wholesale possession of fue! within Washing- ton,” Pet. App. 17a (Fairhurst, C.J., dissenting) (em- phasis omitted), not as a tax on the use of a public high- way within the meaning of Article III of the 1855 Treaty. Article III does not exempt goods from taxa- tion outside the Tribe’s reservation simply because they are, or could be, transported by highway. The history of Washington’s motor-fuel tax further demonstrates that it is designed as an excise tax on the * The tax does not apply to fuel imported into the State by pipeline or vessel operated by a “licensee” and bound for a “terminal” or “re- finery.” Pet. App. 18a (Fairhurst, C.J., dissenting) (citing Wash. Rev. Code Ann. §§ &2.36.010(3), (4), (10), and &2.36.020(2)(c) (West 2012); id. §§ 82.38.020(4), (5), (12), and &2.38.030(7)(c) (West 2008)). 11 fuel itself, not as a tax on highway travel. As explained above (pp. 3-4, supra), before the Washington Legisla- ture enacted the current version of the fuel tax, a fed- eral court had concluded that a previous iteration of the tax had placed the incidence of the tax on fuel retailers, which posed a problem with respect to on-reservation Indian retailers due to the established rule that States generally may not tax Indian activities in Indian coun- try. Squaxin Island Tribe v. Stephens, 400 F. Supp. 2d 1250, 1262 (W.D. Wash. 2005); see Pet. 5; Pet. App. 20a-22a. In Oklahoma Tax Commission v. Chickasaw Na- tion, supra, this Court held that although a state cannot impose a tax on fuel sold by a tribe in Indian country, “the State generally is free to amend its law to shift the tax’s legal incidence.” 515 U.S. at 460. Following that guidance, the Washington Legislature amended the previous version of the motor-fuel tax by shifting its le- gal incidence up the supply chain to entities that supply fuel to retailers before the fuel arrives on an Indian res- ervation. /bid.; Pet. 5-6. The Washington tax thus op- erates in the same way as the tax upheld by this Court in Wagnon, 546 U.S. at 99-100 (upholding Kansas tax imposed on fuel distributors upon “their initial receipt of motor fuel,” where the distributors were permitted but not required to pass the tax down the distribution chain to retailers). That the State now taxes fuel when it is first possessed by a distributor in the State— whether when removed from a refinery or terminal rack at a bulk storage facility in the State, or brought in from out of State—thus reflects the State’s effort to ensure that the incidence of the tax is not on Indian retailers operating on Indian reservations. It likewise does not 12 reflect an effort to impose any conditions or restrictions on using public highways. 3. The Washington Supreme Court concluded that the State motor-fuel tax is a tax on use of the highways because it “taxes the importation of fuel, which is the transportation of fuel.” Pet. App. 16a. In reaching that conclusion, the court focused on the fact that, in re- spondent’s case, the tax was triggered when respondent moved fuel across the state line inside a truck’s tank. See id. at 13a-14a. The court recognized that the tax would be assessed “regardless of whether [respondent] uses the highway.” /bid. But the court considered that feature “immaterial” because “in this case, it was im- possible for [respondent] to import fuel without using the highway.” /d. at 14a. That analysis of the state fuel tax for purposes of Article III of the 1855 Treaty does not withstand scrutiny. Characterizing a tax based on only one of the types of events that trigger it improperly severs that trigger from the larger statutory context. Cf. Utility Air Reg. Grp. v. EPA, 1348. Ct. 2427, 2442 (2014) (“| Rjeasonable statutory interpretation must account for both ‘the spe- cifie context in which ... language is used’ and ‘the broader context of the statute as a whole.’”) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)). Read as a whole, Washington’s motor-fuel tax does not depend upon use of the highways, even if respondent happens to be using a highway at the time application of the tax to respondent is triggered. The regime as a whole seeks to tax the first wholesale possession of fuel in the State, regardless of how or where that possession occurs. Wash. Rev. Code Ann. §§ 82.36.020(2)(a)-(c) (West 2012), 82.38.030(7) (West 2008). As the statute itself states, the Legislature’s purpose was to impose 13 the motor-fuel tax “at the time and place of the first tax- able event and upon the first taxable person within th[e] state.” Jd. §§ 82.36.022 (West 2012), 82.38.031 (West 2008). And the Washington Supreme Court did not ap- pear to dispute that the Treaty would not bar applica- tion of the tax to respondent if it obtained the motor fuel from a refinery or terminal rack within the State, even if the fuel was withdrawn from the refinery or terminal rack into a tanker truck and respondent then used the truck to transport the fuel over public highways to the Tribe’s reservation. There is no reason for a different result if respondent obtains the fuel from a refinery or terminal rack outside the State and brings it by truck into the State. Thus, the fact that first possession for some regu- lated parties will occur on a highway does not convert an excise tax into a tax on the use of the highway—or a burden on the “right, in common with citizens of the United States, to travel upon all public highways,” 12 Stat. 952-953—any more than a state law banning the possession of a certain product would be a ban on high- way travel simply because the ban encompasses the sit- uation in which the person has brought the product in from out of state via a highway. In both the hypothet- ical and the present case, the highway is only relevant because someone has chosen it as the setting for under- taking an act (here, possession of wholesale fuel) that is subject to a general encumbrance, wherever the act takes place. The Washington Supreme Court therefore erred in concluding that Article III of the 1855 Treaty exempts respondent from paying the state motor-fuel tax. 14 B. The Decision Below Is In Significant Tension With Decisions Of The Ninth Circuit Interpreting Article III Of The 1855 Treaty 1. The Washington Supreme Court’s decision in this case is in significant tension with decisions of the Ninth Circuit—the federal circuit that encompasses the Tribe’s reservation and ceded lands. The Ninth Circuit has held that Article III of the 1855 Treaty exempts mem- bers of the Tribe from complying with state laws that apply to and burden their right to use the public high- ways to bring goods to market, but does not secure any broader right. a. In Cree v. Flores, 157 F.3d 762 (1998), the Ninth Circuit considered whether members of the Tribe were exempt from Washington laws that required registra- tion and licensing of logging trucks along with payment of fees according to gross weight, as well as log-tolerance permits and an associated fee for overweight trucks. /d. at 765. The Tribe and some of its members brought a suit for declaratory and injunctive relief after state of- ficials issued traffic citations to drivers employed by tribal logging businesses that had refused to obtain the necessary licenses or permits. Jbid. The Tribe con- tended that Article III of the 1855 Treaty protected the right of its members to haul timber from the reservation to off-reservation markets without restriction and that the State therefore could not impose licensing fees or permit requirements on logging trucks owned by the Tribe or its members. [bid. To determine how Article [11 would have been un- derstood by the Indians when the Treaty was adopted, the district court conducted an extensive factual inquiry into the Treaty’s history. Yakama Indian Nation v. Flores, 955 F. Supp. 1229, 1236-1246 (E.D. Wash. 1997), 15 aff’d sub nom. Cree v. Flores, supra. The court deter- mined that at the time of the Treaty, the tribal members traveled extensively for the purpose of trade and played a central role in a trade network stretching from the Pa- cifie Northwest to the Great Plains. /d. at 1238. Based on the language of the Treaty, the importance of travel to the Tribe, and representations made by federal ne- gotiators, the court held that tribal members would have understood Article [II to secure a right to use pub- lic highways without limitations such as fees. /d. at 1246-1249. The district court held, however, that the Tribe and its members must comply with state registra- tion requirements for purposes of identification, to the extent the requirements did not impose a fee or sur- charge on the treaty right. /d. at 1260. The Ninth Circuit affirmed, holding that the 1855 Treaty exempted tribal logging companies from compli- ance with state licensing and permitting requirements, and payment of associated fees, for trucks hauling logs on public highways. Cree, 157 F.3d at 769. The court determined that the 1855 Treaty, read as the Tribe would have understood it, secured for the Tribe “the right to transport goods to market over public highways without payment of fees for that use.” Jbid. b. The Ninth Circuit again considered the scope of Article III of the 1855 Treaty in United States v. Smis- kin, supra. In Smiskin, the United States charged two Yakama members with violating the federal Contra- band Cigarette Trafficking Act, 18 U.S.C. 2342(a), which makes it “unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or pur- chase contraband cigarettes,” and incorporates state law to define what is contraband. See 487 F.3d at 1263. The basis for the prosecution was that the defendants 16 had failed to comply with a Washington state law that required persons other than licensed wholesalers to give notice to state officials before transporting “un- stamped” cigarettes—z.e., cigarettes without either a “tax paid” or “tax exempt” stamp affixed to the packaging —within the State. Jbid. The federal Bureau of Alco- hol, Tobacco and Firearms (ATF) had seized 4205 car- tons of unstamped cigarettes from one of the defend- ant’s residences because ATF agents suspected the de- fendants were transporting unstamped cigarettes from smoke shops on an Idaho Indian reservation to smoke shops on various Indian reservations in Washington. Ibid. The Ninth Circuit held that the defendants’ viola- tion of Washington’s pre-notification requirement could not provide a valid basis for a federal prosecution under Section 2342(a) because applying the requirement to tribal members violated Article III of the 1855 Treaty. Id. at 1264. The Ninth Circuit again took as its interpretive base- line this Court’s rule that “[t]he text of a treaty must be construed as the Indians would naturally have under- stood it at the time of the treaty, with doubtful or am- biguous expressions resolved in the Indians’ favor.” Smiskin, 487 F.3d at 1264 (citing Mille Lacs, 526 U.S. at 196, 200). Based on the history of the Treaty de- scribed in Yakama Indian Nation, supra, the court of appeals concluded that the pre-notification requirement was a restriction and condition on the right to travel that violated Article III of the 1855 Treaty. Smiskin, 487 F.3d at 1266. 17 The United States continues to believe that Smiskin was wrongly decided.‘ But in any event, the Ninth Cir- cuit clarified the limits of its Smiskin decision in King Mountain Tobacco Co. v. McKenna, 768 F.3d 989 (2014), cert. denied, 135 S. Ct. 1542 (2015). ce. In King Mountain, the court of appeals held that Article ILI of the 1855 Treaty did not exempt members of the Tribe from complying with a state law that required cigarette companies to place money into an escrow ac- count for every qualifying unit of tobacco sold subject to the State’s cigarette tax, in order to reimburse the State for public-health expenses related to the use of tobacco products. 768 F.3d at 990-992. The court rejected the Tribe’s argument that Article III of the 1855 Treaty “prohibit{s] imposition of economic restrictions or pre- conditions on the Yakama people’s Treaty right to engage in the trade of tobacco products.” /d. at 997. The court explained that while the treaty secures for the Tribe a “right to travel * ** for the purpose of transporting goods to market” without state interference, it does not secure any right to trade beyond the right to transport * The purpose of Washington’s pre-notification requirement was to enforce the collection of the State’s tax on cigarettes. Such a tax may be validly applied to on-reservation sales of cigarettes to non- Indians, even by a tribe or its members, where the incidence of the tax is on the non-Indian purchaser. See, eg., Washington v. Con- federated Tribes of the Colville Reservation, 447 U.S. 134, 154-157 (1980). The pre-notification requirement under Washington law was not directed to the use of public highways as such; it imposed only a modest regulatory requirement as part of a comprehensive cigarette-tax regime. merce earn me sat not exempt from enforcement of the State’s overall shaun, Gein & en Cama Ge eames Gas dats Uh of Om OS Treaty exempted the Tribe from this one feature incidental to trans- portation. 18 goods on the highways. /d. at 998 (emphasis added). Unlike the state laws at issue in Cree and Smiskin, the court reasoned, the escrow requirement did not apply to the transport of particular goods, but rather required cigarette companies to place money in escrow for each unit of tobacco sold. Jd. at 991-992. Therefore, the court held that Article III did not exempt Yakama members from complying with the escrow law. /d. at 998. 2. The Washington Supreme Court’s decision is in considerable tension with those Ninth Circuit cases evaluating the preemption of state laws.° The state laws in Cree and Smiskin required the Tribe to comply with certain requirements in connection with use of the pub- lie highways to transport its goods for trade. Tribal members were required to obtain licenses and permits and to pay fees as a precondition to operating logging trucks on the highways, see Cree, 157 F.3d at 765, or to pre-notify state officials when transporting unstamped cigarettes, see Smiskin, 487 F.3d at 1262. Washing- ton’s motor-fuel tax, by contrast, is levied on each gallon of fuel withdrawn from a refinery or terminal rack in the State or brought into the State, regardless of how the import occurs. Wash. Rev. Code Ann. § 82.36.020(1) (West 2012). ®* The Ninth Circuit applies a different framework to determine whether Article III of the 1855 Treaty creates an exemption from federal taxes. See Ramsey v. United States, 302 F.3d 1074 (2002), cert. denied, 540 U.S. 812 (2003). The court stated in Ramsey that the “applicability of a federal tax to Indians depends on whether ex- press exemptive language exists within the text of the statute or treaty.” Id. at 1078 The court concluded that Article III did not exempt a tribal member who hauled logs on public highways using diesel trucks from paying federal highway-use and diesel-fuel excise taxes. Jd. at 1076. 19 That the tax is imposed by reference to the moment when motor fuel enters the State does not transform the tax into an impermissible burden on the use of the high- ways. To the contrary, for fuel that is imported, the tax is imposed when the fuel enters the state because the Legislature wanted to make clear that the tax was being imposed at the first moment of wholesale possession of motor fuel in Washington,