For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: February 28, 2005

U.S. Supreme Court Declines to Review Fuel Tax Ruling

(Boise) - The United States Supreme Court has declined to review a case dealing with the state's ability to tax motor vehicle fuel sold on Indian reservations, Attorney General Lawrence Wasden said today.

The Attorney General, acting as legal counsel to the Idaho State Tax Commission, filed a petition for certiorari on November 5, 2004, asking the Supreme Court to review the case of Coeur d'Alene Tribe v. Hammond.

The state presented two questions for review:

  • Whether the 2001 amendments to state law shifted the motor fuel tax's legal incidence to distributors as the Legislature explicitly provided, and
  • Whether the term "reservations" in the federal Hayden-Cartwright Act includes Indian reservations.

By declining to accept the case, the Supreme Court allowed to stand a decision by the Ninth Circuit Court of Appeals. In August 2004, the Ninth Circuit upheld the Federal District Court's decision invalidating the tax. The district court had concluded that the amendments had not shifted the tax's legal incidence to the non-Indian distributors. It also rejected the Hayden-Cartwright Act's applicability to Indian reservations.

"I am disappointed that the Supreme Court decided not to hear Idaho's case," Attorney General Wasden said. "The issues raised in Idaho's appeal are important not only for Idaho, but also for many other states. That is why 16 states joined in an amicus brief in support of our petition and why the Multistate Tax Commission, an organization composed of numerous States, also filed a supporting amicus brief. The Supreme Court, however, grants review in a very small percentage of cases."


In 2001, the Idaho Supreme Court decided the case of Goodman Oil Co. v. Idaho State Tax Commission. Goodman Oil Co., a motor fuel distributor, contested its obligation to pay the state tax on fuel sold to a tribally owned retail station on the Coeur d'Alene Indian Reservation. The Idaho Supreme Court found the tax preempted. The court first construed a1936 federal statute, the Hayden-Cartwright Act, which allows state fuel taxes to be imposed on "United States military or other reservations" as inapplicable to Indian reservations. Thus, the Hayden-Cartwright Act did not negate the ordinary rule that States may not place the legal incidence of their taxes on tribes or tribal members with respect to on-reservation transactions. The Idaho Supreme Court then construed the state statute to impose legal incidence on retailers, not distributors.

In 2002, the Idaho Legislature amended the motor fuel tax statute to explicitly place the tax's legal incidence on fuel distributors. Immediately after the amendments took effect in April 2001, the Coeur d'Alene Tribe challenged them in federal district court. The Nez Perce Tribe and the Shoshone Bannock Tribes then filed similar lawsuits. Each tribe acts as a gasoline retailer on its respective reservation and purchases fuel from non-Indian distributors. In August 2002, the Federal District Court invalidated the tax, concluding that the amendments had not shifted the tax's legal incidence to the non-Indian distributors and again rejecting the Hayden-Cartwright Act's applicability to Indian reservations.

The Idaho state tax commissioners appealed the Federal District Court's decision to the Ninth Circuit Court of Appeals. In August 2004, a divided three-judge panel of the Ninth Circuit affirmed the district court's decision.

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