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Washington State Department of Licensing v. Cougar Den Inc.

Oral argument transcript · No. 16-1498 · October Term 2018 · argued October 30, 2018 · the respondent won

Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court

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From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.

Chief Justice Roberts: We'll hear argument first this morning in Case 16-1498, Washington State Department of Licensing versus Cougar Den. Mr. Purcell. ORAL ARGUMENT OF NOAH PURCELL ON BEHALF OF THE PETITIONER

Noah Purcell: Mr. Chief Justice, and may it please the Court: Washington's fuel tax taxes fuel, not highway travel. The tax is non-discriminatory and its incidence is off-reservation, so it applies to Cougar Den unless preempted by express federal law. Nothing in the Yakama treaty preempts this tax. The treaty guarantees the tribe the right in common with others to travel by public highway, but it says nothing that would preempt a generally applicable tax on goods like this one. The contract --

Justice Sotomayor: I'm sorry.

Noah Purcell: I'm sorry, Your Honor.

Justice Sotomayor: Could you tell me (202) 628-4888 Official 1 could you tax the tribe's buying of the fuel in another state?

Noah Purcell: Well, the treaty --

Justice Sotomayor: They take the truck, they leave your state, they go to another state, they buy the fuel. Can you tax them in the buying of that fuel?

Noah Purcell: The other state could certainly tax them on that, Your Honor. They've conceded that. Whether we could tax them as a matter of state law, I don't think so, but -- but --

Justice Sotomayor: All right.

Noah Purcell: -- but not -- certainly not under the treaty.

Justice Sotomayor: So the question is, in my mind, whether the travel rights to freely use the highways permit you to tax them for an incidence carrying the fuel from another state on a highway through your state, correct? Now the court below called this an importation tax.

Noah Purcell: Right.

Justice Sotomayor: You've been resisting that, and you call it a use tax. (202) 628-4888 Official

Noah Purcell: Right.

Justice Sotomayor: But, if it's an importation tax, it's not equally applied. There are wholesalers of all kind who can import without paying the tax, correct?

Noah Purcell: Not if they lack a license like Cougar Den, Your Honor. An unlicensed entity owes the tax when they bring the fuel into the state regardless of how they do so, and licensed entities that buy fuel in the state pay the tax immediately within the state. So this tax applies to fuel purchased in Washington or outside of Washington --

Justice Sotomayor: What is the -- the license? Is it a way to get them not to pay? Who pays for the fuel then once you're licensed? You're a wholesaler, you bring it in, I'm assuming by vessel or by pipeline.

Noah Purcell: Well, then -- sorry. Sorry, Your Honor.

Justice Sotomayor: Then the person who buys the fuel uses it, correct?

Noah Purcell: Well, if you're bringing it into a terminal or refinery, then -- then the tax is due when it's picked up at a (202) 628-4888 Official 1 terminal or a refinery. Who actually pays the tax is a complicated question depending on whether the entity that owns the fuel in the tank is a supplier or not. But that's when the tax is due.

Justice Sotomayor: If we accept that the travel provision entitled this tribe to travel with goods back and forth to a market without a tax, without a license, just like in the fishing rights case, then what gives you the right to charge them within the state? Meaning they're traveling free of tax, free of license, they go to the reservation, you can't tax them on the reservation.

Noah Purcell: Right.

Justice Sotomayor: So I'm not quite sure what permits you to tax them at all.

Noah Purcell: Well, there's two crucial --

Justice Sotomayor: If you can't tax them when they picked up the fuel.

Noah Purcell: There's two crucial points about that, Your Honor. First of all, Cougar Den concedes that we could tax a purchase or sale that a Yakama member makes (202) 628-4888 Official 1 outside of the reservation, even though that would not have been taxed in 1855. What's doing the work --

Justice Sotomayor: At the market.

Noah Purcell: At the market, yes, but -- but --

Justice Sotomayor: But you've just admitted that at the market where they pick this up, you couldn't tax them.

Noah Purcell: Well, the point is, Your Honor, the treaty did not preserve everything exactly as it was in 1855. The key point here is that this Court has adopted a clear rule that as to off-reservation taxes -- off-reservation state taxes can be applied to tribes if -- if they're non-discriminatory and -- and if the incidence is off-reservation. And, here, that's the case, so --

Justice Kagan: Mr. Purcell --

Justice Sotomayor: Well, that --

Justice Kagan: -- there are a lot of issues in this case, but just to make it easier for me, could I ask you to assume a couple of them and then could -- we could focus on one?

Noah Purcell: Sure. (202) 628-4888 Official

Justice Kagan: So you know one issue is does the right to travel include the right to travel with goods, and I'm going to ask you to just assume that it does.

Noah Purcell: Okay.

Justice Kagan: And then another question is, does this treaty preempt generally applicable taxes? And I'm -- that's -- you've been talking a lot about that. And I'm just going to ask you to assume that it does.

Noah Purcell: Okay.

Justice Kagan: In other words, you know, if -- if -- if you have a toll on a road, for example, the fact that it's generally applicable, you still can't apply it to members of the Yakama Nation. I'm just going to ask you --

Noah Purcell: Okay.

Justice Kagan: -- to assume that, okay?

Noah Purcell: Uh-huh.

Justice Kagan: So, if both of those things are true, then it seems to me we come -- to me, the hardest issue, which is how do we look at this tax? Do we look at it as a tax (202) 628-4888 Official 1 that is preventing the Yakama from doing exactly what they bargained for in this treaty; in other words, it -- you know, it's not preventing but burdening the Yakama from traveling on roads with goods, or you keep on saying, well, no, because it's not targeted at that. It's not directed at that. It's a more broad tax on the possession of fuel. And I guess what I want to ask you is why that matters. I mean, it -- it does seem to me that from the Yakama's point of view, and they're, after all, the people who entered into the treaty, from the Yakama's point of view, this tax is burdening exactly what they bargained to get, which is the ability to transport their goods without any burdens, without a tax.

Noah Purcell: No, Your Honor. This tax applies to the fuel itself regardless of whether or how it's transported.

Justice Kagan: I -- know you -- I -- I -- maybe I'm not making myself clear. You're sort of saying, well, the tax applies in other circumstances to people who aren't transporting fuel. But I'm saying, from the Yakama's point (202) 628-4888 Official 1 of view, they're transporting goods on the road, exactly as the treaty says they can, and why do they care if you apply your tax in other circumstances as well? Why should they care? Why does it matter what the full scope of the tax is if, from the Yakama's point of view, the tax burdens exactly what they got as a result of its treaty?

Noah Purcell: Because, Your Honor, this Court has never said that a person or a company can make an activity exempt from state law, an activity like fuel possession, by engaging in that activity while also engaged in a treaty-protected activity like travel. If that's the rule, then a Yakama member could possess illegal firearms or illegal drugs or diseased apples in their car, to just gave a range of examples, and bring them into the state and say your laws against these things violate my right to travel by public highway. And that cannot possibly be the right approach, or else it would preempt any sort of state --

Justice Sotomayor: But even in the fishing rights case, which you don't see as -- (202) 628-4888 Official 1 as comparable, but others might argue it is, the state can regulate for public interest conservation points. The Indian tribe has conceded that you can regulate for public interest on a highway. That wasn't superseded by the treaty. But what they bargained for was to -- to carry goods back and forth from the market without a burden. That was their bargain. Just as, under the fishing rights treaty, they can go and collect fish without paying a tax or getting a license for that fish.

Noah Purcell: Your Honor, in Tulee, this Court said that the -- the state could not tax the very right at issue, the right to fish. But, here, that is not at all what's happening.

Justice Sotomayor: Or impose a toll to do it.

Noah Purcell: Well, and the Court has never said that the state can generally regulate a fishing right in the public interest. It's only said that the state can regulate for the conservation of fish. So --

Justice Sotomayor: Well, that's the public interest. (202) 628-4888 Official

Noah Purcell: Well, but -- but -- but Cougar Den is seeking to expand that to say the state can do anything that would protect public safety. And this Court has never said that about the fishing right. So that's sort of a convenient addition that they've conceded, but it's not found anywhere in the treaty text. And so they're -- they're essentially asking this Court to -- to find kind of reasonable regulations that are okay without any basis in the treaty.

Justice Gorsuch: Well, counsel, is that so? I mean, I thought the interpretation of the phrase "in common with" by the district court in Yakama Indian Nation was that it allowed the state to impose certain regulations that facilitate both native and non-native travel along the same highways. So --

Noah Purcell: That's --

Justice Gorsuch: -- safety regulations, speed limits, would facilitate travel in common.

Noah Purcell: That's what the district court held in Yakama Indian Nation.

Justice Gorsuch: Right. (202) 628-4888 Official

Noah Purcell: Of course, that wouldn't cover something like, for example, regulating firearm possession or diseased apple transportation.

Justice Gorsuch: No, but that -- but -- but -- but it does regulate the questions that we've been talking about in terms of it does provide some safety regulations, for example, right?

Noah Purcell: Well, presumably, that would allow, for example, a speed limit --

Justice Gorsuch: Yeah, okay.

Noah Purcell: -- but not any other sort of regulation on the goods themselves, which is what the state's trying to do here. I mean, what's odd under Cougar Den's theory is that the state --

Justice Gorsuch: That's all that -- under the Yakama Indian Nation holding, that's all that the treaty would allow you to do. And I guess I'm wondering in the first instance why -- why you're not estopped from arguing a different position today?

Noah Purcell: For a number of reasons, Your Honor. First of all, treaty -- this Court (202) 628-4888 Official 1 has always treated treaty interpretation as a question of law for this Court to decide de novo, and that's how this Court has always approached treaty interpretation. It has never considered itself bound by legal conclusions reached by a lower court even in the same case.

Justice Gorsuch: Why, I -- I don't feel bound. I wonder if you are, though. (Laughter.)

Noah Purcell: No, Your Honor. We explained in our reply brief as a matter of state law the argument is just completely wrong that we're bound by any of those statements in the ALJ's ruling or the superior court ruling. But, more importantly, this Court has never considered itself bound by -- by what are really legal conclusions in a district court opinion. And Yakama Indian Nation dealt with a very narrow issue of a fee as a precondition to use the highway. That is not what we have here. Cougar Den and the Yakama Nation are free to use the highway and not pay this tax. (202) 628-4888 Official 1 What they can't do is possess fuel and bring it into the state or purchase it in the state without paying the tax.

Justice Kavanaugh: But they were told at the time of the treaty that you could go on the roads to take your things to market, as if you would be treated off-reservation, as if you were still on the reservation.

Noah Purcell: The first part they were told, Your Honor. The second part they were not. That is a misquote that the other side is using from the -- the -- the --

Justice Kavanaugh: But the effect -- the effect was that, in taking your goods to market, which was the promise, in exchange for a huge area of land, an area of land the size of the State of Maryland that was given up by the tribe, that you could take your goods to market. And this burdens, as Justice Kagan said, this burdens substantially their ability to take goods to market.

Noah Purcell: Your Honor, the Yakama remain entirely free to take goods to market. And Cougar Den has conceded that the state can (202) 628-4888 Official 1 tax their -- their trading of goods off-reservation, as they must. So the idea that the treaty preserved things exactly as they were in 1855, and the Yakama trading practices, is just -- just impractical.

Justice Kagan: But what the treaty seems to present -- prevent is the state from taxing either travel or, as Justice Kavanaugh says, travel with goods. Isn't that exactly what they got in exchange for their land?

Noah Purcell: No, Your Honor, the best reading of the treaty is that it does not preempt non-discriminatory taxes that apply equally to everyone. The treaty says it guarantees a right in common with others to travel by public highway. And none of the reasons the Court deviated from that ordinary meaning in the fishing cases apply here. But even if the Court decided that it guaranteed the Yakama some right beyond what it guaranteed others in terms of traveling without paying a fee for traveling, what we have here is not a fee for traveling. The -- the -- this (202) 628-4888 Official 1 fee does not turn -- this tax does not turn in any way on use of the highway. It's paid on fuel purchased in state, fuel purchased out of state. If Cougar Den brought this fuel into Washington and immediately put it into a tank on the other side of the state line, they would still owe the tax even if they never traveled any farther.

Justice Kagan: Well, the -- the -- the tax legislation taxes a wide range of activities. One is it taxes fuel that's removed in the state from a refinery, but the one that's being applied here is that it taxes motor vehicle fuel entering into this state. So entering into, this is a pretty standard importation tax, which is to say that it's taxing the travel of goods into the state, which, again, seems to be what the Yakama got as a result of this treaty: the ability to take goods to market and to take goods from market, regardless where that market is.

Noah Purcell: But, again, Your Honor, the -- the fuel -- the tax applies to fuel purchased inside Washington and outside of (202) 628-4888 Official 1 Washington and brought into Washington by any means. It would apply if they were bringing it in by private toll road. It is not a tax on using public highways. And -- and the happenstance of where the state line is was not certainly a factor in the 1855 treaty negotiations. What -- what Cougar Den is essentially arguing --

Justice Kagan: Do you -- do you contest -- I mean, if -- if you said what is Cougar Den doing, how would you describe what Cougar Den is doing, what its activity is? Because the way I would describe Cougar Den's activity is that it's bringing goods from market.

Noah Purcell: Well, two things about that, Your Honor. First of all, the treaty does not --

Justice Kagan: I -- I just really asked how would you describe Cougar Den's activity.

Noah Purcell: Sorry. I would describe it as possessing fuel in Washington, Your Honor. That is why they pay the tax. (202) 628-4888 Official 1 Keep in mind, Cougar Den is not even doing the transporting here.

Justice Kagan: You would describe it as possessing fuel as opposed to transporting fuel?

Noah Purcell: They owe the tax because they possess fuel. They are not transporting the fuel in light of the facts of this case.

Justice Kagan: So if Jack says I'm taking my pigs to market, and somebody says, what are you doing, Jack? He says, no, I'm taking my pigs to market. No, I think you're possessing your pigs, Jack.

Noah Purcell: Well, if the state had a rule that diseased pigs could not leave a certain area, under the -- under Crudenser, the state could not apply that rule. And -- and so this is a regulation of the goods, a tax to the goods, not a tax on the travel. That's the crucial point here. That's -- that's one of the crucial points. The other crucial point is, under the best reading of the treaty, this is a non-discriminatory tax that applies to everyone. And so it would not be preempted (202) 628-4888 Official 1 even if it were.

Justice Kavanaugh: That -- that reading of "in common with" was rejected by the Court in the fishing cases.

Noah Purcell: It was, Your Honor, but none of the reasons the Court gave in those cases apply here. So the Court really gave three reasons. And in the Tulee case, the Court said it was despite the phrase "in common with others" that it was going to read the fishing right as creating a greater right for the tribes than for non-Indians. And there were sort of historical, textual, and practical reasons. And the practical reason, first and foremost, was an equal right would have left no fish for the Indians to take because they're so vastly outnumbered by non-Indians. And that's just not the case here. Allowing equal access to the highway --

Justice Gorsuch: We -- counsel, we normally read a -- a -- a phrase to bear the same meaning in all of its applications. And we wouldn't normally read the term "in common (202) 628-4888 Official 1 with" to mean one thing when it's fishing and another thing when it's highways, would we? That would be kind of an extraordinary --

Noah Purcell: Fair --

Justice Gorsuch: -- reading of a statutory term.

Noah Purcell: Fair enough, Your Honor, but in Tulee, this Court said it was sort of deviating from the normal meaning.

Justice Gorsuch: What -- what -- what do you think about that, though?

Noah Purcell: I think you had good reasons for deviating from the normal meaning in Tulee that do not apply here. And so I think the Court should give the phrase its normal meaning.

Justice Gorsuch: But having adopted one reading of it, why wouldn't we be consistent?

Noah Purcell: Because none of the reasons you gave in those cases apply here --

Justice Gorsuch: Okay.

Noah Purcell: -- the textual reasons and practical.

Justice Gorsuch: The next -- next (202) 628-4888 Official 1 concern would be then what do we do about the fact that this is also how the district court concluded it after very careful reading in Yakama Indian Nation about the history of the treaty --

Noah Purcell: Well, it's the --

Justice Gorsuch: -- and looking at the original understanding of both parties and its original meaning at that time, and that the Indians understood it not to mean a common regulation applicable to everybody, but, again, that they would be able to do the same things that they've always done, just with non-native persons present?

Noah Purcell: The meaning of the treaty, of course, is a question of law for this Court to decide de novo. And if the Court doesn't want to reach that issue, of course, you can simply say that whatever the treaty means about travel, this is a tax on goods. I'd like to reserve the remainder of my time for rebuttal if I may.

Chief Justice Roberts: Thank you, counsel. Not -- not so fast. (Laughter.) (202) 628-4888 Official

Chief Justice Roberts: I did that once too. Ms. O'Connell. ORAL ARGUMENT OF ANN O'CONNELL, FOR THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE PETITIONER

Ann O'Connell: Mr. Chief Justice, and may it please the Court: Article III of the Yakama treaty does not exempt tribal members from paying Washington's motor fuel tax. The treaty protects the right in common with others to travel upon the public highways. It does not give tribal members immunity from excise taxes on goods that they're carrying inside their trucks inside -- that they're brought outside of the reservation or obtained outside of the reservation for trade or for any other purpose. Respondent acknowledges that tribal members are not exempt from the economic framework for trading goods that has developed outside of the reservation. If Respondent had obtained this fuel from a refinery in Washington, it could be (202) 628-4888 Official 1 taxed for that transaction. If Oregon had charged a tax on this transaction, the Respondent would have to pay it. Washington's tax is an -- is an economic burden on the fuel that's being carried in the truck. It's not a restriction on their ability to use the highway in common with others.

Justice Breyer: Assume I think you're mostly right, but what about the fact that it's gasoline? I mean, can -- can the state impose tolls on -- on the highway? Say they really want people to use mass transit. We're going to have a $1,000 toll.

Ann O'Connell: I don't --

Justice Breyer: Can they do that?

Ann O'Connell: The state -- well, the state could impose a $1,000 toll if it was doing that for everybody. I think that --

Justice Breyer: Yes, doing it for everybody. Now, by the way, nobody, or hardly anyone, can use the highways, including the tribe.

Ann O'Connell: I think that that (202) 628-4888 Official 1 hypothetical is quite unlikely simply because the -- there's --

Justice Breyer: I believe that they are unlikely to impose it. That's why it's a hypothetical.

Ann O'Connell: There's -- there's an antidiscrimination rule built into --

Justice Breyer: No, no, everyone has to pay the thousand.

Ann O'Connell: Right. So I guess --

Justice Breyer: Including the tribe. And then, if you were going to say they can do that, I really do find it difficult to distinguish this issue.

Ann O'Connell: There -- there could be some restrictions, Justice Breyer, like --

Justice Breyer: There could?

Ann O'Connell: -- if you imposed a, you know, a million dollar tax on everybody's use --

Justice Breyer: No, no, it's $1,000, and, of course, as soon as you agree to that, I'm going to say it's only $50, and then I'm going to say it's $10.

Ann O'Connell: No, right. (202) 628-4888 Official

Justice Breyer: And then, when I'm driving up, I would have thought they can't do that, but if they can't do that, this is gasoline. And maybe all those Oregon and -- and California and other places and everybody pays it, that's true, but if you pay a high gasoline tax, it's pretty hard to travel. And they're supposed to be able to travel on the highway, just as if you get all the salmon out of the river, it's pretty hard to fish.

Ann O'Connell: I -- I suppose there could be circumstances where the restriction that's placed on travel on the highway are so severe that it undermines or --

Justice Breyer: In Oregon, you say that they have the -- they cannot take steps to remove significant numbers of salmon from the steam -- stream, and they cannot take steps sufficient to significantly limit the right to travel on the highway by these people. Do what you want for the other citizens.

Ann O'Connell: So I think there's a couple of distinctions that we need to -- to draw between what you're hypothesizing and what (202) 628-4888 Official 1 is happening here. The first is that, yes, there could be circumstances in which the restriction that's imposed is so severe that it burdens the actual ability or right to travel on the highway. But there's --

Justice Breyer: How much is the tax?

Ann O'Connell: Excuse me?

Justice Breyer: How much is the tax?

Ann O'Connell: Well, we don't think that -- I mean, I -- I don't know.

Justice Breyer: I know you don't think it's relevant, but if I happened to think it was relevant and asked the question how much is the tax, what would the answer be?

Ann O'Connell: I -- I don't have a --

Justice Breyer: You don't know?

Ann O'Connell: -- a number to give you. I think the, you know, district court could determine what -- what was too burdensome then actually --

Justice Breyer: But they didn't make any of these arguments.

Ann O'Connell: No, that's correct. And I think the other thing is, even if you thought that the treaty preempted things like (202) 628-4888 Official 1 fees to use the highway, such as a toll or a licensing fee that was issue -- at issue in Cree, so you adopted the Ninth Circuit's rule of what kinds of things are preempted, it still wouldn't preempt this tax, which isn't a fee to use the highway; it's a tax, an economic burden on the goods that are being carried in the truck. The -- the text of Article III secures to the -- the Yakamas only the right in common with others to travel upon the public highways. And that right, by its plain terms, doesn't protect activities other than highway travel. There's nothing in the negotiating history either that could indicate --

Justice Sotomayor: Well, there's one central part, which is they traveled the highways for free. They weren't burdened by economic -- by economic manner in traveling the highway. So we go back to Justice Breyer's question, which is whether it's 50 cents or a million dollars, you're saying if it's 50 cents or five or 10, presumably, it's okay, you can burden them with that. You just can't burden (202) 628-4888 Official 1 them -- and I presume you would say every other citizen -- by imposing a million dollars? Is that your point?

Ann O'Connell: Well, I don't -- I don't think the state is ever going to impose a tax that is so burdensome that nobody can travel on the highways, but our -- yes, we believe that --

Justice Sotomayor: So you're going back to the point that Justice Gorsuch ended with, which is that you're reading "in common with all others" differently in this context than in the fishing rights context?

Ann O'Connell: Yes. And I think the reason that it's different in this context than in the fishing context is because of the right at issue. I think there are textual differences and historical differences between those two clauses of the treaty.

Justice Sotomayor: Well, the one difference that you can't get around is they didn't sign a treaty and give away that much real estate to get nothing in return, to be treated exactly like every other citizen in traveling the highway. (202) 628-4888 Official

Ann O'Connell: No, I think one -- one thing that is really -- really important about this right to travel provision, the right to use the public highways, is that the -- the tribe was receiving an assurance from Governor Stevens that if they gave up the rest of the land in exchange for the reservation, they would still be able to leave the reservation, they would still be able to travel throughout the area, and that they would be able to do so without discrimination against them, without taxes imposed or without rules imposed that were unique to Indians.

Justice Sotomayor: You just said it: without taxes imposed.

Ann O'Connell: Without taxes imposed that were not applied to everybody else.

Justice Gorsuch: What kind of --

Justice Kavanaugh: It doesn't say that.

Justice Gorsuch: -- what kind of promise is that? Given the constitutional rights to travel and equal protection, is that a -- is that a -- is that an illusory promise, the promise you've just described? (202) 628-4888 Official

Ann O'Connell: No. I mean, I think at the time it was -- it was just a reassurance to the tribe that Governor Stevens was giving. There are examples cited on page 38 of the Petitioner's brief where, at the time, in the mid-1800s, there were restrictions on tribal members leaving reservations. There are instances where people would report back to Congress that the -- the Indian agent on the reservation would issue a pass and tell the tribal members how long they could be gone from the reservation and for what purposes.

Justice Gorsuch: Do you think any of that would hold up today?

Ann O'Connell: No.

Justice Gorsuch: Okay.

Ann O'Connell: Certainly not. But, at the time, it was a reassurance from Governor Stevens that the tribe member --

Justice Kavanaugh: The -- the purpose wasn't -- the purpose wasn't just to leave the reservation, though. The purpose, as I understand it, was to leave for the -- for trade. And if you so burden the trade, that seems inconsistent with the purpose. (202) 628-4888 Official

Ann O'Connell: I -- I don't think, Justice Kavanaugh, that -- that Respondent is even arguing that the trade can't be burdened once they leave the reservation. They acknowledge that the transaction, if they purchased the fuel in Washington, could be taxed, that it could be taxed if -- if Oregon were to impose a tax here. So it's not that they're exempt from the economic framework for trade that's going on outside the reservation. If we could go back to the fishing cases for just a moment --

Justice Kagan: But I think what is at issue is the transport of goods to and from the market, which is what it seems the Yakama is engaging in here.

Ann O'Connell: That's true. I mean, they are transporting goods from market and they are -- when they come back from Oregon with the fuel, but that's not -- the treaty just protects the right in common with others to use the public highways.

Justice Kagan: But if -- if I disagree with you on that -- and I hadn't understood that you were taking that position (202) 628-4888 Official 1 in your brief -- but if I disagree with you on that and I use -- and I understand "in common with" the way Tulee understood "in common with," then it seems, well, there they are, they're doing what this treaty says that the -- that this -- they're doing exactly what this treaty protects, which is transporting goods to and from market.

Ann O'Connell: I think that, under that view, Justice Kagan, the -- the most you could get is to the Ninth Circuit's line where they've said that the state can't impose a -- a fee like a licensing fee or a toll or something like that to use the highway, even if it's being imposed across the board. What's happening here is a different type of restriction. It's an economic burden on the goods that are being transported to and from market that the Respondent concedes it could be taxed for at the -- at the purchase point.

Justice Kagan: But not because of the -- but not at the movement point, not -- not when it -- the -- the goods go from one state to another on the highway. (202) 628-4888 Official

Ann O'Connell: Right. But the -- the distinction between those things, I think, is pretty thin. Oregon could have -- could have taxed this transaction. It doesn't because Oregon, like Washington, doesn't place a tax on fuel that's headed out of the state. They assume that it will be taxed once it gets to the next state.

Justice Kagan: Well, it might be thin, but shouldn't we say that the state has to do things the right way, which is to say the state has to do things without violating the treaty. And if the state has another way to do it, go for it.

Ann O'Connell: I think the -- the state has tried many different ways to impose this tax that have been struck down by various courts. What the state has done here is basically followed this Court's advice in Wagnon, which is to move the incidence of the tax up the supply chain to off the reservation. Now --

Justice Kagan: But what the state has done is to tax exactly the activity that's protected under the treaty, which is the -- (202) 628-4888 Official 1 which is the transportation of goods to and from market.

Ann O'Connell: I -- I don't think so. There's -- I think there's a distinction between -- if you think that -- that the -- the tribe wouldn't be subject to a uniform tax if it taxed the very thing that they were trying to preserve, which was the ability to use the public highways, then that would just -- it would just mean that you couldn't charge them a fee to use the highway or something like that, not that you couldn't tax the goods that are in the truck. I think one -- thank you.

Chief Justice Roberts: Thank you, counsel. Mr. Unikowsky. ORAL ARGUMENT OF ADAM G. UNIKOWSKY ON BEHALF OF THE RESPONDENT

Adam G. Unikowsky: Mr. Chief Justice, and may it please the Court: The Yakama treaty preempts the application of the fuel tax to Respondent for two reasons. The first reason is that, when Respondent transports fuel, it exercises the right to travel secured by the Yakama treaty. (202) 628-4888 Official 1 As such, it has right -- the right to do that without incurring a tax obligation, regardless of whether this tax is styled as one on possession or transportation. Second, even if this case turned on what the tax is on, this really is a tax on transportation because that's what the statute says and that's how the state court construed it as a matter of state law.

Chief Justice Roberts: So if -- if this -- these were apples coming into the State of Washington and there was a fee to -- but they inspected the apples to make sure they weren't diseased and the people who owned the apples had to pay that fee, is that problematic if it wasn't motor fuel, oil, but just apples, a fee to inspect the apples and prevent disease from spreading to other Washington apples?

Adam G. Unikowsky: Your Honor, we wouldn't object to the inspection at all. We -- we might object to the fee. But the inspection is appropriate.

Chief Justice Roberts: Well, that's kind of the -- well, in other words, everybody else bringing apples in has to pay the fee to (202) 628-4888 Official 1 inspect the apples, but the tribe doesn't, even though -- or the -- the fee can't be assessed if the tribe is transporting the apples?

Adam G. Unikowsky: Yeah, I think that if the -- all the tribe is doing is transporting the apples, we absolutely agree the -- the apples can be inspected. We agree that, for regulatory purposes, that's fine.

Chief Justice Roberts: But -- but -- but no fee can be assessed if the tribe is transporting the apples?

Adam G. Unikowsky: Yeah, I think that a fee that goes into the -- you know, the general treasury of the states cannot -- cannot be assessed on the tribe when they're exercising the treaty right. But --

Chief Justice Roberts: Even if the apples don't belong to the tribe? They're bringing them to somebody -- you know, they're just bringing them down the road?

Adam G. Unikowsky: Well, it would depend on who has to pay the tax. So they're -- in this particular tax, if you just appoint an agent to transport it for you, you, the importer who appoints the agent, pays the tax. (202) 628-4888 Official 1 So I think that if the tax was levied on the person who -- so if the taxpayer was the person who owned the apples and they just hired a -- an Indian and a truck to bring it --

Chief Justice Roberts: Yeah.

Adam G. Unikowsky: -- but the state -- yeah, then I think that the --

Chief Justice Roberts: Isn't that what's going on here? I thought --

Adam G. Unikowsky: No.

Chief Justice Roberts: -- it was the owner -- I thought it was the owner of the fuel that is taxed, not the --

Adam G. Unikowsky: Yes, that's Cougar Den.

Chief Justice Roberts: -- not the transporter?

Adam G. Unikowsky: Yes, that's Cougar Den, Your Honor. That's Respondent. The Indian owns the fuel.

Chief Justice Roberts: So it's not who owns -- it -- it's not a -- a separation between the goods and the transport, right?

Adam G. Unikowsky: No, Your Honor, what the statute does is it says it's the (202) 628-4888 Official 1 transportation that's taxed, but the tax is imposed on the owner. So, if you hire someone in a truck to transport for -- something for you, it would makes perfect sense that the state wouldn't want the trucker to have to pay this tax which will probably exceed the fee he's getting for transporting it. So the state -- the statute imputes the act of transportation to the owner of the fuel. That's in the definition of motor vehicle fuel importer. And so, in this case, Cougar Den transports the fuel both via an agent, which is a contractor, and also it uses its own trucks. There's a declaration in the record that says that sometimes it uses its own trucks, sometimes it hires a contractor, but Cougar Den --

Chief Justice Roberts: So -- so, if it's the owner, why do you -- why does it interfere with a right to travel?

Adam G. Unikowsky: Well, it's -- it's the -- it's the owner's transportation either itself or via an agent. The states never (202) 628-4888 Official 1 distinguish, by the way, the transportation via Cougar Den's own trucks and via its agent. That's just the argument the state did not make in its brief. And, you know, so, ultimately, it's the owner that pays the tax. And the idea is, if you hire a trucker, that's not different from just using the trucks that you own. The point is the sine qua non of taxation under the statute is the transportation of goods to market. And whether you do it with your own truck or you hire someone else and a truck, it doesn't change the fact that you need to pay the tax.

Chief Justice Roberts: Does it make a difference -- I think this is the argument on the other side -- that it's assessed per gallon, in other words, that suggests as opposed to per mile that you're carrying it?

Adam G. Unikowsky: No. I --

Chief Justice Roberts: It suggests that it's -- it's based on possession if it's based on right there at that moment how much do you have. They don't care where it's going. They don't care if you use it all up right at (202) 628-4888 Official 1 the border or -- or whatever. It's -- has nothing to do with -- with travel. It's purely on the good itself.

Adam G. Unikowsky: Well, I don't agree -- I don't think that you could just say a tax is on a good. I think this Court has always required an analysis of the precise activity engaged in by the taxpayer. So the Wagnon case, the argument that the tribe made in that case was that really this is a tax on the fuel that's sold at retail. And the test this Court adopted was you've got to have this focused analysis of what is the taxpayer doing that triggers the application of the tax. And in this case, the thing that the taxpayer is doing is importing the fuel. By its terms, the statute says that the taxable event is the entry of fuel into the state, so the traveling with the fuel. And the taxpayer under the statute is defined as the importer. And so I think that just has to be a tax on importation. And, incidentally, it's not even just (202) 628-4888 Official 1 that it's the importer that pays the tax. The tax actually distinguishes for licensed importers between people who use highways and people who don't use highways. And -- I'm sorry.

Justice Alito: But what if the -- I mean, what if the statute said the first entity to possess the fuel in the state must pay the tax?

Adam G. Unikowsky: So we would still say that's preempted, although our legal analysis might differ a little bit.

Justice Alito: Why would that be preempted?

Adam G. Unikowsky: Well, first of all, I think that, as applied to fuel that comes in from out of state, really, first possession just is inherently importation. In other words, you can't be the first possessor of fuel, at least that originates out of state, unless you're the one hauling it into the state. So, in that context, I just think first possession kind of means it.

Justice Alito: Well, I thought you (202) 628-4888 Official 1 just said we have to focus on what the statute says is being taxed, so if the statute says expressly it's -- that possession is being taxed, that doesn't matter.

Adam G. Unikowsky: Okay. So we -- we have two arguments in our brief, a broader argument and a narrower argument. The broader argument actually doesn't depend on what the statute says. It depends on what the tribal member is doing. So, if the tribal member can show that the only thing that they're doing is exercising a treaty right, which is to say transporting goods to market, then they don't pay the tax, no matter how the statute is styled.

Justice Alito: Well, then that's very artificial and you get into this metaphysical question of what they're doing. They're doing many things when they're -- you know, when the farmer is bringing his pigs to market, he's doing many things. He's traveling with the pigs. He's possessing the pigs. He's breathing. He may be doing all kinds of other things.

Adam G. Unikowsky: Well, yeah, but I (202) 628-4888 Official 1 think that things that are inherent in transportation, like breathing while you're transporting it, I think would be sort of wrapped up in transportation. I mean, and on the facts of this case, what we have here is the -- an Indian distributor transporting fuel to an Indian reservation to be sold to an Indian retailer on the reservation and potentially to Indian customers. Really, the only connection that Cougar Den has off-reservation is that it's hauling this fuel.

Justice Breyer: This -- the -- the thing I don't understand is that many states have laws against bringing in diseased apples, all kinds of things. All right? So, if they don't bring it in, you can't transport it at all. So, if your point is that they have a right to transport things, I would have thought you would have said a ban was worse because -- but you don't. You say a ban is okay, but a tax isn't. That's your argument?

Adam G. Unikowsky: Yes, that is our (202) 628-4888 Official 1 argument, Your Honor.

Justice Breyer: Okay. Now, if you tax what they do in this state, is they have a tax that says if you buy goods to use in your house somewhere else, you have to -- you have to pay a use tax when you bring it into our state. And then another state says we're going to legalize marijuana, but we tax it pretty high, and another state says we have -- you know, you -- I can go on and on and on. And you're saying, well, this tribe, it doesn't have to pay the tax on marijuana. It doesn't have to pay the ordinary sales tax, which take the form of a use tax in the state. And I could probably think of 10 other examples. And, my goodness, I say why -- why not? Is that your position, what I said?

Adam G. Unikowsky: No, it is not our position. We're not claiming that at all.

Justice Breyer: Good. Now, fine. I'm glad it isn't because my own position I had a good argument against. (Laughter.)

Justice Breyer: But I'd like -- I'd (202) 628-4888 Official 1 like -- like to -- I'd like to know what your position is then.

Adam G. Unikowsky: We are not claiming exemption from sales taxes. We draw a distinction between the acquisition of something, which is not travel, and the transportation of something that is. So if you --

Justice Breyer: So especially for gas?

Adam G. Unikowsky: Yeah, so if you buy --

Justice Breyer: I didn't see that in your brief. I put the argument to them and I just didn't see that in your brief that you were saying but a tax on gas interferes with transportation.

Adam G. Unikowsky: That -- that's not our position.

Justice Breyer: That's not your argument either.

Adam G. Unikowsky: Our position is not based on the fact that it's --

Justice Breyer: Okay. What is your argument?

Adam G. Unikowsky: Our argument is that (202) 628-4888 Official 1 if you buy fuel and the state imposes a sales tax, as Your Honor referred to, then the acquisition of a good -- it could be fuel, it could be apples, it could be anything -- that can be taxed. That's not travel. But, here, that's happening out of state. I don't think there would be a treaty problem with the taxation of that, but the state hasn't tried to tax that purchase in Oregon, and so that's -- that's out of the case. And so the only thing that the state is taxing --

Justice Breyer: Yes, yes.

Adam G. Unikowsky: -- in the State of Washington is the transportation. So it's actually --

Justice Breyer: What do you mean the -- does it say transportation? Does it say it taxes the transportation?

Adam G. Unikowsky: I think it does. I mean, it talks about --

Justice Breyer: It does?

Adam G. Unikowsky: -- taxable --

Justice Breyer: You know the statute (202) 628-4888 Official 1 better than I. Does the statute say we impose a tax on the transportation of gasoline?

Adam G. Unikowsky: Your Honor, I'll tell you the words of the statute and then what the state court said.

Justice Breyer: What's the answer, yes or no?

Adam G. Unikowsky: It doesn't use the word transport, but the state court said it taxes transportation, and the state court authoritatively construes state statutes.

Justice Kagan: Well, it uses the word enter.

Justice Breyer: What is the word?

Justice Kagan: Enter is a --

Adam G. Unikowsky: Yeah, it uses enter. It says entry of fuel.

Justice Kagan: It's a movement.

Adam G. Unikowsky: The taxpayer is "the importer," and the state court --

Justice Breyer: No, what is the word of the statute?

Justice Kagan: Enter.

Adam G. Unikowsky: Entry. That is the taxable entry into the state. (202) 628-4888 Official

Justice Breyer: You get a tax. A tax is imposed when a good enters.

Adam G. Unikowsky: Yes.

Justice Breyer: A tax is imposed of 90 percent when marijuana enters this state, and you just told me that would be okay.

Adam G. Unikowsky: The taxpayer is defined as the importer and the state court construed the statute as a tax on transportation.

Justice Breyer: An importer of marijuana must pay a tax of 90 percent.

Adam G. Unikowsky: Yes. I think that --

Justice Breyer: You say that is legal or illegal?

Adam G. Unikowsky: I think if it was a tax on marijuana --

Justice Breyer: I -- I just -- what I just said.

Adam G. Unikowsky: I don't see a different between marijuana --

Justice Breyer: Is it legal or illegal?

Adam G. Unikowsky: If it was just a tax, it probably would be illegal, Your Honor. (202) 628-4888 Official

Justice Breyer: You heard what I said. A tax -- the statute says a tax on marijuana is imposed. Now what were the words you used -- I wanted to use the same ones -- upon entry of the marijuana into the state. That's all. I'm just trying to --

Adam G. Unikowsky: Yes. Our position does not depend on the good that's being imported. If it's a tax on fuel or a tax on marijuana, it would be the same thing.

Justice Breyer: All right. So now what you're claiming is that -- and this is what's bothering me and I'm trying to get to it -- you're saying that the tribe, unlike anyone else in the state, can refuse to pay taxes that really have nothing to do with transportation but have to do with drug regulation, which have to do with keeping certain bad things out, which have to do with raising money for other reasons. Now that -- you see what I'm saying? I'm saying the common sense of it is why would this treaty give a tribe the right not to pay taxes that have really nothing to do with transportation, that's just the way, et cetera. (202) 628-4888 Official

Adam G. Unikowsky: All right. Let me answer that in two ways.

Justice Breyer: Yeah.

Adam G. Unikowsky: The first answer is, if it's truly a regulatory fine, if it's like you can't possess marijuana and we are punishing you, then we don't view that as a tax. We view that as a regulation.

Justice Breyer: All right.

Adam G. Unikowsky: I think that, you know, the distinction between taxes and fines might in some cases be difficult to identify. Not in this case. This is definitely a -- a tax.

Justice Alito: So where do you get the difference between a regulation and a -- and -- and a tax under the words of the treaty?

Adam G. Unikowsky: So I -- I -- so we're following this Court's decision in Tulee and Yakama Indian Nation. I'm not trying to evade your question. The words of the treaty, I think it's the "in common with" language that opens the door to certain types of regulatory rules. I think that, by implication, the fact that the (202) 628-4888 Official 1 Yakama ceded rights in all of this land probably opens the door to the state to protect public safety in that land. Right? So, if a person's carrying a firearm or diseased apples, which is going to cause other people to die, then there's a similar justification for permitting those laws as permitting speed limits.

Justice Alito: Where does that come from? There's what -- you -- you -- you prohibit certain things. You tax certain things. Where does that come from?

Adam G. Unikowsky: Well, so this is the line the Court drew in the Tulee case with respect to the fishing clause and in the Puyallup case. There's like explicit language saying we distinguish between the two. So we're following the Court's lead on this issue. And the Court has essentially said that a tax isn't necessary in the relevant sense. And so you don't need the tax to ensure that non-Indians can use the resource in common with Indians. And, similarly, I don't think you -- you need a tax to ensure, you know, public (202) 628-4888 Official 1 safety in the relevant sense, whereas I think that you really need to prevent, you know, diseased apples or firearms in order to protect public safety.

Justice Kavanaugh: If an off-reservation sales tax is okay, as you say it is, why is an off-reservation possession tax not okay?

Adam G. Unikowsky: Well, I don't think this is a possession tax, Your Honor. I think it's a -- it's a transportation tax.

Justice Kavanaugh: Suppose it is a possession tax. Is that then okay?

Adam G. Unikowsky: So we -- we have a broader argument --

Justice Kavanaugh: An off-reservation possession tax?

Adam G. Unikowsky: So we have a broader argument in our brief and a narrower one. So the broader one it's not, and the narrower one it is. So the broader argument in our brief is you've got to look at what the tribal member is doing. And because he can't -- it's like a tax on breathing, right? You can't transport something without possessing it, just like you (202) 628-4888 Official 1 can't transport it without breathing it.

Justice Kavanaugh: That seems to be an argument that it's a sham, that it's really getting to transportation. "Sham" might be too strong a word, but it's not -- it's really about transportation, not possession. What if it's really about possession?

Adam G. Unikowsky: So I think, under the broadest possible version of our argument, we probably -- but I'm not going to push this very hard -- I think it would be preempted, but I'm not going to push it very hard because I think that this really is a transportation tax. I think it's actually quite helpful to look at why the statute is written the way it is, to understand why we really think this is a transportation tax. So I get that the overall goal of the state is to ensure that all fuel sold at retail is subject to a tax. But the natural way to do that is to just to tax the retail sale, but this Court has held in the Chickasaw Nation case that those types of taxes are preempted. And, in fact, some Washington taxes were preempted. And so what the state decided to do (202) 628-4888 Official 1 is, as my colleague states, move the incidence outside the reservation. But the thing is, for tax -- for fuel like this, when you have an Indian distributor hauling it from out of state to the Indian reservation, to sale to an Indian retailer, the only connection between this fuel and off-reservation activity is that you're hauling it across this stretch of land. That's it.

Chief Justice Roberts: Well, what if you have the -- the tank where the fuel is going to go in is -- is right by the border and it's a tax on fuel that goes into the tank? They don't care what you do with it; you can transport it, you can -- whatever you want to do with it. And it's owned by Cougar Den, the -- the -- the tank, and they then use it, transport it in their trucks. In other words, the state doesn't care about transportation. It just wants -- as soon as it comes into the border, with no involvement by Cougar Den, it comes into -- it's taxed in their tank, and then that's it. End of story as far as the state's concerned.

Adam G. Unikowsky: I understand that (202) 628-4888 Official 1 overall the state just wants the money in some sense. But the reason it's structured this tax this way is because it knows --

Chief Justice Roberts: No, I'm talking about my hypothetical tax, okay? It's as soon as it goes into a tank, not one of the tanker trucks, then it's taxed on that. As soon as you -- it enters into a tank at the border and it's taxed, is that okay? Nothing to do about transportation at all.

Adam G. Unikowsky: Well, if you're referring to like taking the -- the fuel from the truck and putting it into a big tank off the reservation at the border, if that's the hypothetical --

Chief Justice Roberts: A non- -- non-Indian truck.

Adam G. Unikowsky: Yeah, that -- if that's the hypothetical, then that wouldn't be transportation. That would be delivery to some retailer, to some other tank, or something like that. So I -- I -- I think that we draw a -- you have to look at the taxable event. If the event is the transportation, there's one result. If it's the delivery to a big tank, (202) 628-4888 Official 1 outside the reservation --

Justice Breyer: It doesn't say transportation.

Adam G. Unikowsky: -- it's a different one.

Justice Breyer: It -- it -- I -- it says bulk entry or something like that, non-bulk entry. And what I'm actually bothered about is people are going to buy millions of things online. And so a state says the following: We just want our sales tax. And so they pass a statute that looks like this. When something you've bought online enters into the state, a tax is due. You know, that's pretty close to this statute. And what I'm having trouble is seeing how your argument -- that's why I have this other argument, where it's just fuel. But you don't accept that. Okay. How your argument would permit the state to -- it would deny the state the right to tax the Indian tribe when they've done what everybody else has done, just bought things online, and they haven't yet paid the use tax or haven't yet paid the comparable sales tax. (202) 628-4888 Official 1 Now that's what's really bothering me. And -- and if you can give me a minute or so on that, I would be helped.

Adam G. Unikowsky: Yeah, I'm happy to. So on -- on the hypothetical of buying things online, I think it would depend on how the statute defined the taxable event. So, of course, there's -- there's some recent developments in the law in the Wayfair case involving out-of-state taxation. So, if the state is capable of taxing the sale -- in other words, the taxable event is the transaction itself -- that wouldn't be a treaty issue. There might be other issues, dormant Commerce Clause, whatever. That wouldn't be a treaty issue. So if that -- that is the incidence, in some sense, of the tax, that's the thing that's being taxed, then that wouldn't necessarily be a treaty problem. So if --

Justice Ginsburg: Incidence is -- you're -- you're shipping -- shipping something into the state from out of state. That's what it was in the -- in the sales and compensating use tax case. (202) 628-4888 Official

Adam G. Unikowsky: Yes, Your Honor. So if -- in other words, it depends on what's being taxed. So, if it's the shipment on the highway and it's an Indian who's paying the tax, then I think that that would -- that would restrict the right to travel because --

Justice Ginsburg: But it's a shipment of goods into our state. You're selling something to a state resident, you have to pay the tax on the goods that are sold to an in-state resident.

Adam G. Unikowsky: I think that, again, this Court has really drawn a -- has not really talked about in terms of a tax on goods. The -- the Court has analyzed it in terms of a tax on the relevant activity. So there's a tax on the sale or a tax on the transportation, but you've got to look at what the taxpayer is -- is specifically doing. I think that's what the Wagnon -- so I don't mean to evade your hypothetical. I just -- I -- it just really depends on exactly how the statute is structured.

Justice Alito: Suppose the --

Justice Kagan: Mr. Unikowsky -- (202) 628-4888 Official

Justice Alito: -- suppose the fuel arrives by tanker and it is taxed when it reaches the -- the port of Seattle, but everybody knows that, at that point, it's going to be transferred to trucks owned by Cougar Den. Would that be -- what would your position be?

Adam G. Unikowsky: That would not be preempted. First of all, it would probably be a non-Indian taxpayer who pays the tax because -- assuming the tanker truck is owned by someone who isn't an Indian.

Justice Alito: Well, suppose it's somebody in the tribe.

Adam G. Unikowsky: Even so, I don't think so. I think that -- the Wagnon case really, I think --

Justice Alito: Why -- why would it not be?

Adam G. Unikowsky: Because the taxable transaction isn't the transportation of the fuel. We don't read this treaty, as the state claims, to have -- to just have this broad umbrella protection of any trade that's in any way facilitated by highway travel. What we say (202) 628-4888 Official 1 is that you've got to have a very focused look at what precisely is being taxed.

Justice Alito: Why does it matter whether it arrives by sea or across the border from Oregon?

Adam G. Unikowsky: Well, if the -- if the relevant taxable event is the entry into a port by a --

Justice Alito: If the relevant taxable event is the possession, the first possession within the border of Washington?

Adam G. Unikowsky: Well, it depends -- in that scenario where it arrives by a tanker truck, the first possessor is someone who's using a big boat and is not traveling on public highways. So that possessor is not exercising any right under the treaty. Now I understand there might be downstream economic consequences on Cougar Den, but I think that we're just trying to follow the analysis in the Wagnon case, which has required this specific analysis of what's being taxed. I -- I -- I think the Wagnon --

Justice Kagan: Mr. Unikowsky --

Adam G. Unikowsky: Yes. (202) 628-4888 Official

Justice Kagan: -- it seems to me you can look at this in one of two ways, and which way you look at it, in part, you know, suggests who should win. The first is you -- you could say: What is the taxpayer here doing? Is what the taxpayer here doing within the terms of the treaty? And there, it just seems to me that you win because what the taxpayer is doing is transporting goods to and from market. You can say he's possessing the goods. You can say he's breathing while he's transporting the goods. But what he's doing is transporting goods to and from market. So -- so that suggests that you should win, where the focus is on the activity taxed. But what I hear the state and the SG in its brief saying is you shouldn't focus on the thing that the taxpayer is doing, you should instead sort of look to the purpose of the state. You should look to what is the full scope of activities that the state is trying to tax and why they have this tax. And according to them, they have this tax because they want to get to every single taxpayer who possesses (202) 628-4888 Official 1 fuel in the state. And this is what's necessary to get to Yakama taxpayers. So what should we focus on: the activity that the taxpayer is doing or the purpose of the state legislation?

Adam G. Unikowsky: So, of course, I think it's the activity. And I think that your question is really what this case boils down to. And I think there's a lot of reasons why the former answer is correct and the latter is not. First of all, I just think that the treaty right focuses on the Indian's right. It says the Indian has the right to trade and -- to travel, excuse me. I don't see a focus on sort of the holistic intent of the state and why it's enacting a particular tax. Also, I think, in the Wagnon case, the whole argument by the tribe in that case is that what the state was really trying to do was burden things on the reservation. The Court said we don't look at these broad assessments of purpose. We -- we look at this formal analysis of the thing that's being taxed. And that's really just the analysis that we're (202) 628-4888 Official 1 asking the Court to do here. And, actually, in the right to fish cases, the Court has done the same thing. Look, the Court has understood the right to fish as essentially providing an easement on private property to fish that preempts any state laws that would prevent you to going on the property. Those laws were the ultimate generally applicable laws. They applied to Indians and non-Indians. They applied regardless of whether you're going on the property to fish or to do something else. They had absolutely nothing whatsoever to do with fishing, but they were still held to be preempted because you looked at what the Indian was trying to do, which is fish, and the Court held that the treaty gave the Indian the right to do that. I think that's also true, by the way, with like the on-reservation tax versus off-reservation tax distinction. Like in Chickasaw Nation, this Court held that a tax on -- on on-reservation activity was preempted. The tax at issue had -- was not targeting Indian reservations. It was a generally (202) 628-4888 Official 1 applicable tax that applied to everybody, but as applied to protected activity, in that case on-reservation activity, the tax was preempted.

Justice Kavanaugh: Counsel, do you --

Justice Ginsburg: But these retailers -- these are off-reservation -- the retailers of the fuel, they are off-reservation or on-reservation?

Adam G. Unikowsky: The retailers are exclusively on the reservation. That's why the state doesn't -- isn't able to tax the sale, because it's an Indian retailer. All of the retailers that Cougar Den sells to are Yakama retailers on the reservation.

Justice Ginsburg: And they sell to not people, not exclusively people on the reservation, right?

Adam G. Unikowsky: That's true. Well we haven't disputed that the state can collect -- order the retailer to collect the tax from non-Indian consumers. So, if the state is concerned about collecting that tax, we haven't disputed that's the way to do it. And this is what the Court said in Chickasaw Nation. It says if the state (202) 628-4888 Official 1 wants to make sure this tax is collected from non-Indian consumers, it could just amend its laws to -- to provide that. And we haven't disputed --

Justice Breyer: I'm not talking about non-Indians. I'm talking about the Indian consumers. I've now read the statute again, and it seems there are four relevant words. The tax on fuel applies when the fuel "enters into this state." And now all I have to do is substitute for the word "fuel" things bought online, which could be anything at all, and then we can have diseased things or I don't know what, marijuana, and you are saying -- and I think you are saying this -- that this statute, which had to do with travel on the roads, applies to all those things as long as they use the words "the tax applies when it enters into this state." Now I hope I'm wrong -- or maybe I'm right -- I don't know. I want to hear your answer.

Adam G. Unikowsky: That's not exactly our (202) 628-4888 Official 1 position because there's a few other things that have to be true. So, first of all, the tax --

Justice Breyer: Yes, it also, by the way, has to be the case that it goes by FedEx or it goes by UPS or it goes by a -- a truck or something like that. It can't just go by an airplane and be delivered by a drone. I've got that. Now what else?

Adam G. Unikowsky: So, we -- again, we have a broader argument and a narrower argument. We do have one specific argument in our brief which focuses on the fact that this -- this traveled through the -- the ceded area. Now I think that it would still be preempted even if it was outside the ceded area, but sort of the narrowest argument in our brief goes like this, right? To look at what the Indians secured, you have to look at what they had. And they had something special on this particular stretch of land, which is a tax immunity, and, therefore, if you want to look at what they kept, it's an immunity that applies specifically when the truck is going across that land. (202) 628-4888 Official 1 Now I will say that for off -- for -- for travel off the ceded area, I probably still would be arguing preemption given that the treaty by its terms applies to all public highways. But the narrowest version of our argument in our brief really only applies to this particular travel because of the special rights that the tribe enjoyed on that stretch of land at the time of the treaty.

Justice Kavanaugh: The -- the language of the treaty does not distinguish, though --

Adam G. Unikowsky: That's correct.

Justice Kavanaugh: -- between the ceded area and the other areas.

Adam G. Unikowsky: So the textual hook for that would be the word "secured," which this Court has construed as requiring looking at what they already possessed when --

Justice Kavanaugh: Then another question, which is your -- your position depends on disaggregating possession and transportation, but you could possess something without transporting. You can obviously (202) 628-4888 Official 1 transport without possessing fuel. So the tax -- why -- why can't we disaggregate possession and transportation?

Adam G. Unikowsky: Well, first of all, I think that in many ways these are state law questions. Like, there's this fundamental dispute in this case about whether this is just like one statute on first possession or a whole bunch of different subsections that are taxing different types of things, one of which is transportation. And it -- it's kind of like a philosophical question. But I think that ultimately that's a state law question, not a federal question. It seems to me if the state court is construing authority --

Justice Kavanaugh: So, if a state court construed it differently from this state court, you would have a different position?

Adam G. Unikowsky: I mean, I think I'd probably still try to argue preemption, but I think it would be much harder than the argument I'm currently making to you today, because the Court has held that the incidence of the tax is a question of state law. (202) 628-4888 Official 1 It just seems to me that if -- if the state court is saying that this is a transportation tax, and transportation is treaty-protected activity, it just kind of follows like almost, like, inevitably that there's -- there's preemption because, you know, you're taxing treaty-protected activity based on the statute as it's authoritatively construed by the state court. I'm -- I -- I just would like to say one thing about why I think that, you know, it's -- this -- what the state is doing here is quite inconsistent with I think what the expectation of the tribe would have been in 1855, because the tribe was actually specifically concerned about transporting fuel along this route, right? And so Governor Stephens promised in the treaty minutes, you can take your goods to market to the river, which is a reference to the Columbia River. And this actually used to be their land. So sort of as consideration for giving up this stretch of land, which at the time was their land, that they agreed that they would continue to -- to travel across it. They'd (202) 628-4888 Official 1 have the right to travel. And so I think it -- it is a little bit of a bait and switch to the Yakamas to say, well, now we're going to basically exploit the fact that you have to travel across this stretch of land to impose this tax that we wouldn't otherwise be able to impose, and, by the way, the effect of the tax is to mimic in a tax on the reservation -- on on-reservation retailers. And I think that, you know, I haven't talked about the treaty canon so far because I think neutral principles are more than sufficient to resolve this case for Respondent, but at least under the -- the generous interpretation principles for Indians, I don't think that's what the Indians thought they were getting, that this exploitation of the travel on the very land they gave up, securing for themselves the right to travel across it. I think that it's very natural and consistent with what I think the expectation of the Yakamas would have been, that they could continue traveling across that land with their goods as they were already doing it at the (202) 628-4888 Official 1 time, and -- and that means -- that -- that means transporting without paying a fee or owing an obligation to the states.

Justice Sotomayor: Does it mean anything that this tax is literally on traveling the route, importing by a highway? There is no similar tax on importation by licensed people. They don't pay the tax. Only the user who buys it pays the tax, correct?

Adam G. Unikowsky: Yes. I think that's actually a very important point in this case, because the state cast this as a first possession tax, but, honestly, that's just the state's gloss on it. That's not what it says. And, in fact, that's not even how it operates, because, if you're the first possessor via highway, you pay the tax. But, if you're a licensed importer and you're a first possessor via a boat, you don't.

Chief Justice Roberts: Well, you want to characterize it as a transport tax, and the statute doesn't say that either.

Adam G. Unikowsky: Well, I think that the state -- the state court is responsible for construing state law. It says import, which is (202) 628-4888 Official 1 the importer pays the tax. On page 121 of the Joint Appendix, the taxpayer is defined as the importer. And the state court said, which I think is intuitive, that importation is a species of transportation. And so there is an authoritative decision that this statute taxes transportation. So --

Justice Sotomayor: The problem in this is that it's not consistent. You're right, the wholesalers, licensed wholesalers are the importers, but they don't pay the tax.

Adam G. Unikowsky: Yeah. So this is not a tax on first possession. It just doesn't work that way. And -- and the state is just adding this gloss that this is just one big tax on first possession, even though, obviously, when you just look at the words of the statute, it isn't one. And that's why I think the Court should just use the words of the statute which talk about importation and entry and the construction of that by the state court, rather than determining preemption, essentially by the gloss placed on the state's attorneys based on words that are not in the statute, nor did the (202) 628-4888 Official 1 state court think those things to be true.

Justice Kavanaugh: To state the obvious, the value of -- current value of the land the tribe gave up is enormous, right?

Adam G. Unikowsky: It's a third of the State of Washington, I believe, Your Honor. Thank you.

Chief Justice Roberts: Thank you, counsel. Four minutes, Mr. Purcell. REBUTTAL ARGUMENT OF NOAH PURCELL ON BEHALF OF THE PETITIONER

Noah Purcell: Thank you, Mr. Chief Justice. I'd like to point out two crucial facts about what will happen if you accept Cougar Den's position. First to Justice Breyer's point, if you accept their position, Yakama members can transport goods nationwide without taxation or regulation. That's why you see such a broad coalition of states joining an amicus brief on our side.

Justice Sotomayor: They don't have a treaty with everybody. (202) 628-4888 Official

Noah Purcell: They have a treaty with the United States, Your Honor. And as counsel just said --

Justice Sotomayor: No --

Noah Purcell: -- the right to travel says on all public highways. It makes no sense to limit it to the ceded area. Even historically, it wouldn't make any sense because the Yakama traveled beyond the ceded area. And -- and, also, Cougar Den is trying to use the history when it helps them by trying to limit the geography, but then not when it hurts them, like, you know, what goods can be transported or how it can be transported. Of course, the fuel and the highway, and these roads, did not exist at the time. The second crucial point --

Justice Kagan: But on -- on that one, didn't Mr. Unikowsky say, consistent with our case law, that there's a difference between taxation and regulation?

Noah Purcell: And -- and that's just a misrepresentation of the case law. The -- the fishing cases have said the state can regulate (202) 628-4888 Official 1 fishing to conserve the fish -- to fish -- the -- the very thing that's the subject of the treaty. There's no similar -- there's no similar rationale here. The Court has never said that we can regulate fishing more generally than that. There's no distinction in this Court's cases in treaty cases between taxing and regulation. More broadly, Mescalero actually rejected exactly that argument. The second point is that, under their theory, we could completely ban the transportation of fuel by highway if we did it for a regulatory reason, like we decided it's not safe. We could just ban it outright and -- and that would be fine. But we can't impose a generally applicable tax on goods like fuel because it happens to apply when Cougar Den travels on the highway. That makes absolutely no sense. There's no plausible way to read the treaty that would lead to that result. This is a tax on fuel possession. It is not a tax on highway travel. The state court explicitly said it would apply regardless of whether (202) 628-4888 Official 1 Cougar Den uses the highway. It is not a tax on transportation. It is a tax on the fuel itself. So -- so even if you accept much of Cougar Den's position here, it does not lead to a ruling in their favor. And you can tell, as Justice Kavanaugh pointed out, that you can disaggregate transportation from possession here because the statute does and, in fact, on the facts of this case, they are disaggregated. Cougar Den is paying the tax even though they were not transporting fuel. They possessed the fuel. They owned the fuel. So, for all those reasons --

Justice Gorsuch: Has Washington considered taxing non-tribal members for their purchases on tribal lands?

Noah Purcell: Your Honor, that is the system that we had before we adopted this system, and it was struck down by a federal court in Washington. And then we adopted this tax, modeled on what this Court said was okay in Wagnon. I'd also like to address Wagnon just (202) 628-4888 Official 1 does not address the issue in this case. Wagnon was about who the tax applies to and where the incidence of the tax is. In this case, those things are undisputed. Cougar Den owes the tax and it's off reservation. So the rule is that the -- the tax can apply unless preempted by express federal law. And, here, there's nothing in the Yakama treaty that preempts this tax. There's just no plausible way to read the right to travel by public highway in common with others to preempt a tax on goods. So -- so, you know, the -- Wagnon just does not do what they're -- what they're asking it to do. Wagnon described a tax that the State of Washington modeled its tax on. And -- and I just think it's crucial also to understand that even their limited ceded area argument does not work. It does not work. It's -- it's contrary to the treaty text, which says a right to travel on all public highways, and it's -- and it's also refuted by the history that had the Yakama traveling beyond the ceded territory. (202) 628-4888 Official 1 So, if there's no further questions, we'd ask the Court to reverse the state -- state supreme court and hold that the tax applies to Cougar Den. Thank you.

Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 11:05 a.m., the case was submitted.)