and more

After years of allowing the Yakama Nation to breach the audit terms of its agreement on fuel taxes, the WA state Department of Licensing (DOL) has notified the Yakamas it has finally had enough. In a notice to the Yakamas, the state pulled out of negotiations and mediation that has dragged on for years and terminated the agreement effective December 5, 2012 (attached).

A consent decree filed in federal court in 2006 was supposed to finally resolve the long-standing motor fuel tax litigation between the state and the Yakama Nation. Under the terms of the decree, fuel distributors supplying Yakama tribal stations began to discount the state tax on fuel delivery invoices by 75% or approximately 28 cents per gallon. The distributor would then take an equivalent credit off its monthly fuel tax report to DOL. Operating under a license from the tribal government, the station operators (they also signed the decree) were supposed to supply an accounting of the gallons delivered and forward the fuel tax discount provided them by the distributor on to the tribal government.

Each year an audit by DOL would estimate out how many gallons tribal members consumed. By subtracting the estimate of tribal member consumption from the actual amount delivered to the tribal stations, the number of gallons sold by the station operators to non-tribal members would be estimated. If 100% of the state tax rate on sales to non-tribal members was exceeded by the amount credited on the fuel delivery invoices, the tribal government would reimburse DOL for the difference. The tribal government then promised to spend the amount it retained on public roads within the reservation.

Tracking what has gone on during this negotiation process has been extremely difficult and frustrating. The Department of Licensing has used a mirage of confusing legal theories to justify cloaking the entire process under a blanket of secrecy. Public document requests by AUTO has resulted in some insights, even though DOL withheld or redacted scores of documents and nearly all the communications between it and the tribe. Primary reason given was the Department was in good faith negotiations that could eventually result in litigation. However, AUTO's persistence in pushing for access to public records allowed at least some limited insight.

Apparently, the tribal station operators never provided an accounting to the Yakama tribal government. Since the amount forwarded to the tribal government could be divided by 28 cents to estimate the gallons sold, the inability of the tribal government to account for the gallons raises the question of whether or not the tribal station operators actually passed the fuel tax discount on to the tribal government. While DOL acknowledged it could tell nearly exactly how much the state was owed from a review of the reports filed monthly by the delivering distributor, one side or the other apparently claimed the language in the consent decree required the calculation must be done soley based on an audit of the records provided to DOL by the tribal government. With the option of making the calculation off the delivery numbers from the distributor kicked to the curb, the Yakama tribal government apparently took the position it didn't have to give the money back at all. AUTO estimates the amount of fuel tax discounts owed back to the state by the Yakama Nation likely exceeds $25 million.

AUTO can find no evidence that the Yakamas have ever turned over a dime. The questions that seem to remain at this point are:

1). What actions can the state take to recover the taxpayers money?

2). Will the Governor's Office allow DOL to institute litigation to go after those millions that rightfully belong in the motor vehicle account dedicated to public roads?

3) If the state is successful in getting the money back, will the Yakama Nation government get stuck or can it go after its licensed station operators?