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U.S. Supreme Court won't touch Indian tax ruling
Tuesday, May 25, 2004

The U.S. Supreme Court on Monday refused to free the state of South Dakota from refunding gasoline taxes illegally paid by tribal members.

Without comment, the court rejected the state's appeal of a case involving a convenience store owner on the Pine Ridge Reservation. Loren "Bat" Pourier sought a refund of $940,000 in taxes he paid since 1995.

The state refused, citing a federal law that several states have used to justify illegal taxes on Indian commerce. But the South Dakota Supreme Court said the Hayden-Cartwright Act of 1936 does not authorize the 22-cent per gallon tax on gasoline.

"A state has no power to tax tribes, Indian reservation lands, or tribal members residing on Indian reservations unless there has been a cession of jurisdiction or other federal statute permitting the tax," Justice Richard W. Sabers wrote in February 2003..

The battle, however, didn't end there. First, the court said tribal members, and not Pourier, were owed the bulk of the refund even though he never passed the tax onto tribal consumers.

Second, the court said tribal members were owed a refund regardless of when they purchased fuel. The state balked at this holding because it had been imposing the tax since the 1920s. State officials claimed they would be forced to pay out millions.

So both Pourier and the state asked for a reconsideration of these key issues. After a rehearing last May, the high court reiterated in January that the state must refund money to tribal members and not to Pourier.

But the court agreed with the state and imposed a time limit on refunds. In a 4-1 decision, the majority said Indian consumers must seek a refund within 15 months of a fuel purchase. Applications [PDF] can be made through the state's Department of Revenue.

The court, however, did allow refunds for the entire 1995-2004 period at issue in the case. "[A]ny person who was enrolled member of the Oglala Sioux Tribe and who paid the invalidly collected motor fuel tax may timely seek a refund for the taxes paid as part of their purchases made during the same period," wrote Justice John K. Konenkamp.

South Dakota attorney general Larry Long appealed the decision to the U.S. Supreme Court. He was supported by the attorney general from Idaho, another state which illegally pushed its gasoline tax on Indian consumers.

Both states raised the Hayden-Cartwright Act in their appeal. The law includes language authorizing state taxes on "military and other reservations."

But several courts, including at least two federal courts, have ruled the law does not authorize taxes on Indian reservations.

In a case involving Idaho tribes, the Idaho Supreme Court struck down the state's 25-cent gasoline tax, prompting Republican lawmakers to "legalize" it retroactively. A federal court later blocked the state from collecting.

Like South Dakota, Idaho appealed to the U.S. Supreme Court but was rejected.

In yet another case, the 10th Circuit Court of Appeals blocked the state of Kansas from imposing a $1.25 million gasoline tax on Ho-Chunk Inc., the economic development arm of the Winnebago Tribe of Nebraska. The company deals exclusively with three Kansas tribes and argues that the state cannot interfere with inter-tribal commerce.

Ho-Chunk Inc. owns Indianz.Com and AllNative.Com.

South Dakota Supreme Court Decisions:
Pourier v. South Dakota (January 8, 2004) | Pourier v. South Dakota (February 2003)