DCI America

By David Prager, Tribal Attorney, Prairie Band Potawatomi Nation

Wagnon v. Prairie Band Potawatomi Nation,
126 S.Ct. 676. 546 U.S. ___ (2005).

Years ago the United States by treaties guaranteed the sovereignty of Indian Tribes as long as the grass grows. The Supreme Court's ruling against the Potawatomi in their fuel case is like saying that because the grass in question was in a field that was paved for a parking lot and now has no grass, sovereignty is no longer guaranteed. Such disingenuous reasoning must be openly condemned if tribal sovereignty is to be protected as promised. Using similar pretzel logic, the Court held in this fuel case that although a state cannot impair tribal sovereignty directly, it can do so indirectly. The Court has thus upheld form over substance and has ignored and eroded Commerce Clause protections for tribal rights.

The dormant Indian Commerce Clause has generally been the source of federal protection for tribal sovereignty. This "dormant" aspect means that even though Congress has not passed a particular law, certain state action may nevertheless interfere with federal goals for Tribes and be prohibited by the federal courts. Some conservative justices have rejected the dormant clause concept. Justice Thomas, the author of our fuel case opinion, has completely rejected it for Interstate Commerce Clause cases. Not far behind, Justice Scalia would consider only discrimination for such cases. On the other hand, the majority of justices have applied a balancing test to both the Indian and Interstate Commerce Clause. The balancing test has been a more fact- sensitive way to accommodate and balance the state and federal interests. Unfortunately, in the fuel case the Court rejected balancing and looked only at discrimination in judging the state tax.

In response to Chickasaw, Kansas amended its tax laws to instead impose the state fuel taxes upstream on the non-tribal distributors off-reservation. Although the economic impact is exactly the same as a tax imposed directly on a Tribe, this change of form in our case caused the Court to apply a discrimination standard instead of balancing the tribal, state and federal interests. In the Potawatomi fuel case the additional imposition of the state tax made it impossible for the Tribe to impose its own fuel tax and would destroy the tribal business. The Tribe had clearly generated economic value on its reservation, which the Court had indicated in Colville should be entitled to some federal protection from undue state tax burdens. Unfortunately, the formal imposition of the state tax liability at the distributor level rather than the reservation level caused the Court to ignore its ruling in Colville and to refrain from balancing the interests, which Justice Ginsburg in her dissent said favored the Tribe.