Tax-Free Inter-Tribal Commerce Upheld By U.S. District Court

On October 18, the U.S. District Court for the Southern District of California issued a preliminary injunction ruling that affirmed the tax-free distribution and discount sale of tribal fuel. A quick overview of the facts: -- The Torres-Martinez Tribe developed the Red Earth Travel Center on tribal trust lands; -- A Yakama-member-owned business, First American Petroleum, provides tax-free fuel to the Red Earth Travel Center; -- The Torres-Martinez Tribe has delegated certain fuel management authority to First American Petroleum for purpose of obtaining tax-free fuel for the Red Earth Travel Center; -- First American Petroleum transports tax-free fuel to Red Earth Travel Center; -- The Torres-Martinez Tribe "sells fuel and convenience stores items at the travel center to help support the tribal economy"; and -- Ultimately, state fuel or travel-related taxes are not imposed on the Torres-Martinez Tribe or First American Petroleum and those tax savings are passed on to non-Indian patrons of Red Earth Travel Center.

Not only did the District Court hold that fuel or travel-related taxes could not be assessed on First American Petroleum (at least preliminarily) but it acknowledged that the Torres-Martinez Tribe could not be sued for tax collection due to its sovereign immunity. In other words, any California right to collect excise taxes on the fuel sold at the Red Earth Travel Center cannot, as a practical matter, be collected.

The Southern District of California's decision currently stands as a wonderful affirmation of tax-free inter-tribal commerce.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or, or via