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Tuesday, August 4, 2015

U.S. Files Intervention in Support of Tulalip Tribes Lawsuit Against State of Washington Over Right to Collect Taxes From Non-Indian Businesses on Tribal Lands

The United States today filed a motion to intervene and a complaint in intervention on its own behalf and as trustee for the Tulalip Tribes in their lawsuit against the state of Washington and Snohomish County over the imposition of taxes on non-Indian businesses operating on lands held in trust for Tulalip on the Tulalip Reservation.  The intervention seeks to protect the authority of tribes under the U.S. Constitution and federal law to develop reservation resources and fund governmental services without unlawful interference from state and local taxation. 

The Tulalip Tribes occupy a 22,000-acre reservation in Snohomish County, 35 miles north of Seattle.  For economic-development purposes, Tulalip chartered its own municipal corporation, the Consolidated Borough of Quil Ceda Village, on trust land within the Reservation adjacent to Interstate 5.  

“The United States takes seriously the federal role in protecting tribal self-government, which has its foundation in federal statutes, treaties, and regulations,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “To this end, we are committed to eliminating barriers, such as these, which hinder tribes from developing healthy economies and providing necessary governmental services on the reservation.”

With tens of millions of dollars in financial support and planning assistance from the federal government, Tulalip designed and built the infrastructure necessary to support a major retail, tourism and commercial center at Quil Ceda Village, including a tribal casino, resort and shopping center.  The Tribe and federal government manage, maintain and provide all significant governmental services to the tenants and visitors at Quil Ceda, including police and fire protection, emergency medical and 911 services, among many others.

According to the complaint in intervention filed today in Seattle, the state of Washington and Snohomish County did not contribute in any significant respect to the development of Quil Ceda Village.  Moreover, they provide no significant governmental services at the Village and they play no role in the Village’s ongoing operations.  The state and county, however, impose over $40 million in annual property, business and occupation and sales taxes on the on-reservation activities at Quil Ceda.  Even though Tulalip has its own applicable tribal tax laws, state and county taxation in effect precludes Tulalip from imposing its own taxes and deprives it of the tax base needed to fund important governmental services.

The United States has substantial interests in this action by virtue of the Indian Commerce Clause of the U.S. Constitution as well as federal statutes and regulations designed to foster tribal self-determination and economic independence.  The United States also has substantial interests in the interpretation of its statutes and regulations and in the principles governing state and local taxation and regulation of activities on Indian reservations.

On June 12, 2015, the Tribe and Village filed suit against the Director of the Washington State Department of Revenue, as well as against Snohomish County and County officials, seeking declaratory and injunctive relief against the administration and enforcement of state and County sales and use, B&O and property taxes in connection with the economic activities at Quil Ceda Village.  The legal claims in this case, however, squarely implicate federal interests.

Updated August 4, 2015