Each side looking to history to support its argument
At issue is whether the tribe is a sovereign nation or must abide by state laws.
WASHINGTON — Like their bitter casino gambling fight in the 1990s, the State of Rhode Island’s smoke-shop dispute with the Narragansett Indians is rooted in a line from the 25-year-old federal law that settled the tribe’s claim to traditional lands in South County:
“The settlement lands shall be subject to the civil and criminal laws and jurisdiction of the State of Rhode Island.”
Then, as now, the Narragansetts set out to follow other tribes into a profitable business realm where Indians enjoyed rights unavailable to other citizens.
Then, as now, the Narragansetts argued that their sovereignty exempted the enterprise from state regulation and reduced their obligations under the land-claims settlement.
Then, as now, Rhode Island argued that the tribe had freely accepted state regulation when it made the deal that secured its 1,800 acres of tribal land in Charlestown — and later, federal recognition of the sovereignty that had been legally clouded for centuries.
The gambling issue was settled in the state’s favor in a 1997 federal court ruling — later upheld by the Supreme Court — that said the Narragansetts, like any other group, had to get Rhode Island voter approval of any plan to build a high-stakes gambling hall.
But the state’s path to victory was long and far from straight. At one point in 1993, a federal judge in Rhode Island ruled that the tribe qualified for special gambling-business advantages granted by a federal law enacted a decade after the Narragansett Indian Land Claims Settlement Act of 1978.
In response to that ruling, Gov. Bruce G. Sundlun and the tribe made a deal in 1994 for a casino in West Greenwich, subject to statewide referendum. That proved in retrospect to be the high water mark for the Narragansetts’ dreams of gambling wealth; Rhode Island voters rejected the deal that fall.
In 1996, Congress passed an amendment to the federal Indian gambling law that Sen. John H. Chafee, the amendment’s author, portrayed as closing a legal loophole that superseded the Narragansetts’ 1978 agreement to abide by state and local law.
When the courts ruled that Chafee’s measure was constitutional, he said the terms of the original agreement among the tribe, the Town of Charlestown and the state and federal governments had been made clearer than ever.
“If people want to have some gambling in Rhode Island, then everybody ought to play by the same rules,” the Republican senator said.
The opponents of the tribe’s new effort to start a business in tax-free cigarettes — which would threaten a source of state revenue at a moment of budget belt-tightening — say their case is even stronger than it was against Narragansett casino gambling.
Besides the general clause binding the tribe to state and local law, said Joseph S. Larisa, a lawyer for the Town of Charlestown, the 1978 land claims act says specifically that the tribe is not exempt from taxes on income-producing business.
The tribe’s lawyer, John Killoy, responds that the situation is not that simple and argued that point in the lawsuit he filed yesterday in U.S. District Court, Providence.
One implicit argument in Killoy’s case is that tax law is different from gambling law — and it favors the tribe’s pursuit of a tax-free smoke shop.
Independent experts in Indian law note that tax-free tribe-affiliated smoke shops operate across the country, sometimes under agreements between the tribes and the states where they live.
Prof. Richard B. Collins of the University of Colorado at Boulder said that one quirk in federal case law might be crucial.
Collins said the Supreme Court has ruled more than once that tribal smoke shops must impose the equivalent of state taxes on cigarette buyers who are not members of the tribe. But he said that precedent applies only to the majority of states that share a particular tax-law technicality.
Collins said the court’s guidance applies only to the large majority of states where, technically, the tax burden falls on the individual smoker who buys the cigarettes — not on the retail outlet that sells the smokes.
The tribe’s legal filing suggests that Rhode Island’s tax law works to its advantage because the tax burden falls, technically, on the seller, in this case the tribe, and not on the individual cigarette buyer.
Other things being equal, that seemingly esoteric distinction could be a key to the outcome of the legal dispute over the Narragansetts’ smoke shop, Collins said.
But Jeff Neal, a spokesman for Governor Carcieri, said last night, “It doesn’t matter if the tax falls on the store or the individual.” The language of the 1978 settlement act is so clear that the details of state tax law will not figure in the case, said Neal.
Whatever the result of the court dispute — which could drag on for months or years — it’s clear that political considerations could weigh as heavily as legal ones, according to Steve Tullburg of the Washington-based Indian Law Resource Center.
In upstate New York, Tullburg said, federal court decisions went heavily in favor of the state’s argument that Indian tribes were forbidden to sell tax-free cigarettes to non-tribe members.
“But the state has not in fact enforced the law,” he said, because state efforts to do so could prove so politically volatile.
“The idea of state tax agents coming onto Indian land is so offensive” to the tribes in question that New York has made no concerted effort to do so, Tullburg said.
As a consequence, Tullburg said, tribal smoke shops have proliferated in New York, some under formal agreement with the state, some not.
Some Mohawks and Senecas have expanded, moreover, into tax-free gasoline sales and Internet cigarette sales, deepening what were already intractable disputes among the tribes, their neighbors, the state and retail business organizations.
Occasionally, the disputes have erupted into bigger disruptions than Monday’s smoke-shop confrontation in Rhode Island. Some protests have featured blocked highways, tire-burning and fisticuffs, according to Tullburg.
Originally written BY JOHN E. MULLIGAN
Journal Washington Bureau
