Would-be gaming tribe loses showdown

Elizabeth Zuckerman

Tuesday, Dec. 30, 2003 | 11:13 a.m.

PROVIDENCE, R.I. -- A federal judge ruled Monday that the state acted properly in shutting down the Narragansett Indian tribe's tax-free smoke shop, saying the state has the right to tax cigarette sales on the tribe's land.

The dispute over the smoke shop is just one part of a long struggle between the state and the tribe, which has been seeking permission to open a casino for more than a decade but has yet to gain state approval.

A 1996 amendment to federal law introduced by the late Sen. John Chafee, R-R.I., exempts the tribe from the Indian Gaming Regulatory Act, which has allowed tribes, including neighboring Connecticut's Mashantucket Pequots and Mohegans, to open casinos.

U.S. District Judge William Smith's ruling followed a violent July raid in which state police arrested seven tribal members who tried to resist their advance into the trailer where the cigarettes were being sold.

The federally recognized tribe argued that as a sovereign nation, it is free from the state's taxation laws. The state argued that according to the terms of the 1978 settlement agreement that gave the tribe its land in Charlestown, the tribe is bound by state statutes.

Smith found the cigarette tax falls on the tobacco consumer, not the tribe, meaning the tribe is simply an agent for collecting a tax.

"It is appropriate for the state to impose this burden on the tribe; and such a burden does not amount to taxation of the tribe, nor does it violate the tribe's sovereign rights," Smith wrote in his ruling.

Smith said the tribe must comply with the state's taxation laws if it wants to continue selling cigarettes. He also wrote the state was right to execute a search warrant at the store.

The judge declined to address whether the state could impose a cigarette tax that falls directly on the tribe.

Narragansett Chief Sachem Matthew Thomas said it was likely the tribe would appeal. Thomas said he would recommend an appeal to the tribal council, which was expected to meet within a few days.

The shop has been closed since the raid, in which state police confiscated 160,000 remaining cigarettes, and will remain closed while the case is litigated, Thomas said.

Gov. Don Carcieri said the ruling shows that state taxation laws apply on the tribe's sales activities. That's important, he said, because while the issue now is cigarettes, it could also be gasoline or alcohol sales.

"At last, now we have some guidance. We know the tax laws apply, the civil and criminal laws apply," Carcieri said.

Thomas contested that interpretation of the decision, saying the court had upheld the tribe's sovereignty.

"I think the governor has misspoken," he said.

Attorney General Patrick Lynch called the decision a narrow one, saying it addressed only the issue of the tribe's tobacco sales.

Douglas Luckerman, a lawyer for the tribe, hailed the ruling as a partial victory, saying the judge resisted the state's effort to claim full authority over the tribe.

He noted a part of the court's declaration saying "nothing in this opinion should be read to suggest that the state's ability to enter upon tribal land to enforce its criminal/regulatory laws is limitless, or that state authorities may act with impunity. It is not; and they may not."

Carcieri said the state had never tried to claim full authority over the tribe, but now knows its laws do apply on the tribe's lands.

The July raid on the store, which occurred in front of television cameras, sparked sharp criticism, with many calling the state's action violent and excessive.

Carcieri said Monday he regretted the confrontation that erupted surrounding the raid. He has said he had told the state police to execute a search warrant, but to stop if they encountered resistance. The state police have said they believed the resistance they met with was manageable.

State Police spokesman Maj. Brendan Doherty said Monday the police were pleased with the ruling, and that the officers involved in executing the warrant had acted professionally.

A commission appointed by the governor to review the incident concluded in October that unclear instructions from the governor and the Narragansett leadership contributed to the raid turning violent.

On Monday, Luckerman pointed to a section of the judge's ruling that suggests the state might not have chosen the best course of action in enforcing its legal right.

"It is possible (and perhaps worthwhile) to engage in a debate about whether less intrusive means were available to the state to enforce its tax scheme, means which would have been more respectful of the tribe's sovereignty," the judge wrote.

Lynch said the state went forward with the warrant because it stood to lose an estimated $12 million per year in tax revenue.