PROVIDENCE -- In a highly-anticipated ruling this morning, U.S. District
Court Judge William E. Smith found on the the side of the state in the
Narragansett Indian tribal smokeshop dispute, saying that it has the
authority to impose a tax on cigarettes sold at the shop on tribal lands.
Smith also ruled that the state did not violate federal law or the
tribe's sovereign rights in executing a search warrant at the shop
during a State Police raid last July that turned violent.
"This conclusion is driven by the finding that the legal of the State's
cigarette's tax scheme falls on the purchaser or consumer of cigarettes,
and not on the tribe," Smith wrote.
"Under the state's cigarette tax scheme, the Tribe (like other retail
sellers of cigarettes) acts merely as an agent for the collection of the
tax."
Smith characterized the tax collection as a "minimal administrative
burden" and said it was "appropriate for the State to impose this
burden" on the tribe. He ruled it did not amount to taxation or violate
the tribe's sovereign rights.
In finding that the cigarette tax is a tax on consumers and not the
tribe, Smith acknowledged that his ruling leaves unanswered two
"essentially identical" questions raised by the tribe and argued
extensively by both sides.
"Both questions involve the issue of whether, assuming that the legal
incidence of the cigarette tax falls on the tribe, such a tax is lawful
in light of the tribe's sovereign status, and the requirement of
unmistakably clear congressional authorization for a direct tax on the
tribe," Smith wrote.
The 56-page decision was posted on the court's Web site and handed out
at 10 o'clock this morning at the federal courthouse in downtown
Providence.
Reaction
Only one representative from any of the involved parties was present at the
court -- State Police Maj. Brendan Doherty, who initially declined
comment until reading the decision. He later said the State Police were
pleased with the ruling and the officers involved acted professionally.
At a press conference early this afternoon, Governor Carcieri appeared
careful not to characterize the ruling as a victory for the state.
Instead, he said, he saw it as an opportunity to further efforts to
improve relationships with the tribe.
"Today's decision brings much-needed clarity to the complex issues
surrounding state and tribal relations," he said.
"Furthermore, the ruling sets an important benchmark that will be useful
for furthering a respectful and collaborative relationship among the
parties," said the governor, who noted that his office had taken several
steps in recent months to do so, including naming a member of his staff
as a liaison with the tribe and providing technical resources through
the state Department of Economic Development to help with "prudent"
market-based business opportunities.
Carcieri said he spoke to Narragansett Chief Sachem Matthew Thomas after
the ruling today, describing the conversation as "cordial."
Thomas, speaking at a press conference at the smokeshop this afternoon,
said he will recommend to the tribal government that they file an
appeal. He expects a decision to be made within the next couple of days.
He downplayed the impact of the ruling, at one point describing it as a
"minor bump in the road."
Thomas also said the tribe plans to press the General Assembly, which
reconvenes next month, to approve a referendum on casino gambling in the
state.
Earlier today, Douglas Luckerman, a lawyer for the tribe, said he was
disappointed with the decision but said the judge resisted what he
called the state's effort to claim full authority over the tribe.
"The court's now saying again that there are limits on the state's
exercise of its authority over the tribe and now the tribe's land," he
said. "The state can't go on their lands with impunity."
The ruling comes five months after the State Police raid at the Indian
business, conducted as TV news cameras rolled and the press watched. It
led to the arrests of eight tribal members, including Chief Sachem Thomas,
injuries on both sides and sharp criticism, voiced locally and nationally.
The Narragansetts had opened the smoke shop two days earlier, on July
12, as an economic-development opportunity after tribal leadership had
grown frustrated by Governor Carcieri's and the state legislature's
refusal to support a referendum on an Indian casino.
The shop sold tax-free cigarettes at deep discounts to customers from
Rhode Island, Massachusetts and Connecticut.
The tribe claimed that as a federally recognized nation, it did not have
to abide by the state's tax laws. The state argued that in entering a
1978 agreement that gave the tribe its 1,800 acres in Charlestown, the
Narragansetts agreed to abide by state and local laws on its land.
In Rhode Island, a tax is imposed on all cigarettes sold or held for
sale by any person. A stamp on the individual packages demonstrates that
the tax has been paid. Cigarette packages seized by the police did not
have tax stamps.
Within days of the raid, ordered by Carcieri, the tribe sued the
governor, the state, the state attorney general, state police, the town
of Charlestown and others in a bid to reopen its shop.
The court complaints
The tribe's complaint claimed that on Feb. 10, 1983, the federal
Department of the Interior issued a "final determination acknowledging
(recognizing)" that the tribe was and still is an Indian tribe.
"The tribe is therefore a sovereign government subject to the usual
plenary power of Congress over Indian tribes," the complaint said.
After a tribe receives federal recognition, the complaint argued, the
state must have express approval from Congress to impose a tax on the
tribe. The state does not have such approval, it said.
The state filed a counter-complaint in state Superior Court, arguing
that the tribe's failure to comply with Rhode Island's tax scheme was
unlawful under state law. The two parties later agreed to move that
complaint to federal court as well.
However, while commending the effort at cooperation, Smith found in his
ruling today that the federal court had no jurisdiction over matters
raised by the state. He dismissed its complaint and remanded it to state
court.
Unanswered questions
Noting that the First District Court has urged district judges to be
cautious in deciding difficult constitutional questions, Smith also
wrote that it would have been inappropriate for him to explore wider
sovereignty issues.
"In order to analyze these questions, the Court would have to assume
hypothetically that the legal incidence of the Cigarette Tax fell on the
Tribe; all subsequent conclusions with respect to the Tribe's retained
rights of sovereignty and the State's jurisdiction over the settlement
lands would proceed on the basis of this conjecture."
"If this leaves the waters in a turbid state, that cannot be avoided.
The nature of the state's jurisdictional power over the Settlement Lands
and the contours of the Tribe's retained rights of sovereignty have long
been and 'remain ill-defined in certain respects,' " he wrote, quoting a
previous case in part.
The state has argued that the tribe traded away its immunity from Rhode
Island law by entering into the 1978 agreement that gave it the land in
Charlestown. Except for "fishing, hunting and gathering," the deal bound
the land to the "full force and effect" of Rhode Island civil and
criminal laws, according to the state.
Congress approved the agreement.
Subject to state criminal laws
Smith referred to the 1978 land agreement and two U.S. Supreme Court
rulings in deciding that the state was within its rights in executing
the a search warrant and seizing cigarettes.
"Section 1708 of the Settlement Act makes clear that the tribal lands
are subject to the 'criminal laws and jurisdiction of the State,' "
Smith wrote. "If that phrase is to have any meaning, it must include the
right of State law enforcement officials to enter tribal property
pursuant to a validly issued warrant to seize contraband."
State Attorney General Patrick Lynch, who advised Carcieri before the
search warrant was executed, said the "decision supports the response we
took."
"There is no dispute that the Narragansetts were engaged in illegal,
income-producing activities on their land in Charlestown back in July of
this year," Lynch said in a statement issued this afternoon. "Those
activities precipitated the execution of the search warrant that the
State Police served on July 14th.
"I have great respect for the Narragansett Indian Tribe and for its
members. They have struggled to become self sufficient, and I admire
their tenacity," Lynch said. "But as Attorney General, I am duty bound
to enforce the laws of the State of Rhode Island."
Lynch added that the state has already taken steps to improve relations
with the tribe but said more needs to be done. He said representatives
of his and the governor's office have met with the Bureau of Indian
Affairs in Washington, D.C., to discuss "mutual issues of concern."
Lynch said, "I remain hopeful that efforts such as these will enable
both parties to overcome what Judge Smith properly called this
'oftentimes tumultuous relationship'."
- - With reports from Providence Journal political columnist M.
Charles Bakst, Journal staff writer Scott MacKay and The Associated
Press
DIGITAL EXTRA: For more background on the smokeshop raid, and its
aftermath, go to:
http://projo.com/extra/2003/smokeshop/
