The Osage Win One
On February 27, U.S. District Judge Terence Kern in U.S. District Court in Tulsa ordered the State of Oklahoma to enter into binding arbitration with the Osage Nation which maintains that Governor Brad Henry’s emergency rule applying to tribal smoke shops violates the 2003 tobacco compact between the Osage Nation and the State of Oklahoma.
The Oklahoma Tax Commission argued that before the new rule was implemented, cigarette taxes were being avoided by retailers who were using the lowest-rate tax stamp but who were not entitled to them. The tax commission proposed a rule to to limit the number of ‘low tax’ cigarettes which wholesalers could sell to tribal smoke shops to their 2004 sales volume plus ten percent. Governor Henry signed the rule, giving it the effect of law and imposing the restriction upon wholesalers rather than the smoke shops themselves, over which the Oklahoma Tax Commission has no authority.
The compact between Oklahoma and the Osage Nation says issues that are not resolved by “good-faith negotiations” within 30 days are subject to binding arbitration. Oklahoma refused to enter into negotiations with the Osage Nation which then filed suit seeking binding arbitration. In binding arbitration the state and the Osage Nation each name one arbitrator. Those arbitrators then name a third arbitrator, one upon which they can agree.
The Osage Nation named as arbitrator Kevin Gover, who served as a U.S. assistant secretary for Indian Affairs from 1997 to 2000, is a law professor at Arizona State University’s College of Law in Tempe and teaches courses in federal American Indian law. Gover also serves as an associate judge of the Tonto Apache Tribal Court of Appeals and of the San Carlos Apache Tribal Court, both in Arizona. He is originally from Lawton and a member of the Pawnee Nation.
The State of Oklahoma named as arbitrator Michael Burrage of Durant, who is the state’s arbitrator in a tribal compact dispute with the Cherokee Nation, retired in 2001 as chief judge of Muskogee federal court and as a district judge in Tulsa federal court.
The ruling by Judge Kern is a clear win for the Osage Nation and one certain to be causing worry in the Governor’s mansion, where a second ruling attempting to regulate interstate commerce between the Indian Nations and their wholesalers awaits the Governor’s signature.