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Appeals court won't let state tax tribal commerce
Friday, August 29, 2003

The state of Kansas on Thursday lost another round in its attempt to tax inter-tribal commerce.

In a unanimous decision, the 10th Circuit Court of Appeals upheld a preliminary injunction that prevents the state from collecting and imposing a gas tax on the Winnebago Tribe of Nebraska. The state claims the tribe owes $1.25 million for distributing gas to three Kansas tribes.

A federal judge last May halted the tax and state criminal proceedings against Winnebago chairman John Blackhawk and other tribal executives. The state appealed but a three-judge appeals court panel yesterday said the state failed to make its case.

"Characterizing the central question in the case as whether the state can tax the sale of fuel between the Winnebago Tribe and the Kansas tribes, the [lower] court determined that this issue was a matter of federal, not state, law," wrote Judge Stephanie K. Seymour for the majority.

The battle began in March 2002, when Kansas officials seized gas trucks and other property belonging to Ho-Chunk Inc. (HCI), the economic development arm of the Winnebago Tribe. The state then ordered Blackhawk and HCI chief executive Lance Morgan arrested on an inter-state warrant. Morgan's wife, Erin, who manages a tribal business, and another tribal employee were also charged.

Reacting to the latest victory, Morgan criticized the state for interfering in the affairs of sovereign tribal governments. "How many times does Kansas have to lose before they realize the tribes are governments that can't be pushed around at their whim?" Morgan told Indianz.Com. "This isn't 1888."

The Winnebago Tribe has been providing gas to the Kickapoo Tribe, the Sac and Fox Nation and the Iowa Tribe. The tribes say their agreement is free from state taxation. All four tribes are parties to the litigation.

In May 2002, U.S. District Judge Dale E. Saffels, who died last year, agreed with the tribes and barred the state from collecting the $1.25 million that is allegedly owed. Saffels also delayed criminal proceedings against Blackhawk, Morgan and the other executives pending resolution of the dispute.

The 10th Circuit upheld Saffels on all accounts, noting the irreparable harm that the tribes face. The state, Seymour wrote, "simply ignores the district court's consideration of evidence of loss of business, reputation, future viability, and access to credit, all of which interfered with the tribes' self-sufficiency and economic development."

The state has been going after tribes within its own borders on several fronts. In addition to seizing Winnebago property, the state arrested and jailed a non-Indian businessman who was supplying gas to the Prairie Band Potawatomi Nation. The state has also been refusing to recognize license plates issued by the tribe.

The 10th Circuit earlier this month ruled against the state in the car tag case. But a federal judge has said the state can impose a gas tax on a business owned by the tribe.

Ho-Chunk Inc. owns Indianz.Com and its sister e-commerce site AllNative.Com.

Get the Decision:
Winnebago Tribe v. Kansas (August 28, 2003)

Relevant Links:
Winnebago Tribe - http://www.winnebagotribe.com
Ho-Chunk Inc. - http://www.hochunkinc.com