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Kan. wins ruling in tribal gas tax dispute
WEDNESDAY, JANUARY 29, 2003

The state of Kansas can impose a gasoline tax on a tribally-owned enterprise, a federal judge has ruled.

In a case involving the Prairie Band Potawatomi Nation, U.S. District Judge Julie A. Robinson agreed that the tax wasn't authorized by a federal law the state cited in court papers. But in analyzing the tribe's sovereignty claims, she said resolution tilted in the state's favor.

"The tribe's interests in raising revenues simply cannot outweigh the state's legitimate interest in raising revenues through its system of taxation," she wrote on January 15.

The ruling represents another chapter in the state's ongoing battle against Indian Country commerce. The Kansas Department of Revenue has asserted that it can collect taxes on gasoline distributed to tribal land.

The fight escalated last April when state officials seized gas trucks belonging to the Winnebago Tribe of Nebraska, which distributes gas to three tribes in Kansas. The state said the tribe's economic development enterprise, Ho-Chunk Inc., owed $1.25 million and started criminal proceedings against tribal chairman John Blackhawk and Ho-Chunk CEO Lance Morgan.

The dispute was quelled when a federal judge barred the state from taking further action. Because the deal affected inter-tribal relations, U.S. District Judge Dale E. Saffels said it required further analysis. The ruling is on appeal to the 10th Circuit Court of Appeals.

But in the Potawatomi dispute, the judge was able to come to a conclusion because she determined that the facts were clear. Robinson said the "incidence," or burden of the tax, fell on non-Indian consumers who buy gas from the tribe. Additionally, the company that distributes the gas to the tribe is non-Indian owned.

"While the tribe certainly has an interest in raising revenues, that interest is at its weakest when goods are imported from off-reservation for sale to non-Indians," she wrote.

The tribe's gas station is located next to its casino. According to evidence presented to the court, the 73 percent of its sales are to non-Indians.

The tribe levies its own tax on the gas and the station itself. The tribe argued that the addition of the state tax would destroy its business, but Robinson rejected the claim.

Oral arguments in the Winnebago case are expected this fall. The Iowa, Kickapoo and Sac and Fox tribes are part of the case. They buy gas from Ho-Chunk Inc.

Ho-Chunk Inc. owns Indianz.Com and AllNative.Com.

Get the Decision:
Prairie Band Potawatomi Nation v. Kansas (January 15, 2003)

Relevant Links:
Prairie Band Potawatomi Nation - http://www.pbpindiantribe.com
The Winnebago Tribe - http://www.winnebagotribe.com