Osage Nation says it’s appealing to Supreme Court taxation ruling

By Murray Evans
Oklahoma City, Oklahoma (AP) August 2010

The Osage Nation plans to appeal to the U.S. Supreme Court its lawsuit that seeks to exempt tribal members who live and work in Osage County from state income taxes.

According to the tribe’s website, Chief John Red Eagle said the Osage Nation will file the appeal before Oct. 22. Both a U.S. District Court judge and the 10th U.S. Circuit Court of Appeals have ruled against the tribe so far in its 9-year-old lawsuit against the Oklahoma Tax Commission.

The Pawhuska-based tribe claims Congress never affirmatively disestablished its 1.5 million-acre reservation in northeastern Oklahoma and that federal law exempts tribal members who live and work there from paying state income taxes.

Red Eagle replaced Jim Gray on Aug. 4 as the tribe’s chief. Neither Red Eagle nor other tribal officials immediately returned phone and e-mail messages.

Tax Commission spokeswoman Paula Ross said that agency “had anticipated that the Nation would appeal and we will take appropriate action when we receive a copy of that appeal.”

In his ruling in January 2009, U.S. District Court Judge James Payne concluded the tribe’s reservation no longer exists. He said the state of Oklahoma had governed Osage County for more than 100 years and noted the tribe had “not sought to re-establish their claimed reservation or to challenge the state’s taxation until recently.”

Payne also said ruling in favor of the tribe “would have significant practical consequences not only for income taxation but potentially for civil, criminal and regulatory jurisdiction in Osage County.”

Payne cited three federal laws – one from 1890 and two from 1906, one year before Oklahoma became a state – that he said reflected Congress’ intent to “disestablish and terminate Osage County’s reservation status” and subject the tribe, its members and its lands to Oklahoma law.

After the appeals court in May denied the tribe a rehearing of the case, the tribe was given an Aug. 23 deadline to file an appeal to the Supreme Court. Because of a scheduled tribal election, the tribe asked that the deadline be extended and that request was granted.

If the tribe ultimately loses the case, it could place the operation of three of its casinos – in Tulsa, Skiatook and Ponca City – in jeopardy, because those casinos are not located on land held in trust by the federal government, which is required in Oklahoma. The casinos have operated under a 2005 decision by the National Indian Gaming Commission that said the Osage reservation still existed.

Gray has said the tribe would begin the process of placing the land on which the casinos sit into trust. That can be a years-long process, one the tribe apparently is trying to kick-start with help from the state.

Gov. Brad Henry sent a letter recently to U.S. Interior Secretary Ken Salazar, asking that the agency “assist the Osage Nation in completing the process of taking those properties into federal trust as promptly as possible to avoid any possibility of closure of those facilities.”

Henry said in the letter that if the casinos closed, it “would result in the unfortunate loss of many jobs and great hardship on many Oklahoma families. There can be no doubt that the success of our tribal economies has a significant impact on the health of our state economy.”