Tax Commission snuffs out tribal tobacco rules for now

By Michael McNutt

Published: May 31, 2007

A state rule that angered tribal leaders for what they said circumvented tobacco compacts with Oklahoma has been pulled back because "it was not a good idea,” the main compact negotiator for the state said Wednesday.

Arbitrators are deciding two separate matters on whether the state violated tobacco compacts by having a state agency pass emergency rules to crack down on cigarettes being sold with the wrong, cheapest tribal stamps, state Treasurer Scott Meacham said.

In 2006, the Cherokee Nation requested arbitration over one rule and the Osage Nation filed a federal suit over another approved by the state. A federal judge ordered the Osages and the state to follow their compact and settle the matter by arbitration.

Diane Hammons, general counsel for the Cherokee Nation, said she expects a ruling by late summer or early fall.

A ruling on the Osage Nation's lawsuit isn't expected until after that, probably early next year, Principal Chief Jim Gray said.

The Oklahoma Tax Commission last year passed two sets of rules designed to prevent tribally licensed tobacco stores from improperly selling cigarettes with the cheapest tax stamp. The 6-cent stamps are to be sold only in specified areas near Oklahoma borders. Some tribally licensed stores are shipping cigarettes with the 6-cent stamps to other areas, especially around Tulsa, state officials said

The first rule was suspended after the Osage Nation filed its lawsuit. The second rule, which went into effect in June, has been withdrawn.

"It would have created other problems and more litigation,” Meacham said. "It was not a good idea.”

Meacham made the comments during a symposium on tribal sovereignty at the Skirvin Hilton Hotel in Oklahoma City. This year's session on the tobacco tax was considerably tamer than one on the same subject at last year's symposium. Then, several tribal members complained the state rules would put small tribal tobacco store owners out of business.