The Osage Nation returned to Tulsa federal court Thursday, filing
its second lawsuit this year to block controversial state cigarette
But this time, the petition by attorneys Gary S. Pitchlynn and O.
Joseph Williams said the Osage Nation Tax Commission had recorded
proof of harm from the emergency rules enacted this year by the
Oklahoma Tax Commission and signed into law by Gov. Brad Henry.
After the Jan. 13 rules took effect, the lawsuit claims Osage
Nation Tax Commission cigarette tax revenue fell 50 percent in
February from the average over the previous four months. Two
licensed Osage smoke shops also went out of business.
The tax rule is causing a significant and irretrievable loss of
tax revenue, with its licensed retailers suffering significant
reductions in product sales at all the retail locations, and a loss
of customers, the lawsuit alleged. The Nation also suffers
irreparable harm to its sovereign authority to regulate the sale of
cigarettes within its jurisdiction, and to encourage free trade and
commerce between its licensed wholesalers and licensed retailers and
Calls for such evidence reverberated through the first lawsuit.
In that case, filed Feb. 1 after the state failed to respond to
Osage requests for arbitration of the dispute, the tribe requested a
temporary restraining order to block those rules and enforcement of
the arbitration clause in its 2003 compact with the state.
On Feb. 27, U.S. District Judge Terence Kern ordered Henry and
the OTC into arbitration with the Osage, but he issued a stay in the
case rather than a restraining order - despite the tax commission's
approval of a second, even tougher line of emergency rules. Henry
signed those into law April 7, spurring this lawsuit.
Both sets of rules sought to stop what the state considers
illegal sales of exception rate cigarettes at non-exception rate
tribal smoke shops - sales the commission said cost the state
millions in lost tax revenue each month.
A press release by the Osage Nation admitted the state has not
begun to enforce the rule yet and has called for negotiations with
the tribes before it begins enforcement.
The Osage, however, see the dispute as a challenge to their
sovereignty. Thursday's filing requested not only a temporary
restraining order to block these emergency rules, but also
preliminary and permanent injunctions against Henry and the Oklahoma
Tax Commission from creating or enforcing any future rules to
regulate the sale or transportation of cigarettes or tobacco
products in Indian Country, pending arbitration of the first Osage
The state is showing their disregard for dealing with the Indian
tribes by passing these restrictive rules, in direct contempt for
the agreements they have already made, said Principal Chief Jim Gray
of the Osage Nation. Under these circumstances, the Osage Nation has
no choice but to protect commerce on our reservation by filing this
claim in federal court.
The exception rates reflect the complexity of the smoke shop