Newspaper article THE JOURNAL RECORD

Court Rules Fuel Contracts Not Legal

Newspaper article THE JOURNAL RECORD

Court Rules Fuel Contracts Not Legal

Article excerpt

Motor fuel tax contracts formed with Indian tribes through fiscal year 2016 are unconstitutional because they create obligations legally enforceable against the state beyond the current annual appropriation and expressly bind future legislatures, the Court of Civil Appeals, Division I, held Monday.

Contracts between the state and tribes which enter into compacts for collection of motor fuel taxes are part of a 1996 law passed after the U.S. Supreme Court struck down Oklahoma's previous scheme for taxing tribal gasoline outlets. The justices held that Oklahoma could not levy its motor fuel tax on fuel sold by Chickasaw Nation retail stores on tribal trust land.

Under the new law, House Bill 2208 (1996), the motor fuel tax code was restructured to levy the 16-cents-per-gallon tax at the supplier, not the retailer, level. Another provision of the law makes an offer to contract with federally recognized tribes. In return for a tribe's agreement not to challenge the constitutionality of the act, the state withholds a percentage of the tax revenues to be apportioned on a quarterly basis to the accepting tribes. The percentage is on a sliding scale, ranging from 3 percent in for the fiscal that ended June 30, 1997, to 4.5 percent in the current fiscal year and thereafter. Actual amounts received by a particular tribe are based upon amounts of fuel sold by the tribe in a particular year. The part of the law the appeals court found problematical is language providing that the term of the contracts will extend through the fiscal year that ends June 30, 2016, and be renewed for successive 10-year terms, unless one party notifies the other of its intention not to participate further. An exemption for fuel sold on tribal land to tribal members does not apply to contracting tribes. The 1996 law was challenged by John Ryals, a member of the Citizen Band Potawatomi Nation, which is a recognized tribe but has not entered into a contract with the state. At trial, Ryals' motion for summary judgment was decided in favor of the Oklahoma Tax Commission, the tax collecting authority. Ryals said House Bill 2208 is a revenue bill passed in violation of a constitutional provision requiring either a vote of the people or a three-fourths majority in both the House and Senate. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.