Up in Smoke?

For the last few years, one of the most popular videos among Native Americans has been a brief tape that typifies the modern struggle to assert tribal sovereignty. What the grainy TV images of the 2003 raid on the Narragansett Indian Smoke Shop lack in artistry, they make up for in authenticity. Police dogs, handcuffs, the literal weight of state authority in the form of a state trooper on Chief Sachem Matthew Thomas’s back.
This, for many tribes, is the essence of economic development in Indian Country.For nearly twenty years, the tribe has staked its financial future on gambling, proposing a high-stakes bingo hall on tribal lands in 1988, casinos in West Greenwich and West Warwick, and most recently, a slot parlor in Charlestown. The smoke shop, which sold below-market cigarettes, minus the state stamps and taxes, represented a new direction in their quest for a viable tribal business. It lasted two days.

Indianz.com, a news website operated by the Winnebago tribe of Nebraska, still carries a link to the melee in its archive. Unlike the Narragansetts, the Winnebagos marched out of poverty long ago. From 60 percent unemployment in 1988, the tribe has leveraged its casino’s brief monopoly into sixteen subsidiary businesses, ranging from construction to software services, employing more than 500. The 2005 annual report of its business entity, Ho-Chunk, Inc., tallied $111 million in revenues and nearly $40 million in assets.

Despite the profits, Ho-Chunk Chief Executive Officer Lance Morgan says that business failure is much more common among the 562 federally recognized Indian nations. Tribal trust land—so called because tribes don’t own it outright, but rather the Bureau of Indian Affairs holds the land for tribes in trust—is a major obstacle. Trust land can’t be sold, taxed, mortgaged or used as collateral. Without a tax base, tribes are completely dependent on the federal government, Morgan says.  

“The system guarantees the poverty of tribal governments,” he argues. “They tell us to go out there and do economic development, after tying both hands behind our backs.

You can do little things to minimize the disadvantages, but really everything you are doing is a second-best solution.”

The 1978 agreement that awarded the Narragansett tribe 1,800 acres in Charlestown has denied the Narragansetts even a second-best solution. The terms of the settlement required that the tribe extinguish its claims to any other lands and that state law—with the exception of hunting, fishing and property taxes—would govern tribal property. Under this particularly anemic form of self-determination, buttressed by an exclusion in the U.S. Indian Gaming Regulatory Act and upheld by the federal courts, tribal poverty is widespread. According to 2000 U.S. Census data, 39 percent of Rhode Island’s Native American population, the vast majority of whom are Narragansetts, have incomes below the poverty
level. Can a tribe—a nation—with almost none of the advantages of sovereignty prosper?

“I think that day will come,” says Chief Sachem Thomas. “Whether it will come in my lifetime, I can’t say. As a leader I have to be optimistic, no matter what the circumstances. Unfortunately, the state battles us on every issue. Everything you do, you are dragged into court. Let’s look at it realistically. They aren’t going to let us sell something on the land that will compete with them. What does that leave us? An incinerating company?”

A 2005 study by the Harvard Project on Indian Economic Development found Indian self-government to be the most important factor fueling the significant socioeconomic gains Native Americans tribes made between 1990 and 2000. To-day, 200 tribes run full-scale casinos or bingo halls. IGRA buoyed the fortunes of those tribes at nearly twice the rate of nongaming tribes in fifteen indicators of financial and social health.

For example, the real per capita income of Indians in gaming tribes rose 39 percent and 21 percent in nongaming tribes, compared with 11 percent for the total U.S. population. But over that decade, all tribes made impressive headway, despite an increase in the Indian population and stagnant growth in federal funding. (Indians still lag behind the total population, with about half of the United States level of real per capita income and twice the unemployment rate.)   

Nonetheless, says Joseph Kault, director of the Harvard project, acceding tribes the power to craft constitutions, to pass and enforce laws, to define citizenship and regulate domestic affairs of its members has been a powerful force in breaking the cycle of Indian poverty. Self-government can also give tribes an edge in business.  

“Tribes’ primary advantage is their [federal] tax-free status,” Kault says. “Beyond that, every city and county in America has its economic development plan, and they are all trying to do the same thing. The challenge is to convince workers and capital markets that a tribe provides a stable, legal and regulatory environment. Tribes have certain abilities to implement their own laws, and to the extent they can be faster, fairer and safer, they can out-compete people in capital markets.”

Some tribes, like the Seminoles in Flor-ida, have become symbols of this growing economic power. In December, the tribe bought the Hard Rock Café chain, Hard Rock International, for $965 million.   
Governor Donald Carcieri is optimistic about the Narragansetts’ prospects. A 2005 law allowing Lincoln Park’s owner, BLB, to add 1,750 new video slot terminals also created a revenue stream for the tribe. The agreement funnels 5 percent of the new slot revenue into a Tribal Development Fund. To date, the Narragansetts have access to about $400,000 to be used for education, housing, health and social services and economic development, money the tribe won’t touch until the language governing its use is clarified. Nonetheless, House Speaker William J. Murphy Jr. and Rhode Island Economic Development Director Saul Kaplan say they stand ready to assist the tribe in a future nongambling venture.

“We have been offering our assistance to explore any and all opportunities for the entire Narragansett tribe,” Kaplan says. “It’s an exciting time for our state, and the Narragansett tribe is in the middle of an innovation economy.”

And now that the U.S. Supreme Court has let stand a U.S. Circuit Court of Ap-peals ruling last May, affirming the state’s right to execute the search warrant that closed the smoke shop and arrest tribal members who resisted, Carcieri believes the two governments can move forward.

“It clarifies the relationship between the tribe and the state. Until now, there has been an ongoing disagreement,” says Carcieri’s spokesman, Jeff Neal. “There can be no disagreement any longer. From the governor’s point of view, it’s a positive development. It sets the stage for the state and tribe to work together more effectively.”

But from Chief Sachem’s view, the Nar-ragansetts’ sovereignty remains unsettled.

“That decision was a narrowly focused decision on one issue,” Thomas says. “In my mind, the U.S. Congress has not clearly laid out what each entity has the right to do and not to do.”

The First Circuit Court of Appeals is poised to provide more direction. In Jan-uary, the full court reheard an appeal by the state and Charlestown of the Bureau of Indian Affairs’ decision in 1998 to take thirty-one acres in trust for the tribe to build housing. The issue is whether the terms of the 1978 agreement apply to the parcel outside of the original settlement lands. The decision has such widespread implications for tribal sovereignty and gaming, governments in and out of Indian Country are watching closely.

The losing side, no doubt, will appeal to the U.S. Supreme Court. If the tribe wins the last legal round, the Narragansetts will, finally, have a small chunk of the best brand of sovereignty available. Those trust lands may tie the tribe to the federal government, but for the Narragansetts, the second-best solution is better than no solution at all.

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