However, the state of Rhode Island, fearing the tribe really wants to create a tax-free zone or build a casino, sued to block the Narragansetts from putting the land into federal trust, which would essentially free it from state and local law.
On Monday, their fight reaches the U.S. Supreme Court in a case being closely watched across the country because it could determine how tribes recognized after the 1934 Indian Reorganization Act are allowed to buy, govern and use land.
States' rights factor heavily into the case. The Bush administration sides with the tribe, arguing that the 1934 act allows it to take land into trust to benefit American Indians regardless of when their tribes were recognized.
Rhode Island and 21 other states want the Supreme Court to limit that authority because states lose control over tribal trust land within their own borders. They say trust lands can alter the character of surrounding communities, especially when casino income allows tribes to embark on major projects.
Rhode Island Attorney General Patrick Lynch said allowing the federal government to place the Narragansetts' land into trust would free it from state criminal laws and from safety and zoning rules, as well as allow operation of tax-free shops that undercut a financially struggling state's revenue collection.
"Criminals theoretically could go commit crimes in the rest of Rhode Island and hide on that land, and we'd be unable to go get them," Lynch said.
Narragansett Chief Sachem Matthew Thomas, leader of the 2,400-member tribe, scoffs at the notion that tribal land would become lawless and notes that many states have learned to coexist with tribal reservations. His tribe hopes to use its sovereignty as a bargaining chip to stimulate development.
"If you can give someone incentives to come to you and do business with you, that's how you draw them," Thomas said. "Where if you have nothing to offer, no one's going to come around."
The Supreme Court must decide whether the U.S. secretary of the interior can hold land in trust for tribes like the Narragansett, which was federally recognized after the 1934 law was enacted. The court also will have to clarify whether a 1978 land settlement between the tribe and Rhode Island puts limits on new trust lands in the state.
After buying the land in Charlestown, the tribe started construction on a housing complex for the elderly, but work stopped because of mismanagement and legal disputes, leaving a dozen empty houses. Thomas said he wants to complete the project and pursue some form of "economic development" on the site. He will not rule out gambling, and the tribe has unsuccessfully sought approval to build a casino in Rhode Island in the past.
Voters rejected a state constitutional amendment in 2006 that would have allowed the Narragansetts to open a casino in West Warwick.
Lawyers for the state and town leaders in Charlestown argue the Narragansetts cannot place their land in trust under the Indian Reorganization Act because the tribe was not recognized when it was passed. In their view, Congress wanted the act to help tribes that lost millions of acres during a forced assimilation campaign that began in 1887 - and the Narragansetts aren't one of them.
Disbanded by Rhode Island lawmakers in 1880, the Narragansetts sold off nearly all their remaining land in a murky deal and were not recognized by the federal government until 1983.
Indian rights advocates say Congress never meant to cut off tribes recognized after 1934 and say the act was supposed to set a template for future relations with tribes.
It is unclear how many tribes could be affected by a ruling in the Narragansett case. State and town attorneys estimate that several hundred tribes recognized after 1934 could find themselves unable to place new land into trust under the act if Rhode Island prevails.
Richard Guest, an attorney for the Native American Rights Fund, believes the number is more likely in the dozens. The legal fund wants to make sure any ruling does not go too far.
"We are concerned that they could reach broader decisions and reopen these challenges that go across the board," Guest said.