In an important test of the reach of tribal sovereignty, California's political watchdog agency is suing one of the state's wealthiest and most influential Indian tribes, accusing it of violating campaign finance reporting laws.

The Agua Caliente Band of Cahuilla Indians, which operates two casinos in and around Palm Springs, argues those laws do not apply to it because it is a sovereign entity. The Fair Political Practices Commission says California has the right to ensure the integrity of its election system.

The case will apparently be the nation's first involving tribal nations' contributions to the political process. With gambling-rich tribes increasingly among the top political donors, the ability of state governments to monitor money in politics could hang in the balance.

The dispute has "enormous potential ramifications for this state and nation," said Jim Knox, executive director of California Common Cause. "It will completely undermine the system of campaign reporting if the state's largest donors aren't obliged to report."

The FPPC alleges that the Agua Calientes, the only tribe in the state with two casinos, was late in disclosing more than $8 million in donations to candidates and causes between 1998 and 2002, a period in which Indian gambling was on the ballot.

The Agua Calientes argue they disclosed all the required information, though not always on the FPPC's forms or on its timetable. The 300-member tribe contends it did so voluntarily and has no legal obligation.

"This case is not about disclosure ... this case is about power," the tribe said in court papers. "Under the distribution of sovereignty among the states and tribes recognized in the U.S. Constitution, no state agency may use a state court to compel a federally recognized Indian tribe to submit to a state statute."

The FPPC replied: "The defendant tribe and its members, as full participants in the government they share with all other citizens of California, are subject to the rules protecting all citizens from undue influence of money and from improper and corrupt practices."

The first hearing in the case is set for Wednesday in state court in Sacramento.

Agua Caliente chairman Richard Milanovich did not respond to interview requests. FPPC chairwoman Karen Getman said she is prepared to pursue the case to the U.S. Supreme Court if necessary.

Before 1998, when Indian gambling was first on the ballot in California, Indian tribes donated little money to political campaigns in the state.

That year, they catapulted to the top of donor lists. They spent millions, mostly to promote Proposition 5 to legalize gambling. The Agua Calientes alone donated more than $5 million to the campaign and were the third-largest donors to legislative races in the state, behind the prison officers union and another tribe, the Morongo Band of Mission Indians.

Proposition 5 passed overwhelmingly but was thrown out by the courts as unconstitutional. Two years later, voters passed Proposition 1A, which amended the California Constitution to allow Indian tribes to conduct Nevada-style gambling. It, too, was promoted by millions in tribal donations.

Since then, Indian gambling has grown into a multibillion-dollar industry in California.

State law requires candidates and groups promoting initiatives to report the contributions they receive. So even if tribes did not detail their donations, much of the information would become public. But it would be piecemeal, not consolidated in one place. FPPC officials argue that it would be nearly impossible to gauge the extent of a tribe's political donations.

Legal experts said the state might have trouble proving it has the authority to enforce campaign finance laws against tribal governments.

The Supreme Court ruled in 1832 that Indian tribes have sovereign immunity from state laws on their reservations. Under a 1953 federal law, California and five other states do have criminal jurisdiction over Indian lands. But states' legal authority to pursue civil litigation such as the FPPC lawsuit is murky.

Around the country, local authorities and Indian tribes have had sovereignty clashes over such issues as cigarette taxes, fire codes and zoning. Campaign finance has not become an issue before in part because tribes have only recently become major contributors.

Most tribes around the country comply with state campaign finance laws, even while some question whether those laws apply to them.

A possible indication of trouble ahead for the FPPC was the unusual refusal by state Attorney General Bill Lockyer to take the case, forcing the agency to hire a private attorney.

"Taking this case into federal court without the best facts possible is a very risky proposition. The federal courts are very deferential to the sovereign rights of tribal nations," Lockyer spokesman Nathan Barankin said.

Barankin said the attorney general's refusal was unrelated to the hundreds of thousands of dollars in tribal donations he has received, including at least $25,000 from the Agua Calientes.