A federal mediator yesterday waded into the dispute between officials in Aquinnah and the Wampanoag Tribe of Gay Head (Aquinnah) over the tribe's plans to form its own police force.

The recipient of more than $300,000 in grant money from the U.S. Department of Justice, the tribe is already interviewing candidates for a chief of police to head up tribal law enforcement.

"There is going to be a tribal police department," tribal chairman Beverly Wright told the Gazette shortly after she and two other members of the tribal council met with Martin Walsh, the regional director of the Department of Justice's community relations services in Boston.

Mr. Walsh met separately with town selectmen and town counsel Ron Rappaport and then later with Wampanoag leaders at tribal headquarters.

Neither town nor tribal officials would disclose whether the meetings broke any new ground, but the involvement of a federal mediator signals a new attempt to bring the two sides together. Last year, Mr. Rappaport asked the state attorney general to help mediate, but that process fell apart after just three meetings.

The tribe first announced plans to man its own police force two years ago, but the controversy around tribal law enforcement had already surfaced that summer when tribal rangers began carrying semi-automatic pistols while patrolling the Gay Head Cliffs.

Aquinnah police chief Douglas Fortes immediately protested. Chief Fortes, who is himself a tribal member, questioned whether the tribe had the right to arm its rangers.

Mr. Rappaport argued that the tribe does not have that right, citing language from state and federal settlement acts from the 1980s that ensure that lands held in trust for the tribe "shall be subject to the civil and criminal laws, ordinances and jurisdiction of the Commonwealth of Massachusetts and the town of Gay Head," now Aquinnah.

Tribal leaders and a top official at the federal Bureau of Indian Affairs, David Nicholas, claim the Wampanoags have the authority to arm their rangers and to establish their own police force.

Mrs. Wright has pointed to the 1987 law that gave federal recognition to the Wampanoags, arguing that the law also assured the tribe could "assume concurrent jurisdiction over its own members."

While the federal mediator tries to broker a compromise, the real issue of tribal sovereignty could be decided in a lawsuit filed last year against the tribe by the town after the tribe built a small shed at its shellfish hatchery without a town building permit.

The outcome of that case could well guide what happens in the current dispute over tribal police, according to several sources. A federal judge last month remanded the lawsuit back to Dukes County superior court, but a court date has not yet been scheduled.

But the tribe's move to establish its own police force comes at a time when the tribe is facing what leaders are calling a fiscal crisis.

In a letter to the Department of Justice last May, Mrs. Wright detailed a grim financial picture of the tribe. Losses from business enterprises could total more than $750,000, she wrote, adding that budget deficits in the last three years have hovered at a half-million dollars.

Economic turmoil at the tribe has been well publicized in the last two years. Back Alley's, a delicatessen in West Tisbury owned by the tribe, sat empty for two years. And last spring, the tribe decided to give up running Alley's General Store four years after they paid $475,000 for the business.

In light of the money troubles, Mrs. Wright asked the federal agency for a waiver that would save the tribe from paying its full 25 per cent matching share of the grant award, but the Department of Justice denied the request.

Money is just one reason that some tribal members oppose the creation of a tribal police force. Spencer Booker is one of roughly 100 people who live in housing on tribal lands in Aquinnah. Earlier this month, residents gathered for their monthly meeting and took up the issue of tribal police.

Mr. Booker said tribal members are well aware of the financial losses sustained by the tribe in recent years. "Extending ourselves at this juncture is not a wise business decision," Mr. Booker said.

"The general consensus of the room was that we're not in favor of the police force," he added. "We're too small of a town, and we feel the police in town do a fine job. We're not a giant Indian nation with 100,000 members. We're talking about 30 households."

In addition to Chief Fortes, the Aquinnah police department happens to be manned by two officers who are also tribal members.

Crime is hardly rampant in this town of just under 400 year-round residents. According to the police report for 2001, there were just seven arrests made in the entire year, down from 10 arrests the year before.

Last year, Chief Fortes told the Gazette that the bulk of the police work in Aquinnah revolves around traffic enforcement, ambulance runs and the business of tourism. "Essentially we herd tourists," he said. "In the summer and shoulder seasons, we have all we can handle, and situations do pop up, but we have what I consider to be a very nominal threat level."

Despite that assessment from town police, the tribe has already spent some of its grant money to buy pistols and bulletproof vests. Neither tribe nor town officials could say when the federal mediator would return for more meetings.