New York State - federal judge, temporary restraining order extended until November 12, 2010..

October 28, 2010 - The chief of a Long Island-based Indian tribe thinks mediation -- rather than complex litigation involving dozens of lawyers -- is the way to settle the battle over New York State's effort to tax Indian cigarette sales. "We have always felt that only through negotiation will we have a true resolution of this case," Harry Wallace, chief of the Unkechauge Indian Nation, told The Buffalo News on Tuesday. "Absolutely, the case should go to mediation."

The State Attorney General's Office -- headed by gubernatorial candidate Andrew M. Cuomo -- does not agree.

Wallace commented in federal court after the latest in a series of legal arguments on the taxation issue before U.S. District Judge Richard J. Arcara. Lawyers for the Unkechauge and St. Regis Mohawk tribes want the judge to block state officials from collecting taxes on cigarette sales to non-Indians. Several other Indian tribes, including the Seneca Nation, have similar cases pending in federal courts in Buffalo and Utica.

A temporary restraining order, which prohibits the state from taxing cigarette sales by businesses in the Unkechauge and St. Regis Mohawk tribes, was supposed to expire this Friday, but Arcara extended it until Nov. 12, 2010.

James F. Simermeyer, an attorney for the Unkechauges, asked the judge to send the case to a court-appointed mediator to see if an agreement can be negotiated, but the State Attorney General's Office opposed the request. "It's our view that this dispute is ill-suited to mediation," said Andrew D. Bing, a state lawyer. "Mediation has no reasonable chance to be productive."

The state has already prevailed on several important points in its Seneca Nation case before Arcara, and that would make it more difficult for mediation to be successful, Bing told the judge.

Arcara said he will consider the mediation request.

Bing estimated that the debt-ridden state could collect $500,000 a day if it is allowed to tax sales from Indian-owned businesses to non-Indians. He said the state strongly disagrees with tribal attorneys who claim the tax collections would destroy the right of tribes to govern themselves.

The state says it wants to collect $4.35 a pack from the Indian businesses, the same amount it now collects from non-Indian businesses such as convenience stores, drugstores and grocery stores.

Wallace said his tribe, which has fewer than 1,000 members, has "eliminated poverty" and sent many young people to college on full scholarships because of the Unkechauges' cigarette economy. "In our part of the state, this [taxation] law is going to send people to Pennsylvania or New Jersey to buy cigarettes," Wallace said. "New Jersey and Pennsylvania [business owners] will get rich."

According to Bing, the state believes that, if tribal cigarette sales are taxed, more New York State smokers will flock to convenience stores and other businesses that sell taxed cigarettes.

Reference: Mediation suggested to settle tax battle by Dan Herbeck, The Buffalo News, 10/26/2010.

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