U.S. District Court (for the Western District of New York) Judge Richard J. Arcara on Thursday, October 14th extended indefinitely his ban on state taxation of cigarette sales by the Seneca Nation and other Indian tribes.
But it was not a complete victory for the Senecas and their supporters.
In one of two rulings, Arcara extended a temporary restraining order that prevents the state from collecting taxes on cigarette sales by Indian-owned businesses to non-Indians. The temporary order, which the judge initially issued during the summer, had been scheduled to end today. judge initially issued during the summer, had been scheduled to end today.
Arcara said Indian tribes throughout the state would "suffer irreparable injury" if he did not extend the temporary order. He said thousands of smoke shop workers would be likely to lose jobs if the state taxation begins now. The judge also voiced concerns about public safety if he does not extend the order. He said he is concerned about the threat of violence by Indian protesters if the taxation begins.
Arcara also filed a second order in which he turned down some of the arguments that Indian tribes have presented to fight off taxation. He said lawyers for the Seneca Nation and the Cayuga Indians have "failed to demonstrate a likelihood of success" on their claims that the state taxation plan is unconstitutional.
Previous decisions in federal courts "make clear that the [Indian tribes'] right to tribal self-government is not impeded by New York's decision to impose a tax-collection duty on sales by Indian retailers to non-members," Arcara wrote, "even if that decision carries with it the inevitable consequence that the [tribes'] coffers will suffer as a result of lost cigarette sales."
While Seneca Nation leaders and protesters publicly insist that the state's taxation efforts violate Indian treaties, that argument has not been advanced by the tribe's lawyers in the litigation before him, Arcara said.
In its legal arguments, the Seneca Nation "expressly acknowledges that, as a general principle, New York State has the authority to require reservation retailers to collect excise taxes on sales to non-Indians," Arcara wrote.
"This point is significant. New York estimates that of the 10 million cartons [of cigarettes] sold last year by [Seneca] retailers, less than 70,000 were purchased by Seneca Nation members for their own personal consumption. Under [previous federal court rulings], the vast majority of sales made by reservation retailers are taxable," the judge wrote.
Arcara said he has already been informed by Seneca and Cayuga lawyers that they would appeal his ruling.
In his view, he wrote, the best course of action is to extend his temporary restraining order while a higher court hears legal arguments on the controversial case.
The lawsuit filed by the Senecas and Cayugas is not the only case on the issue pending before Arcara; he has similar cases filed by the St. Regis Mohawk tribe and the Unkechauge tribe. Another case filed in Utica by the Oneida Indians is expected to be transferred to him. (New York State - tribal lawsuits may be merged within federal court..)
The bottom line, according to many court observers, is that the state could eventually succeed in its efforts to tax Indian cigarette sales, but the multiple legal challenges could block taxation for months or even years.
Reggie Crouse, a Seneca businessman from Salamanca who closed his small smoke shop in June, after the federal Prevent All Cigarette Trafficking Act took effect in June. (U.S. Federal District Court Judge refuses to further delay enforcement of Prevent All Cigarette Trafficking Act took effect (PACT Act)..) The new law bars the U.S. Postal Service from delivering commercially sold cigarettes through the mail. "A lot of us shut down after that, because that's how we sent our product out -- through the mail," Crouse said.
Reference: Tax ban extended on Indian cigarettes Arcara cites likely loss of jobs at smoke shops by Dan Herbeck, News Staff Reporter, BuffaloNews.com, 10/14/2010.
Some related news briefs:
New York State - tribal lawsuits may be merged within federal court..;
U.S. Supreme Court - rejects appeal from Indian merchant who wanted an Idaho Supreme Court ruling overturned..;
New York State - now the Oneida Indian Nation gets restraining order from federal judge.;
New York State - state court clears way for state to collect cigarette tax - on to federal court..;
New York State - U.S. District Judge extends order blocking state from collecting taxes, hearing Sept 14th..;
New York State - cigarette tax collection from Native American sales pushed off until 5-judge panel decides..;
New York State - Seneca Nation and other Indian Tribes get injunction from federal judge delaying tax collection on cigarettes..;
New York State - Governor Patterson will not tax cigarettes sold among Native Americans..;
New York - Senecas asking for Bloomberg to resign over remarks he made..;
New York State - Seneca Indian Nation files sued to block enforcement of a plan to collect cigarette taxes..;