Senecas gain cigarette tax reprieve

The Seneca Nation of Indians won a temporary reprieve Tuesday in its battle to prevent the state from collecting taxes on cigarette sales to non-Indians.

But the tribe's leaders acknowledged that the fight is far from over.

"This is good news, but we still have a lot of work to do," said J.C. Seneca, a smoke shop owner who is the co-chairman of the Seneca Tribal Council. "We can't let our guard down for a minute."

The state's collection of taxes on Native American cigarette sales to non-Indians had been scheduled to begin today.

In a tense courtroom packed with lawyers and Seneca business owners, U.S. District Judge Richard J. Arcara issued a temporary restraining order that prohibits the state from taxing cigarette sales by the Senecas and the Cayuga Indian Nation for at least two weeks.

The state is "temporarily enjoined from implementing, administering and enforcing" the tax law against the Senecas and Cayugas "pending further order of this Court," Arcara said in a brief written order.

The order mentions only the Senecas and the Cayugas because they were the only tribes to contest the state law in Arcara's court.

State officials did not disclose whether they plan to begin tax-enforcement actions today against other tribes in the state. A call to the state Department of Taxation and Finance was not returned.

Arcara will meet with attorneys again Thursday and, within the next few weeks, is expected to issue a more definitive ruling on the state tax issue.

For now, his ruling brings temporary relief to tribal leaders and area police officials who fear that if the tax collections begin, they could ignite hostile and dangerous protests on Seneca Nation reservations in Erie and Cattaraugus counties.

The State Police, the FBI and numerous other law enforcement agencies have been gearing up in recent days for protest actions that could block the Thruway and impede trains passing through the reservations.

They are also investigating a July 5 incident in which someone tried to derail a passenger train with 354 people aboard in Irving. Many police officials believe that the incident was directly tied to the dispute over cigarette taxes.

Supporters of the state law say the Senecas and other tribes have received an unfair advantage for decades because they were not required to collect taxes on cigarette sales. Convenience stores, supermarkets and other non-Indian businesses are required to collect $4.35 per pack.

Arcara's ruling came a day after State Supreme Court Justice Donna M. Siwek ruled against the tribes in a related case. Siwek lifted two injunctions that another judge had previously issued prohibiting the taxation of Native American cigarette sales.

In their challenge before Arcara, Seneca lawyers contend that the taxation would violate Indian treaties dating from as long ago as 1794, but state lawyers say that is inaccurate.

"Judge Arcara's ruling sets the stage for an orderly and thoughtful legal review of what we believe is an illegal, ill-conceived attempt by New York State to use the Seneca Nation and other Indian Nations ... as piggy banks to balance the state budget," said Barry E. Snyder Sr., the Seneca president.

Huge amounts of money are at stake.

Andrew D. Bing of the Attorney General's Office estimated Monday that the deficit-ridden state could collect $110 million in cigarette taxes from Native American businesses in the first six months after the law takes effect.

Seneca Nation leaders say sales of cheap cigarettes -- in addition to casino operations and gasoline sales -- form the backbone of their economy. They say that it is unfair for the state to try to address its budget problems by taxing Indian cigarette sales.

Within the last two decades, Seneca leaders say, cigarette sales have provided jobs for thousands of Senecas and non-Indians, while also turning a relatively few Senecas into millionaires.

Some of the tribe's leaders -- including Seneca and Snyder -- are successful cigarette entrepreneurs.

Seneca told The Buffalo News that if and when the state law does take effect, he will stop selling popular name-brand cigarettes such as Marlboros and Lucky Strikes and will only sell cigarettes made by Senecas.

"We now have our own manufacturers. There are plenty of Seneca-produced cigarettes," Seneca said. "We've made plans to increase our production and our product lines."

He said the tribe will not, under any circumstances, allow the state to collect taxes on Seneca-made cigarettes sold on the reservations.

"We're sticking to our message that the state has no authority or jurisdiction over commerce on our territories," Seneca said. "If state tax agents try to do that, they will be invading our territory. They will be stopped. We will defend our territory."

Robert Odawi Porter, a Seneca Nation lawyer who is running for president of the tribe, and Rick Jemison, chairman of the Seneca Free Trade Association, concurred with Seneca.

"We're all breathing a sigh of relief right now, but we still have to roll up our sleeves and keep fighting this," Jemison said.

Arcara issued his latest ruling after a court session that lasted just four minutes. Carol E. Heckman, a former federal magistrate judge, spoke in behalf of the Senecas during the brief proceeding.

It was the second time this summer that Arcara has temporarily stopped government agencies from enforcing cigarette laws on Native Americans.

In early July, he issued an order temporarily prohibiting the federal government from enforcing the Prevent All Cigarette Trafficking Act against about 140 Seneca businesses.

But on Aug. 12, Arcara ruled against the Senecas, refusing to delay enforcement of the law any further. In that ruling, Arcara said the Senecas "failed to establish a clear likelihood" that their appeals of the law, known as the PACT Act, would succeed.

The PACT Act prevents the U.S. Postal Service from making deliveries of mail order cigarettes.

"We are no longer handling deliveries of any commercial transactions of cigarettes," Karen Mazurkiewicz, Buffalo spokeswoman for the Postal Service, said Tuesday. "The PACT Act is in effect, and we're in compliance."

News Staff Reporter Jay Rey contributed to this report.