Judge orders county to return seized Cayuga cigarettes

SENECA COUNTY, N.Y. – A Seneca County judge has dismissed an indictment against the Cayuga Nation and has ordered Seneca County to return hundreds of thousands of dollars worth of cigarettes seized two years ago in a raid at the nation’s convenience store in Seneca Falls.

Seneca County Judge Dennis Bender issued his ruling after a 10-minute hearing June 28, according to the Syracuse Post-Standard.

Bender ordered the county to return around $375,000 worth of cigarettes that were taken in December 2008 when Seneca and Cayuga county sheriffs raided the nation’s two Lakeside Trading convenience stores in Seneca Falls and Union Springs. During the raid, the county sheriffs seized 17,600 cartons of cigarettes worth more than $575,000, computers and business records.

The counties had claimed that because the nation did not have an official reservation, the stores were violating state tax laws by selling untaxed cigarettes. The Cayuga Nation argued the stores lie within their former ancestral homeland. They argued the territory is a reservation established by federal treaty and that it has never been disestablished.

After a number of lawsuits and counter lawsuits, the case reached the New York Court of Appeals, which ruled in May in the Cayugas’ favor. In a 4-3 decision, the state’s high court upheld a lower court ruling that said the Cayuga Nation does not have to pay state sales taxes on cigarettes sold at its Lakeside Trading convenience stores because the stores are on qualified reservation land. The ruling also cited the lack of an effective method for the state to collect taxes on cigarettes sold to non-Indian customers on reservations.

But the absence of an effective tax collection method came to an end June 21 when the New York state legislature passed a bill to force Indian businesses to collect state taxes on cigarettes sold on reservations to non-Indian customers by requiring all cigarettes sold on Indian reservations to have “an affixed cigarette stamp.”

The nations can either opt into a tax exemption coupon system for cigarettes sold to their members or be subject to a “prior approval system.” In both cases, the state will determine the number of tax-exempt cigarettes an Indian nation citizen can smoke – roughly seven packs a month.

The Seneca Nation denounced the bill as a violation of treaty rights and vowed to fight it.

Meanwhile, the Cayuga Nation plans to ask a Cayuga County judge to follow Bender’s example and dismiss indictments against the nation in his county and return the cigarettes and computers seized from the nation’s Union Springs store, according to the Syracuse Post-Standard.

The nation also plans to sue Cayuga and Seneca counties for $500,000 because the cigarettes confiscated more than two years ago are past their expiration date and cannot be sold.

A Cayuga spokesman did not return a call seeking comment by press time.

The counties have vowed to ask the U.S. Supreme Court to overturn the state appeals court decision, according to the National Association of Convenience Stores, a lobbying group that vigorously opposes the Indian tobacco trade.

“This action represents a responsibility to protect and defend the economic equality of our business community and the hardworking citizens that we were elected to serve,” said Robert Shipley, chairman of the Seneca County Indian Affairs Committee.

Shipley said the appeal would rest on the court’s determination that the stores lie on reservation land. The counties maintain the land is not a reservation under federal law.

But legal experts say it is unlikely the Supreme Court will take up the issue, because the state appeals court ruled on a matter of New York state law, rather than a more universal matter that would be of consequence all over the country.