CATTARAUGUS RESERVATION, N.Y. - In a move to protect one of its strongest business enterprises, the Seneca Nation filed suit in federal district court challenging a New York state law banning the sale of cigarettes over the Internet. In its complaint, the nation alleges that the law is both unconstitutional and a violation of Seneca sovereignty.
"If enforced, the (law) would severely restrict the manner in which Native American retailers in New York have been able to transact business for years, and would represent unlawful interference with the sovereignty of the Nation," wrote Seneca attorneys in court briefs. "Revenue generated through the sale of tobacco products by Native American retailers has assisted in increasing the standard of living for all members of the Nation."
The Senecas are New York's most prominent online Indian tobacco retailers. According to a recent estimate, Seneca-owned businesses involved in the online cigarette trade employ some 1,500 people. The Nation licenses all tobacco merchants operating on its territory; proceeds from the licensing fees support a number of Nation-provided services.
The law, originally enacted in 2000, prohibits the sale of cigarettes ordered both by mail and over the Internet. State officials began enforcing the measure last June after U.S. District Court Judge William M. Skretny declined to stop them.
The legislation was originally touted as a measure to both protect public health and to limit minors' access to tobacco, but some critics believe its real intent is to force New Yorkers to physically purchase their cigarettes from actual New York stores, thus boosting state tax revenue.
Two other legal challenges, both filed last year, to the Internet tobacco sales ban are also pending before Judge Skretny. One is led by the Online Tobacco Retailers Association and includes a Seneca retailer, out-of-state online retailers and disabled smokers. A pair of Seneca business owners filed the other action.
Sales tax collection
In other news of import to the Senecas and other New York tribes, Governor George Pataki on Jan. 20 asked the Legislature to postpone for a year its attempts to collect sales taxes on reservation transactions. The governor wants another 12 months to negotiate price or tax parity agreements with the various state tribes involved in retailing.
"We appreciate the fact that the governor wants to engage in a dialogue with the Indian nations on this issue," said Rickey L. Armstrong Sr., Seneca Nation president, in a Jan. 20 press release. "We recognize this as a positive step by the governor in attempting to achieve a resolution to this issue that is respectful of our sovereignty."
Facing a massive budget deficit, the state legislature last year directed Pataki to enforce the collection of sales taxes on reservation sales of fuel and tobacco to non-Indian customers. In 1997, Pataki halted attempts to collect state taxes on reservation transactions in the wake of blocked Interstates and threats of violence. He expressed his recognition of tribal sovereignty at that time. This experience surely swayed Pataki to pursue a negotiated settlement.
This time, legislators had originally set Dec. 1, 2003 as the deadline to strike a deal with the tribes or to begin tax collections. As that date neared with no deals on the horizon, Pataki got the deadline pushed back to March 1. This still would have allowed legislators to book a month of tax revenue before the state's new fiscal year begins April 1.
There was no immediate word from legislators regarding the 52-week postponement. To the pessimistic, the fact that Pataki wants a whole year could mean that no tribes are anywhere close to a tax agreement. Or it simply could reflect the fact that the complex inter-mingling of tax, land claim and casino revenue sharing issues will take some time to resolve, regardless of whatever progress may have been made to date.