An excerpt from the Buffalo News, via Pechanga:
WASHINGTON — Gov. David A. Paterson warned of possible “violence and death” if the State of New York actually tries collecting taxes on cigarettes sold from Seneca Nation of Indians territory, but lawyers in the know think that “appeals and amicus briefs” are more likely.
Rather than a rage of tire-burning along the Thruway, years of litigation are the more likely result of the state’s latest attempt to collect taxes on cigarettes sold on reservations to non-Indians, legal experts say.
The litigating has already begun in the Buffalo courtroom of U.S. District Judge Richard J. Arcara, and it is likely to continue for years, even though the U.S. Supreme Court in 1994 said that New York could collect such sales taxes. The legal fight continues because the high court did not give the state carte blanche to collect those levies any which way.
In fact, the 16-year-old decision in New York v. Attea left the Senecas plenty of legal room for courts to explore in later cases. For example, that case did not address the argument that the Senecas love to make publicly but that they have been reluctant to use in court: that the state’s effort to collect cigarette taxes on reservations is a violation of their treaty rights.
That’s just one of the open questions that could keep the Senecas’ tobacco business in court and on life support for a long time — even though the Senecas are likely to lose in the end. After all, in five cases from five states, the high court has approved efforts to tax sales to non-Indians on Indian land.
Despite those decisions, “the court specifically left a lot for later” in the 1994 case involving tobacco sales on New York reservations, said Joseph E. Zdarsky, the Buffalo lawyer who represented tobacco wholesaler Milhelm Attea in that Supreme Court case. Much of what the high court left undecided could be decided in the case the tribe filed before Arcara that takes issue with the state’s tax plan.
The tribe also filed a separate lawsuit challenging the PACT Act, the recently enacted federal law that bans the mailing of cigarettes. But given that the federal courts rarely overturn an act of Congress, legal experts dismissed that lawsuit as one with no future.
Similarly, they said the case the Senecas filed in state court against the state’s tax plan is not as significant as the tax case the tribe brought before Arcara — which, like other similar Indian tax cases, could be in the federal court system for years.
“These cases tend to go all the way,” Zdarsky said — that is, all the way to the Supreme Court. That’s because the federal courts have tended to decide Indian taxation cases narrowly, based on the particulars of each case, rather than issuing sweeping pronouncements.
In the tax case before Arcara, the Senecas and the Cayuga Nation challenge the particulars of the tax collection plan the State Legislature implemented earlier this year. The tribes say the plan interferes with the tribes’ sovereign rights under federal law while placing an undue burden on tribal retailers.
“The Legislature’s June 2010 amendments to the Tax Law and the Department’s Emergency Rule threaten the Nation, its members, and its Nation-licensed businesses with immediate, concrete, and irreparable harm,” the Senecas say in one of their court filings.
That’s very different from what was argued in the 1994 Supreme Court case.
The Senecas weren’t even a party to that case. Instead, that was a dispute between the state and a tobacco wholesaler who didn’t want to act as a tax collector on Indian land.
That means the argument the Senecas are making now — that they are being harmed by a new state law — has never been fully fought out in court.
The high court also said in that 1994 case that it was ruling narrowly, on the tobacco tax regulations that the state had imposed at the time and on whether they violate federal laws governing Indian traders.
“This case does not require us to assess for all purposes each feature of New York’s tax enforcement scheme that might affect tribal self government or federal authority over Indian affairs,” said Justice John Paul Stevens, writing for a unanimous court.
What’s more, Stevens mentioned in a footnote that the high court was not asked to decide whether the taxation plan violates the Senecas’ treaties with the U.S. government.
While making that case on billboards, the Senecas keep that argument out of their court cases because they maintain that their treaties are agreements between two sovereign governments — and thus should not be subject to interpretation by U.S. courts.
But other Indian law experts note that the Senecas could make that argument in court if they wanted to, citing a 1794 treaty between the U.S. and the Six Nations of the Iroquois Haudenosaunee Confederacy, which includes the Senecas.
“Attea doesn’t answer the real question presented squarely here — whether the 1794 Treaty of Canandaigua protects the Haudenosaunee communities’ economic and commercial rights,” said Matthew L.M. Fletcher, director of the Michigan State University Indigenous Law Center.
That treaty grants the tribes “the free use and enjoyment” of their lands. That could conceivably be interpreted to bar another government from forcing Seneca merchants to be tax collectors, which is essentially what the state wants to do.
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