A federal judge''s has been declared a major victory for the Seneca Nation of Indians and other tribes in the state that have built a multimillion-dollar business selling tax-free cigarettes by mail order, telephone and the Internet.
In a 72-page decision, U.S. District Judge Loretta A. Preska ruled in Manhattan that the state law making the shipment or transport cigarettes sold via the Internet, mail order or telephone a crime is "unconstitutional . . . and void."
Joseph F. Crangle, attorney for the Seneca Sovereign Partnership, said the ruling is significant on the issue of Indian sovereignty.
"Indian reservations located within New York State are not part of the state, and therefore, direct sales from such reservations are not "in state'' sales," Crangle quoted from the ruling.
Joseph Conway, Gov. George E. Pataki''s press secretary, called the decision "disappointing."
"The court struck down a law intended to save lives by keeping children from smoking." he said. "We plan to work with our federal delegation to try and get this much-needed protection in place."
The law, approved last August by the State Legislature and signed by Pataki, was to have taken effect Jan. 1. The law would have penalized such companies as United Parcel Service and Federal Express for delivering reservation cigarettes not bearing state tax stamps.
The law was challenged in October by Brown & Williamson Tobacco Corp., the Louisville, Ky., cigarette manufacturer that had announced it planned to sell cigarettes - with all applicable state and federal excise taxes paid - via the Internet.
The company argued the law, the first of its kind in the nation, was an "unconstitutional interference with interstate commerce."
At the time, Preska issued a temporary restraining order blocking enforcement of the law pending a decision on the challenge - particularly in regard to interstate commerce.
Tax-free cigarettes, meanwhile, have continued to shipped from Indian reservations.
The state argued that Internet, mail- and phone-order sales of cigarettes pose a "serious threat" to the public health, make it easier for children to obtain cigarettes and "enable smokers to evade state excise taxes" by ordering from the Indians.
Both the Indians and the tobacco company, however, insisted they had procedures to prevent minors from obtaining cigarettes.
Preska''s ruling also reiterated statements made in her restraining order that the state had other options available to keep cigarettes out of the hands of children and collect taxes that would place less of a burden on interstate commerce.
Comway said no decision has been made on appealing the Preska ruling.
Crangle called the ruling "a reaffirmation of the 1866 Supreme Court decision that held Indian "reservations are wholly exempt from state taxation.'' "
"The only question remaining is, when will anti-Indian self-interest groups finally understand the message?" Crangle said.