Tax free cigarettes will continue to be sold to non-Natives on the Seneca Nation for the meantime.

A New York State Supreme Court judge issued a temporary restraining order on the proposed New York state tax of cigarettes Tuesday. The state cannot collect taxes on the sale of cigarettes to non-Indians on Seneca land until the judge hears arguments in the issue on June 1, the Buffalo News reports.

The issue has been bouncing around in courts for months, as the tribes fight the tax.

Meanwhile, two major tobacco wholesalers said this morning that they have shut off the tobacco supply line to Indian tribes across the state.

“It looks like it’s over,” said Peter Day, president of Day Wholesale in Tupper Lake.

The moves come a day after a federal court gave the state the green light to begin collecting taxes on cigarette sales by Indian retailers to non-Indians.

“We’ll be out of business,” said Frank Attea of Buffalo’s Attea Milhem & Bros.

He said the court decision will force him to close his Buffalo tobacco business, which once had been the major tobacco supplier to the Seneca Nation of Indians. He said 30 workers face the loss of their jobs.

Jenna Cederberg

A roller coaster year in the courts for cigarette tax fights, Indian Country Today recaps the happenings and what it meant for Indian nations.

The “cigarette tax war” is one of ICT’s top stories of 2010.

Much of the turmoil took place in New York, where a law was passed by the legislature to ensure non-Indian residents who bought cigarettes bought on reservations were charged a state tax, to be collected from tribes that have already purchased the cigarettes. That fight is currently tied up in the courts on appeal.

The law provides an onerous system whereby nations can opt into a coupon system to get a refund of the taxes they’ve already paid on tax-free cigarettes sold to Indians, or an allocation system in which a wholesaler can tie up a nation’s entire allocation of cigarettes even if the nation or individual retailers have not ordered stock for the wholesaler. . .

So far, the nations have managed to stop the state from implementing its new tax collection scheme. On Dec. 9, a three-judge panel of the 2nd Circuit Court of Appeals rejected the state’s request to lift injunctions in place that stop the state from collecting cigarette taxes sold on Indian land while several challenges to the tax laws are pending. All of the pending lawsuits against the state have been consolidated into one case in front of the federal appeals court.

Also making waves was the federal Prevent All Cigarette Trafficking Act passed this year.

The federal PACT Act – Prevent All Cigarette Trafficking Act – which had been bouncing from Congress to Congress in various incarnations for a number of years was signed into law by President Barack Obama in April.

The new law bans the U.S. Postal Service from delivering cigarettes and certain other tobacco products – a move that will effectively extinguish the mail order tobacco trade run by the many business owners of the Seneca Nation of Indians and other Indian-owned tobacco businesses around the country.

Jenna Cederberg

The Second Circuit Court of Appeals ruled on Dec. 9 that tribes in New York can continue to sell tax-free cigarettes to non-Natives. This while an ongoing legal battle is being fought to determine if new tax laws written by New York in 2009 are legal, Indian Country Today reports.

The state’s new tax law would force them to pay cigarette taxes on sales to non-Indians by requiring wholesalers to pay for and affix a $4.35-a-package tax stamp on all cigarettes sold in the state, and pass the tax on to Native retailers, Gale Courey Toensing reports.

The court did rule that the five separate suits filed by Tribal nations on the issue will be consolidated.

In recent months, judges in two separate federal courts issued orders prohibiting the state from implementing its new tax scheme.

Judge David Hurd, of the U.S. District Court for the Northern District of New York, issued a preliminary injunction Oct. 14 in a case filed by the Oneida Indian Nation against Gov. David Paterson and other state officials, asking the court to declare the state’s new laws illegal. The laws, which were devised last summer, abandoned the state’s decades-long “forbearance” policy – a hands-off approach that allowed the nations to prosper and become economic engines, contributing billions of dollars to the state and providing thousands of jobs in western, central and northern parts of the state.

Jenna Cederberg

The Seneca Nation of Indians this week took an initial step in what will mostly likely be a years-long process to earn ownership rights and regain a sensitive, important piece of historical land in the Kinzua Dam and hydroelectricity plant.

Indian Country Today reports that Seneca President Robert Odawi Porter announced the nation filed application documents with the Federal Energy Regulatory Commission on Nov. 30 for the license to operate the Seneca Pumped Storage Project.

The current owners’ license expires in 2015, and the process through the FERC could take up to five years.

The dam was built to help with things like flood control, and eventually began being used as a hydropower production plant run by private companies for profit. Opened in 1965, the dam construction meant that more than 800 Seneca people were displaced.

The government forced 147 Seneca families out of their homes on 10,000 acres of their treaty-protected Allegany territory in a fertile valley, and relocated them several miles away. The homes were burned and the land was flooded to build the Allegheny Reservoir. The flooded land drowned significant cultural, sacred and ceremonial sites, including a longhouse and burial grounds.

The hydropower project was already permitted by the federal government before the Seneca Nation was informed of plans for its construction. The nation has never been invited to share in the project’s significant financial benefits.

Jenna Cederberg

New York Gov. David A. Paterson visited western New York yesterday to mark the opening of a new Yahoo! Data Center. But instead of celebration, his arrival was greeted by a protest from members of the Tuscarora and Seneca Indian nations.

WGZ-TV reports that they booed as Paterson’s helicopter flew overhead:

For now, the state cannot collect taxes on Native-sold cigarettes, but that’s only due to a temporary federal injunction. If that is lifted by a federal judge, the governor promises to collect the taxes at the wholesale level.

Natives have said such an action would destroy their economies. They hoped to get the Governor’s attention and that of Western New York, to plead their case.

New York has tried to collect the taxes before, only to back off after protests that briefly closed the New York Thruway. But now the state desperately needs money and it’s estimated the taxes could bring in as much as $200 million.

Gwen Florio

So says this report by Carolyn Thompson of the Associated Press:

BUFFALO, N.Y. (AP) — A New York appeals court on Tuesday lifted a temporary order blocking the state from collecting taxes on cigarettes sold by Native American stores to non-Indian customers.

On Sept. 1, a state appellate judge in Rochester restored a restraining order that barred the state from collecting the $4.35-per-pack tax. But the court’s five-judge panel, which took up the case last week, ruled that the state properly approved regulations for the levy.

A federal judge in Buffalo has already temporarily blocked tax collections from two Indian nations — the Senecas and Cayugas — and was holding a hearing Tuesday in that case.

State officials didn’t immediately comment on the decision.

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Here’s the latest from the Associated Press:

ROCHESTER, N.Y. (AP) — A New York appeals court has held off deciding whether to extend or lift an order blocking the state from collecting taxes on cigarettes sold by Native American stores to non-Indian customers.

On Sept. 1, a state appellate judge in Rochester restored a restraining order that barred the state from collecting the $4.35-per-pack tax. The court’s five-judge panel took up the case Thursday, but ended the session without saying when a ruling would be issued.

A federal judge in Buffalo has already temporarily blocked tax collections from two Indian nations — the Senecas and Cayugas — and scheduled a hearing for Tuesday.

The appellate court order applies to all nine New York tribes battling to preserve their tax-free cigarette

Even before yesterday’s shooting of a security guard outside a Native American-owned cigarette shop on Long Island, tensions were high over New York’s plan to collect taxes on cigarettes sold by Natives to non-Natives. Carolyn Thompson of the Associated Press explores the issue in depth:

CATTARAUGUS INDIAN RESERVATION, N.Y. (AP) — As New York Indian Nation leaders battle in courtrooms to preserve their tax-free cigarette market, tensions are rising on reservations, where the state’s renewed efforts to tax sales to non-Native customers is viewed as yet another attack on Native American rights.

“For 200 years, we have been dealing with efforts to take our land, efforts to take our resources, efforts to take our jurisdiction,” said Robert Odawi Porter, senior policy adviser and counsel for the 7,800-member Seneca nation in western New York, which says its cigarette business is a $100 million-a-year industry.

Trustee Lance Gumbs from Long Island’s Shinnecock tribe called the tax “just another extension of … the genocidal tactics of New York state.”

“Every tribe is committed to fight this issue,” said Gumbs at his smoke shop in Southampton.

Nine New York tribes are in the cigarette business. The $4.35 sales tax would force them to raise their prices and blunt their competitive edge over off-reservation sellers. Tribal leaders say the income loss would devastate economies.

A rally last week alongside the New York state Thruway where it bisects the Senecas’ Cattaraugus reservation was organized as a peaceful “people’s rally.” But there were reminders of 1997 chaos that erupted the last time the state tried to tax reservation sales.

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The saga continues. A federal judge has delayed a final ruling for two weeks on imposing a sales tax – originally slated to start today – on cigarettes sold by the Seneca and Cayuga nations to non-Native customers.

The delayed ruling is prompting a business boom at the Native-owned shops as people stock up on cigarettes in anticipation of a $4.35-a-pack tax hike, WIVB reports.

Gwen Florio