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PACT Act stopped temporarily

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Thursday, 01 July 2010

PACT Act stopped temporarily By Gale Courey Toensing Story Published: Jun 30, 2010 BUFFALO, N.Y. – A district court judge has stopped the implementation of a new law that would effectively put out of business all Native American Internet mail order cigarette sales. U.S. District Judge Richard J. Arcara, of Western District Court of New York, issued a temporary restraining order June 28, stopping the U.S. government from enforcing the Prevent All Cigarette Trafficking Act, which would prevent the shipment of cigarettes through the U.S. Postal Service. The act was supposed to go into effect the next day. Aaron Pierce, a Seneca Nation of Indians citizen and business owner, sought the TRO and a preliminary injunction, claiming that the PACT Act is unconstitutional and targets Native mail order cigarette businesses. He sells untaxed cigarettes through Internet mail order sales at his Red Earth and Seneca Smokeshop on Seneca territory. He brought the action against the U.S. government June 25. In issuing the TRO, Arcara said Pierce had demonstrated the three required standards: he would suffer irreparable injury without a TRO in place; he had demonstrated a likelihood of success on the merits of his claim that the PACT Act violates various provisions of the Constitution; and a TRO is in the public interest. The National Association of Convenience Stores, a dedicated foe of Native cigarette sales, was not pleased by the court action. “We are very disappointed in the ruling and reviewing all possibilities for a legal response. NACS was a strong proponent for passage of the PACT Act and worked for years to obtain its enactment,” said Lyle Beckwith, NACS senior vice president of government relations. “We will not stop fighting.” President Barack Obama signed the PACT Act into law at the end of March. In addition to banning the U.S. Postal Service from delivering cigarettes and certain other tobacco products, the act also requires online cigarette sellers to pay all federal, state and local taxes and affix tax stamps before delivering any products to any customers; requires sellers to register with the state where they are based and make periodic reports to state tax collection officials; and requires sellers to verify the age and ID of online customers when they purchase cigarettes or other tobacco products and when they receive them. Violators of the act could be subject to civil fines and face felony charges, including a possible prison sentence of up to three years. Pierce’s complaint claims the PACT Act violates the Commerce Clause, the Import-Export Clause, the Due Process Clause, the Equal Protection Clause, the 10th Amendment, the principles of federalism, and Native American treaties. He claims, for example, that the Commerce Clause is violated because, among other things, it puts an undue burden on cigarette sellers to collect taxes in the states where their cigarettes are delivered rather than where they are sold, transferring Congress’ power to tax interstate commerce to state and local governments. “The PACT Act’s burden on purveyors is not a minimal burden; rather it is an extraordinary burden. In contrast to requiring a retailer to collect a tax from a consumer who is physically in the retailer’s presence, on behalf of the state in which the retailer is located, the PACT Act requires purveyors to comply with thousands of state and local tax statutes, regulations and rules as well as any other cigarette legislation across the country, which, given the Commerce Clause, have no application to them,” the complaint says. Even the act of Congress delegating its legislative power to tax to state and local governments is impermissible and unconstitutional, the complaint says. Pierce’s complaint says the PACT Act violates due process rights because it is “unconstitutionally vague” to the point that it is impossible for him or other vendors to figure out its compliance requirements, “yet, non-compliance will result in several criminal penalties.” The PACT Act violates the equal protection rights of Pierce and other Native Americans “by failing to recognize Native American sovereignty. Regardless of whether Congress intended to single out Natives, the act will have that effect. Unlike a non-Native retailer, by virtue of their sovereign rights, Native retailers can sell cigarettes to other Natives without collecting state sales and use taxes. Yet, under the PACT Act, Red Earth faces the peril of civil and criminal penalties if it continues to exercise those sovereign rights. As a result, the act applies more forcefully against Native retailers than it does against non-Native retailers,” the complaint says. The lawsuit also claims the PACT Act is “motivated by animus” in targeting “remote sellers of cigarettes” and that violates the plaintiff’s equal protection rights. “When the Supreme Court has examined legislation that it found to have been motivated by animus toward a politically-unpopular group, it has been willing to strike down such legislation under a ‘mere rationality’ test,” the complaint says. The PACT Act is irrational, the lawsuit asserts, because it presumes all Internet and other remote tobacco sellers are not law abiding simply by virtue of being remote sellers, and it presumes that cigarette traffickers are more prone to buying cigarettes from remote sellers than point-of-sale sellers. The complaint says Congress exposed its animus toward remote sellers in the PACT Act’s purported purpose to have “remote sellers comply with the same laws that apply to law-abiding tobacco retailers.” “This language reveals an explicit and unfounded presumption that all remote sellers of cigarettes are criminals (and) raises a serious question regarding the legitimacy of Congress’ purpose.” Pierce could not be reached for comment. His attorney, Lisa A, Coppola of the Buffalo firm of Rupp, Baase, Pfalzgraf, Cunningham & Coppola, issued a statement saying she is “looking forward to the final resolution of this matter as soon as possible.” A hearing is scheduled for July 2. http://www.indiancountrytoday.com/home/content/97517284.html

 

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