Yakama treaty protects smokeshop owners from prosecution

Monday, May 21, 2007  

Members of the Yakama Nation of Washington can't be prosecuted under a tobacco contraband law, a federal appeals court ruled on Friday.

After their smokeshop was raided in June 2004, Harry Smiskin and his son, Kato, were indicted for allegedly violating the federal Contraband Cigarette Trafficking Act. According to government prosecutors, the two men failed to notify the state of Washington that they were transporting large quantities of cigarettes without state tax stamps.

But in a unanimous decision, the 9th Circuit Court of Appeals threw out the charges against the Smiskins. A three-judge panel said prosecution under the contraband law violates the Yakama Treaty of 1855 because it prevents tribal members from free use of public highways and interferes with tribal commerce.

"Tribal members were not required to notify anyone prior to transporting goods to market at the time of the treaty, and the treaty guaranteed to them the same rights today," Judge Richard A. Paez wrote for the majority.

The 20-page decision builds on an earlier case involving the "Right to Travel" provision of the treaty. In Cree v. Flores, the 9th Circuit blocked the state of Washington from issuing citations to Yakama logging businesses that lacked state licenses.

"We have already established that the Right to Travel provision 'guarantee[s] the Yakamas the right to transport goods to market for 'trade and other purposes,'" the court said, quoting Cree.

The decision comes amid federal and state efforts that have targeted reservation smokeshops. Just last Tuesday, federal agents raided three Indian businesses in Washington as part of "Operation Chainsmoker," a major investigation into alleged sales of cigarettes without state tax stamps.

That same day, a federal grand jury indicted an Indian business owner for allegedly selling untaxed cigarettes. And back in June 2003, federal agents made a record-breaking seizure of tobacco products on reservations in Washington and Idaho.

Additionally, the state of Washington terminated its tobacco compact with the Yakama Nation this past February. State officials claimed the tribe allowed tobacco to be sold without proper tax stamps -- a major issue in the Smiskin case.

Under the compact, the Yakama Nation collected a tax equivalent to the state's but retained all of the revenues -- even on sales to non-Indians. Under a U.S. Supreme Court case from 1980, the state has a right to tax tobacco sales to non-tribal members.

But without an agreement, the state Department of Revenue said the tribe has to turn over tax revenues from non-Indian transactions. Cindi Holmstrom, the director, said she would inform the Bureau of Alcohol, Tobacco, Firearms and Explosives to start enforcing the Contraband Cigarette Trafficking Act on the tribe.

However, the 9th Circuit's decision affects a key enforcement mechanism in the law. Congress defined "contraband" as 10,000 or more cigarettes that "bear no evidence of the payment of applicable state or local cigarette taxes in the state or locality where such cigarettes are found" -- in other words, it's illegal in Washington to transport tobacco products without state notification.

The Department of Justice argued that notification is critical because it allows the state to enforce tax collections on the sale of goods to non-Indians. But the court said nothing in the law changes the Yakama treaty.

"There is no evidence that Congress intended to abrogate Indian treaty rights through adoption of the CCTA," Paez wrote.

The 9th Circuit also said there are other ways for the state to enforce its rights without trampling on the treaty. "As the [Supreme] Court noted, states have a number of 'adequate alternatives' available to enforce taxes on cigarettes sales to non-Indians by tribal members," Paez wrote.

In tribe filed an amicus brief to defend its treaty rights. "The Yakama Nation thus understandably assigned a special significance to each part of the treaty at the time of signing and continues to view the treaty as a sacred document today," the court noted.

Chairwoman Lavina Washines, the first woman to run the tribe, questioned the tobacco tax compact after she was elected. Along with a separate agreement for gasoline taxes, she said they were signed without proper approval of the tribal council.

"It's an everyday fight to protect our rights, even this day in 2007," Washines told The Yakima Herald-Republic of efforts to impose state laws on the tribe.

Get the Decision:
US v. Smiskin (May 18, 2007)