Yakama Nation is suing state

The Yakama Nation and several cigarette retailers and distributors on the reservation have sued the state of Washington over cigarette taxes, the latest move in a long-running dispute over treaty rights.

The lawsuit, which seeks to block the state from taking what the tribal plaintiffs see as illegal enforcement action, was unsealed Thursday in U.S. District Court in Yakima.

Officials representing the Yakama Nation and attorneys for the state Department of Revenue and the Liquor Control Board are expected to hold a telephone conference with a federal judge this morning.

The judge will consider the Yakama Nation's request for a temporary restraining order against the state regarding enforcement of the state's tobacco tax.

The lawsuit stems from the state's decision in July to drop a tobacco compact with the Yakama Nation. State officials attributed their decision to persistent violations in untaxed sales and difficulties in resolving differences over the terms of the compact.

The compact was intended to stop state enforcement raids on contraband cigarettes while allowing a way for the tribe to collect most of the tax revenue that would be paid if customers purchased their smokes off the reservation. The tribe retained the money for its own programs.

The majority of retailers statewide must collect $20.25 per carton; the compact brought in $16.20 and had been expected to increase by less than $2.

The 9th Circuit Court of Appeals has ruled that the Yakama Nation's Treaty of 1855 bars the state from infringing on tribal commerce by seizing loads of untaxed cigarettes headed for the reservation. But state and tribal officials continue to struggle over sales to non-Indian customers and how those sales should be monitored.

The state has long argued that tribes' failure to collect the state tax creates an unfair price advantage for off-reservation retailers.

The lawsuit counters that the tribe shouldn't have to collect the tax for the state and that the state has overstepped its bounds in threatening action against several tribal retailers and distributors if they don't comply with state tax regulations.

Heidi Irvin, an assistant attorney general who represents the Department of Revenue, declined to comment on the case. The lawsuit includes a 25-page complaint and numerous exhibits, mostly declarations from tobacco retailers and distributors.

"We just started getting the papers this afternoon and haven't had a chance to read through them," Irvin said Thursday.

The plaintiffs' Spokane attorneys, Theresa L. Keyes and J. Michael Keyes, could not be reached for comment.

* Mark Morey can be reached at 577-7671 or mmorey@yakimaherald.com.

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