Associated Press - Friday, June 20, 2003





BUFFALO -- A judge reserved decision Thursday on whether to halt the state's newly enforced ban on Internet cigarette sales after lawyers for several online retailers argued it was unconstitutional.





The Online Tobacco Retailers Association, or OLTRA, along with a Seneca Indian retailer, two out-of-state online sellers and two disabled consumers, asked U.S. District Judge William Skretny for a temporary restraining order while their legal challenge makes its way through the court.





The group ultimately wants the ban thrown out. "This is a constitutional issue. The state has overextended their authority," said attorney Margaret Murphy, who argued the ban harms interstate commerce.





Although the statute prohibiting the direct shipment of cigarettes to New York consumers was passed as public health law, Murphy argued the true purpose was to raise revenue by forcing sellers not subject to state tax rules -- such as sovereign Indian nations -- out of the market.





"They're trying to funnel it so their taxes are going to be collected," Murphy said.





Assistant Attorney General Stephen Gawlik maintained the statute's purpose was to keep cigarettes out of the hands of children.





"The primary purpose is public health," he said. "The fact that it has an indirect effect on taxes is immaterial."





As long as the law treats both in-state and out-of-state sellers equally, he said, it is legal.





Representing Gov. George Pataki, Attorney General Eliot Spitzer and Health Commissioner Antonio Novello, Gawlik pointed to a February ruling by a federal appeals court in New York City upholding the ban.





The court, overturning a lower court decision, ruled the law did not discriminate against interstate commerce.





"The court of appeals has already made this decision," Gawlik said. "It's our position that there's nothing here to argue."





The state Legislature adopted the ban on Internet cigarette sales after the state in 2000 increased the cigarette excise tax from 56 cents per pack to what was then a nation-high $1.11 per pack.





The increase was followed by a loss of tobacco business at New York stores to Indian reservations and the Internet. In 2002, the cigarette excise tax was raised to $1.50.





The statute originally was to take effect Nov. 14, 2000, but was held up by legal challenges. The state began enforcing it Wednesday.