Nebraska state officials apparently seized $13,000 to $14,000 worth of cigarettes from a Ponca tribal smoke shop in Niobrara on Thursday morning, according to the tribe.
Ponca Chairwoman Rebecca White said representatives of the Nebraska Department of Revenue entered the tribe's Ponca Smoke Signals shop in Niobrara at about 11:40 a.m. Thursday. She said they informed the shop's manager that the shop had failed to affix its cigarette packages with a state cigarette tax stamp and began packing up the store's entire inventory of cigarettes.
White said the tribal smoke shop is on federal trust land in Niobrara owned by the tribe. The shop sells only Native-manufactured cigarettes and affixes its own tribal stamp on each carton, she said.
"We have sovereign immunity on our lands, and they are violating our sovereign immunity," White said.
Revenue Department spokeswoman Deepa Buss said the department wouldn't comment on the alleged seizure because it is part of an ongoing investigation. Representatives of the governor's office and the attorney general's office referred questions to the Revenue Department.
A cigarette tax stamp is placed on each package of cigarettes sold in Nebraska as proof that a distributor has paid the state's cigarette tax, according to the Revenue Department's website. However, White said, the Ponca Tribe is not required to pay taxes to the state for the cigarettes it sells, as it is a sovereign nation.
The tribe's Niobrara shop opened in October and is the tribe's second smoke shop. The other, also named Ponca Smoke Signals, opened in December 2009 in Carter Lake, Iowa. The shops sell only tribal-manufactured cigarettes, including Seneca, Signals, Smokin Joes, Sky Dancer and Buffalo brands.
The shops employ 10 people, including three in Niobrara.
The shops are the tribe's only for-profit enterprises, White said.
The tribe lost its federal recognition in the 1960s but regained it in 1990. The Poncas do not have a reservation, but they do have service areas spread across 15 counties in Nebraska, Iowa and South Dakota.
The federal law that restored the tribe gave it the right to put lands into federal trust that would be exempt from federal, state and local taxes, White said.
The Legislature is considering a bill (LB590) that would require tribes to make payments to Nebraska so the state can continue to receive millions of dollars each year through a national settlement agreement that was reached with the four largest tobacco companies in 1998.
Since 2003, the state has received $280 million to $300 million from the four largest tobacco companies. The tobacco companies now are demanding that states force smaller tobacco companies, including those operated by tribes, to also make payments to the states for smoking-related medical costs. The state opposes those demands.
LB590 also would provide a process for the state to sign compacts with tribes to allow them to make tobacco payments to the state.
Tribes currently don't share tobacco sales revenue with the state, nor do they get payments from the tobacco settlement.
Nebraska and the Winnebago Tribe share taxes collected on gas sales on the tribe's northeast Nebraska reservation and are negotiating a compact to share tobacco sales revenue.
White said she considers the seizure of the tribe's cigarettes an effort by the state to get the Winnebago Tribe to agree to its terms. She said the Ponca Tribe expects to join the Winnebago Tribe's compact with the state once it is finalized, because the Winnebago Tribe serves as the Ponca Tribe's cigarette distributor.
She said the Santee Tribe has been selling cigarettes from a tribal store on its reservation just five miles from Niobrara for nearly 15 years.
White said the Ponca Tribe will attempt to get the state to return its cigarettes.
"I believe that we were the easiest target," she said. "We're the newest kid on the block."
Stephanie Freemont, manager of the tribe's Niobrara smoke shop, said one woman and two men entered the shop Thursday morning. One of the men appeared to be wearing a police or security guard uniform, she said.
"They just came and waved their badges around," she said.
The three people constructed fabricated boxes they had brought with them in the store and loaded cartons of cigarettes into the boxes, spending about 90 minutes in the store, she said. They then loaded the boxes into a maroon cargo van.
"They were prepared," she said. "It was just a shock."