ALBANY, N.Y. (AP) – A federal appeals court has upheld a preliminary injunction won by Seneca Indians that blocks enforcement of a federal law requiring the western New York tribe's tobacco businesses to prepay state excise taxes.

The Second Circuit Court of Appeals rejected government arguments that Judge Richard Arcara's July 2010 order granting the injunction was an abuse of his judicial discretion.

Arcara stayed enforcement of last year's Prevent All Cigarettes Trafficking Act, concluding the Senecas are likely to win based on their claim that requiring out-of-state retailers to pay state excise taxes, regardless of their contact with a state, violates their constitutional rights.

The three judges say in Tuesday's ruling Arcara reached “a reasonable conclusion” at this preliminary stage of what is “a close question of law.”