Handing big tobacco corporations a huge victory, the U.S. Senate has passed the Prevent All Cigarette Trafficking Act – an act tribal leaders say is an attack on tribal sovereignty and economies that will devastate Indian tobacco businesses across the country.
The PACT Act passed by unanimous consent without a vote or a hearing late the evening of March 11. The act bans the shipment of cigarettes and certain tobacco products through the U.S. Postal Service, cut- ting off the only remaining delivery service for Indian retailers who do business through Internet sales. A few years ago, former New York Gov. Eliot Spitzer, who was ousted in a prostitution scandal, “persuaded” private carriers such as Federal Express and UPS to “voluntarily” stop shipping tobacco products.
The Senate bill, introduced by Sen. Herb Kohl, D-Wis., has 20 co-sponsors, including New York Democratic Sens. Chuck Schumer and Kirsten Gillibrand. The House version, which was introduced by Rep. Anthony Weiner,
D-N.Y., passed the House last year by a vote of 397-11.
The bill will now move back to the House for a vote, before being sent to President Barack Obama for passage. Tribal leaders are calling on Obama to send the bill back to Congress for an amendment that explicitly exempts sovereign Indian nations from the act.
The PACT Act passed without a single Senator objecting, said Lance Morgan (Winnebago Tribe of Nebraska), CEO of Ho-Chunk, Inc. and partner at Fredericks, Peebles & Morgan.
“So it comes down to Obama. He is an adopted Crow and he says all the right things, but this is real and not the campaign trail. So it will be interesting to see how he reacts when the rhetoric is tested against the reality of supporting tribes.”
White house spokesman Shin Inouye said the president will review the bill further.
“The White house continues to examine the PACT Act and is working with the Department of Justice to consider the bill’s impact while Congress resolves the differences between the house and Senate bills.”
A spokesman for the Senate Committee on Indian Affairs, who asked not to be named, said Sen. Byron Dorgan, D-N.D., had made efforts to protect the nations in the bill.
“Sen. Dorgan had discussions informally with the authors of the bill to make changes to the way the bill was originally written that would ensure tribal governments’ sovereignty and that sovereign immunity would be preserved. For example, state attorneys general cannot sue tribal governments in federal court,” the spokesman said.
Even if the law protects tribal governments, it undermines hundreds, perhaps thousands, of individual business owners whose fees support tribal government services, Morgan said.
“It’s very likely that this law is going to kill the entrepreneurial people in this business and force a lot of business to be done by the tribal government itself. The tribe gets to retain its sovereignty and sovereign immunity, but individuals will be wiped out.”
The Seneca Nation of Indians blasted the Senate for sup- porting the “anti-Indian business” measure. The nation’s 230-plus licensed enterprises conduct a robust cigarette business through Internet sales and post office deliveries, and pay per carton fees to the Seneca government – funds that support government services to its citizens.
The PACT Act will destroy more than 1,000 Native and non-Native tobacco industry jobs in western New York, according to Seneca Nation President Barry E. Snyder Sr.
“What we’re witnessing is an effort by Philip Morris and other global tobacco companies to wipe out competition anyway they can, in this case, at the expense of our economy and our federal treaty rights.”
Philip Morris, the largest tobacco company in the U.S., has supported the PACT Act for the several years it has been in the federal legislature.
“Philip Morris USA is proud to support the PACT Act. The sale of untaxed and under taxed cigarettes and smokeless tobacco products remotely – via the Internet, mail or phone – harms legitimate wholesale and retail businesses, consumers and government budgets,” Philip Morris spokesman David Sutton has said, implying that the Indian tobacco trade is not “legitimate.”
The National Association of Convenience Stores, which has lobbied long and hard against Indian tobacco sales, said the PACT Act has now cleared a “major hurdle” in expanding what they perceive to be their market share.
The bill will “allow legitimate retailers to recover lost business,” NACS said, echoing Philip Morris’ implication that Indian tobacco sales are illegitimate.
Morgan said the bill gives states unprecedented power over sovereign tribal nations’ economic interests.
“The PACT Act is in its entirety an amendment to the Jenkins Act. It is not a standalone act, it just changes the Jenkins Act to add the mail ban, and increase reporting requirements and up the criminal penalties, and also allow the states to sue in federal court to enforce it,” Morgan said.
The Jenkins Act is a 1940s-era law that requires retailers who sell cigarettes into interstate commerce to notify that state’s tax department of purchasers’ names and addresses, as well as the number of cigarettes sold, on a monthly basis so the state can bill the purchaser for taxes due.
“The PACT Act is very tricky. It says it protects tribal nations, but we had those protections anyway, and it doesn’t protect us against the state suing those who deal with us, so in the end the state has figured out a way to win without directly attacking us,” Morgan said.
The increased reporting requirements make the PACT Act a Trojan horse against the nations, he said.
“If you sell to a tribe and don’t report you get sued. If you report your sales to the tribe, then you get sued under a different law. The only way you don’t get sued is if you give the state an extra $4.50 per carton and even then the state can blacklist the Native tobacco product and declare it contraband. This is especially helpful in protecting Marlboro’s market share, upon which the MSA payments are calculated. So this is about money. It is about taking money away from us and protecting the state’s money and the Marlboro Man’s market share.”
Snyder said the Seneca Nation will continue to fight the bill.
J.C. Seneca, councilor and co-chair of the Seneca Nation Foreign Relations Committee, said the PACT Act is part of a broader attack on Native economic gains.
“The ultimate effect of this legislation makes it clear that Termination Era policies to eradicate Indians and treaty rights in New York and across this country are alive and well. Congress has taken the first step on turning the clock back on the Indians in trying to return us to the want, squalor and dependency of the past. As Indian people we have faced these types of challenges and opposition on a daily basis.”
Snyder called on Obama to live up to the commitments he made to Indian country.
“What the Senate has done here flies in the face of the executive order that calls for tribal consultation in matters integrally affecting Native communities. The matter of government-to-government relations must be addressed.”