House bill would wipe out Indian tobacco industry

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WASHINGTON – The House of Representatives recently passed a law that would eliminate the Indian tobacco industry and put thousands of people out of work.

The Prevent All Cigarette Trafficking Act – H.R. 4081 – was passed by Congress Sept. 10 by a vote of 379 – 12. If the bill is approved by the Senate and signed into law by President George W. Bush, it will prohibit the U.S. Postal Service from delivering cigarettes and certain other tobacco products, and put Indian-owned mail order tobacco businesses out of operation.

Philip Morris USA supports PACT Act Indian Country Today asked Philip Morris USA spokesman David Sutton if the tobacco company wrote the Prevent All Cigarette Trafficking Act, if it supports the bill and whether, if passed, the PACT Act would moot two proposed bills in New York’s Legislature that would also eliminate the Indian tobacco industry (including A-11834, which Sutton said was written by Philip Morris USA). Sutton sent the following in a prepared statement: “Philip Morris USA is proud to support the PACT Act. The sale of untaxed and undertaxed cigarettes and smokeless tobacco products remotely – via the Internet, mail or phone – harms legitimate wholesale and retail businesses, consumers and government budgets. “The PACT Act is an important step toward curbing tax evasion that occurs through Internet and other remote sales by closing gaps in federal law. It makes it a felony to sell cigarettes and smokeless tobacco products on the Internet without first paying taxes owed to the state into which the product is being sold, thus eliminating the unfair price advantage that currently exists for these Internet sellers. It would close other loopholes in current law, expand enforcement and legal remedies, and significantly increase penalties for failing to report interstate sales. To address youth access issues, the PACT Act requires Internet sellers to establish age-verification processes. It also prohibits shipping of these products to consumers through the U.S. Postal Service, and places significant controls on private delivery carriers. “We encourage the Senate to take swift action in passing this important legislation. It represents a vital opportunity to protect legitimate channels of commerce. The PACT Act is the result of years of bipartisan discussion, and we applaud the sponsors for their efforts to give authorities additional tools needed to crack down on illegal internet sales.”



The postal service is the only remaining delivery service available to Indian mail order businesses. In recent years, the National Association of Attorneys General pressured services such as UPS, FedEx and DHL to sign “voluntary” agreements not to transport tobacco.

The PACT Act is racially discriminatory and, therefore, a civil rights violation, according to Thomas Moll, an attorney who represents the Seneca Free Trade Association, a private, nonprofit cooperative association comprised of individuals and businesses licensed by the Seneca Nation of Indians. The association he represents is dedicated to developing commerce and industry within and around the territories of the Seneca Nation in western New York state.

“Based on information I’ve seen, 95 to 98 percent of the mail order tobacco businesses are owned by Indians, so in my view the PACT Act is a racially biased piece of legislation that was intended to eliminate the nationwide Indian mail order tobacco trade.”

H.R. 4081 was sponsored in the House by New York Democratic Rep. Anthony Weiner and co-sponsored by seven congressmen. The bill has been kicking around in various incarnations for a few years and it incorporated provisions from an earlier version called the “Do Not Mail Tobacco Bill” that was sponsored by New York Republican Rep. John McHugh.

The goals of the PACT Act are, in part, to reap the “billions of dollars of lost federal, state and local tobacco tax revenue each year”; stop alleged terrorist organizations from allegedly profiting from trafficking in “illegal cigarettes or counterfeit cigarette tax stamps”; prevent the alleged sale of cigarettes to youth; and eliminate the “unfair competition” to “law-abiding retailers.”

Moll said the claims of links to terrorism and reducing tobacco sales to minors are unsubstantiated and are being used to gain support to eliminate Indian businesses.

“The rallying cry for years was that Indian mail order tobacco businesses were selling cigarettes to kids. As it turns out, every reliable study that’s been done shows that’s not true – that far more cigarettes are sold to kids by the convenience stores that dot the landscape than American Indian businesses.

“I think you would be hard-pressed to find any state that has successfully prosecuted an Indian mail order tobacco business for selling cigarettes to minors.”

There is a similar lack of substantiation for the allegations linking Indian tobacco sales to terrorism, Moll said.

“All of a sudden, the politicians are claiming the Indian mail order businesses supply funds to terrorist groups. Again, there’s absolutely nothing to substantiate those allegations. There have been a couple of instances where individual Indians were involved in some fashion with a person having a tenuous connection to an alleged terrorist group,” but the politicians have seized upon these instances and now paint this entire industry with a broad brush.”

Although the PACT Act asserted that “Hezbollah, Hamas, al-Qaida and other terrorist organizations have profited by trafficking in illegal cigarettes or counterfeit cigarette tax stamps,” neither the act nor New York state politicians who have been making the claim have offered any supporting evidence. [See “Politician’s unsubstantiated Indian tobacco-terrorist link targets Oneida,” Vol. 28, Iss. 10.]

The Indian tobacco trade is estimated to be in the billions of dollars each year, but its elimination will affect more than Indians, Moll said.

“Just in the case of the Seneca Nation there will be thousands of non-Native people unemployed, and that’s going to have a devastating effect in western New York.”

He said the legislation is intended to benefit giant tobacco companies such as Philip Morris USA by increasing their market share. “And if you look at the legislation you’ll see it was drafted and supported by politicians with ties to Philip Morris and the National Association of Convenience Stores. We know that.”

A cursory check on www.opensecrets.org showed that Weiner received a $1,000 donation from the National Association of Convenience Stores during the current 2008 election cycle, and that Virginia Republican Rep. Thomas Davis, who co-sponsored the bill, received $15,000 from the Altria Group, Philip Morris USA’s parent company.

Moll said that the politicians out to quash the Indian tobacco industry make “bold allegations” that the Indian mail order tobacco industry violates state and federal laws, “but they can’t actually prove that a single state or federal law has been violated.”

The PACT Act cites the Jenkins Act, 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 that the state can then bill the purchaser for taxes due.

But the Jenkins Act does not apply to businesses licensed by sovereign Indian nations; such businesses are not required to involve themselves in the affairs of foreign governments by helping the states collect their taxes. Even so, several Indian mail order tobacco businesses comply with the law.

“So if the PACT Act was truly about collecting taxes, and not about discriminating against Indians, then it would exempt those businesses that comply with the Jenkins Act,” Moll said.

The bill was universally panned by the 36 readers on www.washingtonwatch.com, a Web site that tracks bills in Congress and their cost to taxpayers.

“This bill is ridiculous. It serves only to force American tobacco users to buy tobacco from the big domestic companies like Philip Morris. Are we sure this bill wasn’t introduced by Big Tobacco?” wrote reader Ben Timpley. “The bill has no edifying or logical purpose in our society and is a prime example of Congress wasting time.”

While the act prohibits the U.S. Postal Service from delivering cigarettes and smokeless tobacco, it provides no such prohibition on the delivery of cigars.

“My personal opinion is that many, many politicians smoke cigars. Cigars have played a great role in political ceremony and many politicians buy their favorite cigars from mail order businesses,” Moll said.