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Headlines
PACT Act a hidden power grab for states
Friday, March 12, 2010
The US Constitution has what is known as the Indian Commerce Clause. It basically states that Congress has the power to regulate commerce with Indian Tribes. Unfortunately, Congress just outsourced that power to the states.
On Thursday night, the US Senate passed what is known as the PACT Act, without even taking a vote. It was by unanimous consent. All Indian Country needed was one US Senator to object, but no one stepped up.
The PACT Act does several things. Mainly it prevents the post office from shipping Internet tobacco products, which for some tribes is big business. However, it does something else that isn’t so clear. It gives the states the power to enforce what is known as the Jenkins Act, a federal law, against tribal economic interests.
Giving the any state the power to enforce a federal law against a tribe is wrong and sends chills up my spine. To be blunt the states have proven over and over again that they can’t be trusted. Their greed always kicks in at some point and they use the law to rationalize it.
But the PACT Act is particularly tricky. There is a portion of the PACT Act that is intended to make tribes feel better. It clarifies that the new law doesn’t impact Tribal sovereignty. Well that is nice of them until you realize what game the states have been playing the last 20 years.
States rarely attack Tribes directly on economic issues because they largely can’t make us do anything. What they do is attempt to get their way indirectly by controlling those who deal with Tribes. “Don’t sell that to the tribe without state tax or we will take your license and throw you in jail” is surprisingly effective on non-Indians.
Interestingly, the US Supreme Court gave them idea in 1990’s when it made the helpful suggestion to states that they move the “legal incidence” of tax upstream economically to those who sell to tribes. This system was further endorsed in 2005, when the court ruled that the downstream economic effects of state tax laws on tribes don’t matter. The states have been using this playbook to isolate tribes economically ever since.
But the Tribes’ are not stupid! In the tobacco industry, the Tribes have been selling directly to each other in what is the modern day emergence of Tribe-to-Tribe commerce. When one tribe sell to another tribe, they are much more likely to ignore the state laws and their threats.
States hate the emergence of Tribe-to-Tribe commerce because it forces them to confront tribes who are acting under tribal law on tribal land. Enter the PACT Act. The Pact Act protects tribes, it says so right in the law. But it doesn’t protect those who sell to Tribes. In fact, it requires all sales to Tribes to be reported to the state and if it isn’t reported then the state can sue you in federal court for a felony violation of the Jenkins Act.
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