The PACT Act Violates All Tribes’ Sovereignty

Yesterday, Washington, DC U.S. District Court Judge Royce Lamberth – who played an instrumental role in Cobell struck a blow to the PACT Act, by preliminarily enjoining federal enforcement of the Act. Judge Lamberth's decision is the second federal court ruling that the PACT Act is unconstitutional, in recent months. While the potentially positive implications of the decisions for Indian Country are still being sorted out, the PACT Act remains an imminent threat to the sovereignty of all Tribal governments, and to any notion of tax-free inter-tribal commerce and trade.

The PACT Act of 2010, as federal agencies no doubt still intend to implement it, violates the sovereignty of all Tribal governments – not only those involved in tobacco commerce. Tribal sovereignty, at its core, includes the right of Tribal Governments to be ruled by their own laws and govern their own economies. But the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), by inviting states and state law into Indian Country, has made clear its intent to enforce the Act in a way that will gut Tribes’ inherent right to self govern and chill Indian economic growth.

According to the U.S. Department of Justice (DOJ), the PACT Act requires Indian tobacco enterprises to comply with state tobacco laws – even within Indian Country. For two centuries, courts have generally barred states from applying their laws to Tribes and Indian businesses within Indian Country. But federal agency interpretation of the Act threatens to change the tribal-state status quo. It requires no close analysis of the law to see that the federal government is shepherding state tax agencies into Indian Country. Although today’s state-federal attacks focus on tobacco, DOJ is establishing a dangerous precedent; one under which the federal government will pass federal laws allowing states to extract previously unavailable value from Tribal economies and causing DOJ to become the states’ enforcement arm in Indian Country.

DOJ’s interpretation of the PACT Act is inconsistent with the law itself, which on its face prohibits the Act from being used to confer states regulatory authority over Indian Country commerce. As the DOJ and ATF read the law, however, the PACT Act widely opens an unprecedented avenue for states to regulate and tax Tribal and inter-Tribal commerce and trade.

The United States has stated that the Act’s definition of “interstate commerce” includes sales within or between Indian reservations. Legal nuances aside, DOJ’s application of the PACT Act’s “interstate commerce” to inter-Tribal tobacco trade – meaning trade between Tribes situated in different states – is a recipe for Tribal economic disaster. Tribes freely traded between and among themselves long before state governments or taxation existed. To now allow state taxation of inter-Tribal commerce and state regulation of the budding Tribal private sector, under color of federal law and law enforcement, threatens to set Tribal economies back nearly two centuries – to when states destroyed Indian Country’s original economies.

Again, the PACT Act expresses Congress’ clear intent that the law not adversely effect Tribal sovereignty. Indeed a pro-Tribal interpretation clause of the Act requires ambiguities in the new law to be resolved in favor of preserving Tribal sovereignty and immunity from state authority. Incredibly, though, the Executive Branch’s interpretations of the law have taken the very opposite approach, with the Act being construed to favor state regulation and taxation in Indian Country. States have already seized the DOJ’s written interpretation of the PACT Act to regulate and tax – the proverbial power to destroy – Tribal and inter-Tribal economies.

Notwithstanding yesterday's court ruling, all of Indian Country must stand together now, united in vocal opposition to the PACT Act.

Gabriel "Gabe" Galanda, a partner at Galanda Broadman PLLC, is an enrolled member of the Round Valley Indian Tribes of Covelo, California.