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House Panel Approves 'Net Tobacco Bill

Native Americans are gearing up to oppose legislation that gives states the authority to enforce federal laws against Internet tobacco retailers. The bill gives states the authority to enforce the Jenkins Act, which requires cigarette vendors to report interstate sales.

The Internet Tobacco Sales Enforcement Act (H.R. 2824), approved on a voice vote Wednesday by the House Judiciary Committee, requires Web cigarette vendors, including Indian tribes, to report sales to state tobacco tax authorities each month. Under the bill, state attorneys general will be able to sue tobacco vendors for civil and criminal penalties in federal court for failing to comply with the law.

The Jenkins Act already requires that companies shipping cigarettes to out-of-state customers report those sales to the respective states. The sellers are not required to collect the taxes but report the individuals who are buying the cigarettes. States then collect the taxes from the individuals. Refusal to provide a report constitutes a misdemeanor punishable by up to one year in prison and a $1000 fine.

The law, however, has been widely ignored by Internet and other remote sellers of tobacco products. At a May subcommittee hearing on the bill, the General Accounting Office testified that none of the Internet sites selling cigarettes were filing the required reports, and 78 percent openly stated that they did not comply or said they were not subject to the Jenkins Act.

"Kids are getting their hands on cheap cigarettes and states are being denied revenues," bill sponsor Mark Green (R-WI) said.

The bill is strongly supported by the National Association of Convenience Stores and the Campaign for Tobacco-Free Kids. Native American groups, however, think the bill infringes on the constitutional sovereignty of Indian lands and is more about revenue collection than children's health.

"We are not opposing enforcement of the Jenkins Act," John Dossett, general counsel for the National Congress of American Indians (NCAI), told internetnews.com. "What's unusual about this bill is giving states the authority to enforce federal laws. This is a very tough issue for us. Very few Indian tribes are involved in this [online cigarette sales]. It is mostly individuals living on tribal grounds."

Dossett said his group supports a Senate version of the bill that beefs up penalties for violations of the Jenkins Act but keeps enforcement in federal hands.

"Indian reservations are a federal enclave. We understand our obligations under interstate sales laws, and we've fully supported federal enforcement in Indian country," Dossett said. "This bill would do away with tribal immunity from state laws."

Dossett also dismissed claims that the bill is intended to keep cigarettes out of the hands of children.

"You'll notice there is no provision in the bill for age verification," he said. "Revenue collection is driving this. It's about convenience stores losing revenue to Internet sales."

The NCAI hopes to keep the bill from coming to a floor vote by pressuring the House leadership to defer the legislation to the House Resources Committee.