79–010

1 John Shiffman, $1 billion Industry Reeling as Faux Crafts Flood Market, USA Today, April

8, 1998 at 2A; James Brooke, American Indian Crafts Lose Native Edge As Foreign Fakes Flourish, International Herald Tribune, August 4, 1997 at 11.

Calendar No. 898

106TH CONGRESS REPORT

2d Session " ! SENATE 106–452

TO IMPROVE THE CAUSE OF ACTION FOR

MISREPRESENTATION OF INDIAN ARTS AND CRAFTS

OCTOBER 2 (legislative day, SEPTEMBER 22), 2000.—Ordered to be printed

Mr. CAMPBELL, from the Committee on Indian Affairs,

submitted the following

REPORT

[To accompany S. 2872]

The Committee on Indian Affairs, to which was referred the bill

(S. 2872) to provide for amendments to the Indian Arts and Crafts

Act of 1990 (IACA, or ‘‘the Act’’), P.L. 101–644 (25 U.S.C. 305e),

having considered the same, reports favorably thereon with a bill

and recommends that the bill do pass.

PURPOSE

The purpose of S. 2872 is to provide technical amendments to improve the enforcement of the IACA for the protection of the economic and cultural integrity of authentic Indian arts and crafts,

and for other purposes.

BACKGROUND

Today’s market for Indian-made goods currently exceeds $1 billion in revenue, but it is estimated that $400 to $500 million of

that demand is being satisfied from non-Indian, and largely, nonU.S. sources.1 This growing influx of inauthentic Indian arts and

crafts has dramatically affected the Indian arts and crafts market

by driving down prices, and tainting consumer confidence in and

the cultural integrity of the market. With Native communities

plagued by unemployment and stagnant economies, the flood of

fake Indian arts and crafts is decimating one of the few forms of

2

2 At the Zuni Pueblo, approximately eighty-five percent of the population relies on Indian arts

and crafts sales as either a primary or secondary source of income. Due to the importation of

inauthentic Indian arts and crafts, these artisans have noticed that it is more difficult to sell

their work and that their work sells at a reduced price from that of ten years ago. Implementation of the Indian Arts and Crafts Act of 1990: Oversight Hearing Before the Senate Committee

on Indian Affairs, 106th Congress (2000) (statement of Tony Eriacho, Jr., Board Member, Indian

Arts and Crafts Association). 3The Isleta Pueblo’s full-time artisan population has reduced from 150 to 30 individuals over

the past ten years. Implementation of the Indian Arts and Crafts Act of 1990: Oversight Hearing

Before the Senate Committee on Indian Affairs, 106th Congress (2000) (statement of Andy

Abeita, President, Council for Indigenous Art and Culture). 4 Id.

entrepreneurship and economic development on Indian reservations.2

Imitation Indian arts and crafts are generally mass-produced,

and thus, manufactured at a substantially reduced cost, generally

around ten percent the cost of the original, authentic good. To compete, traditional Indian artisans are required to reduce their prices

and reduce their profit margin. As a result, many traditional Indian artisans have retired from their professions because of this

weakening of the market.3

Another result of the rapid rise in imitation Indian arts and

crafts is that consumer confidence in this market is declining. Lack

of consumer confidence will reduce the demand for Indian arts and

crafts as consumers shift their preference to goods with greater

consumer protections.

The flood of inauthentic Indian arts and crafts also damages traditional Indian heritage and culture. Indian arts and crafts are created through time-honored cultural practices and traditions. Intergenerated continuity of these cultural practices is threatened when

young people are deterred from becoming artisans because of the

changing market that results from the surge of cheaply made, imitation Indian arts and crafts. The following statement illustrates

the spiritual nature of traditional Indian artistry.

The intangible thing that separates Native Art from the

generic terminology ‘‘arts and crafts’’ is the fact that the

art produced by Indian nations is an extension of their

heart and soul. A Native artist cannot, for the most part,

go out to the local store and purchase raw materials to

make their art or craft. The process for obtaining the raw

materials is an invested effort of harvesting either animals, plants, or other natural materials that first need to

be processed to a usable form. Even this is premised by a

prayer ceremony to the Creator, before taking from the

land * * * It remains a very spiritual act in creating an

art or craft; and many still practice the ‘old Ho Chunk

teaching’ in that a flaw is inconspicuously made in the art

price in respect to the Creator, knowing that He is the

only Perfect Creator.4

THE 1935 ACT AND THE 1990 AMENDMENTS TO THE ACT

The Indian Arts and Crafts Act of 1935 (‘‘the organic Act’’) P.L.

74–355, 25 U.S.C. 305e was enacted to promote American Indian

and Alaskan Native economic development through the expansion

of the Indian arts and crafts market. The organic Act established

the Indian Arts and Crafts Board (IACB) to promote the development of Indian arts and crafts. As a result, the IACB focused on

3

5P.L. 101–644 § 104–105.

6 An Indian tribe may bring a civil cause of action for either itself, an individual Indian, or

an Indian arts and crafts association.

establishing and expanding an Indian arts and crafts market. In

addition, the organic Act had two enforcement mechanisms: (1) the

IACB was authorized to establish a government trademark of

genuineness; and (2) the Act established criminal penalties for the

counterfeiting of the IACB trademark and the misrepresentation of

the authentic Indian arts and crafts. Although the organic Act contained these enforcement provisions, the promotion of Indian arts

and crafts was the primary focus of the IACB throughout the 1935–

1990 period.

In 1990, the Act was amended to provide stronger enforcement

through enhanced civil and criminal sanctions.5 Even with these

strengthened enforcement provisions, to date there has yet to be a

civil or criminal conviction under this Act. In addition, the Department of Interior has yet to issue trademark regulations regarding

the trademark provisions pursuant to the organic Act and the 1990

amendments to the organic Act.

Under the 1990 amendments, the criminal penalties for individuals who violate the statute range from a fine of $250,000 to

$1,000,000 and/or a prison sentence ranging from five to fifteen

years, depending on whether the defendant is a repeat offender. In

addition, a corporation is liable for a sum of $1,000,000 on its first

offense and up to $5,000,000 on subsequent offenses. Civil sanctions include injunctive and other equitable relief, monetary damages, punitive damages and attorneys fees.

In criminal cases, only the Attorney General of the United States

(‘‘Attorney General’’) has standing to prosecute possible violations

of the Act. The IACB’s role in a criminal case is to receive a complaint, recommend that the Federal Bureau of Investigation (FBI)

investigate the merit of the complaint, and then the IACB may recommend that the Attorney General proceed with a criminal action.

The 1990 amendments designate only the Attorney General and an

Indian tribe 6 as having standing to bring civil suit under the Act.

The IACB’s role in a civil case is to receive a complaint, recommend

that the FBI investigate the merit of the complaint, and then recommend that the Secretary of the Interior refer the matter to the

Attorney General for civil prosecution.

SECTION-BY-SECTION ANALYSIS

Sec. 1. Short Title.

The title of this act is the Indian Arts and Crafts Enforcement

Act of 2000.

Sec. 2.

Amendments to Civil Action Provisions. All amendments will be

made to Section 6 of the IACA.

Section 6(a). To enhance the ability of the plaintiff to assess and

calculate damages, the phrase ‘‘directly or indirectly’’ will be added

after the phrase ‘‘against a person who.’’ This provision clarifies

that suit may be brought against a manufacturer and/or supplier

when the plaintiff is not in direct competition with the manufacturer or supplier. For example, this language would authorize an

4

7 15 U.S.C. at § 1117 (1946).

Indian tribe to bring civil suit against wholesalers and others involved in the chain of distribution, although these defendants may

not be the final retailer who sells the violative product.

Section 6(a)(2)(B). This section is amended to clarify how treble

damages can be assessed. Plaintiffs who bring suit under the

IACA, like other consumer protection cases, have difficulty in proving and quantifying damages. For example, lost or diminished sales

attributable to the complained behavior, are difficult or impossible

to prove. With this amendment, plaintiffs may use the defendant’s

profits from selling the violative product as a basis for assessing

damages. This approach is similar to how the Lanham Act assesses

damages.7

Section 6(c)(1)(B). Under Section 305e(c), only the Attorney General or an Indian tribe may bring civil suit for alleged violations

of the IACA. This amendment authorizes both Indian arts and

crafts organizations and individual Indians to bring suit for alleged

violations of the Act.

To date, there has not been a successful prosecution under the

IACA. One of obstacles in enforcing the IACA has been the lack of

suits initiated by either the Attorney General and individual Indian tribes. Often these entities are not aggressive in bringing suits

on behalf of individual artisans and/or artisan organizations because the Attorney General or an Indian tribe suffer no direct injury. Individual Indian artisans and artisan organizations suffer

both financial and cultural injury from inauthentic Indian arts and

crafts entering the market. By broadening standing under the statute, the Committee’s intent is to encourage greater enforcement of

the Act.

Section 6(c). This section is amended to authorize the Attorney

General to allocate a portion of the damages collected in a successful prosecution to reimburse the IACB for its costs in investigating

and bringing about the successful prosecution of the suit.

Section 6(d)(2). This section is amended to make the definition of

Indian products more precise throughout the regulatory process.

This amendment requires the IACB to promulgate regulations

which include specific examples of Indian products to provide guidance to the artisans, as well as purveyors and consumers, of Indian

arts and crafts.

LEGISLATIVE HISTORY

A hearing on the implementation of the Act was held on May 17,

2000 and the Indian Arts and Crafts Enforcement Act of 2000 (S.

2872) was introduced on July 14, 2000, by Senator Campbell, for

himself, and for Senators Bingaman, Kyl, Domenici, and Johnson.

S. 2872 was referred to the Committee on Indian Affairs on July

14, 2000. On July 26, 2000, the Committee on Indian Affairs convened a business meeting to consider S. 2872 and other measures

that had been referred to it, and on that date, the Committee ordered S. 2872 reported favorably without an amendment.

5

COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

On July 26, 2000, the Committee on Indian Affairs, in an open

business session adopted S. 2872 by voice vote and ordered the bill

reported favorably to the full Senate.

COST AND BUDGETARY CONSIDERATION

The cost estimate for S. 2872 as calculated by the Congressional

Budget Office, is set forth below:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, August 7, 2000.

Hon. BEN NIGHTHORSE CAMPBELL,

Chairman, Committee on Indian Affairs,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2872, the Indian Arts and

Crafts Enforcement Act of 2000.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Lanette J. Keith.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

S. 2872—Indian Arts and Crafts Enforcement Act of 2000

CBO estimates that implementing S. 2872 would have no significant impact on the federal budget. Because enactment of S. 2872

would not affect direct spending or receipts, pay-as-you-go procedures would not apply to the bill. S. 2872 contains no intergovernmental or private-sector mandates as defined in the Unfunded

Mandates Reform Act and would impose no costs on state, local, or

tribal governments.

S. 2872 would allow Indian arts and crafts organizations to seek

damages in the federal courts from persons misrepresenting arts

and crafts as having been produced by Indians. Based on information from the Administrative Office of the United States Courts,

CBO expects that any increase in federal costs for court proceedings would not be significant because of the small number of

cases likely to be involved. Any additional costs to implement the

bill would be subject to the availability of appropriated funds.

The CBO staff contact for this estimate is Lanette J. Keith. The

estimate was approved by Robert A. Sunshine, Assistant Director

for Budget Analysis.

REGULATORY IMPACT STATEMENT

Paragraph 11(b) of rule XXVI of the Standing Rules of the Senate requires that each report accompanying a bill to evaluate the

regulatory paperwork impact that would be incurred in implementing the legislation. The committee has concluded that enactment of S. 2872 will create only de minimis regulatory or paperwork burdens.

6

EXECUTIVE COMMUNICATIONS

The Committee has received no official communication from the

Administration on the provisions of the bill.

CHANGES IN EXISTING LAW

In compliance with subsection 12 of rule XXVI of the Standing

Rules of the Senate, changes in existing law made by the bill are

required to be set out in the accompanying Committee report. The

Committee finds that enactment of S. 2872 will result in the following changes to 25 U.S.C. § 305(e), with existing language which

is to be deleted in bold brackets and new language to be added in

italic:

25 U.S.C. 205e(a)

(a) INJUNCTIVE OR EQUITABLE RELIEF; DAMAGES.—

A person specified in subsection (c) of this section may, in a civil

action in a court of competent jurisdiction, bring an action against

a person who, directly or indirectly, offers or displays for sale or

sells, a good, with or without a Government trademark, in a manner that falsely suggests it is Indian produced, an Indian product,

or the product of a particular Indian or Indian tribe or Indian arts

and crafts organization, resident within the United States, to—

(1) obtain injunctive or other equitable relief; and

(2) recover the greater of—

(A) treble damages; or

(B) in the case of each aggrieved individual Indian, Indian tribe, or Indian arts and crafts organization, not less

than $1,000 for each day on which the offer or display for

sale or sale continues.

For purposes of paragraph (2)(A), damages shall include any and

all gross profits accrued by the defendant as a result of the activities

found to violate this subsection.

25 U.S.C. 305e(c)

(c) PERSONS WHO MAY INITIATE CIVIL ACTIONS.—

(1) A civil action under subsection (a) of this section may be

commenced—

(A) by the Attorney General of the United States upon

request of the Secretary of the Interior on behalf of an Indian who is a member of an Indian tribe or on behalf of

an Indian tribe or Indian arts and crafts organization; øor¿

(B) by an Indian tribe on behalf of itself, an Indian who

is a member of the tribe, or on behalf of an Indian arts

and crafts organizationø.¿. or

(C) by an Indian arts and crafts organization on behalf

of itself, or by an Indian on behalf of himself or herself.

(2) Any amount recovered pursuant to this section shall be

paid to the individual Indian, Indian tribe, or Indian arts and

crafts organization, except that—

(A) in the case of paragraph (1)(A), the Attorney General

may direct from øthe amount recovered the amount¿ the

amount recovered—

7

(I) the amount for the costs of suit and reasonable

attorney’s fees awarded pursuant to subsection (b) of

this section and deposit the amount of such costs and

fees as a reimbursement credited to appropriations

currently available to the Attorney General at the

time of receipt of the amount recovered; and

(ii) the amount for the costs of investigation awarded

pursuant to subsection (b) and reimburse the Board the

amount of such costs incurred as a direct result of

Board activities in the suit; and

(B) in the case of paragraph (1)(B), the amount recovered for the costs of suit and reasonable attorney’s fees

pursuant to subsection (b) of this section may be deducted

from the total amount awarded under subsection (a)(2) of

this section

25 U.S.C. 305e(d)(2)

(2) subject to subsection (f), the terms ‘‘Indian product’’ and

‘‘product of a particular Indian tribe or Indian arts and crafts

organization’’ has the meaning given such term in regulations

which may be promulgated by the Secretary of the Interior;

25 U.S.C. 305e(f)

(f) Not later than 180 days after the date of enactment of the Indian Arts and Crafts Enforcement Act of 2000, the Board shall promulgate regulations to include in the definition of the term ‘Indian

product’ specific examples of such product to provide guidance to Indian artisans as well as to purveyors and consumers of Indian arts

and crafts, as defined under this Act.

Æ