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[Senate Report 110-460]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 961
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-460

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TO PROTECT INDIAN ARTS AND CRAFTS THROUGH THE IMPROVEMENT OF APPLICABLE 
              CRIMINAL PROCEEDINGS, AND FOR OTHER PURPOSES

                                _______
                                

               September 15, 2008.--Ordered to be printed

                                _______
                                

    Mr. Dorgan, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1255]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 1255), to protect Indian arts and crafts through the 
improvement of applicable criminal proceedings, and for other 
purposes, having considered the same, reports favorably thereon 
with amendments and recommends that the bill, as amended, do 
pass.

                                Purpose

    The purpose of S. 1255 is to authorize any federal law 
enforcement officer to conduct an investigation of the sale of 
any good that is misrepresented as an Indian-produced good or 
product that occurs on land under the jurisdiction of the 
federal government. The bill also authorizes the Indian Arts 
and Crafts Board to refer an alleged offense to any federal law 
enforcement officer for appropriate investigation. Further, S. 
1255 permits a federal law enforcement officer to investigate 
an alleged offense regardless of whether such officer receives 
a referral from the Board and revises the requirements for 
initiating actions for the misrepresentation of Indian-produced 
goods and products and the penalties for such 
misrepresentation.

                         Background and History

    The Indian Arts and Crafts Act of 1990 (P.L. 101-644) is a 
truth-in-advertising law that prohibits misrepresentation in 
marketing of Indian arts and crafts products within the United 
States. The law covers all Indian and Indian-style traditional 
and contemporary arts and crafts produced after 1935. Under the 
law, it is illegal to offer, sell, or display for sale any 
Indian art or craft product in a manner that falsely suggests 
it is Indian-made or the product of a particular Indian, Indian 
Tribe, or Indian arts and crafts organization that resides 
within the United States. For a first offense under the Act, an 
individual can face civil or criminal penalties of up to a 
$250,000 fine or a 5-year prison term, or both. If a business 
violates the Act, it can face civil penalties or can be 
prosecuted and fined up to $1,000,000.
    A major challenge has been establishing a process to 
investigate cases brought under the Act as the Indian Arts and 
Craft Board must rely exclusively on the willingness of other 
law enforcement agencies to proceed with the investigation of 
complaints. The law is currently written so that only the 
Federal Bureau of Investigation (FBI), acting on behalf of the 
Attorney General, has the authority to investigate and make 
arrests in cases of suspected Indian art counterfeiters. S. 
1255 would amend the law to expand existing federal 
investigative authority by authorizing other federal 
investigative bodies, such as the Bureau of Indian Affairs 
(BIA) Office of Law Enforcement, in addition to the FBI, to 
investigate cases of misrepresentation of Indian arts and 
crafts.
    Tribal and individual Indian income is derived from the 
sale of handmade Indian arts and crafts. Yet, millions of 
dollars are diverted each year from these original artists and 
Indian tribes by those who reproduce and sell counterfeit 
Indian goods. Few, if any, criminal prosecutions have been 
brought in federal court for such violations. Enforcing the 
criminal law under the Indian Arts and Crafts Act is often 
delayed due to limited resources in light of other 
responsibilities of the FBI, including investigating terrorism 
activity and violent crimes in Indian country. Therefore, 
expanding the investigative authority to include other federal 
agencies is intended to promote the active investigation of 
alleged misconduct.

                        Summary of the Amendment

    During an open business meeting on June 19, 2008, the 
Committee considered and approved an amendment to S. 1255. The 
amendment altered the scope of the conduct of investigations to 
alleged violations on all land within the jurisdiction of the 
United States. In addition, the amendment altered the 
submission of findings of alleged violations to any federal or 
State prosecuting authority, rather than just the Attorney 
General of the United States.

                 Section-by-Section Analysis of S. 1255

Sec. 1. Short title

    Section 1 states that the bill may be cited as the ``Indian 
Arts and Crafts Amendments Act of 2008.''

Sec. 2. Indian Arts and Crafts

    Section 2 of the bill expands the powers of the Indian Arts 
and Crafts Board to pursue or defend violations of the bill by 
amending 25 U.S.C. Sec. 305d and Sec. 305e.
    Sec. 305d is amended by striking sections (a) and (b) and 
inserting the following provisions. First, the Act defines 
federal law enforcement officers and their authority to conduct 
alleged violations of the Indian Arts and Crafts Act within the 
jurisdiction of the United States. S. 1255 defines the process 
for criminal proceedings through a referral by the Board to a 
Federal law enforcement officer or by the initiation of an 
investigation by a federal law enforcement officer without the 
referral of the Board. As part of the criminal proceedings, the 
findings of an investigation shall be submitted to a federal 
prosecuting authority or the Indian Arts and Craft Board. When 
the Board receives the findings of an investigation, the Board 
may recommend to the Attorney General that criminal proceedings 
be opened and the Board may provide support, should that 
investigation be initiated. In lieu of, or in addition to, any 
criminal proceedings, the Board may recommend that the Attorney 
General pursue a civil action.
    Sec. 305e is amended by striking subsection (d), 
``Definitions,'' and replacing it as subsection (a). It changes 
the definition of ``Indian tribes'' to be consistent with the 
Indian Self-Determination and Education Assistance Act (25 
U.S.C. 450b) and provides other technical and confirming 
amendments to the ``Definitions'' subsection. Subsection (c), 
entitled ``Persons that May Initiate Civil Actions,'' in 
Sec. 305e is struck and replaced as subsection (d), making 
technical and conforming amendments to the subsection. This 
subsection clarifies how the Attorney General, the Board, and 
any Indian Tribe involved in the civil suit may initiate a 
civil action and recover costs related to attorney's fees or 
other costs incurred as a direct result of the activities of 
the investigation.
    In addition, there are a series of other minor technical 
and confirming amendments to Sec. 305e.

Sec. 3. Misrepresentation of Indian produced goods and products

    Section 3 amends 18 U.S.C. Sec. 1159 and reorganizes the 
structure of penalties that are applied to violations of the 
law. This section structures the penalties in accordance with 
the value of the goods that are offered, sold, or displayed for 
sale in violation of the law. If the applicable good is equal 
to or greater than $1,000, for a first violation, an individual 
will be fined not more than $250,000, imprisoned for not more 
than 5 years, or both. A person other than an individual, for 
example a business, will be fined not more than $1,000,000 for 
a first violation. If the applicable good is less than $1,000 
an individual will be fined not more than $25,000, imprisoned 
for not more than 1 year, or both. A person other than an 
individual, such as a business, will be fined not more than 
$100,000 for a first violation.
    In the case of subsequent violations that person, 
regardless of the amount in which the applicable goods are 
offered, sold, or displayed for sale, an individual will be 
fined and imprisoned for not more than 15 years and a person 
other than an individual, such as a business, will be fined not 
more than $5,000,000.
    Section 3 also clarifies the definition of the term 
``Indian tribe,'' for purposes of this section. There are also 
a number of other technical and conforming amendments to 
Sec. 1159.

                          Legislative History

    S. 1255 was introduced in the Senate on May 1, 2007, by 
Senator John McCain (R-Ariz.). S. 1255 was received in the 
Senate and referred to the Committee on Indian Affairs on May 
1, 2007. The Committee ordered the bill to be reported 
favorably, with an amendment, on June 19, 2008.

                        Committee Recommendation

    On June 19, 2008, the Committee on Indian Affairs convened 
a business meeting to consider S. 1255, and other measures. 
During the business meeting, the Committee voted, by a voice 
vote, to report S. 1255 favorably, with an amendment, to the 
full Senate with a recommendation that it do pass.

                   Cost and Budgetary Considerations

    The following cost estimate for S. 1255, as provided by the 
Congressional Budget Office, is set forth below:

S. 1255--Indian Arts and Crafts Amendments Act of 2007

    S. 1255 would allow any federal law enforcement officer to 
investigate the sale of counterfeit Indian art products, rather 
than only employees of the Federal Bureau of Investigation as 
under current law. Based on information from the Department of 
Justice (DOJ), CBO estimates that the cost of implementing S. 
1255 would not be significant because it would not appreciably 
change the workload of federal law enforcement officers or DOJ 
attorneys who would prosecute the cases.
    S. 1255 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    S. 1255 also would modify the penalties for persons who 
market or sell counterfeit Indian arts and crafts. Under 
current law, the maximum penalties are the same for all 
offenders, regardless of the value of the goods. The bill would 
reduce the maximum penalties for offenders who market or sell 
counterfeit items priced at less than $1,000. Criminal fines 
are recorded as revenues, deposited into the Crime Victims 
Fund, and later spent. CBO estimates that enacting S. 1255 
could reduce the amount of revenues deposited into the fund and 
direct spending from the fund, but any such effects would be 
insignificant.
    The CBO staff contacts for this estimate are Leigh Angres 
and Jeffrey LaFave. The estimate was approved by Peter H. 
Fontaine, Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 1255 will 
have a minimal impact on regulatory or paperwork requirements.

                        Executive Communications

    There have been no executive communications received by the 
Committee with regards to this legislation.

                        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 
S. 1255, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman). Enactment of S. 1255, as amended, 
would affect no changes in existing law except the following 
provisions:

                          25 U.S.C. Sec. 305d

Sec. 305d. [Referral for criminal and civil violations; complaints; 
                    recommendations] Criminal Proceedings; Civil 
                    Actions

    [(a) The Board may receive complaints of violations of 
section 1159 of title 18 and refer complaints of such 
violations to the Federal Bureau of Investigation for 
appropriate investigation. After reviewing the investigation 
report, the Board may recommend to the Attorney General of the 
United States that criminal proceedings be instituted under 
that section.
    [(b) The Board may recommend that the Secretary of the 
Interior refer the matter to the Attorney General for civil 
action under section 305e of this title.]
    (a) Definition of Federal Law Enforcement Officer.--In this 
section, the term ``Federal law enforcement officer'' includes 
a Federal law enforcement officer (as defined in section 115(c) 
of title 18, United States Code).
    (b) Authority to Conduct Investigations.--Any Federal law 
enforcement officer shall have the authority to conduct an 
investigation relating to an alleged violation of this Act 
occurring within the jurisdiction of the United States.
    (c) Criminal Proceedings.--
          (1) Investigation.--
                  (A) In general.--The Board may refer an 
                alleged violation of section 1159 of title 18, 
                United States Code, to any Federal law 
                enforcement officer for appropriate 
                investigation.
                  (B) Referral not required.--A Federal law 
                enforcement officer may investigate an alleged 
                violation of section 1159 of that title 
                regardless of whether the Federal law 
                enforcement officer receives a referral under 
                subparagraph (A).
          (2) Findings.--The findings of an investigation of an 
        alleged violation of section 1159 of title 18, United 
        States Code, by any Federal department or agency under 
        paragraph (1) (A) shall be submitted to--
                  (A) A Federal or State prosecuting authority; 
                or
                  (B) the Board.
          (3) Recommendations.--On receiving the findings of an 
        investigation under paragraph (2), the Board may--
                  (A) recommend to the Attorney General that 
                criminal proceedings be initiated under 13 
                section 1159 of title 18, United States Code; 
                and
                  (B) provide such support to the Attorney 
                General relating to the criminal proceedings as 
                the Attorney General determines to be 
                appropriate.
    (d) Civil Actions.--In lieu of, or in addition to, any 
criminal proceeding under subsection (c), the Board may 
recommend that the Attorney General initiate a civil action 
under section 6.

                          25 U.S.C. Sec. 305e

Sec. 305e. Cause of action for misrepresentation of Indian produced 
                    goods

    (a) Definitions.--In this section:
          (1) Indian project.--The term ``Indian'' means an 
        individual that--
                  (A) is a member of an Indian tribe; or
                  (B) is certified as an Indian artisan by an 
                Indian tribe.
          (2) Indian product.--The term ``Indian product'' has 
        the meaning given the term in any regulation 
        promulgated by the Secretary.
          (3) Indian Tribe.--
                  (A) In general.--The term ``Indian tribe'' 
                has the meaning given the term in section 4 of 
                the Indian Self-Determination and Education 
                Assistance Act (25 U.S.C. 450b).
                  (B) Inclusion.--The term ``Indian tribe'' 
                includes, for purposes of this section only, an 
                Indian group that has been formally recognized 
                as an Indian tribe by--
                          (i) a State legislature;
                          (ii) a State commission; or
                          (iii) another similar organization 
                        vested with State legislative tribal 
                        recognition authority.
          (4) Secretary.--The term ``Secretary'' means the 
        Secretary of the Interior.
    [(a)] (b) Injunctive or equitable relief; damages
    A person specified in [subsection (c)] subsection (d) 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.
    [(b)] (c) Punitive damages; attorney's fee
    In addition to the relief specified in [subsection (a)] 
subsection (b) of this section, the court may award punitive 
damages and the costs of [suit] the civil action and a 
reasonable attorney's fee.
    [(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;
                  [(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 
                organization; 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 deduct from the amount 
                recovered--
                          [(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) of this section 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.]
    (d) Persons That May Initiate Civil Actions.--
          (1) In general.--A civil action under subsection (b) 
        may be initiated by--
                  (A) the Attorney General, at the request of 
                the Secretary acting on behalf of--
                          (i) an Indian tribe;
                          (ii) an Indian; or
                          (iii) an Indian arts and crafts 
                        organization;
                  (B) an Indian tribe, acting on behalf of--
                          (i) the Indian tribe;
                          (ii) a member of that Indian tribe; 
                        or
                          (iii) an Indian arts and crafts 
                        organization;
                  (C) an Indian; or
                  (D) an Indian arts and crafts organization.
          (2) Disposition of amounts recovered.--
                  (A) In general.--Except as provided in 
                subparagraph (B), an amount recovered in a 
                civil action under this section shall be paid 
                to the Indian tribe, the Indian, or the Indian 
                arts and crafts organization on the behalf of 
                which the civil action was initiated.
                  (B) Exceptions.--
                          (i) Attorney general.--In the case of 
                        a civil action initiated under 
                        paragraph (1)(A), the Attorney General 
                        may deduct from the amount--
                                  (I) the amount of the cost of 
                                the civil action and reasonable 
                                attorney's fees awarded under 
                                subsection 2(c), to be 
                                deposited in the Treasury and 
                                credited to appropriations 
                                available to the Attorney 
                                General on the date on which 
                                the amount is recovered; and
                                  (II) the amount of the costs 
                                of investigation awarded under 
                                subsection (c), to reimburse 
                                the Board for the activities of 
                                the Board relating to the civil 
                                action.
                          (ii) the cost of the civil action; 
                        and
                                  (II) reasonable attorney's 
                                fees.
    [(d) Definitions
    [As used in this section--
          [(1) the term ``Indian'' means any individual who is 
        a member of an Indian tribe; or for the purposes of 
        this section is certified as an Indian artisan by an 
        Indian tribe;
          [(2) subject to subsection (f) of this section, the 
        terms ``Indian product'' and ``product of a particular 
        Indian tribe or Indian arts and crafts organization'' 
        has the meaning given such term [1] in regulations 
        which may be promulgated by the Secretary of the 
        Interior;
          [(3) the term ``Indian tribe'' means--
                  [(A) any Indian tribe, band, nation, Alaska 
                Native village, or other organized group or 
                community which is recognized as eligible for 
                the special programs and services provided by 
                the United States to Indians because of their 
                status as Indians; or
                  [(B) any Indian group that has been formally 
                recognized as an Indian tribe by a State 
                legislature or by a State commission or similar 
                organization legislatively vested with State 
                tribal recognition authority; and
          [(4) the term ``Indian arts and crafts organization'' 
        means any legally established arts and crafts marketing 
        organization composed of members of Indian tribes.
    [(e) Severability
    [In the event that] (e) Savings Provision.--If any 
provision of this section is held invalid, it is the intent of 
Congress that the remaining provisions of this section shall 
continue in full force and effect.
    (f) Regulations
    Not later than 180 days after November 9, 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.

                          18 U.S.C. Sec. 1159

Sec. 1159. Misrepresentation of Indian produced goods and products

    (a) It is unlawful to offer or display for sale or sell any 
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.
    [(b) Whoever knowingly violates subsection (a) shall--
          [(1) in the case of a first violation, if an 
        individual, be fined not more than $250,000 or 
        imprisoned not more than five years, or both, and, if a 
        person other than an individual, be fined not more than 
        $1,000,000; and
          [(2) in the case of subsequent violations, if an 
        individual, be fined not more than $1,000,000 or 
        imprisoned not more than fifteen years, or both, and, 
        if a person other than an individual, be fined not more 
        than $5,000,000.]
    (b) Penalty.--Any person that knowingly violates subsection 
(a) shall--
          (1) in the case of a first violation by that person--
                          (A) if the applicable goods are 
                        offered or displayed for sale at a 
                        total price of $1,000 or more, or if 
                        the applicable goods are sold for a 
                        total price of $1,000 or more--
                          (i) in the case of an individual, be 
                        fined not more than $250,000, 
                        imprisoned for not more than 5 years, 
                        or both; and
                          (ii) in the case of a person other 
                        than an individual, be fined not more 
                        than $1,000,000; and
                  (B) if the applicable goods are offered or 
                displayed for sale at a total price of less 
                than $1,000, or if the applicable goods are 
                sold for a total price of less than $1,000--
                          (i) in the case of an individual, be 
                        fined not more than $25,000, imprisoned 
                        for not more than 1 year, or both; and
                          (ii) in the case of a person other 
                        than an individual, be fined not more 
                        than $100,000; and
          (2) in the case of a subsequent violation by that 
        person, regardless of the amount for which any good is 
        offered or displayed for sale or sold--
                  (A) in the case of an individual, be fined 
                under this title, imprisoned for not more than 
                15 years, or both; and
                  (B) in the case of a person other than an 
                individual, be fined not more than $5,000,000.
                  (c) As used in this section--
          (1) the term ``Indian'' means any individual who is a 
        member of an Indian tribe, or for the purposes of this 
        section is certified as an Indian artisan by an Indian 
        tribe;
          (2) 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;
          [(3) the term ``Indian tribe'' means--
                  [(A) any Indian tribe, band, nation, Alaska 
                Native village, or other organized group or 
                community which is recognized as eligible for 
                the special programs and services provided by 
                the United States to Indians because of their 
                status as Indians; or
                  [(B) any Indian group that has been formally 
                recognized as an Indian tribe by a State 
                legislature or by a State commission or similar 
                organization legislatively vested with State 
                tribal recognition authority; and]
          (3) the term ``Indian tribe''--
                  (A) has the meaning given the term in section 
                4 of the Indian Self-Determination and 
                Education Assistance Act (25 U.S.C. 450b); and
                  (B) includes, for purposes of this section 
                only, an Indian group that has been formally 
                recognized as an Indian tribe by--
                        (i) a State legislature;
                          (ii) a State commission; or
              (iii) another similar organization vested with 
            State legislative tribal recognition authority; 
            and''.
          (4) the term ``Indian arts and crafts organization'' 
        means any legally established arts and crafts marketing 
        organization composed of members of Indian tribes.
    (d) In the event that any provision of this section is held 
invalid, it is the intent of Congress that the remaining 
provisions of this section shall continue in full force and 
effect.

                                  
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