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[DOCID: f:hr397p1.111]
From the House Reports Online via GPO Access
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111th Congress                                            Rept. 111-397
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
             INDIAN ARTS AND CRAFTS AMENDMENTS ACT OF 2009

                                _______
                                

                January 15, 2010.--Ordered to be printed

                                _______
                                

  Mr. Rahall, from the Committee on Natural Resources, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 725]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Natural Resources, to whom was referred the 
bill (H.R. 725) to protect Indian arts and crafts through the 
improvement of applicable criminal proceedings, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                          Purpose of the Bill

    The purpose of H.R. 725 is to protect Indian arts and 
crafts through the improvement of applicable criminal 
proceedings, and for other purposes.

                  Background and Need for Legislation

    In 1935, Congress enacted legislation to establish the 
Indian Arts and Crafts Board (49 Stat. 891). The Indian Arts 
and Crafts Board, an agency within the U.S. Department of the 
Interior, is responsible for promoting the development of 
American Indian and Alaska Native arts and crafts, improving 
the economic status of members of Indian tribes, and helping to 
develop and expand marketing opportunities for arts and crafts 
produced by American Indians and Alaska Natives.
    The 1935 legislation adopted criminal penalties for selling 
goods with the misrepresentation that they were Indian 
produced. This provision, currently located in section 1159 of 
title 18, U.S. Code, set fines not to exceed $500 or 
imprisonment not to exceed six months, or both. Although this 
law was in effect for many years, it provided no meaningful 
deterrent to those who misrepresented imitation arts and crafts 
as Indian produced. In addition, ``willful'' intent was 
required to be proved, therefore, very little enforcement took 
place.
    In response to growing problem of products misrepresented 
or erroneously represented as produced by Indians, Congress 
passed the Indian Arts and Crafts Act of 1990 (Public Law 101-
644). This Act is essentially a truth-in-advertising law that 
prohibits misrepresentation in the marketing of Indian arts and 
crafts products within the United States. The law makes it 
illegal to offer, display for sale, or sell, any art or craft 
product 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.
    Under the Act, an Indian is defined as a member of any 
federally or State recognized Indian Tribe, or an individual 
certified as an Indian artisan by an Indian Tribe. The law 
covers all Indian and Indian-style traditional and contemporary 
arts and crafts produced after 1935. Some traditional items 
frequently copied by non-Indians include Indian-style jewelry, 
pottery, baskets, carved stone fetishes, woven rugs, kachina 
dolls, and clothing.
    Despite these efforts, information from the Department of 
Justice indicates that very few cases relating to the sale of 
counterfeit Indian goods are investigated each year. A recent 
Wall Street Journal article referred to a ``tsunami of cheap 
imported jewelry--designed to look like authentic Native 
American art--is flooding the Southwest United States''. The 
New Mexico State Attorney General's Office has stated that at 
least 50 percent of the Indian jewelry on the New Mexico market 
is misrepresented in some way. The Indian Arts and Crafts 
Association reports that some of the fake Indian arts and 
crafts are ``virtually indistinguishable'' and that counterfeit 
Indian products have become ``more sophisticated,'' estimating 
that nationally, as much as 75% of the roughly $1 billion of 
jewelry, pottery, rugs and other merchandise sold every year as 
authentic is not.
    H.R. 725 seeks to address this continuing problem by 
strengthening the penalties associated with misrepresentation 
of Indian produced goods, and by empowering federal, tribal and 
local authorities to undertake investigations and enforcement. 
A Senate companion bill (S. 151) passed the Senate on July 24, 
2009.

                            Committee Action

    H.R. 725 was introduced on January 27, 2009 by 
Representative Ed Pastor (D-AZ). The bill was referred to the 
Committee on Natural Resources, and in addition to the 
Committee on the Judiciary. On December 2, 2009, the full 
Committee held a hearing on the bill.
    On December 16, 2009 the full Natural Resources Committee 
met to consider H.R. 725. The bill was ordered favorably 
reported to the House of Representatives by voice vote.

                      Section-by-Section Analysis


Section 1. Short title

    This section provides that this Act may be cited as the 
``Indian Arts and Crafts Amendments Act of 2009.''

Section 2. Indian arts and crafts

    Subsection 2(a) amends Section 5 of the Act entitled ``An 
Act to promote the development of Indian arts and crafts and to 
create a board to assist therein, and for other purposes,'' (25 
U.S.C. 305d) to authorize any federal law enforcement officer 
to conduct investigations of an offense involving the sale of 
any good that is misrepresented as an Indian produced good or 
product that occurs within the jurisdiction of the United 
States. Under current law, only employees of the Federal Bureau 
of Investigation (FBI) are authorized to conduct such 
investigations.
    This subsection also provides that the Indian Arts and 
Crafts Board (the Board) may refer an alleged offense to any 
federal law enforcement officer for appropriate investigation. 
Further, it permits a federal law enforcement officer to 
investigate an alleged offense regardless of whether such 
officer receives a referral from the Board.
    Subsection 2(a) further provides that the findings of an 
investigation of an alleged offense shall be submitted to a 
federal or state prosecuting authority; or to the Board. H.R. 
725 provides that the Board may, upon receiving the findings of 
such an investigation, recommend to the Attorney General that 
criminal proceedings be initiated and provide such support to 
the Attorney General relating to the criminal proceedings as 
the Attorney General determines to be appropriate. This 
subsection also authorizes the Board to recommend that the 
Attorney General initiate a civil action.
    Subsection 2(b) amends 25 U.S.C. 305e to specify the 
persons who may initiate civil actions for misrepresentation of 
Indian produced goods. These include the Attorney General, an 
Indian tribe, an Indian, or an Indian arts and crafts 
organization. The subsection makes further amendments regarding 
the disposition of amounts recovered in a civil action under 
this section.

Section 3. Misrepresentation of Indian produced goods and products

    This section amends Section 1159 of title 18, United States 
Code, to clarify penalties resulting from violation of the Act. 
Under current law, the maximum penalties are the same for all 
offenders, regardless of the value of the goods. This section 
provides that, for goods that are offered or displayed for sale 
at a total price of $1,000 or more, a first time violation by 
an individual will result in a fine of not more than $250,000, 
imprisonment for not more than 5 years, or both.
    In the case where a violator is other than an individual, 
(such as a company, group, or organization), this section 
provides that the violator shall be fined not more than 
$1,000,000 for a first time violation. If the applicable goods 
are offered or displayed for sale at a total price of less than 
$1,000, an individual shall be fined not more than $25,000, 
imprisoned for not more than one year, or both, for the first 
violation. A violator who is other than an individual shall be 
fined not more than $100,000. For subsequent violations an 
individual may be fined, or imprisoned for not more than 15 
years, or both. For a person other than an individual, the bill 
provides that for a subsequent violation they shall be fined 
not more than $5,000,000.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                   Constitutional Authority Statement

    Article I, section 8 of the Constitution of the United 
States grants Congress the authority to enact this bill.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that Rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to protect Indian arts and crafts 
through the improvement of applicable criminal proceedings, and 
for other purposes.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

H.R. 725--Indian Arts and Crafts Amendments Act of 2009

    H.R. 725 would allow any federal law enforcement officer to 
investigate the sale of counterfeit Indian art products. Under 
current law, only employees of the Federal Bureau of 
Investigation are authorized to conduct such investigations. 
Information from the Department of Justice (DOJ) indicates that 
very few cases relating to the sale of counterfeit Indian goods 
are investigated each year. CBO estimates that the cost of 
implementing H.R. 725 would not be significant because we 
expect that it would not appreciably change the workload of 
federal law enforcement officers or DOJ attorneys who would 
prosecute the cases.
    H.R. 725 also would reduce the maximum penalties for 
offenders who market or sell counterfeit items priced at less 
than $1,000. Under current law, the maximum penalties are the 
same for all offenders, regardless of the price of the goods. 
Criminal fines are recorded as revenues, deposited into the 
Crime Victims Fund, and later spent. CBO estimates that 
enacting H.R. 725 could reduce the amount of revenues deposited 
into the fund and direct spending from that fund, but any such 
effects would be insignificant given the small number of cases 
involved.
    H.R. 725 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.
    On May 5, 2009, CBO transmitted a cost estimate for S. 151, 
the Indian Arts and Crafts Amendments Act of 2009, as ordered 
reported by the Senate Committee on Indian Affairs on April 30, 
2009. The House and Senate versions of the legislation are very 
similar, and the CBO cost estimates are the same.
    The CBO staff contact for this estimate is Jeff LaFave. The 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                           Earmark Statement

    H.R. 725 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, 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):

                         ACT OF AUGUST 27, 1935

  AN ACT To promote the development of Indian arts and crafts and to 
       create a board to assist therein, and for other purposes.



           *       *       *       *       *       *       *
  [Sec. 5. (a) The Board may receive complaints of violations 
of section 1159 of title 18, United States Code, 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 6.]

SEC. 5. CRIMINAL PROCEEDINGS; CIVIL ACTIONS.

  (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, as appropriate, 
        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 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.
  Sec. 6.
  (a) Definitions.--In this section:
          (1) Indian.--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) A person specified in [subsection (c)] subsection 
(d) 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)  * * *

           *       *       *       *       *       *       *

  [(b)] (c) In addition to the relief specified in [subsection 
(a)] subsection (b), the court may award punitive damages and 
the costs of [suit] the civil action and a reasonable 
attorney's fee.
  [(c)(1) A civil action under subsection (a) 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) 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) may be 
        deducted from the total amount awarded under subsection 
        (a)(2).
  [(d) 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), 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
          [(4) the term ``Indian arts and crafts organization'' 
        means any legally established arts and crafts marketing 
        organization composed of members of Indian tribes.]
  (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 (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) Indian tribe.--In the case of a 
                        civil action initiated under paragraph 
                        (1)(B), the Indian tribe may deduct 
                        from the amount--
                                  (I) the amount of the cost of 
                                the civil action; and
                                  (II) reasonable attorney's 
                                fees.
  [(e) 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.

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 18, UNITED STATES CODE

PART I--CRIMES

           *       *       *       *       *       *       *


CHAPTER 53--INDIANS

           *       *       *       *       *       *       *


Sec. 1159. Misrepresentation of Indian produced goods and products

  (a) * * *
  [(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) * * *

           *       *       *       *       *       *       *

          [(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

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    H.R. 725 amends the Indian Arts and Crafts Act primarily to 
enable any law enforcement official to investigate and 
prosecute violations of the Act. Under existing law, the Act is 
generally enforced when the Indian Arts and Crafts Board refers 
complaints to the Federal Bureau of Investigation (FBI) for 
investigation, or when the FBI on its own initiative launches 
an investigation. Other law offices generally do not 
investigate violations of the Act, and the FBI's resources 
clearly must be prioritized with arts and crafts crime being 
secondary to such duties as investigating major crimes and 
terrorism threats.
    After the legislative hearing on H.R. 725 within the 
Natural Resources Committee, it became clear that the Bureau of 
Indian Affairs' Office of Law Enforcement is contemplated to be 
the primary agency to investigate and enforce violations of the 
Act. To add clarity to the intent of H.R. 725, and to ensure 
that law enforcement officers without suitable background or 
experience in dealing with Indian tribes or with artists or 
counterfeit arts and crafts, do not become primary enforcers of 
this Act, it should be made clear through an amendment to H.R. 
725 or through appropriate communications with the 
Administration that only qualified agencies, such as the BIA, 
are expected to have primary enforcement of this law. As 
currently drafted, H.R. 725 grants explicit authority to ``any 
Federal law enforcement officer'' to enforce the Act. This is 
an overly broad grant of authority. Clarification, either 
through amendment or administrative act, is needed as arts and 
crafts enforcement should not be a burden placed on ``any 
Federal law enforcement officer,'' such as the Secret Service, 
the U.S. Capitol Police, or the many other law enforcement 
agencies with no duties related to arts and crafts.
                                                      Doc Hastings.

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