By DAVID D. KIRKPATRICK
Published: March 5, 2010
There is a relatively short list of people who like mail-order cigarettes: teenagers, adults evading sales taxes and the Seneca Nation of Indians of western New York, which dominates the national market.
Even the big tobacco companies oppose the practice, in part to stamp out the Senecas’ competition. And with the industry’s strange-bedfellow backing, a bill to block the shipment of cigarettes passed the House of Representatives last spring by a vote of 397 to 11. A Senate committee approved it unanimously last fall.
But then the Senecas, who control a gambling and cigarette empire that brings in more than $1 billion a year, began a campaign of back-room lobbying and public political threats. That now appears to have shut down the legislation and kept the tribe in the cigarette business, a case study in the power of a well-financed special interest to thwart what had seemed to be a national consensus.
“Isn’t that the way things go in the American system?” asked Richard Nephew, co-chairman of the Seneca Nation’s foreign relations committee. “It is something new for us to actively get involved in the American political process,” he said. “But we are trying to learn what works in America, and I guess making political contributions is something that works.”
As recently as December, a ban on mail-order cigarettes called the PACT Act — for Prevent All Cigarette Trafficking — looked all but certain to become law. After the Senate Judiciary Committee approved the House measure, Senator Harry Reid of Nevada, the majority leader, prepared the bill for passage on the floor. No senator has publicly opposed the legislation.
But at the last minute, two or three Democratic senators told party leaders privately that they might block the bill, according to senior Senate Democratic aides. They spoke on the condition of anonymity because they were not authorized to speak publicly.
The Senecas and their lobbyists said they did not know who their Senate protectors were. Records of the tribe’s campaign contributions offered few clues; the only significant donation was a $15,000 check to the Republican Senatorial Campaign Committee.
The Senecas’ apparent victory — at least for now — is a comeback of sorts. Five years ago, the Indian nation lost much of its business when Eliot Spitzer, then attorney general of New York, pressured private carriers like FedEx and UPS to stop delivering cigarettes in the interest of keeping them away from children. That forced the Senecas to rely on the United States Postal Service, which declined to join the ban. The tribe’s sales fell to about 12 million cartons a year from a peak of about 30 million cartons in 2004, according to the New York State Department of Taxation and Finance.
Despite its professed inexperience in Washington, the Seneca Nation is well represented on K Street. Last year, the tribe spent more than $300,000 in reported fees to three lobbying firms: the powerhouse Akin Gump; Holland & Knight, where its lobbyists include Ben Nighthorse Campbell, a former senator and American Indian; and Sonnenschein Nath & Rosenthal, which represents many Indian nations and led the Senecas’ side of the cigarette fight. Sonnenschein reported that its fees from the Senecas jumped threefold to $110,000 in the fourth quarter as the battle heated up.
The Senecas and their lobbyists won the support of other Indian nations and advocacy groups, including the National Congress of American Indians, by attacking the proposed legislation as an intrusion on Indian sovereignty. The Senecas charged that it would give states powers to police Indian land; its Congressional sponsors dispute that.
“Conferring jurisdiction to the states — that should be very troubling to every Indian tribe,” Mr. Nephew said.
On Capitol Hill, the lobbyists distributed memorandums painting the legislation as a ploy by big tobacco companies to scapegoat American Indians for teenage smoking, beating back low-price competition in the process. (The tribe’s online Seneca Smokeshop specializes in Indian-made and other “economy” brands.)
And in hard-pressed western New York, the Senecas warned that the proposed ban could cost 1,000 jobs in the cigarette business. “An attack on the Seneca Nation is an attack on the economy of western New York,” J. C. Seneca, who runs a tobacco business and is co-chairman of the tribe’s foreign relations committee, told The Buffalo News. With its cigarette sales and casinos, Mr. Seneca said, the Indian nation was “a $1.1 billion economic engine” that would use its tobacco profits for new investments and jobs.
By mid-December, the campaign had won two important converts. Two western New York congressmen, Brian Higgins and Eric Massa, both Democrats, wrote letters to the state’s two senators, Charles E. Schumer and Kirsten E. Gillibrand, also Democrats, urging them to block Senate passage. Mr. Higgins and Mr. Massa had voted for the bill in the House, but they said the Senecas’ arguments about the economic impact had changed their minds.
“I do not believe that western New York can afford any more job losses,” Mr. Higgins wrote to the senators. (Mr. Massa, who announced this week that he was retiring, echoed the sentiment.)
The next month, the Senecas sent a warning in the form of an electronic billboard along an upstate New York highway. “Don’t let the PACT Act destroy western New York’s economy,” the billboard declared. “Tell Senators Schumer and Gillibrand No.”
The nation, which has fought off years of New York State efforts to tax its cigarettes, had already dedicated a $1 million war chest for political retaliation against any New York State official who crossed the tribe. Also in January, the Seneca Nation’s foreign relations committee approved a proposal to spend $250,000 opposing Ms. Gillibrand’s campaign for election this fall; it will be her first statewide race because she was appointed last year to fill the seat left open by Secretary of State Hillary Rodham Clinton.
Both New York senators are sponsors of the bill, and both said through spokesmen that they had not worked behind the scenes to slow its passage. Matt Canter, a spokesman for Ms. Gillibrand, said she supported economic development but not at the price of enabling teenage smoking.
Seneca officials and their lobbyists said the tribe tried to prevent under-age sales, in some cases by requiring faxed proof of age. Critics said faxed identification was easy to fake or borrow. The Senecas noted that online wine merchants use private carriers like UPS and FedEx that allow them to require the signature of an adult, but the Seneca cigarette dealers must rely on the United States Postal Service, which does not offer that option.
“It seems very discriminatory, as if they were targeting the Seneca Nation,” Mr. Nephew of the Senecas said of the federal legislation.
Senate Democratic leaders could still revive the measure, perhaps by attaching it to some other bill. Republicans have talked of pushing forward, possibly to make trouble for Ms. Gillibrand. But even if it did pass, Mr. Nephew said, it would ban only cigarette shipments and not cigars. “I guess there are a lot of cigar smokers in Washington and places where powerful people hang out,” Mr. Nephew said. “It appears that they are protecting their own habit.”