Bill to Repeal Ban Prohibiting Distilleries on Tribal Lands Making Headway

Pictured: The Great Wolf Lodge in Grand Mound, Washington. The Chehalis Tribe would like to start distilling spirits. (Courtesy camknows / Flickr)

In 1834, the 23rd United States Congress passed “an Act to regulate trade and intercourse with the Indian tribes, and to preserve peace on the frontiers.” In section 21 of this law, Congress mandated “that if any person whatever shall, within the limits of the Indian country, set up or continue any distillery for manufacturing ardent spirits, he shall forfeit and pay a penalty of one thousand dollars; and it shall be the duty […] to destroy and break up the same; and it shall be lawful to employ the military force of the United States in executing that duty.”

That law, enacted on June 30, 1834, is now codified at 25 U.S.C. § 251 (“Section 251”), and it’s creating trouble for one Washington Tribe that wants to set up a brewing and distilling operation.

In 2016, when the Confederated Tribes of the Chehalis Reservation in southwestern Washington state wanted to start distilling their own spirits, the Bureau of Indian Affairs stymied the plan, citing the Section 251 provision and forcing the Chehalis to buy spirits from producers off the reservation.

According to The New York Times, “the ban, which was signed by Andrew Jackson, was a piece of a broader paternalistic policy scheme that treated American Indians as wards of the state. Indians, the thinking went, were uncivilized, incapable of enlightened self-rule, and bound to be fleeced by white settlers.”

In 1953, Congress amended the law to allow alcohol to be sold on reservations, but the ban on production remained.

Now, a bill (H.R. 5317) introduced in March by Rep. Jaime Herrera Beutler, a Republican who represents the district encompassing the Chehalis, aims to change that and end the distilling ban once and for all by deleting the Section 251 provision. Since it was introduced, the bill has made significant progress.

In April, the House Natural Resources Subcommittee on Indian, Insular, and Alaska Native Affairs held a hearing on the bill, in which the Chehalis’ Tribal Chairman Harry Pickernell, Sr. and Darryl LaCounte, Acting Deputy Director of the Office of Trust Services at the Bureau of Indian Affairs were invited as witnesses.

In a memorandum prepared for the hearing, the subcommittee outlined the need for the legislation, writing that “While the law may have advanced a valid public policy goal in the mid-19th century, it is not compatible with the modern policy of promoting tribal self-determination and economic diversification on Indian lands where existing laws provide reasonable regulation of liquor transactions.”

Chairman Pickernell’s testimony outlined the need for the legislation and the impact it would have on the Tribal economy and Tribal job creation.

“Southwest Washington has long been an economically depressed area lacking in businesses and jobs for Tribal members and non-Indians alike,” he said. “The Tribe operates a casino but is always looking for a way to diversify its economic base to continue to support its education, health, housing, safety, and other programs for its members. Approximately 40 percent of Tribal members are under the age of 21 and will need jobs in the future.”

“Currently the Tribe is planning to develop a stand-alone brewery and a stand-alone distillery, both of which will be on-reservation and 100 percent owned and operated by the Tribe,” Pickernell continued. “Each of these enterprises is intended to both provide new skills and training to Tribal members and non-Indians, but also provide skilled jobs on the Reservation.”

Pickernell noted that “by allowing the Tribe’s project to move forward, repealing Section 251 will create jobs both for Tribal members and the surrounding communities and provide an economic return to the Tribe for use to support its tribal programs. These will include jobs constructing the distillery, learning the distillery production trade, and addressing the marketing and distribution of the Tribe’s products.”

The Tribe has already obtained building permits for the project, has completed the full design, and purchased some of the needed equipment. In addition to putting the project on hold out of fear that it will could be destroyed by the BIA, the Section 251 statute is also enacting other barriers by preventing them from obtaining the additional financing they need to complete the project.

Following the Subcommittee hearing, the full Natural Resources Committee met to consider the bill on May 8, where it passed by unanimous consent. It is now awaiting action in the entire House of Representatives.

For Tribes, the ability to set up breweries and distilleries could be a boon to Tribal economic development. According to the American Craft Spirits Association, there are now more than 1,500 craft distilleries nationwide, representing growth of more than 20 percent in the last year. Furthermore, the craft spirits industry employed almost 19,600 people. The industry sold nearly 6 million cases in 2016, with $3 billion in sales and 25 percent growth by value. And distillery and tasting room sales make up 34 percent of all sales for small craft distilleries. Washington state, where the Chehalis hope to set up shop, is third in the number of craft distilleries, behind California and New York.

As the New York Times article notes, “Over two-thirds of areas with majority Native American populations have unemployment rates above the national average, with some as high as 20 percent. Denying Native Americans access to this fountain of decent-paying, blue-collar manufacturing jobs based on nothing more than an ancient and offensive law is indefensible.”