In Nebraska, some liquor stores sell booze to minors and manage to hang onto their licenses, according to Nebraska Liquor Control Commission data. That’s as long as the stores are doing business in Whiteclay, Nebraska, located about 250 feet south of the Oglala Sioux Tribe’s Pine Ridge Indian Reservation.

The reservation, almost all of which lies just over the border in South Dakota, is officially dry, with consumption, possession and sales of alcohol banned. Meanwhile, tribal members, including youngsters caught in a recent police sting, make up almost the entire customer base of Whiteclay’s four liquor stores, which sell the equivalent of 4.9 million cans of beer annually out of ramshackle buildings lining a two-lane prairie road. With no white settlements for miles around, and a population of 14, not counting the drunks passed out in the streets, the town appears to exist primarily to get liquor onto the dry reservation.

Business is brisk in Whiteclay. But some nights are special. “Every year on prom night, you can watch reservation high-school kids in tuxedos and prom dresses pulling up and buying cases of beer,” said a tribal member, who asked not to be identified for fear of retribution. “They’re obviously under 21. I did it myself when I was in high school.” He bought his first beer in Whiteclay at 14, he said.

Whiteclay’s beer stores also trade alcohol for sex and sell to bootleggers, intoxicated customers and people who have no legal place, such as a licensed bar or café, in which to consume their purchases. That’s according to the Oglala Sioux Tribe, which has filed a federal lawsuit against the stores and the breweries and distributors that supply them, for knowingly contributing to the epidemic of alcoholism on their impoverished reservation.

While plying their trade, the beer stores create wealth locally and throughout the state, taking in millions of dollars in revenue and generating income, business and sales taxes. In 2010, just the federal and state excise taxes (included in liquor’s sale price) amounted to $413,932, according to the state liquor commission.

More alcohol-derived dollars flow into and around the state, thanks to campaign contributions from local liquor distributors and trade groups and international manufacturers like Anheuser-Busch, maker of Budweiser and other brands: they gave candidates for in-state offices $135,000 in 2010, according to the Institute on Money in State Politics.

The beer storeowners in Whiteclay declined to comment for this article, but Vic Clark, manager of the Arrowhead Foods grocery and a town resident since 1993, called all of its businesses “gold mines in hell.”

“Hell” is a good description of what the Oglala Sioux Tribe’s lawsuit says liquor has done to its community. The complaint claims alcohol’s “devastating injuries” have overwhelmed the tribe’s health-care, social-services, education and justice systems for generations. According to the tribal government, alcoholism has a severe impact on 85 percent of reservation families. About 90 percent of crime on Pine Ridge is alcohol-related, says its police department–which has no jurisdiction over Whiteclay.

Policing comes from a town 20 miles away that relies on occasional patrols and a camera mounted in Whiteclay to see if anything’s going on. A year ago, store owners beat a Native American man in front of their establishment, landing him in the hospital, according to filmmaker Mark Vasina, director of the award-winning 2008 documentary, Battle for Whiteclay. The camera did not pick up the assault. “It doesn’t pick up bootleggers filling their trunks behind the stores either,” Vasina said.

“Whiteclay is a unique situation,” said the tribe’s attorney, Tom White, of White and Jorgenson, in Omaha. “When a liquor store elsewhere sells its goods, it can assume they will be used lawfully. In contrast, in Whiteclay, there’s no publicly accessible place to consume alcohol legally, so the stores sell it knowing that, without a doubt, it will be used unlawfully.” The beer must be either consumed in public in violation of Nebraska law or carried onto the dry reservation in violation of Oglala Sioux Tribe law, White said.

The tribe’s lawsuit also claims that years of media coverage of Whiteclay–from newspaper and magazine articles to a feature-length documentary movie and YouTube videos–means everyone in the supply chain, from the breweries to the retail stories, is well aware of problems associated with the town’s liquor trade.

“They all know they’ve unleashed a flood of alcohol onto a vulnerable population,” said White.

“Supply and demand,” Clark said. “That’s why businesses pop up.” He scoffed at the idea of ongoing criminality in Whiteclay, as opposed to occasional mishaps–misreading the date on an ID and selling to a minor by mistake, for example. “These [beer-store owners] are family guys,” he said. “Why would they jeopardize their businesses for a few extra dollars?” He dismissed the Oglala lawsuit as “politics” and “blatant lies,” adding, “No one wants to make the tribe accountable. The beer stores are not the police of Native American people.”

Clark addressed the allegations of sex-for-beer exchanges. “There’s not sex happening. If it is, it’s no different than Scottsbluff, Omaha or Lincoln. Someone says, ‘I’ll flash you some boob if you buy me a beer’–that’s how society works,” he explained. “Whiteclay is no different from any town by any reservation in the United States.”

James (Toby) Big Boy, chairman of the Oglala Sioux Tribe Judiciary Committee, said that the tribe has been trying for years to shut down liquor sales over the border in Nebraska, to no avail. Tribal leaders have pleaded with Nebraska state officeholders to crack down on Whiteclay, set up tribal-police blockades of the road to the town and held annual protest marches focusing on unsolved murders and unexplained deaths of Native Americans in the Whiteclay area.

“Alcohol is depleting our people and our culture,” Big Boy said, adding that the tribe is turning to the courts out of desperation. “We’ve tried talking to Nebraska and gotten nowhere. The federal government doesn’t care either; it never even pushed for justice in the case of the murders.”

Of all the startling statistics associated with Pine Ridge–85% unemployment, an infant mortality rate 300% higher than the country as a whole, teen suicide 150% higher and life expectancy at least 25 years shorter–the one that most affected White, he said, was the proportion of Pine Ridge children diagnosed with fetal-alcohol syndrome or fetal alcohol spectrum disorder.

“One in four children on the reservation has fetal-alcohol effects,” the lawyer said. “That condemns a baby to a life of misery before it takes its first breath.”

The power of alcohol on the reservation may be hard for outsiders to understand, said the tribal member who bought his first Whiteclay beer at 14 and is now sober: “It affects us like crack cocaine affects other people. Our children are exposed to alcohol before they’re born. They’re born into damaged families. With no jobs to be found, there’s nothing to do when they grow up, and alcohol offers a way to blot out reality.”

Several major breweries supply the beer on Whiteclay shelves, including Miller, Molson Coors and Pabst, according to the state liquor commission. The bulk of Whiteclay sales, though–about 75%–comes from Anheuser-Busch. Leading up to the 2010 election, the giant firm donated to many Nebraska candidates, including the current governor, Republican Dave Heineman, who received $11,000. All told, beer, liquor and wine companies made up Heineman’s top-contributing industry sector, at more than $96,000. Candidates for other offices that year received amounts ranging from several hundred to several thousand dollars. Neither Anheuser Busch nor the governor’s office replied to requests for a comment.

Even impoverished reservations–including Pine Ridge, one of the poorest places in the nation, according to the U.S. Census–can be economic drivers in their regions. That’s because they have minimal economies of their own, with few stores or service businesses where people can spend their money. As a result, little money changes hands on the reservation itself. Funds that do arrive (generally federal dollars, including Social Security, welfare and veterans’ benefits) flow off the reservation almost immediately, typically landing in non-Indian enterprises.

“The federal government sends some $80 million annually to Pine Ridge, and that money is spent in Nebraska, including towns like Chadron, where Walmart built a superstore,” said Nebraska state senator LeRoy J. Louden, who represents the area around Whiteclay and is non-partisan (not affiliated with either major party). “That store was built because of the reservation.”

Whiteclay’s Arrowhead Foods did more than a million dollars in business last year, with an entirely Native American clientele, according to Clark. “I love what I do. It’s kind of a blessing,” he said.

This year, Louden has introduced a bill to create alcohol-impact zones. If it is enacted, local governments–such as Sheridan County, surrounding Whiteclay–would be able ask the state liquor commission to set up special controls in areas where public drunkenness and other alcohol-related problems occur. For example, liquor-store hours might be shortened. “Perhaps you couldn’t start selling till noon,” Loudon said, adding that Whiteclay stores are now open from 8 am until 11 pm.

“I testified in favor of the measure, though it does just a little in terms of solving the problem,” said Vasina. “What Whiteclay needs is 24-hour patrols and comprehensive police investigations of wrongdoing.”

What about personal responsibility, asked Nebraska state senator Tyson Larson, a Republican, who called the lawsuit a product of attorney White “chasing the big pay day.” White is a trial attorney, said Larson, “and they’re always looking for something.” In any case, Larson said, it’s not government’s responsibility to protect you from yourself: “Maybe from other people, such as in laws against drinking and driving. But if you want to drink, you have to live with the consequences.”

Vasina disagreed, calling alcoholism a public health issue. “It’s a disease,” he said. “If we have diseases in the mainstream community–whether infectious diseases like swine flu or drug addictions–we mobilize, producing vaccines, laws, police investigations or whatever is necessary. If we had meth labs in our neighborhoods, would we leave the problem up to individual addicts to resolve? That’s a fairy tale. We are applying rules to the reservation we don’t apply to ourselves.”

“Over the years, thousands have died, and thousands of children have been orphaned, thanks to Whiteclay,” said Winnebago activist Frank LaMere, who has fought for 15 years to close down the town’s liquor trade. “If something like this were to happen in Omaha, Lincoln or any other city or town not associated with a reservation, it would be fixed immediately.”

*Photo note: Photos by citizen journalist provided on condition of anonymity, for fear of retribution.