More on Supreme Court Arguments in Narragansett Case

For more on the historic Narragansett case, see these links:

AP coverage of the case.

Providence Journal article on which attorney actually argued the case.

U.S. Supreme Court to Hear Narragansett Case on November 3

On Monday, the U.S. Supreme Court will hear arguments in Carcieri v. Kempthorne, the case that is expected to settle, once and for all, the litigation between Rhode Island and the Narragansett Indian Tribe that began in 1975, when the Narragansett filed suit to recover tribal lands in Rhode Island.

The Court is expected to decide two key issues:

Can the Interior Secretary place in federal trust land that was privately purchased by Indian tribes recognized after the passage of the 1934 Indian Reorganization Act (IRA), thereby removing the land from state control?

If the Congress passes an Act that terminates previous Indian claims to land, is the Secretary of the Interior precluded from creating additional territory?

At bottom, the case should resolve a split in interpretation concerning whether the IRA applies only to the tribes that were recognized at the time of the Act's passage in 1934, or whether it extends to tribes recognized after that date, or who are recognized in the future. Rhode Island has argued that since the Narragansett were federally recognized in 1983, the Interior Secretary does not have authority to take land into trust for the tribe, because the federal government's authority to take land into trust comes from Section 5 of the IRA, which was written to apply to tribes "now within Federal Jurisdiction" at the time of the Act's passage in 1934. It may seem like a legal technicality, but the outcome will greatly impact the ability of tribes recognized after 1934 to acquire land, and in turn, to exercise governmental authority.

The case is relevant to Indian gaming, because that's the boogeyman to states: if a tribe can get land, then it can get a casino, and that casino might be another Foxwoods (never mind, of course, the economic benefits tribal gaming has brought to the state of Connecticut).

Read more here.

Status Quo in Florida?

Kathryn's quoted in this Tampa Tribune story on the aftermath of the Florida Supreme Court's decision invalidating a portion of the Seminoles' tribal-state compact. As we explained in a number of posts back in July (check our archives if you're interested in catching up!), the Florida Supreme Court ruled that Gov. Crist exceeded his state constitutional authority in authorizing banked card games through the tribal-state compact with the Seminoles.

Despite the state court ruling, though, the tribe continues to operate banked card games, such as blackjack.

The state is a bit stymied. The state attorney general has asked both the NIGC and the U.S. Attorney's office to stop the tribe's games, but to no avail -- not yet, anyway. The tribe has already paid the state $50 million and continues to make payments according to the compact's terms, and as Kathryn points out, stopping the banked card games may also stop the tribe's obligations to pay the state anything: The tribe's leverage, Rand said: the revenue sharing. "That's why, I think, you see the kind of paralysis you do on the part of the state. Do they actually want to push this? What if they just quietly allowed the status quo to occur?"

And -- sigh -- here's further evidence of the dubious distinction between revenue sharing and state taxation of tribal gaming.

According to the article, state senator Mike Haridopolos wants the state to negotiate a new compact that will require the Seminoles to pay even more: "We need to take a second and third look at this," said Haridopolos, R-Melbourne. "I've heard members consistently say that if you taxed all gaming that takes place in the state of Florida at Las Vegas or Louisiana rates, you'd bring in $1 billion a year. That could lower taxes. It's a viable issue to consider."

Read more: Decision Complicates Seminole Gaming Pact

Buffalo Creek Casino Case: Judge Skretny's Decision

On July 8, 2008, the federal district court issued a decision in the case challenging the NIGC's approval of the Seneca Nation's amended ordinance. The case, brought by Citizens Against Casino Gambling in Erie County, is an effort to prevent the tribe from operating a casino in Buffalo.

The plaintiffs claimed that the Buffalo parcel is not "Indian lands," so that Chairman Hogen's conclusion that the parcel meets IGRA's Indian lands requirement is arbitrary and capricious. After a lengthy analysis, Judge Skretny rejected this claim.

The plaintiffs also claimed that the Buffalo parcel did not qualify for the "settlement of a land claim" exception to IGRA's general prohibition against gaming on newly acquired lands, so that Chairman Hogen's conclusion on this point is arbitrary and capricious. On this one, the court sided with the plaintiffs. Recall that the Seneca Nation purchased the Buffalo parcel with funds from the federal Seneca Nation Settlement Act. The Interior Secretary had opined that land purchased with SNSA funds would fall within the "settlement of a land claim" exception.

The court, though, stated, "When the SNSA was enacted, the [Seneca Nation] did not possess an enforceable claim against the United States . . . . Because no claim existed, no claim was settled."

The court went on to hold that "gaming cannot lawfully occur on the Buffalo parcel under the settlement of a land claim exception," and vacated the NIGC's approval of the tribe's amended ordinance.

End of story, right? Wrong. In late July, federal lawyers asked the court to remand the issue to the NIGC. The argument is that while this case was pending, the Interior Department issued new regulations interpreting IGRA's exceptions to the prohibition against gaming on newly acquired lands (the section 2719 exceptions). These new regs take effect this month. And the next scheduled court date is August 21, when the Citizens Against Casino Gambling in Erie County are expected to ask the court to send federal marshals to shut down the Buffalo Creek Casino. Stay tuned.

Buffalo Creek Casino Case: The Story of the Buffalo Parcel

As everyone knows (right?), IGRA only authorizes Class II and III gaming on "Indian lands." For non-reservation land, the determination of whether a parcel of land is "Indian lands" can be very complicated, requiring careful analysis of a complex history of the tribe's interactions and agreements with the state and the federal government. In his July 8 decision, federal judge William Skretny conducted just that kind of analysis, reaching all the way back to the 17th century.

It's a long story that's difficult to make short, but here's the gist: In the 18th and 19th centuries, the Seneca Nation's land was sold and leased under a number of treaties, agreements, and statutes.

In the 1950s, the tribe filed claims against the U.S. for failing to ensure that the Seneca Nation received fair remuneration for its land. In 1969, the claims were still pending. One of the 19th century leases, however, was due to expire, and the New York state legislature set about renegotiating the lease with the tribe. An agreement was reached, and Congress codified it in the Seneca Nation Settlement Act of 1990. The Act included a provision requiring the U.S. to pay the tribe $35 million for past inequities. $5 million was earmarked for the tribe's economic and community development.

Then, in 2002, the Seneca Nation entered into a Class III compact with New York. The compact authorized gaming at three different sites, including on a to-be-purchased parcel of land in Buffalo. The tribe intended to use some of the funds from the 1990 Settlement Act to purchase the land. The compact was "pocket-approved" by the Interior Secretary.

In 2005, the tribe purchased 9 acres of land in Buffalo. A few months later, a citizens group, Citizens Against Casino Gambling in Erie County, filed suit in federal court to prevent the tribe from conducting gaming on the parcel.

Next up: The NIGC's actions

Things Are Brewing in Buffalo!

July is the month for high-profile Indian gaming litigation, and from the looks of it, expect further developments in August.

Besides the controversial case handed down by the Florida Supreme Court earlier this month, litigation has been brewing in New York over the Buffalo Creek Casino.

Just a few days after the Florida decision, a federal judge ruled that despite an NIGC decision to the contrary, the Seneca Nation could not operate gaming on a parcel of land in Buffalo, New York. The tribe currently operates a temporary casino there, and is in the midst of constructing a $333 million casino complex, billed as the largest privately funded construction project in Buffalo's history.

Now, the U.S. has filed a motion asking the federal court to "remand" the case to the NIGC. The tribe supports the motion, with the assistance of their chief legal consultant, the renowned constitutional scholar Laurence Tribe.

How did all that come about? We'll explain it for you!

Next up: The story of the Buffalo parcel . . . .

Attempts to Enforce State Law in Florida

As we explained in our last post, Florida's options for enforcing the Florida Supreme Court decision are limited. Though the court held that the governor could not authorize banked card games as a matter of state constitutional law, this may not necessarily mean that the Seminoles have to stop offering table games at their Hard Rock Hotel & Casino. Legally, the state must turn to the federal government, and politically, the state must decide whether it wants to risk hundreds of millions of dollars in revenue sharing.

The Isle Casino at Pompano Park, a private racino in Florida, brought suit in federal court to shut down the Seminoles' table games. But under IGRA, only a handful of suits are authorized. The statute says that a state or a tribe may sue to stop Class III gaming conducted in violation of a compact. And the federal courts have uniformly held that IGRA does not authorize a general private cause of action. So, being neither a state nor a tribe, the Isle Casino simply cannot sue to enforce IGRA -- which is exactly what the federal district court judge ruled.

The state's next move remains to be seen . . . . But in the meantime, both the Seminole Tribe and Gov. Crist have filed petitions for rehearing in the Florida Supreme Court.

Read more in this Florida Sun-Sentinel story.

The Fallout from the Florida Decision

In our last post, we explained the Florida Supreme Court's recent ruling that Gov. Crist exceeded his state constitutional authority in authorizing banked card games through the tribal-state compact with the Seminoles. That must mean that the Seminoles can't offer banked card games, such as blackjack, right? Not necessarily. There are at least three considerations that make this more complicated, both legally and politically.

First, the compact was negotiated, signed, and approved by the Interior Secretary. Under IGRA, this was a valid compact. The Seminoles have taken the position that a state court decision cannot invalidate a duly approved compact. So, they continue to offer all the games authorized under the compact, including banked card games.

Second, Florida's options for attempting to enforce the court's decision are limited. Florida has no independent state authority over the tribe's casino. At the same time, IGRA states that Class III gaming, such as banked card games, is legal only if it is operated in accordance with a valid compact. But only the federal government can enforce IGRA. The state of Florida can bring suit in federal court to stop unauthorized Class III gaming, or it can try to convince the NIGC or the local U.S. Attorney to shut down any unauthorized Class III gaming.

And third, though the compact contains a severability clause (meaning that even if the court invalidated the portion of the compact that authorized banked card games, the rest of the compact should remain valid), the compact also contains a revenue-sharing provision. The validity of a revenue-sharing provision should turn on whether the state gave the tribe anything above and beyond what the tribe is entitled to under IGRA -- typically, this is some measure of exclusivity, such as the ability to operate banked card games when no one else can. In other words, if the state tries to shut down the tribe's blackjack games, it runs the risk of forfeiting a great deal of revenue -- some $375 million over the first three years of the compact.

Next up: Why was a private casino was unsuccessful in trying to enforce the court's decision?

Read more in this article in the South Florida Sun-Sentinel in which Kathryn is quoted: Does Court Ruling Put Hard Rock in a Hard Place? Also, see Court Strikes Down Florida-Seminole Gaming Deal in the Miami Herald.

Wow – California Negotiated in Bad Faith?

As we discussed in our last post, a federal district court has held that California's revenue sharing demands in its negotiations with the Rincon Band of Luiseno Mission Indians amounted to an illegal tax, and therefore were evidence of the state's bad faith. What was the Band hoping to do – and what are the implications of this holding?

The Band sought to add 900 slot machines at its Harrah's Rincon Casino & Resort. In return, the state sought annual payments of 15% of the average net win for each of the new machines, as well as 10% of the net win on the existing machines. According to numbers crunched by Prof. Bill Eadington, who served as an expert witness for California, this would mean that the state would receive nearly $38M, while the Band's new profits from the deal, after making the required revenue sharing payments to the state, would be less than $2M. (The tribe’s income with or without the new machines would hover around $60 million.) The concessions offered by the state were "an agreement to reduce its fee payment in the future should gaming one day be opened up to non-tribal gaming establishments (a scenario the Court finds speculative and unlikely . . .), 900 more machines and five additional years to operate under its Compact." The court concluded that "[i]t is difficult to regard the State's proposed plan as anything more than a tax." And, the court expressly found that California negotiated in bad faith: "[T]he Court finds that the State's insistence on the payment of such a large fee to its general fund in return for concessions of markedly lesser value was in bad faith . . . ."

We believe this may be the first time a federal court has found that a state has negotiated in bad faith. In an early "scope of gaming" case, Mashantucket Pequot Tribe v. Connecticut, the Second Circuit avoided finding that the state had negotiated in bad faith, noting that the state's refusal to negotiate, whether or not in bad faith, could trigger IGRA's mediated negotiation process. The district court in Lac du Flambeau Band v. Wisconsin similarly avoided a finding of bad faith on the part of the state. Are we right? Let us know what you think!

Read more in Onell Soto's story in the San Diego Union-Tribune by clicking here.

Court Finds that California Negotiated in Bad Faith

In the “so significant it merits a two-part post” file….

A federal district court has held that California's revenue sharing demands in its negotiations with the Rincon Band of Luiseno Mission Indians amounted to an illegal tax, and therefore were evidence of the state's bad faith.

IGRA specifically prohibits states from using tribal-state compacts to tax tribes or to charge tribes a fee to conduct Class III gaming. IGRA also provides that state demands for taxes or fees are evidence of bad faith in compact negotiations. The Interior Secretary has adopted a practice of approving revenue sharing provisions if the state gives up meaningful concessions in exchange for the tribe's revenue sharing payments. Typically, the state concessions are some form of exclusivity -- a promise not to legalize gambling, or to allow tribes to operate games others may not, such as slot machines.

Due to the U.S. Supreme Court's 1996 decision in Seminole Tribe holding that tribes could not sue states under IGRA without state consent, the federal courts rarely examine whether state demands during compact negotiations violate IGRA. In California, however, the state has consented to suit. In 2003, the Ninth Circuit decided one of the very few cases examining state demands for revenue sharing. In that case, In re Indian Gaming Related Cases, which concerned the revenue sharing provisions in the compacts negotiated under Gov. Gray Davis, the Ninth Circuit adopted the Interior Secretary's general approach. The court upheld the revenue sharing provisions in light of the meaningful concessions on the part of the state as well as the provisions' consistency with IGRA's goals.

In Rincon Band v. Schwarzenegger (S.D. Cal. Apr. 29, 2008), the district court applied In re Indian Gaming Related Cases to hold that California was negotiating in bad faith with the Rincon Band over an amended compact. In our next post, we’ll take a look at what the Band sought to do, and how the court held what it did.

Kathryn Quoted in Miami Herald Re. Seminoles and “Administrative Compact”

Kathyrn’s quoted in the September 24th edition of the Miami Herald concerning the efforts of the Seminole Tribe to operate casino-style gaming in Florida.

The Seminole have filed suit in federal court seeing to obtain the go-ahead to install Class III games. That’s the case’s posture, but as the Seminole’s attorney noted, the suit is intended to place political pressure on the state and Governor Charlie Crist to negotiate a tribal-state compact. Said lawyer Barry Richard. ``It's been years they've been asking for this. They want to get what they're entitled to.''

Kathryn’s commentary is more indirect. She notes that the suit, which asks the judge to require Interior Secretary Dirk Kempthorne to approve an “administrative compact,” potentially is affected by State of Texas v. U.S.A., a recent Texas appeals court decision (see our post last month). Although in a different circuit, and therefore not binding in Florida, that case “casts doubt on the ability of the secretary not only to issue the administrative rules so a tribe could operate Class III slot machines but also undermines the secretary's ability to encourage the state to reach a compact because it takes away the secretary's stick,” as Kathryn put it.

Click here for the story.

Class III Gaming in Texas and State Power

Although it seems to have flown under the radar screen, the recent Fifth Circuit decision in State of Texas v. USA (No. 05-50754) decision threatens to eviscerate the federal government’s attempts to prevent tribes from being politically subordinate to states.

The decision clearly frustrates the Kickapoo’s efforts to bring Class III gaming to Texas. But more significantly, it places into question the Interior Secretary’s attempt to bring balance to the politics of negotiating tribal-state compacts by promulgating regulations to compensate for the 1996 Supreme Court decision in Seminole Tribe v. Florida, whose implications for state political power over tribes we've discussed in other posts.

The court’s analysis was rather technical –- it relied on the complicated Chevron legal doctrine for judicial review of agency discretionary authority –- but its political implications are broader for the tribes/states across the U.S. The possibility of an appeal is next, and that in turn would go to the important question of Interior Secretary’s authority under IGRA.

Read the court’s opinion here.