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Signed, Sealed... And Then?

Tribes, states pushing IGRA Envelope on Compact Talks

Signed, Sealed... And Then?

American Indian law experts and federal officials are expressing concern that local government mitigation agreements and labor provisions in recently negotiated casino regulatory compacts in California encroach on tribal sovereignty and self-governance.

Tribal lawyers contend California compacts—and to a lesser extent, those in other states—include revenue sharing and other concessions that violate the intent of the Indian Gaming Regulatory Act (IGRA).

The U.S. Interior Department, in November 2 letters to California Governor Jerry Brown and three tribes, questioned whether compact local mitigation provisions adhere to IGRA prohibitions against taxation of tribal gambling revenues.

Brown and the tribes—Santa Ynez Band of Chumash Indians, Sycuan Band of the Kumeyaay Nation and United Auburn Indian Community—contend mitigation provisions are permissible under IGRA to reimburse local governments for services impacted by tribal casinos.

Interior Assistant Secretary of Indian Affairs Kevin Washburn later “deemed approved” the compacts, a bureaucratic move that stops short of endorsing the agreements but finds them not in conflict with IGRA.

Meanwhile, attorneys for 31other California tribes seeking extension of compacts due to expire in 2020 are miffed that Brown and UNITE HERE are demanding amendments to tribal labor relations ordinances (TLROs) to make it easier for the union to organize casino workers.

California is the only one of 28 states with Indian casinos that requires TLROs as a condition for tribal-state regulatory agreements mandated by federal law for tribes operating casinos.

 “California is unique because union organizing was integrated into the tribal-state gaming compacts,” says Richard Guest, an attorney for the Native American Rights Fund.

“If you want to have a gaming compact, the state of California is saying because of political pressure from organized labor you as a tribe need to have labor provisions which allow for union organizing.”

California tribes with Brown compacts are ceding rights under the National Labor Relations Act (NLRA) at the same time tribes in other states are seeking congressional approval of the Tribal Labor Sovereignty Act, which would give tribes parity with state and local governments exempt from union organizing provisions of the NLRA.

The sovereignty act has been approved by the House and awaits action in the Senate. President Barack Obama opposes the legislation, which he says does not adequately protect tribal casino workers.

TLROs with Chumash and Sycuan call for tribal neutrality and “Consent Election Agreement Procedures” allowing mail-in ballots, which critics contend is tantamount to card checks.

“I find it atrocious, these changes,” says a tribal official who requested anonymity. “The very idea that a state can force a tribal government to be quiet in a collective bargaining election is nuts.

“The state is mandating that tribes surrender their right to advocate that their employees vote ‘no’ in a union organizing election, or ‘yes,’ for that matter. This goes to a fundamental core issue of tribal self-governance.”

Brown spokeswoman Deborah Hoffman says union officials are invited to participate in compact talks only if both parties agree.

“Courts have determined that the issue of labor relations is an appropriate and legally permissible topic for compact negotiations,” Hoffman said in an email. “The state seeks to resolve this issue in a manner that is respectful of tribal sovereignty and fair to employees.”

A 9th Circuit Court of Appeals ruling in 1999 did uphold TLROs as permissible in tribal-state compacts.

But labor is not on IGRA’s list of permissible negotiation topics, and subsequent court rulings, including the U.S. Supreme Court in Michigan v. Bay Mills Indian Community, suggest items not on the list should not be negotiated.

In addition, an administrative law judge in a November ruling on a labor dispute at the Pauma Band of Luiseño Mission Indians casino says the NLRA supersedes TLROs and tribal-state compacts.

“The labor provisions are unnecessary and overreaching,” tribal attorney George Forman says.

Interior did not mention TLROs in its letters to Brown and the tribes. But a high-ranking official who requested anonymity says Interior is conflicted on the role of labor in compact negotiations.

“It’s a tough issue,” the official says.

Leaders of newly compacted tribes herald the agreements.

“The new compact represents a respectful, government-to-government negotiation that mutually benefits the state, tribe and local community,” Sycuan Chairman Cody Martinez said in a prepared statement.

Chumash Chairman Vincent Armenta, a proponent of organized labor, believes the amended TLRO is a more equitable arrangement for the tribe’s 2,000 casino workers.

“Our strategy was to make sure there was a fair opportunity that left the decision up to the employees whether or not they wanted to organize,” Armenta says. “I think the amended TLRO reflected that, very clearly.”

California Focus Of Compact Talks

California is by far the nation’s largest Indian gambling market, with 60 tribes generating $7 billion a year, roughly a fourth of the $28.5 billion won annually by Indian casinos in 28 states.

Thirty-one California tribes operating state-licensed casinos are seeking to renegotiate, as a group, landmark compacts signed by 58 tribes in connection with passage of Proposition 1A in 2000.

Other tribes have since negotiated new or amended compacts with Brown or former Governor Arnold Schwarzenegger. The Lytton Band of Pomo Indians owns a Class II casino near San Francisco not subject to state regulations.

It was the intent of IGRA that gambling be used to strengthen tribal governments and build diversified tribal economies. Tribal-state compact negotiations under IGRA are largely restricted to the scope and regulation of gambling with states reimbursed for regulatory costs.

But 10 of 28 states with Indian casinos receive some form of revenue sharing, upon which Interior generally frowns. Interior policy does allow for revenue sharing if tribes receive a major benefit, most often statewide or regional casino exclusivity.

Critics and Indian law experts contend compact negotiations in California and elsewhere have expanded beyond the intent of IRGA to include jurisdictional issues and matters not related to gambling.

“States and tribes are starting to include provisions in the compacts that

really don’t have anything to do with Indian gaming,” Michigan attorney Lance Boldrey says.

“Interests beyond those associated with gaming are entering into negotiations,” says Joseph Kalt, head of the Harvard Project on American Indian Economic Development. “Tribes are being pressured and, to their own discredit, succumbing to pressure and effectively surrendering sovereignty in key ways.”

“It’s our fault—or, I’ll say me—for not being far-seeing enough when we negotiated IGRA to accept language that (casino) gambling would be illegal unless tribes and states entered into a compact,” says Frank Ducheneaux, former legal counsel for the House Interior Committee credited with drafting IGRA in 1988.

“The compact process put all the power in the hands of the state,” says Ducheneaux, particularly after the U.S. Supreme Court in Seminole v. Florida in 1996 upheld states’ 11th Amendment immunity from lawsuits by tribes seeking to force state officials to the negotiating table. States can simply walk away or demand certain things.

“I don’t so much mind the revenue sharing,” says Ducheneaux, a Cheyenne River Sioux who has since retired from public service. “What is more important is basic tribal governing powers are being ceded because a state insists on labor unionization, OSHA and those kinds of things.”

Compacting Trends Across The Country

Eleven of 28 states with tribal casinos have compacts with no termination dates. Others have automatic extensions.

Compact negotiations were recently completed in Florida, and are ongoing in Michigan and Alabama. Other cash-strapped states such as Oklahoma are anxious to get talks going. Revenue sharing is the goal.

The Seminole Tribe of Florida completed negotiations with the state for the right to continue offering blackjack and other games at its Hard Rock casinos, extending a compact signed in 2010. But negotiations were complicated by proposed commercial gambling in Miami and elsewhere.

In the new deal that starts in 2017, the tribe will contribute more than $3 billion to the state over seven years.

“I have executed this compact after months of collaboration, negotiation and discussion,” Florida Governor Rick Scott said. “This compact represents an unprecedented level of cooperation between the state of Florida and the Seminole Tribe of Florida, including the largest revenue share guarantee in history at $3 billion, which is three times the prior compact guarantee of $1 billion.”

The deal, which still must be approved by the legislature, also allows for the addition of slot machines at a Palm Beach County dog track and also leaves an opening for another casino in Miami-Dade County, as well as allowing for for existing tracks in that county and Broward County to eventually add blackjack tables as well.

In Michigan, negotiations between state officials and six of the state’s 12 casinos tribes whose compacts expired in 2013 will likely remain bogged down for months, if not years.

The agreements with Bay Mills, Grand Traverse Band of Ottawa and Chippewa Indians, Hannahville Indian Community, Lac Vieux Band of Lake Superior Chippewa, Saginaw Chippewa Tribe and Sault Ste. Marie Tribe of Chippewa required that they contribute 8 percent of casino net revenues to the state and 2 percent to local governments.

But commercial casinos in Detroit, tavern slot machines and expanded tribal gambling all violate promised exclusivity, and negated Michigan’s share of revenue from the tribes’ 13 casinos, money Governor Rick Snyder wants back in the budget. In fact, he is hoping for 12 percent of the state’s Indian casino money.

Unfortunately for the governor, compact language allows agreements to remain in effect “until exhaustion of the administrative and judicial remedies set forth in IGRA and/or any other applicable federal law.”

Oklahoma Governor Mary Fallin wants an increased share of revenue from the state’s 33 casino tribes to spur an economy suffering from a struggling oil industry. But she doesn’t have much leverage, because the agreements have automatic 15-year renewals when they expire in 2020. Fallin is termed out of office in 2018.

The agreements give the state 6 percent of the revenues from 41,000 slot machines and 10 percent of the table game win. Tribes have generated $1 billion for the state since a compact was agreed to in 2004.

The state and tribes are sending mixed messages.

“I think it would be fair to say we’re ramping up our discussions with the tribes,” says Steve Mullins, Fallin’s chief counsel.

“There have been no discussions” with the governor’s office, Comanche Nation Chairman Wallace Coffey says, informal or otherwise.

Rather than cede additional revenue sharing to the state, Oklahoma tribes are acquiring more Class II, bingo-style machines not subject to taxes. Class II devices comprise 40 percent of the state machine inventory.

Class II gambling has proven profitable for the Poarch Band of Creek Indians of Alabama, who operate three large hotel-casinos without competition from other tribes or commercial casinos.

Federal courts in September upheld the tribe’s right to operate Class II gambling, ending attempts by state Attorney General Luther Strange to have the machines declared illegal.

Poarch Creek is talking with Governor Robert Bentley about a compact, something the tribe has lacked since opening a bingo parlor in 1985. Alabama officials have rebuffed tribal efforts to get an agreement, but a looming budget deficit has changed the political landscape.

Poarch Creek would welcome a compact to ensure casino exclusivity and allow the tribe the opportunity to open a fourth casino upstate. But the tribe is satisfied with the current state of affairs so long as politicians don’t allow slots at dog tracks, which has been discussed.

“The tribe really doesn’t need a compact,” says Councilman Robert McGhee. “We do well.”

Interior in 2012 rejected a draft Massachusetts tribal-state compact with the Mashpee Wampanoag Tribe that included provisions dealing with hunting and treaty rights on the grounds they were issues not related to gambling. It later approved an agreement eliminating the hunting and fishing provisions but including a revenue share to the state.

The federal agency did not act on an agreement by the New York Oneida to share gambling revenues with the state in exchange for tax and land issues, contending the deal did not constitute a compact.

California Dreamin’

Thirteen California tribes that have negotiated compacts with the Brown administration applaud the process and contend the agreements protect Indian sovereignty.

 Some tribal lawyers agree, noting the Sycuan agreement specifies disputes be resolved in tribal courts. There is no template for the agreements, which vary among the tribes.

“There are a lot of pro-tribal things in these agreements,” Forman says.

But Forman and several other lawyers are critical of mitigation and labor provisions.

Interior’s Paula Hart, director of the Office of Indian Gaming, asked in the November 2 letter for an explanation why local government mitigation provisions “do not constitute a tax, fee, charge or other assessment prohibited by IGRA.”

Brown negotiator Joginder Dhillon and the tribes say revenue sharing is permitted in IGRA to assist local government agencies impacted by tribal casinos.

“As such, it is consistent with other revenue sharing provisions that have been determined not to be a tax or otherwise inconsistent with IGRA,” Martinez says in his letter to Interior.

Tribal attorneys fear mitigation provisions may be used to allow local government jurisdiction over hotel projects and other development on Indian lands not directly related to casinos.

“I can’t address what’s going on in the talks at all,” Forman says of negotiations between his clients and Dhillon. “But there are a lot of things in these compacts that have nothing to do with the regulation of Class III gaming.”

General fund payments demanded by former California governor Schwarzenegger in exchange for additional slot machines were deemed an illegal tax by the 9th Circuit Court of Appeals in a landmark 2010 ruling on a lawsuit filed by the Rincon Band of Luiseno Indians, a decision later upheld by the U.S. Supreme Court.

In lieu of payments to the state’s general fund in violation of Rincon, Brown is asking that tribes enter into mitigation agreements with counties and municipalities for fire, law enforcement and other services. The payments offset contributions to a grant fund and Revenue Sharing Trust Fund (RSTF) used to reimburse tribes with limited or no gaming.

Most tribes voluntarily enter into agreements to reimburse local governments for various services. But some object to mandatory agreements as a violation of sovereignty.

“A tax is a tax,” says a tribal attorney who requested anonymity. “It’s quite remarkable that California is demanding tribes make contributions to local governments and the RSTF instead of the general fund. You’re still looking at a 10 percent tax rate.”

While remaining mute on the labor issues, Interior’s Washburn, an Obama appointee, has pushed back against what he believes to be unreasonable revenue sharing demands. But he has avoided injecting the agency in tribal-state matters.

Washburn declined to be interviewed for this article.

“The Department of the Interior is caught in this Catch-22 where it doesn’t want to deprive a tribe of a compact, yet at the same time these compacts being submitted are stepping over the line,” a tribal source says.

“Someone should perhaps say, ‘This is a tax in violation of IGRA. We’re not going to approve a tax,’” Ducheneaux says. “But then you get to the point where Washburn has to disapprove a compact. Then what happens?

“It’s tough to say to a tribe, ‘We’re not going to let you do this,’ and the tribe loses millions of dollars. That’s tough.”

Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law. He can be reached at [email protected].

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