California, Tribes Consider Next Steps After Compacts Rejected Again

July 28, 2022
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For the second time in less than a year, the U.S. Department of the Interior has not approved gaming compacts with two California tribes claiming that they violated portions of the Indian Gaming Regulatory Act, leaving all sides wondering if a third time will be the charm.

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For the second time in less than a year, the U.S. Department of the Interior (DOI) has not approved gaming compacts with two California tribes claiming that they violated portions of the Indian Gaming Regulatory Act (IGRA), leaving all sides wondering if a third time will be the charm.

“The 2022 compact confers expansive powers on the state and local governments to regulate the tribe’s activities and lands directly related to the actual conduct of gaming,” Bryan Newland, assistant secretary for the Bureau of Indian Affairs (BIA), wrote in rejection letters sent to the tribes and the state.

The decision sends both tribes back to the negotiating table with Governor Gavin Newsom to try and come to an agreement on a third compact that Newland can approve.

“The state will work with the tribes to determine next steps,” Danella Debel, a spokeswoman for the Democratic governor, told VIXIO GamblingCompliance on Wednesday (July 27).

Leo Sisco, chairman of the Santa Rosa Rancheria Tachi Yokut Tribe, and Jose Simon III, chairman of the Middletown Rancheria of Pomo Indians, were unavailable for comment Wednesday.

Newland’s decision also puts on hold the plans the Middletown Rancheria and Santa Rosa Rancheria had for expanding their gaming operations.

The Santa Rosa Rancheria want to expand the Tachi Palace Casino by 44,000 square feet, as well as add other amenities. The Middletown Rancheria also plan to expand the square footage of their Twin Pine casino along with adding other table games, including roulette and craps.

In Newland’s letters dated July 22, he cited overreach and continuing problems with compact language that have not been corrected since the previous compacts were rejected in November 2021.

Newland framed his rejection of the Middletown Rancheria compact as an attempt to protect the tribe against potentially burdensome governmental oversight.

For example, the compact might allow California or Lake County to claim jurisdiction over the hotel rooms on the property, or over a gas station adjacent to Twin Pine Casino & Hotel.

That means any expansion or renovation of the gas station would prompt an environmental review of the plans, which is something that IGRA is meant to prevent.

Newland also expressed concern over the requirement to use binding arbitration to resolve compact disputes which may have changed the parties’ obligations under the 2022 compact, effectively amending the compact in a manner that evades DOI review.

Newland reminded both tribes and Newsom that by passing IGRA in 1988, Congress sought to “safeguard against states leveraging compact negotiations to impose jurisdiction or influence over matters unrelated to gaming and solely flowing from tribes’ inherent sovereignty.”

“I recognize that the disapproval of a Class III is a harsh remedy in circumstances like this, and that it is ultimately the tribe that suffers the greatest consequences of a disapproval,” Newland wrote.

“Secretarial disapproval is a blunt instrument, but it is the only tool the department has at its disposal to protect the balance Congress developed in IGRA.”

Newland noted that the Interior Department has issued at least four guidance letters to the state of California in the past decade, highlighting concern “over the state’s practice of asserting greater control over tribal land use decisions through Class III gaming compacts.”

Newsom called Newland’s decision arbitrary, especially after “these compacts were carefully negotiated by the state and tribes in compliance” with IGRA.

“Despite the tribes’ efforts to meet with [DOI] and changes negotiated with the state of California to address concerns expressed by Interior, the department chose to disregard the interests of the tribes and arbitrarily disapprove the compacts,” Newsom said.

In a statement on Monday (July 25), Sisco said the department’s decision will have a “chilling effect” in Indian Country and the “financial cost to our tribe will be irreparable.”

Simon said the disapproval of their compact was shocking given tribal officials had worked closing with the Interior Department to find agreeable middle ground.

“While California has taken great steps forward, sadly, the betrayal we feel from [DOI] Secretary [Deb] Haaland is something we have come to expect from the federal government,” Simon said.

The California Nations Indian Gaming Association (CNIGA) put the blame squarely on Newsom, however, urging the governor to come to the negotiating table prepared to craft new agreements that are confined to what IGRA permits.

CNIGA chairman James Siva said that although he appreciated the governor’s “stated intention to rectify the many historic wrongs committed or facilitated by the state of California against its Native peoples, in this instance [he] simply is wrong and the Department of the Interior is correct.”

“Simply put, the state should not put any tribe in the position of having to choose between the self-reliance offered through gaming and surrendering its sovereignty in matters not related to and necessary for the regulation, licensing and actual operation of Class III gaming activities,” Siva said.

Last month, Newsom signed Senate Bill 898 that granted extensions of the original compacts that were due to expire on June 30, 2022.

The issue of gaming compacts in California is expected to take a back seat as the campaign to legalize sports betting in the state intensifies as election day draws closer.

Californians on November 8 will decide the fate of a pair of dueling initiatives to legalize sports betting.

Proposition 26, back by a broad coalition of Native American tribes, would authorize retail sports wagering at tribal casinos and the state’s four racetracks. It would also allow tribal casinos to offer roulette, craps, and other dice games.

The other measure, Proposition 27, backed by FanDuel, BetMGM, DraftKings and other gaming companies, would permit commercial operators to partner with tribes to offer online sports betting.

Both the Santa Rose Rancheria and Middletown Rancheria joined Big Valley Band of Pomo Indians as the first three tribes to support Proposition 27.

Sisco said their support is about providing his tribe with “economic opportunity to fortify our tribe’s future for generations and protect tribal sovereignty.”

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