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Citizens Against Casino Gambling In Erie County v. Stevens

United States District Court, Second Circuit

May 10, 2013



WILLIAM M. SKRETNY, Chief District Judge.


On March 31, 2009, Plaintiffs commenced this action challenging the legality of a gambling casino operated by the Seneca Nation of Indians ("SNI") in the city of Buffalo (the "Buffalo Parcel"). Their Motion for Summary Judgment, now before the Court, has been fully briefed by the parties and by amicus SNI.

This action is the third lawsuit commenced by largely the same plaintiffs, who have sought the same relief in their successive suits- i.e., a declaration that Indian gaming in Buffalo is unlawful. Each lawsuit alleges violations of the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 702 et seq., and in each, the plaintiffs have claimed that certain decisions and actions by the defendants were arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.

To persons familiar with these serial actions, many of the facts and legal principles discussed below will have a familiar ring; they relate to disputes addressed in prior cases. To the extent new arguments and authority are presented in support of ongoing disputes, those matters are addressed herein. In addition, one new and critical dispute has surfaced regarding the National Indian Gaming Commission's ("NIGC") approval of the SNI's new gaming ordinance. Whereas the parties had agreed in prior suits that the SNI's Buffalo Parcel is subject to an IGRA prohibition against gaming on land acquired after October 17, 1988, that is no longer the case. Defendants have revisited their interpretation of the statute, and now conclude that the IGRA prohibition does not apply to the Buffalo Parcel. Because the Court agrees that Defendants' revised interpretation comports with Congress's clear intent, Plaintiffs' motion is denied in its entirety, and this case is dismissed.


A. The Relevant Statutory Provisions

Two statutes have been central to plaintiffs' claims-the Indian Gaming Regulatory Act ("IGRA"), under which gaming eligibility determinations are made, and the Seneca Nation Settlement Act of 1990 ("SNSA"), which permitted the SNI to acquire land to be held in restricted fee status. A discussion of the relevant provisions of each, in the context of the factual background of this case, is warranted.

1. The IGRA

Congress enacted IGRA in 1988 to establish a comprehensive statutory scheme governing gambling on Indian lands. 25 U.S.C. §§ 2701-2721.[2] IGRA "seeks to balance the competing sovereign interests of the federal government, state governments and Indian tribes, by giving each a role in the regulatory scheme." Artichoke Joe's v. Norton, 216 F.Supp.2d 1084, 1092 (E.D. Cal. 2002), aff'd, 353 F.3d 712 (9th Cir. 2003), cert. denied, 543 U.S. 815 , 125 S.Ct. 51, 160 L.Ed.2d 20 (2004).

The statute provides for three classes of gaming on Indian land, each of which is subject to a different level of regulation. § 2710. The SNI has repeatedly sought to conduct class III gaming on the Buffalo Parcel. This is the "most heavily regulated and most controversial form of gambling" under IGRA, Artichoke Joe's Cal. Grand Casino v. Norton, 353 F.3d 712, 715 (9th Cir. 2003), and includes, inter alia, slot machines, games such as baccarat, blackjack, roulette, and craps, and sport betting, parimutuel wagering and lotteries, § 2703(8) and (7)(B); 25 C.F.R. § 502.4. For class III gaming to be lawful: (1) the governing body of the tribe having jurisdiction over the "Indian land" on which it wishes to conduct its gambling operation must authorize class III gaming by adopting an "ordinance" or resolution; (2) the Chairman of the National Indian Gaming Commission ("NIGC" or "Commission") must approve the ordinance; (3) the state in which the "Indian land" is located must permit such gaming; and (4) the gaming must be conducted in conformance with a "tribal-state compact" that regulates such gaming. § 2710(d)(1).

In this case, as in the preceding cases, Plaintiffs maintain that the SNI does not have jurisdiction over the Buffalo Parcel; even if it does, the Parcel is subject to a statutory prohibition against gaming; and the Parcel does not fall within any exception to that prohibition. Two IGRA provisions are at the core of this dispute. First is the statute's definition of Indian lands as:

(A) all lands within the limits of any Indian reservation; and
(B) any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation and over which an Indian tribe exercises governmental power.

§ 2703(4) (emphasis supplied). Next is section 20 of IGRA, [3] which provides, in pertinent part:

Gaming on lands acquired after October 17, 1988.
(a) Prohibition on lands acquired in trust by Secretary. Except as provided in subsection (b), gaming regulated by this Act shall not be conducted on lands acquired by the Secretary in trust for the benefit of an Indian tribe after the date of enactment of this Act [enacted Oct. 17, 1988] unless-...
(b) Exceptions.
(1) Subsection (a) will not apply when-
(A) the Secretary, after consultation with the Indian tribe and appropriate State, and local officials, including officials of other nearby Indian tribes, determines that a gaming establishment on newly acquired lands would be in the best interest of the Indian tribe and its members, and would not be detrimental to the surrounding community, but only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary's determination; or
(B) lands are taken into trust as part of-
(i) a settlement of a land claim,
(ii) the initial reservation of an Indian tribe acknowledged by the Secretary under the Federal acknowledgment process, or
(iii) the restoration of lands for an Indian tribe that is restored to Federal recognition.

In its suits, the plaintiffs have challenged the applicability of these provisions to the Buffalo Parcel, which the SNI purchased in 2005 with funds it received through the Seneca Nation Settlement Act of 1990.

2. The SNSA

For more than a century prior to SNSA's enactment, the SNI had leased land on its Allegany Reservation[4] to non-Indians. § 1774(a)(2)(A) and (B). The leases were primarily concentrated near railroad lines in the city of Salamanca and nearby villages. §§ 1774(a)(1) and 1774a(10). Prior to the SNSA's passage, the bulk of these land leases were for a term of ninety-nine years and were set to expire on February 19, 1991. §§ 1774(a)(2)(C) and (4).

In 1969, the New York State legislature created the Salamanca Indian Lease Authority ("SILA") as a public benefit corporation authorized to negotiate and enter into a new lease with the SNI for all leased reservation lands underlying the city. N.Y. PUB. AUTH. LAW §§ 1790-99. Approximately twenty years of lease negotiations ensued, and finally concluded in May 1990. Fluent v. Salamanca Indian Lease Authority , 847 F.Supp. 1046, 1049-50 (W.D.N.Y. 1994). A condition of the lease renewal agreement was that the federal and state governments agree to pay to the SNI a total of $60 million, an amount believed to approximate the difference between the rents the SNI had actually received over the previous 99 years and the fair market rental value of the leased land over that same time period. The federal government was asked to pay $35 million, and the state government $25 million. Id. at 1050; see also, S. REP. NO. 101-511, at 23 (1990). Both governments agreed to do so, and Congress passed "An Act to provide for the renegotiation of certain leases of the Seneca Nation, and for other purposes, " 104 Stat. 1292 (1990), to which it assigned the short title "Seneca Nation Settlement Act of 1990."

The SNSA requires that the SNI use five million dollars of the United States' payment for economic and community development. Id. § 1774d(b)(2). The bulk of the payment-$30, 000, 000-was to be "managed, invested, and used... as determined by the Nation in accordance with [its] Constitution and laws...." Id. § 1774d(b)(1). The SNSA permits the SNI to acquire with SNSA funds land that is "within its aboriginal area in the State [of New York] or situated within or near proximity to former reservation land." Id. § 1774f(c) (alteration added).

State and local governments shall have a period of 30 days after notification by the Secretary or the Seneca Nation of acquisition of, or intent to acquire such lands to comment on the impact of the removal of such lands from real property tax rolls of State political subdivisions. Unless the Secretary determines within 30 days after the comment period that such lands should not be subject to the provisions of section 2116 of the Revised Statutes (25 U.S.C. 177), such lands shall be subject to the provisions of that Act and shall be held in restricted fee status by the Seneca Nation. Based on the proximity of the land acquired to the Seneca Nation's reservations, land acquired may become a part of and expand the boundaries of the Allegany Reservation, the Cattaraugus Reservation, or the Oil Spring Reservation in accordance with the procedures established by the Secretary for this purpose.

Id. Land that is held in restricted fee status cannot be sold, leased, or otherwise conveyed without the approval of the federal government. § 177.

3. Intersection of the IGRA and SNSA

On August 18, 2002, the SNI and the State of New York executed a Tribal-State Gaming Compact (the "Compact") for the conduct of class III gaming at three locations in New York State, one of which was a then-unidentified site to be purchased in the city of Buffalo. The Compact reflects the SNI's intent to use funds it received under SNSA to purchase that land.

Once signed, gaming compacts are forwarded to the Interior Secretary, who may approve, disapprove or take no action on it. § 2710(d)(8). "If the Secretary does not approve or disapprove a compact [within] 45 days after the date on which the compact is submitted to the Secretary for approval, the compact shall be considered to have been approved by the Secretary, but only to the extent the compact is consistent with [IGRA]." § 2710(d)(8)(c).

In this particular instance, the Compact was deemed approved by virtue of then-Secretary Norton's decision not to approve or disapprove it. In a letter to the SNI, Norton opined that land to be purchased with SNSA funds would be "Indian lands" within the meaning of IGRA, and would fall within the "settlement of a land claim" exception to IGRA's general prohibition on gaming on lands acquired after 1988. (Docket No. 58-21 at 6-7.) The Secretary nonetheless declined to affirmatively approve the Compact because of policy concerns over its likely impact on the proliferation of off-reservation gaming development. ( Id. at 2.) The SNI went on to purchase the Buffalo Parcel, consisting of approximately 9 acres, in October 2005. It gave notice to the State of New York and local governments in accordance with §1774f(c), and the Parcel assumed restricted fee status by operation of law on December 2, 2005.

B. Procedural Background

1. The Prior Lawsuits

The plaintiffs' first lawsuit, filed in January 2006, challenged former-Secretary Norton's conclusions that the Buffalo Parcel was "Indian lands" which fell within the "settlement of a land claim" exception, and also the NIGC Chairman's 2002 decision to approve the SNI's ordinance. Citizens Against Casino Gambling in Erie County v. Kempthorne, 06-CV-00001-WMS ( CACGEC I ). In January 2007, the Court found no indication in the record that the NIGC Chairman had considered the threshold jurisdictional question of whether a future land purchase made with SNSA funds would be gaming-eligible Indian lands.[5] The Court vacated the NIGC Chairman's decision to approve the SNI's gaming ordinance, and remanded so that NIGC could address whether the Buffalo Parcel is gaming-eligible Indian land under IGRA. 471 F.Supp.2d 295, 326-27 (W.D.N.Y. 2007), amended in part on reconsideration, 2007 U.S. Dist. LEXIS 29561 (W.D.N.Y. Apr. 20, 2007).

Thereafter, in July 2007, the Chairman concluded that the Buffalo Parcel is gaming eligible Indian land, and he approved an amended ordinance the SNI had enacted on June 9, 2007. The plaintiffs commenced their second lawsuit on July 12, 2007, urging that the Buffalo Parcel is not "Indian country" over which the SNI has jurisdiction and, even if it were, the Parcel does not fall within the settlement of a land claim exception to the general prohibition against gaming on newly acquired land. Citizens Against Casino Gambling in Erie County v. Hogen, 07-CV-00451-WMS ( CACGEC II ). Here, the Court concluded the Buffalo Parcel is Indian country, but is not gaming eligible land.[6] Therefore, it again vacated the NIGC Chairman's approval of the SNI's ordinance. 2008 U.S. Dist. LEXIS 52395, at *209 (W.D.N.Y. July 8, 2008).[7]

2. The IGRA Regulatory Process

IGRA provides that NIGC "shall promulgate such regulations and guidelines as it deems appropriate to implement the provisions of [25 U.S.C. §§ 2701-19]." §2706(b)(10). In 1992 and 1993, the Commission published regulations establishing certain definitions, requirements, and procedures relative to the conduct of gaming under IGRA.[8] 25 C.F.R. Chapter III, Parts 501-99.

Several years later, in 2000, the Bureau of Indian Affairs ("BIA") published a proposed rule to establish "procedures an Indian tribe must follow in seeking a Secretarial determination [under § 2719(b)(1)(A)]" that a gaming establishment on newly acquired land would be in the best interest of the tribe and its members, and would not be detrimental to the surrounding community. 65 Fed. Reg. 55471 (Aug. 25, 2000). Comments on the proposed rule were permitted until November 13, 2000, and later reopened and extended until March 27, 2002. 66 Fed. Reg. 66847 (Dec. 27, 2001); 67 Fed. Reg. 3846 (Jan. 28, 2002). Thereafter, the proposal lay dormant for several years.

On October 5, 2006, the BIA published an amended proposed rule, with the expanded purpose of setting out "procedures that the Department of the Interior will use to determine whether class II or class III gaming can occur on land acquired in trust for an Indian tribe after October 17, 1988." 71 Fed. Reg. 58769, 58772 (Oct. 5, 2006). The BIA explained it was "publishing a new proposed rule because [it] determined that the rule should address not only the exception contained in Section 20(b)(1)(A) of IGRA (Secretarial Determination), but also the other exceptions contained in Section 20 [ i.e., settlement of a land claim, initial reservation, and restored lands], in order to explain to the public how the Department interprets these exceptions." Id. at 58770. The deadline for comments was twice extended and expired on February 1, 2007. 71 Fed. Reg. 70335 (Dec. 4, 2006); 72 Fed. Reg. 1954 (Jan. 17, 2007). The final rule was published on May 20, 2008, and took effect on August 25, 2008. 73 Fed. Reg. 29354 (May 20, 2008); 73 Fed. Reg. 35579 (June 24, 2008). The final regulations reflect DOI's revised interpretation of IGRA's section 20.

3. The Instant Lawsuit

After CACGEC II was decided and the new regulations became effective, the SNI submitted to NIGC a second amended gaming ordinance for the Buffalo Parcel. In a letter dated November 14, 2008, NIGC's Acting General Counsel ...

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