Tribal, Local Government, and Community Relationships

Groups in valley have repeatedly voiced their concern that they are afraid that the Chumash will expand with out any local input or consideration. My research has led me to believe that any future expansion endeavors by the Chumash will include local governmental input as well as community participation. I ran across this roundtable the other day and thought it was a great discussion on this topic. The participants in January of 2005 were ( jobs may have changed since then) Leah Castella of Bingham McCutchen, Daniel Kolkey of Gibson, Dunn & Crutcher and his guest Peter Siggins, Legal Affairs Secretary for Governor Schwarzenegger;Gary Giacomini and former Assemblymember Darrel Steinberg of Hanson Bridget Marcus & Rudy, and Jerome Levine of Holland & Knight. It was moderated by Custom Publishing Editor, Chuleen Svetvilas.

The County Board of Supervisors, local City Councils, as well as the vocal opponent groups in the valley, would do well to read this closely as it specifically addresses what the future may hold.

The discussion really gets started about the 6th paragraph down.

http://www.hansonbridgett.com/pressroom/inthenews/IndianGaming_Jan05.pdf

MODERATOR: What is the future of Indian gaming in California?

STEINBERG: I’ll try and answer your question with a rhetorical question. Does the market pro-vide any answer to the future of gaming? People who visit casinos want a quality experience. InNevada, some casinos are better attended than others. Do the tribes believe that at some pointing California we will reach a point of saturation?

LEVINE: No one really knows yet. Tribes have been on the forefront for many years in using electronic and other gaming technology to meet changing market demands, and will con-tine to do so. The density of the California gaming marketplace is also changing, as differ-net geographic areas become more developed.

SIGGINS: The density of the marketplace improbably the biggest factor. We have eight casinos right now in San Diego County. They’re authorized to have about 16,000 machines. The tribes from that area are very interested in expansion. People want an upscale experience. That’s what we’ve seen with Cache Creek and some of the newer facilities—Baron in Southern California and Again Palm Springs. I really don’t have any idea when we will hit the saturation point. There’s area demand among tribes to expand their operations in many parts of the state.

LEVINE: Eventually there may be a saturation point. There are some areas that don’t have the market that others do. Nevertheless, employment and the generation of local com-mercer are important to tribes, so those factors could justify improving tribal operations and facilities even if profits remain level.

STEINBERG: It’s instructive to look at the compacts that the governor negotiated in June2004 and that the legislature supported over whelmingly. The most significant new direction in the compacts is the binding baseball arbitration provision of disputes between tribes and local governments. Tribal, state, and local governments have grappled with how to balance the sovereign rights of tribes with the impact of casino expansion on surrounding communities. When you are a state legislator, you have a lot of interests to balance, hopefully all within the umbrella of the public interest. The Legislature believes that Indian sovereignty is very important. Since tribal lands exist even as sovereign nations next to local communities, we represent those communities as well. The compacts acknowledged that both sides must have an incentive to negotiate fairly when it comes to mitigation. Under the baseball provision, any unresolved dispute is thrown into the hands of a neutral third party. The arbitrator has no authority to cut it down the middle. It’s all or nothing. So either side takes a big risk if they decide not to negotiate. You may lose it all if you don’t consider the other side’s needs.

LEVINE: But don’t you have a problem with government being required to submit to binding arbitration regarding its future, when vague standards are used? That is the issue. This kind of arbitration provision raises a question about whether or not the governmental nature of the tribal entity is being taken seriously. The notion of an open ended arbitration in which an arbitrator can decide, with no right of appeal, that it’s a great idea to have a four level interchange near the tribe’s facility and that the tribe should pay for its construction as an off-reservation mitigation impact, or else not be able to develop the only land it has, which in some cases it was forced onto—particularly where the reverse scenario is highly unlikely—raises serious policy issues about that process as a model for how governments should interact. The approach seems to come from notion that tribes are not willing to work things out on a cooperative basis with other governments, but that assumption is not borne outbid the facts. I represent a number of tribes allover the country who have great working relationships with local and state governments that were reached voluntarily. That model is in the present compacts negotiated in 1999. Forth few failures that may be claimed, we believe there are far more successes that validate the more typical government-to-goverment approach of the 1999 compacts.

STEINBERG: I’ve always thought that the best arbitration clause was one that never has to be invoked. It’s the clause that puts enough fear in both parties so that they never want to invoke it.

LEVINE: When tribes are in a hostile environment, which unfortunately has all too often been the case, there is sometimes little politcal risk for the local government to be unreasonable, since it is the tribe’s opportunity, not the other government’s, that is at stake. Especially when strong outside forces are bringing pressure to resist tribal development.

KOLKEY: One thing that we made very clear in the compacts and amendments was that local government could not prevent a tribe from engaging in Class III gaming—namely, banked card games, slot machines, and lottery games—to which it was entitled. Instead, althea arbitration provisions were designed to encourage a negotiated resolution for mitigating the off-reservation impacts of that gaming. But nothing that we did would stop a tribe from engaging in the gaming. In terms of respecting tribal sovereignty, arbitration is probably as good a way as any for sovereigns to resolve disputes. Historically, arbitration has been the way that sovereigns have chosen to resolve disputes because it avoids either side from being subjected to the other sovereign’s courts. So the use of arbitration reflects a deference to, and respect for, tribal sovereignty. The baseball arbitration encourages the two governments, tribal and local, to negotiate resolution to the mitigation of off-reservation impacts. If they don’t, an arbitrator is going topic the proposal that’s most reasonable. County governments across the board have been very pleased with the right to be able to negotiate as a government with the tribal governments. They did not feel that the 1999 compacts provided the appropriate framework that would foster a stable relationship between the tribal and the local governments.

SIGGINS: Our constituency is both tribal members and the general public who will patronize these facilities. When we look at how bestow negotiate and work with tribes going forward, we really look for ways to prevent bad things from happening whether it’s oversight and consultation in the building process or addressing off-reservation impacts. While we recognize the tribes’ sovereign power and rights, we are concerned about making enforceable agreements that will have concrete benefits and fail-safes for the communities around them.

GIACOMINI: Sometimes local governments feel that only two sovereigns exist—the tribe and state—and that they operate in a relative vacuum. Now at least somebody is asking local governments’ opinion. Local governments have so much resistance because of the tribes’ ability to create enormous impacts inlays no one else would ever be allowed, and the locals can do nothing to stop it. In May 2003, I was involved in countering a proposal by the Groton Ranchero to build casino on floodplain lands near Highway 37. There was no water, no sewage, and no traffic capacity whatsoever on the 2,000 acres purchased. The most that anybody else could have done on that land was build four houses. So Sonoma and Marin counties went crazy because they were told that there was nothing they could do. People said,“ Wal-Mart or even a hardware store couldn’t come here and show is this possible?” In the end, the tribe retreated from that place, and my hat’s off to them. It was not the place to go. They moved to Rohnert Park where they negotiated some $200 million in impacts mitigation—a very marked improvement in terms of enhancing the relationship with the people affected by the casino. Local resistance isn’t about money, racism against the Indians, or the fact that tribes have casinos. It is about impacts that can’t be paid for. If you clog Highway 37 everyday, money doesn’t help. As the situation evolves and pressures increase to locate casinos where there will be less dramatic unavoidable impacts, we will see more push and pull between local governments and tribes—hence the critical necessity for mutual understanding.

LEVINE: The tribes are part of the local community. They have usually been there far longer than anyone else. They have to face and work with other community members everyday. It isn’t generally in a tribe’s interest, both as members of the community and from a practical, business standpoint, not to be responsive to concerns like that. The assertion that the non-tribal community can’t have any input or influence is fallacious. In your example, the state and local government and populace would have had an opportunity to weigh in, both through the regulatory steps for placing the land in trust and through federal environmental processes. And then the state would have had more input through a compact. At any rate, that project did not happen.

GIACOMINI: Federal legislation compelled the Secretary of the Interior Department to take this land into trust, and Governor Davis had committed to approve the compact. This was a real proposal. The reason it didn’t happen was resistance.

LEVINE: But before that all took place, there would have been many opportunities to deal with the very issues you are talking about. So I disagree that you are just helpless when tribe wants to do something. The helplessness comes when the counties or the cities simply say, “No, we are not going to work with you.” Some tribes have been in those situations for years, where it’s not about dialogue with the tribe at all, but simply a refusal to deal. I don’t think arbitration solves that problem. The assumption should not be that tribes have to be clubbed into some kind of a working relationship. I question that as a policy approach as to how local and state governments should relate to tribal governments.

SIGGINS: That assumption is the wrong assumption. If you look at the baseball arbitration process, we’ve tried to club both parties into working with one another. The most significant thing about the location, planning, and operation of tribal casinos is ongoing and meaningful dialogue between local governments and the tribes. That’s where everything can work or everything can fail. What we’ve really tried to do is come up with a basis where either side can be clubbed over the head for their failure to cooperate and their failure to participate in the negotiation process to try and reach an agreement. If local government is being unreasonable, a tribal proposal can be forced upon them and vice versa. In the end, my bet is we’ll have negotiated agreements in those places where casino development is going to be undertaken.

KOLKEY: With some 107 federally recognized tribes, California has the largest number of tribes that may be entitled to a tribal casino. The state is negotiating compacts with tribes that work for the tribal government, the state government, and the local government.

CASTELLA: I come from the perspective of business, of investors who want to work with tribes as an equal economic player. As Indian gaming continues to develop in California and around the country, these tribes now wield significant amount of economic might. Many people who want to do business with them are concerned about what they perceive to be alack of certainty, which is the direct result of this push and pull from the state, the communities, and the tribes. If you do business with tribes, the question of sovereignty comes into play. What law applies? What environmental regulations apply? Developers and financial interests are concerned about walking into a mine field. Alot of it comes back to tribal sovereignty. Sovereignty means that the courts can ultimately find that despite a business having contract in place with a tribe, the contract isn’t enforceable. It’s in the interest of busnisses to have everybody work together so they know what the rules are so they can comply with them.

KOLKEY: A business has to recognize that it is dealing with sovereign immunity. If the business goes in with its eyes wide open, it will make arrangements that are enforceable between the business and the tribe. What the administration is trying to do is to provide clarity in the compact provisions as to what the standards are and to provide auditing, clear dispute resolution, and standards for that dispute resolution.

CASTELLA: What many investors or businesses perceive as part of the problem is that while the state can put in place what it perceives to be clear rules, those rules only apply if the state has jurisdiction or has regulatory over-sight of the tribes. The tribal court is an important issue in California because the state has very few tribal courts. If you are doing business with a tribe that has sovereign immunity, how do you negotiate for labor interests or for vendors who are working with tribes? If you have a dispute, you’re left without a real way to resolve it, because if you go into the federal court system, the tribes claim that there’s no jurisdiction because of sovereign immunity. But there’s no tribal court system that exists to resolve your dispute.

LEVINE: That’s another one of those generalaties. Having done a lot of bond and complex financing, I can assure you that tribes do workout perfectly conventional business arrangemeints where non-tribal parties are secure in their ability to enforce their rights and achieve the benefits they expected in the event of dispute. Those situations in which a tribe and vendor have not been able to find common ground over a dispute-resolution process, or the process that they designed in their documents turned out be less than it should have been, are the exceptions, not the rule.

CASTELLA: My point is not that negotiated ways don’t exist to resolve disputes. The issue is that California lacks an established tribal court system, which has a lot to do with the size of the tribes and the history of tribes in California. Do you think that there is a place for tribes to come together and organize some kind of dispute resolution mechanism that can fill the gap that is clearly present here?

LEVINE: Absolutely, and there are efforts underway by tribes, either on their own or in combo-nation with other tribes, to do so. I believe that within the next few years we will see the emergence of many effective and professional tribal court systems here, just as they exist in many other states. Tribes have long recognized the need for courts within their own jurisdictions but haven’t always had the resources to fund them. With their successes in gaming another economic development and the ability to be self sufficient, tribes in California are now able to fund stronger governmental infrastructures, including those that address the tribal government’s educational, health care, security, and justice needs.

MODERATOR: Since the tribal courts aren’t fully established in California, Peter, how do you see disputes being resolved?

SIGGINS: We have to address different layers. There are the potential disputes between local governments and tribal governments and there’re consumer claims, third-party tort claims, and those kinds of things. We’ve tried to strike the right balance with private arbitration in the compacts that we’ve negotiated so far. Even on a government-to-government basis, with treaties, there’s often an adjudicator mechanism that each government submits to. If you look at NAFTA, there’s an arbitration process and an arbitration provision that resolves disputes under that treaty. I think that’s by and large similar to what we’ve tried to do here with the local government and third-party interests that can arbitrate claims under our compacts. We’ve tried to find a way that if negotiation breaks down and we can’t reach resolution, there is some mechanism to allow everybody to move forward.

CASTELLA: While there are certainly a lot of regulatory and political situations that are going to evolve, what will only become stronger is the market power that tribes wield. In terms of the future of Indian gaming, tribes will be diversifying interests, getting out of gaming, investing in other businesses, such as the resort or hotel business. And the corollary impact of that will be an increased scrutiny on tribes and tribal governments, and increased scrutiny on how much money is being made and where that money is going. It is the inevitable result of tribes being stronger economic players.

KOLKEY: As tribes’ commercial enterprises expand, there has been and is going to be response by the courts. The San Manuel Bingo and Casino case where the NLRB asserted jurisdiction over the San Manuel casino is an example of administrative bodies beginning to apply laws to tribal casinos as those casinos have gotten bigger and more prosperous. The Third Appellate District’s decisions with respect to the application of the Political Reform Act to tribes show that as tribes become more active, courts are beginning to apply laws to tribes’ activities. These decisions sought to be considered a signal to tribes that the more that they agree to a mutually beneficial relationship with states that afford protections and mitigation, the less there will be an need for judicial intervention and the better they will protect their enterprises. The more that tribes’ arrangements between vendors and businesses provide for an enforceable dispute resolution, the better off tribal enterprises will be. We are seeing just the beginning of the trends responding to the growth of tribal commercial enterprises.