A Compact Between the Commonwealth and the Mashpee Wampanoag 

Today Massachusetts Governor Deval Patrick signed a tribal gaming compact with the Mashpee Wampanoag Tribe (the "Tribe"). The compact is a major first step toward the Tribe becoming the exclusive casino operator in the Southeastern Massachusetts region, one of three regions in which resort casinos may be developed under Massachusetts' new gaming law. But the compact is only a first step in what promises to be a difficult road ahead for the Tribe. Regulatory uncertainties and legal challenges await. This Alert briefly discusses the compact, anticipated next steps for the Tribe and the Massachusetts Gaming Commission (the "Commission"), and the major regulatory and legal hurdles the Tribe now faces.

Regulating the conduct of casino gaming in Massachusetts is "An Act Establishing Expanded Gaming in the Commonwealth" ("Gaming Act"), which Governor Patrick signed into law on November 22, 2011. The Gaming Act permits the newly created Commission to issue a maximum of one casino license in each of three regions defined in the Act. As discussed further below, the Commission's authority to award a casino license in the Southeastern Massachusetts region is restricted if a federally recognized Indian tribe reaches a compact with the Governor and the resulting agreement is approved by the Massachusetts Legislature by July 31, 2012. 

The compact between the Tribe and the Governor provides for the Tribe to give the Commonwealth 21.5% percent of gross gaming revenues from its proposed casino, with the proviso that that payment would drop to 15%t of gross gaming revenue should any other casino open in the Southeast region. This percentage is lower than the 25% of gross gaming revenues any non-tribal casino will have to pay the Commonwealth if it obtains one of the three casino licenses. Under the compact, the Tribe is not permitted to operate live horseracing, thereby removing any potential competition for nearby Plainridge Racecourse. The proposed Taunton casino must be smoke-free and comply with the state's worker's compensation, unemployment and health care laws. In addition, the casino will be subject to the jurisdiction of state law enforcement. The Tribe also agreed to submit to the oversight of a to-be-formed Tribal Gaming Commission, the Commission and the National Indian Gaming Commission ("NIGC"). The Governor, on the other hand, agreed to support the Tribe's pending fee-to-trust application with the federal government and urge the federal government to give the Tribe's application early and expeditious approval (a process that is described in detail below). The compact is automatically renewable after its 15-year term expires.

Governor Patrick must next file the compact with the legislature. As noted above, the legislature has until July 31 to approve the compact. If the legislature does not approve the compact by the July deadline, the Commission is obligated to solicit proposals for a resort casino in the Southeast region by October 31, 2012.

The compact's chances for being passed by the July 31 deadline are uncertain. For one, it remains unclear whether the legislature has the ability to amend the compact or must vote "up or down" on the compact as it currently stands. In a press release, the Governor's Office stated that "[t]he compact must be negotiated and ratified by July 31, 2012," suggesting that the legislature may have an opportunity to make changes.¹  This could prove problematic for the Tribe as, despite its strong democratic majority, the Massachusetts Legislature by no means serves as a pro forma rubber stamp for initiatives out of the Governor's office. In fact, just yesterday state lawmakers rejected Governor Patrick's amendments to the state budget. Moreover, lawmakers from the Southeast region have already expressed concern that the compact does not include any sort of opt-out clause that would allow the Commission to solicit commercial casino bids for the Southeast region should the Tribe's federal fee-to-trust application stall in what is known to be a drawn-out process.

Even if the compact passes by the deadline, the Commission may still solicit proposals for Southeast region if it concludes after August 1, 2012, that the Tribe's fee-to-trust application will not be approved.²  The Gaming Act, however, does not provide any criteria for how or when the Commission may reach this determination. The absence of such guidance is of great concern to non-tribal parties interested in developing a casino in the Southeast region, particularly since the Chairman of the Commission, Stephen Crosby, has stated that he is willing to "give the tribe whatever the appropriate amount of time is to get that decision made" on its pending fee-to-trust application.³ 

Procedural Hurdles to Obtain Approval for a Tribal Casino in Southeastern Massachusetts           

In addition to clearing the hurdle of legislative debate over the compact itself, several other prerequisites must be met before the Mashpee Wampanoag can open a casino in Southeastern Massachusetts. One significant requirement is for the Tribe to obtain approval of its fee-to-trust application concerning a 146-acre parcel of land in Taunton, which the tribe has an option to purchase. Under the federal Indian Reorganization Act ("IRA"), Native American tribes may petition the Bureau of Indian Affairs ("BIA") to have the Secretary of the Interior take land into federal trust for certain tribal uses, including gaming. Land taken into federal trust pursuant to the IRA is exempt from local land use regulations and local and state taxation. When evaluating fee-to-trust applications, the BIA – and ultimately the Secretary who issues the final determination – must consider several factors, including whether the petitioning tribe has historic ties to the land and the economic and environmental impact of the taking on the surrounding areas.⁴  The BIA's processing of fee-to-trust applications is notoriously long – some applications have taken as long as 19 years from the initial petition to a final determination.⁵ 

The Mashpee Wampanoag Tribe's application has only just started working its way through the process. The Tribe filed its fee-to-trust application concerning the Taunton site in March of this year.⁶  Adding to the Tribe's timeline is the requirement that BIA complete an Environmental Impact Statement ("EIS"), which will determine the environmental effect of a casino on the Taunton site. BIA officials have noted that this process alone will take between 13 months and two years to complete.⁷  This estimate, however, may be overly optimistic, as the average time to prepare an EIS is 3.4 years, with the longest EIS process taking as long as 18.4 years.⁸  As of last month, the BIA had only just begun hosting preliminary public "scoping meetings" to "identify potential issues, alternatives, and content for inclusion" in the EIS.⁹  

Potential Legal Challenges to a Mashpee Wampanoag Casino 

In addition to the long procedural morass of the fee-to-trust application process, the Mashpee Wampanoag Tribe will have to survive several expected legal challenges. On top of the considerations identified above, a 2009 U.S. Supreme Court opinion requires the BIA to determine whether the petitioning tribe was "under federal jurisdiction" as of 1934 before granting a fee-to-trust application and taking land into federal trust. In Carcieri v. Salazar¹⁰ the Supreme Court interpreted the language of the IRA to hold that the BIA may only take tribal land into federal trust if the petitioning tribe was either federally recognized or "under federal jurisdiction" as of 1934, when the IRA was enacted. The Justice Thomas opinion did not provide criteria for what the BIA must consider to determine whether a tribe was under federal jurisdiction as of 1934. In a concurring opinion, however, Justice Breyer suggested that the BIA look at whether the petitioning tribe had a treaty with the United States in effect as of 1934; whether the tribe had received a pre-1934 congressional appropriation; and whether the tribe was enrolled with the "Indian Office" as of 1934.¹¹ 

Since Carcieri, numerous Native American tribes, including the Mashpee Wampanoag Tribe (who were not federally recognized until 2007), have called for a legislative "fix" to what they view as a harmful interpretation and restriction of the BIA's authority under the IRA. Despite support from the executive branch and some members of Congress,¹² however, no "fix" has been approved in Congress. To date, the Supreme Court has not had the opportunity to revisit Carcieri nor has any other court attempted to create criteria for establishing "under federal jurisdiction" status as of 1934. Two pending lawsuits, however, may shed light on these issues.

In Match-E-Be-Nash-She-Wish Band of Pottowatomi Indians v. Patchak, a private citizen who neighbors the Gun Lake Casino in Michigan is seeking the closure of that casino (which has been operating since 2009) on the grounds that the Secretary of the Interior illegally acquired the Pottowatomi Tribe's land into federal trust in violation of Carcieri because the Pottowatomi tribe – first federally recognized in 1999 – was not under the jurisdiction of the federal government in 1934. The district court's dismissal went up to the U.S. Supreme Court on the procedural issue of whether the plaintiff, a private citizen, had standing to challenge the Secretary's decision. On June 18, 2012, the Supreme Court overturned the dismissal of the lawsuit, holding that private citizens may challenge the Secretary's acquisitions of tribal lands as citizens' economic, environmental or aesthetic interests could be harmed by such action.¹³  Although the Patchak Court expressly declined to opine as to whether the Pottowatomi tribe was under federal jurisdiction in 1934¹⁴, the opinion tees up the "under federal jurisdiction" question for eventual resolution in the district court. Accordingly, should the Secretary grant its application, not only should the Mashpee Wampanoag Tribe expect challenges based upon its status as of 1934, but given the Patchak opinion's generous interpretation of the interests sufficient for a private citizen to challenge the Secretary's approval of trust applications, it can expect such challenges to come from all directions.

While the Gun Lake Casino litigation demonstrates the uncertainties of operating a casino in Carcieri's shadow, the case of Clark County v. United States¹⁵displays the difficulties Carcieri can pose to even getting a casino project off the ground. The Cowlitz tribe of Washington State – federally recognized since 2000 – submitted its gaming-based fee-to-trust application in 2002. The BIA granted the application in 2010 after concluding that the Cowlitz tribe was "under federal jurisdiction" as of 1934. Several plaintiffs, including local government and private citizens, immediately filed suit in federal court challenging the Cowlitz tribe's 1934 status and, thus, the BIA's authority to approve the tribe's fee-to-trust application. Unlike the case of the Pottowatomi tribe, the Secretary has yet to take the Cowlitz land into trust and has indicated it will wait until after the district court resolves the matter before taking any further action. As with the Patchak case, the Clark County lawsuit is some years away from squarely addressing the Carcieri question.  

Non-Carcieri Challenges to the Tribe's Casino

Carcieri issues aside, two local matters have emerged that could also derail the Mashpee Wampanoag Tribe's casino plans. KG Urban Enterprises, a developer seeking to construct a casino in New Bedford, has challenged the Gaming Act's provision providing for exclusivity of a tribal casino in the Southeast, arguing that the law was preempted by the 1988 Indian Gaming Regulatory Act ("IGRA") and that it violates state and federal equal protection guarantees by allotting a "race-based set-aside" for tribal gaming.¹⁶  Although the suit was dismissed in the district court, KG Urban's appeal is currently pending in the First Circuit Court of Appeals, with a decision possible by the end of the summer. If KG Urban is successful, the Commission may be compelled to solicit bids for the casino licenses in the Southeast region regardless of the strength of the Tribe's trust application.

The Aquinnah Wampanoag Tribe – based in Southeastern Massachusetts—is also pursuing a casino license by seeking to negotiate a compact with the Commonwealth. Although initially stymied by Governor Patrick – who contends that a 1983 settlement between the tribe and the town of Aquinnah (then known as Gay Head) made the tribe subject to certain local zoning regulations prohibiting casino development¹⁷ – the tribe has indicated it will press its case in court if the Governor's office persists in its refusal to negotiate.¹⁸  The Aquinnah Wampanoag tribe's efforts also jeopardize the Mashpee Wampanoag tribe's desired exclusive hold of the region.  

Conclusion

The Mashpee Wampanoag sit in the pole position to develop a casino in Southeastern Massachusetts. Governor Patrick's signature cemented a compact between the Commonwealth of Massachusetts and the Mashpee Wampanoag, seemingly authorizing the Tribe to construct and operate a casino in the town of Taunton. In fact, significant obstacles remain before the first hand of poker can be dealt. In addition to a murky and lengthy application process, legal challenges from competing commercial developers, anti-gaming groups and disapproving private citizens, among others, could derail the Mashpee Wampanoag's efforts. Even if the Tribe is ultimately successful, acquiring every permit and permission required, this success could be tempered by delays of a decade or more. In this complicated area, "success" is anything but a sure bet.  

Footnotes

1 Commonwealth of Massachusetts Executive Department, Office of Governor Deval L. Patrick, Press Release: Governor Patrick Announces Gaming Compact with Mashpee Wampanoag Tribe (July 11, 2012).

2 Gaming Act, § 91(e).

3 George Brennan & Paige Gance, Tribe would be given 'fair shot' to land federal approval, SouthCoastToday.com, June 14, 2012.

4 See 25 C.F.R. § 151.11 ("Off-Reservation Acquisitions").

5 See U.S. Gov't Accountability Office, GAO-06-781, Indian Issues: BIA's Efforts to Impose Time Frames and Collect Better Data Should Improve the Processing of Land in Trust Applications (2006), ("[T]he median processing time for the 87 applications with decisions in fiscal year 2005 was 1.2 years – ranging from 58 days to almost 19 years.").

6 Gerry Tuoti, Mashpee Wampanoag tribe reactivates federal land-into-trust application to include the East Taunton property, Mar. 8, 2012, Taunton Daily Gazette.

7 Id.

8 Piet deWitt & Carole A. deWitt, How Long Does It Take to Prepare an Environmental Impact Statement? 10 Environmental Practice4 (2008), at 164.

9 Bureau of Indian Affairs, Notice of Intent to Prepare an Environmental Impact Statement for the Proposed Fee-to-Trust Transfer of Property and Subsequent Development of a Resort/Hotel and Ancillary Facilities in the City of Taunton, MA and Tribal Government Facilities in the Town of Mashpee, MA by the Mashpee Wampanoag Tribe, Federal Register, May 31, 2012.

10 555 U.S. 379 (2009).

11 Id. at 399.

12 See, e.g., Sen. Daniel Akaka & Rep. Tom Cole, Resolving Carcieri crisis would create jobs, cost taxpayers nothing, The Hill, Nov. 15, 2011.

13 Id. at 18.

14Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, No. 11-246, June 18, 2012, Slip Op. at 4, n.2.

15 No. 1:2011cv00278, D.D.C. filed Jan. 31, 2011.

16 Noah Bierman, Developer files lawsuit over new casino law, Boston Globe, Nov. 22, 2011.

17 See Nelson Sigelman, Of Indian casino in Aquinnah, town counsel says simply 'No,' Martha's Vineyard Times, May 2, 2012.  

18 Christopher Nichols, Lakeville says firm 'no' to casino proposal; Aquinnah plan to continue fighting for location, Taunton Daily Gazette, June 3, 2012 (quoting Aquinnah Wampanoag Chairwoman Cheryl Andrews-Maltais as saying that "[t]he tribe is prepared to pursue its rights in court, if necessary"). See also Bob Salsberg, Legal dispute clouds Mass. Tribal casino future, BusinessWeek.com (noting that the question whether the Indian Gaming Regulatory Act "override[s] the settlement agreement" has "yet to be fully tested in the courts").

Goodwin Procter LLP is one of the nation's leading law firms, with a team of 700 attorneys and offices in Boston, Los Angeles, New York, San Diego, San Francisco and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.

This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. © 2012 Goodwin Procter LLP. All rights reserved.

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