Appeals court blocks Class III gaming for Texas tribe

Tuesday, August 21, 2007  

A federal appeals court on Friday handed the state of Texas another win in the state's long-running campaign against Indian gaming.

Texas officials -- including former governor George W. Bush -- have repeatedly refused to negotiate with tribes even though certain types of Class III games are legal in the state. The stalemate led the Kickapoo Tribe to petition the Interior Department, as its trustee, for help.

Acknowledging the roadblock, Interior Secretary Dirk Kempthorne in May moved to issue procedures to allow the tribe to offer some Class III games. Slot machines, which are the most lucrative form of gaming, were not included.

Despite the restriction, the 5th Circuit Court of Appeals ruled that the Bush appointee overstepped his bounds. In a 2-1 decision, the court said Kempthorne went against the Indian Gaming Regulatory Act by cutting the state out of the Class III compacting process.

"The Secretary may not decide the state's good faith; may not require or name a mediator; and may not pull out of thin air the compact provisions that he is empowered to enforce," Chief Judge Edith H. Jones, a Reagan appointee, wrote in the 42-page opinion. "To infer from this limited authority that the Secretary was implicitly delegated the ability to promulgate a wholesale substitute for the judicial process amounts to logical alchemy."

The holding drew a critical response from Judge James L. Dennis. In a 31-page dissent, the Clinton appointee said Congress gave the Interior Department broad authority to ensure tribes can conduct Class III gaming in states where such gaming is legal.

"The purpose of the IGRA is not simply to establish a neutral bargaining forum; IGRA’s purpose is to affirmatively help Indian tribes enter and conduct the business of gaming, where gaming is not prohibited by state laws of general application, as a means of 'promoting tribal economic development, self-sufficiency, and strong tribal governments,'" Dennis wrote, citing a key provision of IGRA.

And despite agreeing with the outcome of the case, another member of the 5th Circuit expressed concerns that the decision gives states like Texas "leverage to block gaming on Indian land under IGRA in a manner wholly contrary to Congress's intent." Judge Carolyn Dineen King, a Carter appointee, said "the situation clearly calls for congressional action."

Tribes have repeatedly asked Congress to address the situation at issue in the case. In 1996, the U.S. Supreme Court in Seminole Tribe v. Florida said states can invoke their sovereign immunity to block lawsuits over their failure to negotiate Class III compacts.

But attempts to amend IGRA in a manner seen as favorable to Indian Country have failed amid conflicting tribal, state and federal interests. Most recently, Sen. John McCain (R-Arizona) cast the deciding vote against a proposal to "fix" the Seminole decision when the issue came before the Senate Indian Affairs Committee last year.

That leaves tribes like the Kickapoo unable to realize the full intent of IGRA. The tribe, which operates a Class II facility on its reservation, has been asking for Class III gaming since 1995, when President Bush first served as governor.

Two other Texas tribes -- the Tigua and the Alabama-Coushatta -- defied the state and offered Class III games after their requests for compacts were rejected. But in lawsuits initiated under Bush, the 5th Circuit ordered the tribes to close their casinos, sending both into financial difficulties.

The Kickapoo appeared to have a stronger case because the Tigua and the Alabama-Coushatta are subject to special acts of Congress that limit their ability to engage in gaming. But the 5th Circuit -- a heavily conservative court that has consistently ruled against tribal interests -- said the state has the upper hand.

As tribal casinos have exploded into a $23 billion industry, most states have agreed to Class III compacts in exchange for a share of the revenues and regulatory considerations. But a handful -- notably Oklahoma, Wyoming, Florida Texas and Nebraska -- refused to play along.

Oklahoma shifted its stance after state voters approved a Class III compact at the polls three years ago. In a slew of decisions, the 10th Circuit Court of Appeals found Wyoming to be negotiating in "bad faith" under IGRA.

And Florida Gov. Charlie Crist (R) is reportedly close to a deal to the Seminole Tribe, whose leaders sought help from the Interior Department in the same way the Kickapoos in Texas did.

That leaves Texas -- which operates a lottery and allows some types of electronic gaming machines -- and Nebraska as the main holdouts. The Santee Sioux Tribe in Nebraska has petitioned the Interior Department for Class III games though the issue has been tied up in the courts for several years.

Get the Decision:
Texas v. US (August 17, 2007)

Relevant Links:
Kickapoo Lucky Eagle Casino - http://www.kickapooluckyeaglecasino.com
National Indian Gaming Commission - http://www.nigc.gov
National Indian Gaming Association - http://www.indiangaming.org
Senate Indian Affairs Committee - http://indian.senate.gov