STRAINING TO ATONE

 

BY WYLIE R. SHELDON

 

 

PRESENTED TO

 

THE CHIT CHAT CLUB ON MONDAY, NOVEMBER 12, 2007

 

 

I

 

 

            Some seven years ago, not a single lawful Las Vegas-style casino was operating in California.  In fact, the California Constitution, by an Amendment approved by 58% of California voters in 1984, expressly prohibited such casinos in California. 

            Yet, only seventeen years later, in April, 2001, the first lawful Las Vegas-type casino opened for business in California.  This followed an Amendment to the California Constitution adopted by California voters in a Special Election held in March, 2000.  That Amendment, known as Proposition 1A, was an Initiative measure which was approved by nearly 65% of the California voters.  Not only did Proposition 1A permit Las Vegas-type casinos in California – thus overturning the Constitutional prohibition adopted only seventeen years earlier – but it also gave California’s Indian tribes the exclusive right to operate such casinos.  Even more remarkably, two years earlier in the November, 1998 general election, California voters had sanctioned such monopoly for Indian casinos by overwhelmingly approving another Initiative measure known as Proposition 5.  This, of course, was only fourteen years after the passage of the 1984 Constitutional Amendment.  Proposition 5, however, was flawed—and was invalidated by the California Supreme Court in August, 1999.  

            Today, some six and one-half years after the first California Las Vegas-style casino opened, Indian casinos are a very big business in California.  Currently, some fifty-seven tribes  have Las Vegas-style casinos in fifty-eight locations across the state.  Most are clustered in Riverside, San Diego and other Southern California counties, although Northern California boasts the state’s largest casinos:  Cache Creek near Rumsey in Yolo County and Thunder Valley in Lincoln in Placer County. 

            In 2006 Indian casinos in California earned over $7.6 billion in net revenues—that is, gross revenues less prize payouts.  This was $1.6 billion more than the entire Las Vegas strip!   California is now third, behind only Nevada and New Jersey, in gambling revenue; and the California casino revenue is estimated to be one-third of the Indian gaming revenue in the entire United States.  Since 2001 tribal revenue from California casinos has been increasing at the rate of about 25% per year.  This makes tribal casino gambling the fastest-growing industry in the state!   Parenthetically, most of this revenue—at least 75 percent—comes from slot machines, which can generate revenue of $130,000 per machine per year (with very little in the way of operating expenses).  Without question, casinos have become the main source of revenue for Indian tribes in California.  No wonder they are characterized as “the new buffalo”.

            The exclusive right to have casinos has surely driven the rapid growth of Indian tribal casinos in California.  But Indian tribes in California—and elsewhere in the United States—also  enjoy two other major advantages under our system of law.

            First, California tribes can build and operate casinos without having to comply with any state, county or municipal laws.  California tribes may freely disregard all zoning, environmental, life safety, sanitary sewage and other similar regulatory laws adopted over the years by the State of California and its counties and cities to control land development and use. There are no permits or licenses to be obtained or prohibitions to be observed.  The heavy pall of cigarette smoke which fills the gaming rooms in a typical tribal casino is salient evidence of the blanket exemption from local law which the tribes enjoy. 

            Here, I might also add that, in most states, the criminal laws of the state are not applicable—that is, they are of no force or effect—on Indian tribal lands (including casinos).  California is one of only five states which are allowed to impose their criminal laws on Indian lands within their borders under legislation passed by Congress in 1953. 

            The second major advantage which Indian tribes—and their tribal members—in  California and all other states enjoy is that they are not required to pay any state income taxes on their income from their casinos.  Nor do they pay any state or county property taxes or, except on sales to non-Indians, state or county sales taxes.  This tax exemption flows from the general exemption from state and local laws which Indian tribes enjoy.

            Paralleling the almost overnight emergence of the Indian tribal casino industry in  California—and in the United States as a whole—has been the emergence of Indian tribal political power. 

            California Indian tribes in the last ten years have become the largest contributors to  California political campaigns.  The growth has been almost exponential.  In 1992-93 California tribes contributed a mere $33,000 in state and local elections.  This grew to some $2.4 million in 1994-95 and to a total of $10 million from 1990 through 1996.  Between 1999 and the end of 2005, California Indian tribes contributed an estimated $120 million in total in state political campaigns.

            These dollar amounts are simply estimates.  No one really knows how much money California tribes have contributed to California political campaigns—or, for that matter, who or what is the source of their contributions.  This is because California tribes have to date successfully taken the position that they are not subject to California’s Political Reform Act and its reporting and disclosure requirements.  Perhaps we will soon see a change here.  Earlier this year the California Supreme Court ruled that California tribes are indeed bound to comply with the Political Reform Act. 

            On the national level, the tribes have been no less successful in getting their way in Washington.  Indeed, one very prominent scholar of Indian Law, Charles F. Wilkinson,  Professor of Law at the University of Colorado Law School, has recently noted that not a single piece of legislation dealing with Indian affairs has been passed by Congress over Indian opposition since the mid-1960’s—clear evidence of the effectiveness of the Indian lobby.

              In any event, the very large amount of money contributed by California tribes in the recent years to California political causes has been well-spent—if judged by the successes that the tribes have had in Sacramento and with California voters.  In commenting on these successes, Jim Knox, of California Common Cause, has stated, “The tribes were invisible until they started writing checks”.  Given their successes, he says “[t]here is no better illustration of the power of money in politics.”  In any event, I don’t think it is too farfetched to see a definite causal relationship between tribal political power and tribal gaming.

            What happened between the passage of the California Constitutional Amendment in 1984 – which prohibited Las Vegas-style casinos in California – and the passage of Proposition 5 giving Indian tribes the exclusive right to have such casinos just fourteen years later ?  I wish I had the answer.  However, in the balance of this paper I will discuss certain events which may help explain this very rapid and dramatic change. I will focus on events of a legal nature—court decisions and legislation—which together gave California voters the opportunity to permit California Indians to have casinos.  Many of these events, I will suggest, can perhaps be correctly viewed as a collective atonement for wrongs actual or perceived done to the Indians since our nation’s founding.

 

II

 

            To understand the Indian gaming phenomenon, one must start by recognizing that Indian tribes are regarded as sovereign entities under our system of law.  There is general agreement that Indian tribal sovereignty is the most basic principle of all Indian law.   

            The notion of tribal sovereignty goes back to a time earlier than the settlement of the New World.  At least as far back as the 16th century, European legal scholars and philosophers posited that the North American Indian tribes were sovereign entities; and from their first encounters with the tribes the European crowns and their representatives generally treated them as such.   

            After our Independence as a nation, the presence and the power of the Indian tribes was given considerable attention by the federal government.  Professor Wilkinson has noted that during its initial five weeks of existence, the First Congress enacted four laws dealing with Indian affairs; and that treaty-making with Indian tribes was a principal aspect of the Senate’s early business.  Yet, in the Constitution, the Founding Fathers said surprisingly little about Indian tribes and their place in the federal system. 

            Article 1 says Indians on Indian lands are not to be included in the population count to be undertaken immediately to apportion seats in the new House of Representatives. The only other reference in the Constitution to Indians is in the Commerce Clause, which provides: “The Congress shall have Power To… regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; . . .”.   

            That’s it in the Constitution about Indian tribes and Indians.  There’s no provision precluding the States from regulating commerce with the Indian tribes within their borders.  Nor is there is any provision which restricts the States from imposing their laws or otherwise exercising jurisdiction over Indian lands within their borders.  Nor is there any reference to Indian tribal sovereignty or to ownership of Indian tribal lands or to the respective roles of the federal, state and tribal governments vis-à-vis each other in our federal system.  In the dawn of our new nation these important matters remained to be addressed.

 

III

 

            Many of these matters were addressed in three seminal cases decided by the United Supreme Court between 1823 and 1832 in opinions written by Chief Justice John Marshall—of whom Judge Schwarzer gave us a superb and illuminating profile at our last meeting.  These cases have come to be known as the “Marshall Trilogy.”   

            The first case in the Marshall Trilogy, Johnson v. McIntosh, was decided in 1823.  The plaintiffs had brought suit to quiet (or confirm) their title to certain property against the claims of the defendants. The unusual fact here was that both the plaintiffs and the defendants traced their title, respectively, to the property in question to the same Indian tribe—and this forced the Court to look at what kind of title a tribe had to its tribal lands under our system of law.

            In the absence of any guiding precedent, Chief Justice Marshall first reviewed the history of the discovery and settlement of the United States.  He found that all of the European nations, to avoid war with each other over conflicting claims to territory in the New World, came to acknowledge a principle by which the right of territorial acquisition should be regulated:  namely, that discovery gave title to the discovered territory to the discovering nation.  In the case of Indian tribal lands, this title by discovery was not absolute, because the discovery principle recognized a kind of continuing tribal title.  This tribal title, as Marshall explained, consisted of the right to continue to occupy, and to exclude outsiders from, tribal lands—but the tribes no longer had the power to convey title to their lands except to the United States or with its approval (the United States being the successor to the discovering nations).  To the extent of this restriction on the power to grant title—but only to this extent, “[Indian tribal] rights to complete sovereignty, as independent nations, were necessarily diminished”, in Marshall’s words.  By reason of this restriction,  Marshall concluded in this case that the title obtained by the plaintiffs from the tribe was invalid because the United States had never approved such grant; and he confirmed the title of the defendants (which had come directly from the United States).

            I might point out here that the scope of tribal title to tribal lands recognized in Johnson v McIntosh is still very much alive.  In 1985 the United States Supreme Court decided County of Oneida v. Oneida Indian Nation.  At issue was a 1795 agreement with the State of New York in which the Oneida tribe transferred title to the state to some 100,000 acres of Indian land, but such transfer was never approved by the United States government.  In 1970 the tribe filed suit claiming the transaction was, accordingly, invalid; and they sought damages..  The Supreme Court—in a five to four decision—held  the 175-year old land transfer invalid because the United States had never given its approval as required under Johnson v. McIntosh.  Justice Stevens commented in dissent, “it is worthy of emphasis that this claim arose when George Washington was President of the United States.”  Can we detect some straining here ? Perhaps.

            The second case in the Marshall Trilogy, Cherokee Nation v. Georgia, was decided in 1831.  In that case, the Cherokee tribe sought to enjoin the State of Georgia in federal court from annexing certain Cherokee lands lying within the State’s borders.  The Cherokees claimed that the annexation would violate several treaties between the United States and the Cherokees under which the tribe held title to such lands.

            At the outset of his opinion, Chief Justice Marshall sounded an unmistakable note of sympathy for the Indians:

“If courts were permitted to indulge their sympathies, a case better calculated to excite them can scarcely be imagined.  A people once numerous, powerful, and truly independent, found by our ancestors in the quiet and uncontrolled possession of an ample domain, gradually sinking beneath our superior policy, our arts and our arms, have yielded their lands by successive treaties ….”

 

            Notwithstanding such leanings, the Court declined to reach the merits of this dispute, holding that the federal court did not have jurisdiction—what we lawyers call subject matter jurisdiction—to entertain this particular matter. This holding was based on Article 3 of the Constitution, which grants jurisdiction to the federal courts to hear and decide, among other matters, “Controversies… between “a State, or the Citizens thereof, and foreign States, Citizens or Subjects.”  To get into federal court, the Cherokee tribe had filed this action as “the Cherokee Nation of Indians, a foreign state, not owing allegiance to the United States, nor to any state of this union, nor to any prince, potentate or state, other than their own”. 

            This self-characterization by the tribe of itself as a “foreign state” did not persuade Chief Justice Marshall.  He noted that the Commerce Clause, in granting the power to Congress to regulate commerce, specifies that such power extends to commerce with “… foreign Nations . . . and with the Indian Tribes”.  To Marshall, this separate enumeration of  “foreign Nations” and “the Indian Tribes” in the same clause was clear evidence that, for the Founding Fathers, the Indian tribes were not “foreign Nations”.  By extension, therefore, the Cherokee tribe could not be considered as a “foreign State” for purposes of federal court jurisdiction under Article 3.  This conclusion led to Marshall’s famous characterization of the Indian tribes as “domestic dependent nations….[whose] relation to the United States resembles that of a ward to his guardian”.  This was the fount of the principle that there is a trust relationship between the federal government and the tribes which has come to play such an important role in our jurisprudence.

            The final case in the Marshall Trilogy, Worcester v. Georgia, was decided in 1832.  This case squarely addressed the question which was presented, but not answered, in Cherokee Nation v. Georgia:  whether a state could assert its authority over Indian lands located within its borders.  The plaintiff, a Vermont citizen who had been living as a missionary on Cherokee lands in Georgia, had been convicted in a Georgia court of violating a Georgia statute requiring all non-Indians to obtain a state permit before living on Indian lands in the State—and he had been sentenced to four years at hard labor. This statute, the plaintiff argued, violated numerous treaties between the United States and the Cherokee tribe and, thus, was unconstitutional under the Constitutional provision making treaties the supreme law of the land.

            The Supreme Court, speaking again through Chief Justice Marshall, agreed with the plaintiff.  Marshall began by amplifying upon the principle of Indian tribal sovereignty which he had enunciated in Johnson v. McIntosh. In his words:

“The Indian nations had always been considered as distinct, independent political communities, retaining their original natural rights, as the undisputed possessors of the soil, from time immemorial,….” (Italics added)        

 

             Marshall then surveyed numerous treaties between the European discovering nations (and the United States as their successor) and various tribes, including the Cherokees.   He found that the treaties invariably provided that the Indians, for their part, acknowledged their dependence on the European crowns (and later the United States) for protection, and agreed to the regulation of their trade, but only as long as their independence and right to self-government were assured and their tribal land boundaries were fixed and guaranteed.  For Marshall, this tribal dependence on a stronger power in no way impaired the status of the tribes as sovereign nations.  Each treaty, in his words:

“… involved, practically, no claim to their lands, no dominion over their persons.  It merely bound the [particular Indian] nation to the [particular European] crown, as a dependent ally, claiming the protection of a powerful friend and neighbor, and receiving the advantages of that protection, without involving a surrender of their national character.” (Italics added)

 

            Marshall then examined how Congress had dealt with Indian tribal sovereignty in dealing with Indian affairs from the first days of the new nation.  In this review Marshall discovered that:

                        “From the commencement of our government, Congress has passed acts to regulate trade and intercourse with the Indians; which treat them as nations, respect their rights, and manifest a firm purpose to afford that protection which treaties stipulate…All these acts,…consider the several Indian nations as distinct political communities, having territorial boundaries, within which their authority is exclusive, and having a right to all the lands within those boundaries, which is not only acknowledged, but guarantied by the United States.” (Italics added)

 

            Next, answering one of the questions left open under the Constitution, Marshall found that the powers granted to Congress in the Commerce Clause “comprehend all that is required for the regulation of our intercourse with the Indians.”  Or, even more clearly: “The whole intercourse between the United States and this nation, is, by our Constitution and laws, vested in the government of the United States.” These simple statements have grown into the established principle that, under the Commerce Clause, Congress has the exclusive or plenary power over Indian tribes and their lands, which necessarily excludes any such power in the states.  And this plenary power, given the dependence of the tribes upon the federal government for protection, imposes on the federal government a fiduciary obligation, as Marshall first enunciated in Cherokee Nation v Georgia, to act in the best interests of the tribes—thereby creating the so-called trust relationship which has governed the relationship between the federal government and the tribes since Worcester.

            Based upon this thorough review, Marshall concluded that:

“The Cherokee nation, then, is a distinct community occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force,….”

 

            Accordingly, the Court held the Georgia state court judgement convicting and sentencing Mr. Worcester null and void as being repugnant to the Constitution, treaties and laws of the United States. 

            Looking back, Chief Justice Marshall set forth in Worcester v, Georgia, virtually every basic doctrine in Indian law as it has come down to the present: the doctrine of federal plenary power; the doctrine of the trust relationship between the United States and the Indians; the  doctrine of Indian title to tribal lands; and the general inapplicability of state law upon Indian lands. 

              Although written in 1832, Worcester not only remains the dominant opinion in the field of Indian law, but is also viewed as a fount of Constitutional law in general.  Professor Wilkinson remarks that “[s]ince 1970, Worcester has been cited by state and federal courts more than virtually any other case handed down by the Supreme Court between 1789 and the end of the Civil War.  The only cases cited more often are three other cases written by Chief Justice Marshall before 1830, including Marbury v. Madison and McCulloch v. Maryland, both of which Judge Schwarzer discussed at our last meeting.

 

IV

\

            With this backdrop, I now turn to more recent events which lead to the California Indian casino phenomenon.  I will start with Bryan v. Itasca County, decided by the United States Supreme Court in 1976.  In that case, a Chippewa Indian brought an action in a Minnesota court challenging the imposition by Minnesota of a personal property tax on his mobile home located on a Chippewa reservation.  The Minnesota Supreme Court upheld the power of Minnesota to impose the tax on the basis of Public Law 280.  Public Law 280, which had been enacted by Congress in 1953, granted five states (including Minnesota and California) the right to exercise civil and criminal jurisdiction over Indian tribal lands within their borders.  Section 4 of Public Law 280 provides that the civil laws of the designated states that are of  general application to private persons or property shall have the same force and effect within … Indian [lands] as they have elsewhere within the State . . .”.  For the Minnesota Supreme Court, the challenged personal property tax was clearly a “civil law” of “general application” and, thus, should have the “same force and effect” on the Chippewa reservation as elsewhere within the state.   

            The United States Supreme Court disagreed.  While Section 4 may seem to some relatively plain and straightforward, Justice Brennan, writing for the Court, found that the statute was “admittedly ambiguous”—apparently because Congress did not expressly confer upon the designated states the taxation power over Indian lands.  To resolve this ambiguity, Justice Brennan went to the legislative history of Public Law 280 to determine the intent of Congress.  There he found “the absence of anything remotely resembling” an intention to confer upon the states general civil regulatory control over Indian reservations. This was of great importance to Justice Brennan, for if Congress in enacting Public Law 280 had intended to confer upon the states general civil regulatory powers over Indian lands – which he saw as a “sweeping change in the status of tribal government and reservation Indians” – Congress would have expressly said so.         With an ambiguous statute and no Congressional guidance, Justice Brennan was forced to rely upon a unique rule which had been fashioned by the Court over the years for interpreting ambiguous statutes dealing with Indian matters.  This rule, which is said to have its origin in the trust relationship between the federal government and the tribes identified by Chief Justice Marshall in Worcester v. Georgia, has come to be known as the “Blackfeet Tribe presumption”.  This rule provides that the standard principles of statutory construction do not apply in interpreting statutes passed for the benefit of the Indians.  As the rule is usually phrased, such statutes “ …are to be liberally construed, doubtful expressions being resolved in favor of the Indians.”  Here, the Court simply assumed without discussion that Public Law 280 was, indeed, a statute passed “for the benefit of” the Indians.  This is somewhat curious, since Justice Brennan made clear that the “primary concern of Congress in enacting Public Law 280…was with the problem of lawlessness on certain Indian reservations, and the absence of adequate tribal institutions for law enforcement.”    Apparently, the other eight justices on the Supreme Court did not find this to be curious at all since they all agreed with Justice Brennan’s opinion.  Thus, the Court held that Section 4 of Public Law 280 simply constituted a grant of jurisdiction to the courts of the designated states to entertain private civil litigation involving reservation Indians—and gave no authority to the states to apply their law on Indian lands.  Is there some straining here ?

 

V

 

            In 1980 Ronald Reagan was elected President.  On taking office the following January,  he began almost immediately to cut back substantially federal government funding to Indian programs.  This occurred at about the same time that a few tribes, notably in California and Florida, began to open high stakes bingo palaces as a means of raising revenue. 

            Not surprisingly, the Reagan Administration was quick to take note of—and support—this new development.  On January 24, 1983, the President issued an Indian Policy Statement,  reiterating the goals of strengthening tribal governments and promoting tribal self-sufficiency, but adding a new and urgent emphasis: he exhorted the tribes to “reduce their dependence on federal funds by providing a greater percentage of the cost of their self-government.”  This signaled, of course, a shifting of responsibility and cost which was at the heart of many of Reagan’s policies. 

            Within days thereafter, Reagan’s Department of the Interior issued an official policy directive which amplified on the President’s new approach to the Indians:

“A number of tribes have begun to engage in bingo and similar gambling operations on their reservations for the very purpose enunciated in the President’s message.  Given the often limited resources which tribes have for revenue–producing activities, it is believed that this kind of revenue-producing possibility should be protected and enhanced.” (Italics added)

 

 For the tribes and President Reagan, tribal high stakes bingo seemed to be the perfect answer to their respective economic problems.

             In California, like many states at that time, the game of bingo was not prohibited, but it was stringently restricted.   Under the California Penal Code, only charitable organizations could  operate bingo games; the prizes in such games could not exceed a maximum of $250; and all profits from such games must be applied to charitable purposes.  The California Penal Code further provided that anyone who sponsored or operated a bingo game which did not strictly comply with these requirements would be guilty of a misdemeanor punishable by a fine of up to $5,000 or by imprisonment in a county jail for up to one year, or by both.

            The high stakes bingo games which the tribes began to operate in California in the early 1980’s made no attempt to comply with the requirements of the California Penal Code.  Not surprisingly, some California counties in which such games were being operated quite soon brought actions in court to shut them down.  These actions claimed that the tribes were violating the California Penal Code; and that Section 2 of Public Law 280—a different section of the law which the Supreme Court had construed in Bryan v. Itasca County—by its terms permitted California to apply its criminal laws against the offending tribes.  Section 2 expressly provided that the criminal laws of California and the other Public Law 280 states would be applicable on Indian lands within their respective borders “with the same force and effect . . . as they have elsewhere within the State . . .”.

            One California county which sought to shut down the tribal high stakes bingo games was Riverside County.  In response to the County’s action, several tribes sued the County seeking a declaratory judgement to stop the County from proceeding with its action.  They argued that Section 2 of Public Law 280—despite its seemingly clear language—did  not give such authority; and, absent such authority, the State of California could not impose its criminal laws on tribal lands because of the tribe’s status as a sovereign nation under Worcester v. Georgia.  The Federal District Court agreed with the tribes.  The Ninth Circuit Court of Appeals affirmed; and the State of California appealed to the United States Supreme Court.  Thus, we come to California v. Cabazon Band of Mission Indians, which was decided in early 1987 in a 6 to 3 decision written by Justice Byron White.

            Justice White stated that the issue to be decided in Cabazon was this: When a state seeks to enforce a state law on Indian lands under the authority of Public Law 280, “it must be determined whether the law is criminal in nature”, and thus fully applicable on Indian lands under Section 2, or “civil in nature”, in which case, as the Court held in Bryan v. Itasca County, it cannot be enforced by the state on Indian lands.  In deciding whether the California prohibition of high stakes bingo was criminal in nature or civil in nature, the Court adopted the following rationale:  if the intent of a state law is generally to prohibit certain conduct, the law is criminal in nature; but if the state law generally permits the conduct at issue, even if subject to regulation, it must be classified as civil in nature.  In Justice White’s words, “[t]he shorthand test is whether the conduct at issue violates the State’s public policy.” (Italics added)

            For Justice White, the California bingo statute could not be easily categorized as either criminal or civil in nature.  He placed great importance, however, on the fact that California did not prohibit all forms of gambling, noting that the State itself operated a lottery and permitted pari-mutuel horse-race betting, all card games except those specifically enumerated in the California Penal Code, and even bingo itself, provided it was operated in compliance with the Penal Code requirements. This led Justice White to conclude that high stakes bingo did not violate the public policy of California.  Therefore, California’s laws prohibiting high stakes bingo were regulatory and, thus, civil in nature.

             The fact that California could enforce its bingo laws by criminal sanctions did not make them criminal in nature.  For Justice White:

 

“…that an otherwise regulatory law is enforceable by criminal as well as civil means does not necessarily convert it into a criminal law within the meaning of Public Law 280.  Otherwise, the distinction between [Section] 2 and [Section] 4 of that law could easily be avoided and total assimilation permitted. . .”.  (Italics added)

             In thus sounding the assimilationist alarm, Justice White was warning that the states could all too easily threaten the autonomy and independence of its tribes simply by passing regulatory laws and making a violation of any such law a crime in order to enforce the law on Indian lands.  With enough of such civil regulatory laws masked to look like criminal laws, the tribes would lose authority and control over their lands; and sooner or later they would become assimilated into the mainstream of American society.  This was not going to happen on Justice White’s watch.  Thus, the Court held that Section 2 of Public Law 280 did not authorize California to enforce its prohibition of high stakes bingo.

             Justice White then found that the federal and tribal interests of Indian sovereignty, tribal self-sufficiency and economic development easily outweighed California’s interest in  preventing the infiltration of tribal gambling by organized crime.  As evidence of the strong federal interest here, he noted President Reagan’s Indian Policy Statement and he pointed out that the Reagan Administration was then in fact actively providing financial assistance to the tribes for the purpose of constructing bingo facilities and developing tribal gaming enterprises. As for the tribal interests here, he opined that, as a practical matter, gambling was the only way that the tribes could survive in a time of reduced federal support.  In his words:

“The Cabazon and Morongo Reservations contain no natural resources which can be exploited.  The tribal games at present provide the sole source of revenues for the operation of the tribal governments and the provision of tribal services.  They are also the major sources of employment on the reservations.  Self-determination and economic development are not within reach if the Tribes cannot raise revenue and provide employment for their members.”  (Italics added)

 

            I might note that Justice White began his opinion in this case with almost identical words as to the economic significance of high stakes bingo parlors to the tribes.  Perhaps such reiteration of the harsh economics of tribal life gives an us an insight as to the sentiment which underlay Justice White’s opinion—and which predisposed him to find a way—to strain, if you will—to  help the tribes.

            Justice Stevens in dissent found Justice White’s reasoning “curious, to say the least”.  He saw the Court’s conclusion that high stakes bingo did not violate California’s public policy “…[as] tantamount to arguing that driving over 60 miles an hour is consistent with public policy because the State allows driving at speeds up to 55 miles an hour.” For Justice Stevens, the “plain language” of Section 2— the criminal laws of the State of California ‘shall have the same force and effect within such Indian country as they have elsewhere in the State’—clearly  authorized California to enforce its prohibition against high stakes bingo on Indian reservations.

           

                                               

VI

 

 

­­­            Clearly, Cabazon—in holding that the states lack authority to regulate tribal gaming—was a victory for the tribes.  Almost immediately the states went to Congress to get legislation authorizing state regulation of tribal gaming.

            In response to intensive lobbying by both the states and the tribes, Congress acted quickly.  In 1988, a little more than a year after Cabazon was decided, Congress enacted The Indian Gaming Regulatory Act (which I will hereafter refer to as IGRA). IGRA provides a comprehensive statutory scheme for the regulation of “Indian gaming”, which is defined as gaming conducted by an “Indian tribe” on “Indian lands”.  

            IGRA divides Indian gaming into three different classes: 

            Class I and Class II gaming consists of traditional Indian ceremonial games, bingo and certain card games, but excludes any “banked” or “percentage” card games (i.e.,  those where the “house” has a stake in the game or in the pot) and slot machines.  The regulation of Class I and Class II gaming is left to the tribes, subject to some federal and state oversight as set forth in IGRA.

               Class III gaming includes high-stakes games usually associated with Las Vegas-style casino gambling such as slot machines, “banked” and “percentage” card games, and other casino games such as roulette, craps and keno.  IGRA provides that  Class III gaming is to be governed and regulated by an agreement—called a “Tribal-State Compact”—to be entered into between the state and each tribe which wants to engage in such gaming.  The Compact was the means adopted by Congress to resolve the most contentiously-debated issue in the legislation, namely which authority – tribal, state or federal – would regulate Class III gaming.  Under IGRA, a tribe cannot lawfully conduct Class III gaming without having entered into such a Compact; and each state is required to negotiate in good faith with each tribe requesting a Compact.  

            Under IGRA, a Compact may cover only the specific subjects which are spelled out in IGRA.  These include:  the application of the state’s and the tribe’s criminal and civil laws for the regulation of the tribe’s Class III games;  tribal reimbursement to the state to cover the state’s costs of regulating such gaming; operating and facility maintenance standards; and “any other subjects that are directly related to the operation of gaming activities.”  Except for reimbursement for a state’s regulatory costs, IGRA expressly prohibits a state from seeking to impose, through a Compact, any tax, fee, charge or other assessment upon the tribe or its lands or members. 

            As a concession to the many states which at the time did not permit and did not want commercial gambling,  IGRA provides that tribal Class III gaming may take place only in a state that “permits such gaming for any purpose by any person, organization or entity.”  IGRA  also assures the states that nothing in IGRA is to override state gambling laws; but the federal government is given the exclusive right to prosecute tribes for conducting Class III gaming without a Compact.  This provision has had an emasculating effect upon control by California of unlawful Indian gaming, as we shall see.

            IGRA was said to be a grand compromise by Congress in trying to reconcile the competing interests of the federal government, the tribes and the states.  From my perspective, I think it was a significant victory for the Reagan-Bush Administrations and the tribes.  The states came away with very little:  their only means of control of Indian gaming is through a Compact; a Compact can only cover the matters specifically allowed by IGRA and, only then, to the extent that the tribes agree; the states are expressly precluded from taxing the casino earnings of the tribes or tribal members; and the states cannot go after tribes conducting Class III gaming without a Compact because the authority to do so is vested federal government.  In my opinion, IGRA was a triumph for tribal sovereignty; the states came away worse off under IGRA than they had been under Cabazon.  Some straining in evidence here ?

 

VII

 

             Within a short time after IGRA was passed, several Indian tribes in California requested the State to enter into negotiations for Compacts to permit the tribes to operate Class III gaming on tribal lands.  At that time, the specific Class III gaming which the tribes wanted—banked and percentage card games and stand-alone electronic gaming machines (similar to slot machines) – was not permitted under California law (although California did allow other forms of Class III gaming, such as non-electric keno and lotto).  Because the specific Class III gaming activities which the Indians wanted were not permitted, Governor Wilson took the position that  he had no obligation to negotiate with respect to them.  He relied upon the IGRA provision which specifies that “Class III gaming shall be lawful on Indian lands only if  . . . located in a State that permits such gaming for any purpose by any person, organization, or entity . . .”. (Italics added)        In Rumsey Indian Rancheria of Wintun Indians v. Wilson, decided by the Ninth Circuit Court of Appeals in 1994, Governor Wilson’s position was validated.

            Notwithstanding—perhaps in spite of—Rumsey, Class III gaming without a Compact quite rapidly began to appear on an increasing number of California Indian lands.  Since IGRA gives the federal government the exclusive right to stop such unlawful activity, Governor Wilson was powerless to deal with this situation.  And the federal government—under both Presidents Bush and Clinton—did not initiate a single unlawful tribal gambling prosecution during the early post-IGRA years, ostensibly to spur Compact negotiations between the various states and their tribes. 

            Into the mid-1990’s this unstable equilibrium continued in California.  Unlawful Indian casinos proliferated; the federal government took no action to halt this phenomenon; and Governor Wilson was forced to stand idly by.  By the mid-1990’s, it is estimated that there were more than thirty unlawful tribal casinos in operation in California—with over 14,000 electronic gaming machines.  Governor Wilson did what he could, however, to try to put  pressure on the gaming tribes. In 1996 he began to negotiate a model Compact with the Pala Band of Mission Indians which would permit the signatory tribes to have lottery games, but not slot machines.  This moved the Clinton Justice Department to announce that it would finally initiate prosecutions against unlawful tribal gaming if the gaming tribes did not accept the model Pala Compact within sixty days after it was finalized.  On March 6, 1998, the Governor and the Pala Band reached final agreement on the terms of the Pala Compact.  But this Compact was quickly rejected by most of California’s gaming tribes, primarily because of the prohibition of slot machines.  This rejection had momentous consequences:  on May 14, 1998, the Clinton Justice Department initiated twenty-seven actions in federal courts in California to shut down unlawful Indian gaming and to seize the tribal slot machines.

            This spurred the gaming tribes to take action.  Rather than give up their lucrative Class III gaming operations, a coalition of over eighty California tribes—in an unprecedented display of tribal unity—immediately drafted an initiative measure to be presented directly to California voters in the November, 1998 general election.  Remarkably, the tribes gathered more than a million signatures in the record time of only twenty-eight days, thus easily qualifying the measure for the November election by the deadline of July 1.  This measure, formally named “The Tribal Government Gaming and Economic Self-Sufficiency Act of 1998”, was commonly known as Proposition 5. 

            Proposition 5 was to be a watershed event for gaming in California.  The Proposition required the State to enter into a model “Tribal-State Gaming Compact” with California tribes.  The model Compact prohibited slot machines, but would allow the tribes to have non-banked card games and “tribal gaming terminals” (which were said to be different than slot machines).  Most importantly, the tribes were to have the exclusive right to conduct such permitted Class III gaming.  In return for this monopoly, the model Compact required each signatory tribe to contribute effectively about 3% of its net revenue from its tribal gaming terminals to certain funds for the benefit of non-gaming tribes and affected cities and counties. No money was to go into the state’s coffers. 

            Curiously, Proposition 5 proposed to amend California statutory law, but not the California Constitution.  This is curious because the California Constitution, by virtue of the 1984 Amendment which I mentioned earlier, clearly prohibited Las Vegas-style casinos; and, of course, no statute which violates the Constitution would be valid.  In an obvious ploy to circumvent this Constitutional prohibition,  Proposition 5 boldly declared that the gaming activities which the model Compact would authorize were “materially different” from Las Vegas-style casinos.  To many, the asserted “material differences” seemed spurious.  In fact, the Legislative Counsel of the State of California issued an opinion well before the election unequivocally concluding that Proposition 5 would, indeed, be invalid under the California Constitution because it would authorize Law Vegas-style casinos.  But this seemed of utterly no consequence to the people of California, as we shall see.

            It appears that the decision by the tribes to go for a simple statutory change was driven by their sense of alarm when the Clinton Justice Department moved in May, 1998 to shut down unlawful tribal gaming. This left the tribes with only a few weeks before the qualification deadline of July 1.  Not surprisingly in these circumstances, the tribes opted to try to get only the 467,000 signatures required to qualify Proposition 5 as a statutory change instead of the 780,000 signatures which would have been required for a constitutional change.  That they did get a million signatures—in  only twenty-eight days—must have come as a big surprise; and it proved to be early evidence of the depth of public support for Indian gaming.

             In taking Proposition 5 to the people, the tribes argued that Indian casinos were indispensable in promoting tribal self-reliance and economic development; and they vilified the opposition as mere tools of Nevada commercial gaming interests and, more importantly, as anti-Indian.  The No on 5 opposition was, indeed, led by Nevada and California commercial gaming interests, but also included religious conservatives, organized labor and Governor Wilson.  Their principal argument simply—and correctly—pointed out that Proposition 5 would give the tribes an exclusive monopoly and that, because of  tribal sovereignty, Indian casinos would be exempt from any state or local control and from all state and local taxes.    Both sides spent liberally:  the tribes and their allies spent nearly $75,000,000; and their opponents spent some $29,000,000—for a combined total of over $100,000,000, making Proposition 5 the most expensive non-presidential campaign in the history of the United States.  On election day, November 4, 1998, the tribes overwhelmingly prevailed:  62.4% of Californians voting in that election voted in favor of Proposition 5. Clearly, Californians wanted to help the Indians—even knowing that Proposition 5 would be unlikely to withstand a constitutional challenge.   Some collective atonement here ?  I think that case can be made.

              Some two weeks after election day, opponents of Proposition 5 filed a petition directly in the California Supreme Court challenging the constitutionality of Proposition 5 in a matter captioned Hotel Employees & Restaurant Employees Int’l Union v. Davis.  Less than two weeks later, the Supreme Court—declaring that the underlying questions were of “great public importance and must be resolved promptly”—agreed to rule on the petition instead of following its customary procedure of allowing lower courts to address it in the first instance.

                        On August 23, 1999, the Court ruled on the petition, holding that Proposition 5 was unconstitutional under the Constitutional prohibition against Las Vegas-style casinos. The Court easily dismissed the tribes’ claims that the gaming authorized by Proposition 5 was materially different than the gaming offered by the prohibited casinos.  To many, this result was no surprise. 

             Despite this setback for the tribes, Governor Gray Davis – who had been elected in the November 1998 election—recognized that the public’s landslide support of Proposition 5 demonstrated a deeply felt approval of tribal gaming.  Accordingly, he immediately commenced negotiations with a number of tribes (primarily those which had supported him in his successful gubernatorial campaign) to create a second model Compact to be presented to the voters—this time, as a Constitutional Amendment.  After insisting for months on a Compact very much the same as the Proposition 5 Compact, i.e., no banked card games or slot machines, the Governor suddenly offered the tribes more than what they had under Proposition 5—and even more than what they had been seeking in the negotiations.  That is, the Governor agreed to allow the tribes to have full Las Vegas-style slot machines and banked card games and the exclusive right to conduct most types of Class III gaming in the state.   In exchange, the Governor asked the tribes to pay a modest percentage of tribal slot machine earnings—some of which could go into the state’s general fund.  Because of their voracious appetite for slot machines, the tribes eagerly embraced the Governor’s proposal. The tribes may also have been motivated to reach agreement with the Governor because of the announcement in August, 1999 by the Clinton Justice Department that it would once again proceed with enforcement actions against California tribes engaged in unlawful Class III gaming if they did not enter into Compacts with the state by October 13, 1999.

            The negotiations between the Governor and the tribes led to Proposition 1A, an initiative measure to modify the California Constitution.  After quick and overwhelming approval by the Legislature, Proposition 1A was  placed on the ballot on September 10, 1999 to be voted upon in a special election to be held on March 7, 2000.   

            Proposition 1A’s model Tribal-State Compact may be briefly summarized.  Each signatory tribe is allowed to have two casinos and 350 slot machines (and to conduct lottery games and banked and percentage card games).   By paying an annual license fee, each tribe may acquire licenses to operate as many as 2,000 slot machines.  The license fee ranges from $900 for each slot machine in excess of 350 machines up to $4,350 for each slot machine in excess of 1,250 slot machines.  All license fees are to be paid into a trust fund—the so-called Revenue Sharing Trust Fund—for the benefit of tribes in California that do not conduct gaming.

            Each gaming tribe is also required to make an annual payment, beginning in late 2002, to a so-called Special Distribution Fund.  The amount of each payment was to be based upon the number of slot machines operated by the tribe on September 1, 1999.   For each of such 1999 machines, the tribe was to pay a percentage of the tribe’s “net win” (roughly, gross revenue less prize payouts) starting at 7% for each slot machine in excess of 200 and going up to 13% for each slot machine in excess of 1,000.   Funds in the Special Distribution Fund could be used not only to offset state and local government expenses incurred as a consequence of tribal gaming, but also—and this was new—for “any other purposes specified by the Legislature.” 

            The election campaign for and against Proposition 1A was almost a carbon copy of the struggle for and against Proposition 5. The tribes—and their new allies—Nevada gaming interests who now were hoping to be retained to run tribal casinos—repeated their refrain that Indian gaming would replace “welfare with work, despair with hope, and dependency with self-reliance”, and proclaimed, somewhat disingenuously, that Proposition 1A would simply allow the tribes to keep the gaming that they were already conducting.  The Proposition 1A opposition labeled the slot machines which the tribes would have as “the ‘crack cocaine’ of gambling; and ranted against the manifest unfairness of granting the tribes a monopoly on slots—they were seemingly unconcerned about any inconsistency between these two positions.  Probably because the whole matter of Indian gaming had been thoroughly aired in connection with Proposition 5, the Yes and No campaigns for Proposition 1A spent substantially less than the amount which  had been spent on Proposition 5—the tribes spent merely $30,000,000 this time.  The result, nonetheless, was the same on election day, March 7, 2000:  California voters emphatically revalidated their support for tribal gaming – nearly 65% of us voting in that election approved Proposition 1A.  Collective atonement déjà vu ?  It would seem so.

            The votes had hardly been counted when Proposition 1A was challenged in court. In Artichoke Joe’s California Grand Casino v. Norton, the first challenge was based on the IGRA provision specifying that tribal Class III gaming may take place only in a state that “permits such gaming for any purpose by ­any person, organization or entity.”   The claim was that, since the tribes under Proposition 1A were the only ones allowed to conduct Class III gaming, California clearly did not permit “such gaming…by any person, organization or entity”.  The Ninth Circuit seemed to have little trouble in rejecting this claim, ruling that California does “permit” Class III gaming since Proposition 1A permits the tribes to conduct such gaming; and, hence, the IGRA requirement is satisfied.  The Court based its decision on the Blackfeet Tribe presumption, which you may recall was the basis for the ruling by the United States Supreme Court  in Bryan v. Itasca County.  In the Court’s words:

“We are confronted by an ambiguous provision in a federal statute that was intended to benefit Indian tribes.  One construction of the provision favors Indian tribes, while the other does not. . . .We adopt Defendants’ construction, not because it is necessarily the better reading, but because it favors Indian tribes and the statute at issue is both ambiguous and intended to benefit those tribes”.  (Italics added)

 

             

Does anyone else detect some straining by the Court to reach this result ?  

            The second claim in Artichoke Joe’s was that Proposition 1A violated the rights of the plaintiffs—who were mainly card rooms and other competitors of tribal casinos—under the Equal Protection Clause of the United States Constitution.  The Court, however saw no impermissible discrimination here because the exclusive gaming monopoly granted to the tribes was based on a political, not a racial, classification.  That is, it was a preference granted to the tribes in their capacity as “sovereign entities” and not as an ethnic group called “Indians”.  Another strained result ?  Perhaps.

            In another case entitled In Re Indian Gaming Related Cases,  the claim was raised that the Proposition 1A Model Compact violates the IGRA requirement that the only provisions which may be included in a Compact are those which are specifically listed in IGRA and others which are “directly related to the operation of gaming activities”. (Italics added)  The plaintiffs principally complained about the Special Distribution Fund, where the required payments may be allocated not only for certain specified purposes, but also for  “any other purposes specified by the Legislature”; or, in the Court’s words, directly into the “pocket of the State”.   Using another rather arcane rule of statutory construction,  the Court ruled that the phrase “any other purposes specified by the Legislature” should be interpreted as if it read “any other purposes directly related to gaming specified by the legislature.” (Italics added)  Obviously, with such a reading, the challenged provision fits nicely under IGRA.  Frankly, I find this to be a rather thin reed to support the Court’s result.

            The plaintiffs made one other significant argument for invalidating Proposition 1A, to wit: the required tribal payments to the two Funds were simply a tax imposed by the State in violation of the IGRA provision that “…nothing [in IGRA] shall be interpreted as conferring upon a state . . . authority to impose any tax, fee, charge or other assessment upon an Indian tribe”.

            For the Court, this claim, too, was without merit.  The Court reasoned as follows:  in the negotiations leading up to Proposition 1A the state had offered  “meaningful concessions” to the tribes – namely, the exclusive right to conduct Class III gaming in the most populous State in the United States.  In consideration for these concessions, the tribes agreed to make the required payments to the two Funds.  Thus, for the Court, this payment obligation was not “imposed” upon the tribes, but simply came out of the give and take of the negotiations.  Although the state did not have authority to exact such payments, it could bargain to receive them in exchange for a quid pro quo.  Was the court straining here to reach a desired result?  I think so.  I see no real distinction between a state’s “authority to  impose” and its “authority to negotiate ” in a context where the state holds all the cards, so to speak.  Irrespective of the concessions offered by the State, it seems to me that the State’s insistence in negotiations on payments by the tribes comes awfully close to exercising an “authority to impose.”

 

IX

 

              The seven years since Proposition 1A became effective have been a time of adjustments to the model Tribal-State Compact which the Proposition authorized, but the essential relationship between the State and the gaming tribes has not changed.  With each passing year the tribes have sought an increasing number of slot machines to take advantage of the seemingly inexhaustible demand on the part of the public—a demand which one knowledgeable observer calls “huge, gargantuan, unprecedented, [and] unmet”.  In return, the State—facing what seem to be annual budgetary crises—has demanded that the tribes agree to pay a higher percentage of their casino revenues in the form of revenue-sharing payments. Thus, in the most recent Compacts and Compact Amendments, most of the tribes have been allowed to have at least 5000 slot machines; and several have been given the right to have an unlimited number of slots.  As the trade-off,  most of the tribes have agreed to make annual payments directly into the State’s general fund of from 15% to 25% of the net win from their slot machines (roughly, gross revenue less payouts) as well as annual payments to the non-gaming tribes of up to $2,000,000 per year.  For example, in its amended Compact of 2006, the Morongo Band of Mission Indians agreed, in return for being allowed to operate up to 7,500 slot machines in its casino, to make an annual payment to the State of $36.7 million for its existing 2000 slot machines and to pay each year for the 5,500 additional machines permitted under the amended Compact 15% of the net win from the first 3000 additional machines and 25% of the net win from all additional machines.  These increased payments (which have come to be known as revenue-sharing payments) have somewhat swelled the still modest amount which California receives from the tribes.  In the fiscal year 2005-6, the tribes contributed an aggregate amount of some $ 301,000,000 to the State ($173,000,000 of which went to non-gaming tribes and to local governments affected by casino gambling and only $27,000,000 of which went into the State’s General Fund);  this total is up from less than $100,000,000 in 2003.

            Today, there seems to be little concern in Sacramento to shy away from having tribal revenue-sharing payments made directly into the State’s General Fund.  This is somewhat surprising, as such a requirement would seem to violate IGRA’s stricture that such payments may only be applied for purposes directly related to the operation of gaming activities; and that in no event may such payments constitute “any tax, fee, charge, or other assessment upon an Indian tribe…”.  Thus, there is some risk that a court could find that California’s demand for revenue-sharing constitutes the imposition of an illegal state “tax” on Indian gaming.  In this regard I should note that the Ninth Circuit in In Re Indian Gaming Related Cases expressly stated that it was not ruling on the legality of payments required to be made by the tribes directly to a state for its general purpose use.  For now,  however, this does not seem to be too much of a problem for the State of California or its tribes.

 

X

 

            In conclusion I hope that I have made at least a colorable case that we have Indian casinos in California today as the result of a series of events occurring over many years, not the least of which have been a series of policies and decisions by the executive, legislative and judicial branches of our federal and state governments—as well as by the voters of California; and that these policies and decisions often seem to be a bit strained.

            I submit that such straining reflects a collective need to atone to the Indians which is deeply rooted in our national consciousness.  All of us at some level are aware that our history as a nation has not been kind to the tribes.  We uneasily realize, as Elizabeth Kolbert put it recently in The New Yorker, that:

“Before the arrival of the first Europeans, there were, it is estimated, at least forty million indigenous people living in the Americas; by 1650, fewer than ten million were left.  The decline was the result of casual cruelty on the one hand—diseases unwittingly spread—and systematic slaughter on the other.” (Italics added)

 

            We cannot help but agree with the similar sentiment voiced in a recent United States Supreme Court case by the late Chief  Justice Rehnquist  :

                        “[t]hat there was tragedy, deception, barbarity, and virtually every other vice known to man in the 300-year history of the expansion of the original 13 Colonies… cannot be denied.”

 

             For Professor Wilkinson, however, atonement is just one of the causes for the course of modern Indian law.  For him the treaties which often go back hundreds of years:

“emanate a kind of morality profoundly rare in our jurisprudence.  It is far more complicated than a sense of guilt or obligation….Somehow, those old negotiations—typically conducted in but a few days on hot, dry plains between midlevel federal bureaucrats and seemingly ragtag Indian leaders—are tremendously evocative.  Real promises were made on those plains, and the Senate of the United States approved them, making them real laws.  My sense is that most judges cannot shake that.” (Italics added)

 

            I’ll conclude with a somewhat different perspective which I think is relevant. This was given in a recent television interview by Larry Wilmore, a popular African American comedian who perhaps is best known as the Senior Black Reporter on “The Daily Show with Jon Stewart”.  When asked if Black History Month served a purpose, he replied, “Yes, the purpose of making up for centuries of oppression with 28 days of trivia.  I’d rather we got casinos.”   

 

                                    Thank you.