North Coast tribes outlast state in groundbreaking lawsuit over California’s authority to regulate tribal casinos

It’s a legal resolution that came and went with little fanfare. One of the parties in the case, the State of California, seems to have made no public comment on it at all.

But those with familiar with Indian gaming law contend the “joint stipulation and order for dismissal” signed last month by lawyers representing five tribes, along with the state Attorney General’s Office, could drastically change the casino industry in California.

“The state has literally been kicked out of the reservation for these five tribes,” said Lester Marston, the Ukiah-based attorney who represented four of them. “The tribes can now operate an unlimited number of gaming machines, at an unlimited number of casinos on their reservations.”

The dismissal of the case ends five years of litigation, preceded by five years of stalled negotiations over gaming compacts, between five tribes and the Governor’s Office, in a case commonly cited as Chicken Ranch Rancheria vs. California.

The tribes’ lawsuit accused the state of negotiating in bad faith but insisting upon conditions not outlined in the federal Indian Gaming Regulatory Act.

In dropping its appeal in Chicken Ranch, the state has effectively bowed out of negotiations over gaming compacts for Robinson Rancheria in Lake County, the Hopland Band of Pomo Indians in Mendocino County and three other federally recognized tribes — the case is named for a band of Me-Wuk Indians in Tuolumne County.

The resolution circumvents a state system that has been in place since the late 1990s and has paved the way for more than five dozen tribal casinos in California.

Instead, the five tribes are now negotiating separate but identical memorandums of understanding with the National Indian Gaming Commission, a federal agency.

“I found it really unexpected the state would just give in,” said I. Nelson Rose, who has spent decades studying tribal gaming law as a lawyer, law professor and government consultant. “If you have good money and you’ve got good lawyers, you can stall for years. They didn’t have to concede right away.”

The Governor’s Office did not answer a set of questions provided by The Press Democrat, but acknowledged the unprecedented arrangement created by the agreement to dismiss the case.

“Unlike secretarial procedures previously issued by the U.S. Department of the Interior for California tribes, these procedures do not allow for a state regulatory role,” a representative from the Governor’s Office wrote in an email. “The federal National Indian Gaming Commission is responsible for regulation of these tribes’ gaming operations and any questions regarding their implementation may be directed to that agency.”

Rose agrees with Marston that the state’s acquiescence will allow the affected tribes to put as many slot machines as they want on their reservations. The Governor’s Office has generally imposed such limits, as well as revenue sharing requirements with nongaming tribes, as conditions for receiving a gaming license.

Rose wondered if the end of Chicken Ranch vs. California would open other doors as well, such as the ability to host sports wagering or internet gambling on tribal land. Marston said no, pointing to conflicting U.S. District Court decisions that are currently interpreted as prohibiting those activities in California.

But the dismissal will almost certainly impact a half-dozen other tribes currently negotiating compacts with Newsom’s office — and with others who may consider suing the state to reopen their own negotiations, based upon this legal outcome.

“We’ve been getting a flood of tribes contacting us,” Marston said.

Since legalization of Indian gaming in California, 80 tribes have negotiated compacts with the state. That includes three tribes in Sonoma County, five in Mendocino and four in Lake. All told, 63 tribes currently operate 66 casinos in California. Two of those casinos are in Sonoma County, three in Mendocino County and four in Lake County.

The Buena Vista Rancheria of Me-Wuk Indians, based in Amador County, sued Newsom and the state in U.S. District Court last August, declaring that certain provisions of their 2016 compact “are invalid and unenforceable as a result of the United States Court of Appeals for the Ninth Circuit’s decision in Chicken Ranch Rancheria.”

The Picayune Rancheria of the Chukchansi Indians, in Madera County, also is considering legal action, according to Marston.

Closer to home, the Hopland Band’s casino — Sho-Ka-Wah, off Hwy. 175 on rancheria land — closed during the pandemic and remains shuttered. But Marston said the tribe plans to reopen in the wake of the Chicken Ranch dismissal, and that “there will be things in the procedures to help them do that.”

At Robinson Rancheria, a small sovereign territory between Nice and Upper Lake, Chairman Beniakem Cromwell said larger California gaming tribes had too much to lose in taking on the state. It was up to overlooked tribes like his to take this stand.

“What’s on my mind is the bravery of the five tribes,” Cromwell said. “I wasn’t chair in 2018. For them, for us, to say we’re going to fight — no one else was sticking their neck out. We could have got it chopped off. The tribes coming after us will get this (benefit), too. And they deserve it.”

The past five years were a grueling game of hurry-up-and-wait, Cromwell said, as the rancheria responded to every hearing and appeal in the Chicken Ranch case. He made several trips to Washington, D.C., to consult with the gaming commission.

“There are so many plates spinning for a tribe and a tribal chairman at the same time,” Cromwell said. “As chairman, this is one thing I don’t have to think about anymore.”

In Marston’s view, it’s a subtler result of Chicken Ranch that might have the greatest impact.

The gaming compacts signed by the State of California have generally been 25-year agreements, leaving a cloud of uncertainty over tribes’ long-term economic planning. Agreements reached directly with the U.S. Secretary of the Interior will exist in perpetuity, allowing tribes a chance to secure 30-year bonds to pay for infrastructure.

“One reason Hopland can’t open up is they don’t have the population base to generate enough revenue to service the debt on the amount of money it’ll take to open up,” Marston said. “That’s because banks won’t give Hopland a loan beyond 10 years. But take that 10-year loan and spread it over 30 years, and get good interest rate because lenders can use bonds — now a little tribe like Hopland can go out and borrow the money they need to create a facility.”

The five tribes in this groundbreaking case, which also included Blue Lake Rancheria (Humboldt County) and the Chemehuevi Indian Tribe (San Bernardino County), first brought their lawsuit in January 2019.

Their state compacts, originally signed in 1999, were set to renew in 2020. But Robinson Rancheria, the Hopland Band and the others objected to a number of provisions the Governor’s Office sought to add to the compacts, arguing that these demands violated the Indian Gaming Regulatory Act (or IGRA) that governs all tribal casinos in the U.S.

The case made it to the U.S. District Court for the Eastern District of California. There, in March 2021, Judge Anthony W. Ishii ruled in favor of the tribes on three points, saying provisions regulating spousal and child support, environmental rules and lawsuits on casino property were not proper subjects of negotiation under IGRA.

The decision stunned Rose, who argued that making sweeping, even unrealistic, requests during negotiations is an age-old practice.

“Everyone believes in cutting the baby,” Rose said. “One side demands $10, the other side demands $2 million. So we’ll settle for $1 million. Usually, if either side makes an outrageous demand, the danger isn’t that it will be found in bad faith, as the court found here, but that negotiations will break down and the other party walks away.”

The Ninth Circuit Court affirmed Ishii’s decision in July 2022, ultimately sending the case to mediated “baseball arbitration,” in which the two sides present their last best offers. The arbitrator, retired federal district court judge Raul Ramirez, ruled in March 2023 that the tribes’ offer best comported with federal law.

Two months after that, the office of California Attorney General Rob Bonta signaled its refusal to consent to the decision, automatically sending the compact directly to the Secretary of the Interior.

To the tribes at the heart of this lawsuit, it was a disappointing reaction by the state — one of many, in fact, over a 10-year process that has left them weary, but vindicated and ready to move forward.

“I like to remind people it was Gov. (Jerry) Brown who decided to rule against us,” said Cromwell, the Robinson Rancheria chair. “With Newsom, I was like, ‘Just take the loss.’”

You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On X (Twitter) @Skinny_Post.