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After a protracted legal battle, five California Native American tribes, including the Blue Lake Rancheria, have been granted independence from state authority over their casino operations, giving them the right to regulate themselves, with oversight from the National Indian Gaming Commission.

[DISCLOSURE: The Blue Lake Rancheria is a minority owner of the Outpost’s parent company, Lost Coast Communications, Inc.]

This landmark arrangement stems from an Eastern District of California Court ruling, and subsequent Ninth Circuit appeal, in the case of Chicken Ranch Rancheria v. California. The rulings triggered a mediation process required under the Indian Gaming Regulatory Act (IGRA). And finally, with a “joint stipulation and order for dismissal” issued in late January, Department of the Interior Secretary Deb Haaland approved new gaming procedures for the five tribes.

Ukiah-based attorney Lester Marston, who represented four of the five tribes in the case, described this as a significant victory for tribal authority.

“At this point, the State of California has no regulatory role and no say whatsoever about how the tribe conducts Class III gaming on its reservation,” Marston said when reached by phone last week. (Class III games include banked card games such as baccarat and blackjack as well as slot machines and casino games such as roulette, craps and keno.)

“This is a game changer,” Marston continued. “It not only has far-reaching implications across the state, it has far-reaching implications across the nation.”

Under the new federally approved gaming procedures, the five tribes can put an unlimited number of gaming machines in an unlimited number of casinos on their reservations, though economic conditions will likely dictate how many are actually deployed.

Perhaps more significant, according to Marston, are the financial implications. Typically, California tribes have to negotiate new gaming compact provisions with the state periodically. Each new compact comes with a fixed term, which has historically prevented tribes from acquiring 30-year bond financing from banks.

“The State of California allows every single government within the state — every city, every county, every special district, even the State of California itself — to engage in 30-year bond financing,” Marston said. “Why? Because we recognize that construction of infrastructure improvements doesn’t generate revenue, but yet they have to be done.”

Cities need functioning roads, sidewalks, water and sewer systems to attract business and serve residents, for example, and bonds are the means by which such infrastructure typically get financed.

“Tribes can’t [do that] because banks are only going to loan the tribes money that can be paid back within the term of their compact — because it’s the gaming revenue that the tribes are going to use to repay the loan,” Marston explained.

Under the new arrangement with the National Indian Gaming Commission, the five tribes involved now have a compact in perpetuity.

“No other tribe has this … ,” Marston said. “So it opens up a whole new financing avenue that’s available to them.”

Blue Lake Rancheria Chairman Jason Ramos said this case never would have gone to court if the state hadn’t tried to overstep its authority through the gaming compact negotiation process.

“I think it’s important for people to understand that the tribes really were trying to get a deal with the state,” he said. “We really made an effort.”

The root of the tribes’s dispute with the state concerned negotiations over a new gaming compact. In Chicken Ranch Rancheria v. California, the tribes argued that California illegally tried to force them to negotiate provisions relating to matters that had no direct connection to playing games on the casino floor.

This included matters of family law, such as child support and spousal support orders, as well as environmental regulations and liability for personal injuries or property damage that occur anywhere on casino grounds, including restaurants and parking lots. 

The Indian Gaming Regulatory Act strictly limits the topics states may include in tribal-state Class III compacts to those directly related to the operation of gaming activities. While the state tried to draw such connections, the Ninth Circuit Court found that the proposed provisions  were “far outside the bounds of permissible negotiation” under the Indian Gaming Regulation Act and struck them down.

A press release issued by Marston’s law office put it this way: “The Court held that the imposition of State law unrelated to gaming was a bad faith attempt to use the compacting process as subterfuge for expanding State jurisdiction in Indian country.”

The tribes also argued that various fees demanded by the state amounted to an illegal tax under the Indian Gaming Regulatory Act because, in negotiations, the state failed to offer the tribes a meaningful concession in exchange.

Marston likened this to extortion.

“The state put a gun to the tribe’s head and said, ‘You’ve got a choice: You can either pay up the money — let us rob you — or you can not have Class III gaming,” he said.

Again, the Ninth Circuit Court agreed with the tribes, ruling in their favor and sending the matter into court-imposed mediation.

Ramos said this process works just like baseball arbitration: Each side presents its last best offer to an arbitrator — in this case, retired federal district court judge Raul Ramirez — who then must determine which of the two competing offers best comport with federal law.

“And you don’t mix them up,” Ramos said. “You either pick one or the other.”

Last March, the judge selected the tribes’s offer. Two months later, according to the Press-Democrat, the office of California Attorney General Rob Bonta signaled its refusal to consent to his decision, automatically sending the gaming compact matter directly to the Secretary of the Interior.

In consultation with the tribes, Halaand was then required to prescribe procedures that are consistent with the Indian Gaming Regulatory Act, the relevant provisions of state law and the proposed compact selected by the mediator.

Ramos said the decision in the Chicken Ranch case “reset expectations about what were proper subjects of negotiation [under] the Indian Gaming Regulatory Act.”

He added that the Blue Lake Rancheria doesn’t currently have any plans to add more casino games or secure bonds to finance any new facilities, such as a hotel expansion or new casino facilities.

“In the current state of this county’s economy? I don’t think anybody does,” Ramos said.

But the new secretarial procedures will give the tribe more long-term stability.

“What it says is that our business, as it is now, can continue to operate,” Ramos said. “Our team members, including those union team members, their jobs are safe. Moving forward, we can continue business as usual, and if we have an opportunity in the future, if it’s a financial or economic reality, [then] we have an opportunity to do some new things.”

Asked if he was worried that things might have gone the other way — that the courts or the mediator might have upheld the state’s compact rather than the tribes’s — Ramos replied, “I didn’t sleep for three years, man.”

Looking back, he said the fight was worth the risk.

“We were not willing to make those those concessions to the state, especially in light that they had no meaningful concessions on their side … ,” he continued. “We were really forced to take this route, and I’m glad we did. And I’m glad we prevailed, but it was not certain that we would. But we didn’t give up and we didn’t we didn’t give ground when it came to those areas of our tribal sovereignty.”

Why does this case have such large implications for tribes throughout California and beyond? Marston said that the precedent established in the Chicken Ranch case can now be cited during current and future gaming compact negotiations.

“Right now, for example, the tribes in Arizona and New Mexico have provisions in their compact that require them to pay a percentage of their slot revenue to the state,” he said. “In Arizona it’s 8 percent; in New Mexico and 16 percent.”

Unlike in California, where voter-approved Proposition 1A (1999) waived the state’s 11th Amendment immunities, tribes in Arizona and New Mexico can’t sue over gaming compact provisions.

“But now those tribes have a remedy,” Marston said. “What’s the remedy? Well, now they can stop making their payments to the state. The state is then left with a choice: They can either do nothing and the tribes get to keep the money, or they can initiate the dispute resolution provisions in those compacts in Arizona and New Mexico, and they can sue the tribe.”

Once those states go to court voluntarily, they waive their 11th Amendment immunity.

“If New Mexico or Arizona goes into federal court to sue the tribe [that stopped paying percentages of its slot revenues] … the tribes then can assert as a defense the Chicken Ranch decision and argue that it’s an illegal tax, because the states never gave the tribe a meaningful concession in exchange for the payment of the tax.”

Eventually, through such proceedings, more tribes across the country could join the five from this case in becoming self-governing when it comes to casino gaming operations.

Here in California, two other groups of tribes are in their own federal court processes, according to Ramos, with about half a dozen tribes headed for mediation. The Bear River Band of the Rohnerville Rancheria is among the tribes currently in negotiations, and Ramos said negotiators are pointing to the Ninth Circuit Court ruling in the Chicken Ranch case, along with the newly approved secretarial procedures, and asking the state to adhere to the precedents they established.

Marston said his law firm is currently representing the Buena Vista Rancheria of Me-Wuk Indians, based in Amador County, in a lawsuit against Governor Gavin Newsom’s office. The suit argues that certain provisions of the tribe’s 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.”

Marston’s firm is also representing the Picayune Rancheria of Chukchansi Indians (Madera County) in negotiations over a new gaming compact.

“And surprisingly enough,” Marston said, “the Governor has taken the exact same position with Picayune that he took with the five tribes in their negotiations. So I’m not optimistic that we’ll reach an agreement, and if we don’t, Picayune will be filing suit against the government for that.”

The Outpost emailed a number of questions to Governor Newsom’s office. Among them, when the Eastern District Court ruled that the state had been negotiating in bad faith, why didn’t Newsom’s office simply go back to the negotiating table to pursue a new agreement, rather than filing an appeal, thereby opening itself up to litigation?

In response, a spokesperson replied via email that the office has no comment beyond an explanatory paragraph describing the chain of events in terms that imply inevitability:

After the Ninth Circuit ruled against the state in July 2022 in Chicken Ranch Rancheria v. California, 42 F.4th 1024, the state and tribes proceeded through the remedial process required under the Indian Gaming Regulatory Act. That process concluded when the U.S. Department of the Interior issued secretarial procedures for the tribes on January 31, 2024. Once the remedial process had finished, there was no further action for the court to take and the parties agreed to dismiss the case.

Marston said he was surprised that the state never petitioned the U.S. Supreme Court for review of the Ninth District ruling.

But now, that ship has sailed. When it comes to regulating gaming for these five tribes, the State of California is out forever, he said. “They will never, ever be allowed again to have any say in what these five tribes do regarding gaming on their reservation.”

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DOCUMENT: Class III Gaming Secretarial Procedures for the Blue Lake Rancheria