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Michigan's Off-Reservation Casino Battle

JURIST Guest Columnist Gerald Carr, Michigan State Univeristy College of Law Class of 2013, examines the challenges that the Sault Ste. Marie Tribe of Chippewa Indians face over building a casino on land that is not part of their reservation...

The Sault Ste. Marie Tribe currently operates five casinos in Michigan's Upper Peninsula (UP). The Sault Tribe has proposed plans for a sixth casino — the Lansing Kewadin Casino — which would be located far from the Sault Tribe's land base in Lansing, Michigan. City officials approved plans for the casino and the Sault Tribe amended its gaming ordinance, but Michigan Attorney General Bill Schuette opposes this sixth casino. Schuette asserts that the Sault Tribe's use of settlement funds from the Michigan Indian Land Claim Settlement Act (MILCSA) to acquire land for the casino would allow the Sault Tribe to open a casino anywhere in the US.

Congress enacted the Indian Gaming Regulatory Act (IGRA) in 1988 with the purpose of providing a "statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal government." Among the myriad regulations that the IGRA lays out for tribal gaming operations, there are two specific requirements that directly impact tribes seeking to establish casinos off their reservations. First, all Indian gaming must be conducted on Indian lands. Indian lands are defined as "lands within a tribe's reservation, or lands over which an Indian tribe exercises governmental power and are either held in trust by the federal government for tribes or held by any Indian tribe or individual subject to restriction by the US against alienation." The second requirement is the prohibition against gaming "on lands acquired by the Secretary [of the Interior] in trust for the benefit of an Indian tribe after October 17, 1988."

There are three exceptions to these restrictions:

  1. Gaming is permitted on after-acquired lands "within or contiguous to the boundaries of the reservation of the Indian tribe."
  2. Lands can be taken into trust as part of a land claim settlement, the establishment of an initial reservation for a newly acknowledged tribe or as restored lands for a restored tribe.
  3. Gaming is permitted on after-acquired lands through the process called the "two part" determination, in which the Secretary, in consultation with and with the concurring approval of the Governor of the state that the gaming will be in, "determines that a gaming establishment on newly acquired lands would be in the best interest of the Indian tribe and its members, and would not be detrimental to the surrounding community."
The Sault Tribe will acquire the land for the new Lansing casino with funds from MILCSA, which paid judgments awarded by the Indian Claims Commission. Section 108 of MILCSA [PDF] directs the Sault Tribe to create a trust fund known as the Self-Sufficiency Fund (Fund), the principal of which consists of the Tribe's share of the judgment and any additional funds the Tribe may add. MILCSA places restrictions on the use of these funds depending on the ultimate source of the money — principal, interest or some other form of income. For instance, the principal of the Fund must be used for economic development or development of tribal resources, but may not be issued as per capita payments. Interest and other income from the Fund may be issued as per capita payments, or used for educational, social welfare and cultural purposes. Both the principal and income components of the Fund may be used to consolidate or enhance tribal lands, but how lands will be held differs depending on which funds are used. According to the plan, "[a]ny lands acquired using amounts from the Self-Sufficiency Fund shall be held as Indian lands are held." Alternatively, "lands acquired using amounts from interest or other income of the Self-Sufficiency Fund shall be held in trust by the Secretary for the benefit of the tribe." These two funding sources provide different options for a favorable Indian lands determination.

The Sault Tribe may seek a determination that the phrase "held as Indian lands are held" means that any lands purchased from the Fund principal would be held in restricted fee. Restricted fee lands allow Indian tribes to hold legal title, but prohibits the tribe from alienating or encumbering the land without the consent of the federal government. When tribes purchase land in this manner, the restriction on alienation can attach either by operation of law if a treaty or statute directs or generally through the Non-Intercourse Act of 1790, which prohibits the transfer of Indian land without Congressional approval. Not all land purchased by a tribe, however, is automatically held in restricted fee. If the acquired land is outside the borders of a reservation, then the restriction against alienation will not automatically attach. This, coupled with the prohibition on gaming on off-reservation land held in fee simple, generally prevents tribes from simply purchasing land and gaming on it. If the Sault Tribe gains a determination that the language of MILCSA indicates that land purchased with the Fund principal would trigger the restriction against alienation to attach, then any land purchased in this manner would be gaming-eligible Indian land. Additionally, the Department of the Interior has interpreted 25 U.S.C. § 2719(a) to mean that the prohibition against gaming on after-acquired lands does not apply to lands held by a tribe in restricted fee, but would apply to trust land. Under this theory, the Sault Tribe would be uniquely positioned to bypass many of the obstacles to Indian gaming.

Lands purchased by the Sault Tribe with "interest and other income" from the Fund "shall be held in trust by the Secretary for the benefit of the tribe." Trust lands are Indian lands and therefore gaming-eligible. The statutory authority of the secretary of the interior to take lands into trust on behalf of Indian tribes is provided by 25 U.S.C. §§ 465 and 467. The regulations established under this statute contemplate two types of trust land acquisitions — discretionary and mandatory. Discretionary acquisitions must meet the requirements of 25 U.S.C. § 151.10, for on-reservation acquisitions, or 25 U.S.C. § 151.11, for off-reservation acquisitions. But where Congress has mandated that certain land be taken into trust for a tribe, that statute controls rather than §§ 465 and 467 and the regulations at § 151. Therefore, tribes showing that their proposed trust land acquisition is mandated by statute need not satisfy the requirements of the National Environmental Policy Act or demonstrate a need for the land. Moreover, the secretary of the interior lacks discretion and cannot consider jurisdictional issues, the concerns of local governments or the distance between the proposed site and existing tribal lands. These considerations, however, may arise under other inquiries related to gaming approval.

The types of statutes that may be considered mandatory acquisition statutes include federal recognition or restoration acts and land claim settlements such as MILCSA. A mandatory trust acquisition occurs when a statute directs the secretary of the interior to take certain lands into trust for a tribe and, thus, removes the usual secretarial discretion. This is indicated by statutory language [PDF] that uses the imperative word "shall" and includes specificrestrictions on the secretary's discretion. Such restrictions have been interpreted to include geographical limitations, the absence of adverse legal claims to the property or the occurrence of a specific condition. This is a key issue for the Sault Tribe. They may avoid the after-acquired lands prohibition by arguing that MILCSA is a land claim settlement, but a determination that MILCSA is a mandatory trust statute is more challenging because the act contains the word "shall" but specifies no additional restrictions on the secretary's discretion.

Before the Sault Tribe receives federal approval, the following questions need answers: Does MILCSA mandate that the secretary take into trust lands purchased with interest or other income from the Fund? If the land is purchased with principal from the Fund, will it be held in restricted fee by operation of law? Is the purchase of the Lansing property a consolidation or enhancement of landholdings, or other permissible use of the Fund? Finally, the Sault Tribe will have to demonstrate that they will exercise governmental authority over the Lansing casino site. Given these complex issues, the Sault Tribe's proposal is poised to set significant precedent in the evolving field of off-reservation gaming.

Gerald Carr is a third-year student in the Indigenous Law Program at Michigan State University College of Law. He holds a Ph.D. in Cultural Anthropology, specializing in the languages and cultures of Native North America.

Suggested citation: Gerald Carr, Michigan's Off-Reservation Casino Battle, JURIST - Dateline, Aug. 13, 2012, http://jurist.org/dateline/2012/08/gerald-carr-indian-property.php.

This article was prepared for publication by Leigh Argentieri, a senior editor for JURIST's student commentary service. Please direct any questions or comments to her at studentcommentary@jurist.org

Opinions expressed in JURIST Commentary are the sole responsibility of the author and do not necessarily reflect the views of JURIST's editors, staff, donors or the University of Pittsburgh.

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