News Coverage on Rincon Band v. Schwarzeneggar

From the San Diego Union-Tribune:

A federal appeals court Tuesday backed a North County tribe that says Gov. Arnold Schwarzenegger negotiated in bad faith by demanding payments for the state general fund.

The ruling in a lawsuit by the Rincon Indian band against the governor has big implications for the governor, who campaigned on a promise to make tribes “pay their fair share” for casino expansions, and for future negotiations for casino compacts.

“It’s a huge deal,” said law professor Matthew L.M. Fletcher, who follows Indian legal issues nationally. “It’s about millions and millions of dollars to the state of California.”

And it could affect negotiations between the state and other tribes, said Fletcher, who teaches at Michigan State University’s law school.

The issue comes down to what kind of bargain tribes and states can strike. The Indian Gaming Regulatory Act, which oversees how tribes can set up Las Vegas-style casinos, says that states must approve such gambling but can’t tax the profits. So states and tribes have entered into revenue-sharing contracts in which tribes have paid part of their profits in exchange for getting exclusive rights to gamble.

The problem here came up when Rincon and the state tried to renegotiate a deal they struck in 1999. The state said it wanted money for the general fund and in exchange would give the tribe the exclusive right to offer gambling. Rincon said it didn’t want to pay into the general fund, but would pay only for the impact its casino has on its neighbors — things like roads, law enforcement, fire protection. And it said it already had an exclusive deal to offer gambling, so the state’s demand wasn’t a true bargain.

A San Diego judge two years ago ruled the state was negotiating in bad faith.

A three-judge panel on the 9th U.S. Circuit Court of Appeals affirmed that decision in a 2-1 vote.

The state is now likely to ask that the case be reconsidered by a larger panel on the appeals court.