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Ten years after the first overtures were made by the Coyote Valley Pomo Indians to negotiate the right to run a casino on their reservation, dozens of Native Americans packed a 9th U.S. Circuit Court of Appeals courtroom Tuesday in a case that could throw a wrench into the burgeoning Indian gaming scene. The Coyote Valley Pomos are the lone holdout from a group of 57 tribes that sought to run Vegas-style casinos by negotiating tribal-state gaming compacts with Gov. Gray Davis. The tribe alleges that the state unlawfully demanded excessive taxes and forced the tribe to allow organized labor onto their reservations. Every other tribe inked a deal with the state. The Pomos balked, alleging in court that under the federal Indian Gaming and Regulatory Act, the state can only tax sovereign tribes to cover the cost of regulating the casinos. They charged that Davis negotiated in bad faith. Although a three-judge panel wondered whether the state has “wiggle room” under IGRA to negotiate as it wished, it also seemed troubled by some stipulations contained in the compact, including one guaranteeing labor unions’ access to casino workers. The panel also, in a sign that it will interpret IGRA favorably to the tribe, asked lawyers about the federal court’s tradition of erring on the side of tribes when federal laws are unclear. Deputy Attorney General Marc LeForestier conceded that ambiguities are often resolved in favor of tribes, but added that in this case the legislative history demonstrates that “Congress clearly contemplated that tribes and states would have broad discretion to negotiate.” That is true, conceded Arter & Hadden partner Eduardo Roy. But once a tribe refuses to waive provisions barred by IGRA such as excessive taxation, the state must remove them from the negotiating table. Once talks broke down with the Coyote Valley Pomos, the state did offer to reopen talks, Roy said. “But the state’s negotiation was … take a compact that we have given every other tribe or take nothing.” Though each tribe negotiates with the state individually, the compacts all follow closely a model 1999 deal struck with the state. Under the deal, the tribes agreed to pay taxes on their gaming devices toward two funds, one of which is distributed to non-gaming tribes and the other of which is aimed at mitigating the “secondary” effects of gaming, including gambling addiction and the impact gaming has on municipal governments near reservations. Those provisions were agreed to by the 56 tribes, and were derived from Proposition 5 (later struck down by the California Supreme Court), according to Susan Jensen, communications director for the California Nations Indian Gaming Association. Voters later amended the state Constitution with Prop 1A, which was upheld in July by a federal judge. That ruling makes Tuesday’s argument more pressing. The state had suspended compact negotiations pending the ruling, and is set to reopen talks with several tribes seeking to open lucrative casinos to help defray the social ravages many tribes are undergoing, particularly high unemployment. It is unclear what, if any, impact a ruling in favor of the Pomo Indians would have on the existing compacts, but Jensen said the tribes were not strong-armed into creating the funds. “The tribes wanted to do this,” she said. In addition, few, if any, tribal casinos are unionized, Jensen said. The panel was comprised of Judges Michael Daly Hawkins and William Fletcher, as well as 9th Circuit Senior Judge Myron Bright, sitting by designation.

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