Club One Casino, Inc. v. Bernhardt

959 F.3d 1142

CLUB ONE CASINO, INC., dba Club One Casino ; GLCR, Inc., dba The Deuce Lounge and Casino, Plaintiffs-Appellants,

v.David BERNHARDT ; Mike Black, Acting Assistant Secretary of the Interior - Indian Affairs ; U.S. Department of the Interior, Defendants-Appellees.

No. 18-16696

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 11, 2020 San Francisco, California

Filed May 27, 2020

Robert D. Links (argued), Adam G. Slote, and Marglyn E. Paseka, Slote Links & Boreman LLP, San Francisco, California; Robert A. Olson and Timothy T. Coates, Greines Martin Stein & Richland LLP, Los Angeles, California; for Plaintiffs-Appellants.

Tamara Rountree (argued), John David Gunter II, Steven Miskinis, and Joann Kintz, Attorneys; Eric Grant, Deputy Assistant Attorney General; Jeffrey Bossert Clark, Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; for Defendants-Appellees.

Before: R. Guy Cole, Jr.,^** Ronald M. Gould, and Mary H. Murguia, Circuit Judges.

OPINION

MURGUIA, Circuit Judge:

This action is one in a series of actions¹ concerning the proposed construction and operation of a Nevada-style casino on off-reservation land in the County of Madera, California (the "Madera Parcel") by the North Fork Rancheria of Mono Indians (the "North Fork" or "Tribe"), a federally recognized tribe. Plaintiffs-Appellants, Club One Casino and the Deuce Lounge, are cardrooms licensed by the State of California (the "State"). Plaintiffs contend that the approval of the casino project by the United States Secretary of the Interior (the "Secretary") and the United States Department of the Interior (collectively, Defendants-Appellees) is unlawful, and they brought a host of procedural, statutory, and constitutional challenges. The district court granted summary judgment against Plaintiffs on all claims. We affirm.

I

The North Fork Rancheria of Mono Indians of California are the modern descendants of the Mono Indians, who have used and occupied lands in and near California's San Joaquin Valley for several centuries. The Tribe has approximately 1,750 citizens, is headquartered in North Fork, Madera County, California, and has been federally recognized since 1915.

In March 2005, the North Fork applied to the Department of the Interior to have a 305-acre plot of land in Madera County taken into trust by the United States pursuant to section 5108 of the Indian Reorganization Act ("IRA"), 25 U.S.C. §§ 5101 – 5144. The Tribe proposes to construct a casino resort on the property.

In September 2011, the Secretary made a determination pursuant to section 2719 of the Indian Gaming Regulatory Act ("IGRA"), id. §§ 2701–2721, finding that gaming on the land would be in the best interest of the North Fork and not detrimental to the surrounding community (the "Secretarial Determination"). In August 2012, the Governor of the State of California (the "Governor") informed the Secretary that he concurred in the Secretarial Determination and negotiated a compact with the North Fork to govern gaming at the Madera Parcel. In February 2013, the Madera Parcel was acquired in trust by the Secretary for the benefit of the North Fork. In June 2013, the California Legislature passed Assembly Bill 277, which ratified the compact, and the Governor signed the legislation into law the following month. Enough signatures, however, were gathered to place a veto referendum ("Proposition 48") on the November 2014 ballot, which proposed voiding the California Legislature's ratification of the compact. Proposition 48 passed with sixty-one percent of the vote—meaning that Assembly Bill 277, which had ratified the compact between the Tribe and the State, was vetoed by the voters.

After this defeat at the polls, the North Fork requested that the State negotiate a new tribal-state compact to govern gaming at the Madera Parcel. The State refused, citing Proposition 48's passage. In March 2015, the Tribe brought an action under IGRA, alleging that the State failed to negotiate in good faith. N. Fork Rancheria of Mono Indians of Cal. v. California , No. 1:15-CV-00419-AWI-SAB, 2015 WL 11438206, at *1 (E.D. Cal. Nov. 13, 2015). The district court agreed, finding that the State's refusal to negotiate a compact post-referendum violated IGRA, and ordered the State and the North Fork to conclude a compact within sixty days. Id. at *8, *12. When the parties failed to do so, the court selected a mediator and directed the parties to submit their last best offers. The parties complied with the order and the mediator selected the North Fork's proposed compact as "the compact that best comported with IGRA, Federal law, and the orders of this Court." The mediator thereafter submitted the compact to the State for its consent. The State did not consent to the selected compact within the statutorily required time period and the mediator's proposed compact was submitted to the Secretary pursuant to section 2710(d)(7)(B)(vii) of IGRA.

In July 2016, in accordance with IGRA, the Secretary prescribed certain procedures that permitted gaming on the Madera Parcel (the "Secretarial Procedures"). The Secretarial Procedures do not include express findings as to whether the North Fork had jurisdiction or exercised governmental power over the Madera Parcel or whether the Madera Parcel was Indian land.

Plaintiffs, the cardrooms, sued the Secretary and the Department of the Interior in the district court in December 2016. They challenged the Secretary's issuance of the Secretarial Procedures under the Administrative Procedure Act, claiming: (1) the Secretarial Procedures were issued in violation of IGRA, as the Tribe purportedly never acquired jurisdiction or exercised governmental power over the Madera Parcel; and (2) assuming the Tribe acquired jurisdiction and exercised governmental power, IRA violates the Tenth Amendment to the Constitution by reducing the State's jurisdiction over land within its territory without its agreement.

On cross-motions for summary judgment, the district court denied Plaintiffs’ motion and granted Defendants’ motion. In accordance with case law from other circuits, the district court held that: (1) the Tribe had jurisdiction over the Madera Parcel for purposes of IGRA by virtue of the land being acquired in trust for the Tribe and neither consent nor cession by the State was required; (2) Plaintiffs’ Tenth Amendment challenge was not properly before the court, as Plaintiffs had only challenged the issuance of the Secretarial Procedures, not the Secretary's acquisition of the Madera Parcel in trust for the benefit of the Tribe; and (3) alternatively, Plaintiffs lacked standing to bring the Tenth Amendment challenge. Plaintiffs timely appealed.

II

We review the district court's grant of summary judgment de novo to determine whether the Secretary's actions were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) ; Alaska Oil & Gas Ass'n v. Jewell , 815 F.3d 544, 554 (9th Cir. 2016). We have described the arbitrary and capricious standard as deferential and narrow, establishing a "high threshold" for setting aside agency action. River Runners for Wilderness v. Martin , 593 F.3d 1064, 1067, 1070 (9th Cir. 2010) (per curiam). We also review purely legal questions de novo . Wagner v. Nat'l Transp. Safety Bd. , 86 F.3d 928, 930 (9th Cir. 1996).

III

Before proceeding to our analysis, we pause to set out the applicable statutory landscape. Gaming in Indian country is a multi-billion-dollar industry conducted pursuant to the Indian Gaming Regulatory Act of 1988. IGRA "accommodate[s] the interests of tribes in pursuing gaming but also set[s] forth a federal regulatory regime, and g[ives] a powerful role to states by providing for significant state involvement in the decision to permit casino-style gaming." Cohen's Handbook of Federal Indian Law § 12.01, at 876 (2012) ("Federal Indian Law").

Gaming is permitted only on Indian lands, which are defined as "all lands within the limits of any Indian reservation," 25 U.S.C. § 2703(4)(A), and "any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation and over which an Indian tribe exercises governmental power," id. § 2703(4)(B). Thus, a tribe may engage in gaming activities either: (1) on a reservation; or (2) off a reservation on tribal or individual trust land, or land not held in trust but subject to a restriction on alienation, but only if a tribe exercises governmental power over this trust or restricted land. Id. § 2703(4).

Importantly, section 2719 of IGRA prohibits gaming on any lands acquired by the Secretary in trust for the benefit of Indian tribes after October 17, 1988, unless one of several exceptions applies. An exception pertinent to this appeal permits gaming if the Secretary makes a two-part determination: (1) finding that gaming on land acquired in trust after 1988 "would be in the best interest of the Indian tribe and its members"; and (2) that such gaming "would not be detrimental to the surrounding community, but only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary's determination." Id. § 2719(b)(1)(A).

Additionally, IGRA divides gaming into three classes. As relevant here, Class III² games include casino-style games, slot machines, and lotteries. See id. § 2703(8). Generally, Class III games can only be conducted pursuant to tribal-state compacts approved by the Secretary. Id. § 2710(d)(1)(C), (3)(B). If a state generally permits such gaming, IGRA authorizes a tribe to bring an action in federal court³ against a state that refuses to enter into negotiations at all or has refused to negotiate a Class III tribal-state compact in good faith. Id. § 2710(d)(7)(A)(i), (B)...