Indian Gaming Regulatory Act

January 3, 1994 94-R-0040

TO:

FROM: Veronica Rose, Research Associate

James J. Fazzalaro, Principal Analyst

RE: Indian Gaming Regulatory Act

You asked whether the Indian Gaming Regulatory Act (attached) requires the Mashantucket Pequots to compensate local communities for any impact that the Foxwoods Casino has on such communities.

SUMMARY

This office is not authorized to give legal opinions and this memo should not be considered as such. But the answer appears to be a qualified no. The Indian Gaming Regulatory Act (IGRA), which authorizes and generally regulates gaming on Indian reservations, allows a state to assess a federally recognized Indian tribe conducting Class III gaming only the amount necessary to cover the reasonable expenses of oversight of such gaming activities. But a provision of the compact between the Mashantucket Pequots and the State of Connecticut requires the tribe to either provide access from its gaming facilities to the state's highways or have the state provide this access. The tribe must compensate the state for any necessary improvements to public highways that would satisfy this requirement.

THE INDIAN GAMING REGULATORY ACT

The IGRA gives federally recognized Indian tribes the "right to regulate gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal law and is conducted within a state that does not, as a matter of public policy, prohibit such gaming activity" (25 USCA § 2710(5)). But the state

and tribe must negotiate a compact as a prerequisite for conducting certain types of gaming, such as pari-mutuel and casino gaming, which are designated as Class III gaming.

The IGRA attempts to balance the sovereign rights of both states and tribes by creating a framework for resolving legal and jurisdictional issues surrounding gaming on Indian reservations. The compact defines the terms under which Class III gaming may be conducted.

The IGRA expressly provides for a very limited assessment that can be negotiated under a tribal-state compact. It states that "nothing in this section shall be interpreted as conferring upon a state or any of its political subdivisions authority to impose any tax, fee, charge, or other assessment upon an Indian tribe or upon any other person or entity authorized by an Indian tribe to engage in a Class III activity" (25 USCA § 2710(d)(4)). But it permits a tribal-state compact to include provisions relating to "the assessment by the State of such activities in such amounts as are necessary to defray the costs of regulating such [Class III] gaming activity."

The plain language of these provisions indicates that the state does not have the authority to tax or charge the Mashantucket Pequots for engaging in a Class III activity except to cover the state's costs of regulating the activity. The state's lack of authority is further apparent in the second sentence of subsection (4), which prohibits a state from "refus[ing] to enter into Class III gaming negotiations based upon the lack of authority in such State, or its political subdivisions, to impose such a tax, fee, charge, or other assessment."

THE TRIBAL-STATE GAMING COMPACT

The state's lack of authority to assess the Indians for any impact the casino has on the local community is also evident in the following excerpt from the compact, which mirrors the language of the IGRA:

To this end, Section 11(a) of the compact authorizes the state to annually assess the tribe an amount "sufficient to compensate the State for the reasonable and necessary costs of regulating gaming operations and conducting law enforcement investigations pursuant to this Compact."

But Section 14(c) of the compact requires the tribe to: provide access from its gaming facilities to the state's public highways that are "adequate to meet standards of the State Traffic Commission" (STC) or (2) enter into agreements with the STC for the state to provide this access, "including provisions for compensation by the Tribe of the costs incurred by the State in constructing such improvements to the public highways...." The compact also requires the state to provide, at the tribe's expense, reasonable and appropriate signs to allow the public to locate the reservation.

The first permit for developments on the reservation was issued in 1985 for the high stakes bingo facility. But most of the developments have occurred in the last two years, since the tribe decided to construct a casino. Numerous permits and modifications to previous permits have been issued. The process is ongoing as the tribe proposes new developments. Thus far, the tribe has paid or will pay for all road and related improvements required by the permits. This amounts to about $2 million in smaller improvements already completed with approximately $3 million more to be done. By far the largest improvement yet to be done is the widening of Route 2 in the area of the casino, which is likely to cost the tribe about $12-15 million.

The Department of Transportation is considering further improvements to Route 2 from Route 2A in Preston to I-95 in North Stonington, as well as the relocation of Route 2A. While improvements to Route 2 have long been under consideration as a result of significant seasonal congestion, the casino and casino-related developments have accelerated the need for these improvements. One alternative for Route 2, which would involve more minor improvements to increase safety, would cost $9 million. The other alternative, which involves reconstruction of Route 2 as a four-lane, median-divided highway will probably cost about $30 million. Relocation of Route 2A is expected to cost approximately $15 million if it is undertaken. The tribe is expected to share the costs of these improvements as it has in the past and has apparently agreed, at least in principle, to do so, but the amount it will contribute has yet to be determined.

VR:tjo