Kalispel Tribe of Indians v. U.S. Dep't of the Interior

• Decision Date: 01 June 2021
• Docket Number: No. 19-35808,19-35808
• Citation: 999 F.3d 683
• Parties: KALISPEL TRIBE OF INDIANS, a federally recognized Indian tribe, Plaintiff-Appellant, and Spokane County, a municipal corporation and political subdivision of the state of Washington, Plaintiff, v. U.S. DEPARTMENT OF THE INTERIOR; Deb Haaland, Secretary of the Interior; Bryan Newland, Principal Deputy Assistant Secretary for Indian Affairs; Bureau of Indian Affairs; Stanley Speaks, Northwest Regional Office, Bureau of Indian Affairs, Defendants-Appellees, Spokane Tribe of Indians, Intervenor-Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

999 F.3d 683

KALISPEL TRIBE OF INDIANS, a federally recognized Indian tribe, Plaintiff-Appellant,andSpokane County, a municipal corporation and political subdivision of the state of Washington, Plaintiff,

v. U.S. DEPARTMENT OF THE INTERIOR; Deb Haaland, Secretary of the Interior; Bryan Newland, Principal Deputy Assistant Secretary for Indian Affairs; Bureau of Indian Affairs; Stanley Speaks, Northwest Regional Office, Bureau of Indian Affairs, Defendants-Appellees,Spokane Tribe of Indians, Intervenor-Defendant-Appellee.

No. 19-35808

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 8, 2021 San Francisco, California

Filed June 1, 2021

Daniel I. S.J. Rey-Bear (argued), Rey-Bear McLaughlin LLP, Spokane, Washington; Zachary L. Welcker, Kalispel Tribe of Indians Legal Office, Airway Heights, Washington; for Plaintiff-Appellant.

Tamara Rountree (argued), John L. Smeltzer, Joann Kintz, and Devon L. McCune, Attorneys; Eric Grant, Deputy Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; Andrew S. Caulum, Senior Attorney, Office of the Solicitor, United States Department of the Interior, Washington, D.C.; for Defendants-Appellees.

Danielle Spinelli (argued), Kevin M. Lamb, and James D. Barton, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C.; Scott Wheat, General Counsel, Office of the Spokane Tribal Attorney, Wellpinit, Washington; for Intervenor-Defendant-Appellee.

Before: Marsha S. Berzon, Morgan Christen, and Bridget S. Bade, Circuit Judges.

CHRISTEN, Circuit Judge:

Kalispel Tribe of Indians, a federally recognized Indian tribe, appeals the district court's order granting summary judgment in favor of the United States Department of the Interior (the Secretary), the Bureau of Indian Affairs, and federal officials. Kalispel challenged the Secretary's decision that the Spokane Tribe of Indians’ proposed gaming establishment on newly acquired off-reservation land would not be "detrimental to the surrounding community," 25 U.S.C. § 2719(b)(1)(A). Kalispel challenged the Secretary's decision pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701 – 706 ; the National Environmental Policy Act, 42 U.S.C. §§ 4321 – 4347 ; and the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701 – 2719. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm the district court's judgment.

I

Kalispel has owned and operated the Northern Quest Resort and Casino in Airway Heights, Washington since 2000. The land on which Northern Quest sits is located within the Spokane Tribe's historic territory. The Indian Gaming Regulatory Act, 25 U.S.C. §§ 2719 – 2721 (IGRA), allows federally recognized tribes to apply for gaming permits. IGRA also provides that, if the land where a gaming establishment is to be built was acquired after the date IGRA was enacted, the Secretary of the Interior must apply a two-step test to determine whether additional off-reservation gaming will be permitted. Id. §§ 2719(a), 2719(b)(1)(A). Specifically, IGRA requires the Secretary to decide whether: (1) the gaming establishment "would be in the best interest of the Indian tribe"; and (2) the gaming establishment "would not be detrimental to the surrounding community." Id. § 2719(b)(1)(A).

In 2001, the Spokane Tribe began the administrative process to request the Secretary to allow it to open a new casino two miles away from Kalispel's Northern Quest casino. That year, the Department of the Interior took a 145-acre parcel of land in Airway Heights into trust for the Spokane Tribe. Citing economic struggles—including declining sources of income and the costs of mitigating uranium contamination in the Spokane Indian Reservation's groundwater—the Spokane Tribe argued that it needed another casino because its members were living substantially below the federal poverty line and suffering from high rates of unemployment. The Spokane Tribe asserted that its existing resources were not enough to cover its members’ basic needs.

The administrative process to consider the Spokane Tribe's request to open an off-reservation gaming establishment took over ten years to complete. The Secretary solicited two rounds of consultation letters from state, local, and tribal officials, including Kalispel's tribal government. The Secretary also prepared a draft environmental impact statement (EIS), in accordance with the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321 – 4370m-12, and circulated a draft EIS in January 2012 for public comment. The Secretary circulated a final EIS in January 2013 for further public review and comment.

Kalispel objected at several points during the Spokane Tribe's application process, including once to the draft EIS and once to the final EIS. Kalispel asserted that the revenue it would lose to a competing gaming establishment would cause Kalispel to be "unable to meet existing debt obligations without foregoing most or all of the ... governmental operations, economic development efforts, and programs and services that provide for the welfare of tribal members." To demonstrate and quantify the economic harm it projected, Kalispel commissioned two analyses of the Spokane-area gaming market. One report was prepared by PKF Consulting USA, and another was authored by Nathan Associates Inc. Both studies suggested the Spokane Tribe's proposed gaming establishment would have a significant impact on Northern Quest's financial performance, on the resulting revenue available to fund Kalispel's tribal government, and on Kalispel's ability to make per capita expense payments (PCEPs) to its members. PCEPs are tribal government payments to tribal members derived from discretionary use of casino revenue, and Kalispel argued this source of income is vitally important to cover its members’ basic needs, such as housing.¹ See 25 U.S.C. § 2710(b)(3).

Kalispel also commissioned a debt analysis that suggested Kalispel would not be able to pay off the substantial construction debts it incurred to build Northern Quest if new competition reduced its gaming revenue.

In response, the Secretary commissioned four reports and compiled an objective analysis of Kalispel's financial projections. These reports concluded that Kalispel's projections were "wholly unreliable" and based on data and subsets that did not present an accurate baseline. The reports further concluded that, although Kalispel would suffer an initial loss of business if the new casino went forward, Kalispel's gaming revenue would resume growing after the first year of the new casino's operation. The reports also projected that if the new gaming establishment were permitted to open, Kalispel would be able to fulfill its loan obligations, and that Kalispel had not shown that it would not be able to operate its government or provide for its members. The findings of the reports commissioned by the Secretary were reflected in both the draft EIS and final EIS, giving Kalispel an opportunity to respond to the studies and provide further comments. The Spokane Tribe formally requested a two-part IGRA determination in 2012.

On June 25, 2015, the Secretary issued a Secretarial Determination that concluded the proposed gaming facility would be in the Spokane Tribe's best interest and that it would not be detrimental to the surrounding community. In reaching this decision, the Secretary considered all the information gathered during the consultation and NEPA process, as well as public comments and the studies the Secretary and others had commissioned. The Secretary detailed the beneficial effects the new casino was expected to yield for the Spokane Tribe, including jobs and revenue that would enable the Spokane Tribe to address the hardships its members currently suffered.

The Secretarial Determination addressed the impact the new casino would have on the surrounding community and projected over $300 million in economic output, the creation of over 2,200 construction jobs, and nearly $250 million in annual output that would support almost 2,900 long-term jobs and create millions of dollars in tax revenue. Despite initial competition from the new casino and temporary reduction in Kalispel's gaming revenues, the long-term projections for Northern Quest were positive and "normative revenue growth" was expected to resume after the first year of the new casino's operation.

The Secretarial Determination addressed the studies Kalispel commissioned and the comments Kalispel submitted. Even assuming Kalispel's revenue projections were accurate, the Secretary concluded that the projected decrease to Kalispel's gaming revenues "would not prohibit the Kalispel tribal government from providing essential services and facilities to its membership." The Secretary recognized that Kalispel might not be able to make PCEP payments to tribal members, but reached a favorable two-step determination, in part because the Secretary projected the temporary reduction to Kalispel's budget would be 16.7 percent, much less than the percentage Kalispel had forecast. The Secretary predicted that the drop in Northern Quest's gaming revenue would diminish over time, and also determined that members of the surrounding community other than Kalispel would significantly benefit, including the City of Airway Heights and Spokane County. In the end, the Secretary concluded that the competition from the Spokane Tribe's new casino would not create a detrimental impact on the surrounding community.

In 2017, Kalispel sued the Secretary in federal district court, alleging that the Secretary's two-step determination violated the Administrative Procedure Act (APA), IGRA, and NEPA. The Spokane Tribe successfully intervened as a defendant, and the parties agreed that the record provided all the facts necessary for the district court to decide cross-motions for summary judgment.

After briefing was completed, the court held oral argument and ruled that the Secretary complied...