KG Urban Enters., LLC v. Patrick

• Decision Date: 01 August 2012
• Docket Number: No. 12–1233.,12–1233.
• Citation: 693 F.3d 1
• Parties: KG URBAN ENTERPRISES, LLC, Plaintiff, Appellant, v. Deval L. PATRICK, in his official capacity as Governor of the Commonwealth of Massachusetts; Chairman and Commissioners of the Massachusetts Gaming Commission, in their official capacities, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

693 F.3d 1

KG URBAN ENTERPRISES, LLC, Plaintiff, Appellant,

v.Deval L. PATRICK, in his official capacity as Governor of the Commonwealth of Massachusetts; Chairman and Commissioners of the Massachusetts Gaming Commission, in their official capacities, Defendants, Appellees.

No. 12–1233.

United States Court of Appeals,First Circuit.

Heard June 7, 2012.

Decided Aug. 1, 2012.

Paul D. Clement, with whom Jeffrey M. Harris, Brian J. Field, Bancroft PLLC, Kevin M. Considine, Alexander Furey, and Considine & Furey, LLP were on brief, for appellant.

Kenneth W. Salinger, Assistant Attorney General, with whom Martha Coakley, Attorney General of Massachusetts, was on brief, for appellee.

Jeffrey Pokorak, Lorie Graham, and Nicole Friederichs on brief for Suffolk University Law School's Indian Law and Indigenous Peoples Clinic, amicus curiae.

Before LYNCH, Chief Judge, LIPEZ and HOWARD, Circuit Judges.

LYNCH, Chief Judge.

This appeal raises a constitutional challenge to certain provisions of a 2011 Massachusetts law, “An Act Establishing Expanded Gaming in the Commonwealth” (the Massachusetts Gaming Act), 2011 Mass. Acts ch. 194 (largely codified at Mass. Gen. Laws ch. 23K), which sets procedures and standards for authorizing legalized gaming in the Commonwealth of Massachusetts.

KG Urban Enterprises, LLC, a potential applicant for a gaming license, argues that § 91 of the Act provides unauthorized preferences to Indian tribes and on that basis treats the southeast section of the state differently, and this constitutes a classification on the basis of race in violation of the Equal Protection Clause of the Fourteenth Amendment and is inconsistent with Congressional intent in the federal Indian gaming statute.

We affirm the denial of KG's request for injunctive and declaratory relief as to § 91, reject the remainder of KG's claims, vacate the district court's dismissal of the complaint, and remand for such further proceedings as may be appropriate.

I.

This case involves two statutory schemes, one state and one federal. The state scheme is the Massachusetts Gaming Act. The federal scheme is the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701–2721, which establishes a cooperative federal-state-tribal regime for regulating gaming by federally recognized Indian tribes on Indian lands.

A. The Massachusetts Gaming Act

The Massachusetts Gaming Act was enacted on November 22, 2011. The Act establishes “a Massachusetts gaming commission” (the Commission), which consists of five commissioners, defendants here. Mass. Gen. Laws ch. 23K, § 3(a). The Commission is the principal entity charged with implementing the provisions of the Act, including the licensing scheme at issue.

The Act authorizes gaming through the Commission's issuance of “Category 1” and “Category 2” licenses. A category 2 license, not at issue here, allows the licensee “to operate a gaming establishment with no table games and not more than 1,250 slot machines.” Id.§ 2. A category 1 license “permits the licensee to operate a gaming establishment with table games and slot machines.” Id.

As to category 1 licenses, the Act creates three “regions,” regions A, B, and C, corresponding to counties; region A covers the Boston area, B the western portion of the state, and C the southeastern portion of the state. See id. § 19(a). The Commission “may issue not more than 3 category 1 licenses based on the applications and bids submitted to the commission. Not more than 1 license shall be awarded per region.” Id.

While the statute states that “[n]ot more than 1 license shall be awarded per region,” the statute appears to contemplate that three category 1 licenses will be awarded in total. The statute specifies the circumstances where a category 1 license is not to be awarded in a region: “if the commission is not convinced that there is an applicant that has both met the eligibility criteria and provided convincing evidence that the applicant will provide value to the region in which the gaming establishment is proposed to be located and to the commonwealth, no gaming license shall be awarded in that region.” ¹Id.

This case concerns certain special provisions for category 1 licenses in the southeast region only, which is where the state's only federally recognized Indian tribes are located. We describe the statewide procedures before turning to the special procedures which treat the southeast differently.

1. The Statewide Procedures

The Commission's solicitation of applications for category 1 licenses is a key initial step in the category 1 licensing process. The Act does not set a deadline by which the Commission must solicit applications for category 1 licenses, nor does the Act establish any timeframe for such solicitation. Rather, the Act provides that “[t]he commission shall issue a request for applications for category 1 and category 2 licenses; provided, however, that the commission shall first issue a request for applications for the category 2 licenses.” Id. § 8(a). The Commission is required to set deadlines for the receipt of all such applications, id. § 8(c), and to “prescribe the form of the application,” which must require certain detailed information about the entity requesting a license and its proposal, id. § 9(a).

Once the application is reviewed,² the Commission is to “identify which communities shall be designated as the surrounding communities of a proposed gaming establishment.” Id. § 17(a). The applicant must reach an agreement with the surrounding communities “setting forth the conditions to have a gaming establishment located in proximity to the surrounding communities,” id.§ 15(9), before the application process may continue, id. § 17(a). The Commission is then to hold a public hearing within the host community of the gaming site. Id. § 17(c).

Between thirty and ninety days after the hearing, the Commission is to take action on the application: it must either grant a license, deny a license, or extend the period for issuing a decision by up to thirty days. Id. § 17(e). Licenses “shall only be issued to applicants who are qualified under the criteria set forth in [the Act], as determined by the commission.” Id. § 19(a). As said, the Commission may under certain conditions determine that “no gaming license shall be awarded in that region.” Id. Moreover, the Commission has “full discretion as to whether to issue a license.” Id. § 17(g). The Act provides that the Commission's decision as to whether to issue a license is not reviewable: “Applicants shall have no legal right or privilege to a gaming license and shall not be entitled to any further review if denied by the commission.” Id.

A license is to be valid for an initial fifteen-year period. Id. § 19(b). Further, if a license is granted “no other gaming license shall be issued by the commission in any region during that 15–year period.” Id. The Commission is to establish license renewal procedures. Id. Licenses may not be transferred without majority approval of the Commission. Id. § 19(c).

2. Section 91 of the Act

Section 91, which is not codified in Chapter 23K, forms the basis of KG's primary challenge. 2011 Mass. Acts ch. 194, § 91. Section 91(a) provides that “[n]otwithstanding any general or special law or rule or regulation to the contrary, the governor may enter into a compact with a federally recognized Indian tribe in the commonwealth.” Id. § 91(a). The Commission is, upon request of the Governor, to assist in negotiating the compact. Id. § 91(b). The Governor may “only enter into negotiations under this section with a tribe that has purchased, or entered into an agreement to purchase, a parcel of land for the proposed tribal gaming development and scheduled a vote in the host communities for approval of the proposed tribal gaming development.” Id. § 91(c). If a compact is negotiated, it must “be submitted to the general court for approval.” Id. § 91(d).

We divide subsection (e), on which KG's equal protection challenge focuses, into its two component clauses, which provide:

Notwithstanding any general or special law or rule or regulation to the contrary, if a mutually agreed-upon compact has not been negotiated by the governor and Indian tribe or if such compact has not been approved by the general court before July 31, 2012, the commission shall issue a request for applications for a category 1 license in Region C pursuant to chapter 23K of the General Laws not later than October 31, 2012;

provided, however, that if, at any time on or after August 1, 2012, the commission determines that the tribe will not have land taken into trust by the United States Secretary of the Interior, the commission shall consider bids for a category 1 license in Region C under said chapter 23K.

Id. § 91(e). It appears that all aspects of the state-law components of the first clause have, as of the date of this opinion, been complied with. These statutory procedures have been supplemented by the terms of the state-law compact entered into by the Governor and the Mashpee Wampanoag, as described later.

The statute does not, by its literal terms, preclude issuance of a category 1 license in Region C if a compact has been approved. However, KG argued before the district court and on appeal that the statute does bar issuance of a license if a compact is approved by the legislature by July 31 and the Commission has not then determined that the tribe will not have land taken into trust. The defendants do not dispute that interpretation of the statute.

Moreover, the approved compact provides:

Section 91 of the Act provides that if a compact negotiated by the Governor is approved by the General Court by July 31, 2012, the [Commission] will not issue a request for Category 1 License applications in Region C unless and until it determines that the Tribe will not have land taken into trust for it by the United States Secretary of the Interior.

Mashpee Tribal–State Compact § 2.6.³ The compact repeatedly...