Miami Tribe of Oklahoma v. U.S., 97-2396-JWL.

• Decision Date: 08 May 1998
• Docket Number: No. 97-2396-JWL.,97-2396-JWL.
• Citation: 5 F.Supp.2d 1213
• Parties: MIAMI TRIBE OF OKLAHOMA, Plaintiff, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — District of Kansas

5 F.Supp.2d 1213

MIAMI TRIBE OF OKLAHOMA, Plaintiff, v. UNITED STATES of America, et al., Defendants.

No. 97-2396-JWL.

United States District Court, D. Kansas.

May 8, 1998.

Kip A. Kubin, Payne & Jones, Chtd., Overland Park, KS, for Plaintiffs.

Christina L. Medeiros, Office of United States Attorney, Kansas City, KS, for Defendants.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

This action arises under the federal Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701-2721. Pursuant to its authority under IGRA, the National Indian Gaming Commission (NIGC) denied approval of a class II gaming management contract submitted by plaintiff Miami Tribe of Oklahoma (the Tribe) on the ground that the proposed site for the gaming operation did not constitute "Indian lands," as required under IGRA. The Tribe now seeks judicial review of that decision.¹ For the reasons set forth below, the court concludes on the record that is before it that the agency abused its discretion in denying approval for the management contract. The matter is therefore remanded to the NIGC for further proceedings.

I. Background

In 1995, the NIGC disapproved a class II gaming management contract between the Tribe and Butler National Service Corporation. The NIGC relied in part on an opinion from the Department of the Interior (DOI) that the proposed site for the gaming operation, the Maria Christiana Miami Reserve No. 35 (the Reserve), did not constitute "Indian lands", which IGRA defines as trust or restricted land "over which an Indian tribe exercises governmental power." 25 U.S.C. § 2703(4). The Tribe appealed that decision to this court.

On April 10, 1996, the court issued a memorandum and order affirming the NIGC's decision. See Miami Tribe of Okla. v. United States, 927 F.Supp. 1419 (D.Kan.1996). The court first determined that the NIGC's interpretation of the "Indian lands" definition to require jurisdiction was permissible. Id. at 1423. The court then reviewed the history of the Reserve and concluded that the Tribe had relinquished its jurisdiction over the Reserve by 1884 and, furthermore, that Congress had expressly abrogated the Tribe's jurisdiction by 1924. Id. at 1424-27. The court also concluded that jurisdiction could not arise from membership of the current owners of the Reserve because the owners were not in fact members of the Tribe at the time of the agency decision under review. Id. at 1427. The court did not consider the effect of steps taken toward membership after the agency's decision. Id. at 1427-28.

On March 14, 1996, pursuant to an amendment in the Tribe's constitution, the owners of the Reserve were admitted as members of the Tribe. On April 16, 1996, the owners leased the Reserve to the Tribe for purposes of a gaming operation; in the lease agreement, the owners consented to jurisdiction of the Tribe over the Reserve.

On June 18, 1996, the Tribe requested that the NIGC reconsider its earlier disapproval in light of the new membership of the owners of the Reserve. On July 1, 1996, the NIGC again requested an opinion from the DOI on the issue of "Indian lands" under IGRA. The Tribe, through its attorney, submitted two briefs to the DOI in support of its position.

On May 12, 1997, the Solicitor of the DOI issued his opinion that the Reserve did not qualify as "Indian lands" under IGRA. The Solicitor concluded that "the admission of the owners of the land into the Tribe is alone not sufficient evidence of tribal authority to bring the land within the definition of `Indian lands' under IGRA." The Solicitor then reviewed the history of the Tribe's relationship to the Reserve. Next, the Solicitor cited Cheyenne River Sioux Tribe v. State of South Dakota, 830 F.Supp. 523, 528 (D.S.D.1993), aff'd, 3 F.3d 273 (8th Cir.1993), in which the district court, in denying summary judgment on the issue, suggested the following factors that may be relevant in determining whether a tribe "exercises governmental power" over a location:

(1) whether the areas are developed; (2) whether tribal members reside in those areas; (3) whether any governmental services are provided and by whom; (4) whether law enforcement on the lands in question is provided by the Tribe or the State; and (5) other indicia as to who exercises governmental power over those areas.

The Solicitor concluded as follows:

In the case of the Maria Christiana allotment [the Reserve], the land was originally allotted in 1859 to a nonmember of the Tribe. It is some distance from the Tribe's headquarters. Until the adjoining landowner recently provided the Tribe with access, it was inaccessible. It remains undeveloped. No member of the Tribe resides on the land. Until very recently, there had been no tribal oversight. The heirs of the original allottee were not members of the Tribe until 1996 when they were adopted because of their ownership interest in the land. The Miami Tribe of Oklahoma agreed by treaty to move to Oklahoma and cede its interest in this land. The Miami Tribe of Oklahoma did not allege governmental power over the land in the early 1990's and there is no agreement by local jurisdictions that the Tribe has civil and regulatory jurisdiction over the land. Finally, the Miami Tribe of Oklahoma twice received compensation from the United States based on the loss of this land. The initial payment compensated the Tribe for the land; the second payment compensated the Tribe for unpaid interest on the initial payment. Considering all these circumstances leads us to the conclusion that the Miami Tribe does not exercise governmental powers over the Maria Christiana Reserve No. 35 within the meaning of IGRA.

To join the issue, the Tribe actually submitted the management contract to the NIGC for approval on June 11, 1997. On July 23, 1997, the NIGC disapproved the contract on the basis that the Reserve was not "Indian lands" as required under IGRA; the NIGC deferred to the DOI opinion on that issue. On August 14, 1997, the Tribe brought the instant suit by which it seeks review of the NIGC's decision.² On January 23, 1998, the Tribe filed its appeal brief to place the question of the agency's "Indian lands" ruling at issue.

II. Standard of Review

The Chairman of the NIGC disapproved the management contract pursuant to 25 U.S.C. § 2711. That decision is appealable to this court under 25 U.S.C. § 2714 and the Administrative Procedure Act (APA), 5 U.S.C. § 702.

The parties have spent substantial portions of their briefs arguing about whether the court should pay deference to the agency's decision pursuant to Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In arguing that no deference is due here, the Tribe points to Southern Ute Indian Tribe v. Amoco Production Co., 119 F.3d 816 (10th Cir.1997), in which the Tenth Circuit held that deference under Chevron to an agency interpretation of a statute that it administers is appropriate only if that interpretation is rendered by way of legislative rule or adjudication. Id. at 832-33. What both parties overlook, however, is that the interpretation here was made in the context of an adjudication, specifically, the adjudication of the Tribe's application for approval of its management contract. As the court stated in Miami Tribe I, this deferential standard "is the same whether the agency interpretation is performed through rule-making or, as here, informal adjudication." Miami Tribe I, 927 F.Supp. at 1423 (quoting Arco Oil & Gas Co. v. EPA, 14 F.3d 1431, 1433 (10th Cir.1993)).

Although the applicability of Chevron here entitles the NIGC to deference regarding its interpretation of the statute, that, of course, does not end the inquiry. The court's review of the final agency decision in this case is also governed by the APA, specifically 5 U.S.C. § 706(2)(A), which requires the court to set aside an agency action found to be "arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with law." There is no contention here that the NIGC exceeded the scope of its authority or failed to comply with prescribed procedures; the court must therefore determine whether the action was otherwise arbitrary, capricious, or an abuse of discretion. See Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1574 (10th Cir.1994). Thus, even if the court defers to the agency's interpretation of the statutory definition, it must still examine the agency's decision to determine whether the agency's conclusions based on that interpretation pass muster under the APA.

Under the arbitrary and capricious standard, the court "must determine whether the agency considered all relevant factors and whether there has been a clear error of judgment." Id. (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).

Agency action will be set aside "if the agency relied on factors which Congress has not intended for it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise."

Id. (quoting Motor Vehicle Mfrs., 463 U.S. at 43, 103 S.Ct. 2856). The Tenth Circuit further explained the standard as follows:

Because the arbitrary and capricious standard focuses on the rationality of an agency's decisionmaking process rather than on the actual decision, it is well-established that an agency's action must be upheld, if at all, on the basis articulated by the agency itself. Thus, the grounds upon which the agency acted must be clearly disclosed in, and sustained by, the record. The agency must make plain its course of inquiry, its analysis and its reasoning. After-the-fact rationalization by counsel in briefs or argument will not cure noncompliance by the agency with these...