State of Connecticut v. U.S Dept. Interior

• Decision Date: 06 January 2000
• Docket Number: Docket No. 99-6042
• Citation: 228 F.3d 82
• Parties: (2nd Cir. 2000) STATE OF CONNECTICUT, ex rel. Richard Blumenthal, Attorney General; TOWN OF LEDYARD, TOWN OF NORTH STONINGTON, TOWN OF PRESTON, Plaintiffs-Appellees, v. THE UNITED STATES DEPARTMENT OF THE INTERIOR; BRUCE BABBITT, Secretary of the Interior; KEVIN GOVER, Assistant Secretary of the Interior for Indian Affairs; FRANKLIN KEEL, Eastern Area Director, Bureau of Indian Affairs, Defendants-Appellants. August Term 1999 Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 82

228 F.3d 82 (2nd Cir. 2000)

STATE OF CONNECTICUT, ex rel. Richard Blumenthal, Attorney General; TOWN OF LEDYARD, TOWN OF NORTH STONINGTON, TOWN OF PRESTON, Plaintiffs-Appellees, v. THE UNITED STATES DEPARTMENT OF THE INTERIOR; BRUCE BABBITT, Secretary of the Interior; KEVIN GOVER, Assistant Secretary of the Interior for Indian Affairs; FRANKLIN KEEL, Eastern Area Director, Bureau of Indian Affairs, Defendants-Appellants.

Docket No. 99-6042

August Term 1999

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: January 6, 2000

Decided: September 25, 2000

Appeal from a judgment in the United States District Court for the District of Connecticut (Chatigny, J.), granting the plaintiffs-appellees' motion for summary judgment and permanently enjoining the Secretary of the Interior from taking land into trust on behalf of the Mashantucket Pequot Tribe of Indians on grounds that it would violate 25 U.S.C. § 1754(b)(8).

REVERSED and REMANDED.

[Copyrighted Material Omitted] BENJAMIN S. SHARP, Guy R. Martin, Donald C. Baur, Perkins Coie LLP, Washington, D.C., for Plaintiffs-Appellees, Towns of Ledyard, North Stonington, and Preston.

RICHARD BLUMENTHAL, Attorney General for the State of Connecticut; Joseph Rubin, David H. Wrinn, Assistant Attorneys General, Hartford, CT, for Plaintiff-Appellee State of Connecticut.

M. ALICE THURSTON, Roger Martella, Elizabeth Ann Peterson, United States Department of Justice Environmental & Natural Resources Division, Washington, D.C.; Stephen C. Robinson, United States Attorney; Peter Coppelman, Acting Assistant Attorney General; John B. Hughes, Assistant United States Attorney, New Haven, CT, (David Etheridge, Maria Wiseman, Department of the Interior, Washington, D.C., of counsel) for Defendants-Appellants.

PATRICE H. KUNESH, Office of Legal Counsel, Mashantucket Pequot Tribe, Mashantucket, CT, Elizabeth Conway, Brown, Jacobson, Tillinghast, Lahan & King, P.C., Norwich, CT, (Jackson T. King, Jr. on the brief) for amicus curiae Mashantucket Pequot Tribe.

Before: KEARSE, WALKER, and CALABRESI, Circuit Judges.

JOHN M. WALKER, Jr. Circuit Judge:

Defendants-appellants, the United States Department of the Interior; Bruce Babbitt, Secretary of the Interior; Kevin Gover, Assistant Secretary of the Interior for Indian Affairs; and Franklin Keel, Eastern Area Director, Bureau of Indian Affairs (collectively, the "defendants" or the "federal defendants") appeal from a December 16, 1998 judgment of the United States District Court for the District of Connecticut (Robert N. Chatigny, District Judge) denying their motion for summary judgment and granting the summary judgment motion of plaintiffs-appellees State of Connecticut, Town of Ledyard, Town of North Stonington, and Town of Preston (collectively, the "plaintiffs" or the "Connecticut plaintiffs"). The district court permanently enjoined the Secretary of the Interior from taking land into trust on behalf of the Mashantucket Pequot Tribe of Indians on grounds that it would violate 25 U.S.C. § 1754(b)(8). The material facts are not in dispute.

BACKGROUND

In January 1993, the Mashantucket Pequot Tribe of Indians (the "Tribe" or the "Mashantucket Pequots") applied to the Secretary of the Interior (the "Secretary") to have 165 acres of land presently owned by the Tribe in fee taken into trust for their benefit, pursuant to the Indian Reorganization Act, 25 U.S.C. § 461 et seq. ("the IRA"). Exercising his discretion pursuant to 42 U.S.C. § 465, and after applying the criteria set forth in 25 C.F.R. § 151.10, the Secretary agreed to take the land into trust in May, 1995. The Connecticut plaintiffs brought this lawsuit to block the Secretary's action and the Secretary deferred taking title to the land pending the outcome.

The plaintiffs' suit, under the judicial review provisions of the Administrative Procedure Act, 5 U.S.C. § 702, seeks: (1) a declaration that the Secretary's actions violate the Connecticut Indian Land Claims Settlement Act (the "Settlement Act"), 25 U.S.C. §§ 1751-60; and (2) an order permanently enjoining the Secretary from taking the contested land into trust. The federal defendants argue that the Secretary's decision to take the land into trust was a valid exercise of his authority under § 465 of the IRA. On cross-motions for summary judgment, the district court, upon a determination that the Settlement Act prohibited the Secretary's action, permanently enjoined the Secretary from taking the contested 165 acres of land into trust for the Tribe's benefit. This appeal followed.

Underlying the present dispute in part is the remarkable reversal of fortune that the Mashantucket Pequots have enjoyed in recent years. When the Settlement Act was enacted in 1983, the Tribe was impoverished, with no obvious future source of revenue in sight. All of that changed dramatically in 1990 when the Tribe applied to conduct Class III gaming activities on its reservation, pursuant to the newly-enacted Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq. See Mashantucket Pequot Tribe v. Connecticut, 913 F.2d 1024, 1025-28 (2d Cir. 1990) (describing the Tribe's application process and requiring Connecticut to enter into good faith negotiations with the Tribe to create a tribal-state compact). In less than a decade the approximately 300-member Mashantucket Pequot Tribe developed one of the most profitable casinos in the United States, the Foxwoods Resort Casino in Ledyard, Connecticut, grossing nearly $1 billion annually. See Julian Schriebman, Developments in Policy: Federal Indian Law, 14 Yale L. & Pol'y Rev. 353, 361 nn.62-63(1996).

The stakes are considerable for both sides. The tax revenues that plaintiffs will forgo have been estimated at $50,000 annually if the Tribe adheres to its stated intention to leave the 165 acres of land at issue in this case undeveloped. But if the Tribe develops the property, as plaintiffs suspect it might, the tax revenues annually forgone by one or more of these Connecticut plaintiffs could be in the several hundreds of thousands of dollars. The Connecticut plaintiffs are also concerned that an adverse ruling in this case will affect other lands that the Tribe owns or may acquire in the future. Although not directly at issue in this proceeding, the Tribe has applied to the Secretary to have an additional 1,200 acres of non-settlement land taken into trust.

DISCUSSION

We must begin with a brief description of the relevant statutes in order to frame the present dispute. Enacted in 1934, the IRA fundamentally restructured the relationship between Indian tribes and the federal government, reversing the Nineteenth Century goal of assimilation and embodying "principles of tribal self-determination and self-governance." See County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251, 255 (1992). Relevant to this appeal, the IRA authorizes the Secretary to take certain lands into trust for the benefit of an Indian tribe. See 25 U.S.C. § 465. The procedures governing the Secretary's exercise of discretion in this regard are set forth in Department of Interior regulations. See 25 C.F.R. Part 151;¹ see generally Mary Jane Sheppard, Taking Indian Land Into Trust, 44 S.D. L. Rev. 681 (1999) (describing the process by which Indian tribes may apply to have property taken into trust).

When the Secretary takes land into trust on behalf of a tribe pursuant to the IRA, several important consequences follow. Land held in trust is generally not subject to (1) state or local taxation, see 25 U.S.C. § 465; (2) local zoning and regulatory requirements, see 25 C.F.R. § 1.4(a); or, (3) state criminal and civil jurisdiction, unless the tribe consents to such jurisdiction, see 25 U.S.C. §§ 1321(a), 1322(a).

The Connecticut plaintiffs pin their hopes on the Settlement Act which, they argue, prevents the Secretary from taking into trust certain land, like the 165 acres here. The Settlement Act was the consequence of a 1976 lawsuit filed by the Tribe, long before it had any notion that it would become a casino owner, asserting title to several hundred acres of land in and around Ledyard, Connecticut. In that action, the Tribe claimed that in 1855 Connecticut had transferred nearly 800 acres of Tribe-owned land out of tribal hands without congressional approval, in violation of the Nonintercourse provisions of the Trade and Intercourse Act of 1790 (now codified at 25 U.S.C. § 177). See H.R. Rep. No. 98-43, at 2-3 (1983). The immediate effect of the 1976 lawsuit was to place a cloud on the title to hundreds of acres of privately and publicly owned land in Connecticut and to threaten to bring about many years of protracted litigation. The parties to the lawsuit negotiated a tentative settlement that included federal recognition of the Tribe, which would permit land to be taken into trust by the Secretary. Accordingly, an act of Congress was required to implement the terms of the settlement. On October 18, 1983, Congress enacted the Settlement Act to embody the agreement reached by the parties.²

The Settlement Act extinguished the Tribe's claims to hundreds of acres of land. See 25 U.S.C. § 1753. In exchange, the Settlement Act: (1) provided for federal recognition of the Tribe, see id. § 1758; (2) established a $900,000 fund (the "settlement fund"), designed principally for the purchase of private property, see id. § 1754; and (3) identified boundaries within which lands acquired by the Tribe would be held in trust by the Secretary and would constitute the Tribe's reservation, the so-called settlement lands, see id. §§ 1752(3), (4) & (7).

The Settlement Act distinguished between various types of property, however, and these distinctions form the basis for the present controversy. In relevant part, the Settlement Act provides the following definitions:

(3) The term "private settlement lands" means

(A) the eight hundred acres, more or less, of privately held land which are...