For Immediate Release (Rincon, CA) The Ninth Circuit Court of Appeals affirmed the decision of a San Diego federal judge that Governor Arnold Schwarzenegger negotiated in bad faith by demanding an illegal tax in tribal-state compact negotiations with the Rincon Band of Luiseo Indians.

Federal law requires that states deal fairly with Indian tribes and negotiate in good faith. In explaining its decision, the Court of Appeals stated, We . . . find particularly persuasive the fact that the revenue sharing demanded in this case would result in $38 million in additional net revenue to the State compared to $2 million for the tribe.

We applaud this decision because it confirms one of the basic foundations of the relationship between American Indian tribes and states, that Indian tribes are sovereign governments, which, like other governments, cannot be taxed, said Rincon Chairman Bo Mazzetti.

The Court directed San Diego District Court Judge William McCurine to proceed with a 60-day negotiation between the governor and tribe and if no agreement is reached , a court appointed mediator will resolve any impasse. This baseball arbitration remedy was established by Congress when it passed the federal Indian Gaming Regulatory Act (IGRA.
As Appellate Judge Milan Smith stated in the Courts opinion, It is one thing to ask the tribes to contribute funds so the State is not left bearing the costs for gaming-related expenses; it is quite another to ask the tribes to help fix the States budget crisis.
Mazzetti noted, Rincon has been and is willing to pay our fair share, but we have to oppose revenue sharing fees that exceed common business sense, violate federal law, and are used for illegal purposes. Rincon rejected the governor's demands and instead, proposed that reasonable increases in fees be directed to local governments to improve infrastructure and mitigate impacts.
"This is a victory for local governments because it offers the opportunity to keep casino revenue sharing in rural neighboring communities where it is most needed, not lost in the state's general fund where it does not help pay for fire, police, roads and other services, Mazzetti explained.

Mazzetti added that the court case brings resolution to the issue of bad faith and impasse in tribal-state agreements through impartial arbitration, enabling tribes to say no when confronted by a governor that demands illegal fees from tribes. This does not just apply to Rincon, but to all tribes in all states and lays out a roadmap for fair, government-to-government negotiations.

According to Mazzetti, compact negotiations are supposed to be a win-win for both parties, not the state wins and tribes lose. "Ideally, the governor would drop further appeals and agree to new negotiations and arbitration, if necessary. Governor Schwarzenegger can waste more taxpayer's money just to prove the state has more authority over tribal matters than the federal government--a losing propostion, or he can move forward to address the issues the court's have raised."