City of Duluth sues National Indian Gaming CommissionThe city of Duluth has filed suit in U.S. District Court in Washington, D.C., against the National Indian Gaming Commission over the commission’s order that the city no longer could receive revenue-sharing payments from the Fond-du-Luth Casino.
By: John Myers, Duluth News Tribune
The city of Duluth has filed suit in U.S. District Court in Washington, D.C., against the National Indian Gaming Commission over the commission’s order that the city no longer could receive revenue-sharing payments from the Fond-du-Luth Casino.
The city is asking the federal court to overturn the commission’s action of July 2011 that essentially banned the Fond du Lac Band of Lake Superior Chippewa from sharing casino profits with Duluth as it had from 1984 to 2009. An agreement between Duluth and Fond du Lac once funneled nearly $6 million a year into city coffers.
The city alleges the commission had no right to issue its notice of violation — or NOV — in the case. It was that notice of violation that both federal courts and the U.S. Department of Interior relied on in decisions essentially declaring the city-band revenue-sharing agreement null and void, City Attorney Gunnar Johnson said.
“The NOV is what the band has used as the foundation — their entire case — that they should not be required to follow their contract obligations with the city,” Johnson told the News Tribune. “If the NOV does not stand, the rest of their argument falls apart.”
A spokesman for the commission did not immediately return a request to comment on the suit.
Karen Diver, chairman of the Fond du Lac Band, predicted the city’s effort is doomed to fail.
“To date, the District Court, the Court of Appeals, and the full roster of the 8th Circuit Court of Appeals — unanimous by 16 judges — have failed to note any error on the part of the National Indian Gaming Commission’s actions in upholding the Indian Gaming Regulatory Act in its handling of the Fond-du-Luth case,” Diver said. “That seems to not be a good track record for continued further legal action.”
This week’s suit is the latest round in a series of suits and counter-challenges after the Fond du Lac Band stopped paying the city in 2009. The revenue sharing began in 1986, when the band and the city agreed to terms allowing the casino to operate on Superior Street, and city officials claim that a 1994 agreement required the band to pay at least through 2011 and possibly through 2036.
The city and band had been in arbitration to hammer out a new agreement going forward when the commission issued the notice of violation, at which point Fond du Lac walked away from the table.
Based on the notice of violation, the U.S. Department of the Interior in May announced it would cancel the lease agreement between the band and city that once provided the city with 19 percent of all revenue from electronic gambling at the Fond-du-Luth Casino.
Just last week the U.S. Court of Appeals for the 8th Circuit denied a city appeal. The city wanted the 8th Circuit panel to revisit a decision that backed the band and overturned a lower court’s decision requiring the band to pay the city about $12.4 million in casino revenue back payments.
The band at one time sought a return of all the money it shared since 1994, about $75.5 million. The District Court ruled that the band could not recover the money it paid Duluth before 2009. The band did not appeal that ruling and the District Court fight over payments from 2009 to 2011 began.
U.S. District Court Judge Susan Nelson ruled in November 2011 that the band didn’t have to pay beyond 2011 but it did have to make the payments from 2009-11. The band appealed, and the decision on the back payments still isn’t final.
In its suit this week, the city argued that nothing had changed in the laws and rules that had formed the basis of the band-city agreement in 1994, and therefore the Indian Gaming Commission had no basis for deciding the agreement violated the law. The city also argued that the Gaming Commission had acted outside the scope of its authority.
City Attorney Johnson noted it could take months for this week’s suit to reach a hearing, let alone a decision.
Even if successful, the city would then have to take that decision back to other courts and ask them to revisit the revenue-sharing issue based on the overturned notice of violation.
He said the city’s ultimate goals are to recover the $12.5 million in back payments and then negotiate an equitable payment agreement with the band going forward.