The Seneca Nation owns and operates the Seneca Niagara Resort and Casino in Niagara Falls, New York. Photo: Christine K

Compacts | Litigation | New York

Seneca Nation challenges $256 million gaming award after appeal to Trump falters

Monday, June 10, 2019

The Seneca Nation is headed to court to challenge a $256 million arbitration award after an appeal for the Trump administration to intervene in the gaming dispute was rejected as premature.

The tribe asked the Department of the Interior to review the award, contending it functioned as an amendment to its Class III gaming compact because it requires additional revenue sharing payments to the state of New York. But the request was returned last week, with a senior political official seeking more information about the matter.

“This action by the Department of Interior unfortunately fails to resolve the ongoing disagreement between the state of New York and the Seneca Nation. Without federal review, the amendment crafted by the arbitration panel remains unenforceable,” President Rickey L. Armstrong, Sr. said in a news release on Thursday.

In a June 3, 2019, letter to the Seneca Nation, the Trump administration said it declined to review an arbitration award submitted by the tribe due to lack of information about the state of New York's involvement.

With the request to Washington in limbo, the tribe filed a lawsuit in federal court on Thursday. A petition seeks to have the arbitration award erased from the record or, in the alternative, to stay its enforcement so that additional information can be submitted to Interior.

“You cannot simply skip past the fact that the arbitration decision and amendment must concur with federal law, and, right now, the amendment and the law conflict with one another,” Armstrong said. “The only other alternative to resolve the matter would be for the Nation and the state to come to some agreement and jointly submit it to the Department of Interior for review. The Nation is open to those discussions.”

In 2002, the Bureau of Indian Affairs allowed the tribe's compact to take effect without outright approving or rejecting it. As a result, the agreement is considered to be legal but only to the extent its provisions are "consistent" with the Indian Gaming Regulatory Act, according a notice published in the Federal Register.

The tribe subsequently reached a memorandum of understanding in 2013 to settle a prior gaming compact dispute that also impacted the revenue sharing arrangement. There is no record of this agreement, which includes a provision stating that the compact can be automatically renewed in 2016, being submitted to the federal government for review.

But in 2017, the tribe declared that it was no longer required to share revenues from its gaming operation. The state had received $1.4 billion by that time.

"In 2013, an amended version of the compact was agreed upon between the Seneca Nation and New York State," the tribally operated senecagamingtruth.com reads. "In 2017, the Seneca Nation fulfilled its obligation and is no longer required to remit payments to New York State."

The state then invoked the arbitration proceedings of the compact. By a vote of 2-1, a panel ruled in January that the tribe had to keep sharing the payments and also determined that the tribe had to send $256 million in withheld payments to the state.

The negative decision prompted the tribe to ask Interior for assistance. But in a June 3 letter, Principal Deputy Assistant Secretary for Indian Affairs John Tahsuda, who is an appointee of the Trump administration, said Interior doesn't have enough information to consider whether the arbitration award functions as an amendment to the compact.

"Unfortunately, we are returning the arbitration award due to the absence of accompanying documentation required by the department's regulations," the letter stated.

According to the letter, Interior regulations require some form of "certification from the state governor of other state representative" regarding a submitted compact or amendment. That information is lacking from the state, as Armstrong acknowledged last week.

According to the 2002 compact, an arbitration decision "shall be final." The prevailing party -- in this case, the state of New York -- is allowed to go to court to "enforce the arbitration award," the agreement reads.