Second Circuit Court of Appeals Concluded Cayuga Nation Was Not Required to Obtain Local Permits for Operating a Gaming Facility and Affirmed

This post was authored by Olen Botshteyn, Esq.

This case concerns a dispute between the Cayuga Nation (the “Nation”), a federally recognized Indian tribe, and the Village of Union Springs (the “Village”) over a parcel that is located within the bounds of both the Village and the Cayugas’ historic reservation. Over the history, different federal policies applied towards Native Americans, including forced segregation in the eighteenth century, allotment era in the nineteenth century, which was aimed at forced assimilation and finally the period of restoration of lands to tribal ownership as well as exemption of land from state and local taxation, which began in the twentieth century. In a series of litigation that followed these changes, the Supreme Court held that allotment of tribal lands that previously took place did not by itself terminate existing treaty reservations, and that only the Congress has a power to establish and terminate reservations. In the 1970s, following the Court’s reaffirmation that states generally lack authority to regulate Native Americans on reservation land, tribes began opening and using gambling facilities as a means of generating revenue. Then in 1988, with the purpose of reducing tensions between the tribes and local governments which arose after this, the Congress enacted Indian Gaming Regulatory Act (IGRA) “to provide a statutory basis for the operation of gambling by Indian tribes.” IGRA preempts all state and local regulations over gambling with the bounds of an Indian reservation.

In the 1970s, the Cayuga and Oneida Nations filed a series of cases in federal court, seeking to establish that in the past New York illegally acquired land that belonged to the reservations. Having successfully asserted its rights over its historic reservation, the Oneida Nation started purchasing land within the reservation’s bounds and subsequently refused to pay local property taxes. It then sued the City of Sherill, claiming tax immunity, and won. Meanwhile the Cayuga Nation pursued similar efforts. In 2003 it acquired a parcel in the Village and began construction on the property, without following the permitting process, established by the Village’s laws. After the Village issued a series of stop work orders, the Nation sued the Village claiming Nation’s sovereignty over the parcel. In 2004, the district court granted summary judgment to the Nation, and while the Village’s appeal was pending, the Nation opened a gaming facility on the property.

In 2005, however, the court reversed Oneida’s tax immunity case, having concluded that permitting the Oneida Nation to revive “present and future Indian sovereign control, even over land purchased at market price, would have disruptive practical consequences.” In light of this reversal, on appeal, the Nation’s case against the Village was remanded and the district court concluded that the Nation’s efforts to prevent the application of zoning and other local land use laws were “even more disruptive” than Oneida Nation’s efforts to avoid the payment of local taxes, and the gaming facility closed. In 2013, however, it reopened and the Nation informed the Village that the gaming offered at Lakeside (the facility) was governed by IGRA which preempts state and local laws, and that it was not required to obtain a license from the Village. The Nation then applied for a certificate of occupancy and the Village refused, claiming that operation of a gaming facility without a license was in violation of a 1958 games of chance ordinance. The Nation then commenced this action, seeking to establish that the 1958 Ordinance is preempted by IGRA and it was not required to obtain a license from the Village to operate Lakeside. In March 2020, the district court granted summary judgment to the Nation, and the Village appealed.

On appeal, the Village asserted issue and claim preclusion and argued that IGRA preemption was actually litigated in 2003 or, in the alternative, that the Nation was required to litigate it then. The court disagreed. The 2003 litigation arose from the claim of tribal immunity from the Village’s zoning laws and the Nation did not premise its claim on IGRA preemption. In addition, when the 2003 complaint was filed, the Nation had not begun gaming, and the Village had not sought to enforce the 1958 Ordinance, and all in all the cause of action was different than in the present case. Further, on the merits, the court came to a conclusion that IGRA applies here, as the parcel is considered a part of the Indian reservation. “By 1988, it was well understood that once a block of land is set aside for an Indian reservation and no matter what happens to the title of individual plots within the area, the entire block retains its reservation status until Congress explicitly indicates otherwise,” and based on this argument, the parcel is the part of the Nation’s reservation. The court thus concluded that the parcel qualifies as “Indian lands” within the meaning of IGRA and that IGRA preempts state and local laws that purport to regulate or limit gaming on the parcel.

Cayuga Nation v Turner, 2021 WL 3160077 (2nd Cir. CA 7/27/2021)