An erial view of the Foxwoods Resort Casino on the Mashantucket Pequot Indian Reservation in Ledyard, Connecticut.

Mashantucket Pequots Won’t Appeal Tax Case to Supremes

Gale Courey Toensing
1/23/14

The Mashantucket Pequot Tribal Nation will not ask the United States Supreme Court to review a 2nd Circuit Court of Appeals ruling that the state and local governments can collect taxes on slot machines leased from non-tribal businesses.

The Mashantucket Pequot Tribal Nation owns and operates Foxwoods Resort Casino in southeastern Connecticut. It is the largest casino in the country and has contributed more than $3 billion to the state since opening in 1992. William L. Satti, the Nation’s Director of Legislative Affairs, announced the tribe’s decision in a prepared statement January 21. While the tribe sees the appeals court ruling as a violation of its sovereignty and previous cases, it will work with local authorities to resolve the issue, the statement said.

“In view of the Mashantucket Pequot Tribal Nation’s strong government-to-government relationship with the State of Connecticut and the Tribe’s desire to work with the State to address taxation issues through agreement, the Tribal Nation has decided not to file a petition for certiorari with the US Supreme Court challenging the Court of Appeals decision on taxation of leased slot machines,” the statement said.

Tribal officials noted that the Tribe is a separate sovereign that governs activities and provides services within its territory and that it challenged the right of the local town to impose taxes on tribal land “because such taxes are an affront to the Tribe’s sovereign authority over its territory especially since the Tribe, not the Town, provides the government services within the Reservation. While the Tribal Nation strongly disagrees with the Second Circuit decision and does not believe it is in accord with Supreme Court precedent, the Tribal Nation believes the most productive approach to address tax issues between sovereigns is to enter discussions with the State and to continue to foster its relationship with the neighboring towns by working together on mutually beneficially projects and agreements.”

The case goes back to August 2006 and September 2008 when the Nation filed complaints against the Town of Ledyard, Connecticut, on behalf of two companies who lease slot machines to the tribe for use at Foxwoods Resort Casino. The Nation had argued that imposition of the tax by the town was preempted by the federal Indian Trader Statutes and the Indian Gaming Regulatory Act (IGRA) and previous case law. In March 2012, a federal district court upheld the Nation’s position. “Indian tribes are distinct sovereign entities that are ‘distinct, independent political communities retaining their original natural rights,’” the judge wrote. “States do not have authority to regulate Indian tribes where a state law is preempted by federal law or infringes upon the ‘right of reservation Indians to make their own laws and be ruled by them.’”

RELATED: Mashantucket Court Ruling Reaffirms Non-taxable Status of Reservations

But a three-judge panel of the 2nd Circuit Court of Appeals said last July that the federal court had erred and none of the Mashantucket Pequot’s arguments barred the town from taxing a non-tribal entity. “[T]he tribe’s generalized interests in sovereignty and economic development are not significantly impeded by the state’s generally-applicable tax; neither are the federal interests protected in IGRA,” the panel said.

“[T]he affront to the state’s sovereignty on one hand approximates the affront to the tribe’s sovereignty on the other. The balance of equities here favors the town and state.”

RELATED: An Attack on Sovereignty: 2nd Circuit OKs Tax on Tribal Casino Slots

The 2nd Circuit ruling noted that the slot machines leased by the two companies combined generate $20,000 in annual property taxes. The town spent more than $900,000 on legal fees in the case, according to local reports. 

The case was deemed so potentially dangerous to Indian country that last fall the Seminole Tribe of Florida, the Coquille Indian Tribe of Oregon and the Confederated Tribes of the Umatilla Indian Reservation filed a “friends of the court” brief with the appeals court for a full panel re-hearing of the case. The request was denied.

RELATED: Five Tribes Join Mashantucket Appeal of Critical Tax Ruling

With the appeals court ruling in place, tribes all over the country could now be subject to local taxes on non-tribally owned property used on tribal land. But Mashantucket Pequot leaders were caught in a dilemma with this case. More likely than not the current Supreme Court would have upheld the appeals court ruling, leaving no room for further action. This way, other tribes can take the same tax battle to other courts and hope for a better outcome.

RELATED: Attorneys’ Advice to Tribes: ‘Stay Out of the Courts!’

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