Lawyers for developer KG Urban believe they will prevail in bid to throw out state's casino guidelines
JOHN SLADEWSKI/The Standard-Times A photograph of a sketch provided by KG Urban Associates showing their plan for a casino at the former Cannon Street power plant in New Bedford.Contributed
As the Mashpee Wampanoag methodically cross items off the checklist they hope will lead to state sanction for an Indian casino in East Taunton, a time bomb ticks ominously in the background.
Acquire property? Done.
Conduct a referendum vote in the host community? Accomplished.
Negotiate a compact with the governor? On track, according to the state officials.
Convince the state Gaming Commission that land on which the casino would operate will be taken into trust by the federal Department of the Interior's Bureau of Indian Affairs? Not so fast.
That's where the process breaks down, according to a team of legal experts pulled together by KG Urban Enterprises of New York, which hopes to develop a casino at the site of the abandoned Cannon Street power plant in New Bedford. KG Urban brought its legal team to the SouthCoast last week, meeting with The Standard-Times Editorial Board.
"You can go through the whole process, but when you get to the end of it, the law of the land says they cannot" take land into trust, said Marsha Sajer, a lawyer who specializes in Indian gaming. "It's all going to come down to land-into-trust and will that land be approved for gaming, which is not going to happen under Carcieri."
The Carcieri ruling handed down by the U.S. Supreme Court in March 2009 determined that land could no longer be taken into trust for any tribe recognized by the federal government after 1934. The Mashpee tribe gained recognition in 2007.
KG filed suit immediately after the governor signed the state's Expanded Gaming Act in November, claiming the preference given to federally recognized tribes for the Southeastern Massachusetts casino license was a "race-based set-aside" that violated the Equal Protection Clause of the Constitution.
On Feb. 17, U.S. District Court Judge Nathaniel M. Gorton ruled that, "Unfortunately, governing caselaw is to the contrary," and dismissed the case. KG appealed and arguments were heard by a three-judge panel in the Court of Appeals of the First Circuit in Boston on June 7.
Gorton's decision "was not a bad opinion for us," said Paul Clement, KG's high-powered, high-profile lead counsel. "It cleared a lot of the underbrush away. In many ways he ruled in our favor, but he's a district court judge and he has to follow the (precedent-setting) Supreme Court decision.
"Gorton found for us on a factual basis," said Andrew Stern, KG's managing director and principal. "He agreed that we suffered from and continue to suffer from hardship. He agreed that the balance of hardship tilted toward us. But his hands were tied by one legal precedent."
Based on the questions asked at the June 7 hearing by Chief Judge Sandra Lynch — who, ironically, was the judge the Supreme Court overruled in its Carcieri decision — KG's legal experts feel they've got a good shot at prevailing in their appeal.
"This is just a guess ... but I think it's tempting on their part to wait and see what happens on July 31, then act sometime soon after," Clement said.
"The best outcome for us is a preliminary injunction against Section 91 of the act so the Southeast would be treated like anyone else," Clement said. "That would give us the opportunity to compete for a commercial license in the Southeast on its merits. If you knock (Section 91) out, the rest of the bill still works."
And if the appeal fails?
"I would strongly recommend to my client that, if we lost, we ought to file a petition to be heard by the Supreme Court," Clement said. "I believe we would have some very sympathetic ears there."
Clement has argued more than 60 cases in front of the Supreme Court and served as lead counsel in the high-profile hearing opposing the federal health care plan, known as Obamacare, earlier this year.
"I think we could take it up to the Supreme Court relatively quickly," possibly as soon as the next session, which begins in October, Clement said.
A head start
The expanded gaming law allows up to three casinos in three distinct areas of the state, plus a slots parlor, and gives federally recognized tribes a head start on the process for obtaining the Southeastern Massachusetts license. A tribe has until July 31 to acquire property for its casino, to schedule a referendum vote in the host community, to negotiate a gaming compact with the governor and convince the state gaming commission that its property would be taken into federal trust. Only if it fails would commercial applicants be allowed to seek a license for the area.
KG, which has been laying the groundwork for a casino development in New Bedford for four years, has argued that that's both unfair and illegal.
"Southeastern Massachusetts is essentially being left behind," Stern said.
While five major players are angling for the casino license set aside for Western Massachusetts, no one, outside of KG and the two federally recognized tribes, has expressed any interest in the Southeast. For years, a number of potential developers held options for land and expressed interest in developing a casino in the Hicks-Logan neighborhood off Interstate 195, but those options have been allowed to lapse.
We're being told that this is rigged, that the fix is in, Stern said. "Nobody will return my phone calls.
"I spent $5 million and no one will spend even a couple of hundred thousand dollars now."
"There's only one explanation for it," Clement said. The Indian preference "absolutely freezes out a whole section of the state. Not only do we lose a head start, but once casinos are established in the other two sections of the state, it's over."
"A place like Suffolk Downs could snap up a customer base with a mass marketing campaign," Stern said. "We'd be left at the bottom of a 50-foot pit looking for investors."
Kevin Considine, local counsel for KG, said he fears, "It's about to get worse for the Southeast. The governor and tribe are negotiating a compact in which the tribe will agree to pay the state some percentage of its gaming revenues. The quid pro quo for that is that the tribe will be given exclusive gaming rights in the Southeast."
The problem with that, Stern argued, is "if (the tribe) can't get land forever and the governor gives them exclusive gaming rights forever, everyone else is locked out forever."
Even if the Mashpee Wampanoag don't qualify under the Indian process set up by the law, they still could compete for a commercial license. In that scenario, the tribe would have the advantage of already having negotiated with the state.
"There's certainly no guarantee that there isn't going to be some residual effect from what's been happening," Clement said, but KG won't quit.
"I'm not going home," Stern said. "I'm committed to it. If I wasn't ready to compete with Mashpee on the merits of a project, then I never would have begun."
The Indian dilemma
"There's always been this general notion on Beacon Hill that you need to take care of the Indians," said Bill Bernstein, KG's lead lobbyist. "It's ingrained itself in the mentality up there. So when we had the gaming discussion with that ingrained notion, they decided to do something to take care of the Indians as opposed to once we do what we want to do, then the Indians can do what's available to them."
An earlier version of the state's gaming legislation would have reserved a commercial license for a tribe, but that did not pass and the accommodation was removed from subsequent bills.
Still, "It's very difficult to shake the notion loose that Indians are the magic bullet," Stern said. "It's in the head of the (SouthCoast) delegation that (partnering with a tribe is) the shortcut to getting a gaming license. You had members of this delegation saying that you have to appease the Indians," Stern said, although it was the sense of local legislators that the Indian preference in the law would never really matter because they could never get land taken into trust.
"I had discussions with (local legislators)" that confirmed that belief, said Lou Cabral, KG's local liaison.
The Bureau of Indian Affairs has continued to do the spade work for taking land into trust, including a hearing last week on the Masphee's petition, but has acted only once since the Carcieri decision.
The Cowlitz tribe of Washington had land taken into trust, but multiple lawsuits immediately were filed that could tie up the case for years, Sajer said.
Another Supreme Court ruling last week interjected yet another roadblock in the land-into-trust process. That ruling, which expanded the number of people who may sue to block the taking of land into trust and gave them six years in which to do so instead of the previous 30 days, could cause years of delay and may spook potential developers and investors.
"That's really significant," Clement said. "It takes a process that's already very challenging and makes it that much harder."
Stephen Crosby, chairman of the Massachusetts Gaming Commission, recently said he'd be willing to wait for years if necessary, for the Mashpee to have land taken into trust, which incensed Stern.
"Where do these guys get the nerve to say they're willing to wait years, because it's just the Southeast?" he asked.
The state's only other federally recognized tribe, the Wampanoag of Gay Head (Aquinnah) face the same hurdles as the Mashpee Wampanoag — plus a few more.
The Aquinnah also were recognized after 1934, making them similarly ineligible to get land into trust under Carcieri. Additionally, the tribe has suffered overwhelming defeats when it asked voters in Freetown and Lakeville to host and Indian casino and was rebuffed by governor when it asked to open compact negotiations.
The state maintains that the Aquinnah gave up their gaming rights in a 1987 land deal, so it won't talk to the tribe about a casino in Freetown and Lakeville or even on its already recognized sovereign land on Martha's Vineyard.
The Aquinnah claim they never gave up their gaming rights and would pursue legal action to exercise them.
$5 million spent
KG already has spent more than $5 million on its proposed casino and has projected total spending of more than $1 billion if the group is ultimately awarded a casino license. And it would be far more beneficial to the area than a sprawling Indian casino build in an industrial park, Stern argued.
First, it would clean up a contaminated urban brownfields area at an expected cost of $50 million, something he said the government would be hard-pressed to do itself. And second, it would provide an economic engine to revitalize a struggling downtown and replace long-gone manufacturing jobs.
"All we've ever wanted is to get up to the plate and take a few swings," Stern said. "We'll compete with anybody.
"I have to count on my product being the best one. We're ready to rock here."
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