THE SECRETARY OF THE INTERIOR 

WASHINGTON 

NOV 1 2 2002 

The Honorable Cyrus Schincller 

Nation President 

Seneca Nation of Yndians 

Route 438 

Irving, New York 14081 

Dear President Schindler: 

We have completed our review of the 'Kiial-State Gaming Compact (Compact) for the conduct 

of Class Ill gaming activities between the Seneca Nation of Indians (Nation) and the State of 

New Yak (State), executed on August 18,2002, and received by the Department on September 

. 10,2002. Generally, the Compact authorizes the l%ie to conduct Class IU gaming at three sites: 

an identified area within the City of Niagara Palls, or an alternative site witbin the County of 

Niagara; an unidentified area within the County of Exie or the City of BWo; and an onreservation site. The Compact quires that the Tribe pay the State a percentage of the Tribe's 

gaming revenue in exchange for several benefits including an exclusive 10,500 square-mile area 

in Westem New York and start-@ benefits, provided by the State. The Tribe agrees to purchase 

the gaming sites with funds from the Seneca Nation Settlement Act of 1990,25 U.S.C. 1774 

(Settlement Act) resenring five million dollars for housing adjacent to the gaming sites. 

Under the Indian Gaming ReguIatory Act (XGRA), 25 U.S.C. $2710(d)(8)(C), the Secretary may 

approve or disapprove the Compact within forty-five days of its subam. Ifthe Secretary 

does not qqmve or disapprove the Compact within forty-five days, IGRA states that the 

Compact is considered to have been approved by tbe Secretary, "but only to the extent the 

compact is consistent with the provisions of [!GRA.]." Under IGRA the Department must 

determine whether tha Compact violates IGRA, any oh provision of Federal law that does not 

relate to jurisdiction over gaming on Indian lands, or the trust obligations of the United States to 

Jndians. 

As part of the Department's review of the Compact, on September 302 2002, we sent a letter to 

the parties seeking clarification of various provisions of the €ompa@. The responses we 

received fiom the State and the Nation have resolved most of our questions, as well as resolving 

some additional issues raised by mn-compacting parties. We have also held sevd meetings 

and conference calls with the parties to discuss the Compaot aud our concerns. t 

I have decided to allow this Compact to take effect without Secretarial action. I use this 

approach reluctantly. In enacting IGM, Congress provided limited reasons firr Secretmid 

approval or disapproval. However, because I want to express my ems on important policy 
concern regarding the Compact, concerns that fa outside of the limited reasons in IGRA for 

Secretarial disapproval, I must avail myself of the opportunity to do so. I believe the State and 

Nation negotiated in good faith, however, I couId not afkaively approve the Compact because 

of the effect it is likely to have on fuhve compacts:' 

Gend Observations 

Sinoe taking office, I have had the opportunity to review and decide a number of Indian 

gaming-dated matters. I do not have the luxury of reviewing any compact without considering 

the trends that will emerge with each successive compact. As I have reviewed this and previous 

compacts, my concerns reganling IGRA and the interplay with other aspects of Indian policy 

have become sufficient to warrant this explanation. 

I Wy support Indian gaming as envisioned by the &aftas of IGRA - that Indian tribes 

should have the full economic opporhx6ty of gaming within the bounddes of reservations 

existing at the time of IQIRA's passage. But I am also mindful that when mies seek to game on 

off-reservation land, the State has a greater govemmntal interest in regulating tribal offreservation gaming activities. Tribe are increasingly seeking to develop gaming hilities in 

areas lar from their reservations, focusing on selecting a location based on market potential rather 

. than exercising governmental jurisdiction on existing Indian lands. ft is understandable that 

tribes who are geographically isolated may desire to look beyond the boundaries of their 

reservation to take advantage of the economic opportunities of Indian gaming. However, I 

believe that IGRA does not envision that off-reservation gaming would become pervasive. 

Even with this concern in mind, 1 have concluded that this Compact appropriately permits 

gaming on the subject lands because Congress has expressly provided for the Nation tiacquire 

certain lands pusuant to the Settlement: Act. I am nevertheless concerned that elements of this 

Compact may be used by fuhue parties to proliferate off-reservation gaming development on 

lands not identified as part of a Congressional settlement but instead on lands selected sokly 

based an economic potentid, wholly devoid of any other legitimate connection Thus, to the 

extent that other states and tribes model future compacts af€er'this one, and seek to have the 

United States take land into trust for these gaming vennmq they should understand that my 

IJ ~tacrm,l~me~&~tand~~~es~wldm&~cr~onsn~

to improve tbt compact dwelp and revitw process. While I do not want to intnzde into the partid sumkngthnegotiations, I am ccfncemed that the DejWmat receives a compact that is a fhit acumpli * mnch 

opportunity for the -to atpress its pokyvim, exexcept as part of ke 45-day process. ?bur, as 

the process cnrrently works, compacting parties have onh) the guidance of previom campacts as a staPbhg poiat for 

thc parameters of fbeir negotiations. X believe that the process would be enhanced if both parties aoailcd them&es 

of the.Dqdmat's info& guidance pri to the delivery oftbeir i5nalized compact to my desk for review. Al 

times, pe have been able to mah changes during the 45-day ~cvibw process, however, the parties here hered 

the Department that it would be impossile to make changes to this Cornpan within the review paiod. 

Deparmaaual input, psior to the canpact being submitted, might have been exhPdely hdpfhl ben. 
views regarding land acquired through a Congressional settlement are somewhat d.Xfkrent &om 

my views when a tribe is seeking a discretionary off-reservation trust acquisition or a two-part 

determination under IGRA. While I do not intend to signal an absohte bar on off-reservation 

gaming, I am extremely concerned that the principles underlykg the enactmat of XGRA are 

being stretched in ways Congress never imagined when enacting IGRA. 

Revenue Sharin~ and Geogra~hic Exclusivity 

Section 12(a) of the Compact &rants the Nation the exclusive right to o&rate specifically 

defined gaming devices within a 10,500 squaremile, geographic area in Westem New Ymlc2 In 

exchange for this gedgraphic exclusivity right, Section 12 requires the Nation to make graduated 

revenuesharing payments to the State (&om 18% to 25% of net drop, less a local share) over the 

course of the 14-ym duration of the Compact. If the State violates the exclusivity provision In 

Section 12(a)(l), the payment to the State ceases as to the particular category of gaming device 

for which exc1usivity no longer exists. If the State violates the exclusivity provision in Section 

12(a)(2), the payment to the State ceases altogether? 

The Department has sharply limited the circumstances under which Indian tribes can 

make direct payments to a state for purposes other than defraying the costs of regulating Class IU 

gaming activities. To date, the Department has approved payments to a state only when the state 

has agreed to provide the tribe with substantial exclusivity for Indian gaming, i.e., where a . 

compact provides a tribe with substantial economic benefits in the fom of a right to conduct 

Class Ift gaming activities that are on more favorable terms than any dghts of non-Indians to 

conduct similar gaming activities in the state. The payment to the state must be appropriate in 

light of the exclusivity xight conkrred on the tribe. 

The Nation and the State have advanced arguments that the geographic exclusivity 

defined in Section 12(a)(l) of the Compact is substantial and meanihghl, pointing out that this 

zone of excIusivity is a 10,500 square-mile area in Western New York that, based on p~of~onal 

analysis of tbe market from which the Nation's gaming ficility would draw, includes primary (up 

to 50 miles), secondary (51-99 miles), and tertiary (100-150 miles) customer markets for any 

'' Scaion iz(aX1) of tbe Compsc( provides tbe f011owing description of the geographic am "(I* the 

cast, StateRoute 14fimmSodus~oiatto~P~~anjaborderwidrNewYo~ @?to thenorta,thew 

between New York and Canada; {iii) to the south, the Penasyitvania bo&x with New YO& (iv) to thc we% thc 

barda belweenPmsq4mia and New Yodc." 

JJ The Deparbnent asked if tbe Nation's txclwiye right to opcnte slot machiaes with the zone of 

exc1wmty was lost and the Nation thadi ceased makiug revenue payments, whether it would violate the 

pvision of New Yorlc hw pmichg the possessjan-of slot machine only pursuant to a gaming compact where tbe 

State receives a negotiated percentage of the net drop. The State bas argucd that by negotiating this CmnpacC with 

ihe Nation that includes the receipt of a negotiated pactntnge of tbe net drop, it has met its obli@ion unda tbc 

law, men if revenue payments decline to zero. We concar with the Statc's inkqreption of the meaning of its law 

and con* that the State bas mez its legal 0bligatio;a. 
established Buffdo and Niagara Falls gaming facility. According to the economic analysis 

provided by the Nation, the total revenues currently anticipated from the gaming operations over - 

the term of the Compact, exceed five billion dollars, of which the State would receive less than 

one billion dollars, and a portion of those State funds would go to local governments. The 

Nation estimates its anticipated return after all expenses to significantly exceed two billion 

dollars over the fourteen-year term of the Compact. 

The Nation argues that exclusivity in a gdg market of this size is extremely vdluable 

and justifies on its own the average seventeen percent Ievenue share that the State will receive 

under the Compact &erethe locaI payment. However, the Nation and the State argue that the . 

State is also providing the Nation with other substantial benefits in exchange fbr the revenue 

share. Section 1 1 of the Compact cammits the State to transfer the Niagara Falls Convention 

Center for the sum of am dollar, which will enable the Nation to realize substantial savings, 

approximately foxty million dollars, on otherwise significant development and start-up costs. 

Other forms of State assistance that the Nation bargained for and obtained are the State's 

agreement to use its sovereign power of eminent domain to acquire other parcels of land required 

for the project. Fiy, Section 11 of &e Compact secures for the Nation the opportunity to 

operate two off-reservation gaming fkilities within the popplous and well-visited geographic 

wkets of Buffalo and Niagara Falls. . . 

While I believe that the Nation is receiving a substantial economic benefit that justifies 

the revenue sharing, I am very troubled that the parties have chosen to exclude other tribes within 

the area of geographic exclusivity. The Compact.creates two areas of exclusivity - one the enhe 

Westm portion of New York and another a twenty-five-mile radius of any gaming facility 

authorized under this Compact. Those provisions support my conclusion that the revenue 

sharing is justified. However, the drafters of this Compact have excluded Indian gaming fmm 

most of the area of exclusivity. The choice to specifically deny other tribes gaming opportunities . 

is the primary reason I have chosen not to aftirmatively approve tbis Compact 

It is worth noting., however, that the Compact does create an exception for two no* 

compacting tribes, the Tuscarora Iudian Nation and the Tonawanda Band of Seneca Indians, in . 

both of these areas of mcl&vity. Without violating the terms of the Compact, the State may 

negotiate with these Tribes to establish a gaming Wty eiiher on feddly-recognized Indian 

lands existing on the effective date of this Compact or outside of the twen~~mile radius 

within Westem New York. 

The Tonawanda Band and the Tuscarora Nation have notified us that they strongly object 

to approval of the Compact because, in their view, it violates the trust obligation ofthe United 

States to the two Nations by including provisions that explicitly restrict the economic 

opportunities that wonld otherwise be available to them under federal law, without their consent. 

These is no pestion that in spp-ving the Compact, thc Department would essentially ratify an 

agreement that has the efh~ of restricting the economic opportunities of the Tonawanda Band 

and the TuscaroraNation because the State has a strong incentive not to permit these two Nations 
to conduct gaming off-reservation within the twmtycfive mile (exclusivity) radius, to avoid 

losing revenue-sharing payments to which it is' otherwise entitled Grom the Nation. 

I have reviewed whether this piouision violates our trust obligation to Tndians, and I 

conclude that it does not. Under the terms of the Compact, the State @es not violate the 

exclusivity provision of the Compact if the Tqnawanda Band and the Tuscarora Nation game on 

existing federally-recognized Indian lands. Thus, &ere is no dishoentive to the State to negotiate 

for on-reservation gaming activities. fie remaining question is, therefbre, whether any t be 

enjoys a legal right to oE-reswation gaming under IGRA 1 believe that Congress in enacting 

IGRA, stxwlc a delicate balance between State and tribal interests that did not create an absolute 

right to off-reservation gaming. 

Even though this provision does not violate my trust obligation to hdians, I am sfill 

troubred that parties in fUhue compacts may pit tribe against tribe. While I believe that it was 

unintentid here, especially because both the Tonawanda Band and the TuscaroraNation are 

regarded as Witionally apposed to gaming, X do not welcome tlje prospeot of future compacts . 

pitting tribes against one another. While I understand that the State is required to negotiate in 

good-fgitb with a11 Indian triies and it has assured us that it understands its obligation under law, 

1 still find a provision excluding other Indian gaming anathe& to basic notions of fairness in 

competition and, if pushed to its extreme by &we compacts, inconsistent with the gods of 

IGRAP 

To summarize, this Compact provii@s fi,r substantial geographic exclusivity coupled with 

other valuable consideration. It is for this reason that X believe this revenudaring ammgement 

is oonsistent with IGRk 

Lands Acauired bu& the Seneca Nation Settlement At$ 

Subsections 1 l(b)(4) and (c) of the Compact provide for the use of settlement fderived from the SenecaNation Settlement Act of 1990,25 U.S-C. 5 1774 (Settlement Act) to 

"acquire the pariels in the City of Niagara Falls and the City of BufEao" for the purpose of 

gaming. Under the terms of the Settlement Act, the Nation may use settlement funds to acquire 

"land within the aboriginal area in State or situated within or near proximity to fonnex 

reservations Iands-" The Settlement Act also provides that dess the Serretary determhes that 

lands acquired pursuant to the Act should not be subject to 25 U.S.C. 8 277, such lands shall be 

held in 'ksbicted fee" as opposed to being held in bust by.the United States; 

In reviewing whether the pqmsed gaming pamk meet the Settlanent Act's requirement 

that the lands are "situated within or near proximity to former reservations lands," the Nation bas 

Monwer, wmitktmding this or any okr pvision of tbis Co- the Department will contiwe to 

enbatain any Section 20 two-part determination app~ons submitted by an Indian tnbc within tbe stat^ O~NW 

York pursusnt to IGRA. 
ro/ UL mun 14: ar PAb 

- - c. - " 

p~ovided suf?icient documentation demonstrating that the exterior boundaries of the Nation's 

fnmer BuBFalo Cntk Reservation ovalap a portion of the present day boundary of the City of 

. Buffalo and is within fourteen miles of the Ciw. of Palls exterior boundary. Moreover, 

the exterior boundary of the Nation's former Tonawanda Itsemtion is within famtea mifes of 

the City of Bmo and tvithin twenty-two miles of the City of Niagara Falls. We the 

Settlement Act does n6t ddhe 'kithin or near proximity" and there is no legislative history for 

guidance, it is our opinion that the two cities of Niagara Falls and Buffalo are "situated within or 

near proximity to" the Nation's bmer Buffalo Creek and Tonawandh memations for purposes 

of the Settlement Act. 

I want to emphasize, however, that the analysis regarding off-reservation land as part of a 

Congressionally-approved settlement greatly di&s fiom the analysis the Deparbnent engages in 

when the issue is simply a trust acquisition for off-reservation gaming. Here, Congress tied the 

acquisition of lands thmugh the Settlement Act to lands in 'hear proximity" to the Nation's 

former reservation. This decision rests squarely on a Congressionally-approved settlement of a 

land claim. Consequently, my analysis of "within or near proximity" should be underitood as 

limited to the interpretation of the Settlemerit Act alone. 

Indian Lands under IGRq 

IGRA permits a tribe to conduct gaming activities on Indian lands if the tribe has 

\ jurisdiction over those lands, and only if the tribe uses that jurisdiction to exercise govmtal 

power over thc lands. There is no question that the Settlement Act requires the parcels to be 

placed in "restricted fee'! status. As such, these parcels will come within the definition of "Indian 

lands" in IGRA if the Nation exacise~ governmental power over them. The Department 

assumes that the Nation will exercise governmental powen ova these lands when they are 

acquind in restricted fee. It is our opinion that the Nation will have jmisdiction ova thsc 

parcels because they meet the definition of'?ndian countgf' lmdg 18 U.S.C. § 1 151. 

HistoricaUy, Indian county is land thaf generally speaking, is subject to the primary jmisdiction 

of the Federal Govef~ment md the trii inhabiting it. As interpreted by the COWS, Wan 

c0unQ-y includes lands which have been set side by the Federal Government fir the use of 

Indians and subject to federal sup&tendence. In this regard, it is clea that lands ptaeed in 

restricted mahls under the Settlement M are set aside for the use of the Nation, and that such 

restricted status cmtempld fcderal superhtenclence ova these lands. Finally, the Settlement 

Act authorizes lands held in restricted status to expand the Nations' reswation boundaries, or 

become part ofthe Nation's resmatian. Accor~y~ we believe that the Settlement Act 

contwplates that lands placed in restricted stalas be held in the same legal manner as existing 

Nation's lands are held and tb, subject to the Nation's jurisdictioa 

Section 20 of IGM, 25 U.S.C. 5 2719 contains a genemil prohibition on gaming on kmds 

acquired in trust by the Secretary for the bencfit ofan Iamm tribe af€& Octok 17,1988, unless 
one of several statutory exceptions is applicable to the land Under tbe Compact, h Nation . 

plans to use the provisions of the Settlement Act to acquire the.land in restricted fb, rather than 

in trust. The Department has examined whether Sedion 20 of 1GR.A a~plies to the Compact. 

We have reviewed whether Con- intended, by using the wards 'k trust' in Section 20 of 

IGRA, to completely prohibit gaming on lands acquired in restricted fee status by an Indian tribe 

after October 17,1988. I cannot conclude that Congress intended to limit the restriction to 

gaming on after-acquired land to omlyper se trwt acquisitions. .The Settlement Act clearly 

contemplates the acquisition of Tndian lands which would otherwise constitute after-acquired 

lands. To conclude otherwise would arguably create unintended exceptions to the Secfion 20 

prohibitions and undermine the regolatory regime prescribed by IGRk i believe that lands held 

in restricted fee status purmant to an Act of Congress such as is presented within this Compact 

must be subject to the qbents of Section 20 of IGRG 

The legislative history to the Settlement Act makes clear that one of its purposes was to 

settle some of the Nation's land claim issues. Thus, the Nation's parcels to be acquired pumimt 

to the Compact and the Settlement Act will be exempt fiom the prohiition on gaming contained 

in Section 20 because they are lands acquired as part of the settIement of a land claim, and thus 

fhll within the exception in 25 U.S.C. 8 2719(b)(l)@)(i). 

Use of Rernainin~ Settlement Act Funds for Housii 

Section 1 1 (c) of the Compact provides fbr the "acquisition of parcels to meet the housing 

needs of the Nation's members!' 1GM provides tbat a gaming compact will govm gaming 

activities on Indian lands of the Indian tribe and "may include provisions relating to . . . any other 

subjects that are directly related to the operation of gaming aotivities." It has been the policy of . 

the Department that a Class III gam&g oompadt can only include provisions that are "diredly 

related" to the option of gaming activities, and cannot include provisions that are not germane 

to gaming activities. The Depaitment has taken this position because it represents a common 

sense approach to the interpretation of IGRA. 

In response to our inquixy, tbe Nation has advised us that land acquired fbr homing under 

Section 1 l(c) of the Compact is directly related to tbe operation of gaming activities because the 

primary purpose in acquiring such parcels is to provide housing for tribal members next to the. 

Nation's gaming facilities. However, because Section I l(c) of the Compact does not require any 

relation to the gaming activities3 we believe that the Nation's argument that this provision is 

directly relllted to gamingb tenuous and strains the directly related criterion rrqnind by ERA. 

In wnclusion, while I believe that the Nation and the State worked hard to negotiate a 

Compact that met the immediate nce*, X believe the policy consideratinns outlined 

above counsel against an affjrmati~edppval. Since I did not approve or disapprove the . 

Compact within 45 days, the Compact is considered to have beol appmved, ''but only to the 
extent the compact is consistent with the pmvidolls of Dm]." The Compact takes e&et when 

notice is published in the Federal Register pursuant to Section I 2 (d)(3)(B) of IORq 25 U.S.C. 8 

2271 O(d)(3)@)- 

Sincerely, 

Identical letter sent to: 

The Honorable George E. Pas