Opinion ID: 848685
Heading Depth: 3
Heading Rank: 2

Heading: the contractual nature of compacts

Text: As explained above, IGRA only grants the states bargaining power, not regulatory power, over tribal gaming. The Legislature is prohibited from unilaterally imposing its will on the tribes; rather, under IGRA, it must negotiate with the tribes to reach a mutual agreement. [6] As further noted above, the hallmark of legislation is unilateral imposition of legislative will. Such a unilateral imposition of legislative will is completely absent in the Legislature's approval of tribal-state gaming compacts under IGRA. Here, the Legislature's approval of the compacts follows the assent of the parties governed by those compacts. Thus, the Legislature's role here requires mutual assent by the parties  a characteristic that is not only the hallmark of a contractual agreement but is also absolutely foreign to the concept of legislating. Rood v. Gen. Dynamics Corp., 444 Mich. 107, 118, 507 N.W.2d 591 (1993). See Confederated Tribes of the Chehalis Reservation v. Johnson, 135 Wash.2d 734, 750, 958 P.2d 260 (1998) (Tribal-state gaming compacts are agreements, not legislation, and are interpreted as contracts.) Further, the compacts approved by HCR 115 do not apply to the citizens of the state of Michigan as a whole; they only bind the two parties to the compact. Legislation looks to the future and changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject to its power. Dist of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 477, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), quoting Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 226, 29 S.Ct. 67, 53 L.Ed. 150 (1908). Here, the compacts approved by HCR 115 have no application to those subject to legislative power; rather, they only set forth the parameters within which the tribes, as sovereign nations, have agreed to operate their gaming facilities. Under the terms of the compacts, the tribes themselves, not the state, regulate the conduct of class III gaming on tribal lands. The Legislature has no obligations regarding the regulation of gaming whatsoever, nor can the state unilaterally rectify a violation of the compacts. Similarly, in approving the compacts at issue here, the Legislature has not dictated the rights or duties of those other than the contracting parties. Despite plaintiffs' arguments to the contrary, we find that § 18 of the compacts does not obligate local units of government to create local revenue sharing boards. Indeed, because the local government units are not parties to the contract, it would not be possible for the compacts to impose any obligations on the local governments. Third parties cannot be bound by the terms of the compacts. Instead, the compacts make local units of government third-party beneficiaries of the compacts, with the creation of the revenue sharing boards simply a condition precedent to receiving those benefits. A party is a third-party beneficiary if the promisor has undertaken to give or do or refrain from doing something directly to or for said person. MCL 600.1405(1). Here, the tribes have promised to give 2% of their net earnings to local communities, provided those communities create the revenue sharing boards to receive and disburse the payments. If the local governments choose not to create the sharing boards, they simply can no longer receive the benefit of the funds. But they are under no obligation to create the revenue sharing boards and receive the benefit granted by the tribes. Further, we reject plaintiffs' argument that the Legislature's approval by resolution has affected the rights of state citizens by setting age limitations for gaming or employment in the tribal casinos. These restrictions are not restrictions on the citizens of Michigan; rather, they are restrictions only on the tribes. The compacts provide the minimum requirements that the tribes agree to use in hiring and admitting guests to the casinos. The state has no power to regulate the casinos or enforce violations of the compact, but must use the dispute resolution procedure provided in the compacts if a violation occurs. Finally, we hold that the Legislature's approval of the tribal-state compacts does not create any affirmative state obligations. The compacts do not create any state agencies or impose any regulatory obligation on the state. The state also has no responsibility to enforce the compacts' requirements  that responsibility falls on the tribes alone. In this way, the compacts here can be distinguished from those at issue in the cases relied upon by plaintiffs. In Kansas v. Finney, 251 Kan. 559, 836 P.2d 1169 (1992), the compact at issue created a state gaming agency responsible for monitoring the tribe's compliance with the contract, and the compact was not submitted to the legislature for any form of approval. The court found that, under Kansas law, the creation of a state agency was a legislative function. Absent an appropriate delegation of power by the legislature or legislative approval of the compact, [7] the compacts could not bind the state to the increased obligations. Unlike the compact in Finney, however, the compacts at issue here do not create any state agencies and were presented to the Legislature for approval. Similarly, in New Mexico v. Johnson, 120 N.M. 562, 904 P.2d 11 (1995), the compacts authorized more forms of gaming than were otherwise permitted in New Mexico. As in Finney, the compacts were not presented to the state legislature for any form of approval. The court held that the governor could not enter into the compacts and thereby create new forms of gaming without any action on the part of the legislature. Id. at 574, 836 P.2d 1169. Unlike the compacts in Johnson, the compacts here do not create new forms of gaming and were presented to the Legislature for approval. Thus, the compacts do not impose new obligations on the citizens of the state subject to the Legislature's power; they simply reflect the contractual terms agreed to by two sovereign entities.