Elk Grove Indian casino faces new challenge from gambling watchdog group

The Wilton Rancheria tribe’s bid to bring a casino to suburban Elk Grove encountered a key roadblock Tuesday, when the project’s foes filed an appeal against the federal government’s decision to take land into trust for the tribe.

Stand Up for California, a Penryn-based gambling watchdog group, submitted an appeal with the Bureau of Indian Affairs, alleging that the U.S. Department of Interior improperly handled Wilton Rancheria’s application for trust land status. Under state and federal laws, tribes must have sovereign land before they can build a casino.

In a written statement, Wilton Rancheria spokesman Bob Magnuson called the appeal “pathetic.”

“We know there are going to be nuisance lawsuits and that’s all this is,” the statement said.

The filing suggested that the Interior Department had the wrong person sign off on the proposal to take the tribe’s 36 acres into trust. Under regulations cited by Stand Up, a final decision to take land into trust must be made by the secretary or assistant secretary of Indian Affairs.

“A principal deputy assistant secretary lacks authority to make this decision,” said Cheryl Schmit, director of Stand Up.

In the case of Wilton’s application, the green light was given on Jan. 19 – the last day of the Obama administration – by Lawrence S. Roberts, principal deputy assistant secretary of Indian Affairs. The Bureau of Indian Affairs did not respond to a request for comment.

“We are in somewhat uncharted waters,” said Howard Dickstein, a Sacramento tribal-law attorney who has represented several tribes including the owner of Thunder Valley Casino in Lincoln. “This is a murky situation where you have one administration walking out the door, rushing through the process of taking land into trust.”

The action this week casts a dark cloud on the $400 million casino, hotel and convention center project the tribe has repeatedly insisted is moving forward. The Interior Board of Indian Affairs must now hear the appeal, which could take months, say legal experts.

The 36 acres purchased by the tribe last month from Dallas-based Howard Hughes Corp. is part of a 100-acre parcel off Highway 99 that was originally earmarked for development of an outlet shopping center. Hughes has argued that a casino is necessary to make the outlet a success.

While the Bureau of Indian Affairs confirmed last week that the land was taken in trust as of Feb. 10, the event has not been published in the National Register, a legal formality. The administration of President Donald Trump issued a memo on its first day that halted all publication in the National Register, which is customary for a new government. The Department of Interior is still without a Trump-appointed leader.

Dickstein, who has been following the deal closely, said, “I don’t think the (Interior Department’s) actions can withstand scrutiny.”

If Stand Up loses the appeal, the organization could still file a lawsuit in federal court to block the tribe. Even if the Wilton Rancheria eventually prevails in having its land taken into trust, there are more challenges on the horizon, stemming from the existence of a development agreement between the city of Elk Grove and Howard Hughes to build an outlet mall on the 100-acre parcel. The city contends that it loses authority over the land once it is taken by the federal government. Still, several prominent legal experts, including Dickstein, argue that development agreement could either stall or halt the casino.

Elk Grove spokeswoman Kristyn Nelson declined comment, saying the appeal was an issue between the federal government and Wilton Rancheria.

Katherine Florey, a professor at the UC Davis School of Law, warned that Indian law is ambiguous enough so that the case “could be tied down in litigation for quite a while.”

“Even if the tribe is ultimately successful, it often takes a long time to get there,” she said.

This story was originally published February 22, 2017 at 4:25 PM with the headline "Elk Grove Indian casino faces new challenge from gambling watchdog group."