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Pojoaque Tribe Says New Mexico Is Bullying Them Into Higher Revenue Sharing Rate

For all of July, the small New Mexico Pueblo of Pojoaque has been gaming without a compact, which is illegal under federal law. But the U.S. Attorney and the National Indian Gaming Commission are declining to prosecute. And the state of New Mexico is pissed.

“While every other gaming tribe in the state has made responsible decisions to ensure their continued successful … operations, Pojoaque continues on a reckless path,” said Michael Lonergan, press secretary for New Mexico Governor Susana Martinez.

But the Pueblo’s governor, Joseph Talachy, says he’s taking a stand against tactics by the state that aim to bully the Pueblo into paying an unfair tax rate.

The Pueblo has been operating under an 8 percent tax, or “revenue sharing” provision, since its 2001 compact. But the state wants to raise it to 10 percent. When the recession hit in 2008, Pojoaque gaming took such a hit that the Pueblo is still recovering. The Pueblo pays between $5 and 6 million a year in revenue sharing to the state under the 8 percent tax, which would mean an increase of just over $1 million if it is raised to 10 percent.

“At 10 percent, we will have to fire employees,” Talachy said. “Social programs would have to be cut, and our capital improvement money would take a hit.”

The state does have the Pueblo backed into a legal corner. Under the federal Indian Gaming Regulatory Act, the two entities are supposed to negotiate in good faith to come up with a compact to regulate Class III gaming, which includes lucrative slot machines and banked card games like blackjack. If a state fails to negotiate in good faith, the regulation allows a tribe to sue the state in federal court. But there’s a catch: Congress isn’t allowed to force the state into court except in very rare circumstances, and tribal gaming isn’t one of them.

New Mexico took advantage of the easy out. When the Pueblo tried to sue the state to force good-faith negotiations on the compact, the state asserted its sovereign immunity, so the case was dismissed.

That was in early 2014. Soon afterwards, the Pueblo tried to use another of IGRA’s provisions to go straight to the Secretary of Interior, who can, in such cases of failed negotiations, work out terms for gaming without a state compact. That process was well under way for the Pueblo, when the state sued the Department of Interior to stop it. The State claimed that it’s unfair for the Secretary to go around a state when bad faith hasn’t been proved in court. They won, in federal District Court in the state of New Mexico, last year.

“This Court sympathizes with the Pueblo of Pojoaque’s situation,” wrote Senior United States District Judge James A. Parker, in an opinion issued in October. “New Mexico’s ability to prevent federal court oversight of its behavior during negotiations has essentially left New Mexico in an unassailable position in a process that Congress clearly intended to take place between ‘equal’ sovereigns. But the fact that the unambiguous terms of a statute give rise to absurd or anomalous results does not give a federal court any license to revise the statute in order to avoid those outcomes.”

The Department of Interior has appealed that ruling to the 10th Circuit Court of Appeals. Meanwhile, the Pueblo’s compact expired on June 30, making any Class III gaming illegal. But Talachy appears to have secured a reprieve. “I believe that the public interest is best served by maintaining the status quo while the appeal in the Tenth Circuit litigation is pending,” said U.S. Attorney Damon P. Martinez, in a June 30 statement. “I therefore have advised the Pueblo and the State that I will exercise my discretion not to bring an enforcement action against the Pueblo during the pendency of the appeal so long as the Pueblo continues to operate its gaming facilities in accord with the terms of its expiring compact to the extent feasible.”

Meanwhile, 13 other New Mexico tribes have signed on to New Mexico’s terms, 10 percent tax and all. Derrick Watchman, CEO of the Navajo Nation Gaming Enterprise, said the Navajo Nation signed on because the 2015 provisions “allow the Navajo Nation to continue to grow its gaming business and continue to provide jobs in the New Mexico portion of the Navajo Nation. This is all in line with the Nation exercising its sovereignty."

But Talachy points out that every tribe is different; what works for the Navajo Nation doesn’t automatically fit a rural Pueblo with 1,200 members. And for him, sovereignty means negotiating a fair deal for his people. “If the state wins,” he says, “it sets a precedent for any state in the country to bully a tribe into a compact that isn’t fair.”

The State doesn’t appear to be stopping at a legal battle. Talachy says the state has already put his vendors on notice that they’ll suffer consequences if they continue to deal with the Pueblo.

Lonergan made the state’s position clear: “the U.S. Attorney’s decision provides no protection to banks, credit card vendors, gaming machine vendors, advertisers, bondholders, and others that are now doing business with an illegal gambling enterprise,” he said.

Talachy is unfazed. “Attack our vendors. Attack our employees. Hell, you can put me in jail,” he said. “But I’m not going to give in to your bullying.”