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Santee Beat Government Freeze

OMAHA, Neb. ? The Santee Sioux Tribe of Nebraska can finally legally operate their casino and beyond that look to the future for economic development, thanks to a victory in federal court.

U.S. District Judge Joseph Bataillon overruled the state of Nebraska and declared that gaming devices the tribe had installed fell in the Class II category of the Indian Gaming Regulatory Act (IGRA).

"We feel a sense of freedom for the first time in six years. The government put sanctions on us just like any country they are at war with," said Thelma Thomas, vice chairwoman of the tribal council.

The federal government put sanctions on the tribe because of the operation of the Ohiya Casino, considered a Class III gaming operation at the time. Today the Santee have incorporated Class II gaming devices. The state, however, argued in court that the devices were not Class II, but Class III, requiring a state compact. The judge agreed with the tribe, however.

The battle between the Santee and the federal and state governments has lasted for five years, costing millions of dollars in lost potential economic development and frozen tribal bank accounts. It also caused an incalculable loss of confidence from a business investment community that could have assisted in development of an economic base.

"It's called terrorism, what they are doing to us," Thomas said. She said the tribe has met six times with the U.S. government in an attempt to have the sanctions removed. Another meeting was held last week with the U.S. Attorney Mike Heavican, but the results are not yet known.

The government has levied liens against non-trust land held by the tribe on the Santee Reservation and given no assurance that bank accounts won't be seized again. Thomas said that federal grants, such as the COPS grant, were also withheld. The liens and sanctions were imposed in attempts to collect federal court fines, now exceeding $4 million, for failure to close the Ohiya Casino.

The justice department seized the tribal bank accounts three months after the tribe opened a Class III gaming enterprise without a state compact and against the orders of the National Indian Gaming Commission.

The small casino, located on the northeastern Nebraska reservation town of Santee was located in a small converted caf? that had closed nearly six years earlier. The Santee wanted to employ tribal members and improve economic conditions on the impoverished reservation.

"This goes beyond the Santee. It was a welcome victory for all tribes that want to go into Class II gaming," said Conley Schulte, attorney for the Santee.

Schulte said it was now possible for businesses to consider investing on the Santee reservation without fear of having their assets seized by the federal justice department.

The only other employment at the time was a pharmaceutical company that closed. The building was then used as a box factory.

The Ohiya casino employed 38 people, many who were taken off the welfare rolls. The U.S. Attorney ordered the casino closed, but the tenacious Santee held their ground. With the support of the tribal members, the tribal council faced down a threat of imprisonment.

In June of 2001 the Santee changed the gaming machines to Lucky Tab 2 machines, which were given approval by the NIGC as Class II machines. Class II gambling is legal in Nebraska, but the Las Vegas style or Class III gaming is not.

Judge Bataillon sided with the Santee and ruled the new machines to be Class II. In addition he suspended the $6,000 per day fines imposed by the federal courts retroactive to May when the new machines went online.

"We were just overjoyed," said Thomas.

"We want to get on with doing business and employing our people and serving the people up here in northeast Nebraska."

People in the surrounding communities and counties have consistently supported the Ohiya Casino. Business people in nearby Niobrara said the motels and cafes saw an increase in business while the casino was open.

But there is a downside. The Class II machines determine a winner by reading a pull-tab. They don't have the excitement of a video lottery machine or full-scale slot machine.

During equivalent May to September periods, revenues dropped from $360,000 with Class III machines to around $80,000 with the pull-tab machines.

The state continued to argue that the pull-tab machines, which are similar to the type used to dispense the state's Pickle cards, were in fact, Class III machines. The difference, the state argued, was that the Ohiya Casino machines offered sound and visual aspects where the pickle machines were silent.

"We showed the judge that the Santee met with the agreement made with the NIGC. Monty Deer (NIGC Chairman) told the Santee to put in the Pull Tab 2 machines, which they did. The Santee were encouraged to do what they were told," Schulte said.

Schulte said they called in experts to testify that the machines were nothing like Class III type gaming devices, "and the judge agreed."

"This may be the domino effect, the barriers will start to fall for the Santee Sioux Tribe. We hope justice will back off and stop the fines so the tribe can employ some people.

"The tribe can't use the bank until this gets resolved. The government shut down the tribe completely," Schulte said. The Justice department even seized the monies made by tribal members in bake sales and other fundraisers when the funds were put in the bank accounts.

When the bank accounts were first frozen, payroll checks to tribal employees were late, but many continued to work, mostly on a volunteer basis for a short time. Later, tribal members were afraid to cash their checks at any of the banks for fear the justice department would seize those funds.

The revenues provided by the federal government for programs were not affected by the seizures.

The Santee want the Justice Department wipe out all claims on the fines that have accrued over the past five years, more than $4 million, but Judge Bataillon's ruling does not affect fines prior to May 15, 2001.

As of press time the U.S. Attorney had not made the decision whether he would appeal the ruling. Prior to the trial he said if the ruling was not favorable to the government it would be appealed all the way to the Supreme Court.

Schulte said he hoped the government would give up trying to collect the fines that were imposed since 1999. Then U.S. Judge William Cambridge imposed a $3,000 a day fine on the Santee, later increased to $6,000 per day, for not complying with Nebraska law, which prohibits Class III gaming.

The Santee and the state and other tribes in the state have been at odds over compact negotiations for years. The small Santee Tribe took the issue to the limit and accused the state of not negotiating the compacts in good faith and filed a lawsuit in federal court to prove their point.

At each step of the way the Santee lost in court and the NIGC under former Chairman Harold Monteau ordered the Ohiya Casino closed. Monteau now works for the tribe's legal firm Monteau, Peebles, Evans and Crowle.

Schulte said if the government stepped back from collecting the fines the Santee "could initiate a tribal economy."

The battle to move into Class III gaming is not over for the Santee. Two efforts in the state legislature to approve a referendum vote of the people were stopped in committee.

Thomas said the tribe is still pursuing that option. It is also beginning a massive state-wide petition campaign to change the provision in the state's constitution that prohibits Class III gaming.

"It's an uphill battle for this tribe. The culture and prayers of our people have gotten us through.

"I would like the federal government to provide aid so we can rebuild our economy, the one they helped destroy," Thomas said.

If states refuse to negotiate gaming compacts "in good faith", the Secretary of Interior has the power under IGRA to impose a compact on the two parties.

The Santee went through the motions of submitting their version of a compact to then Interior Secretary Bruce Babbitt. But the exercise was stymied by a federal Court of Appeals decision in a separate Florida lawsuit that prevented the Secretary from intervening in the compact decisions. The case is still pending.

"The Santee filed suit against the government a month ago demanding the Secretary take action on the secretarial rule. There has been no action taken for two years. (Interior Secretary Gale) Norton is on trial now for not taking action (in the Trust Funds case), this may keep her in court for not taking action in this case," Schulte said.

A coalition of gaming tribes from Oklahoma and California are rallying to support the Santee. There is a special holiday project underway.