Supreme Court Decision May Make it Easier to Challenge IRA Land-Into-Trust Acquisitions

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On Monday, June 18, 2012, the U.S. Supreme Court issued its decision in Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 567 U.S. ___ (2012), which could dramatically impact the tribal land-into-trust acquisition process nationwide. In an 8-1 decision, the Supreme Court held that an owner of real property (Patchak) near the Gun Lake Casino in Michigan had standing to challenge the Secretary of the Interior’s acquisition of land into trust on behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians (Band). The Supreme Court concluded that the government had waived sovereign immunity and that Patchak had prudential standing to challenge the Secretary’s acquisition of the land. The Supreme Court reasoned that Patchak was not claiming any competing interest in the Gun Lake land, so the claim was not barred by the Quiet Title Act (QTA), and that he had asserted an interest “arguably within the zone of interests” protected or regulated under the Administrative Procedure Act (APA). The Supreme Court remanded the case to be tried on the merits.

In 2009, the Secretary of the Interior took land in Wayland Township, Michigan, into trust for the Band, which the Band intended to use for gaming purposes. Patchak brought a claim under the APA, which allows a plaintiff, under certain circumstances, to claim a federal agency or employee violated a law. Here, Patchak’s APA claim was that the Secretary violated § 465 of the Indian Reorganization Act (IRA).

Patchak challenged that acquisition on the basis that the Secretary exceeded her authority under the APA. Specifically, because the Band was not a federally recognized tribe as of 1934 (when the IRA was enacted), according to Patchak, the Secretary was not permitted to acquire the Gun Lake Casino land in trust for the Band. To support his standing to sue, Patchak claimed the Gun Lake Casino would increase traffic and crime and irreversibly change the area’s rural quality. He requested the government be divested of title to the land. (Notably, during this litigation, the Band proceeded with the casino’s development; it has been operating a casino there since 2011.) The District Court dismissed Patchak’s claim on the basis he lacked standing, and, on appeal, the D.C. Circuit reversed that decision. The Supreme Court granted certiorari to review both courts’ decisions.

Ultimately, the Supreme Court sided with Patchak, opening the door for him to challenge the government’s ownership. Patchak brought his claim under the APA, but the government countered that under the APA, Patchak could not bring his claim if the remedy he sought (here, divestiture of title) would otherwise be barred under another statute. The QTA, which bars quiet title actions against the United States related to Indian lands, according to the government, was such a statute.

The Supreme Court rejected the government’s QTA argument because Patchak was not claiming a right, title or interest in the land; he was instead seeking a declaration that the government was not entitled to any such right, title or interest in that land. Writing for the majority, Justice Elena Kagan said that particular claim was not a quiet title claim at all. In doing away with the government’s quiet title argument, the Supreme Court next needed only to consider whether the government was subject to a lawsuit under the APA. To bring an APA claim, a plaintiff must show both standing under Article III and prudential standing, which is where the plaintiff’s interests are “arguably within the zone of interests to be protected or regulated by the statute” the plaintiff claimed was violated. The government argued that Patchak lacked standing because § 465 of the IRA focuses only on the act of land acquisition, rather than use of the land once it is acquired, but the Supreme Court disagreed.

According to the Supreme Court, the “capstone” of the IRA is § 465, which permits the United States to acquire land for a tribe and the purpose of that statute is to rehabilitate tribal economic life. The Supreme Court reasoned that although the IRA does not speak to land use, the Secretary “takes title to properties with at least one eye directed toward how tribes will use those lands to support economic development.” It follows, therefore, that “decisions under [§ 465] are closely enough and often enough intertwined with considerations of land use” that the differences between “land acquisition” and “land use” were immaterial. Accordingly, Patchak had sufficient prudential standing to pursue his claim.

The lone dissenter, Justice Sonia Sotomayor, believes this ruling ironically will permit persons with tenuous connections to Indian lands to challenge the government’s acquisition of those lands, whereas persons who actually may have “right, title or interest” in those Indian lands are barred from bringing such claims. This, according to Justice Sotomayor, runs afoul of the QTA’s purpose, which was drafted intentionally to quell certain challenges to government property ownership. Moreover, and perhaps most importantly, it will frustrate the government’s ability to expeditiously take land into trust for tribes and virtually does away with the IRA’s expedited 30-day statute of limitations for judicial review. Instead, the government’s land-into-trust decisions may now be subjected to the APA’s six-year statute of limitations, which could have a chilling effect on tribal development. The majority acknowledged her argument was “not without force,” but expressly left that to be worked out by Congress.

The Supreme Court did not decide this case on the merits, so it remains to be seen whether the Government will actually be divested of the Gun Lake land. Nor did the Supreme Court rule on the Carcieri implications – leaving that open for further debate. Litigation on the merits of this case will likely take years, making it less likely that the casino will be shut down. But the Supreme Court’s decision has a much wider impact than on just the Gun Lake Casino. The ruling could lead to other challenges of tribal land acquisitions, which, in turn could inhibit would-be investors who might otherwise lend to tribes or invest in gaming projects and increase the likelihood that anti-gaming groups will oppose land-into-trust acquisitions (particularly since the new six-year window will give such interests more time to raise necessary support and capital), all of which could impact proposed casino development or other economic development on tribal lands.

Published In: Administrative Agency Updates, Civil Procedure Updates, Indigenous Peoples Updates, Mergers & Acquisitions Updates, Commercial Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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