If Maine voters approve the Tribal Gaming Act by citizen initiative, what would the casino look like, who would regulate it, and could the Legislature change it later?

Plain-English summary

Public Safety Commissioner Michael Cantara, writing on behalf of several executive agencies, asked the AG to analyze the proposed Maine Tribal Gaming Act. The bill was a citizen initiative on track for the November 2003 ballot. If passed and ratified by the Passamaquoddy Tribe and the Penobscot Nation, the Act would have created a new Subchapter II in Title 30 M.R.S.A. Chapter 601, alongside the existing Maine Implementing Act for the Indian Land Claims Settlement.

AG Steven Rowe answered eight questions, but said up front he could not opine with certainty on most of them. The bill went straight from drafters to the ballot without the usual legislative refinement process. There were no committee reports, no amendments, no negotiation history with the Tribes or executive agencies, the things courts and lawyers normally rely on to construe a complex statute.

The bill's most significant feature was an attempted 20-year lock: the Tribes' consent would be required to amend or repeal the Act for two decades. The AG explained that Maine statutes are all amendable under the Maine Constitution, so the only possible source of a binding 20-year limit was the federal Maine Indian Claims Settlement Act, 25 U.S.C. §§ 1721 to 1735. Under § 1725(e)(1), the State can amend the Maine Implementing Act for the Tribes only with their consent, and only for amendments touching specific subject areas (regulatory jurisdiction, allocation of governmental responsibility between State and tribe, or allocation of jurisdiction between courts). Some parts of the gaming bill (Tribal casino regulation) might fall within those areas. Other parts (revenue allocation) clearly do not. The AG predicted that questions about which provisions could later be amended without tribal consent would likely have to be sorted out in court. Severability would also be an issue.

The AG worked through municipal and state regulatory jurisdiction. The proposed casino site was required to be located outside Indian territory, which the AG read as keeping the Tribes' authority to enforce ordinances and certain state laws inside their existing Indian territories (defined in 30 M.R.S.A. § 6205(1) and (2)). But the bill's enumeration of which state laws applied (building, sanitary, fire, water discharges) and which state law enforcement could enter (the Maine State Police) could be read by a court as silently exempting the site from other state environmental laws, municipal ordinances, and county and municipal police authority. The AG noted competing canons of statutory construction (expressio unius cuts one way, but courts avoid illogical results) and could not predict the outcome.

On IGRA: the federal Indian Gaming Regulatory Act and the National Indian Gaming Commission do not apply in Maine. The First Circuit settled that in Passamaquoddy Tribe v. State of Maine, 75 F.3d 784 (1996). The bill nonetheless required state rulemaking and tribal standards to "substantially conform" to the Connecticut Compact, the body of federal procedures the Secretary of the Interior imposed on the Mashantucket Pequot Tribe. Importing IGRA-developed substance into Maine through a state statute, without IGRA's own enforcement machinery, raised uncertainty about what would actually be enforceable.

On taxes: the Implementing Act at 30 M.R.S.A. § 6208(3) treats the Tribes as business corporations subject to Maine corporate income tax when acting commercially. The IRS takes the same view under Rev. Rul. 94-16. The initiated bill at § 6312(2) implied (incorrectly, in the AG's view) that the Tribes were federally tax-exempt and therefore state tax-exempt as well. The bill's § 6312(3) imposed a 25% fee on video facsimile revenues "so long as no change in state law occurs to tax or exact any fee" on gaming, which could be argued (the AG thought wrongly, but argued) to mean that any income tax assessment cancels the fee.

On dedicated revenue: § 6312(4) tried to dedicate the 25% fee to property tax relief (50%), general purpose aid for local schools (40%), the Maine State Grant Program (5%), and FAME scholarship distributions (5%). Maine law is clear that one Legislature cannot bind a future Legislature's appropriation decisions. SC Testing Technology, Inc. v. Dept. of Environmental Protection, 688 A.2d 421, 425 (Me. 1996). The dedications are statutory aspiration, not binding. The Legislature could honor them as a matter of policy but is not required to.

On scope of gambling: existing Maine law makes all gambling illegal unless expressly permitted. Penobscot Nation v. Stilphen, 461 A.2d 478 (Me. 1983). The bill authorized "any and all forms of gaming and wagering" at the site, including telephone and Internet wagering forms that are currently illegal everywhere in Maine, broader than the typical IGRA-regulated state.

On cost recovery: the bill at § 6309 authorized annual assessment of the Tribes for "reasonable and necessary costs of regulating gaming operations and conducting law enforcement investigations," but only for the Department of Public Safety and State Police, with no express coverage for District Attorney offices, local police, or other state agencies. The Legislature would have discretion to allocate part of the 25% fee for those uncovered costs under § 6312(4).

The conclusion was sober. The bill raised serious legal issues across taxes, jurisdiction, enforcement, and amendment. Many of those issues would have to be resolved by the courts after enactment, with no opportunity to clean up the language before the vote.

Currency note

This opinion was issued in 2003. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

(Historical note: the Tribal Gaming Act citizen initiative was rejected by Maine voters in November 2003. A separate companion question on slot machines at commercial harness racing tracks was approved.)

Common questions

Q: What was the Maine Tribal Gaming Act trying to do?
A: Authorize the Passamaquoddy Tribe and the Penobscot Nation to operate a casino at a single site outside Indian territory, under a regulatory framework patterned on the Connecticut Compact, with revenues from a 25% fee on video facsimile gaming directed toward property tax relief and school funding.

Q: Why was the AG so cautious about giving definite answers?
A: The bill went to the ballot without legislative refinement, so there were no committee reports, no amendments, and no chance to fix ambiguities before the vote. The AG had to interpret unfamiliar statutory language by itself, against the backdrop of the federal Settlement Act and the existing Maine Implementing Act, with no judicial guidance.

Q: Could the Tribes really lock the Act against amendment for 20 years?
A: Uncertain. State statutes are always amendable under the Maine Constitution. The only possible source of a binding limit was the federal Maine Indian Claims Settlement Act, which restricts State amendments to the Implementing Act on specific subjects to those approved by the affected Tribe. The AG thought some parts of the gaming bill might fall within those federally protected subjects, and other parts (revenue) clearly would not.

Q: Did IGRA apply?
A: No. The First Circuit held in Passamaquoddy Tribe v. State of Maine, 75 F.3d 784 (1996), that IGRA does not apply in Maine. The bill nonetheless required state rules and tribal standards to substantially track the Connecticut Compact (an IGRA-derived document), without IGRA's enforcement machinery.

Q: Were the Tribes really tax-exempt under the bill?
A: The bill's language hinted yes; the AG said no. The Implementing Act at § 6208(3) treats the Tribes as Maine corporations when conducting commercial activity and makes them subject to state corporate income tax. The IRS treats commercial activity income as federally taxable. Anything in the bill suggesting otherwise was, in the AG's view, contrary to existing law.

Q: Were the dedicated revenue provisions binding?
A: No. One Legislature cannot bind a future Legislature's appropriation decisions. The Legislature could choose to spend the fee revenue on property tax relief and school funding as a policy matter, but the dedication itself was unenforceable.

Q: Could municipalities regulate the casino?
A: Probably, but with uncertainty. The bill did not expressly preempt local ordinances, and Maine's home-rule preemption test is strict. But the bill's selective listing of which state laws applied could be read by a court as implying that unenumerated laws (including local ordinances) did not.

Background and statutory framework

The federal Maine Indian Claims Settlement Act, 25 U.S.C. §§ 1721 to 1735, resolved the land claims and jurisdictional disputes of the Passamaquoddy Tribe and the Penobscot Nation against the State of Maine. The federal Act approved the Maine Implementing Act, 30 M.R.S.A. §§ 6201 to 6214, which sets the jurisdictional relationship between the Tribes and the State. Under § 1725(e)(1) of the federal Act, the State may amend the Implementing Act on specified subject areas only with the affected Tribe's consent.

The initiated bill would have created a new Subchapter II of Chapter 601 of Title 30, alongside the Implementing Act (which would have been redesignated Subchapter I). The bill required Tribal ratification after voter approval. If only one Tribe ratified, the Act would have been effective only for that Tribe, which would have created internal inconsistencies because the "tribal gaming agency" and "tribal gaming operator" were defined as joint entities.

The Maine Implementing Act gives the Tribes municipal-level powers within their respective Indian territories under § 6206(1), with criminal and civil enforcement authority over their own ordinances and certain state laws also confined to those territories. The proposed casino site under the initiated bill had to be located outside Indian territory under proposed §§ 6302(18) and 6303(5), so existing Tribal authority over the casino site would have been limited.

IGRA, 25 U.S.C. §§ 2701 to 2721, governs gaming on Indian lands elsewhere in the United States. The National Indian Gaming Commission enforces IGRA, with authority to fine up to $25,000 per violation and to close establishments for substantial violations. The First Circuit held in Passamaquoddy Tribe v. State of Maine that IGRA does not apply in Maine because the Maine Indian Claims Settlement Act predated IGRA and established the controlling jurisdictional regime.

Maine constitutional law restricts the dedication of revenues. Only constitutional amendments (like the gas tax dedication and the Inland Fisheries fee dedication) can bind future Legislatures' appropriation decisions. SC Testing Technology, Inc. v. Dept. of Environmental Protection, 688 A.2d 421 (Me. 1996); Opinion of the Justices, 673 A.2d 693 (Me. 1996).

Citations

• 25 U.S.C. §§ 1721-1735 (Maine Indian Claims Settlement Act)
• 25 U.S.C. § 1725(e)(1) (State amendment authority with Tribal consent)
• 25 U.S.C. §§ 2701-2721 (Indian Gaming Regulatory Act)
• 25 U.S.C. § 2713 (NIGC fines and closures)
• 30 M.R.S.A. §§ 6201-6214 (Maine Implementing Act)
• 30 M.R.S.A. § 6208(3) (Tribes as business corporations for tax purposes)
• Passamaquoddy Tribe v. State of Maine, 75 F.3d 784 (1st Cir. 1996) (IGRA does not apply in Maine)
• Penobscot Nation v. Stilphen, 461 A.2d 478 (Me. 1983) (all gambling illegal unless permitted)
• SC Testing Technology, Inc. v. Dept. of Envtl. Prot., 688 A.2d 421 (Me. 1996) (one Legislature cannot bind future Legislatures)
• Opinion of the Justices, 673 A.2d 693 (Me. 1996)
• IRS Rev. Rul. 94-16, 1994-1 C.B. 19 (tribal commercial corporations subject to federal income tax)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/2003/ag_20031016.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

G. STEVEN ROWE
ATTORNEY GENERAL

STATE OF MAINE
OFFICE OF THE ATTORNEY GENERAL
6 STATE HOUSE STATION
AUGUSTA, MAINE 04333-0006

03-7

October 16, 2003

Michael P. Cantara, Commissioner
Department of Public Safety
State House Station #42
Augusta, ME 04333

RE: Your Request for Legal Analysis of the Proposed Maine Tribal Gaming Act

Dear Commissioner Cantara:

You have requested an opinion concerning certain legal aspects of the proposed Maine Tribal Gaming Act, should this citizen initiative be approved by the Maine voters and ratified by the Passamaquoddy Tribe and Penobscot Nation (hereafter "the Tribes"). The initiated bill would establish the Maine Tribal Gaming Act (hereafter "the initiated bill") as a new Subchapter II in Title 30 M.R.S.A. Chapter 601. It is our understanding that you have raised the questions in your correspondence of September 5, 2003 and September 9, 2003 on behalf of various interested executive agencies, as well as your own department.

At the outset, it must be emphasized that it is not possible for this Office to opine with certainty on all of the issues you have raised. In large part, this is due to the lack of clarity of various provisions of the initiated bill. In the usual legislative process, the language of the bill would have been refined with input from state agencies, legislators and their staff, and other interested persons. Historically, the Legislature, the Executive, the Courts, as well as this Office, have been and continue to be highly respectful of the initiative process. Nonetheless, the absence of an opportunity to clarify intent before the people vote is significant in the case of a complex and detailed bill like the one before us. As a practical matter, we do not have available to us tools such as legislative debate, committee reports, and amendments to facilitate our efforts to construe the language of the initiated bill. Our analysis is based on the language of the initiated bill itself, accepted legal principles of interpretation, and an assessment of how the bill would fit into the larger body of existing Maine law.

The most significant issue raised by the initiated bill is the attempt to bar the Legislature, as well as the people of the State acting through the initiative process, from amending it for a period of twenty years unless the consent of the Tribes is obtained. The purported immutability of the initiated bill raises serious constitutional concerns, but their ultimate resolution is difficult to predict because of the complex relationship between the Tribes and the State under a combination of state and federal law provisions. This issue underlies all of your questions, and limits our ability to predict their answers with certainty. Further, the potential that a court could ultimately determine that the State is barred from amending any given provision of the bill raises the stakes on issues of statutory construction. In the past, the crafting of any legislation touching upon the State's relationship with the Tribes has been the subject of negotiation and substantial scrutiny. Such a process did not occur here. Moreover, to the extent there are ambiguities and internal inconsistencies in the initiated bill, the bill provides that its provisions "must be liberally construed in favor of gaming by and on behalf of the Tribes." Proposed § 6314.

Because the interpretive issues you raise are both affected and made more complex by the interaction between the initiated bill and existing state and federal law governing settlement of the Tribes' land claims against the State, we first address your question #3, which requires a review of that relationship.

Future Amendments and the Liberal Construction Requirement

3. You asked, "My read is that the Act may not be changed or amended without the consent of the Tribes during its 20 year life, and must be liberally construed in favor of gambling and the Tribes. Is this your analysis?"

Summary response: The initiated bill may be viewed as an amendment to the Implementing Act, but the extent to which the twenty-year limitation on legislative change is binding depends on the applicability of the federal Settlement Act. The initiated bill mandates that it be liberally construed in favor of gaming by and on behalf of the Tribes.

The first part of this question presents a particularly complex issue involving nuances of federalism. The initiated bill grants the Tribes the authority to conduct gaming for twenty years, and it may be construed as prohibiting the Maine people, by further initiative or through their duly elected Legislature, from repealing, amending or otherwise changing the new law that would be created by the initiated bill for twenty years unless the Tribes agree. Such a result would be analogous to a binding treaty that cannot be altered without approval by both parties.

To the extent there is authority for such an unalterable statute, it arises not out of Maine's Constitution, as all statutes may be amended; indeed, even state constitutional provisions can be amended, though with greater difficulty. Rather, the possible authority for this binding "law" arises out of the federal Maine Indian Claims Settlement Act, 25 U.S.C. §§ 1721-1735 (the "Settlement Act"), which resolved the land claims and jurisdictional disputes between the Maine Tribes and the State. The Maine Implementing Act (30 M.R.S.A. §§ 6201-6214) established the jurisdictional relationship between the Tribes and the State, and the federal Settlement Act approved that arrangement. In addition, the federal Act authorized the State "to amend the Maine . . . Act with respect to either the Passamaquoddy Tribe or the Penobscot Nation" provided that any such amendment is consented to by the affected Tribe and the amendment relates to:

(A) the enforcement or application of civil, criminal, or regulatory laws of the Passamaquoddy Tribe, the Penobscot Nation and the State within their respective jurisdictions; (B) the allocation or determination of governmental responsibility of the State and the tribe or nation over specified subject matters or specified geographical areas, or both, including provision for concurrent jurisdiction between the State and the tribe or nation; or (C) the allocation of jurisdiction between tribal courts and State courts.

25 U.S.C. § 1725(e)(1). For the purposes of determining whether the twenty-year "no amendment" restriction applies, the question, then, is whether all or some portions of the initiated bill fall within these three defined subject areas.

Assuming the initiative process is a valid means to amend the Maine Implementing Act, there are portions of the initiated bill, regarding regulation of the proposed Tribal casino that arguably could fall within (A) or (B), above. There are other aspects of the initiated bill, however, such as allocation of revenue, which appear to have nothing to do with the jurisdictional relationship between the Tribes and the State contemplated by § 1725(e)(1). Moreover, there are aspects of the initiated bill that could be put into existing law without amending the Implementing Act. It may turn out that the State can later amend at least portions of the initiated bill, but that may have to be determined by subsequent court action.

Regarding the second part of your question, the initiated bill mandates that it "must be liberally construed in favor of gaming by and on behalf of the Tribes." Proposed § 6314. If there are ambiguities, the interpretation that favors Tribal gaming interests is likely to prevail. However, the canons of statutory construction also direct the courts to avoid illogical results, and interpret the language of the initiated bill in the context of the larger body of the Implementing Act and other relevant Maine laws.

Municipal Jurisdiction and Application of State Regulatory Standards

1. You asked, "Does the Tribal Gaming Act effectively expand tribal jurisdiction to non-Indian land, supplanting local municipal jurisdiction over the site of any casino?"

2. You asked, "Although the Maine Indian Land Claims Settlement Act makes the Tribes subject to all laws of the State, the initiated bill appears to cut back the State's jurisdiction by referring to only state criminal jurisdiction and certain limited health and safety codes. Notably excluded from the 'application of state regulatory standards' are any state environmental permitting standards and required permits under the Site Location of Development Act and the Natural Resources Protection Act. Would this restrict the State's ability to enforce other types of violations? (Environmental, for example)."

Summary response: The initiated bill does not expand existing tribal jurisdiction beyond Indian territory. However, the language of the bill is somewhat unclear on issues such as the extent of municipal jurisdiction, the authority of local law enforcement, and the applicability of state regulatory and civil enforcement laws not explicitly referenced.

Because your questions concerning the impact of the initiated measure on existing municipal jurisdiction and state regulatory authority overlap, we address them together.

The Implementing Act, in 30 M.R.S.A. § 6206(1), gives the Tribes the powers and duties of municipalities under state law "within their respective Indian territories." "Indian territory" is specifically and separately defined for both the Passamaquoddy Tribe and the Penobscot Nation in § 6205(1) & (2). The Tribes' authority to enforce their own ordinances and certain specified state laws is limited to their respective Indian territories. See 30 M.R.S.A. §§ 6206, 6207, 6209-A, 6209-B, and 6210. The initiated bill specifies that the gaming facility may not be located on any land over which the Tribes exercise jurisdiction. Proposed §§ 6302(18), 6303(5). Thus, it appears that the Tribes' authority under the Implementing Act to adopt ordinances and to enforce those ordinances and certain state laws will not extend to a casino located outside of Indian territories.

Although the initiated bill does not explicitly provide any exemption for the proposed casino from existing State or local laws, other than those that prohibit gambling, it does contain several provisions that generate questions about the applicability of existing state and local laws. Your question leads us to proposed § 6311(1), which provides, in pertinent part, "Each gaming facility is subject to the laws and regulations of the State relating to public facilities with regard to building, sanitary and health standards and fire safety and to the laws and rules of the State relating to water discharges by public facilities." This language raises several issues.

Municipal jurisdiction. The term "State" is defined in proposed § 6302(19) to mean "the State of Maine and its authorized officials, agents and representatives." In contrast, the definition of "laws of the State" found in the language of the Implementing Act is "Constitution and all statutes, rules or regulations and the common law of the State and its political subdivisions, and subsequent amendments thereto or judicial interpretations thereof." 30 M.R.S.A. § 6203(4) (emphasis supplied). The omission of any reference to political subdivisions in § 6302(19) and § 6311(1) could be read as an indirect way of exempting the casino site from municipal ordinances.

State laws not enumerated. Proposed § 6311(1) provides that the gaming facilities would be subject to the laws, regulations and rules of the "State" regarding "building, sanitary and health standards," "fire safety," and "water discharges by public facilities." It does not reference any other state environmental laws that are generally applicable to such developments, nor any local ordinances. As a matter of statutory construction, the specific inclusion of certain items without referencing others suggests that the items not listed are not applicable. Westcott v. Allstate Insurance, 397 A.2d 156, 169 (Me. 1979). This principle could be invoked to exclude laws not referenced in § 6311(1). Another canon of statutory construction directs courts to construe all statutory provisions to have meaning and to avoid interpreting language as mere surplusage wherever possible. Home Builders Ass'n v. Town of Eliot, 2000 ME 82, ¶¶ 7-8, 750 A.2d 566, 570. The required location of the casino outside Indian territory suggests that all generally applicable laws would apply. If that is the intent, however, then there would be no need to include the language § 6311(1) in the initiated bill, and its provisions therefore become mere surplusage.

In interpreting the language of the initiated bill, we are mindful that courts will avoid results that are "inconsistent, unreasonable or illogical." Town of Eagle Lake v. Comm'r, Dept. of Education, 2003 ME 37 ¶ 7, 818 A.2d 1034, 1037 (citations omitted); see also Interstate Food Processing Corp. v. Town of Fort Fairfield, 1997 ME 193 ¶ 4, 698 A.2d 1074, 1075-76. A court may reject an assertion that the casino site, which has no special status as tribal land or a federal enclave, is shielded from laws of general applicability, such as municipal ordinances, that are not explicitly identified or made inapplicable. See Whorff v. Johnson, 143 Me. 198, 206, 58 A.2d 553 (1948) (rejecting maxim "expressio unius est exclusio alterius" to avoid "unreasonable, inconsistent, and unjust" result).

Similar issues arise as to proposed § 6304, which in subsection (1) provides that the "State has jurisdiction to enforce all criminal laws of the State that are consistent with this subchapter on the site, including enforcement within the gaming facilities." The specific grant of authority regarding criminal offenses implies that the casino site may be exempt from civil laws normally within the purview of law enforcement officers. As with proposed § 6311(1), the question of municipal enforcement arises from the various definitions of "State," and it takes yet another twist here as the result of language in proposed § 6304(2), which governs access to the gaming facilities for law enforcement purposes.

Officers of the state law enforcement agency [defined in proposed § 6302(21) as the Maine State Police] must be accorded free access to any gaming facilities for the purpose of maintaining public order and public safety and enforcing applicable criminal laws of the State as permitted under this section; and personnel employed by the tribal gaming operator shall for such purposes provide officers of the state law enforcement agency access to locked and secure areas of the gaming facilities in accordance with the standards of management and operation adopted pursuant to section 6307.

Proposed § 6304(2) (emphasis supplied). On its face, the initiated bill grants enforcement authority and access only to the Maine State Police. Access is explicitly provided for with respect to the gaming facilities pursuant to standards that will track those in effect in Connecticut, and only for the purposes of enforcing criminal laws and maintaining public order and safety, presumably on the entire site. For example, the law enforcement authority identified for the Maine State Police may be interpreted as an acknowledgement rather than a grant of authority that is not otherwise intended to limit the existing authority of municipal and county law enforcement officers to enforce the civil and criminal laws. However, the language leaves open the question of whether municipal law enforcement officers, who would otherwise have jurisdiction and authority to enforce criminal and civil violations of the law, would have the authority to respond to and enforce the laws of the State with respect to either the gaming facilities or the larger site.

There is some degree of uncertainty about whether a court, in applying the rules of statutory construction, might conclude that the initiated bill precludes application of state laws that it does not explicitly reference. The Legislature may lack the authority to amend the bill, if enacted by the voters, to eliminate these uncertainties, absent consent of the Tribes. However, we think a court would hesitate before reaching the conclusion that an implication drawn from an incomplete list of state laws is a sufficient legal basis to set aside the jurisdictional agreement that is the foundation of Maine's Implementing Act.

The Federal Indian Gaming Regulatory Act and the Connecticut Compact

2. You asked, "Is it accurate that because the Connecticut Compact was negotiated under the federal Indian Gaming Regulatory Act, it provides for regulatory oversight and enforcement by the National Indian Gaming Commission, as well as the State? Does/would the commission have the power to fine and close a casino? Here, because the Indian Gaming Regulatory Act does not seem to apply, there is not federal oversight nor any power to close a casino, even temporarily, should there be problems. Do you see it that way? Are Maine's hands tied in this regard?"

Summary response: The National Indian Gaming Commission would have no authority to regulate a tribal casino in Maine. The initiated bill requires certain state rulemaking to conform to the Connecticut Compact, which was established under federal laws that do not apply in Maine, namely IGRA and the substantial body of rules adopted under IGRA.

The federal Indian Gaming Regulatory Act (hereafter "IGRA") establishes requirements applicable to gaming on Indian lands that are enforced by the National Indian Gaming Commission (hereafter "the Commission"). 25 U.S.C. §§ 2701-2721. The Commission has adopted a body of rules that further detail the substantive requirements and regulatory authority established by IGRA. The Chairman of the Commission has the authority to levy and collect fines of up to $25,000 per violation of IGRA, rules adopted under IGRA, or certain IGRA-required tribal ordinances or resolutions governing gaming, for which opportunity for a hearing before the Commission is provided. The Chairman may temporarily suspend activities at a gaming establishment for substantial violations, and the Commission has the authority to make such a suspension permanent. 25 U.S.C. § 2713.

It is settled law that IGRA does not apply in Maine. Passamaquoddy Tribe v. State of Maine, 75 F.3d 784 (1st Cir. 1996). Accordingly, the regulatory oversight provided by the Commission under IGRA will not apply. The terms of the initiated bill do provide for fines to be imposed against the tribal gaming operator or any gaming services enterprise for violations of the bill or rules adopted thereunder (proposed § 6310), but do not contain provisions like those in IGRA described above authorizing the closure of a gaming facility. The fines authorized by the initiated bill are civil penalties, available only for violations of the statute or standards of operation. There is no provision for criminal enforcement of any part of the proposed subchapter. While the Department of Public Safety may employ "subpoena powers with which it may be vested under the laws of the State" to investigate violations of the Tribal Gaming Act by the tribal gaming operator (proposed § 6310(2)), we are not aware of investigatory subpoena powers available under current law to the Department for this purpose.

Although IGRA does not apply within Maine and the National Indian Gaming Commission would have no jurisdiction or authority with respect to the proposed casino, the regulation of the casino would be governed to a large extent by the terms of the "Connecticut Compact." This compact is in fact not a negotiated agreement, but a body of federal procedures prescribed by the Secretary of the Interior pursuant to IGRA after the State of Connecticut refused to negotiate a compact. Mashantucket Pequot Tribe v. State of Connecticut, 737 F. Supp. 169 (D. Conn.), aff'd 913 F.2d 1024 (2d Cir. 1990), cert. denied, 499 U.S. 975 (1991); 56 Fed. Reg. 24996, May 31, 1991 (Notice of Final Mashantucket Pequot Gaming Procedures). The Connecticut Compact defines the relationship between the State of Connecticut and the Mashantucket Pequot Tribe with respect to that Tribe's casino operations in Connecticut, and governs the details of the casino operation. Under the initiated bill, the Connecticut Compact would define aspects of the relationship between the State of Maine and the Tribes operating the Maine casino, the Department of Public Safety's regulatory and enforcement authority.

The vehicles carrying the Connecticut Compact into Maine law would be the Tribes' standards of operation and management and the Department of Public Safety's rules. The initiated bill gives the "tribal gaming agency" the authority to adopt "standards of operation and management to govern all gaming operations by the tribal gaming operator." Proposed § 6307. The initial standards "must be substantially identical to those currently in effect pursuant to the Connecticut Compact." Id. Although "subject to the approval of" the Department of Public Safety, there may be no basis for the Department to disapprove the standards if they are consistent with the Connecticut Compact.

The initiated bill gives the Department of Public Safety certain rule-making authority. In all instances of Department of Public Safety rule-making, the rules must be "substantially in the form and substance of the corresponding provisions of the Connecticut Compact." The Department has the authority to propose rules regarding the licensing of "gaming employees" and the registration of gaming services enterprises. The Department of Public Safety also has the authority to adopt rules regarding the operation of the gaming facility that the tribes fail to adopt as their standards of operation and management, but only to the extent that these areas are covered by the Connecticut Compact. The rules are major substantive rules, but the Legislature may have no authority to amend or reject those rules for reasons other than lack of conformity to the Connecticut Compact. Proposed § 6308.

Tax and Liability Issues

4. You asked, "Although the Maine Indian Land Claims Settlement Act provides that the Tribes are to be treated as a corporation organized under the laws of the State when carrying out commercial enterprises, which makes them fully subject to federal and State corporate income taxation and the liabilities associated with any commercial operation, it appears that the Act seeks (i) to exempt the casino operation from corporate income taxes (or to provide a credit that might be used to offset all Tribal income regardless of its source); and (ii) to limit the Tribes' liability for casino operations. Is this an accurate read of the Act, in your view?"

Summary response: The language regarding the tax status of the Tribes and the tribal gaming operator is ambiguous as a result of apparent misstatements of existing law and internal inconsistencies. The initiated bill does include language that, on its face, seeks to limit the liability of the Tribes for acts or omissions of the tribal gaming operator.

Before discussing certain tax issues raised by the initiated bill, we believe it would be helpful to review our understanding of some underlying income tax principles. The Implementing Act provides that either the Passamaquoddy Tribe or the Penobscot Nation "when acting in its business capacity as distinguished from its governmental capacity, shall be deemed to be a business corporation organized under the laws of the State and shall be taxed as such." 30 M.R.S.A. § 6208(3). The legislative history of the Implementing Act suggests strongly that, regardless of whether the Tribes are subject to federal income tax, they are nonetheless subject to Maine income tax on income resulting from any business activity.

On the federal level, it is the view of the Internal Revenue Service, as set forth in a 1994 Revenue Ruling, that "a corporation organized by an Indian tribe under state law is subject to federal income tax on the income earned in the conduct of the commercial business on and off the tribe's reservation." Rev. Rul. 94-16, 1994-1 C.B. 19. We are not aware of any federal case law that is contrary to this ruling.

Thus, the Tribes (since they would be viewed under the Implementing Act as Maine corporations organized under state law when participating in the operation of the casino) would be subject to Maine income tax on any income they earned from the gaming operations or other business activity at the site in the same way that any Maine corporation would be subject to Maine income tax on such income. See 36 M.R.S.A. §§ 5102(6) & 5200 (corporation is subject to Maine income tax on its Maine net income when it is subject to federal income tax). This is true regardless of whether the tribal gaming operator is established as a corporation or in some other form permitted by proposed § 6302(23) of the initiated bill.

The initiated bill provides that the tribal gaming operator is subject to Maine "corporation taxes in accordance with its particular form of organization." Proposed § 6312(2). That subsection also states that "[i]n accordance with section 6208 [of the Implementing Act], so long as the Tribes are exempt from the payment of federal income taxes on business corporations, they are not subject to taxation under the laws of the State applicable to business corporations." This language implies that the Tribes are not subject to federal income tax and, accordingly, are also not subject to state tax on income from commercial activity, such as income from the gaming operations or other business activity at the site. In our view, such an assumption is contrary both to IRS Revenue Ruling 94-16 and to § 6208(3) of the Implementing Act.

The assumption that the Tribes are not subject to state or federal income tax is also present in the language of proposed § 6312(3), which establishes the fee on video facsimile revenues, providing that "[s]o long as no change in state law occurs to tax or exact any fee on the gaming operations or other activities at the site except as provided in subsections 1 and 2 [of proposed § 6312], the tribal gaming operator shall pay to the State an annual fee of 25% of the gross revenues of video facsimile revenues operated by the tribal gaming operator." This language, particularly when coupled with § 6312(2), could support an argument that if income tax is assessed, as we believe is required, then such an assessment represents a "change in the law" sufficient to eliminate liability for the fee.

The ultimate tax liability of the Tribes and the tribal gaming operator is also impacted by the tax credit provision in the language of proposed § 6312(3) quoted above. If, as we believe, the Tribes and the tribal gaming operator are subject to Maine income tax on the income from the gaming operations or other business activity at the site, this portion of proposed § 6312(3) would entitle them to a credit against their Maine income tax liability in the amount of the fee paid that year by the tribal gaming operator. Such a credit would enable the Tribes or tribal gaming operator to reduce or eliminate their Maine income tax liability, which liability might include income unrelated to their gaming operations.

This initiated bill also provides that neither the Tribes nor a third party is liable for the acts or omissions of the tribal gaming operator "except as specifically provided by a contract to which such Tribe or third party is a signatory or otherwise as provided by law without regard to this subchapter." Proposed § 6302(23). There is no indication as to who the "third party" might be. Under current law, the Tribes are immune from suit only when acting in their governmental capacity. 30 M.R.S.A. § 6206(2); 25 U.S.C. § 1725(d). If the present statutory provisions are "otherwise as provided by law," it would appear that the Tribes would continue to be subject to civil and criminal liability when operating a casino, an activity which would not fall within their governmental capacity. Such an interpretation would appear to render § 6302(23) surplusage, raising uncertainties as to how this provision would be construed.

Enforceability of Dedicated Revenue Provisions

5. You asked, "Although the Act purports to dedicate certain revenues to be paid to the State for property tax relief and education, that purported dedication would seem to be wholly unenforceable because only a constitutional amendment, like the constitutional amendments establishing the gas tax or the fees dedicated to the Department of Inland Fisheries and Wildlife, can restrict spending decisions of future legislatures. Is this consistent with the Attorney General's view?"

Summary response: The proposed dedicated revenue provisions are not binding on the Maine Legislature.

This question concerns the provisions in proposed § 6312(4) of the initiated bill, which specify how proceeds from the annual fee on video facsimile revenues are to be allocated by the State. First, "costs resulting from gaming operations" conducted under the initiated bill are to be mitigated, with the remainder of the proceeds to be allocated as follows: fifty percent to supplement, not supplant, required deposits to the Local Government Fund to be used for residential property tax relief; forty percent to supplement, not supplant, the state appropriation for the program cost portion of general purpose aid to local schools; five percent to the Maine State Grant Program; and five percent to the Finance Authority of Maine to be distributed to private nonprofit organizations with a principal purpose of providing scholarships and otherwise enhancing postsecondary education of Maine students.

You correctly note that the initiated bill was not proposed as a constitutional amendment, in whole or in part, unlike the dedication of the gas tax to the Highway Fund or the fees effectively dedicated to Inland Fisheries & Wildlife. Me. Const., Art. IX, §§ 19 and 22. Article 4, Part Third, § 1 of the Maine Constitution vests in the Legislature "full power to make and establish all reasonable laws and regulations for the defense and benefit of the people of this State, not repugnant to this Constitution, nor to that of the United States." It is well established that the Legislature may not enact a law that purports to bind a future Legislature. SC Testing Technology, Inc. v. Dept. of Environmental Protection, 688 A.2d 421, 425 (Me. 1996) (citing Opinion of the Justices, 673 A.2d 693, 695 (Me. 1996)).

There is nothing in the constitutional provisions governing the process of legislation by initiative to suggest that the people may enact laws that supersede or amend the Maine Constitution. To the contrary, the people may not propose an amendment to the Constitution by initiative. Me. Const., Art. III, Pt. 3d, § 18(1). Thus, as a matter of state law, the terms of proposed § 6312(4) that purport to direct the Legislature to spend state revenues resulting from imposition of fees on the casino are unenforceable.

To the extent it may be argued that this part of the initiated bill would override these constitutional provisions by reason of its proposed placement in the Implementing Act, we disagree. While lack of certainty on this issue permeates this opinion, in this instance we cannot conceive of an argument that would support a determination that the Maine Legislature's constitutional authority to appropriate funds is properly a part of the jurisdictional relationship between the State and the Tribes.

Extent of Gambling Activities Permissible under the Act

7. You asked, "What limitations, if any, are there on the types of gambling activities that are authorized?"

Summary response: The initiated bill authorizes the tribal gaming operator to conduct all forms of gambling on the site.

In responding to your question regarding the scope of gambling activity, we first outline the current status of legalized gambling in Maine. The Maine Legislature has legalized some types of gambling activities in highly regulated formats. The Maine Law Court has reaffirmed what is clear from Maine's statutory framework, all gambling in Maine is illegal unless expressly permitted by statute. Penobscot Nation v. Stilphen, 461 A.2d 478, 482 (Me. 1983). The law specifically exempts activities conducted by non-profit organizations and licensed by the State Police such as beano, certain games of chance, and raffles from the definition of unlawful gambling. Wagering on harness racing and the State-run lottery are permitted to the extent authorized. 8 M.R.S.A. §§ 261-A through 295; 8 M.R.S.A. §§ 371-389. Telephone and Internet wagering are not expressly permitted by statute, and are thus illegal. See Op. Me. Att'y Gen. 01-02 (December 10, 2001) (telephone wagering).

In contrast, the initiated bill would allow the Tribes to engage in any and all forms of gambling, without limitation, at a single site. In the words of proposed § 6303(1), "The Tribes may jointly, through one or more tribal gaming operators, as the Tribes may elect, conduct, on one site and subject to this subchapter [the initiated bill], and notwithstanding any other provision of the laws of the State, any and all forms of gaming and wagering . . ." (emphasis provided). The list of examples set out in the bill, e.g., card games, bazaar games, lottery games and video facsimiles, is not an exclusive list.

Recoverable Costs

8. You asked, "To what extent are State & local costs resulting from casino operations recoverable?"

Summary response: State regulatory and law enforcement costs recoverable through annual assessment may be limited by the language of the initiated bill to those incurred by the Department of Public Safety and the State Police. The Legislature may set aside part of the video gaming fees in mitigation of other costs (resulting from gaming operations that are otherwise not provided for). It is unclear whether the State's initial costs of creating the required regulatory structure will be recoverable.

Proposed § 6309 authorizes the State to assess the Tribes annually for "the reasonable and necessary costs of regulating gaming operations and conducting law enforcement investigations pursuant to this subchapter." This provision may result in reimbursement only for the Department of Public Safety and the State Police, as they are the only agencies with a regulatory and enforcement role expressly stated in the initiated bill. Costs incurred by other state agencies, District Attorneys' Offices, and other local law enforcement may not be covered.

To the extent these costs are not covered by proposed § 6309, the Legislature would have discretion to allocate funds from the 25% fee on video facsimile gaming revenues to cover such costs. Proposed § 6312(4) provides that "a portion" of the fee is to be allocated annually to pay for "mitigation of costs resulting from gaming operations," language that appears to leave the Legislature discretion in determining both the costs to be reimbursed and the exact portion of the fee to be dedicated to this purpose. If the Legislature elects to allocate funds to cover state and local costs not covered by the proposed § 6309 assessment, that will reduce the money available for allocation pursuant to the formula established by proposed § 6312(4).

Conclusion

The initiated bill raises a number of serious and significant legal issues concerning taxes, revenue, jurisdiction of local and state law enforcement authorities, applicability of state and local laws, and the extent to which this proposed act may be immune from legislative amendment for twenty years. As we have indicated, your questions regarding these issues do not lend themselves to unqualified answers. The legal uncertainties reflected in this opinion are an outgrowth of the fact that the initiated bill contains a number of ambiguities and provisions that do not integrate well with existing state laws. On these questions, should there be legal challenges, ultimately the courts would have to decide.

Sincerely,

G. Steven Rowe
Attorney General