TAXPAYERS OF MICHIGAN V STATE OF MICHIGAN
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STATE OF MICHIGAN
COURT OF APPEALS
TAXPAYERS OF MICHIGAN AGAINST
CASINOS and LAURA BAIRD,
FOR PUBLICATION
November 12, 2002
9:00 a.m.
Plaintiffs-Appellees/CrossAppellants,
v
No. 225017; 225066
Ingham Circuit Court
LC No. 99-090195-CZ
THE STATE OF MICHIGAN,
Defendant-Appellant,
and
NORTH AMERICAN SPORTS MANAGEMENT
COMPANY, INC, IV, and GAMING
ENTERTAINMENT, LLC,
Updated Copy
February 14, 2003
Intervening-DefendantsAppellants/Cross-Appellees.
Before: Hood, P.J., and Holbrook, Jr., and Owens, JJ.
HOOD, P.J.
Defendant, state of Michigan, appeals as of right from the trial court's determination that
legislative approval, by resolution, of compacts allowing operation of casinos by Indian tribes
violated provisions of the Michigan Constitution.1 We affirm in part and reverse in part.
1
Following the hearing regarding cross-motions for summary disposition, the trial court granted
in part and denied in part each motion. Specifically, the trial court held that approval of the
compacts by joint resolution violated Const 1963, art 4, § 22, requiring that all legislation shall
be passed by bill. Additionally, the trial court held that Const 1963, art 3, § 2, governing
separation of powers, was violated because of the Governor's authority to amend the compacts.
Lastly, the trial court held that Const 1963, art 4, § 29, requiring that all local measures be
approved by two-thirds of the members of each house and a majority of electors voting in the
affected district, was inapplicable.
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In 1997 and 1998, Governor John Engler negotiated compacts with four Indian tribes2 to
permit class III gaming by the tribes on eligible Indian lands in Michigan. The terms of the
compacts contained various regulatory provisions. The tribes agreed to hiring criteria for their
employees and management and agreed to provide benefits and disability compensation in
conformance with Michigan law. The tribes also agreed to a minimum age requirement of
eighteen years for participation in any class III game. The tribes adopted Michigan law regarding
the sale and regulation of alcoholic beverages. Compact provisions addressed revenue payments
to the state and to local governments and the creation of an oversight body to address the manner
of distribution of revenues. However, the compacts did not provide the state with any authority
to enforce the provisions of the compacts. Rather, they provided that representatives of the tribes
and the state would meet to resolve any dispute regarding alleged noncompliance. If resolution
could not be reached, the matter would be submitted to arbitration. The compacts provided that
the Governor would endorse the compacts and concurrence in that endorsement by the Michigan
Legislature would occur by "resolution." The governor had the ability to receive and agree to any
amendments of the compacts.
A bill becomes law when it has the concurrence of a majority of members elected to and
serving in each house. Const 1963, art 4, § 26. However, the approval of the compacts was
submitted to the Legislature through the joint resolution process that required only a majority of
voting members. The Legislature approved the compacts by a majority of voting members.
House Concurrent Resolution No. 115 (December 10, 1998). The manner of approval of the
compacts is challenged in this appeal.
I. The Origins of Federal Authorization for Operation of Casinos
In California v Cabazon Band of Mission Indians, 480 US 202, 204-207; 107 S Ct 1083;
94 L Ed 2d 244 (1987), two federally recognized Indian tribes conducted bingo games on their
reservations pursuant to an ordinance approved by the Secretary of the Interior. Other card
games, including draw poker, were also played at the facility. The games were open to the
general public and were played predominantly by non-Indians who came onto the Indian
reservation. The games were the primary source of employment for tribal members, and the
profits were the sole source of tribal income. The state of California sought to apply provisions
of its penal code to preclude the gambling activity. California law permitted bingo games, as
long as the games were staffed and operated by members of a designated charitable organization
who were not paid for their services. Profits could only be utilized for charitable purposes, and
prizes were limited to a nominal amount. The state sought to enforce these restrictions on the
2
The tribes involved are the Little River Band of Ottawa Indians, the band described in the
compacts as the Pokagon Band of Ottawa Tribe and in the briefs as the Pokagon Band of
Potawatomi Indians, the Little Traverse Bay Bands of Odawa Indians, and the Nottawaseppi
Huron Potawatomi. In order to facilitate establishment of a casino, Indian tribes frequently retain
consultants. Intervening defendants North American Sports Management Company, Inc., IV
(dismissed from the action on August 12, 2002), and Gaming Entertainment, LLC, are
consultants that provide financial and other support to Indian tribes that open and operate
casinos.
-2-
Indian reservations. The tribes sued in federal court for a declaration that state ordinances could
not be applied against the reservation and for an injunction against any enforcement. Id.
The Supreme Court held that state jurisdiction over the tribes could only occur under
limited circumstances:
The Court has consistently recognized that Indian tribes retain "attributes
of sovereignty over both their members and their territory," and that "tribal
sovereignty is dependent on, and subordinate to, only the Federal Government, not
the States," . . . . It is clear, however, that state laws may be applied to tribal
Indians on their reservations if Congress has expressly so provided. [Id. at 207
(citations omitted).]
The state alleged that congressional authority was granted by 18 USC 1162, a statute granting
broad criminal jurisdiction and limited civil jurisdiction to six states, including California, over
specified areas of Indian country, and by the Organized Crime Control Act (OCCA), 18 USC
1955. However, the United States Supreme Court concluded that congressional law neither
permitted regulation nor precluded operation of the gaming activities conducted by the Indian
tribes. Specifically, the Court noted that California law did not ban all forms of gambling. The
state itself operated a state lottery and encouraged its citizens to participate in this state-run
gambling. Additionally, the state allowed pari-mutuel horse-race betting, and more than four
hundred card rooms similar to the card rooms operated by the tribes were active in the state.
When state law permitted conduct, subject to regulation, it was civil regulatory law and federal
statutes did not authorize enforcement on an Indian reservation. Thus, in light of the substantial
amount of gambling activity permitted and the state's active operation of a state lottery, the
Supreme Court concluded that California regulated rather than prohibited gambling in general
and bingo in particular. Therefore, the state could not interfere with this permitted conduct that
occurred on an Indian reservation. Cabazon, supra at 207-214.
The United States Supreme Court then analyzed the burden on Indian tribes when the
state sought to regulate the dealings of non-Indians participating in bingo games on Indian
reservations. The United States Supreme Court held that state jurisdiction was preempted if it
interfered or was incompatible with federal and tribal interests reflected in tribal law.
Throughout history the congressional goal was to allow Indian self-government, including selfsufficiency and economic development. After examining the congressional laws and policies
designed to achieve this goal by allowing tribal bingo enterprises, the United States Supreme
Court stated:
These policies and actions, which demonstrate the Government's approval
and active promotion of tribal bingo enterprises, are of particular relevance in this
case. The Cabazon and Morongo Reservations contain no natural resources which
can be exploited. The tribal games at present provide the sole source of revenues
for the operation of the tribal governments and the provision of tribal services.
They are also the major sources of employment on the reservations. Selfdetermination and economic development are not within reach if the Tribes
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cannot raise revenues and provide employment for their members. The Tribes'
interests obviously parallel the federal interests.
* * *
We conclude that the State's interest in preventing the infiltration of the
tribal bingo enterprises by organized crime does not justify state regulation of the
tribal bingo enterprises in light of the compelling federal and tribal interests
supporting them. State regulation would impermissibly infringe on tribal
government, and this conclusion applies equally to the county's attempted
regulation of the Cabazon card club. We therefore affirm the judgment of the
Court of Appeals and remand the case for further proceedings consistent with this
opinion. [Cabazon, supra at 218-222.]
In response to the Cabazon decision, Congress enacted the Indian Gaming Regulatory Act
(IGRA), 25 USC 2701 et seq. This act explicitly authorizes licensed gaming activities on Indian
lands by Indian tribes to generate tribal revenue, 25 USC 2701(1), and promote the goals of tribal
economic development and self-sufficiency, 25 USC 2701(4). The regulation of gaming activity
on Indian lands is exclusively the province of the Indian tribes. 25 USC 2701(5). The operation
of gaming activity by Indian tribes is permitted within a state that does not as a matter of law and
public policy prohibit such gaming activity. Id. Class III gaming activities3 are lawful on Indian
lands only if the activities are authorized by ordinance or resolution and conducted in
conformance with a tribal-state compact entered into between a tribe and a state. 25 USC
2710(d)(1)(A),(C). Upon receiving a request to enter into negotiations to complete a compact,
the state "shall negotiate" in good faith to enter into such a compact. 25 USC 2701(d)(3)(A).
While the compact "may" include provisions addressing application of criminal and civil law,
allocation of criminal and civil jurisdiction, cost allocation, taxation, remedies for breach of
contract, and operation standards, there is no provision for enforcement of these provisions. 25
USC 2701(d)(3)(C). The state must demonstrate that it has negotiated in good faith, and failed
negotiations may be challenged in court and submitted to a mediator for resolution. 25 USC
2710(d)(7)(B).
II. The Federal Compact Clause
US Const, art I, § 10, cl 3 provides:
No State shall, without the Consent of Congress, lay any Duty of Tonnage,
keep Troops, or Ships of War in time of Peace, enter into any Agreement or
Compact with another State, or with a foreign Power, or engage in War, unless
actually invaded, or in such imminent Danger as will not admit of delay.
A compact is a contract. Texas v New Mexico, 482 US 124, 128; 107 S Ct 2279; 96 L Ed 2d 105
(1987). For interstate agreements that fall outside the scope of the Compact Clause,
3
The parties do not dispute the classification of gaming at issue.
-4-
congressional consent is not required. Cuyler v Adams, 449 US 433, 440; 101 S Ct 703; 66 L Ed
2d 641 (1981). An agreement falls outside the scope of the Compact Clause when it is not
directed to the formation of any combination tending to increase the political power in the States,
which may encroach upon or interfere with the just supremacy of the United States. Id. Thus, if
an agreement falls outside the scope of the Compact Clause, it will not be invalidated on the
basis of lack of congressional consent. Id. Congressional consent to a compact elevates the
interstate compact into a law of the United States. Texas, supra. Because an interstate compact
can be categorized as both a contract and a statute, it is appropriate to look at contractual rules
and rules of statutory construction in the event of an ambiguity. Oklahoma v New Mexico, 501
US 221, 236; 111 S Ct 2281; 115 L Ed 2d 207 (1991). Accordingly, it is appropriate to look at
legislative history, extrinsic evidence of the compact negotiations, and negotiation history of
other interstate compacts when construing a compact. Id.
The use of compacts predates the United States Constitution. The Articles of
Confederation contained the Compact Clause provision that was later incorporated into the
United States Constitution without much explanation. United States Steel Corp v Multistate Tax
Comm, 434 US 452, 459-462; 98 S Ct 799; 54 L Ed 2d 682 (1978). However, historically,
congressional consent was not deemed essential to the validity of a compact. For example, in
Wharton v Wise, 153 US 155, 168-170; 14 S Ct 783; 38 L Ed 2d 669 (1894), the United States
Supreme Court acknowledged that congressional consent was required before a state could enter
into an agreement with a foreign state or before two or more states entered into "treaties,
alliances, or confederations." However, the lack of congressional consent was not deemed
essential to the 1785 compact between Virginia and Maryland to govern the navigation and
fishing rights in the Potomac River, the Pocomoke River, and the Chesapeake Bay. United
States Steel Corp, supra at 460, n 10.
The validity of a compact lacking congressional approval was examined in United States
Steel Corp, supra. As a result of a decision by the Supreme Court,4 net income from interstate
operations of a foreign corporation could be subjected to state taxation provided that the levy was
nondiscriminatory and fairly apportioned to local activities that form a sufficient nexus to support
the exercise of taxing power. In response to the decision, Congress authorized a study of uniform
taxing standards, but there was no resulting legislation. In the interim, the Multistate Tax
Compact was drafted. The compact created a Multistate Tax Commission comprised of tax
administrators from member states. It authorized the study and development of state and local
tax systems to create uniformity and compatibility of tax laws. The commission was also
authorized to adopt uniform administrative regulations when two or more states had uniform
provisions related to specified types of taxes. These regulations were advisory only, and each
member state had the power to reject, disregard, amend, or modify any rule or regulation
promulgated by the commission. For the regulations to have any force, each state had to adopt
the regulations in accordance with their own law. The commission also allowed audits that
would occur on the state's behalf, provided this provision was adopted by a state by statute. Each
state retained complete control over all aspects of the computation and rate of taxation, and a
4
See Northwestern States Portland Cement Co v Minnesota, 358 US 450; 79 S Ct 357; 3 L Ed
2d 421 (1950).
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state could withdraw from the compact by enacting a repealing statute. The plaintiffs were
multistate taxpayers "threatened with audits by the Commission." The complaint attacked the
constitutionality of the compact, alleging that it, never having received the consent of Congress,
was invalid under the Compact Clause.
The United States Supreme Court acknowledged that most multilateral compacts had
been submitted for congressional approval, but concluded, "this historical practice, which may
simply reflect considerations of caution and convenience on the part of the submitting States, is
not controlling." United States Steel Corp, supra at 471. However, the general rule was that
"'application of the Compact Clause is limited to agreements that are "directed to the formation
of any combination tending to increase the political power in the States, which may encroach
upon or interfere with the just supremacy of the United States."'" Id. at 471, quoting New
Hampshire v Maine, 426 US 363, 369; 96 S Ct 2113; 48 L Ed 2d 701 (1976), quoting Virginia v
Tennessee, 148 US 503, 519; 13 S Ct 728; 37 L Ed 537 (1893). Thus, the fact that the tax
compacts lacked congressional consent was not dispositive. Rather, whether the compacts
enhanced "state power quoad the National Government" was the key test. The plaintiffs alleged
that the "Compact's effect" threatened federal supremacy. The Supreme Court rejected the
constitutional challenges to the compact based on encroachment upon federal supremacy,
enhancement of state power, and encroachment upon federal commerce power. United States
Steel Corp, supra at 473-476.
Specifically, the Supreme Court rejected the constitutional challenges because of the
appellants' failure to demonstrate aggrandized power and the failure to demonstrate that any
enhanced power could be exercised, stating:
The third aspect of the Compact's operation said to encroach upon federal
commerce power involves the Commission's requirement that multistate
businesses under audit file data concerning affiliated corporations. Appellants
argue that the costs of compiling financial data of related corporations burden the
conduct of interstate commerce for the benefit of the taxing States. Since each
State presumably could impose similar filing requirements individually, however,
appellants again do not show that the Commission's practices, as auditing agent
for member States, aggrandize their power or threaten federal control of
commerce. Moreover, to the extent that the Commission is engaged in joint
audits, appellants' filing burdens well may be reduced.
Appellants' final claim of enhanced state power with respect to commerce
is that the "enforcement powers" conferred upon the Commission enable that body
to exercise authority over interstate business to a greater extent than the sum of
the States' authority acting individually. This claim also falls short of meeting the
standard of Virginia v Tennessee. Article VIII of the Compact authorizes the
Commission to require the attendance of persons and the production of documents
in connection with its audits. The Commission, however, has no power to punish
failures to comply. It must resort to the courts for compulsory process, as would
any auditing agent employed by the individual States. The only novel feature of
the Commission's "enforcement powers" is the provision in Art VIII permitting
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the Commission to resort to the courts of any State adopting that Article.
Adoption of that Article, then amounts to nothing more than reciprocal legislation
for providing mutual assistance to the auditors of the member States. [Id. at 475476 (emphasis added).]
The significance of this decision to the case pending before this Court is two-fold. The consent
or approval of compacts is the result of historic practice based on caution or convenience, and the
procedure for approval, whether by resolution or legislation, has not been mandated by law.5 The
key test to determine the validity of a compact, in the absence of congressional approval, was an
examination of the power structure that was established by the contracting states in relationship
to the federal government. Additionally, the allegation of enhanced power through compacts was
insufficient to void the compact where there was an inability to exercise that power.
III. Michigan Law Addressing Compacts
While federal law has been established to govern the construction and interpretation of a
compact and the necessity of congressional consent or approval, Michigan has not delineated
standards for passage of compacts or contracts. However, two Michigan appellate court
decisions contain dicta that address compacts. In 1990, pursuant to the IGRA, several Indian
tribes filed suit against Governor Engler to compel him to enter into a gaming compact. Tiger
Stadium Fan Club, Inc v Governor, 217 Mich App 439, 443; 553 NW2d 7 (1996). Before trial,
the parties entered into a consent judgment. This consent judgment provided that the tribes
would make semiannual payments of eight percent of gaming revenues to the Michigan Strategic
Fund (MSF), a public corporation established by the Michigan Strategic Fund Act, MCL
125.2001 et seq.; for a specified period. Additionally, the tribes would make payments of two
percent of certain gaming revenues to local units of government in the immediate vicinity of each
tribal casino. The consent judgment became effective upon execution and approval of the
compacts by resolution of the Legislature. The Legislature approved the compacts by resolution
in September 1993, although the resolution did not specifically mention the payments to the
MSF. However, the Legislature was aware of the terms. Id. at 443-444.
After the tribal casinos began making deposits to the MSF, the City of Detroit Downtown
Development Authority (DDA) requested a grant. The MSF adopted a resolution and agreed to
the grant request in an amount not to exceed $55 million. This grant agreement provided that the
funds would be used to assist with costs associated with infrastructure, land development, and
site development necessary for the construction of a new stadium for the Detroit Tigers. A
complaint was filed, alleging that the gaming revenues were state funds within the meaning of
5
Despite the creation of rules governing establishment of a compact, there do not appear to be
any uniform rules of procedure for congressional consent. For example, Congress approved a
compact between the state of Ohio and Commonwealth of Pennsylvania addressing Pymatuning
Lake as an act of Congress, 75 PL 398; 50 Stat 865 (1937), but a compact of free association was
passed by joint resolution, 99 PL 658; 100 Stat 3672 (1986). There does not appear to be a rule
of procedure to determine whether an act or a joint resolution may be utilized as the method of
congressional consent.
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the Appropriations Clause of the state constitution and any disbursement from the fund by the
MSF without an appropriation by the Legislature was a violation of the Separation of Powers
Clause of the state constitution. It was also asserted that the MSF did not have the statutory
authority to make a grant to the DDA. Id. at 448-449.
This Court concluded that the revenues involved were not public funds subject to
appropriation because they were gratuitous payments negotiated by the Governor and designated
for a specific purpose, and payment to and disbursement from the MSF without an act of the
Legislature did not violate the Appropriations Clause. Id. at 452-454. The Court of Appeals also
concluded that the Governor did not violate the Separation of Powers Clause by negotiating and
effectuating the settlement, stating:
We conclude, however, that because the revenues are not subject to the
Appropriations Clause and are gratuitous payments for a designated purpose, no
appropriation was necessary and the Governor did not usurp the Legislature's
power in entering into an agreement providing for the payment of the revenues
directly to the MSF and that the Separation of Powers Clause does not require
legislative action before the revenues may be spent by the MSF. It has long been
Michigan law that courts should not interfere with the actions of the Governor
when he acts pursuant to constitutional or statutory authority. See Sutherland v
Governor, 29 Mich 320, 328 (1874). We also observe that the Legislature was
aware that the consent judgment provided that the gaming revenues were to be
paid directly to the MSF. Thus, the Governor constitutionally caused the
equivalent of a grant to be made, with the approval of the Legislature, to a state
corporation authorized by the Legislature to receive and accept grants, gifts, and
other aids. [Id. at 454-456.]
In a footnote, the Court of Appeals noted that the House of Representatives concurred in the
tribal-state gaming compacts. However, the resolution when considered by the Senate drew
criticism. It was questioned whether the Governor had the authority to negotiate the compact,
whether the general procedures for enacting a law should apply, and whether the generated funds
should be utilized for the construction of a team stadium. However, ultimately, the Senate
approved the resolution. This Court, in dicta, rejected any concern about usurped powers:
It is thus clear, first, that the Senate was aware of the terms of the
compacts and consent judgment, including the provision for the payment of eight
percent of certain gaming revenues directly to the MSF, and, second, that the
Senate rejected challenges to the Governor's constitutional authority to negotiate
the compacts and adopted the concurrent resolution with the intention of ratifying
and approving the compacts and settlement agreement as negotiated by the
Governor. We recognize that it is a separate question whether the concurrent
resolution would constitute sufficient legislative action if the revenues were
determined to be subject to appropriation, one we do not address because our
decision that the revenues are not subject to appropriation makes it unnecessary to
do so. Putting aside Appropriations Clause considerations, and having in mind
that the Legislature ratified and approved the Governor's actions and the resulting
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compacts and consent judgment, we reject the argument that the Governor
usurped the powers of the Legislature. [Id. at 455-456, n 5.]
Thus, previously, in the context of a compact, the Legislature questioned how a compact should
be approved, but took no action to implement rules regarding passage of compacts.
Significantly, this Court held, albeit in dicta, that there was no usurping of power by the
Governor because the Legislature ratified and approved the consent judgment through the use of
a joint resolution. However, this Court may find dicta persuasive and choose to follow it.
Dykstra v Dep't of Transp, 208 Mich App 390, 392; 528 NW2d 754 (1995).6
In McCartney v Attorney Gen, 231 Mich App 722, 724-725; 587 NW2d 824 (1998), the
plaintiff filed suit when the defendant failed to provide six documents relating to the Governor's
negotiations with three Indian tribes regarding casino gambling as requested under the Freedom
of Information Act (FOIA), MCL 15.231 et seq. The documents were categorized as those
delivered by the Governor's office to the defendant, seeking legal advice, and internal
memoranda of the defendant with regard to the legal advice. The trial court held that the
documents were exempt from production under the attorney-client privilege exemption of the
FOIA, MCL 15.243(1)(h), and the deliberative process exemption, MCL 15.243(1)(n). As a
preliminary matter, the plaintiff alleged that the defendant and the Governor did not enjoy an
attorney-client relationship with regard to the documents and that the Governor's actions were
"ultra vires" or outside the scope of his authority. This Court held that there was a reasonable
basis for the Governor's authority to negotiate tribal-state gaming compacts:
The Governor is constitutionally authorized to present and recommend
legislation. Const 1963, art 5, § 17. There is no prohibition in Michigan law that
would bar the Governor's actions in negotiating a gaming compact and then
presenting it to the Legislature. Several other jurisdictions have reached similar
conclusions in addressing the precise issue whether a state governor has authority
to negotiate gambling compacts with Indian tribes pursuant to the federal Indian
Gaming Regulatory Act (IGRA), 25 USC 2701 et seq.
In State ex rel Stephan v Finney, 251 Kan 559, 582-583; 836 P2d 1169
(1992), the court held that the governor had power to negotiate a gaming compact
with an Indian tribe, but could not bind the state to the resulting terms of any
compact. Absent "an appropriate delegation of power by the Kansas Legislature
or legislative approval of the compact, the Governor had no power to bind the
State to the terms" of the compact. State ex rel Stephan v Finney, 254 Kan 632,
6
We note that plaintiffs rely on an opinion of the Attorney General that concluded that the
compacts should have been submitted as legislation. OAG, 1997-1998, No 6960, p 83 (October
21, 1997). The opinion of the Attorney General is not binding on courts as precedent, and it is
questionable whether a governmental agency is even bound by an opinion of the Attorney
General. Danse Corp v Madison Heights, 466 Mich 175, 182, n 6; 644 NW2d 721 (2002).
Following an in-depth analysis of the historical context of tribal gaming, the historical approval
of compacts, the origins of tribal gaming through IGRA, and Michigan case law, we decline the
invitation to adopt the opinion of the Attorney General.
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635; 867 P2d 1034 (1994). In State ex rel Clark v Johnson, 120 NM 562; 904
P2d 11 (1995), the court recognized that the governor could not enter into a
gaming compact solely on his own authority. It held that the governor lacked
constitutional authority to bind the state by unilaterally entering into compacts.
Id. at 576. However, the court also recognized that the legislature could authorize
the governor to enter into a gaming compact "or ratify his actions with respect to
a compact he has negotiated . . . ." Id. at 574 (emphasis added). Thus, although
the governor could not bind the state, he could negotiate a compact subject to
legislative ratification. Finally in Narragansett Indian Tribe of Rhode Island v
State, 667 A2d 280 (RI, 1995), the court held that the governor lacked
constitutional and legislative authority to bind the state to a compact negotiated by
him. However, the court noted:
"We also take care to note that our opinion in no way suggests that the
Governor, in his capacity as Chief Executive officer of this state, lacks the
authority to advocate, to initiate, and to negotiate, short of executing, a tribal-state
compact. All that we determine herein is that the Governor, absent specific
authorization from the General Assembly, had no express or implied
constitutional right or statutory authority to finally execute and bind the state to
such a compact by his execution thereof. [Id. at 282.]" [McCartney, supra at
726-728.]
This Court then recognized the Tiger Stadium decision:
Recently, this Court indicated that the Governor had the ability to
negotiate and enter into compacts with an Indian tribe under the IGRA. In Tiger
Stadium Fan Club, Inc v Governor, 217 Mich App 439; 553 NW2d 7 (1996), the
Governor had been sued by Indian tribes to compel him to conclude a gaming
compact. Subsequently, the Governor negotiated and entered into a consent
judgment, which included a provision that certain gaming revenues would be paid
into the Michigan Strategic Fund as long as the compact remained in effect. Id. at
443. "The consent judgment was to become effective upon execution of compacts
between the tribes and the Governor and approval of the compacts by resolution
of the Legislature." Id. (emphasis added). Although the issue in Tiger Stadium
Fan Club was different than that presented to this Court in this case (the plaintiffs
in Tiger Stadium Fan Club were arguing that the Governor did not have authority
to agree that revenues would be paid directly to the strategic fund), this Court
ruled that the Governor "did not violate the Separation of Powers Clause in
negotiating and effectuating the settlement." Id. at 454. The Governor negotiated
and executed the compact and then presented it to the Legislature as part of the
consent judgment. Thus, this Court acknowledged that the Governor has the
ability to enter into compacts with Indian tribes, subject to the approval of the
Legislature.
We emphasize that the Governor has executive power, Const 1963, art 5, §
1, and the power to suggest legislation, Const 1963, art 5, § 17. We also
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emphasize that there is no constitutional impediment to the Governor's negotiating
with an Indian tribe where the product of his negotiations has no effect without
legislative approval. We find that there are bases upon which the Governor had
authority to negotiate with the Indian tribes on proposed compacts, which were
subsequently presented to the Legislature for approval. For that reason, we cannot
conclude that his actions were clearly ultra vires. Rather, we conclude that the
Governor did not usurp legislative power because he did not attempt to bind the
Legislature or the state to any terms in the compact. He did not enact legislation
or force legislation on the Legislature. In its well-reasoned opinion, the trial court
also recognized that the Governor did not exceed the scope of his authority when
he conducted negotiations and discussions with the Indian tribes and later
presented gaming compacts to the Legislature for its approval or rejection. We
agree with the trial court's analysis. [Id. at 728-729.]
As previously stated, this Court may adopt dicta that we find persuasive. Dykstra, supra. The
Governor clearly had the authority to negotiate the compacts with the Indian tribes. Following
these negotiations, the compacts were submitted to the Legislature for approval. This approval
took the form of a joint resolution, rather than legislation. The difference between the forms of
approval is that legislation receives an enhanced standard of adoption. The resolution process
required only a majority of members who were present or chose to participate, not a majority of
elected members. The compact agreements were not the result of a decision by the citizenry at
large or a policy choice by members of the Legislature, but rather, were the result of
congressional policy in an area where state law is preempted. Accordingly, we adopt the dicta set
forth in McCartney, supra, and Tiger Stadium Fan Club, supra, and reject plaintiffs'
constitutional challenges as set forth in this opinion.
IV. Appellate Review
Our review of constitutional issues is de novo. Armstrong v Ypsilanti Charter Twp, 248
Mich App 573, 582; 640 NW2d 321 (2001). The party asserting the constitutional challenge has
the burden of proof. Taylor v Gate Pharmaceuticals, 248 Mich App 472, 477; 639 NW2d 45
(2001). Before addressing the constitutionality of a provision, this Court must examine
alternative, nonconstitutional grounds that might obviate the necessity of deciding the
constitutional question. VandenBerg v VandenBerg, 231 Mich App 497, 499; 586 NW2d 570
(1998). Furthermore, constitutional questions will not be addressed when the issue is not ripe for
review. Dep't of Social Sers v Emmanuel Baptist Preschool, 434 Mich 380, 389; 455 NW2d 1
(1990).
V. The Constitutional Challenges
Plaintiffs allege that the submission of the compacts for approval through the joint
resolution process instead of through the legislative process for passage of a bill violates Const
1963, art 4, § 22; art 3, § 2; and art 4, § 29.
Const 1963, art 4, § 22 provides: "All legislation shall be by bill and may originate in
either house."
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Const 1963, art 3, § 2 provides: "The powers of government are divided into three
branches: legislative, executive and judicial. No person exercising powers of one branch shall
exercise powers properly belonging to another branch except as expressly provided in this
constitution."
Const 1963, art 4, § 29 provides:
The legislature shall pass no local or special act in any case where a
general act can be made applicable, and whether a general act can be made
applicable shall be a judicial question. No local or special act shall take effect
until approved by two-thirds of the members elected to and serving in each house
and by a majority of the electors voting thereon in the district affected. Any act
repealing local or special acts shall require only a majority of the members elected
to and serving in each house and shall not require submission to the electors of
such district.
However, we also note that plaintiffs repeatedly question the astuteness of the process by
asserting that lame duck members, to avoid contravening the public policy of this state against
casino gambling, resorted to joint resolution for approval. This assertion ignores the process
through which these casinos originated. Michigan voters did not approve and could not approve
of the casinos at issue. Furthermore, state legislators did not have the option of approving or
disapproving casino gambling operated by Indian tribes. States that permit gambling activities,
subject to regulation, may not prohibit casino gambling. Cabazon, supra. Indeed, this state,
before the voter initiated referendum approving casinos in the city of Detroit, permitted various
forms of gambling. This state authorized horse racing, MCL 431.301 et seq., and established and
operates a state lottery, MCL 432.9, that is promoted through advertising. See MCL 432.41(4).
Finally, a voter initiated law authorized casino gambling in the city of Detroit.7 Thus, Michigan
regulates rather than prohibits gambling. Pursuant to Cabazon, supra, the state cannot prohibit
Indian tribal gaming. In light of statutory regulation authorizing gambling activities in this state,
federal law dictates that the state negotiate compacts with Indian tribes to allow casino gambling
on Indian reservations. 25 USC 2701 et seq.
As an initial matter, we note that the IGRA sets forth the authorization for class III
gaming activities between Indian tribes and individual states in 25 USC 2710(d):
(d) Class III gaming activities; authorization; revocation; Tribal-State
compact
7
MCL 432.202(l)(i) permits gambling based on a population of at least 800,000 at the time of
issuance of a license. We note also that the Michigan Gaming Control and Revenue Act
(MGCRA), MCL 432.201 et seq., contains an exception to its application with regard to casino
gambling conducted under the IGRA. MCL 432.203(2). Additionally, in the event that states are
given authority by the federal government to regulate gambling on Indian tribal land, new
legislation would be passed to regulate those casinos. MCL 432.203(5).
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(1) Class III gaming activities shall be lawful on Indian lands only if such
activities are—
(A) authorized by an ordinance or resolution that—
(i) is adopted by the governing body of the Indian tribe having jurisdiction
over such lands,
(ii) meets the requirements of subsection (b) of this section, and
(iii) is approved by the Chairman,
(B) located in a State that permits such gaming for any purpose by any
person, organization, or entity, and
(C) conducted in conformance with a Tribal-State compact entered into by
the Indian tribe and the State under paragraph (3) that is in effect. [Emphasis
added.]
Review of the plain language of the IGRA, In re MCI Telecomms Complaint, 460 Mich 396, 411;
596 NW2d 164 (1999), reveals that authorization may occur through ordinance or by resolution.
In light of the acknowledged preemption in this area, see MCL 432.203(5), the resolution process
is a sufficient method for approval of compacts. The approval by resolution contained in the
IGRA is consistent with federal law addressing compacts. Congressional approval was generally
one of historic occurrence rather than necessity. The true test of congressional approval occurs
when powers of an entity are usurped. United States Steel Corp, supra. State legislative power
cannot be usurped in this context because of the congressional decision to permit casino
gambling on tribal land and the terms of the IGRA. While states may have the ability to
negotiate and include regulatory terms in the compacts, there is no mechanism for enforcement.
Rather, any dispute is submitted to arbitration or a mediator. Consequently, the challenge to the
method of approval by resolution is without merit.
However, we also independently conclude that Const 1963, art 4, § 22 was not violated.
Irrespective of the terms of the compacts that impose obligations on the Indian tribes themselves
and the administrative functions assumed by the state, there is no enforcement provision within
compacts to ensure that the compact terms are satisfied. Similarly, irrespective of whether the
terms of the compact encroach upon legislative functions, the inability to enforce those terms
precludes a challenge to the constitutionality of the compact. United States Steel Corp, supra.
There is no indication that the limited role of the states and the plenary authority held by
Congress has been altered by the terms utilized in the compacts. Plaintiffs cannot theorize that
the language of the compacts rises to the level of legislation, but rather has the burden of proof to
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establish the alleged constitutional violation. Taylor, supra. Plaintiffs have failed to meet this
burden.8
Additionally, to construe a compact, we examine its history, extrinsic evidence of the
negotiations concerning the compact, and the negotiation history of other compacts. Oklahoma,
supra. Defendants allege and plaintiffs do not dispute, Taylor supra, that contracts executed by
the state of Michigan are routinely approved by the resolution process. Furthermore, in 1993,
compacts were approved by the resolution process. Tiger Stadium Fan Club, supra. The
Legislature has a prior course of conduct, albeit unwritten, for approval of contracts. "Neither an
administrative agency nor the judicial branch should trump the legislative process." Michigan
Gaming Institution, Inc v State Bd of Ed, 211 Mich App 514, 522; 536 NW2d 289 (1995), rev'd
on other grounds 451 Mich 899 (1996).9
Plaintiffs next allege that the compacts violate the Separation of Powers Clause, Const
1963, art 4, § 29, because the compacts give the Governor the authority to amend the compacts
without a provision for legislative approval of the amendments. We disagree. Constitutional
questions will not be addressed when the issue is not ripe for review. Emmanuel Baptist, supra.
There is no indication that amendment was requested or made in this manner. Accordingly, this
issue is not ripe for appellate review.
Lastly, plaintiffs allege that the compacts violated the provision requiring passage of
legislation affecting local communities. Const 1963, art 4, § 29. We disagree. This state has no
authority to regulate conduct on Indian tribal lands. Thus, while cities surrounding the
designated casino areas may be affected, the IGRA has provided that Indian tribes may operate
8
We note that, despite the extensive pleadings filed in this action, plaintiffs failed to address
various facts raised by defendant. For example, defendant noted that the compacts executed in
1993 were approved by the resolution process and that a declaration that the compacts of 1998
are invalid because they were approved by resolution would necessarily negate the prior
compacts. Additionally, defendant asserts, and plaintiffs do not dispute, that approval by
resolution is the form of approval employed for state contracts. If, by course of conduct,
contractual approval occurs through the resolution process, it is inappropriate to seek judicial
interference with this legislative process. We note that the standing rules of each legislative body
contain references to contracts, resolutions, and appropriations under certain circumstances. A
written policy of contract approval in these rules or passage of legislation addressing approval of
contracts would alleviate a challenge to the manner of contract approval. Additionally, we note
that the parties failed to address what remedy would be available if we had determined that the
resolution process was unconstitutional in light of Const 1963, art 1, § 10.
9
In Michigan Gaming Institution, the petitioner applied to the respondents for a license to
operate a school to teach prospective gambling employees. Then appellate Judge, now Justice,
Corrigan concluded in her dissent that the application should be denied because the school would
be teaching behavior that violates provisions of the Penal Code. However, the dissenting
opinion, adopted by the Supreme Court, expressly noted that public opinion regarding casino
gambling was "in flux" and that Michigan did not choose to allow casino gambling on Indian
reservations, but was required to negotiate with the tribes by virtue of the IGRA. Plaintiffs'
contention that this opinion supports their position is without merit. Rather, the forecast of
change in the context of casino gambling was realized as shown by the MGCRA.
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casinos on tribal lands. The citizens of the state of Michigan cannot vote on the propriety of
placing tribal casinos on tribal lands. Thus, this argument is without merit. Accordingly, we
reverse the trial court's conclusion that the approval of the compacts by way of resolution violates
Const 1963, art 4, § 22 and Const 1963, art 3, § 2, and affirm the trial court's conclusion that the
approval did not violate Const 1963, art 4, § 29, albeit on other grounds.10
Affirmed in part and reversed in part. We do not retain jurisdiction.
/s/ Harold Hood
/s/ Donald E. Holbrook, Jr.
/s/ Donald S. Owens
10
Although procedural challenges were raised regarding plaintiffs' standing and regarding real
party in interest based on the failure to add the Indian tribes to the litigation, we have addressed
the merits of the appeal because the issue was one of recurring public significance that was not
definitively resolved by McCartney, supra, and Tiger Stadium Fan Club, supra. See Camden v
Kaufman, 240 Mich App 389, 393; 613 NW2d 335 (2000).
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