Fort Independence Indian Community v. California (679 F. Supp. 2d 1159, 2009)

ORDER

LAWRENCE K. KARLTON, Senior District Judge.

Plaintiff Fort Independence Indian Community, a federally recognized tribe, brings suit against the State of California and associated officials (collectively, the “State”). The Tribe’s sole remaining claim alleges that the State has violated its obligation to negotiate in good faith regarding a Tribal-State gaming compact. In particular, the Tribe argues that the State has improperly insisted upon a revenue sharing agreement. Although the Indian Gaming Regulatory Act is apparently hostile to such agreements, they have become common. These agreements have also been upheld by the Department of the Interior, the agency that administers this aspect of the IGRA.

The parties have filed cross motions for summary judgment. The court resolves the matters on the papers, including supplemental briefing, and after oral argument. Questions of material fact remain, but the court grants summary adjudication/partial summary judgment as to several issues.

I. BACKGROUND

A. Statutory Background

The Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq., divides gaming into three classes. Class III gaming, which includes slot machines and similar devices, is at issue in this case. Under IGRA, a tribe may conduct Class III gaming only in “conformance with a Tribal-State compact entered into by the Indian Tribe and the State and approved by the Secretary of the Interior.” Coyote Valley Band of Pomo Indians v. California (In re Indian Gaming Related Cases Chemehuevi Indian Tribe), 331 F.3d 1094, 1097 (9th Cir.2003) (citing §§ 2710(d)(1), (d)(3)(B)) (hereinafter Coyote Valley II). Such gaming must also comply with certain other conditions not relevant here. Id.

A tribe seeking to conduct Class III gaming may request that the state “enter into negotiations for the purpose of entering into a Tribal-State compact.” § 2710(d)(3)(A). If the state permits other Class III gaming of the types sought, the state must honor the request and negotiate in “good faith.” Id., Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 1258 (9th Cir.1994), amended by 99 F.3d 321 (9th Cir.1996). The State may negotiate “regarding aspects of class III tribal gaming that might affect legitimate State interests.” Coyote Valley II, 331 F.3d at 1097; see also § 2710(d)(3)(C) (enumerating topics that “may” be addressed by compacts).

The present dispute principally concerns the extent to which a state may seek money from a tribe. IGRA does not provide authority to “impose any tax, fee, charge, or other assessment” other than assessments necessary to defray the costs of regulating gaming. § 2710(d)(4). However, a state does not “impose” a fee when the state “offer[s] meaningful concessions in return for its demands.” Coyote Valley II, 331 F.3d at 1111. IGRA separately provides that “any demand by the State for direct taxation of the Indian tribe” shall be considered as non-conclusive evidence of bad faith. § 2710(d)(7)(B)(iii)(H).

IGRA provides a cause of action whereby tribes can enforce the obligation to negotiate in good faith. § 2710(d)(7)(A); see also S. Rep. 100-446, *14-15 (Aug. 3, 1988), U.S.Code Cong. & Admin.News 1988, pp. 3071, 3084-85. Although IGRA does not waive sovereign immunity, California has by statute consented to suit. Cal. Gov.Code § 98005, Seminole Tribe v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); see also Coyote Valley II, 331 F.3d at 1101 n. 9.

Once a compact has been negotiated, it does not take effect until the Secretary of the Interior affirms that it complies with IGRA. § 2710(d)(8)(B)(i).

B. The 1999 California Compacts

In the gaming context, California’s present relationship with tribes is largely the product of 60 compacts negotiated in 1999. The Ninth Circuit provided the history of these negotiations in Coyote Valley II, 331 F.3d at 1100-07, the relevant portions of which are summarized here. Prior to 1999, California prohibited slot machines and other forms of class III gaming sought by the tribes. Accordingly, California was not obliged to negotiate compacts authorizing such gaming, and refused to do so. Rumsey, 64 F.3d at 1258, § 2710(d)(3)(A). In 1998, a coalition of tribes introduced a ballot initiative that would compel the State to change this policy. This measure passed, and although it was later invalidated by the California Supreme Court, it set in motion a process culminating in extensive negotiations, further legislation, and an amendment to the California Constitution. The amendment to the Constitution included the following:

the Governor is authorized to negotiate and conclude compacts, subject to ratification by the Legislature, for the operation of slot machines and for the conduct of lottery and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. Accordingly, slot machines, lottery games, and banking and percentage card games are hereby permitted to be conducted and operated on tribal lands subject to those compacts.

Calif. Const. Art. IV, § 19(f). Concurrent with the effort to pass this amendment, the State negotiated with a group of tribes to produce a template compact. Sixty tribes adopted the template (the “1999 Compact”) shortly after the amendment was ratified. Coyote Valley II, 331 F.3d at 1104.

The sixty tribes’ adoption of this compact, and the contemporarily passed legislation, established the major features of California’s present treatment of gaming. Most significantly, tribes are the exclusive operators of slot machines and certain other forms of class III gaming. Prior to 1999, the California constitution had prohibited all slot machines and certain other forms of gaming desired by the tribes. As part of the changes surrounding the 1999 compacts, the constitution was amended to allow tribal gaming, although other gaming remains prohibited.

A second major feature is the Revenue Sharing Trust Fund (“RSTF”), which redistributes wealth among the tribes. Tribes adopting the 1999 compacts pay into the fund by purchasing “ ‘licenses’ to acquire and maintain gaming devices in excess of’ certain quantities. Coyote Valley II, 331 F.3d at 1105. The RSTF pays out to “non-compact tribes,” defined as “[fjederally recognized tribes that are operating fewer than 350 gaming devices.” Non-compact tribes each receive up to $1.1 million annually from the RSTF. The 1999 Compacts explicitly provide that non-compact tribes are third party beneficiaries of the compacts, but also that non-compact tribes have no right to enforce the compacts.

Two other features of the 1999 Compacts are pertinent here. The 1999 Compacts called for payments of a percentage of revenue into a “Special Distribution Fund.” This fund may be used only to pay expenses related to gaming, including shortfalls in the RSTF. Id. at 1113-14. The 1999 Compacts also oblige tribes to provide a procedure “addressing organizational and representational rights of Class III Gaming Employees and other employees associated with the Tribe’s Class III gaming enterprise.” Id. at 1116 (quoting section 10.7 of the 1999 Compact). The Ninth Circuit has held that both of these provisions are consistent with IGRA. Id. at 1114,1116.

C. Other State-Tribal Gaming Compacts

California compacts negotiated since 1999 and compacts negotiated by other states contain several additional features pertinent here.

The post-1999 California compacts are notable in two ways. First, the State has entered twenty one compacts with “non-compact tribes,” allowing them to operate fewer than 350 gaming devices and still receive payments from the RSTF. Conversely, there are no federally recognized California tribes operating fewer than 350 class III gaming devices pursuant to a compact that do not receive RSTF payments. Second, many California compacts subsequent to the 1999 compacts provide for “revenue sharing” with the state. See, e.g., Tribal-State Compact Between the State of California and the Pinoleville Pomo Nation, executed March 10, 2009, Pl.’s RFJN Ex. 6. These provisions, unlike the “special distribution fund” approved in Coyote Valley II, provide for payment into the State’s general fund, such that the funds received may be used for any purpose. Ordinary English would appear to require that a program in which a percentage of revenues must be paid to a state is a tax. However, the arrangements between sovereigns, the State and the Tribes, use the term “revenue sharing” to refer to programs of this type. This term is used ubiquitously in compacts with California and with other states, and by the Department of the Interior. Accordingly, the court adopts this practice here. In California, compacts use the term “revenue sharing” to refer to sharing of revenue between the tribe and the state, and the acronym “RSTF” to refer to the sharing of revenue between tribes. For the remainder of this order, this court uses the term “unrestricted revenue sharing” to refer to programs wherein a portion of gaming revenues is paid into the state’s general fund and the state’s use of those payments is unrestricted.

Post-1999 California compacts with unrestricted revenue sharing provisions specify that revenue sharing is offered in exchange for the “meaningful concession” of continued tribal exclusivity. See, e.g., Tribal-State Gaming Compact between The Coyote Valley Band of Pomo Indians and The State of California, §§ 4.3.1(b), 15.3 (Aug. 24, 2004) (accepted by the Secretary of the Interior at 69 Fed. Reg. 76004) available at http://www.cgcc.ca.gov/ compaets/coyote_valley%20Compact.pdf. Notwithstanding the fact that California law presently prohibits all non-tribal gaming, the State promises in these compacts to prohibit non-tribal gaming within a certain region. Id. The revenue sharing provisions become void in the event that non-tribal gaming becomes permitted within this area.

Numerous other states have also negotiated compacts with tribes that provide for unrestricted revenue sharing coupled with tribal exclusivity provisions. See, e.g., Pueblo of Sandia v. Babbitt, 47 F.Supp.2d 49, 52 (D.D.C.1999) (concerning compact negotiated with New Mexico); see also Coyote Valley II, 331 F.3d at 1115 n. 17 (noting that Connecticut, New Mexico and New York have entered compacts containing such provisions).

D. Fort Independence’s Negotiations

Having provided this background, the court turns to the facts particular to this case. Fort Independence is an Indian tribe located in Inyo County, California, and is recognized by the Secretary of the Interior. See 72 Fed. Reg. 13,648 (March 22, 2007). Fort Independence does not currently have a compact with the State, and does not conduct any Class III gaming. As a “non-compact” tribe, Fort Independence (hereinafter the “Tribe”) presently receives annual payments of $1.1 million from the RSTF.

From July 2004 to January 2008, the Tribe negotiated with the State regarding formation of a gaming compact. In general, the Tribe argues that the State negotiated in bad faith by requesting unrestricted revenue sharing and that the Tribe relinquish the right to receive RSTF payments. The parties also negotiated the range of geographic exclusivity guaranteed to the Tribe and the number of devices the Tribe would be authorized to operate. Informed by this overview, the court turns to the history of the negotiations.

1. July 2004 Request

In July 2004, Fort Independence formally requested that the State enter into Tribal-State Compact negotiations under the IGRA, 25 U.S.C. § 2710(d)(3)(A). In its request to begin negotiations, the Tribe stated:

The Fort Independence Tribe agrees with the Governor’s belief that Indian Tribes should provide compensation to the state in recognition of the unique privilege and benefit that gaming provides.

(Pl.’s Statement of Undisputed Facts (“PSUF”) 1.) The Tribe “estimate^] that the approximately 80 gaming devices the Tribe is seeking would generate a win [to the tribe] per day of about $80 per machine.” Id.

2. December 2004 Draft

In response to this request, the Tribe and the State began negotiations in the fall of 2004. (PSUF 2; Def.’s Record of Negotiations (“RN”) Ex. B) In December 2004, the Tribe provided a draft compact preamble to the State. This draft preamble mirrored the language of the 1999 compacts, expressly recognizing the benefits the Tribe would gain from its tribal exclusivity, and identifying exclusivity as a “meaningful concession.” (PSUF 6.) The State negotiator incorporated this preamble into a draft compact. (PSUF 8.) The State contends that the terms of this draft compact were based on the parties’ negotiations up to that point; the Tribe insists that the State unilaterally proposed the terms. The draft provided for revenue sharing with the State, ranging from 10 to 25 percent of the Tribe’s net win. (PSUF 8.) The draft also included a section on the RSTF, but this was marked “[open]” rather than containing any specific provisions. The parties did not discuss the draft or compact again until January 26, 2006.

3. Tribe’s Disagreement in June and July 2006

In the summer of 2006, the Tribe communicated various objections to the State regarding the State’s positions. The Tribe argued that unrestricted revenue sharing was prohibited because the State had offered an inadequate concession. (Decl. of Darcie L. Houck Supp. Pl’s Mot., Ex O.) The Tribe further argued that relinquishment of RSTF payments were prohibited, that the State was not permitting enough gaming devices, that the draft provided for too much local control over ancillary issues, and that the environmental provisions were too burdensome. Id.

4.Drafts Prepared by The Tribe

In December of 2006, the Tribe presented a photocopy of the State’s draft compact on which the Tribe had made handwritten modifications. (Houck Decl. Ex. S.) This draft, as modified, included the earlier preamble, a schedule for revenue sharing payments to the state, an RSTF section stating “use language similar to other compacts, w/$10 M threshold -> $900/machine,” and an exclusivity provision prohibiting non-tribal gaming in a 55 mile radius.

The Tribe sent the State another draft in February of 2007. (Houck Deck Ex. U.) This draft retained the earlier preamble. However, it did not provide for revenue sharing, and allowed the Tribe to continue to receive payments from the RSTF, although the draft specified that these payments would only be used for non-gaming activities.

In May of 2007, the Tribe made another proposal. (Houck Decl. Ex. X.) This time, the Tribe proposed that it would begin to share revenue once its net revenues, less debt servicing and infrastructure payments, exceeded $12 million per year. Revenue sharing obligations would be offset by the money the tribe paid for other fees, such as fees to local government for associated infrastructure. Under this proposal, the tribe would continue to receive RSTF payments until the $12 million cutoff. This proposal provided for geographic exclusivity within 100 miles.

5. The Parties’ Fall 2007 Negotiations

In August 2007, the State proposed a compact with some revenue sharing at all net revenue levels, phasing out of RSTF payments, exclusivity for 55 miles, and authorization of up to 349 devices. (Houck Decl. Ex. Z.) The day after receiving this proposal, the Tribe responded by contending that it did not have to negotiate revenue sharing and RSTF payments absent meaningful concessions.

The Tribe then counter-proposed a plan with no revenue sharing, continued receipt of the full $1.1 million RSTF payments, 349 devices, and payments to the State only for mitigation of off-reservation impacts. The Tribe supported its proposal with a “gaming market assessment,” projecting future revenue under various scenarios. The Tribe asserted that this document showed that any amount of revenue sharing would cause the Tribe to operate at a loss. The State rejected this proposal.

Fort Independence then filed the complaint in this action on February 25, 2008. The complaint alleged claims under the IGRA and under the California and United States Equal Protection Clauses. The court granted the State’s motion for judgment on the pleadings as to the Equal Protection claims by Order of September 10, 2008, 2008 WL 6137129. Pending before the court are cross motions for summary judgment on the IGRA good faith claim.

II. STANDARD

Each party has filed a motion styled as a motion for summary judgment. The Tribe asserts that the normal Fed.R.Civ.P. 56 standard applies, whereas the State does not discuss the standard applicable to its motion. Courts have varied in their handling of motions to enforce IGRA’s good faith obligation. In Indian Gaming Related Cases v. California, 147 F.Supp.2d 1011, 1020-21 (N.D.Cal.2001) (Coyote Valley I), affirmed by Coyote Valley II, 331 F.3d 1094, the court considered a tribe’s “motion for an order requiring Defendant State of California to negotiate,” which the court resolved on the papers and after a hearing without discussion of what standard applied. 147 F.Supp.2d 1011, 1013. The Ninth Circuit affirmed denial of this motion without discussing the posture of the case. In its evaluation, the Ninth Circuit weighed evidence, concluding that the evidence of good faith overcame the evidence of bad.

In contrast, in Rincon Band of Luiseno Mission Indians of the Rincon Reservation v. Schwarzenegger, No. 04-cv-1151, 2008 WL 6136699 (S.D.Cal. April 29, 2008) (hereinafter Rincon Band) the court considered cross motions for summary judgment. The court recited the standards applicable to such motions, and proceeding to resolve all issues presented in that case. That court’s resolution of the issues did not require weighing of evidence.

Here, where the parties label their motions as motions for summary judgment, the court uses the ordinary standards applicable to such motions, recognizing that this differs from the posture of the Coyote Valley cases.

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Poller v. Columbia Broadcasting System, 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir.1985); Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th Cir.1984).

Under summary judgment practice, the moving party

[Ajlways bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “[W]here the nonmoving party will bear the burden of proof at trial on a dispositive issue, a summary judgment motion may properly be made in reliance solely on the ‘pleadings, depositions, answers to interrogatories, and admissions on file.’ ” Id. Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial. Id. at 322. “[A] complete failure of proof concerning an essential element of the non-moving party’s case necessarily renders all other facts immaterial.” Id. In such a circumstance, summary judgment should be granted, “so long as whatever is before the district court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied.” Id. at 323.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); First Nat’l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir.1979), cert. denied, 445 U.S. 951, 100 S.Ct. 1600, 63 L.Ed.2d 786 (1980).

In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e); Matsushita, 475 U.S. at 586 n. 11, 106 S.Ct. 1348; First Nat’l Bank, 391 U.S. at 289, 88 S.Ct. 1575; Strong v. France, 474 F.2d 747, 749 (9th Cir.1973). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505; Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir.1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” First Nat’l Bank, 391 U.S. at 290, 88 S.Ct. 1575; T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’ ” Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e) advisory committee’s note on 1963 amendments); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir.1985).

In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); Poller, 368 U.S. at 468, 82 S.Ct. 486; SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir.1982). The evidence of the opposing party is to be believed, Anderson, 477 U.S. at 255, 106 S.Ct. 2505, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam)); Abramson v. Univ. of Haw., 594 F.2d 202, 208 (9th Cir.1979). Nevertheless, inferences are not drawn out of the air, and it is the opposing party’s obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D.Cal.1985), aff'd, 810 F.2d 898, 902 (9th Cir.1987).

Finally, to demonstrate a genuine issue, the opposing party “must do more than simply show that there is some metaphysical doubt as to the material facts.... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (citation omitted).

III. ANALYSIS

The heart of this dispute is the State’s request for revenue sharing, and the tension between IGRA’s apparent hostility to revenue sharing and the prevalence of revenue sharing agreements.

The Tribe first argues that the State has insisted on negotiating topics which are not those that “may” be included in compacts under section 2710(d)(3)(C), and that mere negotiation of these topics violates IGRA. The court concludes that both unrestricted revenue sharing (when tied to exclusivity) and forfeiture of RSTF payments are issues that directly relate to gaming under section 2710(d)(3)(C)(vii), such that provisions relating to these issues “may” be included in compacts under section 2710(d)(3)(C).

Second, the Tribe argues that revenue sharing and forfeiture of RSTF payments are taxes which the state has impermissibly imposed or demanded in violation of sections 2710(d)(4) and (d)(7)(B)(iii)(II). The court concludes that forfeiture of RSTF payments is not a tax, but that revenue sharing is, and that there is a triable question as to whether the state has offered a meaningful concession in exchange for the revenue sharing provisions.

Third and finally, the remaining evidence does not permit summary judgment as to good or bad faith. The parties separately dispute whether the State has provided evidence sufficient to demonstrate its good faith. Accordingly, the question regarding a meaningful concession is material, and the parties’ motions must be denied.

A. Method of Statutory Interpretation

Resolution of this case turns almost entirely on interpretation of IGRA. The court is guided by the principles of deference to agency interpretation of statutes and of interpreting statutes passed for the benefit of tribes in a way that favors tribal interests.

The interpretation of statutes that are administered by executive agencies, and concomitant judicial deference to agency interpretation, has received significant recent attention from the courts. See, e.g., Barnhart v. Walton, 535 U.S. 212, 222, 122 S.Ct. 1265, 152 L.Ed.2d 330 (2002), United States v. Mead Corp., 533 U.S. 218, 230, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The cases have established a three step process for “Chevron” interpretation. Wilderness Soc’y v. United States FWS, 353 F.3d 1051, 1060 (9th Cir.2003) (en banc), amended by 360 F.3d 1374 (2004). First, the court must determine whether the statutory text is ambiguous. This determination is made with reference to ordinary textual tools of interpretation. For example, when making this threshold determination,

“a reviewing court should not confine itself to examining a particular statutory provision in isolation.” Rather, “[t]he meaning — or ambiguity — of certain words or phrases may only become evident when placed in context.... It is a ‘fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’ ”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007) (quoting FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000)) (internal citations omitted). Second, if the text is ambiguous, the court then determines whether the agency interpretation is of a type entitled to deference under Chevron. Mead Corp., 533 U.S. at 229-30, 121 S.Ct. 2164. If the agency interpretation is entitled to Chevron deference, the third step is to determine whether the agency interpretation is a reasonable interpretation of the statute. If so, the court adopts it. If the agency interpretation is not entitled to deference under Chevron, it may nonetheless be entitled to a distinct form of deference under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). See Marmolejo-Campos v. Holder, 558 F.3d 903, 909 (9th Cir.2009) (en banc).

A second canon of interpretation is that statutes passed to benefit Tribes should be interpreted in light of this purpose. See, e.g., Montana v. Blackfeet Tribe, 471 U.S. 759, 766, 105 S.Ct. 2399, 85 L.Ed.2d 753 (1985). When Chevron deference is owed to an agency interpretation, however, Ninth Circuit authority provides that Chevron deference trumps application of the Blackfeet canon. Confederated Salish & Kootenai Tribes v. United States, 343 F.3d 1193, 1198 (9th Cir.2003) (citing Blackfeet Tribe, 471 U.S. at 766, 105 S.Ct.2399). As discussed below, the court need not decide whether this hierarchy applies when the agency receives Skidmore deference. See Shields v. United States, 698 F.2d 987, 991 (9th Cir.1983).

B. Objections to Topics of Negotiation, § 2710(d)(3)(C)

Section 2710(d)(3)(C) provides that compacts “may include provisions relating to” a list of topics, including “subjects that are directly related to the operation of gaming activities.” § 2710(d)(3)(C)(vii). The Tribe argues that both the discontinuation of RSTF payments and the unrestricted revenue sharing provision fall outside this list of topics.

As to RSTF payments, the Ninth Circuit has already held that the RSTF program falls within section 2710(d)(3)(C)(vii). Coyote Valley II, 331 F.3d at 1111.

Congress sought through the IGRA to “promotfe] tribal economic development, self-sufficiency, and strong tribal governments.” The RSTF provision advances this Congressional goal by creating a mechanism whereby all of California’s tribes — -not just those fortunate enough to have land located in populous or accessible areas — can benefit from class III gaming activities in the State.

Id. (quoting § 2701(1), emphasis in original). Thus, this topic directly relates to gaming, and no further analysis is required.

The Tribe’s arguments as to whether unrestricted revenue sharing is “directly related to” gaming raise novel issues regarding the effect of a topic’s omission from the list of factors that “may” be included in compacts. The State argues that the revenue sharing is “directly related to” gaming, and that the State may therefore insist upon inclusion of this provision. The Tribe argues that the revenue sharing is not directly related to gaming, and that as a result, either the State cannot insist on negotiating this issue (although the Tribe may agree to do so) or that negotiation of this issue is prohibited.

These three positions respectively correspond to the treatment of mandatory, permissive, and prohibited topics of negotiation recognized under the National Labor Relations Act. See Retlaw Broadcasting Co. v. NLRB, 172 F.3d 660, 665 (9th Cir.1999) (discussing these three categories); see also Coyote Valley I, 147 F.Supp.2d at 1020-21 (cases interpreting the NLRA provide guidance in interpreting IGRA’s good faith provisions, although NLRA caselaw cannot be applied “wholesale”). Under the NLRA, employers and employee representatives have an “obligation ... to ... confer in good faith with respect to wages, hours, and other terms and conditions of employment.” 29 U.S.C. § 158(d). Courts interpreting this language have recognized a trichotomy of subjects. The subjects about which parties are obliged to confer are “mandatory” subjects. For these, a party may insist on its position relative to these provisions even if doing so leads to impasse. NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 350, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958). In general, “all other subjects are permissive subjects.” Retlaw Broadcasting, 172 F.3d at 665 (quotation omitted). “The parties may bargain collectively on permissive terms, but they are not required to do so.” Id. Thus, a party may not “insist on a permissive subject to the point of impasse.” Id. (citing Borg-Warner, 356 U.S. at 349, 78 S.Ct. 718). Third, in an exception to the general rule that all un-enumerated subjects are permissive, subjects “proscribed by federal or, where appropriately applied, state law” are prohibited subjects that may not be negotiated. Idaho Statesman v. NLRB, 836 F.2d 1396, 1400 (D.C.Cir.1988). For example, the NLRA provides that a contract to boycott another employer is unenforceable. NLRA § 8(e), 29 U.S.C. § 158(e). Parties are therefore prohibited from negotiating this topic.

Returning to the IGRA, as explained below, this court concludes that topics other than those enumerated by section 2710(d)(3)(C) are prohibited topics of negotiation. Enumerated topics may be mandatory or permissive. Accordingly, if unrestricted revenue sharing did not directly relate to gaming, then negotiation of it would be strong, if not determinative, evidence of bad faith. The court concludes, however, that unrestricted revenue sharing directly relates to gaming within the meaning of 2710(d)(3)(C)(vii).

1. Under Section 2710(d)(3)(C), Negotiation of Topics Not Enumerated Is Prohibited

The statutory text of section 2710(d)(3)(C) sharply differs from the NLRA. The NLRA enumerates topics for which parties have an “obligation ... to ... confer,” 29 U.S.C. § 158(d). IGRA, in contrast, enumerates topics that “may” be included in compacts, and by extension, that may be negotiated. § 2710(d)(3)(C). Under the inclusio unius est exclusio alterius canon of construction, both lists are presumed to be exhaustive. See, e.g., United States v. 4,432 Mastercases of Cigarettes, 448 F.3d 1168, 1190 (9th Cir.2006). Thus, while topics not enumerated by NLRA are merely topics for which the parties have no obligation to negotiate (i.e., permissive or prohibited topics), topics not enumerated by IGRA are ones which the parties may not negotiate (i.e., prohibited topics). The statute is not ambiguous in this regard.

In Seminole Tribe, the Supreme Court stated that “ § 2710(d)(3) ... describes the permissible scope of a Tribal-State compact,” implying that provisions outside of this section were prohibited. 517 U.S. at 49, 116 S.Ct. 1114. Similarly, Coyote Valley II concluded that the three compact provisions at issue were within section (d)(3)(C), implying that they would have been prohibited if they were not without stating this point directly. 331 F.3d at 1111, 1114. See also Wisconsin v. Ho-Chunk Nation, 512 F.3d 921, 933 (7th Cir. 2008). These interpretations, while dicta, support the court’s conclusion, and the court is not aware of any opinion squarely addressing the issue.

Although the court holds that “may” as used in this section is unambiguous, such that further inquiry is not required, the court notes that this interpretation is consistent with both the legislative history of IGRA and the Department of the Interi- or’s interpretations and implementation of the statute. According to the Senate’s Select Committee on Indian Affairs’ report, section 2710(d)(3)(C) “describes the issues that may be the subject of negotiations between a tribe and a State in reaching a compact.... The Committee does not intend that compacts be used as a subterfuge for imposing State jurisdiction on tribal lands.” S. Rep. 100-446, *14-15 (Aug. 3, 1988), U.S.Code Cong. & Admin.News 1988, pp. 3071, 3084-85. In like manner, the Department of Interior has held that section 2710(d)(3)(C) “limits the proper topics for compact negotiations to those that bear a direct relationship to the operation of gaming activities.” Letter from Principal Deputy Assistant Secretary of Indian Affairs to Kenneth Blanchard, Governor, Absentee Shawnee Tribe of Oklahoma (Dec. 17, 2004) (approving in part the Shawnee-Oklahoma Compact). The Department of Interior has enforced this limitation by rejecting a compact provision that would terminate the gaming compact in the event that the Tribe materially breached the terms of a separate tobacco compact, concluding that even though the Tribe and State had agreed to this provision, it violated section 2710(d)(3)(C). Id.

Thus, the court concludes that parties may not negotiate topics other than those enumerated by IGRA. Turning to those that are enumerated, all such topics may be negotiated without violating section 2710(d)(3)(C). Moreover, a party may in at least some instances insist on its position with respect to negotiation of these topics. Coyote Valley II, 331 F.3d at 1111 (“the State did not lack good faith when it insisted that Coyote Valley adopt [the RSTF provision] as a precondition for entering a Tribal-State compact.”) (emphasis added), id. at 1114 (“the State’s insistence on” the Special Distribution Fund was permissible). The panel in Coyote Valley II did not explicitly state that it used “insist” in the sense used under the NLRA, namely, bargaining to impasse. The facts of that case, however, indicate that this is what occurred. Such insistence is not always permissible, as demonstrated by the panel’s treatment of sections 2710(d)(4) and (d)(7)(B)(iii)(II), discussed below. Here, the court merely notes that the topics enumerated by section 2710(d)(3)(C) are either permissive or mandatory as those terms are used under the NLRA.

2. Unrestricted Revenue Sharing and § 2710(d) (3) (C)(vii)

Pursuant to the above analysis, if unrestricted revenue sharing provisions do not directly relate to gaming or otherwise fall within section 2710(d)(3)(C), then such provisions violate IGRA and are prohibited. The court concludes that phrase “directly related to ... gaming” is ambiguous and that the Department of the Interior’s interpretation of the phrase is not entitled to Chevron deference. Nonetheless, Skid-more deference to the agency, the Blackfeet Tribe canon, and the ordinary tools of statutory interpretation together compel the conclusion that unrestricted revenue sharing provisions that are tied to exclusivity provisions directly relate to gaming within the meaning of section 2710(d)(3)(C)(vii).

a. Section 2710(d)(3)(C)(vii) Is Ambiguous

The only subsection of section 2710(d)(3)(C) potentially encompassing unrestricted revenue sharing is subsection (vii), a catch-all provision for “any other subjects that are directly related to the operation of gaming activities.” As explained above, in Coyote Valley II, the Ninth Circuit held that both the RSTF and Special Distribution Funds provision of the 1999 Compacts directly related to gaming. The Ninth Circuit’s analysis focused primarily on the uses to which the funds would be put. 331 F.3d at 1111. This relationship is absent here, where the funds may be used for any purpose. No circuit court has ruled on the lawfulness of an unrestricted revenue sharing provision, and this court is not aware of an district court opinion ruling on this issue. See Wisconsin v. Ho-Chunk Nation, 512 F.3d 921, 932 (7th Cir.2008) (concluding that the validity of a revenue sharing provision was not before it, but noting that as of mid 2008, no Circuit decision other than Coyote Valley II had addressed revenue-sharing). As the court understands the issue, there are four other potential relationships between revenue sharing and gaming activity. Three of these are plainly outside the scope of the statute, but the statute is unclear as to whether the fourth relationship is “direct.”

The State argues that revenue sharing directly relates to gaming because it provides an incentive to the State to negotiate and enter compacts on terms that are otherwise favorable to Tribes. According to this argument, revenue sharing provisions thereby increase the amount of gaming that will be conducted, and further the Tribe’s ability to profit from gaming. Revenue sharing provisions may in fact have this effect. Nonetheless, the statute cannot be read to encompass this type of relationship. Every conceivable compact provision will affect either the State’s or the Tribe’s willingness to enter the compact. If this incentivizing effect was sufficient to constitute a “direct relationship” to gaming, then every conceivable provision would satisfy section 2710(d)(3)(C)(vii). The court cannot accept this construction of the statute, because it renders a restrictive term a nullity. “[A] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.” Corley v. United States, - U.S. -, 129 S.Ct. 1558, 1563, 173 L.Ed.2d 443 (2009) (quoting Hibbs v. Winn, 542 U.S. 88, 101, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004)) (internal quotation marks omitted).

A more obvious relationship between revenue sharing and gaming is that the revenue comes from gaming. When the statute is read as a whole, however, it is clear that this fact does not bring revenue sharing within the scope of section 2710(d)(3)(C)(vii). See Dolan v. United States Postal Serv., 546 U.S. 481, 485, 126 S.Ct. 1252, 163 L.Ed.2d 1079 (2006) (“Interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute, _”). Subsection (iii) provides that compacts may include “assessments,” a form of revenue sharing, tied to “defray[ment of| the costs of regulating [gaming] activity.” § 2710(d)(3)(C)(iii). If all revenue sharing was permitted under subsection (vii), there would be no need for subsection (iii) to permit a specific form of revenue sharing. In addition, IGRA’s general hostility to taxation, §§ 2710(d)(4), (d)(7)(b)(iii)(II), indicates that this relationship is not the type envisioned by (d)(3)(C)(vii).

Finally, revenue sharing is related to gaining in that gaming is related to tribal exclusivity, and tribal exclusivity is purportedly related to revenue sharing. The relationship between gaming and exclusivity is clearly direct. “Gaming activity” may refer to all gaming, or only to gaming on tribal lands. If it is the former, then prohibition of non-tribal gaming directly relates to gaming activity. If it is the later, then exclusivity still relates to tribal gaming in that exclusivity makes tribal gaming substantially more profitable. This relationship, although slightly attenuated, is nonetheless as direct as the relationships approved by the Ninth Circuit in Coyote Valley II. Thus, exclusivity directly relates to gaming activity, and the court need not resolve any ambiguity as to the meaning of “gaming activity.”

The second step is the relationship between exclusivity and revenue sharing. There are two such relationships. The first is the fact that in negotiations, exclusivity was offered in exchange for revenue sharing. The fact that one provision directly relates to gaming cannot mean that any other provision that is offered in exchange also directly relates to gaming, because this would eviscerate the prohibition imposed by section 2710(d)(3)(C). That is, such a construction would allow any provision to be included in a compact simply by connecting it to a permissible provision during negotiations.

Here, however, exclusivity and revenue sharing are related by more than the fact that in negotiation one is offered in exchange for the other. Exclusivity causes the state to forgo revenue that could have been raised by taxing non-tribal gaming, and the revenue sharing provision purportedly offsets this loss of revenue. The court cannot conclude that the text of the statute unambiguously indicates that this final relationship is direct or indirect. Unlike the other relationships considered above, the statutory context does not clearly exclude this type of relationship. Absent a blanket exclusion, the statute does not provide a clear answer as to how attenuated a relationship may be while still being direct. The Ninth Circuit’s interpretation of the statutory text in Coyote Valley II does not resolve this ambiguity. On one hand, unrestricted revenue sharing is less directly related to gaming than are the SDF and labor provisions accepted by Coyote Valley II. Those provisions involved collecting funds for payment of costs incurred by gaming itself, and for rights of workers employed by gaming facilities. 331 F.3d at 1114, 1116. On the other hand, revenue sharing to offset revenue lost through exclusivity is not obviously less directly related to gaming than the RSTF provision, which is related to gaming in that it reallocates funds raised by gaming in a manner that effectuates IGRA’s purpose. Id. at 1111. Although revenue sharing and exclusivity have a less obvious connection to the statute’s purpose, the connection to gaming itself is comparable, and the Ninth Circuit neither implied nor concluded that only provisions that further the statute’s primary purpose suffice. Accordingly, the statutory text is ambiguous as to whether revenue sharing, when offered in connection with exclusivity, is directly related to gaming operations. The court therefore turns to the next step in the Chevron analysis.

b. The Agency Interpretation Is Not Entitled to Deference Under Chevron

Once it is determined that a statute is ambiguous, the court must determine whether an agency’s interpretation of the statute is entitled to deference under Chevron. In Mead, the Supreme Court established that an agency interpretation receives Chevron deference only when (1) it is reasonable to believe that “Congress delegated authority to the agency generally to make rules carrying the force of law,” and (2) “the agency interpretation claiming deference was promulgated in the exercise of that authority.” Mead, 533 U.S. at 226-27, 121 S.Ct. 2164; see also MarmolejoCampos, 558 F.3d at 908. In interpreting Mead, the Ninth Circuit has held that an interpretation has the force of law only when it has a precedential effect that binds third parties. “[T]he precedential value of an agency action [is] the essential factor in determining whether Chevron deference is appropriate.” Marmolejo-Campos, 558 F.3d at 909 (quoting Alvarado v. Gonzales, 449 F.3d 915, 922 (9th Cir.2006)) (emphasis in original). The Ninth Circuit has repeatedly applied this rule. In considering the Bureau of Immigration Appeals’ affirmation of an immigration judge’s interpretation of the phrase “paroled into the United States” in 8 U.S.C. § 1255, the Ninth Circuit declined to extend Chevron deference “ ‘[b]ecause the BIA’s decision was an unpublished disposition, issued by a single member of the BIA, which does not bind third parties.’ ” Ortega-Cervantes v. Gonzales, 501 F.3d 1111, 1113 (9th Cir.2007) (quoting Garda-Quintero v. Gonzales, 455 F.3d 1006, 1012 (9th Cir.2006)). Although the BIA has the authority to establish binding precedent through case-by-case adjudication, the unpublished, single-member decision was not an exercise of that authority. Garcia-Quintero, 455 F.3d at 1012; see also 8 C.F.R. § 1003.1(e) (specifying that such decisions are non-precedential). Similarly, the Ninth Circuit has held that the U.S. Fish and Wildlife Service’s decision to issue a permit to operate a project in a wilderness area did not “ ‘bespeak the legislative type of activity that would naturally bind more than the parties to the ruling,’ ” and was not entitled to Chevron deference. Wilderness Soc’y, 353 F.3d at 1067 (quoting Mead, 533 U.S. at 232, 121 S.Ct. 2164). See also High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630, 648 (9th Cir.2004).

The Department of the Interior interprets IGRA when it is presented with a compact for approval. In some cases, the agency’s approval has been accompanied by an explicit interpretation of section 2710(d)(3)(C). For example, the agency rejected a gaming compact provision that would trigger nullification of a separate tobacco compact. Letter from Principal Deputy Assistant Secretary of Indian Affairs to Kenneth Blanchard, Governor, Absentee Shawnee Tribe of Oklahoma (Dec. 17, 2004). This court is not aware of any explicit interpretation of section 2710(d)(3)(C)(vii) as it specifically applies to revenue sharing. However, the Secretary has repeatedly approved compacts that contain exclusivity and revenue sharing provisions, in California and elsewhere. By so doing, the agency has implicitly concluded that revenue sharing is consistent with IGRA, and thus with section 2710(d)(3)(C)(vii). Indeed, the agency has demonstrated that it will reject compacts that it determines violate this provision.

The Department of Interior’s decisions to approve individual State-Tribal Gaming Compacts appear not to have a precedential effect that binds third parties, although the parties have not briefed this issue. The Department’s approvals result from a relatively informal procedure, under which the State and Tribe submit a copy of the compact and documents indicating their approval thereof to the Secretary, who notifies the parties in writing of his decision within 45 days. 25 C.F.R. §§ 293.8-293.14. Formality of procedures is not determinative, but it is one indication that an interpretation has the force of law. Mead, 533 U.S. at 230, 121 S.Ct. 2164. In addition, nothing indicates that the agency’s approval of one compact establishes a precedent that binds the agency in future cases, and thus also binds third parties. Instead, the agency is apparently able to change its interpretation of IGRA, subject to the ordinary restraints on agency action. Thus, the court concludes that the agency’s approval of individual compacts, and the implicit interpretation of section 2710(d)(3)(C) as applied to revenue sharing contained therein, does not bind third parties, and is therefore not entitled to deference under Chevron. Marmolejo-Campos, 558 F.3d at 909.

c. Interpreting IGRA under Skidmore and Blackfeet Tribe

Because the statutory text is ambiguous and the agency interpretation is not entitled to Chevron deference, the court must itself resolve the ambiguity in the statute. Here, the court is primarily guided by two canons of interpretation. Although the agency interpretation is not entitled to deference under Chevron, the court finds deference to be appropriate under Skidmore. And because IGRA was enacted in part to benefit tribes, the Blackfeet Tribe canon directs the court to interpret IGRA in a manner consistent with that purpose. Here, the court concludes that the Blackfeet canon does not squarely support either interpretation, and the court thereby adopts the Department of Interior’s position, concluding that unrestricted revenue sharing tied to exclusivity arrangements directly relates to gaming activities.

While Chevron deference takes its force from an assumed Congressional delegation of authority to the agency, Skidmore deference reflects the fact that the agency has experience with the statute and is likely to reach a reasoned interpretation regardless of whether Congress intended the agency’s interpretation to be binding. Mead, 533 U.S. at 230, 121 S.Ct. 2164. In contrast with Chevron deference, Skidmore deference is not all-or-nothing. “The weight [accorded to an administrative] judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Skidmore, 323 U.S. at 140, 65 S.Ct. 161.

In this case, the agency has not provided a detailed explanation of its interpretation. Nonetheless, the interpretation embodied by the approvals is longstanding, and has been frequently and consistently applied. Congress is undoubtedly aware of this interpretation, yet it has not chosen to revisit IGRA. These facts weigh heavily in favor of deference. This court must also acknowledge the extremely disruptive effect that would result from a finding to the contrary. Finally, as discussed above, the agency’s interpretation of the statute is plausible. Accordingly, the agency’s interpretation of whether section 2710(d)(3)(C) encompasses unrestricted revenue sharing provisions connected to exclusivity is entitled to deference under Skidmore. See also Artichoke Joe’s California Grand Casino v. Norton, 216 F.Supp.2d 1084, 1126-27 (E.D.Cal.2002) aff'd by 353 F.3d 712, 730 (9th Cir.2003).

The Blackfeet canon directs courts to interpret ambiguity in statutes passed for tribes’ benefit in a way that favors tribes. Here, the Tribe argues that this canon should cause the court to reject the agency’s interpretation. Although the Tribe here argues that a prohibition on revenue sharing is in its interest, the issue is the interest of tribes generally. Coyote Valley II, 331 F.3d at 1111. These interests are unclear. When IGRA was drafted, Congress concluded that States were in a position of superior bargaining power. S. Rep. 100-146, *14-15, U.S.Code Cong. & Admin.News 1988, pp. 3071, 3084-85. Limiting the scope of permissible negotiations is an apparent aspect of Congress’s attempt to prevent States from exploiting this power. Thus, Congress may have concluded that it was in tribes’ interests to interpret section 2710(d)(3)(C) narrowly. However, the Supreme Court’s decision that IGRA did not abrogate states’ sovereign immunity leaves the tribes’ interests less clear. Seminole Tribe, 517 U.S. at 47, 116 S.Ct. 1114. In other states, sovereign immunity has not been waived, and tribes therefore cannot sue to enforce states’ obligation to negotiate under IGRA. See Pueblo of Sandia v. Babbitt, 47 F.Supp.2d 49, 51 (D.D.C.1999). Some tribes have used revenue-sharing agreements to entice non-waiving and recalcitrant states into negotiations. Id. Concluding that revenue sharing provisions are not directly related to gaming activities, and that revenue sharing is therefore prohibited, would eliminate one of the only tools these tribes have to encourage states to negotiate compacts. Accordingly, it is not at all clear that a statutory prohibition on unrestricted revenue sharing would provide the greatest benefit to tribes generally.

Because the Blackfeet canon has no clear application here, the court need not decide the relationship between the Blackfeet canon and Skidmore deference. The court defers under Skidmore to the Department of Interior’s longstanding and consistent, albeit implicit, interpretation of the statute. When an unrestricted revenue sharing provision is tied to an exclusivity provision, the revenue sharing is “directly related” to gaming activities, and therefore within the scope of section 2710(d)(3)(C)(vii). Candor requires the court to acknowledge that there are strong arguments supporting contrary interpretations of this section. Nevertheless, the court holds that the State’s efforts to negotiate this topic did not violate section 2710(d)(3)(C).

C. Fee Demands and Meaningful Concessions

The Tribe next argues that the State’s conduct amounts to either an “imposition” of or a “demand for” a tax. Under section 2710(d)(3)(C)(iii), a state may tax gaming “in such amounts as are necessary to defray the costs of regulating such activity.” Section 2710(d)(4) provides that aside from such taxes, IGRA does not provide States with “authority to impose any tax, fee, charge, or other assessment,” and “[n]o State may refuse to enter into ... negotiations ... based on the lack of [such] authority.” Section 2710(d)(7)(b)(iii)(II) provides that a “demand ... for direct taxation” is “evidence” of bad faith. A compact provision can violate these sections even if it falls within section 2710(d)(3)(C). Coyote Valley II, 331 F.3d at 1112.

IGRA does not define “impose” and “demand.” In ordinary usage, the terms connote different contexts. Imposition refers to a state acting unilaterally, and compelling a tribe to pay a tax. Demand, on the other hand, refers to behavior during bilateral negotiation. Rather than a compulsion, a demand is insistence on acceptance.

As the Ninth Circuit has interpreted the terms, they are functionally equivalent. Without explicitly defining “imposition”, Coyote Valley II explained what it was not. Where a state “offers meaningful concessions in return for fee demands, it does not exercise ‘authority to impose’ anything.” Coyote Valley II, 331 F.3d at 1112. Even when “the State[] insist[s] on” a tribe’s acceptance of a fee in exchange for a meaningful concession offered by the State, the State does not “impose” a fee. Id. at 1114. The Secretary of the Interior apparently concludes that a State imposes a fee whenever a compact includes a fee which is not offset by a meaningful concession. Letter from the Principal Deputy Assistant Secretary of Indian Affairs to Kenneth Blanchard, Governor of the Absentee Shawnee Tribe of Oklahoma (December 17, 2004). Coyote Valley II indicated that imposition of a fee is bad faith per se. When a concession is inadequate, insistence on a fee might “amount to an attempt to ‘impose’ a fee, and therefore amount to bad faith on the part of a State.” Coyote Valley II, 331 F.3d at 1112 (emphasis added).

A “demand” for a fee, on the other hand, is merely evidence of bad faith, and this evidence may be outweighed by evidence of good faith. Coyote Valley II illustrated this distinction by assuming that the State had demanded a fee even though the State did not impose one, only to hold that any evidence of bad faith was outweighed by evidence of good faith. Id. at 1114. Despite this distinction, the evidence of good faith and the evidence of a meaningful concession were largely one and the same. The first evidence of good faith with respect to the demand for revenue sharing was that “the tribes receive ... an exclusive right to conduct class III gaming in the most populous State in the country,” which the court had earlier identified as a meaningful concession. The second piece of evidence was that “the terms of the compact restrict what the State can do with the money it receives from the tribes pursuant to the [revenue sharing] provision, and all of the purposes to which the money can be put are directly related to gaming.” This language merely reiterates Coyote Valley II’s analysis of section 2710(d)(3)(C). As explained above, this court concludes that revenue sharing directly relates to gaming when it is tied to an exclusivity provision.

The effect of Coyote Valley IF s analysis is that, at least with respect to revenue sharing, the existence of a meaningful concession, together with compliance with section 2710(d)(3)(C), is sufficient to determine both whether a fee is imposed and whether the fee demand is itself proof of bad faith.

Despite reaching this conclusion, the court notes that as with many other issues in this case, the relationship between sections 2719(d)(4) and (d)(7)(B)(iii)(II) presents a difficult and largely novel question. The court responds to two potential concerns. Coyote Valley II explained, in reference to the weighing of evidence of good and bad faith under section (d)(7)(B)(iii)(II), that “the good faith inquiry is nuanced and fact-specific, and not amenable to bright-line rules.” 331 F.3d at 1113. Here, the court adopts the rule that a demand for a tax is not sufficient to demonstrate bad faith when the demand comports with section 2710(d)(3)(C) and the state offers a meaningful concession. This rule comports with Coyote Valley II because, as illustrated below, the question of whether a meaningful concession has been offered is itself “nuanced and fact specific,” and because the broader good faith inquiry, in which the tribe may introduce evidence other than the demand for a tax, lies outside the scope of this rule.

A second concern is that treating imposition and demand as near-equivalents renders one statutory provision surplusage. However, the two provisions use different language for different purposes. Section 2710(d)(7)(B)(iii)(II) explains that certain negotiating behavior indicates bad faith, whereas section 2710(d)(4) explains that the State has no power outside of its power in negotiation.

Having laid this groundwork, the court turns to the facts of this case. As explained in the following sections, the court concludes that surrender of the right to receive RSTF payments is not a “tax, fee, charge, or other assessment,” within the meaning of section 2710(d)(4) or a “direct tax” within the meaning of section 2710(d)(7)(B)(iii)(II). Unrestricted revenue sharing is such a tax, and the State’s offer of exclusivity is a concession, but a triable question remains as to whether this concession is meaningful.

1. Forfeiting Receipt of RSTF Payments Is Not A Tax

The Tribe argues that the forfeiture of the right to receive payments from