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Cybersecurity, Sports Betting, Hemp, and Child Welfare: 2020 Indian Law Updates

By Procopio Partner Mindy M. Morton and Associates Gabriela Magee and Racheal M. White Hawk

Tribes saw significant developments in the laws governing Indian country in 2019. Among those changes was a district court decision dismantling the forty-year-old Indian Child Welfare Act (ICWA), a decision that is currently being reviewed by the full U.S. Court of Appeals for the Fifth Circuit. Tribes also saw the development of new business opportunities and regulations in hemp production. Additionally, proposed and recently enacted legislation at the state and federal levels could have significant impacts on tribal gaming and business operations, including the new cybersecurity law in California and a proposed amendment to the Indian Gaming Regulatory Act (IGRA) regarding internet sports wagering.

Each of these major changes in the law will continue to evolve as the year 2020 progresses. We provide summaries of a few notable developments below.

California Legislation

California Consumer Privacy Act California Civil Code Section 1798.100 et seq.

The California Consumer Privacy Act (CCPA), set to take effect July 2020, requires compliance by all businesses that (1) do business in California; (2) collect California consumers’ personal information and (3) do one of the following: earn annual gross revenue in excess of $25 million, buy, receive, sell or share for commercial purposes the personal information of 50,000 or more consumers, households or devices per year, or gets at least half of its annual revenues from selling the personal information of consumers. To comply, companies must disclose what types of personal information are disclosed, why they are collecting it, with whom the information is being shared, provide consumers a description of their rights under the CCPA, and allow consumers to opt out of having their personal information sold or disclosed to third parties.

Whether the CCPA applies to tribal businesses such as tribal gaming enterprises is still unclear. However, federal law may soon track similar requirements of the CCPA. Therefore, tribes should consider preparing their operations for the application of cybersecurity laws, either through the CCPA or a federal law that could apply similar standards and requirements.  

Proposed California Legislation

California Sports Wagering Regulation and Unlawful Gambling Enforcement Act and ACA-16 (Ballot Initiative and Legislation Respectively)

On November 14, 2019, four tribes in California proposed a ballot initiative called the “California Sports Wagering Regulation and Unlawful Gambling Enforcement Act,” which has the support of at least 18 tribal governments in California. The initiative would permit sports betting to be conducted by (1) “Approved Racetrack Operators”, or horse racing tracks, in person and at the horse racing track’s facility after January 1, 2022; and (2) Indian tribes on Indian lands pursuant to Tribal-State Compacts. Bets may be placed on professional, college, or amateur sports or athletic events.

The initiative prohibits the placing of sports bets by individuals under 21 years of age, advertising to children, wagering on high school sports and California-based college teams, and sports wagering on any currently illegal sporting event or contest, including animal contests such as dog racing. The horse racing tracks will be taxed by the State at 10% for sports wagering. The initiative also establishes a California sports wagering fund, which the State may use for depositing taxes on the horse racing tracks as well as any payments made to the State under Tribal-State Compacts. Of funds received by the State, 30% will be used for problem gambling, mental health, and enforcement of sports wagering and other forms of gaming in California, and the remainder will go toward the General Fund. The initiative also adds civil penalties of up to $10,000 per violation of certain sections of California’s Gaming Code, and adds the ability of citizens to enforce such sections as private attorneys general. The tribes will have until about June 25, 2020 to collect approximately 1 million signatures for the initiative to appear on the November 2020 ballot.

Competing with the above tribal ballot initiative, California Senator Bill Dodd and Assembly member Adam Gray have introduced a bill to the California Legislature, ACA-16, proposing to amend the California Constitution by allowing the Legislature to authorize and provide for sports wagering by statute. Two-thirds of the Assembly and Senate must vote in favor of this amendment in order to place it on the November 2020 ballot. A joint Senate-Assembly informational hearing will be held on January 8 in Sacramento for the Legislature to develop its proposed model for sports wagering in California.

Proposed Federal Legislation

Federal Lawmakers Introduce Mobile Sports Betting Amendments to Indian Gaming Regulatory Act

On December 19, 2019, four members of the U.S. House of Representatives introduced H.R. 5502, which seeks to amend the Indian Gaming Regulatory Act (IGRA). The bill would provide clarification as to when internet sports betting is considered on or off Indian lands under IGRA. The bill is co-sponsored by three New York Republican and Democratic U.S. Representatives (Reps. Brindisi, Katko, and Higgins) and one Arizona Republican U.S. Representative (Rep. Gosar), and is entitled “Removing Federal Barriers to Offering of Mobile Sports Wagers on Indian Lands Act.”

The bill has three main components. First, for purposes of IGRA only, a sports wager made through the internet (including through a website or a mobile app) would be deemed to be made where the server or other computer equipment accepting the bet (the “Server”) is physically located. Second, the bill further provides that a sports wager is exclusively on Indian lands under IGRA if the person placing the bet and the Server are located in the same state and the applicable state and tribe have entered a gaming compact authorizing internet sports wagering. Third, the bill removes the revenue and term requirements under IGRA for management contracts, which require that management contracts must not provide more than 30% of net gaming revenue to third party operators (or 40% if additional requirements are met) and must not exceed five years in duration (or seven years if additional requirements are met). 

Federal Regulations

Establishment of a Domestic Hemp Production Program 7 C.F.R. Section 990 et seq.

On October 31, 2019, the Agricultural Marketing Service for the U.S. Department of Agriculture (USDA) published an interim final rule establishing a domestic hemp production program (Interim Final Rule). The Interim Final Rule will be in effect from October 31, 2019, to November 1, 2021. The Interim Final Rule allows hemp producers to legally produce and sell hemp with a hemp production license issued by a state or tribe with a USDA-approved hemp production plan or issued directly by the USDA.
Tribal governments, similar to states, are able to create and submit a plan regulating the production of hemp within their respective jurisdictions. The plan must meet the requirements of the Interim Final Rule and be approved by the USDA before any hemp production licenses can be issued under it. Compliance with the approved plan and the Interim Final Rule is critical to the success of a tribal hemp production program, as there are significant penalties and sanctions for violating the Interim Final Rule and/or an approved USDA plan.

The comment period has been extended to January 29, 2020, and tribes are encouraged to submit their comments to ensure the final rule meets the needs and addresses the unique concerns of tribal governments, who, through its various governmental arms, may have a dual role in a hemp production program as a regulator and a producer.

Federal Case Law

Brackeen v. Bernhardt, Case No. 18-11479 in the U.S. Court of Appeals for the Fifth Circuit

This year, after a panel of the U.S. Court of Appeals for the Fifth Circuit upheld the Indian Child Welfare Act (ICWA) as constitutional, the Fifth Circuit vacated the panel decision and granted a rehearing of Brackeen v. Bernhardt en banc. ICWA has been under attack across the country with numerous cases being filed in attempts to dismantle ICWA and the foundations of federal Indian law.

ICWA is a law that was enacted over 40 years ago to address the assimilationist policies of the federal government toward Native Americans. Before ICWA was passed, more than 25% of Indian children were forcibly removed from their homes and 90% of those children were placed in non-Indian homes; this happened for a period of about 40 years before Congress recognized the harm it was inflicting on tribal communities and put a stop to it by enacting ICWA. ICWA is designed to protect the best interests of Indian children and protect tribal families and communities by, among other things, allowing cases involving Indian children to be transferred from state to tribal courts and requiring preferences for placement of Indian children first with their extended family members, second with tribal members if no extended family member is available, third with other Indians if no tribal members are available, and finally with non-Indians if no one in the preceding categories is available.

In the Fifth Circuit case, Brackeen v. Bernhardt, the plaintiffs include non-Indians seeking to adopt Indian children and the state governments of Texas, Indiana, and Louisiana. Plaintiffs sued the federal government (and four tribes intervened as defendants), arguing ICWA is unconstitutional. Plaintiffs argue ICWA’s placement preferences violate the Equal Protection Clause of the U.S. Constitution, and ICWA’s provisions violate the anti-commandeering and non-delegation doctrines. Plaintiffs initially lost on the merits on all claims at the Fifth Circuit, but the court has granted a rehearing en banc (or with the full court) with oral argument scheduled for January 22, 2020, in New Orleans.

Procopio represented Native American women, tribes, and organizations and worked with the American Civil Liberties Union (ACLU) Foundation and the ACLU Foundation of Texas in writing an amicus brief to the court in support of the federal government and tribal intervenors. The amicus brief highlighted the powerful stories of Native American women who had either gone through the foster care system or who had adopted Indian children through ICWA; the amicus brief also argued for the use of well-settled domestic law and international law in interpreting the Constitution to protect tribes’ right to self-determination and to prohibit assimilationist policies such as the removal of Indian children from Indian homes.  Procopio will continue monitoring the case as it develops.

Conclusion

Significant legal developments have occurred in Indian country over the last year.  Some of the developments discussed above present opportunities for tribal governments and their businesses and some present substantial uncertainty. Our Native American Law Practice Group monitors case law, legislation, and regulations impacting tribal governments and their businesses to ensure our clients are prepared to take advantage of new opportunities and proactively respond to developments in the law.

 

Mindy M. Morton is a Partner at Procopio and a member of its Native American Law, Privacy and Cybersecurity and Intellectual Property Litigation practices. Her practice focuses on internet and intellectual property litigation. She litigates cutting-edge cases at the intersection of technology and free speech issues. She defends internet companies against defamation, copyright, trademark and related claims on First Amendment, Communications Decency Act Section 230, DMCA and US SPEECH Act grounds. She also helps clients resolve disputes involving trade secret, patent, trademark, copyright, computer fraud and non-compete agreement litigation.

Gabriela Magee is an Associate at Procopio and a member of its Native American Law practice group. She focuses her practice on advising tribal clients on a variety of issues regarding governance, environmental permitting, gaming, intergovernmental agreements, cultural resource protection and contracts. As an active member of her tribal government, Gabriela provides a unique perspective to client service in that she has reviewed, selected, and worked with firms for various consulting services for her tribe.

Racheal M. White Hawk is an Associate at Procopio and a member of its Native American Law practice group. An enrolled citizen of the Rosebud Sioux Tribe of South Dakota, Racheal is admitted to practice before the United States Court of Appeals for the Ninth and Fifth Circuits and for all of the state courts of Arizona. She represents tribal governments and businesses in a wide array of legal matters.