City Could Not Enter Into A Municipal Services Agreement With An Indian Tribe Concerning Future Construction Of A Casino Without Complying With California Environmental Quality Act

In County of Amador v. City of Plymouth, (— Cal.Rptr. 3d —, 2007 WL 1129390, Cal.App. 3 Dist., Apr. 17, 2007) a California Court of Appeal considered whether a city had to comply with the California Environmental Quality Act (“CEQA”) before it could enter into a municipal services agreement with an Indian tribe seeking to have land in or adjacent to the city placed into trust by the federal government so that the tribe could build a casino. The Court of Appeal held that the municipal services agreement was invalid because the city committed to perform future projects and services that may have an impact on the environment but did not make an inquiry into any such environmental impact as required by CEQA.


The City of Plymouth (“City”) is a small town located in the County of Amador (“County”). The Ione Band of Miwok Indians (“Ione”), a federally recognized tribe, has an option to purchase 228 acres of land that is in or adjacent to the City. The Ione applied to the United States Secretary of the Interior to place the land into trust for the Ione. The Ione intend to build a 120,000 square foot gaming facility on a portion of the land located within the City limits. The proposed facility will include a casino building, a hotel, restaurants, and night clubs or bars.

The Ione sought to enter into a municipal services agreement (“MSA”) with the City under which the City would support the trust application of the Ione. In return, the Ione would give the City millions of dollars to mitigate the impacts of the casino and to compensate the City for the municipal services that it would be providing to the casino. The City council adopted a resolution approving the MSA and sent a letter in support of the trust application to the Secretary of the Interior. The MSA recognizes that the casino will bring a need for increased infrastructure, services, and criminal justice and provides for a one time payment to the City in the amount of $5.85 million. The MSA unconditionally obligates the City to remodel its existing fire station and to vacate a portion of a City road that will provide access to the casino. The MSA obligates the City, subject to certain conditions, to construct connections for the casino’s sewer and water systems and to increase the capacity of these systems to meet the needs of the development.

The County and several individuals brought a lawsuit asking that the City be ordered to set aside its resolution approving the MSA. The County asked the trial court to enjoin the MSA’s implementation as a project that is subject to CEQA. The trial court granted a peremptory writ of mandate invalidating the MSA. The Ione intervened in the lawsuit and filed an appeal of the trial court’s decision.


The Court of Appeal agreed with the trial court and held that the MSA must be invalidated because the City failed to comply with CEQA. The purpose of CEQA “is to require a public entity to consider the environmental consequences of a project before it is approved.” The County argued that “the MSA constitutes approval of a project because it obligates the City to send a letter of support for the [Ione’s] fee-to-trust application to the Secretary, obligates the City to reconstruct its fire station, obligates the City to extend its sewer and water services, and obligates the City to vacate portions of a City road.” The court agreed with the County.

A “project” under the terms of CEQA includes an activity directly undertaken by a public agency “which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” Public works construction, and activities related to such construction, are included within the term “project”. The court concluded that the “public works and road vacation constitute a project subject to CEQA and the MSA constitutes the approval or contingent approval of the project.” The fact that the Ione could themselves provide the municipal services is immaterial as long as the MSA is in effect.

The court rejected the Ione’s argument that the MSA in exempt from CEQA because the execution of an intergovernmental agreement between a city or county and a tribe “‘pursuant to the express authority of, or as expressly referenced in, an amended tribal-state gaming compact’ is not subject to CEQA.” No gaming compact has been executed between the State and the Ione and, therefore, this exception can not apply.

The MSA commits the City to a definite course of action in regard to vacation of a portion of a City road to provide access to the casino. The Ione induced the City to carry out this action by providing payments to offset the costs for the services and the impact of the gaming center. The Ione need the support of the City to get approval to build a casino. Gaming may not be conducted on newly-acquired land that is placed into trust for a tribe unless the Secretary of the Interior “‘after consultation with the Indian tribe and appropriate State, and local officials’ determines that a gaming establishment on newly acquired lands would be in the Tribe’s best interest ‘and would not be detrimental to the surrounding community, but only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary’s determination . . . .'”

The court concluded that an environmental impact report (“EIR”) is needed for the vacation of the City’s road because the vacation “will be a cause of the environmental impacts occasioned by its use to carry the substantial traffic to a large casino hotel.” The fire station remodel “has the potential for resulting in direct physical change in the environment” and the City’s decision to undertake the remodel necessitates environmental review. The City’s commitment to provide water and sewer services and install the necessary infrastructure commits it to a definite course of action that may impact the environment. The court rejected the Ione’s argument that the MSA is merely a funding mechanism and is not a project within the meaning of CEQA. The MSA commits City to perform certain acts that may affect the environment, but the MSA failed to acknowledge that any of its actions might require CEQA review.

The City failed to comply with CEQA when it approved the MSA without performing an initial study to determine whether it needed to prepare an EIR or a negative declaration. The court found that the MSA must be invalidated because of the City’s failure to comply with CEQA.

Legal Alert Disclaimer

Legal Alerts are published by Kronick Moskovitz Tiedemann & Girard as a timely reporting service to alert clients and other friends of recent changes in case law, opinions or codes. This alert does not represent the legal opinion of the firm or any member of the firm on the issues described, and the information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult.