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December 20, 1996

WINIFRED S. FEEZOR, et al., Plaintiffs,
BRUCE BABBITT, Secretary, Department of the Interior, et al., Defendants.

JAMES ROBERTSON, United States District Judge

The opinion of the court was delivered by: ROBERTSON

The Shakopee Mdewankanton Sioux Community operates a lucrative gaming enterprise in Prior Lake, Minnesota. The Community is divided by a dispute about how the proceeds of that enterprise are to be shared. In 1993, the Community enacted an ordinance providing for the adoption of new members. The effect of that ordinance was substantial dilution of each Community member's share of the gaming proceeds. In this action, some Community members challenge the Department of the Interior's approval of the adoption ordinance.

 The government moves to dismiss, asserting that the Court lacks subject matter jurisdiction and that plaintiffs lack standing. In the alternative, the government moves for summary judgment upon the administrative record. Plaintiffs move for partial summary judgment. The facts material to the issues presented by these motions are not in dispute. For the reasons set forth in this memorandum, this matter will be remanded to the Department of Interior for further consideration.


 The Shakopee Mdewankanton Sioux Community was organized under the Indian Reorganization Act, 25 U.S.C. §§ 476-79, in 1969. A Community constitution was adopted at that time and amended in 1980.

 On October 27, 1993, the Community enacted an ordinance adopting 165 individuals as new members of the tribe and establishing a process by which persons not qualified as Community members by blood could petition for membership. *fn1"

 Also on October 27, 1993, the tribe enacted an ordinance governing the distribution of the business proceeds of the Community's casino. This ordinance was needed to bring the tribe into compliance with the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701-21. The ordinance provided that casino proceeds would be distributed only to qualified constitutional members.

 The Community Constitution expressly provides for adoption ordinances but makes them "subject to the approval of the Secretary of the Interior." (Art. II, Sec. 2). The October 27 ordinance was duly submitted to the Area Director, Minneapolis Office, Bureau of Indian Affairs, and it was disapproved.

 On November 30, 1993, the General Council of the Community ("all persons qualified to vote in . . . Community elections," Art. III) enacted a second adoption ordinance that is the real subject of this case. The second adoption ordinance did not have an automatic enrollment provision but was otherwise similar to the first ordinance. The Area Director disapproved this ordinance as well, on December 13, 1993. The primary reason given for the disapproval was that the ordinance eliminated the 1/4 blood requirement of the Community Constitution, and thus, absent a constitutional amendment, that it was unconstitutional.

 The Community appealed the disapproval of the first and second adoption ordinances to the Interior Board of Indian Appeals. Other appeals were filed by individual members of the Community: plaintiffs Winifred Feezor et al. appealed from the Area Director's decision approving the business proceeds distribution ordinance; other Community members filed appeals challenging the Area Director's disapproval of both adoption ordinances. All appeals were consolidated before the IBIA. By order dated April 28, 1994, the IBIA ruled that individual Community members, including plaintiffs Feezor et al., lacked standing to challenge the Area Director's decisions.

 On February 8, 1995, IBIA ruled on the Community's adoption ordinance appeals. IBIA dismissed as moot the appeal from the Area Director's ruling on the first ordinance but overruled the Area Director as to the second ordinance and remanded with instructions that it be approved. IBIA reasoned that the competing interpretations of the Community Constitution, one by the Area Director and the other by the Community, were both reasonable. In such a case, IBIA concluded, the Area Director and IBIA should defer to the tribe. Thereafter, in compliance with the IBIA ruling, the Area Director approved the second adoption ordinance.

 The Area Director forwarded the ordinance and approval letter to Assistant Secretary Deer on March 2, 1995. On May 12, 1995, plaintiffs' counsel, acting on behalf of several Community members including plaintiffs Feezor et al., wrote to Secretary Babbitt urging revocation of the Area Director's approval of the ordinance. A few days later, by memorandum addressed to the Area Director, Assistant Secretary Deer concluded that the Area Director's approval was proper. Then, by letter to plaintiffs' counsel dated May 23, 1995, Assistant Secretary Deer declared that the IBIA decision was final and that an appeal lay only in district court. By letter dated June 19, 1996, Solicitor Leshy informed plaintiffs that Secretary Babbitt was declining to exercise his review power under 43 C.F.R. § 4.5(a)(2)(1995). This action was filed on July 18, 1996.


 1. Subject-matter jurisdiction

 Plaintiffs invoke this Court's jurisdiction under the Administrative Procedure Act, 5 U.S.C. §§ 551-599, 701-706; the Indian Reorganization Act, 25 U.S.C. §§ 476-79; and 28 U.S.C. § 1331. Defendants argue that neither the APA or the Indian Reorganization Act contains a grant of subject-matter jurisdiction and that plaintiffs' invocation of 28 U.S.C. § 1331 is misplaced because their claims do not arise under federal law.

 In Califano v. Sanders, 430 U.S. 99, 106, 51 L. Ed. 2d 192, 97 S. Ct. 980 (1977), the Supreme Court recognized that the APA does not itself grant jurisdiction to the federal courts to review federal agency action but held that 28 U.S.C. § 1331, "subject only to preclusion-of-review statutes created by Congress, . . . confer[s] subject-matter jurisdiction on federal courts to review agency ...

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