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Fond du Lac vs. Duluth: back in federal court

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What, if anything, does the Fond du Lac Band of Superior Chippewa owe Duluth for city services under a revenue-sharing agreement that ended in 2011? The question has been in court since 2009, and will likely remain there for some time, according to the Duluth News Tribune. The band announced Monday that it will file an appeal with the 8th Circuit Court of Appeals over a district court's recent order that it pay the city more than $10 million.

On Oct. 8, Judge Susan Nelson ruled the band was responsible for payments the city should have received between late 2009 and April 2011.

In a recent profile of band chairwoman Karen Diver, the StarTribune recounts the history of the tension. It began in 1984 when a revenue-sharing agreement established the first urban tribal casino in the country. In 1994, a revised agreement guaranteed Duluth 19 percent of gross revenues from Fond-du-Luth, which has earned the tribe close to $200 million.

Since then, the city and the band have disagreed about the contributions the other has made. The band says it didn't need the city's support to operate the casino. The city says it provides the casino services it needs.

In 2009, the tribe stopped paying the city its cut, which was then about $6 million a year and $75 million since 1994. The city sued.

While federal court took up the dispute, the band took the question to the National Indian Gaming Commission. The commission ruled that the revenue-sharing agreement between the band and the city of Duluth violated federal law, which requires that Indian tribes retain "sole proprietary interest" of their casinos.

Earlier this year, an appeals court ruled for the Fond du Lac band — agreeing that it does not have to pay Duluth going forward. But last month, a judge ruled that the tribe owes the city at least $10 million in back payments.

U.S. District Judge Susan Nelson’s ruling was for casino revenue back payments from late 2009 to April 2011, the period of time Duluth claimed the band stopped making payments to the city — not for the amount of money Duluth claims the band since that date. In her ruling, Nelson noted that the band has profited more than $20 million since it stopped paying the city, yet the band continued to receive city services for free.

Duluth City Attorney Gunnar Johnson said the band owed the city more than $12.4 million in principal and interest as of early 2013.

Fond du Lac Band chairwoman Karen Diver responded in a news conference that the city overestimated the amount.

Now the federal appeals court will be considering the question for the second time.

Duluth City Attorney Gunnar Johnson said he was surprised by the band's decision to appeal.

“It’s disappointing to continue to drag out this case when the city is still struggling to fix its streets, including the street in front of the casino — Superior Street, which brings customers to their door each day,” he said.

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