The strange case of the casino, the Senate leader and the defense bill

Schumer-Graham amendment to NDAA is part of a long history of congressional efforts on behalf of the Catawba Indian Nation

A sign welcomes people to the Catawba Indian Nation’s reservation near Rock Hill, S.C., in April 2019. (Jeffrey Collins/AP file photo)
A sign welcomes people to the Catawba Indian Nation’s reservation near Rock Hill, S.C., in April 2019. (Jeffrey Collins/AP file photo)
Posted January 12, 2022 at 5:01am

The annual defense policy bill signed into law last month authorized billions of dollars for a vast array of Pentagon programs. It also did something else: It granted a South Carolina-based Native American tribe permission to open a casino in North Carolina.

The unusual provision was shepherded by an even more unlikely ally — Senate Majority Leader Charles E. Schumer.

Each year since 1961, Congress has passed the National Defense Authorization Act, a vast piece of legislation that authorized $768 billion for the Defense Department in fiscal 2022.

The measure’s size and consistent enactment has also turned it into a catchall for lawmakers’ legislative priorities that might not otherwise get a vote. And some of those priorities stray far afield from national security matters.

A striking example is the casino amendment, sponsored by Schumer and an odd bedfellow for the New York Democrat, South Carolina Republican Lindsey Graham. Its inclusion in the defense law is an example of two Washington truisms: that provisions lawmakers favor hitch rides on moving vehicles, no matter how unrelated, and that money and influence can get the attention of Congress.

Big money is at stake for the Catawba Indian Nation and the developers it worked with to build and run the $273 million, 14,700-square-foot casino in Kings Mountain, N.C., about 35 miles from the tribe’s reservation near the city of Rock Hill, S.C.

In recent years, advocates of the casino made campaign contributions to lawmakers who championed it in Congress and spent handsomely on lobbyists with connections on Capitol Hill.

Often, unrelated provisions inserted in the defense bill are uncontroversial. Ahead of the fiscal 2022 defense bill, lawmakers submitted hundreds of amendments on topics ranging from chimpanzee relocation to the sustainability of feeding troops vegetable-based protein.

The case of the Catawba tribe casino, however, stands out.

South Carolina GOP Sen. Lindsey Graham and Senate Majority Leader Charles E. Schumer teamed up to help the South Carolina-based Catawba Indian Nation. (Tom Williams/CQ Roll Call file photo)

For the Catawba, the inclusion of the amendment is the product of a nearly decadelong effort to exempt themselves from a 1993 settlement with the U.S. government that, in exchange for federal recognition, subjected the tribe to South Carolina’s state gambling laws, rather than the more flexible federal Indian Gaming Regulatory Act.

The Indian Gaming Regulatory Act allows tribes to conduct types of gambling that individual states might not otherwise allow. In the case of South Carolina, Native American-run casinos would not be able to offer table games and slot machines.

The tribe’s campaign to disentangle itself from South Carolina’s stricter laws garnered attention in 2018 when the Department of the Interior rejected the Catawba Nation’s bid to build a casino in Kings Mountain, N.C., just across the South Carolina border.

Legislation proposed

Graham and Schumer’s amendment to the defense bill is also part of a long history of congressional attempts to authorize the Catawba Nation’s casino.

In March 2019, Graham introduced the Catawba Indian Nation Lands Act, which would have permitted the Catawba Nation to conduct gambling in North Carolina. The measure was never considered by the full Senate, but in March 2020 the Department of the Interior reversed its earlier decision and made some North Carolina land available to the tribe.

Five days after the Department of the Interior’s reversal, the Eastern Band of Cherokee Indians, a North Carolina-based tribe that operates two casinos in the state, sued the Catawba and the Interior Department in federal court to try to stop the new casino, which would compete with its own.

The suit claimed political pressure from Wallace Cheves, a GOP megadonor, developer and managing partner of Skyboat Gaming, a company formed in 2009 to “develop gaming opportunities” for the Catawba Indian Nation, prompted the government to clear the way for the casino without congressional approval.

Richard Sneed, the principal chief of the Eastern Band of Cherokee Indians, told the House Natural Resources Subcommittee for Indigenous Peoples during a September 2020 hearing that the Catawba Nation’s off-reservation casino deal gives the tribal gambling industry “a black eye” and that Congress should allow the federal courts to decide the outcome of the dispute.

But Schumer and Graham’s amendment nullifies the legal proceedings.

“We are disappointed to not be granted the ability to defend our position in the courtroom,” Sneed said in the statement released after the defense bill’s passage.

Campaign contributions

Two months before the Department of the Interior reversed its decision and allowed the Catawba to take North Carolina land into trust, Cheves, who listed Skyboat Gaming as his employer on the filings, donated $125,000 to the Trump Victory PAC, according to FEC filings.

After the reversal, Cheves continued to donate, sending the former president’s PAC $11,200 in August 2020 and $100,000 to the Trump-Graham Majority Fund in May 2021.

Cheves also donated to key members of Congress. Cheves gave a total of $8,400 toward Graham’s Senate reelection bids in 2017 and 2020 (and $5,400 to Graham’s failed 2016 presidential campaign).

Between 2015 and 2016, Cheves gave $16,400 in support of electing North Carolina Republican Sen. Richard M. Burr, and $15,500 toward the election of North Carolina’s other Republican senator, Thom Tillis.

In March 2019, Burr and Tillis co-sponsored Graham’s Catawba Indian Nation Lands Act bill. Three months later, Cheves sent the Tillis and Colleagues Victory Committee a check for $55,900.

Daniel Keylin, a spokesman for Tillis, told CQ Roll Call that donations “never have and never will have an impact on Senator Tillis’ support for legislation.”

Two years later, in March 2021, Rep. James E. Clyburn, D-S.C., introduced the Catawba Indian Nation Lands Act in the House. The bill would ratify the Department of the Interior’s decision to take North Carolina land into a trust for the Catawba Indian Nation and permit gambling on the land.

In September 2021, Cheves donated $5,800 to Clyburn’s PAC, Friends of Jim Clyburn. In November 2021, the House passed Clyburn’s bill by a vote of 361-55.

Kevin Bishop, a spokesman for Graham, said, “The Catawba Nation has been treated unfairly by the federal government, and the legislation that was passed rights that wrong.” Bishop said the suggestion of any connection between Graham’s legislative activity and political donations is “nonsense.”

Cheves, Burr and Clyburn did not respond to requests for comment.

Lobbying

The Catawba Nation also took independent steps to help secure the future of its casino.

In the first nine months of 2021, the Catawba paid the D.C.-based law and lobbying firm Hobbs, Straus, Dean & Walker $30,000 to push for political action on its behalf, according to Senate lobbying disclosure documents.

The tribe also paid PACE, another D.C.-based lobbying firm, $90,000 over the same period. A disclosure from PACE lists “gaming on newly acquired lands” as its specific lobbying issue.

Among those at PACE listed on the disclosure forms are Devin Rhinerson, a former senior policy adviser to California Democratic Sen. Dianne Feinstein; Kevin Eastman, a former legislative director for Rep. Doug LaMalfa, R-Calif.; and Scott Dacey, a former legislative liaison for the administrator of the Small Business Administration under President George H.W. Bush and the former chief of staff at the National Indian Gaming Commission, the federal government’s lead regulatory agency of gambling conducted on tribal lands.

Another lobbyist, Rob Lehman of D.C.’s WilmerHale firm, also received $90,000 from the Catawba Nation in the first nine months of 2021. Lehman is the former chief of staff to Ohio Republican Sen. Rob Portman.

Lobbying disclosures on behalf of the Catawba date as far back as 2003.

Schumer’s role

It’s understandable that lawmakers from the Carolinas have taken an interest in the Catawba case. Schumer’s decision to get involved is more mysterious.

But he, too, has received contributions from an interested party. Between August and September 2021, Jeremy and Louis Jacobs donated $17,400 to Schumer’s Friends of Schumer PAC.

Jeremy Jacobs is the chairman and Louis Jacobs the CEO of Delaware North, a Buffalo, N.Y.-based company that consulted on the Catawba casino project and now serves as the casino’s gambling and hotel operator.

“Delaware North is incredibly proud of our partnership with the Catawba Nation,” Louis Jacobs said during a ribbon-cutting ceremony for the casino in July 2021. Delaware North did not respond to a request for comment.

Schumer’s spokeswoman, Allison Biasotti, did not respond to a question about the nature of Schumer’s relationship with the Jacobs family.

She said that Schumer has “long been a champion of native issues” and called the outcome for the Catawba Tribe “fairness and long overdue justice.”

Influence game

According to Mandy Smithberger, director of the watchdog group Project on Government Oversight’s Center for Defense Information, outside entities often make donations with the goal of getting access to lawmakers and being able to influence policy.

Part of the problem, Smithberger said, is that the final version of the fiscal 2022 defense bill was negotiated behind closed doors among leaders of the Armed Services committees.

“Leaders always have disproportionate influence over how rules are or are not applied,” Smithberger said, “and it’s a mistake that the process was not more open — if it were, people might see things like this and begin asking questions.”

Other experts agree that the legislative process surrounding the Pentagon policy bill contributes to a lack of transparency.

The defense bill “has been used for years for things totally unrelated to national defense — mainly because it’s the only authorization bill that gets approved year after year,” said Frederico Bartels, a senior policy analyst for defense budgeting at the conservative Heritage Foundation think tank.

Bartels said the inclusion of seemingly unrelated provisions in the defense bill reflects a general decline of the congressional capacity to legislate as lawmakers increasingly count on a small number of legislative vehicles to get bills passed.

“This is part of the sausage-making process that shouldn’t be there. All pieces of a bill deserve their own time in the sun,” Bartels said.