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Photographer: George Rose/Getty Images Photographer: George Rose/Getty Images

California’s latest water war is being waged at the edge of wine country against an Indian tribe planning a massive casino expansion as a group of landowners tries to stop them with a lawsuit from 1897.

The Santa Ynez Band of Chumash Indians is spending $170 million to build out its resort, featuring a 12-story tower on a bucolic landscape where only the mountains are higher. The tribe has also snapped up 1,400 more acres to house cramped residents of its reservation.

Santa Ynez Photographer: Edvard Pettersson/Bloomberg

The landowners say the Chumash are spoiling the Santa Ynez Valley, the only wine-tasting day trip from Hollywood and the backdrop for the 2004 film “ Sideways,” and that the casino site isn’t part of the tribe’s federally recognized reservation. The landowners went to court, saying the judgment from the 1897 suit means the Chumash can’t tap the local creek for the resort.

In other words, they’re threatening to choke off the Indians’ water supply, and doing so when water is more precious than ever after a four-year drought has left California parched. The fight is also brewing as frictions between local communities and Indian tribes over the casino industry are on the rise.

Tribal Exemptions

The casinos raked in $28.5 billion in gross gambling revenue in 2014, the difference between wins and losses before deducting costs, the National Indian Gaming Commission says. About a quarter of that comes from California and Northern Nevada. The Las Vegas Strip took in $6.37 billion, data from the University of Nevada, Las Vegas, show.

“Local communities might be excited about the employment opportunities at a tribal casino but, on the other hand, might not like it that the casino is exempt from local wage and hours laws,” said Kevin Rosenberg, a lawyer with Lowenstein & Weatherwax LLP in Los Angeles who works on gambling cases but isn’t involved in this one.

Vincent Armenta Photographer: Edvard Pettersson/Bloomberg

In the Santa Ynez Valley, the Chumash say, it’s all the work of a small group who’ve tried to block them at every turn and would like the tribe out of the valley altogether.

“As far as Santa Ynez being a nice place, we’re aware of that,” Vincent Armenta, the tribe’s chairman, said in an interview at the Chumash Casino Resort. “We’ve been here well before the town was even being developed, and before the movie stars came.”

‘Lawless Chaos’

By 11 a.m. on a recent Tuesday, the slot machines were flooded with retirees and others. A steady stream of gamblers pulled up at valet parking amid the deafening construction. Armenta, who had a welding business in Los Angeles before becoming chairman in 1999, declined to discuss the financial details of the business, which has 2,000 slots and more than 40 table games.

“We’ve been successful,” he said. “In the last 14 years, we’ve built the business from what would be considered a very small business to a multibillion-dollar enterprise, including other properties off-site, hotels, restaurants, gas stations, commercial property, rentals in different states.”

Some of the locals aren’t impressed. “You’re being asked to approve of the wholesale destruction of lives and livelihoods,” Nancy Crawford-Hall, a horse breeder who owns the 10,000-acre San Lucas Ranch and has lived in the valley for 60 years, said in October at a public meeting of county officials and Chumash representatives.

She called the hotel tower the “height of arrogance” and said the tribe was likelier to build casinos than houses on the new land, bringing “lawless chaos” to the valley.

Water, Water

The Indian property isn’t subject to local environmental and safety regulations, so the community has no recourse to address any violations, said Steve Pappas, the executive director of Save the Valley LLC, the group that has taken the tribe to court.

Chumash Casino Photographer: Edvard Pettersson/Bloomberg

California officials last year sent Armenta a letter expressing concern over the casino’s projected increase in water use -- an extra 36,000 gallons a day -- among other things. In the Santa Ynez Valley, as in so much of California, the green rolling hills are now brown rolling hills. In August, the Chumash agreed to address local environmental concerns as part of their renewed gaming compact with the state.

That isn’t good enough for Pappas. He said the tribe has been using federal Indian policy as a lever to acquire land, wealth and power.

Ancient History

“Every time we’ve raised one of those issues, the answer is ‘Yes, we’re violating, we understand that, we know that’s the law. But the land is in trust for the Santa Ynez Band of Mission Indians, so therefore we don’t have to follow the law,’” Pappas said. Save the Valley has been stymied in previous attempts to sue the Chumash because the tribe, which is its own nation legally speaking, enjoys sovereign immunity.

So the group went to the history books and discovered the judgment, from 1906, that followed the 19th-century suit, originally filed by the bishop of Monterey against Indians living on the Catholic Church’s land. He wanted to establish the terms by which they could live there, restricting water use to domestic purposes.

The key to the suit predates statehood. The Church got the land from the Mexican governor of California in 1844. Part of it went to San Francisco’s diocese and the rest to Monterey’s, with a creek dividing the property. According to Save the Valley, the land extending 25 acres west of the creek is the only parcel that was ultimately designated as a reservation.

Local Rules

The casino is on the 75 acres east of the creek, which were later transferred to the U.S. but never formally made part of the federal reservation, Save the Valley argues, meaning that parcel must comply with local land use rules. The judgment limits the use of water by the Indians living on the east side of the creek to irrigation and domestic purposes. Save the Valley says that prohibits the Chumash from using it for the casino.

The U.S., which holds reservation land in trust for tribes, has moved the matter to federal court in Los Angeles, arguing that it involves the federal question of sovereign immunity. The judge is considering whether to allow Save the Valley to resurrect the lawsuit.

Not all of the Chumash’s neighbors are worried about the tribe’s plans.

“It’s only a small group that has been bitching and moaning,” said Mark Burnett of the Maverick Saloon, near the Chumash casino. “Nobody else talks about it. And everybody else here gets along.”