By BOB SALSBERG
BOSTON (AP) -- The federal government rejected a compact between Massachusetts and the Mashpee Wampanoags, dealing a major setback to the tribe's hopes for building a resort casino in Taunton.
In a letter to Gov. Deval Patrick explaining its decision, the U.S. Interior Department -- which oversees the Bureau of Indian Affairs -- said the compact called for the tribe to send too great a share of its gambling revenue back to the state.
The compact negotiated between the Mashpee and Patrick, and later approved by the Legislature, called for the tribe to return 21.5 percent of future gambling revenues to Massachusetts, the highest figure ever negotiated between a state and Native American tribe.
The bureau said the revenue allocation was too generous to the state and would undermine the Indian Gaming Regulatory Act, which says gaming should primarily benefit tribes.
"While we have approved varying revenue sharing schemes in exchange for tangible benefits to tribes for over 20 years, the revenue sharing provisions in this Compact go beyond those permitted by the Department and IGRA," wrote Kevin Washburn, assistant secretary of Indian Affairs in the U.S. Department of the Interior.
The bureau also said that the compact strayed too far into non-gaming issues, such as the tribe's hunting and fishing rights and land claims, and sought to give the state regulation over activities not directly related to gambling.
In separate statements Friday, Patrick and the tribe expressed disappointment with the ruling but vowed to reopen negotiations toward a revised compact.
The governor said the compact he negotiated with the tribe under the terms of the state's new gambling law was "extraordinarily fair" to both sides.
"Its terms rightly recognized and respected the sovereign rights of the Mashpee Wampanoag Tribe while remaining consistent with the goals and principals of the Expanded Gaming Act -- namely bringing jobs and economic development to every region of the state," Patrick said.
Patrick also defended the 21.5 percent revenue deal as reflecting market reality.
"It presents an enormous economic benefit to the Tribe and justifies the proposed revenue sharing obligations in our agreement," he said.
The casino law allows for up to three regional resort casinos in the state, but it gave exclusive rights in southeastern Massachusetts to a federally recognized Indian tribe if it agreed to a compact with the state by July 31, 2012.
Cedric Cromwell, tribal chairman of the Mashpee Wampanoag, said rejection of the compact was a possibility that had been anticipated. He said the tribe was prepared to reopen negotiations with the state immediately.
"We believe that these issues can be resolved quickly and cooperatively, and the Compact can be re-submitted ... for swift action," Cromwell said in his statement. "The Mashpee Wampanoag Tribe and the Commonwealth have negotiated respectfully and collaboratively to come to an initial agreement, and we will continue to negotiate in that same spirit."
Nedra Darling, a spokeswoman for the Interior Department, said the compact contained several provisions that did not comply with law, but that Washburn was hopeful a new agreement could be reached between the state and the tribe.
The tribe has proposed a $500 million, 150,000-square-foot casino on 146 acres at an industrial park at the junction of routes 24 and 140 in Taunton. The tribe reached a separate agreement with the city that calls for about $33 million in up-front payments to the city and minimum annual payments of $13 million after the casino begins operation.
Taunton Mayor Thomas Noye also expressed hope that the compact could be renegotiated to address the federal government's concerns. He added that an initial $1.5 million payment made to Taunton by the tribe in August would be kept by the city regardless of whether the tribe wins approval to move forward with the casino.