[Senate Hearing 110-405]
[From the U.S. Government Publishing Office]
S. Hrg. 110-405
THE NATIONAL INDIAN GAMING COMMISSION
=======================================================================
HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
APRIL 17, 2008
__________
Printed for the use of the Committee on Indian Affairs
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42-319 PDF WASHINGTON DC: 2008
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
LISA MURKOWSKI, Alaska, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota TOM COBURN, M.D., Oklahoma
DANIEL K. AKAKA, Hawaii JOHN BARRASSO, Wyoming
TIM JOHNSON, South Dakota PETE V. DOMENICI, New Mexico
MARIA CANTWELL, Washington GORDON H. SMITH, Oregon
CLAIRE McCASKILL, Missouri RICHARD BURR, North Carolina
JON TESTER, Montana
Allison C. Binney, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on April 17, 2008................................... 1
Statement of Senator Dorgan...................................... 53
Statement of Senator Tester...................................... 1
Witnesses
Carlyle, Delia, Chairwoman, Arizona Indian Gaming Association;
Chairwoman, Ak-Chin Indian Community........................... 12
Prepared statement with attachment........................... 13
Hogen, Philip N., Chairman, National Indian Gaming Commission.... 3
Prepared statement........................................... 5
Luger, J. Kurt, Executive Director, North Dakota and Great Plains
Indian Gaming Association...................................... 32
Prepared statement........................................... 34
Matthews, J.R., Niga Executive Committee Member and Vice
Chairman, Quapaw Tribe of Oklahoma; accompanied by Mark Van
Norman, Executive Director, National Indian Gaming Association. 18
Prepared statement........................................... 20
Patterson, Brian, President, United South and Eastern Tribes,
Inc............................................................ 27
Prepared statement........................................... 29
Rand, Kathryn R.L., J.D., Professor, University of North Dakota
School of Law; Co-Director, Institute for the Study of Tribal
Gaming Law and Policy; accompanied by Steven Andrew Light,
Ph.D., Professor, University of North Dakota College of
Business and Public Administration; Co-Director, Institute for
the Study of Tribal Gaming Law and Policy...................... 41
Prepared statement with attachment........................... 43
Appendix
Boren, Hon. Dan, U.S. Representative from Oklahoma, prepared
statement with attachment...................................... 67
Supplementary Information Submitted by:
Confederate Salish and Kootenai Tribes of the Flathead Nation 200
Hogen, Philip N.............................................. 203
Miccosukee Tribe of Indians of Florida....................... 75
Poarch Band of Creek Indians................................. 168
Seminole Tribe of Florida, Metlakatla Indian Community,
Kickapoo Traditional Tribe of Texas, and the Wichita and
Affiliated Tribes of Oklahoma.............................. 144
Seneca Nation of Indians..................................... 192
THE NATIONAL INDIAN GAMING COMMISSION
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THURSDAY, APRIL 17, 2008
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:30 a.m. in
room 562, Dirksen Senate Office Building, Hon. Jon Tester,
presiding.
OPENING STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator Tester. [Presiding.] I would like to call the
Indian Affairs Committee meeting on the oversight of the
National Indian Gaming Commission to order. We have a great
panel to hear from today. The panelists can go ahead and take
your respective seats now. I have a quick opening statement and
then we will get to the testimony and the questions and answers
shortly thereafter.
I want to welcome everybody, especially the panelists, to
the Committee meeting today. I want to thank you for being here
to visit about the National Indian Gaming Commission's
consultation processes. As everybody in this room knows, Indian
gaming is a dual-edged sword. On one side, the Indian gaming
represents the most significant economic development system
since the treaties were made. On the other side, gaming carries
the possibility of fraud, corruption and abuse.
To help ensure gaming contributes more positive than
negative to Indian Country, Congress established the NIGC.
According to the Indian Gaming Regulatory Act, the NIGC role is
to shield tribes from organized crime, ensure that Indians are
the primary beneficiaries of gaming, and ensure gaming is
conducted fairly.
It is undisputed that NIGC is a big job to do. More than
400 gaming enterprises on 230 reservations in 30 States
generated about $26 billion in 2006. To complicate matters,
each tribe is an individual nation with unique goals and needs.
The NIGC is a relatively young entity as far as Government
agencies go, and it is reasonable to expect a few growing pains
along the way.
We are here today to ensure that the NIGC and Indian gaming
overall are accomplishing its missions to improve Indian
Country with meaningful, safe and fair economic development. I
have several concerns about the process today and hope this
hearing helps clarify the issues for everybody here. I want to
be sure that the NIGC is spending more of its time to ensure
Indian Country is successful with gaming, rather than merely
building bureaucracy.
Along those lines, however, I am concerned that this very
important job is in the hands of only three people, but right
now it is in the hands of only two people because one of the
positions has not been filled and both those people are
Republicans. I want to be sure that the consultation it does is
meaningful. The tribes have reported that although the NIGC
announces its proposed rules and collects comments from the
tribes, that the NIGC is merely going through more than just
the motions. The comments have little influence on its
decision-making process. Along these lines, I would like to get
your thoughts about the Rahall bill that is currently before
the House of Representatives regarding consultation, H.R. 5608.
I am also concerned about the recent controversy
surrounding the proposed Class II regulations. With an
estimated $1 billion to $2 billion loss at stake in an industry
created to provide economic benefit to Indian Country, we need
to be very, very careful about how we proceed. I am
particularly concerned because tribes are fairly new to the
gaming regulations and business enterprise, and only giving
them one month to analyze the economic impact statement and no
time to analyze the cost-benefit analysis is contrary to NIGC's
mission.
That is why Senator Baucus, my comrade from Montana, and I
wrote you a letter, Mr. Hogen. In that letter, we had asked you
to extend that comment period until tribes had an opportunity
to analyze the important aspects and comment appropriately. It
is vital for you to understand the impact of this decision will
have on Indian Country and avoid losses if at all possible.
And finally, with all the criticisms we have heard about
the NIGC, I also want to be sure that gaming operators
understand that it is not fair to complain about the NIGC
process just because they don't happen to agree with the rule
or regulation. The NIGC has a big and very complicated job to
do with limited resources. It is important that we all work
together.
So in closing, I want to thank you all for being here
today. I look forward to this discussion. We are here today to
ensure that as we grow, we continue to adhere to the goals
identified by Congress. Working together, we truly can improve
Indian Country through economic development and gaming can be a
contributor.
I want to welcome the panelists here today. It is great to
have you. I will introduce you and then we will go in the order
of introduction.
We have the Honorable Phil Hogen, Chairman of the National
Indian Gaming Commission right here in Washington, D.C.,
formerly out of the great State of South Dakota. We have the
Honorable Delia Carlyle, Chairwoman of the Arizona Indian
Gaming Association, Chairwoman of the Ak-Chin Indian Community
Council of Phoenix, Arizona. We have the Honorable J.R.
Mathews, Board Member and Vice Chairman of the Quapaw Tribe of
Oklahoma, Quapaw, Oklahoma. He is accompanied by Mark Van
Norman, Executive Director of the National Indian Gaming
Association, Washington, D.C.
We have Brian Patterson, the President of the United South
and Eastern Tribes of Nashville, Tennessee; and Kurt Luger,
Executive Director of the Great Plains Indian Gaming
Association, Bismarck, North Dakota. And finally, last but
certainly not least, we have Kathryn R.L. Rand, accompanied by
Steven Light, Co-Directors, Institute for the Study of Tribal
Gaming Law and Policy, University of North Dakota, Grand Forks,
North Dakota.
Welcome, all.
We will start with you, Mr. Hogen.
STATEMENT OF PHILIP N. HOGEN, CHAIRMAN, NATIONAL INDIAN GAMING
COMMISSION
Mr. Hogen. Good morning, Senator. Thank you for inviting
the National Indian Gaming Commission to testify. With me today
here seated behind me is Norm DeRosier, who is the Vice Chair
of the Commission, and as you observed, the other member of
what ordinarily is a three-member commission.
It is really important and timely that the Senate from time
to time look at agencies like ours. Getting ready for these
hearings is kind of like doing my income tax. I don't look
forward to its preparation, but once I get done with it, I am
really better off because I can put things in better
perspective and identify some areas where I probably could have
done things a little better.
With respect to Indian gaming, I want to say at the outset
and remind everybody Indian gaming is not a Federal program.
Indians invented Indian gaming. It has been working great. Our
job is to be part of the solution, not part of the problem.
The growth of Indian gaming revenues continues to increase.
I think with the economy slowing up a little bit, the growth
rate might slow down a little, but it is getting bigger and it
is doing great things for meeting Indian needs.
NIGC's role, very generally, is to ensure ongoing integrity
in this industry. We need to do that so the public will
perceive that there is integrity and they will continue to come
to tribal gaming facilities. We need to do that to make sure
that the tribal assets, the tribal gaming revenues are
protected and go to the right place.
But most important, in looking at the regulation of Indian
gaming, we need to bear in mind that the tribes do the heavy
lifting. The tribes are there all day, every day, 24/7, 365
days a year. If they fall down on the job, then the thing is
going to have trouble. Our job is to try and assist them in
that regard.
We do that primarily in three ways. We help to assure the
suitability of the people they hire to run the place. That is,
they license the tribal gaming employees and we help them going
to the FBI to check the fingerprint base and so forth do that.
We also help them assure that the play at the tribal gaming
facility, the casino or the bingo hall, is fair, fair to the
players, fair to the tribal gaming facility.
And thirdly, we want to make sure that the dollars that
come in the door and are eventually supposed to end up in the
tribal bank account get there, so that the developers and the
contractors don't get an unfair share along the way or
something doesn't fall through the cracks. So internal controls
and various mechanisms permit them to do that.
With respect to our agency, we have our headquarters office
here in Washington, D.C. We have five regional offices out in
the Country, so to speak, and one region is served from our
D.C. office. We have currently 416 tribal gaming operations out
in Indian Country operated by 230 tribes. We try to do our job
with a staff of 104 staff members.
We have several divisions that we are broken into. We have
an audit division that, first of all, looks over the audits
that are done by outside accountants for tribal operations, and
then sent to the NIGC, and we go out and do audits with respect
to the performance or the compliance with the tribe's internal
control standards, and in the case of Class II gaming, the NIGC
internal control standards.
We have a contracts division that reviews and recommends
approval or disapproval of proposed management contracts the
tribes enter into with outside developers and so forth. In
connection with that, they do background investigations of
those folks who tribes interface with. That contracts division
also participates in the background investigation role the NIGC
plays to support tribal gaming commissions as they license
their employees.
And of course, we have an enforcement division. We have
investigators who look to make sure that the Indian Gaming
Regulatory Act, the NIGC regulations, the tribe's gaming
ordinance, and the tribal-State compact are being complied
with. To do this, we need some legal advice. We have an office
of general counsel. I think we have 17 staff within that
office. We often get sued for one reason or the other. They
defend that litigation with the Department of Justice, and they
advise the rest of the Commission. And then to do the job, of
course, we have a division of Administration.
One of the events that was significant in the life of the
National Indian Gaming Commission was the ruling in what is
called the CRIT case, Colorado River Indian Tribes case, that
challenged NIGC's application of minimum internal control
standards to Class III or casino gaming. That part of the
Indian gaming, the casino gaming, represents 90 percent of that
$26 billion that is generated, but the court decided that we
had gone too far as we attempted to apply those regulations. So
we have necessarily modified what we do and how we do it in
that connection.
We still maintain minimum internal control standards, and
we do that of course because they still apply to Class II
gaming. And in a number of cases, those MICS have been adopted
by tribal-State compacts, so they need to stay current with
technical advances and so forth.
Recently, a number of tribes have amended their tribal
gaming ordinances to adopt or incorporate the NIGC MICS with
respect to Class III gaming and to recognize the NIGC's role to
monitor that to take enforcement action if there are
violations.
So while we have changed after the CRIT decision, it hasn't
been a drop in the interest in the minimum internal control
standards. There are a number of tribes, knowing that the CRIT
decision took that jurisdiction away from us, would like some
help and have invited us to come in, look at their Class III
mixed compliance, and we are doing that.
Senator Tester. Chairman Hogen, one thing that I didn't
state, and goes to all, we are going to try to limit you to
five minutes. Your complete testimony will be a part of the
record, so continue on and if you can wrap it up in the next
two or three minutes, it would be much appreciated.
Mr. Hogen. Okay.
We are funded not with any taxpayers' dollars. We are
funded with fees that we assess on tribal gaming. We recently
set the rate for that fee, and it will be .057 percent. We
reduced the rate from what it had been in the prior year, and
that will collect about $15.4 million based on our projections.
That is an increase from the previous year's budget.
In addition to the fees, we also collect money with respect
to the service we provide on the fingerprints and the
management contractors pay their own way with respect to the
background investigations they do.
I know that the Committee is very interested in the
consultation that NIGC conducts. We have adopted a consultation
policy. We attempt to adhere to that, and we are watching with
great interest that bill that is in the House that relates to
consultation. Consultation is a good idea, but I think in terms
of current controversy, if you will, it is not, in my view,
that we haven't consulted. Rather, it is that we haven't agreed
with everything that the tribe has asked or suggested of us
with respect to the Class II standards. I would be happy to
respond to questions that might arise in that connection.
So we do have many other areas addressed in our written
testimony, and I would be happy to respond to any questions
that you or the Committee might have with respect to anything
we do.
Thank you, Senator.
[The prepared statement of Mr. Hogen follows:]
Prepared Statement of Philip N. Hogen, Chairman, National Indian Gaming
Commission
Good morning Chairman Dorgan and members of the Committee. The
National Indian Gaming Commission (NIGC) is delighted that the
Committee has once again chosen to look at the NIGC and the role it
plays under the Indian Gaming Regulatory Act (IGRA). As I have
testified before, Indian gaming is the greatest engine for economic
development that Indian country has developed.
Indian gaming is not a federal program, and its genesis did not
occur with the enactment of IGRA. Rather, tribes have been gaming since
before the inception of the Act and in many respects, the structure
established by IGRA has fostered the growth and development of that
industry. IGRA created the NIGC and it is the nation's only federal
gaming regulatory entity. To put the regulation of tribal gaming in
proper context, we need to appreciate that the vast majority of the
regulation of tribal gaming is done by the tribes themselves, with
their tribal gaming commissions and regulatory authorities. In many
instances, where tribes conduct Class III or casino gaming, state
regulators also participate in the process. NIGC has a discrete role to
play in this process and is only one partner in a team of regulators.
As I have often told this Committee, the growth of revenues
generated by tribal gaming is large, and getting larger. For individual
casinos, however, growth may slow and, in some cases, may even
diminish. There has been and continues to be growth in the industry,
which now generates nearly $26 billion of gross gaming revenues
annually, and which represents the second largest component of gaming
revenues generated by the gaming industry in the United States.
NIGC's role in the structure established by IGRA is to ensure
ongoing integrity in the tribal gaming industry by assisting tribes to
determine the suitability of those whom they approve or license to
staff and operate their gaming operations and to ensure that the play
at the casinos and bingo halls is fair, both to the customer players
and to the facilities themselves. In addition, NIGC ensures that the
revenues generated by the tribal gaming operations go to the tribal
governments and are not wrongfully siphoned away or disproportionately
paid to those who supply and assist tribes as they conduct those
operations.
As the Committee knows, zero taxpayer's dollars are provided to
NIGC to fund its role, but rather the tribes pay their way through fees
the Commission assesses on the tribes' gross gaming revenues. The large
and growing scope of Indian gaming of late has meant that NIGC, too,
has grown and is growing to keep pace. The composition and staffing of
NIGC is currently as follows:
Overview of the Commission
The NIGC is headed by three Commissioners. The Chairman is
appointed by the President with the advice and consent of the Senate
and the other two Commissioners are appointed by the Secretary of the
Interior. One Commissioner position is currently vacant.
Our current structure is comprised of our Washington D.C.
Headquarters Offices, six regional offices (one of which is housed in
our D.C. offices) and five satellite offices. The typical regional
office is composed of a regional director, several field investigators,
one or two auditors and administrative staff.
Collectively our field personnel consist of six regional directors,
field and background investigators, auditors, and administrative staff
(with one vacancy). It should be noted that the auditors in the
regional or satellite offices actually report to the Director of Audits
in our D.C. offices.
Our D.C. Headquarters houses the Directors of Enforcement,
Training, Auditing, and Contracts. The Directors and our managers for
Information Technology (IT), Freedom of Information Act requests,
Finance and other administrative roles all report to a Chief of Staff.
In addition there is the Office of General Counsel. The attached chart
further breaks down the composition of our staffing. Of our 104
employees, 22 are Native American, 16 of whom are enrolled tribal
members.
A brief description of the function and achievement of the several
divisions of the Commission follows:
Enforcement Division
NIGC's Enforcement Division, through its field investigators,
reviews the conduct of gaming at 416 tribal gaming operations run by
230 tribes.
As a result of NIGC field investigators' work and with the help of
NIGC's Office of General Counsel, in 2007 NIGC issued seven Notices of
Violation and entered into an additional 4 Settlement Agreements in
lieu of notices of violation. Although informal compliance is the
primary method for assuring compliance, approximately 160 Notices of
Violation have been issued over the years.
Training
Along with Congress's grant of flexibility in the amount of fees
collected to fund our activities came a mandate to provide technical
assistance to tribal gaming operations. NIGC has always seen training
as an important part of its mission but has taken special care to offer
training since enactment of Pub. L. No. 109-221 on May 12, 2006. For
example, in calendar year 2007, NIGC's Division of Enforcement provided
over 700 hours of formal training to tribal regulators. This figure
excludes all the hours of informal training that took place during the
715 site visits that were conducted during 2007 or that took place at
national and regional gaming conferences. Training topics include:
tribal background investigations and licensing; environment, public
health and safety programs; tribal gaming commission duties; and slot
machine technology.
NIGC recently hired a Director of Training, who will oversee the
agency's training efforts, integrating the work of our field
investigators and field auditors in providing the training, both formal
and informal, that is needed by tribal gaming facilities and
regulators.
Audit Division
Since the U.S. Court of Appeals for the D.C. Circuit affirmed the
holding in the Colorado River Indian Tribes (CRIT) decision, the Audit
Division has foregone the conduct of Minimum Internal Control Standards
(MICS) audits at most gaming operations conducting Class III gaming;
however, at the time of the decision follow-up was being performed from
several previous audits. At the request of some tribes, that work
continued and reports of findings were provided to the tribal gaming
regulatory authorities for their disposition. Furthermore, in addition
to performing four compliance audits at Class II gaming operations, the
Division has received two requests from Class III properties to conduct
audits; one has been completed and the other is in progress.
The Division has also conducted audits confirming that the uses of
gaming revenue by three tribal governments were compliant with NIGC
regulations. Complementing the audit work has been an increased demand
for training assistance from gaming operations and tribal regulatory
personnel. Since the beginning of the current fiscal year, audit staff
have participated in or conducted training on 17 occasions.
The Audit Division has also worked to install a computerized
accounting system to improve various aspects of the agency's financial
management. The new system has allowed the automation of billings and
receipts for the tribes that process fingerprints of tribal gaming
operation key employees through the NIGC. The new system also allows us
to better monitor the timely payment of NIGC quarterly fees and to more
accurately track payment of fines and penalties that are deposited with
the U.S. Treasury. The system will also help improve NIGC's monthly
financial management through preparation of monthly financial
statements, comparing actual expenditures to budgeting revenues and
expenses to facilitate financial planning for the future.
Contracts Division
The Contracts Division is responsible for reviewing all management
contracts and amendments in order to make a recommendation to the
Chairman, who must approve management contracts before they become
effective.
Tribal Background Investigations and Licensing
The NIGC assisted in processing over 72,000 fingerprint cards for
tribal gaming operations. All the fingerprint information is sent
electronically to the Federal Bureau of Investigation, pursuant to a
MOU with the Bureau with most of the results returned to the tribes
within 24 hours. This is a marked improvement since the early days of
NIGC when results were sent through the mail and not received for two
to four months.
Administration Division
The NIGC Administration Division has responsibility for, among
other things, responding to Freedom of Information Act (FOIA) requests.
Our FOIA Office began FY 2007 with 10 pending requests, and received
101 new requests. By December 31, 2007, the Office had processed and
closed out 108 of those requests; the remaining three were closed out
within the 20-day time limit.
In addition to updating the Employee Manual with many new policies
and procedures, the Division is also working to create an updated
agency-wide data base.
Office of General Counsel
The Office of General Counsel (OGC), a staff of 17, provides legal
advice and counsel to the Commission.
Currently, OGC attorneys, along with the Department of Justice, are
handling 13 cases in Federal courts and monitoring 11 additional cases
that impact the Commission. In 2006, 69 ordinances and amendments were
submitted for review, and in 2007, an additional 49 were submitted. In
every instance, those reviews were completed within the 90-day
statutory deadline.
Twenty-eight contracts in 2006 and 22 contracts in 2007 were
submitted to OGC for a review of management and sole proprietary
interest. The OGC issues advisory opinions on these contracts as a
service to tribes and contractors so that they may avoid possible
violations of the IGRA.
The OGC also assumed responsibility for tracking whether tribal
gaming facilities are located on Indian lands. It established an Indian
lands data base to capture all of the information required to determine
if the lands are eligible for gaming. That data base is undergoing a
complete revamping to make it more user friendly. The OGC is also
developing a system of maps to reflect where the gaming operations are
located.
The OGC, along with NIGC's program personnel, staffs the
Commission's work on regulations. It also provides legal advice on the
distinction between class II and class III games. As a consequence,
over a period of five years, the Office helped draft and revise the
Commission's several drafts of the regulations for classification,
facsimile definition, technical standards, and class II minimum
internal control standards. To do so, they staffed the meetings of two
advisory committees, the meetings of a separate working group formed by
the advisory committees, consultation hearings, and hundreds of
individual consultations, and reviewed hundreds of written comments
submitted by tribes, states and others.
The OGC also drafted Facility License Standards which were
published as final in the Federal Register in February of this year.
The regulation requires tribes to notify the Commission 120 days before
a tribe plans to license a new facility. The rule was finalized after
nearly two years of consultation with tribal leaders and 217 written
comments on prior drafts and proposed standards. Since the Facility
License Standards were published, the NIGC has received seven tribal
notifications of intent to open a new gaming facility in 120 days. We
have requested information from another five tribes regarding their
intent to open a facility within the 120-day timeframe.
The Commission's Evolving Mission
Over time, of course, the methods by which the Commission fulfills
its mission have evolved, and continue to evolve. Some of the areas of
focus in this regard are as follows:
Consultation
In keeping with the obligation to consult, NIGC adopted its
consultation policy in early 2004, a copy of which is attached and
which we published in the Federal Register. This policy was itself a
product of the Commission's consultation with tribes as it was
formulated. In the course of formulating this policy, NIGC also
gathered and examined the consultation policies of other federal
agencies, and discussed the utility of those policies with those
agencies.
In the course of consulting on regulations, we typically first
draft the proposed regulations, based on the agency's experience of
what is needed for healthy regulation, and then we present these
proposed regulations to the tribes. The proposals are often published
on our website and, for example, in the case of the classification
regulations, are presented to tribal advisory committees, so that
tribal gaming regulators with the most experience in the field can
advise NIGC of how the regulations would affect them.
We continue to seek consultation in the most effective ways. While
there are 562 recognized tribes in the United States, only about 230
are engaged in Indian gaming, and so it is that group to whom the NIGC
has most often turned for consultation. In the two years 2006 to 2007,
NIGC has conducted 154 government-to-government consultations.
In addition, I met with 41 tribes here in my office in D.C. at
their request to discuss a myriad of issues. NIGC also attended 15
tribal advisory committee meetings, 15 national and regional
conferences, and 8 tribal leadership meetings to which we were invited.
In addition, on September 16, 2006, we held a public hearing on the
class II regulations. That hearing, at which 27 speakers made public
comments, was attended by 129 participants.
It is not possible, of course, for the Commission to visit every
tribe on its reservation each time an issue or policy might affect
tribes. Gaming tribes have formed regional gaming associations, such as
the Great Plains Indian Gaming Association (GPIGA), the Oklahoma Indian
Gaming Association (OIGA), the Washington Indian Gaming Association
(WIGA), the California Nations Indian Gaming Association (CNIGA), the
Midwest Alliance of Sovereign Tribes (MAST), and the New Mexico Indian
Gaming Association (NMIGA), among others, as well as national and
regional organizations such as National Indian Gaming Association
(NIGA), National Congress of American Indians (NCAI) and United South
and Eastern Tribes (USET). Those organizations meet annually or more
often, and NIGC has taken those opportunities to invite tribal
leadership to attend consultation meetings on a NIGC-to-individual-
tribe basis. Consulting at gaming association meetings maximizes the
use of the Commission's time and minimizes the travel expenses that
tribes, who ordinarily attend those meetings anyway, must expend for
consultation.
Many tribes accept these invitations, many do not. Some tribes send
their tribal chair, president or governor, and members of their tribal
council to these consultation sessions, while others only send
representatives of their tribal gaming commissions, or in some
instances staff members of the tribal gaming commission or of the
tribal gaming operations. The consultation session is always most
effective when tribal leadership, by way of tribal chair or council, is
present. The letters of invitation identify issues that NIGC is
currently focusing on, and about which the agency would like tribal
input. The letters always include an invitation to discuss any other
topics that might be of particular interest to an individual tribe.
Some consultations, therefore, have been limited to a single issue,
such as NIGC's proposals to better distinguish gaming equipment
permissible for uncompacted Class II gaming from that permitted for
compacted Class III gaming. Others might focus on issues specific to
the individual concerns of the tribes.
We do not only make ourselves available for numerous consultations
but we also listen seriously to what we hear at those consultations.
The regulations NIGC adopts are published with thorough preambles,
which attempt to summarize all of the issues raised in the government-
to-government consultation sessions the Commission has held with
tribes, as well as those raised by all other commenters providing
written comment, during the comment period on the regulation. We write
such detailed preambles so that commenters will know that we considered
their comments and understand why those comments were or were not
accepted.
We also take to heart what we hear at consultations while we
formulate our regulations. For example, the proposed regulations on
Minimum Internal Control Standards for Class II gaming were written
completely in response to observations made by the Tribal Advisory
Committee on the Class II regulations. Likewise, we have drastically
revised our Class II classification regulations and technical standards
based on tribal feedback. While it may not be patently clear to the
Committee why reducing the number of daubs or ball releases in an
electronic bingo game is important, I can assure you, it is a topic of
hot debate among gaming tribes and the states. The fact that we have
reduced the number of daubs from two (after the game starts) to one,
makes a tremendous difference in the speed with which the game may be
played.
This is not to say that our responses to tribal feedback are met
with applause in Indian Country. We believe that consultation should
not necessarily mean agreement and that the parties consulting should
not measure the good faith or effectiveness of the consultation by
whether agreement is reached. We must also balance the desire for
collaboration with the regulated community (Indian gaming tribes) with
our statutory mission to provide robust and healthy regulation.
Typically, there is little or no clamor for consultation if the
action being considered is favorably received throughout the Indian
gaming industry. NIGC's recent reduction in the fees it imposes on
gross gaming revenues to fund NIGC operations provides such an example.
On the other hand, if the issue the agency is considering is viewed as
problematic, often there are concerns expressed that consultation has
been inadequate.
A further challenge the NIGC has observed is that consultation is
most often criticized by tribes when the eventual policy that the
agency settles on is at odds with the position expressed by tribes
during consultations. That is, the NIGC's failure, from the tribal
point of view, was not in the consultation per se but rather that the
Commission did not agree with tribal points of view. It is often the
case that the only consultation deemed adequate is that in which the
Commission always fully comports with tribal points of view. NIGC often
finds itself sympathetic to tribal points of view, but it is also bound
by statutory constraints. For example, the IGRA's characterization of
certain games as Class III requires the sanction of tribal-state
compacts.
Government Performance and Results Act (GPRA)
In mid-2006 IGRA was amended by Pub. L. No. 109-221 (Act of May 12,
2006) to require the NIGC to formally comply with the Government
Performance and Results Act (GPRA).
The formal GPRA process was new to NIGC, and we lacked knowledge
and experience in our agency in preparing strategic and performance
plans in accordance with GPRA procedures and requirements. Our staff,
after reading GPRA and reviewing one or two existing plans from other
agencies, drafted a plan for FY 2008. In light of feedback, including
from tribal representatives who read the discussion draft on our
website, the plan was essentially discarded and we started anew.
The new draft was completed around the first of April 2008. We are
now seeking review, guidance and assistance relative to our new plan.
We hope to have a draft strategic plan suitable for submission to
Tribes and Congress for comments by the end of June 2008.
CRIT Decision
In performing its oversight role, in the 1990s NIGC addressed
concerns about the lack of internal controls in a number of tribal
gaming facilities by adopting a comprehensive set of Minimum Internal
Control Standards (MICS), which the NIGC applied to Class II and Class
III gaming. While many tribes at that time already had excellent
internal control systems, a number did not, and as a result of the
application of those standards, the entire Indian gaming industry moved
to a more professional level, some tribes adopting the NIGC MICS, some
tribal-state compacts adopting those MICS, and many tribes combining
the NIGC standards with their own, more rigorous standards. The annual
audits IGRA requires tribes conduct and furnish to NIGC for review,
thereafter included independent auditors' analysis of tribal compliance
with those standards. NIGC expanded its team of auditors and conducted
tribal audits in connection with compliance with those standards. Those
standards were applied to Class II and Class III gaming. At the time of
their adoption, many tribes, while complying with the new regulations,
voiced a concern that NIGC lacked the authority to so regulate Class
III gaming--Class III gaming constituting more than 90% of the $26
billion of gross gaming revenues per year. Those concerns crystallized
in a judicial challenge brought by the Colorado River Indian Tribes
(CRIT) to the NIGC's MICS's application to Class III gaming. The United
States District Court and the United States Court of Appeals in the
District of Columbia agreed with the tribes reasoning and in 2006
decreed that NIGC could no longer mandate tribal compliance in that
area. Thus, the role and approach of NIGC in that area has since
changed. A number of tribes have recently amended their tribal gaming
ordinances to adopt and include the NIGC MICS, and to recognize NIGC's
enforcement authority over Class III. In those instances NIGC has
reverted to the role that it earlier played. Elsewhere, NIGC confines
its review of MICS compliance to Class II gaming except when a number
of tribes have invited the NIGC to their facilities to do Class III
MICS audits on a voluntary basis.
Classification Standards
Perhaps the highest profile initiative of the NIGC in recent years
has been its effort to adopt a regulatory scheme to draw a brighter
line to distinguish gaming equipment tribes may use for uncompacted
Class II gaming (bingo, etc), from that which tribes employ for
compacted Class III gaming (casino gaming). The IGRA recognized that
the long standing Johnson Act prohibited ``gambling devices'' in Indian
country, but made a specific exemption for the use of such equipment
when it is utilized pursuant to the tribalstate compact. The Act also
recited that tribes could use computers and electronic and technologic
aids when they conducted their bingo and games similar to bingo, but
further provided that slot machines of any kind and electronic
facsimiles of games of chance fell into the compacted Class III
category. After taking enforcement actions, closing tribal gaming
facilities and imposing significant fines, in instances where the NIGC
observed slot machines or electronic facsimiles of games of chance
being employed in the absence of compacts, the Commission attempted to
better address the issue by providing a number of advisory opinions
with respect to equipment it deemed playable without a compact. That
process proved complex and difficult, and with the rapid advances in
technology, we discovered that no sooner were such advisory opinions
written, than they became obsolete. Thus, a long effort, assisted by
tribal advisory committees, was commenced to write regulations to
clarify what equipment could be used without a compact, and how such
equipment could be identified and certified. This effort included a
long discussion and negotiations with the Department of Justice, which
has responsibility for enforcement of the Johnson Act, and drafting and
proposing rules which, after strong criticism by tribes and others
during many consultation sessions, were withdrawn.
As a result of a long arduous effort by the NIGC's tribal advisory
committees, working with a working group of representatives who build,
design and regulate such equipment at the tribal level, a new package
of proposals was published in the Federal Register in October, 2007.
Much consultation with respect to those proposals was held thereafter,
and the comment period was extended several times, most recently
concluding on March 9, 2008. In connection with this effort the
Commission commissioned an economic impact study which will be
considered together with the comments on the proposals under
consideration. This long-standing effort deserves to be fairly and
finally concluded, and the Commission is cautiously optimistic that
with the information received from tribes, states and the public, it
can publish final rules with respect to at least some aspects of this
concern in the near future.
Unless or until clarity is brought to this area, challenges will
remain for gaming tribes, as well as those of us who attempt to
regulate them. Tribal gaming is by no means the only sector where
concerns of this nature exist. In many states, there is a significant
expansion of what is purported to be charitable gaming using automated
bingo equipment. These states find themselves struggling with questions
about whether such equipment complies with their charitable gaming laws
or runs afoul of their gambling laws, and, generally, with the scope of
permissible charitable gaming within their borders. In some instances,
this has raised issues about violating the ``exclusivity'' that tribes
understood they had bargained for in their Class III compacts in
exchange for revenue sharing with the states. Tribes cannot expect to
have an unfettered breadth of Class II gaming equipment in their
sector, yet require states to view the issue very narrowly. Clarity in
this area will serve many purposes.
Change in the Face of Growth
The NIGC, in the context of the federal family, is a relatively
young and small agency. It was not long ago when NIGC's staff consisted
of only a handful of people, operating from a single office. As the
industry grew from at most a $200 million industry when IGRA was
enacted to a $26 billion industry, the agency's budget grew from $1.2
million in 1991, to $13 million in 2006, to $20.5 million in 2008. The
days are not long past when there were only five ``field
investigators'' operating out of their homes and the trunks of their
cars, spread throughout Indian country.
As this growth has occurred, it has become necessary to adopt more
and more formal policies and procedures. The agency has always
attempted to look at federal statutes, such as most of Title 5 U.S.C.
governing government organization and employees, and through more
specific procedures of the Department of the Interior under our
interagency arrangement with the Department to provide administrative
support. With the agency's growth, it has become necessary to develop
and adopt more agency-specific policies, and this is a work in
progress. Recently the agency has adopted policies relating to
reasonable accommodations under Equal Employment Opportunity Commission
guidance, and undoubtedly as the agency continues to grow, further
policies of this nature will be deemed appropriate. Common sense and
good judgment has always been the approach the agency has attempted to
take when dealing with its management. As the NIGC has now grown to
have a staff of more than 100, formal policies and procedures become a
greater necessity. While an informal approach kept the agency nimble in
its early days, experience is showing that as it has grown, more
bureaucracy, to ensure due processes and transparency, is appropriate
and the agency continues to examine its practices to develop measures
that are necessary. In this connection, the agency is using its own
audit staff to conduct audits of a number of its programs, and greater
consistency and clarity is resulting there from.
That is an overview of how we are evolving in carrying out our
mission. I will be happy to answer any questions the Committee have.
Thank you.
Staffing at the NIGC Headquarters
1--Chief of Staff
2--Commission assistants
1--Director of Audits
1--Director of Enforcement
1--Director of Training
1--Director, Region VI
1--Director, Congressional and Media Relations
1--Director of Contracts
1--Financial Analyst
1--NEPA Compliance Officer
2--Tribal Background Investigation Staff
1--Support Staff
1--Director of Administration (vacant)
11--Administration Personnel (1 vacant)
1--IT Manager
4--IT Staff (1 vacant)
1--Acting General Counsel
13--Attorneys (2 on detail)
5--Legal staff
--------------------------------------
D.C. Total 50
Field Total 54
--------------------------------------
Agency Total 104
April, 2008
Senator Tester. Thank you, Chairman Hogen. I appreciate
that.
Along the lines of testimony, Congressman Boren has
requested a statement for the record and it will be also
included. *
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* The information referred to is printed in the Appendix.
---------------------------------------------------------------------------
Senator Tester. Delia, I look forward to your testimony. As
with the previous one, if you can keep it to about five minutes
and we will put your full testimony in the record. So go ahead.
Thank you for being here.
STATEMENT OF DELIA CARLYLE, CHAIRWOMAN, ARIZONA
INDIAN GAMING ASSOCIATION; CHAIRWOMAN, AK-CHIN
INDIAN COMMUNITY
Ms. Carlyle. Thank you. Good morning, Chairman Dorgan, Vice
Chairman Murkowski, Senator Tester and other distinguished
members of this Committee and staff. My name is Delia Carlyle.
I am currently the Chairman of the Ak-Chin Indian Community,
which is just south of Phoenix, not in Phoenix, but south of
Phoenix. I am also the Chair of the Arizona Indian Gaming
Association, which represents 19 tribes with gaming compacts in
Arizona.
My comments today are on behalf of both my tribe and AIGA,
and are based on my written comments which I respectfully
request be entered into the record.
First, let me discuss what I think many of you may have
heard about Indian gaming in Arizona. First and foremost,
tribal gaming activity in Arizona is rigorously regulated by
both the tribes and the State in Arizona. In Arizona, the
tribes and the State have developed a collaborative partnership
for effective regulation of Indian gaming.
Now, that is not to say we agree on everything. Like many
good relationships, we often agree to disagree, but remain
reasonable, respectful and attentive. To reiterate what the
Arizona Department of Gaming Director Paul Bullis had
previously stated to this Committee, and I quote, ``Although
the compact is the cornerstone of our partnership, what makes
the partnership work is communication, discussion, engagement,
and a process for resolving issues.'' In fact, in May of 2007,
Casino Enterprise Management Magazine wrote that Arizona's
regulatory program exemplifies the very best in regulation.
I want to touch upon a few issues with the NIGC's current
practices and regulations. In general, the NIGC is overreaching
with its recent regulations and appears to be engaging in
empire-building as there is no significant reason for them to
be involving themselves in areas already regulated by other
Federal, tribal and State agencies.
The publishing of the NIGC's facility licensing standards
is a prime example of how NIGC has disregarded meaningful
tribal consultation and collaboration, and adopts its own
rules. Based upon our experience in Arizona, tribal
consultation and collaboration means actually listening to and
considering tribal perspectives, not just sitting across from
tribal representatives in a one-hour meeting and responding
with a thank you for your comments.
Here is an example of what we think the NIGC considers
consultation. At our January, 2008 annual Southwest Indian
Gaming Trade Show, the Arizona tribal leaders extended an
invitation to the NIGC to meet with them and talk about a
number of issues, one of which was how tribes and the NIGC
could better communicate. The first item brought up by tribal
leaders was the NIGC's facility licensing regulations.
To our surprise, the answer from NIGC was that the
regulations were already at the Federal Register waiting to be
published and additional comments were not necessary. When
asked if there were changes from the last draft, the answer was
yes. When asked if NIGC could let the tribal leaders know what
those changes were, the answer from NIGC was no.
If you look further into this issue, you will see that the
December 12th, 2007 NIGC consultation letter to Arizona tribal
leaders included the status of proposed facility licensing
regulations as a bullet point discussion item. Doesn't it seem
odd that NIGC listed for discussion with tribal leaders the
proposed facility licensing standards, when the NIGC already
had its version of the standards at the Federal Register
waiting to be published?
With the new regulations, the NIGC is trying to expand from
a gaming activity regulator to a sanitation, emergency
preparedness, electrical, plumbing, food and water,
construction and maintenance, hazardous materials, and
environmental regulator.
Mr. Chairman and other distinguished members of this
Committee, tribes already have EPA, OSHA, IHS and other
Federal, State and tribal regulators who review environmental
health and safety conditions. There are more than enough
Federal layers piled on our industry.
Moreover, we are highly dubious of gaming regulators turned
all of the above regulators at the swoop of a Federal Register
publication. We do not need yet another Federal agency
expanding beyond its statutory mission as directed by Congress
to become another unwieldy, ever-growing bureaucracy.
Finally, on October 1st, 2007, the NIGC submitted its draft
Government Performance Results Act report, GPRA. Subsequently,
as I have been informed, the NIGC has decided on its own to
revise its own GPRA report. The NIGC should not be allowed to
stall this long. We question the logic of implementing
significant changes to the current regulations when tribes do
not know how we fit within NIGC's strategic five-year plan.
In addition, tribes are also waiting for the plan on
technical training, which is another part of the GPRA report.
Again, on behalf of the Ak-Chin Indian Community and the
Arizona Indian Gaming Association, I would like to thank the
Chairman, Vice Chair and other members of this Committee for
holding this important meeting.
Thank you.
[The prepared statement of Ms. Carlyle follows:]
Prepared Statement of Delia Carlyle, Chairwoman, Arizona Indian Gaming
Association; Chairwoman, Ak-Chin Indian Community
Introduction
Good Morning, Chairman Dorgan, Vice-Chair Murkowski, other
distinguished members of this Committee and Staff.
My name is Delia Carlyle and I am the Chairman of the Ak-Chin
Indian Community. I am also Chair of the Arizona Indian Gaming
Association (AIGA) which represents 19 tribes in Arizona. My comments
today are on behalf of both my Tribe and AIGA.
The Ak-Chin Indian Community Reservation was established in May
1912 and comprised over 47,000 acres. A few months later, more than
half of the Reservation was taken by the federal government and reduced
to its present day size of almost 22,000 acres. The Community is
located approximately 35 miles south of Phoenix, Arizona, near the Gila
River Indian Reservation. We are a small tribe with about 800 enrolled
members.
Ak-Chin is an O'odham word which means ``people of the wash.'' The
term refers to a type of desert farming that depends on the area's
washes where our ancestral people planted beans, corn and squash, which
were irrigated from the wash runoff from storms. While we are still
farmers today, we also engage in another form of economic development
known as Tribal Governmental Gaming which helps support the needs and
dreams of our tribe and tribal members.
On behalf of the Ak-Chin Indian Community I would like to thank the
Chairman, Vice-Chair, and the other members of this Committee for
holding this hearing on oversight of the National Indian Gaming
Commission (NIGC).
Collaborative Regulation: Arizona Indian Tribes and the Arizona
Department of Gaming
First, let me discuss what I think many of you may have heard about
Arizona Indian gaming. In Arizona, the tribes and State have developed
a collaborative partnership for effective regulation of Indian gaming.
After years, if not decades, of the State not accepting that tribes are
in fact sovereign governments, Arizona, under the leadership of
Governor Napolitano, now understands that tribes are indeed sovereign
governments that predate Arizona. Moreover, under the leadership of
Executive Director Paul Bullis at the Arizona Department of Gaming, the
relationship between tribes and the State has become a successful
partnership. That is not to say we agree on everything. Like many good
relationships, we often agree to disagree but remain reasonable,
respectful and attentive.
In Arizona, the Tribal-State Gaming Compacts delineate the roles
and responsibilities of the tribes and State. To reiterate what
Director Bullis has previously stated to this Committee, ``[a]lthough
the Compact is the cornerstone of our partnership, what makes the
partnership work is communication, discussion, engagement, and a
process for resolving issues.'' \1\
---------------------------------------------------------------------------
\1\ SCIA March 8, 2006 Testimony of Mr. Paul Bullis.
---------------------------------------------------------------------------
Pursuant to our Compacts, tribal gaming in Arizona funds the vast
majority of the Arizona Department of Gaming's budget and regulatory
activities. The Department's Fiscal Year 2008 budget is approximately
$15.6 million, and for FY 2009 about $16.3 million. To highlight some
examples, the tribally-funded Arizona Department of Gaming: \2\
---------------------------------------------------------------------------
\2\ Arizona Department of Gaming.
Has 111 employees (comprised of numerous peace officers,
---------------------------------------------------------------------------
auditors, CPAs and CFEs);
Performed approximately 12,000 slot machine inspection and
certifications;
Conducted over 300 vendor background reviews and
certifications with 100 being new vendor certifications and 200
renewals; and
Conducted approximately 10,000 employee background reviews
and certifications with almost 2,500 new applications and over
7,500 renewals.
Please keep in mind that tribal regulatory agencies also inspect
and certify slot machines; review and certify employee and vendor
backgrounds; and have multi-million dollar budgets and staff to ensure
fair and safe gaming on our tribal lands. In May 2007, ``Casino
Enterprise Management'' magazine wrote that Arizona's regulatory
program exemplifies ``the very best in regulation,'' The magazine staff
spent several days with the Arizona Department of Gaming and observed
their gaming compliance technicians inspecting slot machines at our
casinos. The article said: ``The state regulators and the tribal
regulators work together for the best interest of gaming and to assure
compliant and effective enforcement. The Department's management and
staff have worked hard to build a comprehensive and efficient system of
checks and balances that not only work well for them, but . . . are
also welcomed by the tribes.'' Consequently, tribal gaming activity in
Arizona is rigorously regulated by both the tribes and the State.
Problems with NIGC Regulation--Facility Licensing Standards
I want to touch upon several issues we have with NIGC current
regulatory regime. In general, the NIGC is overreaching with its recent
regulations, and appears to be engaged in empire building as there is
no significant reason for them to be involving themselves in areas
already regulated by other tribal, federal, and state agencies.
The promulgation and publishing of the Facility Licensing Standards
are prime examples of how the NIGC has disregarded meaningful tribal
consultation and collaboration, and unilaterally adopts its own rules.
The NIGC's own March 31, 2004 Tribal Consultation Policy requires that:
To the extent practicable and permitted by law, the NIGC will
engage in regular, timely, and meaningful government-to-
government consultation and collaboration with Federally-
recognized Indian tribes, when formulating and implementing
NIGC administrative regulations . . . which may substantially
affect or impact the operation or regulation of gaming on
Indian lands by tribes under the provisions of IGRA.
Accordingly, collaboration means more than the NIGC incorporating
grammatical comments into their regulations. Based upon our experience
with tribal and State regulation in Arizona, consultation and
collaboration means actually listening to and considering tribal
perspectives not just sitting across from tribal representatives in a
one hour meeting and responding with only a curt ``thanks for your
comments.'' This regulation by fiat must be replaced by meaningful
consultation and collaboration with tribes, instead of the all too
familiar ``we [NIGC] considered that comment but . . . .''
Here is an example of what NIGC considers consultation. As stated
in Chairman Hogan's testimony on H.R. 5608, ``Gaming tribes have formed
regional gaming associations, such as . . . . Those organizations meet
annually or more often, and NIGC has taken those opportunities to
invite tribal leaders to attend consultation meetings on a NIGC-to-
individual-tribe basis. Consulting at gaming association meetings
maximizes the use of the Commission's time and minimizes the travel
expenses that tribes, who ordinarily attend those meeting anyway, must
expend for consultation.'' While this looks great on the surface, the
experience we had at our Annual Southwest Trade Show was very
different. Although Arizona tribes received letters to meet with NIGC
(see attached example letter), tribal leaders also extended an
invitation to the NIGC to meet with them at a breakfast since some of
the tribal leaders could not meet with the NIGC at their scheduled time
(where the NIGC met with tribal staff). The first comment to the
Commissioners was that they would like to talk about the ``Facility
Licensing Draft Regulations.'' To our surprise, the answer from the
NIGC was that the regulations were already at the Federal Register
waiting to be published and additional comments were unnecessary. When
asked if there were changes from the last draft--the answer was yes.
When asked if they could let the leaders know what changes were made--
the answer was no.
If you look further into this issue you will see that the NIGC
consultation letters to tribal leaders inviting them to a consultation
meeting were dated December 12, 2007. One of the bullet point
discussion items was the ``[s]tatus of proposed facility licensing
regulations.'' Our tribal leaders' breakfast meeting was on January 15,
2008. The new regulations were published on February 1, 2008. It seems
disingenuous that the NIGC listed for discussion with tribal leaders
the proposed gaming facility licensing standards, when the NIGC already
had its version of the standards at the Federal Register waiting to be
published two weeks later.
A significant problem at the NIGC is that they have stopped
listening to tribes. As I have previously stated, in Arizona, both the
tribes and the Arizona Department of Gaming work together to fulfill
the goals of the Compact by listening to each other to develop a mutual
understanding, even if we don't always agree. The problem with the NIGC
is that they are hearing tribes--but not listening! While this NIGC
administration has done a good job of meeting with tribes as compared
to their predecessors, they are putting quantity of meetings over
quality of listening to tribes. For example, most tribes in Arizona met
with the NIGC in March 2007 and January 2008 regarding the Facility
Licensing Standards. Again, the quality of consultation is far more
important than the quantity of tribal consultations.
In December of 2007, the AIGA submitted written comments to the
NIGC which detailed AIGA's objections to their Facility Licensing
Standards. In summary, the 19 Indian tribes of AIGA find it offensive
that the NIGC's Standards conflict with the intent of IGRA, which
recognizes tribal authority to regulate the construction, maintenance,
and operation of a tribal gaming facility within tribal jurisdiction.
In addition, the regulations provide a very broad grant of authority
and discretion to only the Chairman, as opposed to the Commission, for
approving gaming facility licenses. IGRA itself provides that a tribe
must issue a facility license for Class II or III gaming. Finally, the
tribe must provide in its tribal gaming ordinance that it will comply
with appropriate construction, maintenance, and operation of these
facilities.
Furthermore, our State-Tribal Compacts already require tribes to
comply with minimum operational standards to protect environment,
health and safety. Once again, the NIGC's rules conflict with our
Compact and, thus, are a waste of resources when tribal operations in
Arizona already comply with such standards.
The overbreadth of regulation is especially true for the new Gaming
Facility Licensing Standards. The Indian Gaming Regulatory Act (IGRA)
is supposed to provide a balanced framework for tribal, state, and
federal regulators. Unfortunately, the NIGC has upset that delicate
balance with its new Gaming Facility Licensing Standards. With the new
regulations, the NIGC is trying to expand from a gaming activity
regulator to a sanitation, emergency preparedness, electrical,
plumbing, food and water, construction and maintenance, hazardous
materials, and environmental regulator. Mr. Chairman and other
distinguished members of the Committee, we already have the EPA, OSHA,
IHS, and other federal, state and tribal regulators who review
environmental, and health and safety conditions. There are more than
enough federal layers piled on our industry. Moreover, we are highly
dubious of gaming regulators turned all-of-the-above regulators at the
swoop of a federal register publication. We do not need yet another
federal agency expanding beyond its statutory mission as directed by
Congress to become another unwieldy, burgeoning bureaucracy.
Finally, another major concern of many tribal regulators is whether
the NIGC is prepared to understand and apply new technology as it rolls
out today and in the future. We are concerned that the NIGC's process
for Class II gaming could once again delay available technology and
future gaming activities for tribal gaming.
Revised GPRA
On October 1, 2007, the NIGC submitted its Draft Government
Performance Results Act Report (GPRA). The GPRA Report was due pursuant
to the Congressional mandate as part of S. 1295, the National Indian
Gaming Commission Accountability Act of 2005. Subsequently, as I have
been informed, the NIGC has decided on its own to revise its own draft,
a draft that was approved by the Chairman of NIGC and submitted for
comment to the Office of Budget and Management. The NIGC's decision to
revise its GPRA Report stalls its mandated requirement to submit to
Congress: (1) a strategic five-year plan, annual performance plans, and
performance reports, and (2) as part of its compliance with GPRA, a
plan that addresses technical assistance to tribal gaming operations.
If in fact the NIGC is not going to comply with the mandate, then it
should be held responsible. The NIGC should not be allowed to stall
this long, and Congress should not enable the delay. Without the GPRA
Report, tribes have no idea how the current regulations fit into the
NIGC's five-year plan and when, or if, the technical assistance that
many tribes need are adequate or even being developed. Furthermore, we
question the logic of embarking on such large regulatory changes
without first knowing how they fit into a strategic plan and without
that plan going out for consultation with the very people who have to
implement it.
Conclusion
Again, on behalf of the Ak-Chin Indian Community I would like to
thank the Chairman, Vice-Chair, and the other members of this Committee
for holding this very important hearing. Thank you.
Attachment
Senator Tester. Thank you, Ms. Carlyle.
Mr. Mathews?
STATEMENT OF J.R. MATTHEWS, NIGA EXECUTIVE
COMMITTEE MEMBER AND VICE CHAIRMAN, QUAPAW TRIBE OF OKLAHOMA;
ACCOMPANIED BY MARK VAN NORMAN,
EXECUTIVE DIRECTOR, NATIONAL INDIAN GAMING
ASSOCIATION
Mr. Mathews. Thank you, Mr. Chairman.
Senator Tester and other members of the Committee, my name
is J.R. Mathews. I am the Vice Chairman of the Quapaw Tribe of
Oklahoma. As a Board Member, I am speaking on behalf of the
National Indian Gaming Association. Thank you for this
opportunity.
The Indian Gaming Regulatory Act is a remarkable success.
Nationwide, there are over 230 tribes in 28 States which are
engaged in gaming, and these tribes are using revenues to build
or rebuild their communities.
Last year, Indian gaming, as you know, generated more than
$26 billion in gross revenues for those tribal governments.
That means that we created more than 700,000 jobs nationwide
and generated almost $12 billion in Federal, State and local
revenues.
Tribal governments are dedicated to building and
maintaining strong regulatory systems because of our sovereign
authority, governmental operations and resources are at stake.
Under IGRA, tribal governments are the primary day-to-day
regulators of Indian gaming. We have dedicated tremendous
resources to the regulation of Indian gaming. Tribes spent over
$345 million last year on tribal, State and local regulations.
We have more than 3,300 expert regulators and staff.
Among our concerns today is the government-to-government
consultation and a need for a statutory directive to the NIGC
to consult with Indian tribes. Executive Order 13175
establishes the framework for Federal agencies to work with
Indian tribes and elected tribal leaders.
When Federal action will substantially and directly affect
tribal governments, the essential principles and the guiding
agency actions should be an all-out respect for tribal
sovereignty and self-government, the maximum administrative
discretion for tribal governments, and preserving the
prerogatives of tribal lawmaking whenever possible.
This is a firm belief among tribal leaders that while the
NIGC is willing to meet with tribal leaders, the NIGC does not
accommodate tribal government concerns. Instead, the NIGC has a
pre-determined decision that has already been made, and they
tell us they are open to change, but they don't listen to us.
Tribal leaders believe that Federal agencies should try to
reasonably accommodate a tribal government concern, not just to
sit across the table from us and then go on about business as
usual. The tribal Federal government-to-government relationship
needs to be better than this, especially when the agency has
``Indian'' in its name. The NIGC should do the utmost to
accommodate our views through consultation. We should not get a
flippant response to the quote that was stated, consultation
does not mean agreement.
The United States should operate on a basis of mutual
consent with Indian tribes, just as it does with U.S.
territories. A statutory directive to the NIGC on government-
to-government consultation is both appropriate and necessary.
We encourage this Committee to introduce legislation along the
lines of House Resolution 5608 which seeks to codify the
Executive Order 13175. Also Executive Order 12866 requires that
agencies examine whether or not these alternatives to direct
regulations consider the cost and benefits of the regulations,
consult with State, local and tribal governments, and minimize
the burdens on them.
In addition, regulations should be drafted in a manner that
is simple and easy to understand. The NIGC has failed to comply
with these standards.
NIGC's own economic impact analysis found that the Class II
proposals would cost Indian tribes between $1.2 billion and
$2.8 billion annually. The NIGC does not conduct cost/benefit
analysis of its regulatory proposals. That violated Executive
Order 12866. Clearly, the NIGC is failing to comply with the
general rules for Federal regulatory proposals.
The NIGC should adopt and comply with the Regulatory
Flexibility Act. Because the NIGC failed to conduct its
economic impact analysis until the close of the comment period,
and it did not consider lower-cost alternatives as required by
the Regulatory Flexibility Act, once again the NIGC should open
its regulation and consider the cost and benefits of
alternatives.
The NIGC should comply with the Federal Advisory Committee
Act. The NIGC has been regularly constituting and disbanding
tribal advisory committees. This gives the impression that when
an existing TAC objected to the arbitrary NIGC policies, the
NIGC abolished them and sought a new TAC that would be amenable
to the NIGC views.
The NIGC should comply with Congress's directive to provide
training. Despite a clear directive to the NIGC in the NIGC
Accountability Act, they have not provided meaningful training
and technical assistance. Congress should act to ensure that
the National Indian Gaming Commission is working with tribal
governments to build up tribal government institutions, rather
than a Washington-centered approach and relying primarily on
rulemaking to resolve perceived problems.
Thank you for this opportunity to speak.
[The prepared statement of Mr. Mathews follows:]
Prepared Statement of J.R. Mathews, NIGA Executive Committee Member;
Vice-Chairman, Quapaw Tribe of Oklahoma
Good Morning, Mr. Chairman and Members of the Committee. Thank you
for inviting me to testify today.
My name is J.R. Mathews. I am the Vice Chairman of the Quapaw Tribe
of Oklahoma and I serve on the Executive Committee of the National
Indian Gaming Association.
I am speaking today on behalf of the National Indian Gaming
Association and its 184 Member Tribes. NIGA is a tribal government
association dedicated to supporting Indian gaming and defending Indian
sovereignty. I am accompanied by Mark Van Norman, NIGA's Executive
Director. Mark is a member of the Cheyenne River Sioux Tribe of South
Dakota.
Indian Gaming: The Native American Success Story
The Indian Gaming Regulatory Act is a remarkable success.
Nationwide there are 231 tribes in 28 states which are engaged in
gaming. Tribes are using revenues to build or rebuild their
communities, while putting tribal members to work and providing basic
and essential tribal government services. Tribes are also generating
significant taxes to Federal, state and local governments through
Indian gaming and making significant charitable contributions to their
communities and other Indian tribes. Last year, Indian gaming generated
$26.5 billion in gross revenues (before capital costs, salaries,
expenses and depreciation, etc.) for tribal governments. That means
tribal governments created more than 700,000 jobs through Indian gaming
nationwide and generated almost $12 billion in Federal, state and local
revenue.
Here are some examples of the tribal community infrastructure and
the essential government services that Indian gaming revenues provide:
The Mescalero Apache Tribe of New Mexico built a new high
school;
The Choctaw Nation of Oklahoma built a new hospital;
Gila River established a new police and emergency medical
unit;
The Pechanga Band established a new fire department;
The Mohegan Tribe is building a water system for the Tribe
and seven of its surrounding communities;
The Rosebud Sioux Tribe established child care and provides
new school clothes for impoverished students;
The Fort Berthold Tribes established a new Headstart center;
The Tohono O'odham Nation is funding the Tohono O'odham
Community College and used $30 million to fund a student
scholarship program; and
Several tribal governments provided major funding for the
new Smithsonian Museum of the American Indian.
These positive developments are happening across Indian country.
The development of Indian lands is a benefit to surrounding
communities. For example, Gila River EMTs serve as first responders to
accidents in their stretch of I-10. The Pechanga Band's Fire Department
responded to the California wildfires, working hard to save homes and
lives in neighboring communities.
Indian gaming benefits neighboring Indian tribes as well. The
Shakopee Mdewakanton Sioux Tribe, for example, has generously assisted
many Indian tribes in Minnesota, the Dakotas, and Nebraska, including
refinancing the Oglala Sioux Tribe's debt, providing a grant to help
build a new nursing home for the Cheyenne River Sioux Tribe and an
economic development grant for the Santee Sioux Tribe.
The public recognizes that Indian gaming is a success. A national
poll of 1,000 voters conducted on March 14, 2008 for NIGA by the
independent polling firm Fairbank, Maslin, Maullin & Associates found
that American voters generally agree that Indian gaming has been a
success:
81 percent agree that Indian tribes benefit from having
casinos;
82 percent agree that Indian gaming provides revenues that
tribes can use to provide essential services to their members;
79 percent agree that Indian gaming provides jobs for
Indians;
65 percent agree that Indian gaming benefits state and local
communities; and
68 percent agree that Indian gaming allows Indian tribes to
break the cycle of poverty and welfare and become self-reliant.
Approximately, twenty-four million visitors annually travel to
Indian country to visit Indian gaming facilities and on average, make 7
visits per year. Thus, many voters have now experienced Indian gaming
personally and their first hand experience is reflected in the polling
data.\1\
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\1\ At the outset of the poll, 59 percent of American voters
support Indian gaming. After learning about the uses of Indian gaming
revenue for essential tribal government purposes and economic
development, 69 percent of voters support Indian gaming.
---------------------------------------------------------------------------
The Existing Regulatory Framework for Indian Gaming
Tribal governments are dedicated to building and maintaining strong
regulatory systems because tribal sovereign authority, government
operations and resources are at stake. Under IGRA, tribal governments
are the primary day-to-day regulators of Indian gaming and regulate
Indian gaming through tribal gaming commissions. Tribal gaming
regulators work with the NIGC to regulate Class II gaming, and through
the Tribal-State Compact process, tribal gaming regulators work with
state regulators to safeguard Class III gaming.
Tribal governments have dedicated tremendous resources to the
regulation of Indian gaming: Tribes spent over $345 million last year
nationwide on tribal, state, and Federal regulation:
$260 million to fund tribal government gaming regulatory
agencies;
$71 million to reimburse states for state regulatory work
under the Tribal-State Compact process; and
$14.5 million for the NIGC's budget.
At the tribal, state, and Federal level, more than 3,350 expert
regulators and staff protect Indian gaming:
Tribal governments employ former FBI agents, BIA, tribal and
state police, New Jersey, Nevada, and other state regulators,
military officers, accountants, auditors, attorneys and bank
surveillance officers;
Tribal governments employ more than 2,800 gaming regulators
and staff;
State regulatory agencies assist tribal governments with
regulation, including California and North Dakota Attorney
Generals, the Arizona Department of Gaming and the New York
Racing and Wagering Commission;
State governments employ more than 500 state gaming
regulators, staff and law enforcement officers to help tribes
regulate Indian gaming;
The National Indian Gaming Commission is led by Philip
Hogen, former U.S. Attorney and past Associate Solicitor for
Indian Affairs; and Commissioner Norm DesRosier is a former
tribal gaming regulator and state law enforcement officer.
At the Federal level, the NIGC employs more than 100
regulators and staff.
Tribal governments also employ state-of-the-art surveillance and
security equipment. For example, the Mashantucket Pequot Tribal Nation
uses the most technologically advanced facial recognition, high
resolution digital cameras and picture enhancing technology. The
Pequot's digital storage for the system has more capacity than the IRS
or the Library of Congress computer storage system. In fact, the Nation
helped Rhode Island state police after the tragic nightclub fire by
enhancing a videotape of the occurrence, so state police could study
the events in great detail.
At the state level, more than 200 tribal governments have entered
into 250 Tribal-State Compacts with 23 States. Typically, Tribal-State
Compacts include rules on internal controls and regulation. For
example, California 1999 Compacts require tribal governments to
maintain accounting, machine and technical standards that meet or
exceed industry standards. In California, tribal governments have
incorporated MICS into their tribal gaming regulatory ordinances.\2\
The Fairbanks Maslin poll found that 76 percent of American voters
support the Tribal-State Compact system.
---------------------------------------------------------------------------
\2\ Alturas Rancheria, for example, provides in its tribal gaming
ordinance: ``Tribal Gaming Commission regulations necessary to carry
out the orderly performance of its duties and powers shall include . .
. the following: The Minimum Internal Control Standards (MICS) as
issued by the NIGC.'' This type of incorporation by reference is
unaffected by the Federal Court decision in Colorado River Indian
Tribes. In California, tribal governments spent approximately $104
million to fund regulation of Indian gaming in 2006. Of the $100
million, Tribal governments spent $80 million to fund tribal regulation
of Indian gaming, $20 million for state regulation, and $4 million for
Federal regulation. The State of California dedicates more than 100
regulators and staff to Indian gaming regulation while tribal
governments maintain 800 tribal regulators and staff.
---------------------------------------------------------------------------
Indian gaming is also protected by the oversight of the FBI and the
U.S. Attorneys. The FBI and the U.S. Justice Department have authority
to prosecute anyone who would cheat, embezzle, or defraud an Indian
gaming facility-this applies to management, employees, and patrons. 18
U.S.C. 1163. Tribal governments work with the Department of Treasury
Financial Crimes Enforcement Network to prevent money laundering, the
IRS to ensure Federal tax compliance, and the Secret Service to prevent
counterfeiting. Tribal governments have stringent regulatory systems in
place that compare favorably with Federal and state regulatory systems.
Seventy-four percent of American voters agree that IGRA provides enough
or more than enough regulation, according to the Fairbank, Maslin poll.
Only 15 percent of American voters believe that there should be more
regulation.
Government-to-Government Consultation: Need for a Statutory Directive
Since 1960, when then Senator John F. Kennedy pledged to
``[e]mphasize genuinely cooperative relations between Federal officials
and Indians,'' each succeeding Administration has pledged to promote
tribal self-government. President Kennedy followed through on his
pledge by ending the Termination Policy and establishing Federal
programs to revitalize Indian country. President Johnson helped tribal
governments build capacity to provide essential services to tribal
citizens.
Building on the work of the Kennedy-Johnson Administrations,
President Nixon promoted the Indian Self-Determination Act to empower
tribal governments to provide the government services that the Bureau
of Indian Affairs and the Indian Health Service previously provided.
Nixon heralded the new Indian Self-Determination Policy in a special
message to Congress, which explained:
It is long past time that the Indian polices of the Federal
government began to recognize and build upon the capacities and
insights of the Indian people. Both as a matter of justice and
as a matter of enlightened social policy, we must begin to act
on the basis of what the Indians themselves have long been
telling us. The time has come to break decisively with the past
and to create the conditions for a new era in which the Indian
future is determined by Indian acts and Indian decisions.
President Nixon, Special Message on Indian Affairs, July 8,
1970.
Presidents Ford, Carter, Reagan and Bush used the Indian Self-
Determination Policy as the baseline for American Indian policy. In
their Administrations, Congress built upon Self-Determination Policy
through the Indian Health Care Improvement Act, the American Indian
Religious Freedom Act, the Tribal College Act, the Indian Self-
Governance Act, and the Indian Gaming Regulatory Act, among others.
On January 24, 1983, President Reagan issued a Statement on
American Indian Policy, explaining:
When European colonial powers began to explore and colonize
this land, they entered into treaties with the sovereign Indian
nations. Our new nation continued to make treaties and to deal
with Indian tribes on a government-to-government basis.
Throughout our history, despite periods of conflict and
shifting national priorities, the government-to-government
relationship between the United States and Indian tribes has
endured. The Constitution, treaties, laws and court decisions
have consistently recognized a unique political relationship
between Indian tribes and the United States which this
administration pledges to uphold . . . .
The administration intends to . . . remove[e] the obstacles to
self-government and . . . creat[e] a more favorable environment
for the development of healthy reservation economies . . . .
Development will be charted by the tribes, not the Federal
Government . . . . Our policy is to reaffirm dealing with
Indian tribes on a government-to-government basis and to pursue
the policy of self-government for Indian tribes without
threatening termination . . . .
President Clinton's Executive Memorandum and Executive Orders on
Consultation and Coordination with Tribal Governments took President
Reagan's announcement the next steps forward.
Executive Order 13175 on Consultation and Coordination with Tribal
Governments, EO 13175, establishes the framework for Federal agencies
to work with Indian tribes and elected tribal leaders. President
Clinton issued it in 2000 and President Bush affirmed it in 2004. When
Federal action will substantially and directly affect tribal self-
government or tribal rights, the essential principles that guide agency
action are:
Respect for tribal sovereignty and self-government, treaty
rights, lands and natural resources, and the Federal trust
responsibility;
Maximum administrative discretion for tribal governments;
and
Preserve the prerogatives of tribal law-making whenever
possible.
The Executive Order recommends that consensual decision-making,
such as negotiated rulemaking be used when possible.
Five years ago, the National Indian Gaming Association and our
Member Tribes asked the Senate Committee on Indian Affairs to enact a
statutory directive to the NIGC to consult with tribal governments on a
government-to-government basis. The NIGC, for its part, said, ``No,
there is no need for a statutory directive because we will develop our
own policy.''
There is a firm belief among tribal leaders that, while the NIGC is
willing to meet with tribal leaders, the NIGC does not accommodate
tribal government concerns. Instead NIGC has a pre-determined decision
made, they tell us that they are open to change, but they do not
accommodate tribal leader concerns. Chairman Hogen says, ``Consultation
does not mean agreement.'' Well, we believe that is the wrong attitude.
Tribal leaders believe that, to the maximum extent possible, Federal
agencies should try to reasonably accommodate tribal government
concerns--not just sit across the table for a little while and then go
about with business as usual. One tribal representative explained to us
that:
As long as they feel they that tribal governments do not need
to be consulted in the rulemaking process until after the final
rules are crafted by NIGC and published, then they are
perpetuating a failed process. Tribes not only have the same
responsibilities and goals to protect the integrity of Indian
gaming, they have the primary responsibility, and they have
created the governmental institutions in the tribal gaming
commissions and have hired and trained staff in the areas of
compliance, surveillance, security, co-jurisdictional law
enforcement, etc.
Some tribal government leaders are reluctant to meet with the NIGC
because they believe that informational meetings are wrongly being
reported as Federal-tribal government-to-government consultation. A
Northwest tribal representative has informed us that:
In my dealings with the NW tribes thru ATNI and WIGA, even as
recently as yesterday, what I hear is that tribes are reluctant
to sign up for the consultations offered at the trade show next
week, or ANY consultation opportunity for that matter.
Many of the NW tribes' consultation meetings with NIGC over the
past 2-3 years were mischaracterized by the NIGC in their
October 2007 letters to Congressman Rahall and Senator Dorgan
regarding the proposed Class II package, stating that the
listed tribes were consulted regarding the proposed
regulations. Most, if not all, tribes discussed (when the NIGC
wasn't monopolizing the conversation) their own individual
tribe's issues at those meetings. One tribe . . . gave a tour
of their surveillance department to the NIGC only to have their
tribe show up on the list of tribes having been consulted with
on the proposed regulations. What?!?
. . . Also, the laundry list provided in the notice of
consultation is huge. There are 7 bullets in the notice but if
you read each one, it's really 13 topics plus your own tribe's
issues. All done in 45 minutes should you have the full amount
of time once NIGC is done with their spiel.
In sum, the tribes up here feel that they are damned if they do
and damned if they don't. If they sign up, chances of
misrepresentation of their meeting to benefit the NIGC's
position is likely to occur. If they don't, then their absence
will be misrepresented as not haven taken the opportunity to
consult when offered (as done with my tribe.) And finally, most
believe that even if they could manage to have their meetings
represented accurately, whatever they say about the proposed
regulations will not be considered. That is, what difference
will it make? They aren't listening anyway. Why bother? This is
a good indicator that something is wrong with the NIGC's
consultation process.
The Federal-tribal government-to-government relationship needs to
work better than this, especially when the agency has ``Indian'' in its
name!
The United States' government-to-government relationship with
Indian tribes is as venerable as the American Republic. In 1796,
President George Washington told the Cherokee Nation that:
The wise men of the United States meet together once a year to
consider what will be for the good of all of their people . . .
. I have thought that a meeting of your wise men once or twice
a year would be alike useful to you . . . . The beloved agent
of the United States would meet with them . . . . If it should
be agreeable to you that your wise men should hold such
meetings, you will speak your mind to my beloved man . . . . to
be communicated to the President of the United States . . . .
President George Washington Letter to the Cherokee Nation,
August 29, 1796.
President Thomas Jefferson said, ``The sacredness of [Native
American] rights is felt by all thinking persons in America as well as
Europe.'' \3\ Jefferson's view is embodied in the Louisiana Purchase
Treaty, where the United States agreed to honor prior European
treaties, until such time as it entered its own treaties with the
Indian nations, based upon mutual consent:
---------------------------------------------------------------------------
\3\ A. Josephy, The Patriot Chiefs (1961) at 178.
The United States promise to execute such treaties and articles
as may have been agreed between Spain and the tribes and
nations of Indians until by mutual consent of the United States
and the said tribes or nations other Suitable articles shall
have been agreed upon. \4\
---------------------------------------------------------------------------
\4\ Louisiana Purchase Treaty (Treaty between U.S.A. and the French
Republic), Article VI (1803). (Spain is referenced because France
acquired Louisiana territory from Spain).
In total, the United States entered into more than 370 Indian
treaties, and these treaties guaranteed tribal lands and tribal self-
government. Those guarantees continue to protect tribal self-government
and tribal lands today.
Given this background, the NIGC should do its utmost to accommodate
tribal government views through consultation. We should not get a
flippant response that consultation does not mean agreement. The United
States should operate on a basis of mutual consent with Indian tribes,
whenever possible--just as it does with United States territories. A
statutory directive to NIGC on government-to-government consultation is
both appropriate and necessary. We encourage the Committee to introduce
legislation along the lines of H.R. 5608, which seeks to codify
Executive Order 13175.
NIGC Should Follow Basic Rules for Drafting Regulations: Executive
Order 12866
Executive Order 12866, as modified by the Bush Administration to
exempt the Vice President, provides the framework for Federal agency
rule-making. The Executive Order provides:
The American people deserve a regulatory system that works for
them, not against them . . . . [R]egulatory approaches that
respect the role of State, local, and tribal governments; and
regulations that are effective, consistent, sensible, and
understandable . . . .
This Executive Order requires that agencies identify the problem
the regulation is intended to address, examine whether there are
alternatives to direct regulation, determine the costs and benefits of
the regulation, consult with state, local and tribal governments and
seek to minimize the burdens on those governments. In addition,
regulations should be drafted in a manner that is simple and easy to
understand.
NIGC has failed to comply with these standards. First of all,
tribal governments have asked: What is the need for these regulations?
NIGC has responded that it seeks clarity in terms of the definition of
Class II technologic aids, yet its proposed definition is inherently
ambiguous and does little or nothing to promote clarity. Indeed, Indian
tribes have pointed out that its proposed definition of ``electro-
mechanical facsimile'' may very well be contrary to IGRA's statutory
language and contrary to five Federal Court of Appeals cases on this
subject. See U.S. v. 162 Megamania Gambling Devices, 231 F. 3d 713
(10th Cir. 2000); U.S. v. 103 Electronic Gambling Devices, 223 F. 3d
1091, 1093 (9th Cir. 2000); Seneca-Cayuga Tribe of Oklahoma v. National
Indian Gaming Commission, 327 F.3d 1019 (10th Cir. 2003); United States
v. Santee Sioux Tribe, 324 F.3d 607, 615-617 (8th Cir. 2003); Diamond
Games v. Reno, 230 F.3d 713 (D.C. Cir. 2000). Thus, the primary NIGC
rationale for the regulation is baseless and leaves the regulation
without foundation or merit.
The Oklahoma Indian Gaming Association makes the point a different
way-where there is clear statutory guidance, why is the agency adding
new legal requirements of its own making? OIGA states:
Assuming for arguments sake, that classification regulations
were needed, another question that has been asked and not
answered is why hasn't the NIGC used the statute and the
Federal court cases, both those won and lost, as guidelines for
drafting regulations? Instead, the NIGC has chosen to draft
extremely cumbersome language, which arbitrarily adds more than
one legal element beyond the elements that IGRA uses to define
the game of ``bingo.'' Given the strict construction given to
IGRA in other cases like the Colorado River Indian Tribes
decision, and with three Federal Appeals Courts ruling that the
statutory language of IGRA establishes the legal elements for
bingo, the NIGC has no valid reason to go down a legally
perilous path.
As Gerry Danforth, Chairman of the Oneida Tribe of Wisconsin
testified before the House Natural Resources Committee last week, if
NIGC took the time to really consult with tribal governments on a
government-to-government basis, it would find workable, acceptable and
durable solutions to regulatory issues that do not lead to litigation.
So, the time invested in consultation and coordination with Indian
tribes is well worth it.
NIGC's own economic impact analysis (conducted by an independent
economist) found that its Class II regulatory proposal would cost
Indian tribes between $1.2 billion and $2.8 billion annually. While the
four proposed Class II regulations were published on October 24, 2007,
the economic impact study was not published until February 1, 2008 and
the comment period on the regulations closed on March 9, 2008. NIGC did
not conduct a cost-benefit analysis of its regulatory proposals. That
violated Executive Order 12866. A cost-benefit analysis should have
considered the cost of alternative regulatory approaches, such as using
existing statutory definitions or existing regulatory definitions. The
existing regulatory Class II technologic aid definition would carry no
additional cost because it has been in force since June, 2002, the
industry has already accommodated the regulation, and the Federal
Courts have approved the regulation. \5\
---------------------------------------------------------------------------
\5\ Seneca-Cayuga Tribe of Oklahoma v. National Indian Gaming
Commission, 327 F.3d 1019 (10th Cir. 2003) (10th Circuit relied on NIGC
2002 Class II regulations); United States v. Santee Sioux Tribe, 324
F.3d 607, 615-617 (8th Cir. 2003) (Relying on the NIGC 2002 Class II
regulations, the Court found that ``NIGC's conclusion that Lucky Tab II
is a permissible class II gaming device seems to be a reasonable
interpretation of the IGRA'').
---------------------------------------------------------------------------
Clearly, the NIGC is failing to comply with the general rules for
Federal regulatory proposals. Indeed, on the Class II regulations, the
NIGC failed the very basic task of drafting the regulations in a simple
manner: After months of work by the Class II gaming manufacturers group
convened by NIGC, NIGC took a fairly reasonable rewrite of its Class II
minimum internal control standards regulation and re-inserted its old
Class II MICS rule by reference. That is not plain English--the
incorporation by reference makes it almost impossible to understand the
new regulatory proposal, or to point out potential conflicts between
the old and new rule. This proposal needs to go back to the ``drawing
board'' for a ``plain English'' lesson.
NIGC Should Comply with the Regulatory Flexibility Act
The Regulatory Flexibility Act requires Federal agencies to
consider the economic impact of Federal regulations on small
governments, communities, and entities. The RFA requires agencies to
consider lower cost alternatives to expensive regulations. Experts
explain the RFA as follows:
The Regulatory Flexibility Act created several new sections in
the APA. The legislative history states that the intention of
the Act is ``to encourage individuals, small businesses, small
organizations, and small government bodies that would otherwise
be unnecessarily adversely affected by Federal regulations . .
. . It is primarily aimed at forcing agencies to consider the
problems of small businesses and local governments and to
investigate least cost alternatives in regulation.
C.A. Wright & C.H. Koch, ``Judicial Review of Administrative
Action,'' 32 Fed. Prac. & Proc. Judicial Review, Section 8187
(2008).
Yet, because the NIGC failed to conduct its economic impact
analysis until the close of the comment period and it did not consider
lower cost alternatives as required by the Regulatory Flexibility Act.
Thus, with the comment period closed tribal governments are left to
contemplate an economic impact of $1.2 billion to $2.8 billion in lost
income, a loss of perhaps 35,000 jobs, and an additional compliance
burden of $347 million. Once again, the NIGC should re-open its
regulation and consider lower cost alternatives to its proposed
regulations.
NIGC Should Comply With Congress's Directive to Provide Training
In 2006, Congress gave the NIGC new authority to work with tribal
governments to provide technical assistance and training to tribal
regulators. Public Law No. 109-221 (2006). Specifically, the NIGC
Accountability Act is intended to do three things:
Provide increased funding for NIGC by empowering NIGC to
assess a fee up to the level of $0.80 per $1,000 of gross
Indian gaming revenue;
Require NIGC to follow the Government Performance and
Results Act; and
Require NIGC to include a training and technical assistance
plan in its GPRA compliance plan.
NIGC is currently undertaking a paperwork shuffle of its GPRA
compliance plan, but Indian tribes were not consulted in its
development, there have been no national or regional meetings scheduled
to consult with tribes on the GPRA plan, and no training or technical
assistance programs have been undertaken pursuant to the plan. NIGC has
increased its fees and is spending more money under the fee provisions.
NIGC Should Comply with the Federal Advisory Committee Act
Congress established a general rule to limit the use of Federal
Advisory Committees by regulatory agencies because they are not
democratic. Yet, it provided an exception for Federal agency
consultation with state, local and tribal governments. That exception
only applies to tribal governments when Federal agencies meet with
authorized tribal government representatives. Under FACA, GSA provides
oversight of Federal Advisory Committees.
The NIGC, however, has been regularly constituting and disbanding
Tribal Advisory Committees for work regarding the development of the
NIGC's regulatory proposals. It has several problems with this
approach:
No Tribal Advisory Committee (TAC) plan or proposal was
presented to GSA to ensure that NIGC is actually complying with
FACA;
TAC Members were not initially requested to be authorized
representatives of their tribal governments and some were not,
putting them outside the FACA exception for consultation with
tribal governments;
While the NIGC established the TAC to assist in the
development of its Class II regulations, this committee was
limited to seven members expected to represent all of Indian
country; and
Although the TAC unanimously objected to unreasonable
restrictions on Class II games, none of its significant
objections were accepted by the NIGC.
Just last month, the NIGC disbanded its existing TAC and Minimum
Internal Control Standards Tribal Advisory Committee (MICS TAC) and
then asked for the formation of a new Tribal Advisory Committee, to be
limited to tribal regulators with five or more years experience. This
gives the impression that when the existing TACS objected to arbitrary
NIGC policies, the NIGC abolished them and sought a new TAC that would
be amenable to NIGC views. As a tribal representative explained to us:
NIGC's latest initiative to dissolve existing tribal advisory
committees and to appoint new committees whose member's
qualifications have been predetermined by NIGC is done without
tribal consultation. The NIGC should be consult with the tribes
concerning the purposes and functions of the committees, and
the qualifications of committee members.
Tribes do have staff with the legal, technical and operational
experience and skills to develop an effective regulatory
environment, and they are willing and able to consult with NIGC
to contribute their expertise to the process. It is clear from
Chairman Hogen's letter of February 29, 2008, that NIGC intends
to exclude many experienced and competent candidates, who have
legal or operational experience, rather than ``auditing'' or
``accounting'' experience.
Indeed, the NIGC's new tribal regulatory experience requirement
excludes elected tribal leaders while FACA expressly authorizes Federal
consultation with elected tribal leaders as the primary exception to
the general prohibition on ``expert'' advisory committees!
Miscellaneous Concerns
We have additional concerns with the NIGC. For example, NIGC does
not have an audited financial statement available for review. The NIGC
is just now implementing an accounting package that will give it the
ability to produce financial statements. For the past 5 years, the NIGC
has collected more fees than needed for its operating budget over the
past 5 years. At the end of last year, the amount was greater than $10
million. While IGRA requires ``excess'' fees to be returned to the
Tribes, these funds have been retained by NIGC from year to year.
Conclusion
Congress should act to ensure that the National Indian Gaming
Commission is working with tribal governments to build up tribal
government institutions rather than using a Washington-centered
approach and relying primarily on rulemaking to solve perceived
problems. We encourage the Senate Committee to consider legislation
like H.R. 5608 to mandate an accountable government-to-government
consultation process for the NIGC. In addition, the NIGC should begin
to provide training and technical assistance to tribal governments and
tribal gaming regulators as Congress mandated in 2006. NIGC has been
collecting increased fees, but has yet to engage tribes under its new
requirement to provide training and technical assistance. Perhaps if it
did, NIGC would find a useful role, besides continually revising
existing NIGC regulations.
Senator Tester. Thank you, Mr. Mathews.
Mr. Patterson?
STATEMENT OF BRIAN PATTERSON, PRESIDENT, UNITED SOUTH AND
EASTERN TRIBES
Mr. Patterson. Good morning, Senator Tester and
distinguished members of the Committee on Indian Affairs. My
name is Brian Patterson. I am the President of the United South
and Eastern Tribes. I am also a member of the Oneida Indian
Nation where I serve as Bear Clan Representative to the
nation's council. Thank you for the opportunity to testify
before the Committee on our experiences with the National
Indian Gaming Commission.
USET represents 25 federally recognized tribes from Maine
to Texas to Florida. While for the most part the relationship
of our member tribes with the NIGC works well and is positive,
there is one very important area in which USET feels that NIGC
has failed to meet its responsibility to Indian Country, and
our tribes are affected by this failure far more than other
areas of the Country. The NIGC and USET share the same common
goal of ensuring that Indian gaming operates in a manner which
benefits and protects tribal interests. I will highlight
several areas in which we have been able to establish positive
relationships.
One, our member tribes have been able to work
collaboratively with the NIGC to identify areas in which the
tribes could improve the regulation before they become
problematic. Two, despite a Federal decision limiting the
NIGC's jurisdiction on Class III gaming operations, several of
our member tribes have continued to work with the NIGC to
ensure that their operations meet minimal internal control
standards.
Three, a number of our member tribes are located in States
which allow Class III gaming as a matter of State law, but the
States refuse to negotiate with tribes for Class III gaming
compacts. The NIGC has been helpful in providing these tribes
with technical assistance in the operation of Class II gaming
and offering support and assistance with developing the
regulatory framework necessary for secretarial procedures to
move forward.
Four, the NIGC has also provided on-site training to a
number of our member tribes which provides them with invaluable
technical assistance they need to develop and improve their
regulatory systems.
As I have mentioned above, there is one very important
situation in which we believe the NIGC has failed to meet and
fulfill its responsibilities to those tribes who are only able
to operate Class II gaming. For the member USET tribes who find
themselves in this situation, the State's regulatory scheme
would in fact allow them to operate Class III gaming. However,
for these tribes, their respective State has refused to
negotiate a Class III compact with the tribe.
These tribes are therefore left to operate Class II games,
and apply to the Department of Interior for Class III gaming
procedures, a process which has taken years to navigate. Thus,
the regulation of Class II gaming is vital to USET member
tribes, especially those located in Florida, Alabama,
Louisiana, and Texas. Consequently, USET member tribes follow
the NIGC's regulatory efforts in the area of Class II gaming
with great interest.
Unfortunately, the NIGC's new set of proposed regulations
addressing Class II definitions would have a devastating impact
on many gaming operations. The NIGC's own economic impact study
estimates that the draft Class II regulations will cost the
tribal gaming industry over $1.2 billion a year.
Much to our dismay, these regulations are dramatically
different than previous drafts that have been worked on between
NIGC and tribes. The USET tribes generally believe that NIGC
has not listened to our comments, nor have they acknowledged
the current state of the law. USET tribes are most concerned
that the NIGC has set on a specific outcome with regard to
adoption of these proposed regulations pertaining to Class II
gaming, and that this has skewed the rulemaking process. I have
attached copies of our member tribes' comments regarding the
proposed gaming classification regulations.
One additional area on which we would like to comment is
that of governmental planning and performance. The application
of the Government Performance Results Act to the NIGC is a
positive step. We look forward to an ongoing consultation and
dialogue with the Commission as the draft GPRA report is
finalized.
In conclusion, our member tribes feel the overall
relationship between the tribes and NIGC is positive. We
acknowledge Chairman Hogen's support of Indian tribes over the
many years and in his many different roles. But we also believe
that NIGC has failed in one very significant respect with its
unyielding move toward reworking Class II gaming regulation.
A lot of hard work has already been done to develop
consensus positions on many of the Class II issues. This
provides a good place for us to re-engage with the Federal
Government in establishing a meaningful dialogue to reach out
to an acceptable outcome for Indian nations.
Thank you, Senator Tester, for the opportunity to testify
before you today.
[The prepared statement of Mr. Patterson follows:]
Prepared Statement of Brian Patterson, President, United South and
Eastern Tribes, Inc.
Good morning Mr. Chairman and distinguished members of the
Committee on Indian Affairs, my name is Brian Patterson, and I am the
President of the United South and Eastern tribes, Inc. (USET). I am
also an enrolled member of the Oneida Indian Nation, where I serve on
the Nation's Council as a Bear Clan Representative. Thank you for the
opportunity to testify before the Committee on our experiences with the
National Indian Gaming Commission (``Commission'' or ``NIGC'').
United South and Eastern Tribes, Inc. is a non-profit, inter-tribal
organization that collectively represents its member tribes at the
regional and national levels. USET represents twenty-five federally
recognized tribes. \1\
---------------------------------------------------------------------------
\1\ Members of the United South and Eastern Tribes, Inc., include:
Eastern Band of Cherokee, Mississippi Band of Choctaw, Miccosukee
Tribe, Seminole Tribe of Florida, the Chitimacha Tribe of Louisiana,
the Seneca Nation of Indians, the Coushatta Tribe of Louisiana, the St.
Regis Band of Mohawk Indians, Penobscot Indian Nation, the
Passamaquoddy Tribe Indian Township, the Passamaquoddy Pleasant Point,
the Houlton Band of Maliseet Indians, the Tunica-Biloxi Indians of
Louisiana, the Poarch Band of Creek Indians, the Narragansett Indian
Tribe, the Mashantucket Pequot Tribe, the Wampanoag Tribe of Gay Head
(Aquinnah), the Alabama-Coushatta Tribe of Texas, the Oneida Indian
Nation, the Aroostook Band of Micmac Indians, the Catawba Indian
Nation, the Jena Band of Choctaw Indians, the Mohegan Tribe of
Connecticut, the Cayuga Nation, and the Mashpee Wampanoag Tribe.
---------------------------------------------------------------------------
Included among the members of USET are some of the largest gaming
tribes in the United States. We also represent tribes with more modest
gaming facilities, as well as tribes that currently do not engage in
gaming.
Congress enacted IGRA ``to promote tribal economic development,
tribal self-sufficiency, and strong tribal government.'' \2\ The Act,
for the most part, has accomplished those goals. Indian gaming has been
described as ``the only federal Indian economic initiative that ever
worked.'' That is absolutely correct. Indian gaming has served as a
critical economic tool to enable Indian nations to once again provide
essential governmental services to their members, re-assert their
sovereignty, and promote the goals of self-determination and self-
sufficiency.
---------------------------------------------------------------------------
\2\ 25 U.S.C. Sec. 2701(4)
---------------------------------------------------------------------------
Prior to the advent of Indian gaming, many Indian nations, while
legally recognized as sovereign governments, were not able to provide
basic, governmental services to their people. They had all of the legal
attributes of sovereign nations, but many did not have the practical
ability to be an effective government for their members. Consequently,
despite a strong and proud tradition, Indian nations languished in a
two hundred year cycle of poverty.
Today, the resources of Indian gaming operations are used to
provide essential governmental services to tribal members. Indian
nations across the country are using gaming revenues to invest in
dozens of tribal member programs, including home ownership initiatives,
tuition assistance for everything from elementary schools to post-
doctorate work, health insurance for all tribal members, and access to
top-notch health clinics.
We cannot calculate the intangible benefits of the impact such
economic development has created, including the impact on the most
important matter for an Indian nation--its human resources. Suffice it
to say that in many situations, Indian governments have seen their
members move from unemployment rolls to being gainfully employed.
Reclaiming a past heritage also has been a priority for all USET
members, and gaming proceeds have enabled Indian nations to make
tremendous gains in this area. In many respects, these individual
efforts culminated collectively in the dedication of the National
Museum of the American Indian in September 2004. I am proud to note
that the three largest contributions to the building of this tremendous
institution came from Indian nations that are Members of USET. \3\ I
want to thank the Committee for its leadership in making this museum a
reality, and in particular, Senator Inouye for his vision and
dedication to ensuring that the museum would meet the expectations of
Indian people.
---------------------------------------------------------------------------
\3\ Jim Adams, Leaders guide museum with humble yet historic
partnership, Indian Country Today (Lakota Times), Sept. 22, 2004, at 1.
---------------------------------------------------------------------------
While for the most part, the relationship of our member tribes with
the NIGC works well and is positive, there is one very important area
in which USET member Tribes feel the NIGC has failed to meet its
responsibilities to Indian Country, and our tribes are
disproportionately affected by this failure far more than other areas
of the Country. I am here today to discuss both the negative and
positive aspects of our members' relationship with the NIGC.
Working Toward a Common Goal
The National Indian Gaming Commission and the United Southern and
Eastern Tribes, Inc., share the common goal of ensuring that Indian
gaming operated by the USET Tribes is operated fairly and in a manner
which benefits and protects the Tribes' interests. We believe that the
Tribes and the NIGC have been able to establish a relationship that
assists both parties in meeting their goals.
There are several areas in which we have been able to establish
positive relationships.
1. Working together to identify problem areas.
Our member tribes have been able to work collaboratively with the
NIGC to identify areas in which the Tribes could improve their
regulation before they become problematic. It can be helpful to engage
the assistance of the NIGC, even though Tribes are quite effective at
resolving the vast majority of these issues without such assistance.
2. Voluntarily working with NIGC to conduct on-site reviews of their
Class III gaming operations.
Despite the holding in the Colorado River Indian Tribe (CRIT) v.
National Indian Gaming Commission, several of our member tribes have
continued to work with the NIGC to ensure that their operations meet
minimum internal control standards. Many tribes, since the CRIT
decision was issued, have voluntarily continued to follow the Minimum
Internal Control Standards set in place by the NIGC prior to the
decision.
The NIGC has assisted more than one of our member Tribes with on-
site visits to assess voluntary compliance with those MICS standards.
3. Working with tribes who have applied for Secretarial Procedures.
A number of our member Tribes are located in states which allow
Class III gaming as a matter of State law, but the States refuse to
negotiate with the tribes for Class III gaming compacts. These tribes
are left to operate Class II gaming and seek Secretarial Procedures.
The NIGC has been helpful in providing these tribes with technical
assistance in the operation of Class II gaming, and offering support
and assistance with developing the regulatory framework necessary for
Secretarial Procedures to move forward. In at least one instance, the
NIGC has offered to provide Class III regulatory services to the Tribe
seeking procedures.
4. Providing on-site training and review.
The NIGC has also provided on-site training to a number of our
member Tribes, which provides them with invaluable technical assistance
they need to develop and improve their new or existing regulatory
systems. They are also available and have provided on-site reviews to
assess the adequacy of existing systems in place, and provide advice on
how to improve those systems, preventing problems before they can
happen.
When Relationships Break Down
As I mentioned above, there is one very important situation in
which we believe the NIGC has failed to meet its responsibilities to
those Tribes who are only able to operate Class II gaming.
For the member Tribes of USET who find themselves in this
situation, their state's regulatory scheme would in fact allow them to
operate Class III gaming. However, for these Tribes, their respective
state has refused to negotiate a Class III compact with the Tribe.
These Tribes are therefore left to operate Class II games, and apply to
the Department of Interior for Class III gaming procedures, a process
which takes years to navigate. In the case of one of our member Tribes,
this process of receiving Class III gaming took sixteen years (16) to
resolve and is still not complete.
Thus, the regulation of Class II gaming is vital to many of our
member Tribes, especially those located in Florida, Alabama, Louisiana
and Texas. Consequently, USET member tribes follow the NIGC's
regulatory efforts in the area of Class II gaming with great interest.
\4\
---------------------------------------------------------------------------
\4\ In addition, the regulation of Class II gaming is important
even to those tribes who operate pursuant to Class III compacts because
in many instances the terms of the compact expire. There is no
guarantee that a state with a new governor and legislature will
negotiate in good faith over a new compact.
---------------------------------------------------------------------------
In the past several years, the NIGC has attempted to modify the
regulatory structure surrounding Class II gaming in a number of ways,
beginning in 2003 with the formation of a Tribal Advisory Committee
charged with creating a ``bright line'' between Class II and Class III
gaming. These efforts led to the NIGC's publication of Game
Classification Standards and amendments to its definition of
electromechanical facsimile on May 26, 2006, as well as proposed Class
II Technical Standards on August 11, 2006. Tribes overwhelmingly
opposed these draft regulations, a position that was driven home during
a hearing held on September 19, 2006. Most Tribes stated that the new
standards would impose an unwieldy and unworkable system of rules on
Class II operators, and would cause severe economic harm to Indian
tribes who operate Class II games. And tribes were not alone in their
opposition of these regulations: gaming manufacturers also opposed the
NIGC's regulations.
In the wake of this hearing, the NIGC held a follow-up meeting in
December of 2006 with what is now termed the ``Tribal Gaming Working
Group.'' This Working Group consists of Tribal Leaders, technical and
legal experts, and members of the NIGC's Tribal Advisory Committee
(TAC) on Class II gaming, which itself is made up of Tribal
representatives and Class II technical experts. During this follow-up
meeting, the draft regulations were discussed, and it was agreed that
the Working Group would develop a more suitable set of Class II
Technical Standards. Less than two months later, on January 25, 2007,
this group provided a revised draft of the Class II Technical Standards
to the NIGC for review and consideration. Now understanding that they
were looking at Class II gaming incorrectly, and that they needed to
look at Class II gaming more systematically, the NIGC withdrew all
pending Class II regulations on February 15, 2007.
The NIGC, in conjunction with the Tribal Gaming Working Group, then
embarked on an extensive effort to revise the NIGC's Minimum Internal
Control Standards (MICS) so that they conformed to the Technical
Standards, as revised. The Working Group also made additional
conforming changes to the already revised Technical Standards to ensure
that when taken as a whole, the overall package was consistent.
The work product from this extensive effort was submitted to the
NIGC on September 12, 2007. On October 24, 2007, the NIGC published
four new sets of proposed regulations addressing the Facsimile
Definition, Game Classification Standards, the MICS and the Class II
Technical Standards. Much to our dismay, however, our member tribes who
participated in this process were completely shocked to find that
significant and material changes had been made by the NIGC to the
collaborative September 2007 drafts.
Overall, USET Tribes generally believe that the NIGC has not
listened to their comments, nor have they acknowledged the current
state of the law. Our member Tribes also are concerned with the
appearance that the NIGC simply went through the motions of
``consultation'' by holding meetings with tribal leaders and
representatives when in fact, they had no intention of attempting to
reach a consensus or even making meaningful concessions regarding the
substance of the draft regulations.
Perhaps most disturbing, our members Tribes are concerned that the
NIGC has not heeded Tribal concerns regarding the devastating impacts
that these proposals will have on the Tribal gaming industry. The
NIGC's own economic impact study estimates that the draft Class II
regulations will cost the tribal gaming industry over $1.2 billion a
year.
At the end of the day, USET Tribes are concerned that the NIGC has
been set on a specific outcome with regard to the adoption of the
proposed regulations pertaining to Class II gaming, and that this
orientation to a specific outcome has skewed the rulemaking process.
They also feel that, despite their best efforts to deal with the NIGC
fairly on these issues, they have not received the same treatment in
return.
I have attached copies of our member Tribes comments regarding the
proposed gaming classification regulation for your information, because
I feel the information contained in them is important and too detailed
to be properly addressed by my brief testimony.
Governmental Performance and Results Act
One additional area in which we would like to comment is that of
governmental planning and performance. Until very recently, the
National Indian Gaming Commission was not required to take part in the
standard strategic planning and performance assessment in which other
agencies are required to participate.
This changed very recently, with the adoption of Public Law 109-
221, which subjected the NIGC to the requirements of the Government
Performance and Results Act (GPRA) of 1993 (Public Law 103-62) and
additionally required the NIGC to provide a plan for technical
assistance to tribal gaming operations in accordance with GPRA.
We believe that the application of GPRA to the NIGC is a positive
step toward making the Commission more transparent and accountable to
the public and particularly to Indian Country. We are also encouraged
by the development of the draft GPRA plan proposed by the NIGC is a
move in the right direction, and we look forward to an ongoing
consultation and dialogue with the NIGC on their future plans before
the report is finalized.
Conclusion
As you can see, the relationship between the diverse tribes who
make up the United South and Eastern Tribes and the Commission is
complicated. Overall, our member tribes feel that the relationship
between tribes and the NIGC is positive. We acknowledge Chairman
Hogen's support of Indian tribes over many years and in many different
roles. But we also believe that NIGC has failed in one very significant
respect, with its unyielding move toward reworking Class II gaming
regulation.
The failure of the NIGC to properly consult with tribes regarding
its Class II rulemaking efforts has left our member Tribes frustrated.
However, if afforded the opportunity, we are committed to continuing to
work with Congress and the NIGC on the Class II gaming issues. A lot of
hard work already has been done to develop consensus positions on many
of the Class II issues. This provides a good place for us to re-engage
with the Federal Government in establishing meaningful dialogue to
reach to an acceptable outcome for Indian nations.
Thank you, Mr. Chairman, for the opportunity to testify today.
Senator Tester. Thank you, Mr. Patterson.
Mr. Luger?
STATEMENT OF J. KURT LUGER, EXECUTIVE DIRECTOR, NORTH DAKOTA
AND GREAT PLAINS INDIAN GAMING
ASSOCIATION
Mr. Luger. Thank you, Senator. My name is Kurt Luger. I am
a member of the Cheyenne River Sioux Tribe in South Dakota. My
office is in Bismarck, North Dakota and I represent 28 nations
from Kansas, Nebraska, Iowa, North Dakota, South Dakota, and
the great State of Montana.
I am here today, and I will great right to the heart of our
concerns with the NIGC. It is that they have adopted a top-down
inside-the-beltway approach to the regulation of Indian gaming.
Rather than coming out to the field to assist tribal
governments in ensuring that tribal regulatory systems are
running appropriately. The NIGC constantly wants to write new
Federal rules. We acknowledge that the NIGC is willing to sit
down with tribal leaders and willing to attend tribal meetings.
Unfortunately, tribal leaders often come away with the feeling
that NIGC had a predetermined decision and that despite tribal
concerns, the NIGC will not move off its own bureaucratic
agenda to find its way to respect tribal sovereignty and self-
government.
We are told that consultation does not mean agreement, but
consultation is supposed to be meaningful and it should require
consideration of tribal points of view and accommodation of
those perspectives to the greatest extent possible. For
example, when the NIGC was developing its Class II regulatory
proposals, it was very reluctant to consider tribal
governmental points of view. Yet when the gaming manufacturers
made a point, the NIGC would listen to them readily.
The other thing that happens is when something appears to
make travel concerns, the Chairman and Commissioners go back
and talk to the NIGC lawyers and any sign of accommodation is
later dropped. There is simply too much inside-the-beltway
counseling and not enough field experience.
I brought with me five recommendations that we believe
would help the NIGC in fulfilling its mission to assist Indian
tribes with gaming regulation. One, our first recommendation is
to make Federal and tribal consultation meaningful, that NIGC
should be directed by statute to follow Executive Order 13175,
and we call upon the Senate Committee to consider a bill
similar to H.R. 5608.
Our next recommendations concern training and technical
assistance. In 2006, the NIGC Accountability Act was signed
into law. In that Act, Congress intended three things: to
provide increased funding to the NIGC; require the NIGC to
comply with the Government Performance and Results Act; and to
require the NIGC to include training and technical assistance
plans to the GPRA.
NIGC is currently undertaking a paperwork shuffle of its
GPRA compliance plan, but Indian tribes were not consulted in
its development. There have been no national or regional
meetings scheduled to consider with the tribes on the GPRA
plan, and no training or technical assistance programs have
been undertaken. NIGC, however, has increased its fees and is
spending the money under the fee provisions.
Two, we recommend that NIGC hire a training and technical
assistance director with Indian gaming experience. We urge the
Senate Committee to ensure that NIGC hires a training and
technical assistance director to begin providing training and
technical assistance programs to tribal governments and tribal
gaming regulators.
Three, we also recommend that NIGC provide training and
technical assistance that meets or exceeds industry standards.
This is critical. We need practical training and useful
technical assistance that can really help tribal regulators to
establish and maintain top-notch systems that meet or exceed
industry standards.
Mr. Chairman, our experience of you today called up what I
myself and my association has put on more than 150 training
sessions. I went back through my record. Their people have been
at less than 10 of them. They tell me one of two things: they
are not available or they don't have the expertise in that
particular field to do it. So, I get them from Indian Country,
from within ourselves. If lawyers who do not know the industry
standards are assigned to the task of training and technical
assistance, it is a waste of time.
The NIGC should apply Indian preference in hiring. The
District Court of the District of Columbia recently ruled that
Indian preference in hiring applies to ``positions in the
Department of Interior whether within or without the Bureau of
Indian Affairs that directly and primarily provides services to
Indians.'' NIGC is directly and primarily providing regulatory
services to Indians within the meaning of Indian preference,
yet NIGC has a poor track record of hiring Indians. Only three
out of 17 supervisory personnel at the NIGC Washington
headquarters are Indian. This must change.
Lastly, we are also very concerned with NIGC's use of
Federal advisory committees. The NIGC claims exemption from
FACA and constitutes and disbands tribal advisory committees at
will. It is a recommendation that NIGC submit its claimed FACA
exception to GSA for its review, and upon a favorable review by
GSA, that the tribal advisory committees be formed only after
consultation about their use and purpose with tribal
governments.
In conclusion, the NIGC must respect tribal governments as
day-to-day regulators of Indian gaming and become more of a
user-friendly agency. NIGC must stop its top-down inside-the-
beltway approach. We have seen it before. It was called the BIA
and the IHS, and we don't need anymore of that.
Thank you very, very much for your time and for being
invited today.
[The prepared statement of Mr. Luger follows:]
Prepared Statement of J. Kurt Luger, Executive Director, North Dakota
and Great Plains Indian Gaming Association
Good Morning, Chairman Dorgan and Members of the Committee. Thank
you for inviting me to testify this morning.
My name is Kurt Luger and I am a member of the Cheyenne River Sioux
Tribe. I grew up on the Standing Rock Sioux reservation in North Dakota
on my family ranch and my family operates a grocery store and small
business in Fort Yates, North Dakota.
I serve as the Executive Director of the North Dakota Indian Gaming
Association, which includes the Spirit Lake Sioux Tribe, Standing Rock
Sioux Tribe, Sisseton-Wahpeton Sioux Tribe, the Three Affiliated Tribes
of Fort Berthold, and the Turtle Mountain Chippewa Tribe.
I also serve as the Executive Director of the Great Plains Indian
Gaming Association, which covers North Dakota, South Dakota, Nebraska,
Iowa, Kansas, Wyoming, and Montana. GPIGA was founded in 1997, and we
have 28 Tribes as Members. This year we will hold our 16th Annual
Gaming Conference & Trade Show together with the Minnesota Indian
Gaming Association on May 18-21, 2008 at the Mystic Lake Casino &
Hotel. Senator Dorgan, I respectfully extend to you an invitation to be
our keynote speaker on Monday, May 19, 2008, so our tribal leaders can
hear from you directly about the Committee's policies and priorities.
At GPIGA, our mission is to bring together the federally recognized
Indian Nations in the Great Plains Region who are operating gaming
enterprises in a spirit of cooperation to develop common strategies and
positions concerning issues affecting all gaming tribes; to promote
tribal economic development and its positive impacts within the Great
Plains; to provide pertinent and contemporary information for the
benefit of the GPIGA member nations; to draw upon the unique status of
those Great Plains Indian Nations which have treaties between
themselves and the United States; and to provide our Member Tribes with
information about national legislation and issues affecting tribal
economic development.
Naturally, we are concerned about the manner in which the NIGC
approaches its mission to assist tribes in regulating Indian gaming.
Rather than a cooperative environment where the NIGC and Indian tribes
work together to ensure the highest standards of regulation, Tribes are
left with the impression that the NIGC has chosen to write regulations
without tribal input or concern for the affect those regulations will
have on tribal sovereignty and the Indian gaming industry. Similarly,
we are concerned by the lack of training and technical assistance on
those regulations to Indian tribes and tribal regulators despite a
mandate to do so in the NIGC Accountability Act of 2006.
Background: Federal-Tribal Government-to-Government Relations
Before the United States, Indian tribes were independent sovereigns
with sustainable economies, strong agricultural traditions, vast
natural resources and extensive trade networks. Early United States'
treaties sought to foster ``a firm and lasting peace'' with the North
Dakota tribes, to build a trade network between the United States and
North Dakota tribes, and to extend Federal protection to the tribes.
See Treaty with the Mandan (1825); Treaty with the Arikara (1825);
Treaty with the Hunkpapa Sioux (1825). Later, the United States sought
cessions of land from North Dakota tribes through war, treaty, or
statutory agreement, and these cessions left the tribes destitute.
Through these treaties the United States acknowledged the status of
Indian tribes as sovereigns and established the principle of
government-to-government relations between the United States and Indian
tribes. In fact, these principles are part of the very fabric of the
Constitution, as set forth in the Indian Commerce and Treaty Clauses.
The United States never withdrew its treaty pledges of peace,
friendship, and protection for North Dakota's Indian tribes, and
accordingly, we seek to hold the United States to its Federal trust
responsibility. Part of the Federal trust responsibility is a duty to
protect tribal self-government, which means that to the greatest extent
possible, the United States, its officers and agencies should work with
Indian tribes on a basis of mutual respect and mutual consent.
Indian Gaming in North Dakota
The Indian Gaming Regulatory Act's purpose is to build strong
tribal governments, promote tribal economic development and foster
tribal self-sufficiency. Indian gaming has been an important economic
development activity for Indian tribes in North Dakota and the Great
Plains region. 25 U.S.C. section 2701(4).
After almost 20 years of experience under the Indian Gaming
Regulatory Act, we can say definitively that Indian gaming is working
in rural areas of America. Indian tribes that faced 50, 60, and even 70
percent unemployment are now generating jobs not only for their own
tribal members, but for neighboring non-Indians as well. I live and
work in North Dakota so I will use the North Dakota Tribes as a
representative example.
In North Dakota, Indian gaming has a significant economic impact.
Our tribal government gaming operations provide employment, essential
tribal government revenue that funds essential services and community
infrastructure, and generates much needed revenue for communities
statewide through the economic multiplier effect. Our Tribes have
created 2,400 direct, full-time jobs with pension and health care
benefits. The payroll from the gaming operations exceeds $55 million,
and approximately $39 million of that payroll goes to tribal members
who live in rural North Dakota. More than 70 percent of our gaming
employees are Native Americans and 40 percent of our employees were
formerly unemployed and survived on welfare.
Our tribal government payroll contributes $156 million annually to
the total economy of the state. Tribal government gaming operations
purchased over $45 million in goods and services within North Dakota.
Purchases were made in 93 communities throughout the State. Without
these sales, the state would lose $100 million of economic activity in
cities throughout the State. We have estimated our total economic
impact in the State since 1997 to have exceeded $1.3 billion.
Indian Tribes in North Dakota
In North Dakota, 5 tribal governments operate Indian gaming
facilities: the Three Affiliated Tribes of Fort Berthold--Mandan,
Hidatsa, and Arikara; the Spirit Lake Sioux Tribe, the Turtle Mountain
Chippewa Tribe, the Standing Rock Sioux Tribe and the Sisseton-Wahpeton
Sioux Tribe. Both the Standing Rock Sioux Tribe's reservation and the
Sisseton-Wahpeton Sioux Tribe's reservation straddle the border with
South Dakota.
Three Affiliated Tribes. The Three Affiliated Tribes, Mandan,
Hidatsa, and Arikara, operate as a unified tribal government. These
Tribes have occupied the Missouri valley for hundreds and thousands of
years, planted corn, squash, and beans on the fertile flood plains, and
hunted buffalo and wild game. Living in stockaded villages, the Three
Affiliated Tribes were devastated by smallpox epidemics in 1792, 1836,
and 1837.
The traditional lands of the Mandan, Hidatsa, and Arikara
encompassed an area of 12 million acres from eastern North Dakota to
Montana and as far south as Nebraska and Wyoming. Early on, the Three
Affiliated Tribes established friendly relationships with the United
States. They welcomed the Lewis and Clark expedition into their
villages and assisted them on their journey. The Fort Laramie Treaty of
1851, congressional acts and executive orders reduced the Tribes' lands
to 1,000,000 acres in western North Dakota.
In the 1950s, the Three Affiliated Tribes were asked to undertake a
tremendous sacrifice by allowing the United States to dam the Missouri
River and flood their reservation. The original tribal headquarters
were flooded and families were moved away from the fertile Missouri
River flood plain up on to the high prairie. When Lake Sakakawea was
formed by the dam, the new lake divided the reservation into three
parts.
Due to the flooding, the Tribes suffered an enormous loss of
natural resources, including the most fertile land on the reservation,
their community was divided and the small village life that many had
known along the Missouri River was gone. The tribal headquarters were
relocated four miles away in New Town, North Dakota. Today, the tribal
population is about 10,000 with about 5,000 living on the reservation.
Spirit Lake Sioux Tribe. The Spirit Lake Sioux Tribe is composed of
the Sisseton-Wahpeton and Yankton bands of the Dakota or Sioux Nation.
Originally residing in Minnesota and eastern North Dakota, the Spirit
Lake Sioux Reservation was established by the Treaty of 1867 with the
United States. The Treaty of 1867 provides that: ``The . . . Sioux
Indians, represented in council, will continue . . . friendly relations
with the Government and people of the United States . . . .'' The
Treaty recognizes the Spirit Lake Sioux Reservation as the
``permanent'' reservation of the Tribe.
The Tribe has worked to develop jobs through manufacturing,
providing Kevlar helmets and military vests to the Pentagon through
Sioux Manufacturing Corporation, yet with a reservation population of
over 6,000 people, the Tribe has struggled with 59 percent unemployment
as the Defense Department budget was cut in the 1990s. The Spirit Lake
Reservation encompasses 405 square miles north of the Sheyenne River in
northeastern North Dakota.
Turtle Mountain Chippewa Tribe. The Chippewa or Ojibwe people
originally inhabited the Great Lakes Region and began to hunt and trade
in North Dakota in the late 18th and early 19th Centuries.
Historically, the Chippewa and the Dakota fought wars with each other,
but they settled their differences through the Treaty of Sweet Corn in
1858.
In 1882, Congress set aside a 32 mile tract in Northeastern North
Dakota for the Turtle Mountain Band of Chippewa 11 miles from the
Canadian border. With the passing of the great buffalo herds, the
Chippewa turned to agriculture and ranching, and faced many
difficulties due to encroachment by settlers.
Today, almost 20,000 tribal members live on the 6 12 mile
Turtle Mountain reservation. Belcourt, North Dakota, the tribal
headquarters, has become the 5th largest city in the state.
Standing Rock Sioux Tribe. The Standing Rock Sioux Tribe is
composed of Sitting Bull's Band, the Hunkpapa, and the Yanktonai, with
some Black Foot Sioux on the South Dakota side. In the Fort Laramie
Treaty of 1868, the United States pledged that: ``The Government of the
United States desires peace and its honor is hereby pledged to keep
it.'' The Treaty also provides that the Great Sioux Reservation was to
serve as the ``permanent home'' of the Sioux Nation.
Yet, in 1876, General Custer and the 7th Cavalry came out to Sioux
country to force the Sioux tribes on to diminished reservations. In
1889, the Federal Government once again called on the Sioux Nation to
cede millions more acres of reservation lands, and the Standing Rock
Sioux Reservation was established by the Act of March 2, 1889. Sitting
Bull had opposed the land cession and in 1890, he was murdered by
United States officers--that is, the BIA police acting in concert with
the U.S. Cavalry and under the direction of the Indian Agent.
The Standing Rock Sioux Reservation is composed of 2.3 million
acres of land lying across the North and South Dakota border in the
central area of the State. Like the Three Affiliated Tribes, the
Standing Rock Sioux Tribe was asked to make a substantial sacrifice for
flood control and ceded almost 56,000 acres of the best reservation
land for Lake Sakakawea. Tribal members were removed from their
traditional homes along the Missouri River flood plain and relocated
well up above the river. Today, the population of resident tribal
members is almost 10,000.
Sisseton-Wahpeton Sioux Tribe. Located in Southeastern North Dakota
and Northeastern South Dakota, the Sisseton-Wahpeton Sioux Tribe has a
total enrollment of over 10,000 tribal members and a resident
population of about 5,000 tribal members. The Tribe was originally
located in Minnesota, but pressure from white settlers pushed the Tribe
westward. The Treaty of 1858 with the United States established the
Sisseton-Wahpeton Sioux Reservation, which today has approximately
250,000 acres in North and South Dakota.
The Tribal-State Compact Process in North Dakota
Since the beginning of tribal gaming in North Dakota, its primary
function has been to provide employment and economic development
opportunities. Indian gaming has also provided vital funding for tribal
government infrastructure, essential services including police and fire
protection, education, and water and sewer services, and tribal
programs, such as health care, elderly nutrition, and child care.
There are five Indian gaming facilities in the state--Four Bears
Casino & Lodge (Three Affiliated Tribes), Sky Dancer Casino & Lodge
(Turtle Mountain), Spirit Lake Casino (Spirit Lake Sioux), Dakota Magic
Casino (Sisseton-Wahpeton), and Prairie Knights Casino & Lodge
(Standing Rock).
In North Dakota, tribal governments have worked hard to maintain
our sovereign authority and territorial integrity, so that we can
provide a life for our people on our own homelands. The Indian Gaming
Regulatory Act acknowledges the governmental status of Indian tribes
and seeks to promote ``tribal economic development, self-sufficiency,
and strong tribal governments.''
Historically, state law does not apply to Indian tribes or Indians
on Indian lands in the absence of an express congressional delegation
of authority. That means that under general principles of Indian
sovereignty, Indian tribes are able to conduct gaming under tribal law,
not state law. Yet, through the Indian Gaming Regulatory Act, Congress
made a compromise between tribal interests and state interests and
established the Tribal-State Compact process for the regulation of
Class III gaming. The Senate Committee Report explains:
It is a long and well-established principle of Federal Indian
law as expressed in the United States Constitution . . . that
unless authorized by act of Congress, the jurisdiction of State
governments and the application of state laws do not extend to
Indian lands . . . . [U]nless a tribe affirmatively elects to
have State laws and State jurisdiction extend to tribal lands,
the Congress will not unilaterally impose or allow State
jurisdiction on Indian lands for the regulation of Indian
gaming activities. The mechanism for facilitating the unusual
relationship in which a tribe might affirmatively seek the . .
. application of state laws . . . is a Tribal-State Compact.
The Administration expressly rejected a primary Federal regulatory
role:
Recognizing that the extension of State jurisdiction on Indian
lands has traditionally been inimical to Indian interests, some
have suggested the creation of a Federal regulatory agency to
regulate class II and class III gaming activities on Indian
lands. Justice Department officials were opposed to this
approach, arguing that the expertise to regulate gaming
activities and to enforce laws related to gaming could be found
in state agencies, and thus there was no need to duplicate
those mechanisms on a Federal level.
Senate Report No. 100-497 at 5-7 (1988).
Accordingly, when tribal governments conduct Class III gaming, IGRA
first requires three things: (1) a tribal gaming regulatory ordinance
that meets minimum statutory standards, approved by the NIGC; (2) the
Tribe is located in a state where Class III gaming is allowed for any
purpose by any person, entity or organization; and (3) a Tribal-State
Compact. The Tribal-State Compact provides the rules for Class III
gaming:
(i) the application of the criminal and civil laws of the
Indian tribe or the State that are directly related to, and
necessary for, the licensing and regulation of such activity;
(ii) the allocation of criminal and civil jurisdiction between
the State and the Indian tribe necessary for the enforcement of
such laws and regulations;
(iii) the assessment by the State of such activities in such
amounts as are necessary to defray the costs of regulating such
activity;
(iv) taxation by the Indian tribe of such activity in such
amounts comparable to amounts assessed by the State for
comparable activities;
(v) remedies for breach of contract;
(vi) standards for the operation of such activity and
maintenance of the gaming facility, including licensing; and
(vii) other subjects that are directly related to the operation
of gaming activities.
25 U.S.C. sec. 2710(d)(3).
Tribal gaming regulatory ordinances support the Tribal-State
Compact provisions. Tribal gaming ordinances must include: (1) the
tribe has sole ownership of the gaming facility; (2) net revenues are
used first and foremost for essential government purposes and tribal
infrastructure; (3) annual audits are provided to NIGC (including
independent review of contracts in excess of $25,000); (4) standards
for construction and maintenance of the facility; and (5) a background
check and licensing system for management and key employees. The tribal
ordinance process is intended to provide a measure of respect for
tribal law-making authority, so the NIGC can only disapprove of a
tribal ordinance if it does not meet the statutory criteria.
North Dakota Tribal-State Relations
In North Dakota, both our Tribes and the States have taken the
Tribal-State Compact very seriously. Our first Tribal-State Compacts
were approved in 1992 and they were renewed in 1999. We follow a broad,
inclusive process of negotiation where all 5 Tribes work together and
we negotiate with the Executive Branch, including the Governor's office
and the Attorney General. The State Senate Majority and Minority
Leaders and the State House Majority and Minority Leaders are invited
to sit in on our compact negotiation meetings. The Tribes participate
in six public hearings throughout the State to gather public input.
Then our Tribal-State Compacts are approved through the normal
legislative process, including committee hearings and approval by a
vote of the State Legislature.
All of the North Dakota tribes have worked to maintain positive
government-to-government relationships with the State of North Dakota.
We meet every two years with the same group of state officials that
negotiate Tribal-State Compacts to review tribal progress and any
regulatory or implementation issues that may arise.
Our Tribes expressly adopted Minimum Internal Control Standards
through our Tribal-State Compacts--which incorporate the NIGC MICS by
reference:
Minimum Internal Control Standards
``Tribes shall abide with such Minimum Internal Control
Standards as are adopted, published, and finalized by the
National Indian Gaming Commission and as may be in current
effect.''
The State Attorney General is vested with authority to regulate
gaming under state law, so Attorney General has expertise in this area:
The State Attorney General regulates the State Lottery, horse-
racing and charitable gaming, alcoholic beverages, and tobacco
retailers, enforces consumer protection laws, and operates the
Bureau of Criminal Investigations. The Attorney General's
Gaming Division regulates, enforces and administers charitable
gaming in North Dakota. The division provides training,
performs audits and investigations of gaming organizations;
reviews gaming tax returns; issues administrative complaints;
conducts criminal history record checks of gaming employees and
Indian casino employees; and ensures compliance with tribal-
state casino gaming compacts.
The Attorney General's office works with our tribal gaming
commissions to address any significant issues that arise in Class III
gaming conducted pursuant to our compacts. Our compacts provide: (1)
GAAP and IGRA standards for accounting; (2) regulation, testing and
reporting for electronic machines to the state; (3) regulation for
table games; (4) background checks conducted by the State Attorney
General's office and licensing standards for our tribal gaming
commissions; and (5) random inspections by the State Attorney General's
office and tribal gaming commissions. The Tribes in North Dakota have
worked very hard to preserve a strong relationship with the State, and
the State for, its part, has worked in good faith with the Tribes.
In North Dakota, tribal governments employ more than 325 tribal
regulators and staff. In 2006, tribal governments spent $7.4 million on
tribal and state regulation of Indian gaming in North Dakota. That's
$1.48 million per tribal government and we run relatively modest
operations. We just had our biennial meeting with state officials and
no regulatory issues or deficiencies were identified by any party. The
Attorney General has said that his office is comfortable that we have
achieved our original intention to create a safe, secure and effective
tribal-state regulatory system.
Attorney General Stenjhem has complimented the tribal governments
on our record of strong regulation and has cooperated with the tribal
regulatory agencies to apprehend and prosecute those who attempt to
cheat our casinos. The Attorney General has recognized that Indian
gaming has created important jobs and generated vital revenue for
tribal self-government. He made it clear that he is proud that the
State has not asked for revenue sharing. State officials in North
Dakota know that tribal governments have many unmet needs and it helps
the whole state, when tribal governments have a way to create jobs and
generate essential governmental revenue.
The Role of the NIGC--Background Oversight/Training and Technical
Assistance
The National Indian Gaming Commission was established to assist
Indian tribes with the regulation of Indian gaming. Under IGRA, tribal
gaming regulators are the primary day-to-day regulators of Indian
gaming and they regulate Indian gaming under tribal gaming ordinances,
which are approved by the NIGC provided that they conform to minimum
federal statutory standards.
For Class II gaming, tribal regulators are supported by continuous
monitoring of the NIGC. For Class III gaming, tribal regulators are
supported by State regulators in accordance with Tribal-State compacts
and the NIGC has a specialized role. Specifically, the NIGC:
NIGC reviews and approves tribal gaming regulatory laws;
NIGC reviews tribal background checks and gaming licenses;
NIGC receives independent annual audits of tribal gaming
facilities;
As part of the annual audits, NIGC receives audits of gaming
contractors over $25,000; and
NIGC approves management contracts.
In addition to the Tribal-State Compact system, IGRA specifically
provides that NIGC authority to work with tribal governments to ensure
the enforcement of NIGC approved tribal ordinances under 25 U.S.C. sec.
2713:
Subject to such regulations as may be prescribed by the
Commission, the Chairman shall have authority to levy and
collect appropriate civil fines, not to exceed $25,000 per
violation, against the tribal operator of an Indian game or a
management contractor engaged in gaming for any violation of
any provision of this chapter, any regulation prescribed by the
Commission pursuant to this chapter, or tribal regulations,
ordinances, or resolutions approved under section 2710 or 2712
of this title.
Thus, the NIGC has authority to assist the tribes in ensuring
proper enforcement of those tribal minimum internal control standards.
This role continues and was not interrupted by the Federal Court
decision in Colorado River Indian Tribes v. NIGC. \1\
---------------------------------------------------------------------------
\1\ In essence, the Federal Court ruling simply held that the NIGC
may not draw up new Federal standards for the operation of Class III
Indian gaming over and above Tribal-State Compacts. The Federal Court
left in place the original understanding of IGRA.
---------------------------------------------------------------------------
Top Down/Inside the Beltway Approach to Regulation
Our concern with the NIGC is that they have adopted a top-down,
inside the beltway approach to the regulation of Indian gaming. Rather,
than coming out to the field to assist tribal governments in ensuring
that tribal regulatory systems are running appropriately, the NIGC
constantly wants to write new Federal rules.
To strengthen the United States' government-to-government
relationships with Indian tribes, President Clinton issued Executive
Order No. 13175 (2000), which directs Federal agencies to consult and
coordinate with Indian tribes on Federal rulemaking and agency actions
that have substantial direct impacts on tribal self-government, tribal
lands and treaty rights. In considering Federal rulemaking that so
impact tribal interests, the Executive Order provides that agencies
shall adhere to the following criteria:
Respect for tribal self-government and sovereignty, treaty
and other rights that arise from the Federal trust
relationship;
Provide tribes with the maximum administrative discretion
possible; and
Encourage tribes to develop their own policies to achieve
objectives, defer to tribal standards where possible, and
otherwise preserve the prerogatives and authority of Indian
tribes.
The Executive Order also directs Federal agencies to consider the
need for the regulation in light of tribal interests, take tribal
concerns into account, and use consensual mechanisms for decision-
making, including negotiated rulemaking, where appropriate. On
September 23, 2004, President Bush issued an Executive Memorandum
directing Federal agencies to adhere to Executive Order 13175.
We acknowledge that the NIGC is willing to sit down with tribal
leaders and is willing to attend tribal meetings. Unfortunately, tribal
leaders often come away with the feeling that NIGC had a pre-determined
decision and that despite tribal concerns, NIGC will not move off its
own bureaucratic agenda to find a way to respect tribal sovereignty and
self-government. We are sometimes told that consultation does not mean
agreement but consultation is supposed to be meaningful and it should
require consideration of tribal points of view and accommodation of
those perspectives to the greatest extent possible.
For example, when the NIGC was developing its Class II regulatory
proposals it was very reluctant to consider tribal government points of
view, yet when the gaming manufacturers made a point, the NIGC would
listen to them. The other thing that happens is when we sometimes
appear to make some headway in promoting tribal government concerns,
the Chairman and Commissioners go back and talk to NIGC lawyers and any
sign of accommodation is later dropped. There is simply too much inside
the beltway counseling and not enough field experience.
Recommendation: Make the Federal-Tribal Government-to-Government
Relationship Meaningful! The NIGC should be directed by statute to
follow Executive Order No. 13175 and we call upon the Senate Committee
to consider a bill similar to H.R. 5608. If possible, we would ask the
Committee to pass that bill with an expanded scope to cover other
Federal agencies.
Training and Technical Assistance
In 2006, Congress gave the NIGC new authority to work with tribal
governments to provide technical assistance and training to tribal
regulators. Public Law No. 109-221 (2006). Specifically, the NIGC
Accountability Act is intended to do three things:
Provide increased funding for NIGC by empowering NIGC to
assess a fee up to the level of $0.80 per $1,000 of gross
Indian gaming revenue;
Require NIGC to follow the Government Performance and
Results Act; and
Require NIGC to include a training and technical assistance
plan in its GPRA compliance plan.
NIGC is currently undertaking a paperwork shuffle of its GPRA
compliance plan, but Indian tribes were not consulted in its
development, there have been no national or regional meetings scheduled
to consult with tribes on the GPRA plan, and no training or technical
assistance programs have been undertaken pursuant to the plan. NIGC has
increased its fees and is spending more money under the fee provisions.
Recommendation: NIGC Must Hire a Training/Technical Assistance
Director with Indian Gaming Experience! We urge the Senate Committee to
ensure that the NIGC hires a training and technical assistance director
to begin providing training and technical assistance programs to tribal
governments and tribal gaming regulators. We strongly believe that the
NIGC training and technical assistance director should be someone who
has actual Indian gaming field experience (meaning that they have
worked for an Indian tribe).
Recommendation: NIGC Must Provide Training/Technical Assistance
that Meets or Exceeds Industry Standards! If Washington lawyers who
have never worked in the field sit around a conference table at the
agency headquarters and dream up training subjects, the NIGC is headed
for failure in this area. We need practical training and useful
technical assistance that can really help tribal regulators to
establish and maintain top-notch systems that meet or exceed industry
standards. If lawyers who do not know the industry standards are
assigned to the task of training and technical assistance, it is a
waste of time.
The NIGC Should Apply Indian Preference in Hiring
Recommendation: NIGC Must Use Indian Preference in Hiring! Under
existing law, NIGC should provide for Indian preference in hiring. On
March 31, 2008, the U.S. District Court for the District of Columbia
ruled that Indian preference in hiring applies to all ``positions in
the Department of the Interior, whether within or without the Bureau of
Indian Affairs, that directly and primarily relate to providing
services to Indians . . . .'' Indian Educators Federation v. Dirk
Kempthorne,__F.3d__(Civ. No. 04-01215) (March 31, 2008). IGRA expressly
places the NIGC within the Department of the Interior and it is without
question that NIGC is engaged in providing regulatory services for
Indian gaming, which is a tribal government activity. Hence, NIGC is
directly and primarily providing regulatory services to Indians within
the meaning of Indian preference. Yet, NIGC has a poor track record of
hiring Indians: only 3 out of 17 supervisory personnel at the NIGC
Washington headquarters are Indian. This must change.
Federal Advisory Committees
In general, the Federal Advisory Committee Act (FACA) frowns on the
use of Federal Advisory Committees because they are composed of
unelected experts who may have an unknown impact on Federal policy
while the public is excluded. There is an exception for consultation
with state, local and tribal government representatives because such
consultation is appropriate to promote federalism, comity, and respect
for tribal self-government. Normally, when a Federal Advisory Committee
is formed a plan must be filed with GSA.
NIGC simply claims exemption from FACA and constitutes and disbands
Tribal Advisory Committees at will. Recommendation: Tribal Advisory
Committees Should be Formed Only After Consultation with Tribal
Governments about their uses and purposes. They should be staffed with
tribal government representatives freely nominated by sovereign tribal
governments. Instead, NIGC calls for experts and puts qualifications on
its Tribal Advisory Committees that fly in the face of FACA. For
example, NIGC just disbanded a MICS Tribal Advisory Committee and
Technical Standards Tribal Advisory Committee and shortly thereafter,
announced the formation of a new Tribal Advisory Committee that would
limit its membership to tribal regulators with 5 or more years of
experience. That means that no elected tribal government leaders will
be on the committee and no gaming operators will be on the committee.
That seems to subvert the FACA exception that NIGC is relying upon by
cherry-picking committee members who are amenable to the NIGC
viewpoint.
Recommendation: NIGC Should Submit Its Claimed FACA Exception to
GSA for Review. NIGC should submit its Tribal Advisory Committee plans
to GSA for approval as an exception to FACA to ensure that it is not
end-running the statute.
Conclusion: NIGC Must Respect Tribal Governments as Day-to-Day
Regulators
NIGC should embrace Congress' direction to provide training and
technical assistance to tribal governments and tribal gaming
regulators. Moreover, NIGC should meaningfully consult with tribal
governments concerning the need for new regulations. For example, where
NIGC just issued regulations in 2002 on Class II Technologic Aids, NIGC
should truly consider the importance of simply maintaining those
regulations as an alternative to new regulations. Especially, where
those 2002 regulations were approved by the Federal Court of Appeals!
In short, NIGC needs to become a more user friendly agency, and
stop the top/down inside the beltway regulatory directive approach to
its mission. Tribal governments invest hundreds of millions of dollars
for regulation and NIGC is not happy unless it is duplicating tribal
government regulation.
Senator Tester. Thank you, Mr. Luger.
Ms. Rand?
STATEMENT OF KATHRYN R.L. RAND, J.D., PROFESSOR,
UNIVERSITY OF NORTH DAKOTA SCHOOL OF LAW; CO-
DIRECTOR, INSTITUTE FOR THE STUDY OF TRIBAL GAMING LAW AND
POLICY; ACCOMPANIED BY STEVEN ANDREW LIGHT, Ph.D., PROFESSOR,
UNIVERSITY OF NORTH DAKOTA COLLEGE OF BUSINESS AND PUBLIC
ADMINISTRATION; CO-DIRECTOR, INSTITUTE FOR THE STUDY OF TRIBAL
GAMING LAW AND POLICY
Ms. Rand. Thank you, Senator Dorgan and the Committee for
inviting us to testify this morning. My name is Kathryn Rand. I
am a professor at the University of North Dakota School of Law,
and with me is Dr. Steven Light, a professor at the University
of North Dakota College of Business and Public Administration.
We are the Co-Directors of the Institute for the Study of
Tribal Gaming Law and Policy at the University of North Dakota.
We are not here to criticize the NIGC. Our testimony will
focus on three issues raised in our written statement:
consultation with tribes; accountability; and agency capture.
These issues, including our recommendations for each, are
addressed in detail in our written statement.
As the Committee knows, the NIGC has a government-to-
government tribal consultation policy, and as you have heard,
tribal leaders have criticized the NIGC's consultation as pro
forma and without substantive impact on decisions. These
criticisms are illustrated by the protracted process of
promulgating Class II bright-line regulations.
The NIGC's accountability is complicated by its varied
stakeholders and the fact that it addresses highly
controversial and technically complex issues. Several questions
related to the Commission's accountability are raised in the
context of the Class II-proposed regulations.
For example, are the proposed regulations necessary, given
the Commission's 2002 amendments and the Federal court's
application of the same? And is the content of the proposed
regulations consistent with congressional intent, especially
given the potential economic impact on tribes?
With agency capture, the question is how to balance
appropriate government-to-government consultation and
stakeholder accountability with the risk of capture. For
example, both tribes and game manufacturers have a vested
interest in a strong Class II market and have sought to
influence the NIGC's regulation of the same.
We have a few preliminary recommendations in each of these
areas. With regard to consultation, we recommend comparing
other agency practices. For example, the IHS has a relatively
detailed and specific consultation policy which requires the
definition of consultation and specific triggers for the
process of consultation.
We also recommend clarifying the nature of government-to-
government consultation, which should be uniquely geared toward
tribes' governmental status and their relationship with the
Federal Government.
And also with regard to consultation, we recommend
considering consent-based policy-making in the form of
negotiated rulemaking. True government-to-government
consultation may afford tribes a role in decision-making. There
is a need for clear criteria and mechanisms to trigger
negotiated rulemaking. For example, the IHS policy ties
negotiated rulemaking to specific issues.
With regard to accountability, we recommend preserving the
NIGC's role in tribal institution-building. The NIGC has a dual
role of facilitating and overseeing tribal regulation of
gaming. Any accountability measures should take into account
the NIGC's facilitation of effective tribal regulation.
Also with regard to accountability, we recommend accounting
for the NIGC's effective gambling regulation. The NIGC is also
responsible for some direct regulation of gaming, and this
regulation should be tailored to IGRA's goals and to the
specific needs of the tribal gaming industry, including
fostering tribal economic development.
Finally, with regard to accountability, we recommend
increasing transparency as much as possible.
On the issue of capture, we recommend ensuring sufficient
funding and personnel for the NIGC and, perhaps more
importantly, weighing the capture risk against IGRA's goals and
the NIGC's role in facilitating tribal institution-building.
There is a need for the NIGC to be informed by tribal and
industry expertise. We recommend guidelines for the formation
of work groups and advisory committees, as well as their input.
Thank you. Both Dr. Light and I stand ready to answer the
Committee's questions.
[The prepared statement of Ms. Rand follows:]
Prepared Statement of Kathryn R.L. Rand, J.D., Professor, University of
North Dakota School of Law; Co-Director, Institute for the Study of
Tribal Gaming Law and Policy; accompanied by Steven Andrew Light,
Ph.D., Professor, University of North Dakota College of Business and
Public Administration; Co-Director, Institute for the Study of Tribal
Gaming Law and Policy
Good morning. We thank Senator Dorgan and the Committee for this
opportunity to appear before you today to discuss the role of the
National Indian Gaming Commission (NIGC) in effective and appropriate
regulation of Indian gaming.
We co-direct the Institute for the Study of Tribal Gaming Law and
Policy at the University of North Dakota, which provides legal and
policy assistance related to tribal gaming enterprises to all
interested governments and organizations, assists tribes with gaming
enterprises in pursuing reservation economic development and building
strong tribal governments, and contributes to the scholarly and
practical research and literature in the area of tribal gaming. Our
testimony today is informed by our research and scholarship in the area
of Indian gaming over the past twelve years.
In the last two decades, the tribal gaming industry has seen rapid
expansion under the regulatory framework of the Indian Gaming
Regulatory Act of 1988 (IGRA). Some 400 tribal gaming establishments in
as many as 30 states are operated by 230 tribes that have decided to
pursue gaming to create jobs, facilitate economic development, and
provide public services to their members. The Indian gaming industry
generated $25 billion in 2006. As a peculiar intersection of federal
Indian law and gambling law, Indian gaming is a particularly
complicated and highly specialized topic, giving rise to numerous legal
questions fraught with political and policy implications. A regulatory
official must respond to a phenomenal array of such questions, from
concepts related to abstract theoretical principles or
preconstitutional history to those with highly technical answers
grounded in the interpretation of current federal law and regulations.
Given the growth of the industry and the myriad and recurring legal and
political issues concerning Indian gaming, it perhaps should come as no
surprise that many, including members of Congress, see Indian gaming as
meriting vigorous federal oversight.
The congressional goals reflected in IGRA and its legislative
history contemplated both federal Indian law and policy and Congress's
expectations for the tribal gaming industry. Although federal Indian
policy may not have significantly changed since 1988, the Indian gaming
industry certainly has. The predominant view, at least of non-tribal
policymakers and the general public, is that the rapid growth of the
industry has created significant problems that should be solved through
more stringent regulation. Congress's goal in providing sufficient
regulation of tribal gaming to ensure legality and protect the
financial interests of gaming tribes remains critically important. At
the same time, we believe the success of the industry has created
opportunities to achieve two additional goals of at least equal
importance in the long term. Together, the three goals of sound
regulation, tribal institution building, and improving tribal-state
relations, each of which is based on Congress's original intent in
enacting IGRA, should serve as lodestars for Congress's policymaking
for Indian gaming. See Kathryn R.L. Rand & Steven Andrew Light, How
Congress Can and Should ``Fix'' the Indian Gaming Regulatory Act:
Recommendations for Law and Policy Reform, 13 VA. J. SOC. POL'Y & L.
396 (2006).
Today we have been asked to provide our opinions related to
Congress's legislative oversight of the NIGC, the independent federal
regulatory agency charged with regulating Indian gaming. Indian gaming
presents complexities unlike most other industries subject to federal
regulation. We believe that the NIGC has been largely successful in its
efforts to work with tribes in regulating a complex and changing
industry. The members of this Committee undoubtedly are familiar with
the NIGC's authority and many of the issues swirling around its
implementation and enforcement of IGRA and federal Indian law and
policy. As the NIGC itself has acknowledged, there is a strong
perception among tribes that the NIGC does not adequately consult with
tribal leaders regarding proposed regulations, a criticism raised
repeatedly during the NIGC's protracted process of issuing proposed
regulations related to Class II gaming. Recently, the NIGC requested
assistance from the National Indian Gaming Association (NIGA) in
developing and implementing procedures and practices for government-to-
government consultation with tribes.
We welcome this opportunity to contribute our views on how best to
ensure appropriate congressional oversight and efficient and
accountable governance through the NIGC's meaningful consultation and
cooperation with tribal governments. In this statement, we focus on
three issues related to the NIGC's role that we believe may be helpful
to the Committee: communication and consultation policies and
practices, accountability, and agency capture.
I. Scope of NIGC Powers
In IGRA, Congress specified several goals related to the
overarching tenets of federal Indian policy. Congress intended IGRA to
codify tribes' right to conduct gaming on Indian lands as a means of
promoting tribal economic development, self-sufficiency, and strong
tribal governments, while providing sufficient regulation to ensure
legality and to protect the financial interest of gaming tribes.
Congress also enacted IGRA to establish an independent federal
regulatory authority in the form of the NIGC.
IGRA situates the NIGC within the U.S. Department of the Interior.
At least two of the NIGC's three members must be enrolled members of a
tribe. IGRA also requires the Commission to submit a report, with
minority views, to Congress every two years. The NIGC's mission is ``to
regulate gaming activities on Indian lands for the purpose of shielding
Indian tribes from organized crime and other corrupting influences; to
ensure that Indian tribes are the primary beneficiaries of gaming
revenue; and to assure that gaming is conducted fairly and honestly by
both operators and players.'' IGRA assigns some powers to the NIGC
Chair, and others to the full Commission. The powers of the Chair
include authority to issue temporary closure orders, to levy and
collect civil fines, to approve tribal ordinances and resolutions, and
to approve management contracts. The Chair's decisions in these areas
may be appealed to the full Commission. The Commission also may
delegate additional authority to the Chair. The Commission's powers
include authority to order permanent closure, to monitor and inspect
Class II gaming, to conduct background investigations, to issue self-
regulation certificates, and to issue subpoenas, order testimony, take
depositions, and hold hearings. The NIGC also exercises broad authority
to ``promulgate such regulations and guidelines as it deems appropriate
to implement [IGRA's] provisions.'' 25 U.S.C. Sec. 2706(b)(10). In
addition to promulgating formal regulations, the NIGC also issues
opinion letters and other informal interpretations of IGRA.
In 2000, President Clinton issued Executive Order 13175, titled
``Consultation and Coordination with Indian Tribal Governments.'' The
Executive Order sets forth three ``fundamental principles'' to guide
regulations, legislative proposals or recommendations, and other policy
statements or actions that have ``substantial direct effects on one or
more Indian tribes'':
The unique nature of the tribal-federal relationship
Federal law's recognition of tribal sovereignty
Federal Indian policy recognizing tribal self-government and
supporting tribal sovereignty and self-determination
The Executive Order further specifies ``policymaking criteria,''
directing federal agencies to:
Respect tribal self-government and sovereignty
Grant tribal governments the maximum administrative
discretion possible
Encourage tribes to develop their own policies to achieve
federal program objectives, defer to tribes to establish
standards, and consult with tribes as to the need for federal
standards
In a 2004 memorandum, President Bush directed federal agencies to
adhere to the principles reflected in the Executive Order and to ``work
with tribal governments in a manner that cultivates mutual respect and
fosters greater understanding.'' Accordingly, the NIGC adopted a
Government-to-Government Tribal Consultation Policy. In addition to
incorporating the fundamental principles set out in the Executive
Order, the NIGC policy references IGRA's recognition of tribal
sovereignty, its policy goals, and its regulatory framework, including
the primary authority and responsibility of tribes over Indian gaming.
The policy provides that:
to the extent practicable and permitted by law, the NIGC will
engage in regular, timely, and meaningful government-to-
government consultation and collaboration with Federally
recognized Indian tribes, when formulating and implementing
NIGC administrative regulations, bulletins, or guidelines, or
preparing legislative proposals or comments for Congress, which
may substantially affect or impact the operation or regulation
of gaming on Indian lands by tribes under the provisions of
IGRA.
The NIGC policy also sets forth ``policymaking principles and
guidelines,'' including:
Reasonable consideration of variations among tribes, gaming
operations, and tribal-state compacts
Qualified deference to tribal regulations and standards for
Indian gaming
Provision of technical assistance to tribes in complying
with federal law and in implementing their own policies and
standards
Restraint from enacting policies that will impose
substantial direct compliance or enforcement costs on tribes,
if the policies are not required by IGRA or necessary to
further IGRA's goals
Granting tribes the maximum administrative and regulatory
discretion possible in operating and regulating Indian gaming,
and elimination of unnecessary and redundant federal regulation
``in order to conserve limited tribal resources, preserve the
prerogatives and sovereign authority of tribes over their own
internal affairs, and promote strong tribal government and
self-determination''
The policy's procedures and guidelines have as the primary focus
consultation and collaboration with individual tribes. The consultation
procedures promise ``early notification'' to tribes of proposed
policies, ``adequate opportunity'' for discussion, and ``meaningful
input regarding the legality, need, nature, form, content, scope and
application of such proposed regulations, including opportunity to
recommend other alternative solutions or approaches.'' As part of the
consultation process and before issuing a final decision, the NIGC will
``answer tribal questions and carefully consider all tribal positions
and recommendations.'' The NIGC also will ``consult with affected
tribes to select and establish fairly representative intertribal work
groups, task forces, or advisory committees'' in developing
administrative regulations or legislative proposals. Finally, the
policy provides that ``[t]he NIGC will, to the extent it deems
practicable, appropriate, and permitted by law, explore and consider
the use of consensual policy making mechanisms, including negotiated
rulemaking.''
One of the more pressing issues with which the NIGC has grappled is
game classification. If a particular game falls within Class II, then
it may be operated by a tribe without a tribal-state compact; if the
game falls within Class III, however, legal operation requires a
compact. IGRA's definitions do not offer much in the way of technical
guidance. Class II gaming is defined as ``bingo (whether or not
electronic, computer or other technologic aids are used in connection
therewith),'' as well as some card games. Class II gaming specifically
excludes house-banked card games and ``electronic or electromechanical
facsimiles of any game of chance or slot machines of any kind.'' Games
excluded from Class II fall within Class III, a residual category that
includes all other forms of gaming (excepting, of course, Class I's
traditional games). In addition to the statutory definitions, the NIGC
promulgated regulations meant to clarify the distinctions between Class
II and Class III gaming. The current regulations in large part mimic
the statutory language, but also provide ``plain English'' definitions
and additional guidance. The NIGC also issues advisory opinions on
whether a specific game is Class II or Class III.
Whether a game falls within the catch-all of Class III or qualifies
as a Class II game has significant impact. The legality of Class II
games depends only on whether ``such gaming'' is permitted in the state
and the tribe retains exclusive regulatory jurisdiction (with limited
federal oversight) over the games. Class III games, on the other hand,
are allowed only under the terms of a valid tribal-state compact.
As reflected in IGRA's legislative history, Congress included the
Class II ``technologic aid'' provision to ensure that tribes ``have
maximum flexibility to utilize games such as bingo and lotto for tribal
economic development.'' Tribes' Class II games should not be limited to
``existing game sizes, levels of participation, or current
technology,'' but should ``take advantage of modern methods'' of
conducting games. See S. Rep. 100-446, 100th Cong. 2d Sess., 1988
U.S.C.C.A.N. 3071. Although Congress's intent in authorizing Class II
technologic aids may have been clear, the line between a Class II
technologic aid and a Class III electronic facsimile was not. IGRA did
not define either term, and until it amended its regulations in 2002,
the NIGC offered little additional guidance. The 2002 amendments
provided more detailed definitions, as well as illustrative examples of
Class II technologic aids. The 2002 amendments were applied by the
federal courts in United States v. Santee Sioux Tribe, 324 F.3d 607
(8th Cir. 2003), and Seneca-Cayuga Tribe of Oklahoma v. NIGC, 327 F.3d
1019 (10th Cir. 2003), to conclude that the machines at issue in each
case fell within Class II.
In both Santee Sioux Tribe and Seneca-Cayuga Tribe, the U.S.
Department of Justice took a position contrary to that of the NIGC,
contending that both games at issue were Class III electronic
facsimiles or, alternatively, even if Class II technologic aids, the
games violated the Johnson Act's criminal prohibition against gambling
devices in Indian country. Because the Johnson Act is a federal
criminal statute separate from IGRA and enforced by the Justice
Department, the NIGC's interpretation of the Johnson Act is not
entitled to the same deference as its interpretation of IGRA. Though
agency officials were not uniform in their reading of the statutes,
generally speaking the NIGC and the Justice Department disagreed over
the Johnson Act's applicability to Class II aids. In 2005, the Justice
Department sought legislation that would include Class II gambling
devices within the scope of the Johnson Act. The Justice Department's
proposal was met with tribal opposition, and failed to find a sponsor
in Congress.
In the meantime, though, the NIGC was in the protracted process of
issuing new, highly technical regulations governing Class II electronic
aids, sometimes called the ``bright line'' rules. In 2004, the NIGC
formed a Class II Game Classifications Standards Advisory Committee,
charged with assisting the NIGC in developing definitive classification
and technical standards for distinguishing Class II aids from Class III
facsimiles. In May 2006, the NIGC published its first set of proposed
regulations. During the public comment period, it collected comments
from over 80 tribes, as well as state and local governments, game
manufacturers, citizen groups, and others, and conducted multiple
hearings. See http://www.nigc.gov/LawsRegulations/
ProposedAmendmentsandRegulations/
ClassIIGameClassificationStandardsWithdrawn/tabid/705/Default.aspx.
The 2006 proposed ``bright line'' regulations were criticized by
tribes on two grounds. First, in requiring slower play, the rules would
undermine the Class II market. An economic impact study concerning the
2006 proposed regulations commissioned by the NIGC found the rules
would have ``a significant negative impact'' on Class II gaming
revenue, and therefore on the tribes that operate such games. The study
concluded that the proposed changes would reduce gaming revenue by
$142.7 million, with an accompanying loss of $9.6 million in non-gaming
revenue and a $17.4 million reduction in tribal government revenue.
Second, the regulations would trigger IGRA's tribal-state compacting
requirement. In drawing a bright line between Class II and Class III
games, the proposed regulations would shift some Class II games into
the Class III category. Tribes in states that allow Class III gaming
would need to convince the state to negotiate a new compact, opening up
the process to the whims and vagaries of state politics and the
possibility of state-mandated revenue sharing.
Interagency contestation with the Department of Justice and
continued criticism from tribes and game manufacturers considerably
slowed the NIGC's promulgation of the new Class II regulations.
Following the initial announcement of the 2006 proposed standards, a
group of prominent manufacturers formed the Technical Standards Work
Group (TSWG) to draft an alternative regulatory scheme to submit to the
NIGC. Together with the Technical Standards Tribal Advisory Committee,
a group of tribal operators and experts that had been advising the
NIGC, the TSWG submitted alternative Technical Standards to the
Commission in early 2007. In February 2007, the NIGC formally withdrew
the 2006 proposed regulations. The NIGC published its new set of
proposed regulations in October 2007, eventually extending the public
comment period until March 9, 2008. On February 1, 2008, the NIGC
released a second economic impact study, which estimated that under the
2007 proposed regulations tribes could lose up to $2.8 billion in
revenues and face expenses of almost $350 million in redeveloping Class
II machines. Both tribal and industry leaders have complimented
Chairman Hogen's efforts and acknowledged some improvements over the
2006 proposed regulations, but also have expressed frustration and
disappointment in both the process and the substance of the 2007
proposed regulations.
II. Concerns Expressed About the NIGC: The Goldilocks Gamut
Indian gaming is a product of the confluence of law and public
policy that sanction and regulate the industry at the tribal, state,
and federal levels. With so much at stake for so many stakeholders, it
is no surprise that the resultant regulatory politics of tribal gaming
is complex and controversial. The NIGC is charged with the complex task
of monitoring and enforcing IGRA in relation to a host of ever-changing
issues. The Commission interfaces with 230 sovereign tribal
governments, as many as 30 sovereign state governments, and a powerful
industry lobby that increasingly resembles that of the commercial
gaming industry--in part because it includes identical players with a
global reach, from game manufacturers to the commercial conglomerates
that operate the majority of the casinos in Reno, Atlantic City, and on
the Las Vegas Strip, and in part because of the growing clout of tribal
advocacy associations like NIGA and its state and regional partners,
such as the California Nations Indian Gaming Association (CNIGA).
Despite its broad authority under IGRA and its generally successful
efforts to regulate a complex industry, the NIGC variously has been
accused of being underfunded, understaffed, and underempowered to
regulate tribal gaming, overly solicitous of tribal, state, or industry
interests, and overzealous and overreaching in exercising its statutory
grant of authority.
In the last 20 years, the NIGC has faced a number of ``hot-button''
issues across the U.S. with which the agency is involved through direct
regulation or advisory opinions or in conjunction with decision making
by other federal agencies. These highly controversial, sometimes
rapidly developing, and often technically complex issues include:
Promulgation of rules defining Class II technologic aids and
Class III electronic facsimiles, as detailed above
Gaming on newly acquired lands, including land-into-trust
and ``Indian land'' determinations
Enforcement actions and closure of gaming operations
Tribal-state compacting and a ``Seminole Tribe'' fix to
address perceived political imbalances between tribal and state
governments
Management contracts and consulting agreements with non-
tribal parties
Tribal use of gaming revenue, including transparency and
accountability
Employment issues, including unionization of tribal casino
employees
Tribal acknowledgment determinations
Differences of opinion across and within federal agencies
Calls to amend IGRA and other federal statutes to address
the above issues and more
A critical feature unifying the issues the NIGC faces is that they
vary by tribe, by state, and even by gaming establishment, creating a
tension between the need for uniform industry regulatory standards to
effectuate IGRA's overarching policy goals, and the highly localized
and particularized nature of issues that might compel highly tailored
and even tribe-specific regulation. Elsewhere we have written in detail
about the very different issues faced by tribes across the U.S., and
the governmental challenges they create. See, e.g., STEVEN ANDREW LIGHT
& KATHRYN R.L. RAND, INDIAN GAMING AND TRIBAL SOVEREIGNTY: THE CASINO
COMPROMISE (2005); Rand & Light, How Congress Can and Should ``Fix''
the Indian Gaming Regulatory Act.
Depending on the issue and the interests involved, concerns
expressed about the NIGC's authority, resources (including funding and
personnel), and decisions have run a Goldilocks gamut, ranging from
``far too much'' to ``nowhere near enough.'' Rarely is the agency seen
as having or exercising ``just the right amount'' of regulatory
authority--although admittedly few agencies are.
We turn to three prominent critiques of NIGC authority that the
above issues illustrate, and which may be of the greatest concern to
this Committee as we sit before you in today's oversight hearing: the
NIGC's communication and consultation policies and practices, its
accountability to various stakeholders, including Congress and tribal
governments, and the possibility of agency capture.
A. Communication and consultation policies and practices
Under the NIGC's own government-to-government consultation policy,
the NIGC routinely communicates with tribes through ``Dear Tribal
Leader'' letters, attends tribal gaming association and other trade
conferences and meetings, and conducts consultation sessions with
individual tribal leaders. It also has convened working groups and
advisory committees to assist in policy formulation.
Nevertheless, some tribal leaders and others have criticized the
NIGC's consultation process as being pro forma; that is, the letters
are sent and the meetings and sessions for the most part occur, but the
consultation efforts are too little, too late (for instance, key
information is released just before relevant deadlines, or consultation
comes only after regulations are fully drafted and formally proposed),
or tribal input does not have a significant or substantive impact on
the NIGC's decision making. For example, the NIGC's protracted efforts
to promulgate Class II ``bright line'' regulations have been subject to
extensive criticism regarding both the process and substance of the
NIGC's consultation with affected tribes. Recently, NIGA and a number
of tribal leaders have criticized the fact that the NIGC closed the
formal notice-and-comment period on the proposed regulations just over
a month after releasing an economic impact study it commissioned that
estimated the proposed regulations would cost tribes as much as $2.8
billion in lost revenues.
Succinctly put, the question is whether the NIGC in fact conducts
timely and meaningful communication and consultation with the parties
it regulates, which include sovereign tribal governments. The answer,
though, depends upon the nature of government-to-government
consultation--an area where tribes and the federal government may not
agree.
B. Accountability
Like all administrative agencies, the NIGC is subject to concerns
about accountability, whether to its enabling legislation (and
therefore to congressional intent), its own internal policies, or
appropriate stakeholders. Previous congressional hearings, including a
Senate Indian Affairs Committee oversight hearing at which we testified
in April 2005, have aired concerns about the NIGC's resources and
capacity to adequately carry out its regulatory authority under IGRA.
Despite its formal tribal consultation policy, the NIGC is one of three
federal agencies singled out in a recent House bill (H.R. 5608, 110th
Congress, 2d Session) meant to ensure an ``accountable consultation
process'' between the agencies and tribal governments, including
``meaningful and timely input by tribal officials in the formulating,
amending, implementing, or rescinding [of] policies that have tribal
implications.'' The broad and varied range of stakeholders to which the
NIGC must at some level answer, including Congress, tribes, states,
industry, and the public, further complicates the issue of agency
accountability.
The attempt to promulgate Class II regulations illustrates several
additional issues related to accountability. Some have suggested that,
given the NIGC's 2002 amendments and subsequent application of the same
in the federal courts, the proposed regulations were the result of
pressure from the Justice Department and some members of Congress
rather than any real need for new standards. From that perspective, the
NIGC's accountability to Congress and other federal agencies trumped
accountability to tribes. The distinction between a Class II
technologic aid and a Class III electronic facsimile is, in many ways,
a technical one. Game manufacturers and tribal regulators complained
that the proposed standards lacked cognizance of game technology and
were too rigid to accommodate innovation, therefore hamstringing the
manufacture of games that would allow tribes to maintain and further
develop the Class II market through the use of ``modern methods'' of
conducting games. Some tribes have been critical of what they saw as
continual NIGC lip service to tribal sovereignty and self-government,
while perhaps embodying the stereotype of a federal agency that
purports to be ``here to help'' but in reality simply assumes control.
Others pointed out that with an estimated impact of $1 billion to $2.8
billion in lost revenues, the proposed regulations would undermine
IGRA's goals of tribal economic development, tribal self-sufficiency,
and strong tribal governments.
The NIGC frequently must deal with and resolve highly controversial
and technically complicated issues in which the varied nature of
stakeholders and their interests make it difficult to assess the
outcomes. The question here is how best to assess whether the NIGC is
``doing its job'' while appropriately balancing relevant imperatives.
C. Agency capture
A frequently expressed concern in regulatory administration is the
evolution of a capture effect. Agency capture occurs as regulator and
industry develop an iterated relationship in which industry views come
to govern how regulation occurs. Without sufficient and appropriate
legislative oversight, the agency becomes a tool of those it seeks to
regulate. The conditions under which this model prevails are found in
the relationship between the public and private sectors. The profit
motive is best served by a favorable regulatory environment, and agency
independence is sacrificed at the altar of private gain. Ultimately,
the agency fails to promote the public interest. One need only look at
recent headlines concerning American Airlines and the FAA to find
evidence of agency capture--and calls for more and better legislative
oversight in the future.
In the context of the regulation of Indian gaming by the NIGC, the
capture criticism stems from two oft-made assertions: the NIGC is a
``toothless tiger,'' and tribal government gaming commissions are akin
to ``the fox guarding the henhouse.'' See, e.g., Donald L. Barlett &
James B. Steele, Wheel of Misfortune, TIME (Dec. 16, 2002), 48, 59. The
charge is that the NIGC is unwilling or lacks the resources to guard
against capture by the numerous gaming tribes it regulates or that
tribal and industry interests may align in such a way as to exacerbate
the risk. For instance, in the context of the development of the
proposed Class II ``bright line'' regulations, both tribes and game
manufacturers have vested interests in a competitive and lucrative
Class II market. Both groups possess valuable and relevant knowledge
and technical expertise that the NIGC has taken into account through
what has ended up being a protracted and iterated process of
consultation with working groups comprised of tribal officials and game
manufacturers.
As we explained to this Committee in our 2005 testimony, our views
on agency capture are based on our sense of at least three key
differences between the Indian gaming and commercial gambling
industries: regulatory structures, policy impetus, and who benefits. At
the structural level, capture theory focuses on the capture of an
entire agency by the industry. However, in contrast to commercial
gaming, we note that tribal gaming operations are subject to extensive
tribal, state, and federal regulations. Simply put, there are too many
regulatory authorities involved to allow one (or the capture of one) to
dominate. The policy impetus behind Indian gaming revolves around the
goals stated in IGRA: tribal economic development, self-sufficiency,
and self-governance. Tribal gaming commissions have a clear stake in
promoting these goals, which are quite different than the profit
motivation in the private sector. The vast majority of gaming tribes
see Indian gaming as the first viable means of economic development in
generations, and tribal regulatory authorities are less likely to lose
sight of effective regulation and compliance with policy goals than if
they were regulating private industry. These policy motivations relate
to the third key difference between the private and public sectors: who
benefits. Agency capture subverts a public interest. But Indian gaming
directly supports tribal governments and underwrites their ability to
provide essential government services--a clear public interest.
Here, then, the question is how to balance appropriate government-
to-government tribal consultation and accountability to stakeholders
with the risk of agency capture.
III. Recommendations
In exercising oversight of the NIGC and its role in regulating the
Indian gaming industry, Congress should be guided by the best available
data and analysis. The same definitely is true for the NIGC in
exercising its authority as an independent regulatory agency. In our
prior work, we have identified three lodestar policy goals for Indian
gaming law and policy. The three goals--sound regulation, tribal
institution building, and improving tribal-state relations, each of
which is based on Congress's original intent in enacting IGRA--should
serve to guide this Committee in its consideration of the issues raised
in today's hearing. See Rand & Light, How Congress Can and Should
``Fix'' the Indian Regulatory Act.
We wish to offer a few preliminary concrete recommendations that
may be useful to the Committee in exercising its oversight function.
A. Communication and consultation policies and practices
1. Compare other agency consultation and communication practices.
We recommend gathering information about how other federal agencies
interact with sovereign tribal governments, including assessment of the
success of these practices, as measured in large part through the
degree to which they align with and serve the articulated goals of
federal Indian policy with regard to tribal self-government and self-
determination.
2. Clarify the nature of government-to-government communication and
consultation. As both Executive Order 13175 and the NIGC's tribal
consultation policy acknowledge, tribal sovereignty and the federal
government's trust obligation shape tribes' unique status in the
American political system. Accordingly, the NIGC's consultation policy
should be uniquely geared to tribes' governmental status and
relationship with the federal government, both in theory and in
practice. The challenge, of course, is ensuring that the promises of
both the Executive Order and the NIGC policy are kept in their
implementation. Along with willpower and oversight, truly meaningful
consultation requires resources, concretely realized in NIGC funding
and personnel.
3. Consider requiring consent-based policymaking in the form of
negotiated or hybrid rulemaking. Further, government-to-government
consultation with tribes may require more than notice-and-comment
periods and consultation sessions in which tribes may be listened to,
but which do not provide tribes a direct role in setting priorities or
shaping policy outcomes. Government-to-government consultation perhaps
should include a defined role for affected tribes in the decision-
making process. This may be appropriate, given not only tribes' unique
status, but also the fact that unlike state governments, tribes have
not delegated authority to the federal government. On a practical
level, our point here is that the NIGC's consultation policy promises
to ``explore and consider the use of consensual policy making
mechanisms, including negotiated rulemaking,'' but the criteria for the
NIGC's decision on whether and when to use that process appear to be at
the sole discretion of the agency. Clear criteria, along with a
mechanism to trigger negotiated or hybrid rulemaking, should be
established.
4. Define and implement meaningful consultation and communication
policies and practices. Perhaps taking a cue from the impetus behind
H.B. 5608, Congress's intent and expectations regarding government-to-
government consultation in the NIGC's exercise of its statutory
authority should be made clear. In addition to the points made above,
this should include timeliness of notice and appropriate opportunity
for input, guidelines for expanding or adjusting the usual formal
notice-and-comment requirements, and guidelines and outcome measures
for adherence to the goals of both IGRA and federal Indian policy.
B. Accountability
1. Further IGRA's goal of tribal economic development. The NIGC's
regulatory role is distinct from that of other federal agencies, such
as the BIA or the IHS, that implement or provide programmatic services
to tribes and American Indian people. Indian gaming is neither a public
entitlement program nor a federal obligation, but an aspect of tribal
governmental authority, as Congress recognized in IGRA. One of IGRA's
goals is to foster tribal economic development, a point to keep in mind
in balancing the NIGC's relevant imperatives created by its varied
stakeholders. Elsewhere we have discussed the social and economic
impacts of tribal gaming, and we note that these considerations are
relevant to both Congress's and the NIGC's decisions. As the economic
impact studies connected to the Class II ``bright line'' rules clearly
illustrate, the NIGC's decisions have a very real impact on tribes and
tribal members, and the future of tribal communities.
2. Preserve the NIGC's role in tribal institution building. The
NIGC is in the difficult position of both facilitating and overseeing
tribal regulation of an industry that, in the private sector,
traditionally has merited stringent governmental control. The NIGC has
a dual role with regard to tribal regulation, as it provides technical
assistance to tribes and encourages tribal institution building
necessary for effective tribal regulation of gaming enterprises. As the
NIGC's consultation policy promises, tribes should be given the maximum
administrative and regulatory discretion possible. The NIGC should
resort to federal policy or regulation only where required by IGRA or
necessary to meet IGRA's policy goals. Thus, accountability measures
must take into account the NIGC's effective facilitation of tribal
regulation, and not merely its direct regulatory role.
3. Account for effective gaming regulation. Another challenge faced
by the NIGC is the effective regulation of gambling itself. In enacting
IGRA, Congress was well aware of the challenges of gaming regulation,
particularly for casino-style gaming. IGRA's regulatory framework,
which involves tribal, state, and federal regulation, balances federal
standards with the need for regulation tailored to local concerns and
needs. In assigning Class II regulation primarily to tribes, and Class
III regulation primarily to tribal-state compacts, Congress recognized
the need to tailor regulation to specific jurisdictional circumstances.
Accountability, then, must not be measured solely by uniformity imposed
by the NIGC through federal standards and regulations. Here, too, we
emphasize the need for information gathering to build federal expertise
in gaming regulation and to tailor general gaming policy to the
specific goals and challenges of the Indian gaming industry.
4. Increase transparency. The NIGC should be applauded for its
efforts to maintain an accessible and informative Web site. As with
nearly any government agency, however, more could be done to make
information readily available to stakeholders, including Congress,
tribes, states, industry, and the public. We note that increased
transparency also serves the constituents of the governments charged
with tribal gaming regulation at the tribal, state, and federal levels.
C. Agency capture
1. Ensure sufficient funding and personnel. Both the NIGC and
tribes need sufficient resources to fulfill their obligations under
IGRA. The NIGC's current levels of funding and personnel may constrain
its ability to engage in meaningful government-to-government
consultation with tribes, and also subject the NIGC to criticisms
concerning its investigative and enforcement responsibilities as well
as to charges of secrecy and behind-the-scenes decision making.
2. Balance accountable consultation and agency capture. Perceptions
of the risk of agency capture must take into account the goals of IGRA
and federal Indian policy, as well as the NIGC's role in facilitating
effective tribal regulation. A perceived threat of agency capture must
not be allowed to undermine the primacy of tribal regulation under IGRA
or the NIGC's responsibility to consult with tribes on a government-to-
government basis. Additionally, as the Class II ``bright line''
regulations illustrate, there is a need for industry and technical
expertise to inform the NIGC's decisions. The work groups and advisory
committees convened as part of the NIGC's process in promulgating the
proposed Class II regulations should serve as a model for instituting a
more formal and less ad hoc process. Guidelines and mechanisms
concerning the formation of and input by such groups should be
developed.
At the Committee's request, we would be glad to elaborate further
on the points made in this written statement or other issues related to
the NIGC that the Committee deems pertinent.
Attachment
Institute for the Study of Tribal Gaming Law and Policy at the
University of North Dakota
About the Institute
Co-Directors Kathryn R.L. Rand (Law) and Steven Andrew Light
(Political Science) founded the Institute for the Study of Tribal
Gaming Law and Policy at the University of North Dakota in 2002 as the
first university-affiliated institute in the U.S. dedicated to the
study of Indian gaming. The Institute provides legal and policy
assistance and analysis to all interested individuals, governments, and
organizations, and conducting scholarly and practical research in the
area of tribal gaming.
The Institute adopts a unique ``team-based'' interdisciplinary
approach to legal and policy analysis of the complicated and technical
issues related to Indian gaming, including regulation and agency
authority, policy and socioeconomic impact analysis, tribal-state
compacting, Class II vs. Class III gaming, tribal law and sovereignty,
federal Indian law, labor relations, state referenda and voter
initiatives, the federal acknowledgment process, land-into-trust
applications, and ``off-reservation'' gaming.
About the Co-Directors
Kathryn R.L. Rand (J.D., University of Michigan School of Law;
B.A., University of North Dakota) is Floyd B. Sperry Professor of Law
and Associate Dean for Academic Affairs and Research at the University
of North Dakota School of Law. Steven Andrew Light (Ph.D., Northwestern
University; B.A., Yale University) is Associate Professor of Political
Science and Public Administration at the University of North Dakota
College of Business and Public Administration.
Rand and Light are internationally recognized experts on Indian
gaming, with over 30 publications and three books: Indian Gaming Law:
Cases and Materials (Carolina Academic Press, 2008), Indian Gaming Law
and Policy (Carolina Academic Press, 2006), and Indian Gaming and
Tribal Sovereignty: The Casino Compromise (University Press of Kansas,
2005). They have testified on Indian gaming regulation before the U.S.
Senate Committee on Indian Affairs in Washington, D.C., and were
featured on C-SPAN's Book TV. They frequently present their research
and perspectives on Indian gaming before diverse audiences, including
professional and trade groups, tribal and non-tribal civic
associations, academic conferences, and university endowed lectures.
Rand and Light have been quoted extensively by media throughout the
world, including the New York Times, Boston Globe, Miami Herald, Sydney
(Australia) Morning Herald, International Herald Tribune, San Diego
Union-Tribune, and Bloomberg Media. Both are members of the
International Masters of Gaming Law, and Rand is on the Editorial Board
of the Gaming Law Review. Rand and Light write a column, ``Indian
Gaming Today,'' that appears regularly in Casino Lawyer magazine, and
have written for Casino Enterprise Management and Indian Gaming
magazines. They blog on Indian gaming and the legal, political, and
public policy issues raised by the tribal gaming industry at their
website, Indian Gaming Today, at indiangamingtoday.com.
Selected Publications Related to Indian Gaming
Books
Kathryn R.L. Rand & Steven Andrew Light. 2008. INDIAN GAMING LAW:
CASES AND MATERIALS (Durham, NC: Carolina Academic Press)
Kathryn R.L. Rand & Steven Andrew Light. 2006. INDIAN GAMING LAW
AND POLICY (Durham, NC: Carolina Academic Press)
Steven Andrew Light & Kathryn R.L. Rand. 2005. INDIAN GAMING AND
TRIBAL SOVEREIGNTY: THE CASINO COMPROMISE (Lawrence, KS: University
Press of Kansas)
Book Chapters
Kathryn R.L. Rand & Steven Andrew Light. Forthcoming 2009. Morality
Policymaking and Indian Gaming: Negotiating a Different Terrain. In
Alan Wolfe & Erik Owens, eds., GAMBLING AND THE AMERICAN MORAL
LANDSCAPE
Kathryn R.L. Rand & Steven Andrew Light. Forthcoming 2009. Within
Boundaries: Indian Gaming in North Dakota and Beyond. In Pauliina
Raento & David Schwartz, eds., GAMBLING, SPACE, AND TIME (Reno:
University of Nevada Press)
Steven Andrew Light. Forthcoming 2008. Indian Gaming and State-
Level Constraints on Tribal Interest-Group Behavior. In Tracy A. Skopek
& Kenneth N. Hansen, eds., ENFRANCHISING INDIAN COUNTRY: THE POLITICS
AND ORGANIZATION OF NATIVE AMERICAN GAMING INTERESTS (Reno: University
of Nevada Press)
Kathryn R.L. Rand. Forthcoming 2008. State Law, State Politics, and
State Courts: Indian Gaming and Intergovernmental Relations. In Tracy
A. Skopek & Kenneth N. Hansen, eds., ENFRANCHISING INDIAN COUNTRY: THE
POLITICS AND ORGANIZATION OF NATIVE AMERICAN GAMING INTERESTS (Reno:
University of Nevada Press)
Kathryn R.L. Rand & Steven Andrew Light. 2007. North Dakota. In
William Thompson & Anthony Cabot, eds., INTERNATIONAL CASINO LAW (Reno:
Institute for the Study of Gambling and Commercial Gaming)
Journal and Law Review Articles
Kathryn R.L. Rand, Steven Andrew Light, & Alan P. Meister.
Forthcoming 2008. Questionable Federal ``Guidance'' on Off-Reservation
Indian Gaming: Legal and Economic Issues. GAMING LAW REVIEW 12
Steven Andrew Light. Forthcoming 2008. Indian Gaming and
Intergovernmental Relations: State-Level Constraints On Tribal
Political Influence Over Policy Outcomes. AMERICAN REVIEW OF PUBLIC
ADMINISTRATION 38
Kathryn R.L. Rand. 2007. Caught in the Middle: How State Politics,
State Law, and State Courts Constrain Tribal Influence Over Indian
Gaming. MARQUETTE LAW REVIEW 90(4): 971-1008
Kathryn R.L. Rand & Steven Andrew Light. 2006. How Congress Can and
Should ``Fix'' the Indian Gaming Regulatory Act: Recommendations for
Law and Policy Reform. VIRGINIA JOURNAL OF SOCIAL POLICY & THE LAW
13(3): 396-473
Steven Andrew Light & Kathryn R.L. Rand. 2006. The ``Tribal
Loophole'': Federal Campaign Finance Law and Tribal Political
Participation After Jack Abramoff. GAMING LAW REVIEW 10: 230-39
Steven Andrew Light, Kathryn R.L. Rand, & Alan P. Meister. 2004.
Spreading the Wealth: Indian Gaming and Tribal-State Revenue-Sharing
Agreements. NORTH DAKOTA LAW REVIEW 80(4): 657-79
Steven Andrew Light & Kathryn R.L. Rand. 2004. Reconciling the
Paradox of Tribal Sovereignty: Three Frameworks for Developing Indian
Gaming Law and Policy. NEVADA LAW JOURNAL 4(2): 262-84
Steven Andrew Light. 2004. The Third Sovereign: Indian Gaming as a
Teaching Case in Intergovernmental Relations and Public Administration.
JOURNAL OF PUBLIC AFFAIRS EDUCATION 10(4): 311-27
Steven A. Light & Kathryn R.L. Rand. 2001. Are All Bets Off? Off-
Reservation Indian Gaming in Wisconsin. GAMING LAW REVIEW 5: 351-63
Kathryn R.L. Rand & Steven A. Light. 2001. Raising the Stakes:
Tribal Sovereignty and Indian Gaming in North Dakota. GAMING LAW REVIEW
5: 329-40
Kathryn R.L. Rand & Steven A. Light. 1998. Do ``Fish and Chips''
Mix? The Politics of Indian Gaming in Wisconsin. GAMING LAW REVIEW 2:
129-42
Kathryn R.L. Rand and Steven A. Light. 1997. Virtue or Vice? How
IGRA Shapes the Politics of Native American Gaming, Sovereignty, and
Identity. VIRGINIA JOURNAL OF SOCIAL POLICY & THE LAW 4: 381-437
Prior Congressional Testimony
Kathryn R.L. Rand and Steven Andrew Light. Prepared Statement and
Oral Testimony, Oversight Hearing on the Regulation of Indian Gaming,
United States Senate, Committee on Indian Affairs (John McCain, Chair),
109th Congress, 1st Session (April 27, 2005).
Senator Tester. Thank you, Ms. Rand.
Chairman Dorgan, do you have comments?
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. [Presiding.] Senator Tester, first of all
thank you for filling in this morning as Chair. I was called
over to Senator Reid's office for a leadership meeting and it
just lasted longer than we had expected. So my apologies to the
witnesses. I have had a chance to review the testimony,
however, and I thank you again, Senator Tester, for being such
a significant part of our Committee.
Why don't you proceed with your questions, Senator Tester?
Senator Tester. Thank you. I will just say that any time
that you need to be away from the Committee for leadership
reasons, it is time well spent. So thanks.
I do have a bunch of questions. I guess I will just start
out with a pretty basic one to Mr. Hogen. You have heard the
testimony here today, as have I. Do you think that there is a
problem in communication between the NIGC and the tribes?
Mr. Hogen. Yes, there is a problem. We continually work on
it, as how can we better come up with a system that permits us
to get the views of 230 tribal governments across the Nation
when we confront an issue that we might act on that is going to
impact upon them.
We are currently engaged in consultation. We are going out
to the National Indian Gaming Association's meeting next week.
We have scheduled consultations with tribes that will be
attending there. We had more people ask for a slot than we had
time for, given the other demands of the National Indian Gaming
Association. So we have set up the overflow to go both to the
Great Plains Association's meeting in Minneapolis and out to
Reno for the National Congress of American Indians. So having
the time to do it all is one of the challenges.
Ms. Carlyle referenced a consultation we held out in the
Southwest and talked about our adoption of this facility
license regulation and how we put on our letter inviting to
talk about things that we wanted to talk about the status of
that. When we got there, we said it has already been adopted,
and that is true. That was the status of it. It was in the
transition period of going to the Federal Register.
Why did we do it when we did it? Well, we had a long
consultation period. We significantly modified the proposal
based on the consultation that we had received. But as you just
observed, Senator Tester, we are short a commissioner.
Commissioner Choney, the non-Republican, we wanted to get his
view. He was there with us through the formulation of that. He
was leaving on the 31st of December. You know, sometimes there
comes a time when you just have to get it done.
So we adopted that policy and we don't micro-manage the
environment for health and public safety. We merely ask tribes,
please tell us what your roles are and certify as you license
your gaming facility that you are in compliance.
Senator Tester. A couple of questions, and maybe I should
ask you if this is correct. Delia, Mr. Hogen cited the facility
regulations and your testimony said there was no time for
comment, there was no consultation. And I just wanted to make
sure that was correct. That's what you did say, right?
Ms. Carlyle. Yes.
Senator Tester. Mr. Hogen, I kind of feel like I am up here
as judge and jury, but the fact is that if there is one thing
that can get me fired up about Government quicker than anything
is lack of public opportunity for input. Sometimes the public
takes advantage of it; sometimes the public doesn't take
advantage of it. But if you presented those regs, I am sure
that you heard that there was unhappiness in the hinterlands
because the truth is as I heard it from everyone of these folks
that were testifying here today.
At what time do you step back and say, maybe we need to re-
think this and actively pursue more participation, knowing full
well that the input you might get may not be input you agree
with or the input you want to deal with, but that is the nature
of this beast. It is the nature of where I sit and it is the
nature of where you sit. It is probably the nature of where
every one of these guys sit, too, from their constituents.
So at what point in time do you step back and say, hold it,
be honest with ourselves, we didn't give enough time for public
input. Let's go back to the drawing board and let's do it
again.
I appreciate the fact that there is a point in time where
you have to get it done, but I never heard, with the exception
of one of them, that said the relationship overall is positive,
Mr. Patterson, that the relationship overall is positive with
the NIGC. I never heard a lot of glowing comments out of the
testimony here today.
Mr. Hogen. With respect to this example, and I think it
probably serves to exemplify how we often do this, we started
the process by writing a letter to tribal leaders saying the
Indian Gaming Regulatory Act says that you have to license your
gaming facilities, and it says if you are going to build and
operate a tribal gaming facility, you have to take steps to
protect the environment, health and public safety, but it
doesn't have a lot more detail than that, and we are thinking
about writing a regulation to kind of tie those together,
licensing and complying with those concerns.
And then we send our a draft of what we were thinking
about. We got a lot of criticism, particularly with respect to
the information we want to gather about the Indian lands where
the gaming facilities were located. I have forgotten exactly
the sequence, but then we published the regulation and we
received comments, and every time we went on one of these
consultation stops, that was on the agenda. At a point, we said
we have it wrong here.
Senator Tester. How many days from the time you announced
it until the time you adopted it?
Mr. Hogen. I would guess more than six months, but I don't
know for sure.
Senator Tester. Could you get that for me?
Mr. Hogen. I absolutely can, Senator.
Senator Tester. That is the first thing.
The second thing is, do you have enough people to do the
job adequately?
Mr. Hogen. I think yes, I think we do.
Senator Tester. Okay. How many people do you have working
for you?
Mr. Hogen. One hundred and four.
Senator Tester. You have 400 gaming enterprises, 230
reservations in 30 States, 104 people. I just want to make sure
that is fine.
When you receive the tribal comments, how do you utilize
them in your decision-making process? It shouldn't just be
tribal comments, any comments. How do you utilize those in your
decision-making process?
Mr. Hogen. We read them. We discuss them. And if we think a
step forward is going to be the adoption of the regulation, we
know that in the preamble that we publish in the Federal
Register with the final regulation, we have to say what they
are and why we agreed or disagreed with them.
Senator Tester. So do you get back to the people who put
forth their recommendations or the comments and say, you know,
we don't agree on this and here is why? Or is that not
something that you do?
Mr. Hogen. I don't know that we send a letter to each and
every author of the comments. During this ongoing consultation
process, we attempt to share our thinking, yes.
Senator Tester. Okay. Have you looked at other agencies? I
know that one of the individuals brought up IHS. I am not sure
that that is a good example. But have you looked at other
agencies to see how they do it? Is your consultation process on
rulemaking similar to what other agencies do?
Mr. Hogen. I believe it is. When we drafted the
consultation policy, we looked at every other Federal agency's
policy that we could get our hands on, including the Indian
Health Service. And we tried to put the best of all of those in
our policy.
Now, having it in the policy and doing it are two different
things.
Senator Tester. That is kind of your job, though.
Mr. Hogen. Absolutely, absolutely. So I think it is
important to bear in mind as you look at what IHS does,
providing health care to a greater or lesser extent for Indian
people, and what we do are qualitatively different. We are a
regulatory agency. We are the traffic cop. That is not a fun
job to have. We don't provide services in the same way the
Indian Health Service does. So what we agree on may have some
limits.
Senator Tester. Okay. I preface the letter that Senator
Baucus and I sent to you a while back. I am just curious. I
mean, why were tribes given one month to comment on the
economic impact and really no time to comment on the cost/
benefit analysis? I think just why, that is all. I think that
that kind of action really doesn't do much for me as a policy-
maker, period.
Mr. Hogen. One reason is we agreed absolutely with their
view of the cost/benefit study. First of all, it wasn't the
initial cost/benefit study. It was a modification of the cost/
benefit study based on our modification of the proposal which
we made because they made the comments. But if we adopt the
regulations, they will have a draconian effect on the dollars
generated by Class II gaming, but that doesn't necessarily make
them wrong. It is just that is a fact of life.
Senator Tester. I am not saying that. I am not saying
whether their comments are right or wrong. I am saying 30 days,
I don't know how many Class II operations are out there, but
you have a pretty big area you are taking on. And you obviously
felt 30 days was adequate, whether you agree with them or not,
just the comment period, the time, 30 days from your
perspective you felt was adequate?
Mr. Hogen. It was part of the package. We had four discrete
regulatory proposals. Part of the process was we decided we
better to the cost/benefit or the economic impact study.
Senator Tester. Consultation and listening to folks is a
big deal. The question is, as it is coming out of this meeting,
do you think it is going to take an act of Congress to make it
happen? Or do you think the way things are, and I am sorry I
haven't focused any questions to the rest of you guys, and I am
sorry that I have focused them all on you, Mr. Hogen, too, but
is it going to take an act of Congress to get this done? Or
will an act of Congress do any good?
Mr. Hogen. I think the proposed act of Congress that is the
House bill would do a disservice to us, the regulators who have
a job to do. Then we would need more people. We would need a
lot more lawyers because everything we would try to do would be
resulting in a lawsuit brought by one of the 230 tribes that
the regulations might affect.
But cut to the chase, Senator. The hue and cry for the
consultation concern has to do with what we have proposed in
our Class II regulations. You have heard from the tribes, they
are not listening. They haven't modified their proposal based
on what we have said. Nobody has asked us what is our point of
view, what changes have we made. But more importantly, why do
we take the position that we do? We take the position that we
do because that is exactly how we read the Indian Gaming
Regulatory Act.
I would be delighted if Congress would amend that and say
tribes can do whatever they want with bingo machines. But they
haven't. They said if they use electronic and electric
facsimiles of games of chance, then they are Class III. They
have to have a compact. I would be happy to explain that
further.
Senator Tester. I have taken too much time. I am going to
turn this over to Senator Dorgan. But I do want to make one
last comment in relation to that comment. It is your job to
communicate. It is my job to communicate. I have to tell people
what I am doing and you have to tell people what their doing.
And the truth is to say that do away with the rules so that we
don't have to regulate anymore I don't think was the intent of
NIGC.
So I think that what I heard at this Committee, and I came
in here with, well, with a little bit because of our letter we
sent off and we were denied on that extension, and I thought
that was kind of interesting and actually raised some red flags
there. But when I come into these meetings and I hear people
that are working on the ground saying nobody is listening to
us, I understand. I make decisions all the time that people
don't agree with, but I try to make sure that those statements
don't happen because it is your job and it is my job and it is
policy-makers and part of the bureaucracy that if we don't
listen to the people we are working for, we aren't going to be
there very long.
Senator Dorgan?
The Chairman. Senator Tester, thank you very much.
This is not only an interesting, but also a very important
issue. The gross revenues for Indian gaming have now reached I
believe $25 billion. They have grown very rapidly. I think all
of us understand the urgency and the need for effective
regulatory capability. I know there are very different views
about what form that should take from time to time. Mr. Luger
and I have had long discussions over time.
Maybe, Kurt, you would take the position we don't need a
National Indian Gaming Commission because the States have a
regulatory authority and the tribes have a regulatory
authority. So in most cases, you have two regulatory
authorities. Others would take the position that you must have
a national regulatory commission because some States say they
regulate, but in fact do not effectively regulate, and all you
have is the tribe, at which one level is not sufficient.
So this is very important. The one thing all of us would
share, I believe, is we want to make certain that Indian gaming
is able to continue free of scandal, free of difficulty, free
of any criminal element. We understand. We have watched areas
of gaming long before Indians had gaming in this Country. In
every area where there is billions of dollars of gaming, it is
a magnet for criminal elements, a magnet for fraud, a magnet
for stealing and so on.
So that is why we have a long history in this Country, and
just using Nevada as an example, of very aggressive, very, very
certain kinds of regulatory authority with respect to gaming.
It is different than many other enterprises.
Having said all that, I want to ask a couple of questions
with respect to the commission itself.
Mr. Hogen, I am trying to understand. We are told by some,
and I don't know this as a fact, that you have as much as $12
million in reserves. We have tried to get information from the
commission about that, excess fees. Do you have a reserve? If
so, how big is it?
Mr. Hogen. About $10 million, Senator.
The Chairman. And what do you do with the reserve?
Mr. Hogen. Well, we are, as I mentioned earlier, not funded
by taxpayers' dollars. Rather, we are funded by the fees we
collect. If we were a Department of the Interior, on the first
of October every fiscal year, we would get the dollars and we
would have them to spend. But we collect those dollars on a
quarterly basis. They come in over the year. So if we didn't
have some money in the bank, so to speak, we wouldn't be able
to pay the rent. So we need a little money there to tide us
over.
The Chairman. I understand that. But do you have a detailed
accounting of fees versus and operating budget?
Let me say to Senator Tester, I appreciate your chairing
this morning and appreciate your work on the Committee. I know
you have to run. I am going to continue to ask questions of the
panel, so thank you, Senator Tester.
Do you have an operating budget and an accounting of fees
that you can provide to the Committee? We have not seen that
and that would be helpful to us.
Mr. Hogen. We certainly do. I have it with me if you would
like it now, Senator.
The Chairman. And you say you have a reserve because I
think you make the point you need a reserve, given the
financial mechanism with which we finance the commission. What
size a reserve do you think is necessary?
Mr. Hogen. We are trying to draw down on the carryover
amount. It is probably excessive the way it is.
The Chairman. What size is the reserve you think you need?
Mr. Hogen. Probably $5 million would be closer to ensure
that there is no risk in terms of a smooth operation.
The Chairman. But the other way of looking at this, and the
reason I ask the question is these come from fees sent in by
tribes. So we need to work with you on an accounting here so we
understand what is your operating budget, what kind of a
reserve do you need. Because if you have $5 million in excess
fees, it probably ought to go back to the tribes if you don't
need them for operating purposes.
You have an Acting General Counsel, I understand, since
2002. Why has that position been only acting for now nearly six
years?
Mr. Hogen. The Chairman hires the General Counsel, and I
have been the Chairman since December of 2002. It is not my
first stint on the commission. I served as an Associate
Commissioner and for a little while as Vice Chairman for a
four-year period from 1995 to 1999. During that time, Penny
Coleman, who is our Acting General Counsel, was in the Office
of General Counsel. She came to NIGC from the Solicitor's
Office over at the Department of Interior when IGRA was
enacted. So she is kind of the institutional memory with
respect to a lot of these things.
Penny is a career employee, not a political appointee,
which she would be if she were the General Counsel of the NIGC.
I found that her style, her knowledge, her experience served
the commission very well. Rather than have her risk her career
status and have her come on board and be political and then
maybe have no place to go, it worked fine, in my experience, to
have her serve as our Acting General Counsel. I am glad that we
have done it that way.
The Chairman. Well, that is a curious thing, though, isn't
it? Think of how many places in our government we would have if
people said, well, I don't want to assume the risk of actually
assuming the office. So we would have a whole government full
of acting people. Would they have the responsibility and the
authority? You do what you need to do on that, but I don't
think that is necessarily a good way to handle that
responsibility. You have a specific post for a General Counsel,
and to have an Acting General Counsel for six years makes
little sense to me.
I am going to ask you a couple of other questions, and then
I am going to have some questions of the rest of the panel.
I think that you need to publish some kinds of financial
statements so that the Congress and also the tribes who are
funding the commission understand what is happening. You don't
now do that. Is there a reason you don't do that? And will you
be doing that?
Mr. Hogen. Well, we do it, Senator, in part in the
appropriations process. We get, like every other Federal
agency, what is referred to as the green book, where we break
down the dollars. One of the reasons that is not particularly
informative with respect to us is we are so small that the
million-dollar increments that they use there makes it harder
to get a good picture.
When I go to tribal gaming association meetings, I will
display on a PowerPoint this is what we spend for compensation;
this is what we are spending for rent and travel; these are our
plans for the coming year, and so forth. But your advice is
well taken. We will not only provide you, but the Indian tribal
constituency that we serve with more of that information.
The Chairman. Let me suggest you do a yearly report so that
it is not just when you go out and make a presentation. I am
not suggesting you are hiding anything, far from it. But I
think those that are financing you through fees should
understand what your financial report is and shows. We would
like to see that as well, so that would be something I would
recommend.
Let me now talk just a bit about the issue of consultation.
I understand this is kind of a unique situation. First of all,
consultation, as I have said as Chairman of this Committee, is
critically important. That is the hallmark, in my judgment. Our
government needs to consult with tribes. I think the Indian
Gaming Commission needs to consult with tribes. Consultation is
critically important.
Obviously, you know from the testimony at this hearing and
you know from other circumstances that there are discordant
voices out there who feel you have not engaged in the
consultation they would like. You say, well maybe that is
because they don't like the result of some of our rulings.
Maybe so, but whatever your rulings, it seems to me the issue
of consultation is a continuum that I think is required of you
and should be expected of you by us and by the tribes.
Let me ask Ms. Rand. You are at the law school, correct?
Ms. Rand. That is correct.
The Chairman. Tell me about how you see the consultation as
you know it exists here or doesn't exist here, either one, with
respect to consultation in other circumstances with other
Federal entities and jurisdictions.
Ms. Rand. Senator, I think that we would suggest that
government-to-government consultation with tribes should be
distinct from the ordinary public notice and comment period
required by Federal law; that it should be uniquely tailored to
tribes' status as governments and their relationship with the
Federal Government.
We brought up the IHS policy for two purposes. First, that
there may be a more concrete way to address some of the issues
either in the NIGC's own policy or through a directive to the
NIGC. But also as Senator Tester implied, that what is promised
on paper may not be implemented in practice. We think that that
might be a very important issue for the commission or the
Committee to grapple with.
The Chairman. I am not sure the IHS is necessarily a good
model, as we have noticed before. If you want to take a look at
an institution that pays very little attention to consultation,
look at the Indian Health Service. I have a couple of
investigations I have requested of them precisely because
instead of consulting with anybody, they do whatever they damn
well please. They are shifting incompetents around to various
places in the Country instead of getting rid of the
incompetents.
But the issue of consultation with respect to a regulatory
authority and those that would be regulated I understand is
different and interesting to discuss, but nonetheless still
required. What are the conditions under which it is required
and how should it be conducted? That is what I think we are
trying to understand.
Mr. Luger, you discussed this in your testimony. I probably
spoke for you when I said you would probably prefer that we not
have a National Indian Gaming Commission. Was I accurate about
that?
Mr. Luger. Fairly accurate. I think it has its role. I just
think that the role as it is currently taking place is
bureaucratic. Phil is in a tough position. Phil and I are
friends so it is not a personal thing, but they are just moving
boxes around, Senator. We have regulatory problems out there.
Any time, for example--and I will be very brief--the
Standing Rock Sioux Tribe calls up NIGC and thinks that they
may have something wrong in their system. You are having a
punitive conversation automatically. You can't have a
confidential conversation saying I think maybe this might be
it, but I am not sure, but you have the expertise and I want
you to come in and look at it.
Standing Rock just subjected themselves to punitive action.
I cannot stress this enough. Again, it is not a personal attack
on NIGC. I would say this with any agency that any entity has
to deal with. Bring in some experts. You have too many P.E.
majors working for him and trying to help us in the gaming
industry. I am generalizing.
The Chairman. We are not talking about Class III today. We
are talking about Class II, because we are just talking about
consultations here.
But with respect to Class II gaming, if the NIGC received a
complaint and they said the Standing Rock Reservation is
absolutely defying regulations, they are going to call you.
They are going to send people in. They have a right, it seems
to me, in that circumstance to say, here are the regulations
and you at this point are not in compliance. So they are purely
regulatory and everyone who is aggrieved by that would feel it
is all punitive, but that is the role of a regulator, number
one.
Number two, in the circumstance you just described, when
you call the commission, you ought not when you call the
commission get some notion there is some punitive voice on the
other end of the line. That is a culture issue with the NIGC. I
don't know whether that is true or not, but you say it is true.
Mr. Hogen, what about that?
Mr. Hogen. I think the record will reflect almost without
exception whenever we learn, whether it is by the tribe telling
us or some other, that there is a problem, the first thing we
do is say let's fix this. Let us help you fix this. And only at
the last resort do we end up with a notice of violation that
might result in a fine, or in a worst-case scenario result in
closure.
But Kurt is right that there are some tensions there in the
relationship. If you hire your lawyer and you go in and say I
want to ask you whether this is wrong or not, you hope he
doesn't have to turn around and tell the FBI. We are supposed
to provide this technical assistance, which I think we do a
pretty good job of, but we also wear the traffic cop hat. We
have to do that.
But the practice as borne out is very seldom do we--we have
never issued a notice of violation for failure to adhere to the
minimum internal control standards. We have always gotten it
fixed, sometimes by way of an agreement, a kind of settlement
agreement.
The Chairman. Let me ask Ms. Carlyle, you are from Arizona?
Ms. Carlyle. Yes.
The Chairman. Arizona is reputed to have a fine statewide
Indian gaming regulatory strata. Is that correct?
Ms. Carlyle. I would be a little biased, but say yes.
The Chairman. You have a pretty substantial statewide
effort with respect to Indian gaming regulatory practices.
Ms. Carlyle. Yes, we do, Senator. I am very proud of that
process.
The Chairman. If you pick up the phone and call the Nevada
folks and say, look, we think we have a wrinkle here, is it
different than calling the NIGC in terms of consultation from
you to them?
Ms. Carlyle. Nevada?
The Chairman. Yes.
Arizona, I am sorry.
Ms. Carlyle. That is why I looked, Nevada.
[Laughter.]
The Chairman. Don't call Nevada. Call Arizona.
[Laughter.]
Let's assume that you pick up the phone and you call the
regulatory authorities in the State, as opposed to calling the
Indian Gaming Commission. Do you detect a cultural difference
there?
Ms. Carlyle. No.
The Chairman. Okay.
Ms. Carlyle. I think based on the process that we have
started that has been in Arizona, that relationship is
understood, I want to say, so there is not a problem in picking
up the phone and saying there could be a problem.
The Chairman. I see.
Mr. Patterson, you are from Tennessee?
Mr. Patterson. Oneida Indian Nation, Upstate and Central
New York.
The Chairman. I see. The organization is in Nashville.
Mr. Patterson. Yes, Senator.
The Chairman. How many people does the State of New York
employ to be involved in the State regulatory process of Indian
gaming? Do you know?
Mr. Patterson. Mr. Chairman, I do not have that answer, but
I would be glad to research that.
The Chairman. Would you submit that?
Mr. Patterson. Yes, sir.
The Chairman. And Mr. Mathews, you are here accompanied by
Mark Van Norman. He is an acquaintance of this Committee. He
has testified here a good number of times. You heard Mr. Luger
talk about the issue of a tribe seeking information from the
NIGC, or at least going to the NIGC, suggesting they have an
issue. Do you have experience with that at all?
Mr. Mathews. Yes, we do.
The Chairman. Tell me your experience.
Mr. Mathews. I would just like to say this, that for our
own tribe, the Quapaw Tribe of Oklahoma, we did have an issue
several years ago, that the NIGC brought to us, with a
management contract and a person that was working with us. I
have to say that through the efforts of the NIGC, along with
our tribe, we ended up getting rid of this guy. It was a very
bad situation. We learned a lot. We have become a much stronger
tribe with our regulatory issues. We have a very, very strong
regulatory body, and it is due to the assistance that we got
through the NIGC. We are very proud of that fact.
On the other hand, what they are doing now, we do have a
problem with, in the publication of these four regulations,
with the consultation that we don't feel is thorough, that we
feel is a rush to judgment. It is a pre-determined
consultation. As Phil has even said, consultation does not mean
agreement, but when you have so many tribes in Indian Country
that are against what they are doing and the way they are doing
it, there has to be some red flag thrown up there.
We think they should consider cost/benefit alternatives to
their current approach. They should reopen these regs for
comments, along with the cost/benefit analysis. It is funny
that the regulators expect us to comply with some of their
rules when they don't even comply with their own. So we have
issues there.
But it is very obvious that Indian Country wants
regulation. We have 3,300 regulators across the Country. They
spend an enormous amount of money on regulations. It is very
important to keep out those bad elements, to make sure that we
are providing a safe environment for our patrons and our
employees. By doing that, we feel that we have to have strong
regulations.
The Chairman. Mr. Hogen, the commission regulations on
Class II, you have heard today concern and you have heard that
concern before about lack of consultation. My understanding is
that the National Indian Gaming Commission authorized a study
to examine the potential impact of the proposed regulations.
According to at least one of the comments we received, the
commission determined that 57 percent of the Class II games in
play would be considered unlawful if the proposed
classification standards were adopted in the current form. Is
that correct?
Mr. Hogen. Yes. I consider them unlawful right now.
The Chairman. You did an economic impact. When did you
launch that economic impact study? Was it through a consultant?
Mr. Hogen. Yes. We hired a consultant who punches a lot of
Indian gaming numbers. When we first published, I think that
was in May of 2006, we published some regulations. We hired the
expert to do the study. Then after we got those results and we
heard comments, we withdrew that proposal. We then supplemented
it with a pared-down version and had a renewal or an extension
of that impact study done to reflect the changes.
The Chairman. Which of the practices will be shut down
under the Class II regulations?
Mr. Hogen. One-touch bingo machines primarily. However, as
a result of the comments we received, the concern tribes
expressed about the economic impact and so forth, we put in--
and understand these are just drafts. We haven't done a thing
yet. They are just a draft. But we put in a five-year
grandfather clause. We said we know it is going to be a tough
economic impact, so to soften that blow, the useful life of
this equipment is probably about five years, use them until
they are used up, and then comply.
The Chairman. This Committee is not in the business of
trying to do your work or look over your shoulder and determine
whether you are making judgments that are appropriate. Those
are judgments you make. But the Committee is concerned, as
Senator Tester has indicated, that in the conduct of the work
of the National Indian Gaming Commission, that consultation
exists as between the tribes and the commission so that there
is some mutual understanding of what is happening and what are
the consequences.
You have in your own commission adoption going back to 2004
government-to-government tribal consultation policies. So those
exist. Do you feel like you have followed those policies
sufficiently with respect to the Class II proposed rules,
number one? And number two, given the concern by tribal
authorities, do you feel that even if you did follow them, do
you feel those policies are sufficient so that tribes feel like
you have consulted adequately?
Mr. Hogen. Obviously, they do not feel we have consulted
adequately. I think we have made a really good-faith effort,
Senator, to do that. We had four different versions of these
proposals on our website to talk about with tribes before we
actually put them in the Federal Register. When we were about
ready to do that the first time, the Justice Department came
along and said to us, these aren't tough enough; you can't do
that.
Thereafter, we published another set. We met with I think
about 70 tribes on the record government-to-government
consultation. If you look on our website you will find the
transcript of each one of those 67 or 70 meetings. We asked
tribes to send us their best and their brightest in terms of a
tribal advisory committee, tribal regulators and so forth, to
help us with this.
Did we agree with everything they told us? No, we disagreed
with some of it, but we sure learned a lot and we did make lots
of changes. If you have the time, I could enumerate some of
those changes. But we have extended the comment period numerous
times, sometimes to accommodate comment on the economic impact
study and so forth.
But Senator, I am going home some time soon. I am going
back to the Black Hills, and when you hear that hurrah out in
Indian Country, you will know that has happened. But the thing
is, I have to get this done. I have been at it now for more
than five years. It is time to draw this bright line so the
industry, the manufacturers, the tribes, the States, can know
what is going on.
Right now, there is confusion. That is not good for the
industry, and if and when it appears that there is a loss of
the integrity in the system, then the goose that laid the
golden egg will be at risk. I don't want to be responsible for
that. I want to leave it with some clarity.
The Chairman. I believe there should be a bright line, and
I think that bright line is something that would be embraced by
tribes. There needs to be definition. If you don't have
definition, there is chaos. This is, as I said, a $25 billion
growing industry. It is very important that the reputation of
this industry be in tact, that there be effective levels of
regulation that give all of us the assurance that this gaming
and the stream of income from the gaming that can improve and
invest in people's lives will be able to continue.
But that will only happen if we are free of scandal and
free of the kind of criminal element that always tries to
attach to any center of gaming anyplace in this world. We have
plenty of experience with that.
Mr. Luger?
Mr. Luger. Mr. Chairman, just indulge me for 30 seconds.
One, I just want to leave a note that I don't have quite
the gloom-and-doom feeling that Phil does. I don't know if our
dateline should be predicated upon his retirement back to the
Black Hills. But on a separate note, and this is a pledge that
I give to my folks at home, I cannot tell you now grateful and
appreciative I am of you and our North Dakota and South Dakota
delegation for what you did for Woodrow Wilson Keeble.
Everybody in this room knows about it. I love and honor you
for that. That was something that needed to be done. It was a
sore spot in Indian Country. I personally invite you at that
third week in May we will have Woodrow Wilson Keeble Day, and
we would be honored if you would be a part and master of
ceremonies at that. Senator Daschle will be there. I have so
much respect for the work that you did with that that I had to
make that comment today.
From the Standing Rock Sioux Tribe, Sisseton-Wahpeton,
Ayata, the Lakotas and the Dakotas, I want to thank you very,
very much.
The Chairman. Mr. Luger, thank you very much. I was honored
to be a small part of trying to rectify a mistake that was made
many, many years ago of not giving the Medal of Honor to
someone who had earned it, deserved it, and should have
received it except for lost paperwork. It was an emotional
moment to be in the East Room of the White House and have the
President present to the relatives of Woodrow Wilson Keeble the
Medal of Honor that he so richly deserved.
This was a very courageous, very brave American who risked
his life many times and received a number of Purple Hearts,
Silver Star, Bronze Star, the highest honors this Country could
bestow on a very brave soldier. Many years after his death, he
finally received the Medal of Honor.
I regret that his wife, Blossom Keeble, was very hopeful
that this would be done before she passed, but it did not
happen. She passed away last summer. But I know that there is
great pride in Indian Country for this Medal of Honor.
Let me thank all of you for being here.
Yes, Ms. Carlyle?
Ms. Carlyle. Senator, if I could real fast, and I don't
want to touch on Class II because we have a limited number of
that in Arizona, but my biggest concern again, well really, I
wouldn't want to be in NIGC's shoes. So I have to give them
kudos for stepping up to the plate and taking on that
responsibility.
But I truly feel that meaningful consultation, not just
sitting across the table, can occur. If it can happen in
Arizona and other areas, it can happen with the NIGC. My
tribe's biggest concern was the rush on the facility
regulations that was placed on tribes. When we talk about
meaningful consultation, this is a bit of information that the
Arizona Department of Gaming employs 111 people, and they have
a $15.6 million budget. I will say that Arizona and the State,
the collaboration is great.
I always like to end it with saying that we have our
respective meetings. It may be a slow process, but we do come
to a compromise which I was told that when both sides are
equally unhappy, then we have met a true compromise. I think
that is how in Arizona we try to work on that basis somewhat. I
would like to see that with NIGC because the time-frames given
to tribes is not enough. It is not adequate. My counsel only
meets twice a month, but we have to call specials if we have
deadlines. Then we have to include our regulators, too, to make
sure that our comments are appropriate or at least heard and
considered.
Thank you.
The Chairman. Well said.
Mr. Patterson?
Mr. Patterson. Mr. Chairman, I would just like to leave
with the thought to say that my mother always said how naive I
was, but I have a glass in front of me and I say that it is
half full, not half empty.
[Laughter.]
Mr. Patterson. I believe that NIGC and USET share the same
common goal to ensure that Indian gaming operates in a manner
which benefits and protects tribal interests in that respect. I
also believe that a lot of hard work has already been done to
develop consensus positions. I think that is a great place to
re-engage and build consensus.
As far as consultations, sir, my people have had a long
history of consultation, beginning in the 1600s and the Two-Row
Wampum Treaty that my people negotiated with the Europeans when
they first arrived. We have been in consultation for 400 years,
and I support meaningful dialogue.
Thank you, sir.
The Chairman. That is an interesting way of describing the
fact that you know what consultation is when you see it.
Mr. Hogen, let me thank you for chairing the commission. We
have sometimes tensions about various regulations and things,
but our Committee has enjoyed working with you and will
continue until you depart.
I do hope, and I say this to the Indian Health Service and
BIA and every organization, I hope that everyone understands
the need for effective communications. The issue of
consultation--consultation is more than a word. It is an
attitude and it is a culture. It is very important to remind
every agency and every organization that works with tribes
about the meaning of consultation.
So take that from this hearing, and understand that we want
you to succeed. It is in our interest that the NIGC succeed. I
think it is in the tribes' interest for you to succeed in a way
that makes them a significant part of the future of regulation
effective--and I underline the word effective--effective
regulation of Indian gaming. All of us have a big stake in the
effective regulation of Indian gaming.
This Committee will certainly be considering these issues
going forward.
Ms. Rand, let me also say to you something that I think is
important to be said. We have tried to build at the University
of North Dakota a very effective Indian Studies Program in a
wide range of areas, Indian doctors, Indian psychologists,
Indian lawyers--a wide range of areas. And I think we have done
that over a long period of time very successfully. I am
enormously proud of those programs and proud that you are able
to come from those programs and be a part of the hearing here
in Washington, D.C. So I welcome you.
Ms. Rand. Thank you.
The Chairman. Mr. Luger?
Mr. Luger. Senator Dorgan, I know there is a rumor out
there that I have few friends, but Kathryn is one of them.
[Laughter.]
The Chairman. Let me thank all of you for being here today.
This Committee will, as I said, consider all of the issues we
have received today.
The hearing is now adjourned.
[Whereupon, at 11:55 a.m., the Committee was adjourned.]
A P P E N D I X
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