[Senate Hearing 107-166]
[From the U.S. Government Publishing Office]



.                                                       S. Hrg. 107-166
                      INDIAN GAMING REGULATORY ACT
=======================================================================


                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   ON

OVERSIGHT HEARING ON THE IMPLEMENTATION OF THE INDIAN GAMING REGULATORY 
                                  ACT

                               ----------                              

                             JULY 25, 2001
                             WASHINGTON, DC










                      INDIAN GAMING REGULATORY ACT










                                                        S. Hrg. 107-166
                      INDIAN GAMING REGULATORY ACT
=======================================================================




                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   ON

OVERSIGHT HEARING ON THE IMPLEMENTATION OF THE INDIAN GAMING REGULATORY 
                                  ACT

                               __________

                             JULY 25, 2001
                             WASHINGTON, DC
















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                      COMMITTEE ON INDIAN AFFAIRS

                   DANIEL K. INOUYE, Hawaii, Chairman
            BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska              KENT CONRAD, North Dakota
JOHN McCAIN, Arizona,                HARRY REID, Nevada
PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
CRAIG THOMAS, Wyoming                PAUL WELLSTONE, Minnesota
ORRIN G. HATCH, Utah                 BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma            TIM JOHNSON, South Dakota
                                     MARIA CANTWELL, Washington

        Patricia M. Zell, Majority Staff Director/Chief Counsel
         Paul Moorehead, Minority Staff Director/Chief Counsel


                                  (ii)














                            C O N T E N T S

                              ----------                              
                                                                   Page
Statements:
    Blackwell, Sharon, deputy commissioner, Indian Affairs, 
      Department of the Interior.................................     9
    Burris, Tracy, executive director, Oklahoma Gaming Commission    49
    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, 
      vice chairman, Committee on Indian Affairs.................     4
    Deer, Montie R., chairman, National Indian Gaming Commission.    12
    George, Keller, president, United South and Eastern Tribes...    36
    Homer, Elizabeth, commissioner, National Indian Gaming 
      Commission.................................................    15
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman 
      Committee on Indian Affairs................................     1
    Johnson, Tim, U.S. Senator from South Dakota.................     7
    LaSarte, David, executive director, Arizona Indian Gaming 
      Association................................................    45
    McCain, John, U.S. Senator from Arizona......................     6
    Poust, Teresa, commissioner, National Indian Gaming 
      Commission.................................................    15
    Skibine, George, director, Office of Indian Gaming 
      Management, Department of the Interior.....................     9
    Stevens, Jr., Ernie, chairman, National Indian Gaming 
      Association................................................    32
    Tucker, Daniel, J., chairman, California Nations Indian 
      Gaming Association.........................................    42
    Van Norman, Mark, executive director, Indian Gaming 
      Association................................................    32

                                Appendix

Prepared statements:
    Blackwell, Sharon............................................    60
    Burris, Tracy................................................   534
    Deer, Montie R. (with attachments)...........................    64
    DesRosiers, Norman H., commissioner, Viejas Tribal Gaming 
      commission (with attachments)..............................   507
    George, Keller (with attachments)............................   102
    LaSarte, David...............................................   512
    McCain, John, U.S. Senator from Arizona......................    59
    Ohr, Bruce G., chief, Organized Crimes and Racketeering 
      Section, Criminal Division, Department of Justice..........    62
    Stevens, Jr., Ernie (with attachments).......................    77
    Traverso, Robert, interim executive director, California 
      Gambling Control Commission (with attachments).............   538
    Tucker, Daniel, J............................................   500
Additional material submitted for the record:
    An Analysis of the Economic Impact of Indian Gaming in the 
      State of Arizona...........................................   523
    Investor's Daily, article....................................   782
    Letters......................................................   785















                      INDIAN GAMING REGULATORY ACT

                              ----------                              


                        WEDNESDAY, JULY 25, 2001


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:29 a.m. in 
room 216, Hart Senate Office Building, Hon. Daniel K. Inouye 
(chairman of the committee) presiding.
    Present: Senators Inouye, Campbell, McCain, Johnson, and 
Conrad.

 STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII, 
             CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    The Chairman. The committee meets this morning to receive 
testimony on the implementation of the Indian Gaming Regulatory 
Act. This is the first in a series of hearings that the 
committee has planned to explore matters relating to gaming. 
Our next hearing will focus on how other forms of gaming are 
regulated in the various States.
    But today's hearing is on the Indian Gaming Regulatory Act. 
As the primary sponsor of the act in the Senate, I think it is 
important that as we consider the information we will receive 
today, that we have some context in which to place it.
    Some of you may recall 14 years ago the United States 
Supreme Court handed down its ruling in a case known as 
California v. Cabazon Band of Mission Indians.
    As we all now know, the Court found that notwithstanding 
the delegation of authority to various States, including the 
State of California, to exercise jurisdiction over certain 
enumerated crimes on Indian lands, because the State of 
California did not criminally prohibit gaming, the State could 
not enforce its gaming laws on Indian land.
    Thereafter, I think it is fair to say that considerable 
pressure was brought to bear on the Congress to address the 
Supreme Court's ruling. So we began the process of developing 
legislation in consultation with tribal governments, the 
States, and representatives of the Government of the United 
States.
    We developed draft legislation and held hearings to receive 
testimony on that legislation. Because some of you may not know 
what was going on back then, you may be interested to know that 
the Administration, the Government of the United States, was 
adamantly opposed to any Federal presence in the regulation of 
Indian gaming. That was made very clear to all of us.
    This opposition was based, in part, on the perception that 
except for those States in which all gaming was criminally 
prohibited, meaning the States of Utah and Hawaii, most if not 
all of the States had extensive regulatory systems in place 
that had the capacity to assume the responsibility for the 
regulation of Indian gaming.
    We knew that, for the most part, tribal governments did 
not, at that time, have comprehensive regulatory systems in 
place. So one of the most basic features of the act, the tribal 
State compact, was premised upon the anticipation that States 
and tribes could enter into negotiations, which would include 
discussions of how tribal gaming could be regulated.
    It was anticipated at that time that at least initially, 
the States would share their experience with regulating gaming 
with the tribes, and that the tribal governments could draw 
upon the States' regulatory framework in developing a tribal 
regulatory structure.
    It was thought that the Tribal State Compact would reflect 
a transition over a period of time, from regulation that was 
predominately a State regulation, to either a shared regulatory 
structure, or to tribal regulation, exclusively.
    The act left it up to each State to decide and each tribe 
to decide. But as it turns out, that presumption, the 
presumption that most, if not all, of the States had extensive 
regulatory systems for gaming similar to those that existed in 
Nevada and New Jersey, was not born out in fact.
    Because we had a 200-year old history under our 
Constitution, which clearly established that State laws did not 
apply in Indian country, it was understandable that tribes were 
adamantly opposed to State regulation of gaming.
    But we had the Administration on the other side; an 
Administration that was dedicated to the protection of States' 
rights; and they were equally as opposed to any Federal 
regulation of gaming.
    So as with most legislation, we ended up striking a 
balance. So we established a National Indian Gaming Commission 
to serve along with tribes as the regulators of tribal gaming.
    At that time, we simply could not project and did not 
anticipate the growth in the gaming industry generally, and the 
significant expansion of Indian gaming, in particular.
    So the Commission's responsibilities were tailored to what 
we knew at that moment. At that moment, we did not even know 
whether there would be enough Indian gaming operations 
nationwide to warrant having three full-time Commissioners at 
the Commission.
    We also did not know how technology might overtake the 
definitions of class II and class III gaming that are contained 
in the act. We thought tribal gaming operations on different 
reservations might be linked up via satellite; and that as long 
as the player was on Indian lands, and that bingo was conducted 
on Indian lands, then the regulatory framework of the act could 
take this into account and be consistently applied.
    Perhaps the most challenging issue was what law would be 
applied to determine what we now call the scope of gaming. 
There was little Federal law on that subject. There was the 
Johnson Act prohibiting gambling devices on Federal lands, and 
accordingly on Indian lands. But there was no Federal law that 
was as specific as the laws of Nevada or New Jersey, and once 
again, the Administration was opposed to having such a Federal 
law enacted.
    Tribal laws on gaming were sparse, at best, and with rare 
exception, did not address what we think of as casino-type 
gaming.
    All that was left were the laws of the States, and again, a 
presumption was made that all of the States had laws on gaming. 
As it turns out, that was another erroneous assumption; because 
as years passed and litigation ensued over the scope of gaming, 
and the Congress was pressed to amend the act, this committee's 
analysis of the laws of the 50 States found wide variation in 
those laws, where such laws existed.
    In some States, there was just a general prohibition 
against gaming. Over time, certain exceptions were carved out 
of that prohibition, such as the conduct of gaming for 
charitable purposes. That was typical of many States' laws.
    In more recent times, exceptions from the general 
prohibition of gaming and State laws were made for State 
lotteries. But in each State the laws differed, so the generic 
approach that we took in the Indian Gaming Regulatory Act, 
authorizing the States and tribes to negotiate over class III 
gaming activities that are located in a State that permits such 
gaming for any purpose by any person, organization, or entity, 
seemed the most fair way to assure that tribal governments were 
not foreclosed from doing what others in the State were 
permitted to do.
    The 11th amendment law was not well developed in 1988. So 
Justice Department attorneys tell us now they could not have 
advised the committees of Congress that the remedy that the act 
set up for addressing an impasse in negotiations between a 
tribe and a State might later be found to be unconstitutional.
    Having recounted this history, one might well ask how this 
act has worked out at all, given all that we did not know then 
and all that we do know at this moment. That is what we are 
here today to examine.
    How is the Indian Gaming Regulatory Act working? Is it 
working at all? How many tribal governments have opted to 
conduct gaming on their lands; and perhaps more importantly, 
how many have really benefited from gaming?
    Reading the front pages of our papers, one would get the 
impression that all of the tribes have millionaires. We know 
that some have done very well; that is true. But how many 
tribal gaming operations have failed? We know that there have 
been some that are only marginally profitable or which have had 
to close.
    Are there disincentives in the act or obstacles to 
successful development in the act that have caused some tribal 
gaming operations to fail?
    Given what we know today about the expansion of the tribal 
gaming industry, is this little commission that the law 
established adequate to address the growth of the industry?
    With the advent of lotteries and river boat gaming and 
such, have States subsequently developed more comprehensive 
regulatory structures, and do these State systems serve the 
tribes well, or not at all?
    As has been asserted in the past, is tribal gaming overly 
regulated? Are there adequate protections in place to assure 
that those who may be injured on tribal lands have legal 
recourse for their injuries?
    These are some of the difficult and often contentious 
issues that that committee's ongoing oversight of the act has 
raised.
    What we do know is that Indian Gaming Regulatory Act has 
given rise to the development of good working relationships 
between State governments and tribal governments; relationships 
that in many cases did not exist, prior to the enactment of the 
Indian Gaming Act.
    Across the country, tribal governments and State 
governments have learned to work together to address mutually 
shared problems, and where tribal gaming has been successful, 
State and local economies have thrived, also. Let there be no 
mistake about that. Many non-Indian communities have benefited.
    Whether or not the Congress decides to revisit this act to 
bring it up-to-date with the contemporary realities of gaming, 
I do hope that we have established a model that will defend the 
future of tribal/State relations. Because overall, that model 
has worked well, and has shown that governments can help one 
another in important and significant ways.
    With those words, I apologize for the length of my 
statement, but I felt that some foundation had to be set before 
we began receiving testimony.
    Now it is my pleasure to call upon the vice chairman.

 STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM 
      COLORADO, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    Senator Campbell. Thank you, Mr. Chairman, and I apologize 
for being a little bit late. I did not hear your first few 
comments, but I am always interested to hear what the 
experience of many, many years in the Senate has taught you, 
particularly in dealing with Indian problems. Thank you for 
doing a series of hearings on the subject of Indian gaming.
    I was on the House side when the Indian Gaming Regulatory 
Act was signed into law in 1988. In fact, I was on the 
committee of jurisdiction, as you know, and worked on it very 
hard with then-Chairman Mo Udall, who was always a great friend 
of the Indian people.
    I think gaming tribes have been very and rightfully vocal 
about the economic boon it has produced for some, but certainly 
not for all of them. Some tribes have done very well. They are 
usually the ones that are blessed by geography and near an 
urban center.
    Some have been able to provide jobs and certainly some 
problem solving for their people, but have not gotten to the 
point, as some of the tribes, with their huge per-capita 
payments; and, in fact, as you mentioned, a few of them have 
gone broke.
    But I do not think most tribes now believe that Indian 
gaming is the total solution for all the economic problems. It 
is one of the pieces, and it has given them some new 
opportunities, and I certainly have been a supporter of Indian 
gaming.
    There have been some well documented studies that have 
shown the positive impacts that Indian gaming has had on tribal 
communities, as well as local communities.
    I happen to live, as you know, Mr. Chairman, about 200 
yards from a casino on the Southern Ute Indian Reservation. I 
know that their success has been similar to the successes of 
many tribes in many areas, in that they have provided probably 
half the jobs in that casino for non-Indian people who live 
around the area.
    So it has been good for the whole community, generally. 
There have been a few problems, but I think generally it has 
been very good.
    But with the growth of casinos, with more and more coming 
on line, and more and more tribes talking about opening them, I 
very frankly think the day will come when the spendable money 
will be divided and fewer and fewer tribes will be able to 
enter the gaming market.
    But in 1988, who would have ever known that Indian Gaming 
would grow to what it is now, a $10-billion industry; and 
certainly, the recent events in California will mean that there 
is going to be greater expansion. So I think it is really time 
to re-evaluate our role as the Federal Government, and so I 
wanted to commend you on these hearings.
    It is true that revenues have increased significantly. It 
is also true that when we passed IGRA, it was not the Congress' 
intent to have the Federal Government regulate class III 
gaming. It was our intent to strictly limit the Federal 
activity in that arena.
    But as you did allude to, we did have to make some 
concessions to States and we did the best we could. Our intent 
was to make local government--the States and the tribes 
responsible for the conduct and regulation of class III gaming.
    In the past several years, I have become increasingly 
troubled by what I see as a growing gap between the duties of 
the National Indian Gaming Commission, as laid out in IGRA, and 
its expansion and its mandate. I base these comments in part on 
letters we have gotten from tribes and comments from tribes, 
who feel that very often, they are not being consulted with, as 
the Commission grows.
    I want to tell you, Mr. Chairman, I am second to none in my 
commitment to a vigorous Federal regulatory presence in Indian 
gaming; but I am also aware that tribes are regulated by the 
Federal Government, State government, and their own regulatory 
commissions.
    I am not quite sure where we are going with the growth of 
the Commission. But I would remind the committee that when I 
was the chairman of this committee and with Senator Inouye's 
help, I proposed the only change ever made to IGRA, and that 
amendment was to increase the fees to the Commission by 400 
percent, from $2 million to $8 million. The increased fees were 
to be used by the Commission to fulfill its duties as defined 
by IGRA.
    I know that the Commission now receives 100 percent of its 
operating fees from Indian casinos. As you know, they are 
interested in doubling that amount, from $8 million to $16 
million, which would also come from fees assessed on Indian 
casinos.
    I am not quite sure about the direction or the scope or the 
transparency of what the Commission is going, if the doubling 
to $16 million would be justified or not. But there are renewed 
calls for greater regulation and more resources for the 
Commission.
    So I am interested in these hearings. I am looking forward 
to the testimony, and thank you very much for convening this, 
Mr. Chairman.
    The Chairman. Now it is my pleasure to call upon a person I 
will call my partner, because when this matter was thrust upon 
us, I thank God that we had John McCain. He came from Indian 
country.
    As we look back now, we spent hours and hours, and days and 
weeks, visiting Indian country, talking to attorneys general 
and Governors, and we came up with this bill and the law. So if 
there is anyone who has lived through the misery and the glory 
of this bill, it is John McCain.

    STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA

    Senator McCain. I thank you, Mr. Chairman, for your kind 
words and your friendship, but most importantly, for your 
commitment to the betterment of Native Americans, which has 
characterized your entire distinguished career here in the U.S. 
Senate.
    I thank you and Vice Chairman Campbell for scheduling this 
committee hearing today. This committee has an important 
oversight responsibility.
    As I understand it, this hearing is the first in a series 
of hearings that the Chairman intends to hold on Indian gaming 
issues in the 107th Congress. It has been my pleasure to work 
with the Chairman on this issue for over 14 years, and with our 
dear friend and colleague from Arizona, Mo Udall, before that. 
There are few issues which are of more significance for Indian 
communities.
    I would like to just point out, since the passage of the 
Indian Gaming Regulatory Act, the Indian gaming industry has 
grown beyond any expectations. We all know that it is now 
approximately 196 tribes, that are operating 309 gaming 
facilities, with revenues that exceed $10 billion.
    In my home State of Arizona, 17 tribes currently manage 
tribal casinos. Income from Arizona Indian gaming has been 
reported to support more than $250 million in purchases of 
goods and services in the State of Arizona.
    From time to time, we will hear about controversies in 
Indian gaming, alleged misconduct of gaming officials or 
managers or other problems with the act, that potentially 
interfere with responsible and sound regulatory structure. 
These are important issues, and should be raised and discussed 
before this committee.
    It is also important to recall that Indian Gaming 
Regulatory Act is in place due to years of extraordinary 
efforts in the Congress to establish a regulatory and statutory 
structure, where none had previously existed.
    Before the law was passed, the 1987 Cabazon decision made 
clear that tribes could operate gaming, unfettered from State 
regulation. There may be areas which require improvement, but 
we should clarify for the record the status of regulation among 
the three regulatory entities under IGRA: Tribal, State, and 
Federal.
    In this hearing today and in those to come in the months 
ahead, I hope to hear about the following: The adequacy of the 
Federal regulatory structure, and whether the existing 
structure is adequate to deal with existing gaming industry and 
its potential growth; areas where the law might need 
improvement; and investment by tribes in their regulatory 
structures.
    Many assumptions were made about how Indian gaming would be 
regulated when the law was passed. We are in a much different 
position now. I know that Senator Inouye and I would agree that 
we should do everything necessary to protect the integrity of 
the gaming industry, and that is why we are here today.
    I would just like to say, we could not invite every gaming 
tribe to testify, to hear all those who may be concerned about 
Indian gaming. We, on the committee, asked for testimony and 
comments from every Indian gaming tribe, and their views will 
be considered.
    I know that tribal leaders will agree that an appropriate 
regulatory structure is an important component of self-
sufficiency; whether it is for their government operations, 
general business enterprises, or Indian gaming.
    Again, I thank the Chairman for his incredible service on 
this and other Native American issues, and I thank my 
cochairman, Senator Campbell, as well. Thank you, Mr. Chairman.
    Mr. Chairman, I would like to have my complete statement 
made a part of the record.
    The Chairman. Without objection.
    [Prepared statement of Senator McCain appears in appendix.]
    The Chairman. Thank you very much, Senator. Your kind words 
are deeply appreciated.
    Now it is my pleasure and privilege to call upon a new 
member of the committee. But when it comes to Indian affairs, 
he is an old hand. He is from Lakota land: Senator Tim Johnson.

 STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA

    Senator Johnson. Thank you, Mr. Chairman. Again, I join 
Senator McCain's commendation to you for your extraordinary 
leadership over a long period of time on very, very difficult 
issues, and always with your heart in the right place, each and 
every time.
    I want to commend my friend from Colorado, as well, Senator 
Ben Nighthorse Campbell, for his leadership on this committee, 
as well.
    Mr. Chairman, I sought out a seat on both the Indian 
Affairs Committee and on the Appropriations Committee for the 
107th Congress, in large measure, out of concern that we pursue 
in every way possible ways to improve upon and to build 
constructive, respectful partnerships between the Federal 
Government, in a government-to-government relationship with our 
tribes, in order to facilitate the development of greater 
opportunity and prosperity in Indian country.
    In my home State of South Dakota, we have nine 
reservations; eight of which have Indian gaming operations 
going on. But 3 of the 10 most impoverished counties in America 
are South Dakota Native American counties. On the northern 
plains, we have what would have to be described simply as a 
desperate plight.
    There are many factors that we can pursue that would 
contribute toward breaking this cycle of poverty that has gone 
on for so long.
    I invite all the members of the committee, and many of you 
have been to South Dakota, but for those of you who have not, I 
would invite you, because it is a shocking reality that goes on 
each and every day, with unemployment in the high and 70 and 80 
percentile range. It has public health issues that are 
disastrous, and all the symptoms that go with poverty and a 
lack of economic opportunity.
    I applaud your work, Mr. Chairman, and Senator McCain and 
Senator Campbell's work on the Indian gaming issues. As has 
been noted, Indian gaming is not a cure-all. It is mixed in 
terms of the opportunities that it extends to various tribes, 
based on their geographic locations and other factors at work.
    But after having seen the consequences of over 100 years of 
no economic progress whatsoever taking place in South Dakota, I 
would have to say that this has been the first significant job 
creation opportunity that we have had in South Dakota. In many 
ways, I wish that the opportunities were building computers or 
doing other things.
    But the reality is, this is the only thing that has 
happened, that has created jobs by the thousands. It is 
creating the beginning of a middle class in Indian country in 
South Dakota. It is giving people the financial resources to 
attend their tribal colleges, to develop more teachers and 
nurses and managers and role models in the communities.
    It has put a few bucks in the pockets, modestly so, but 
nonetheless, a few bucks in the pockets of thousands of tribal 
members in South Dakota.
    That, in turn, has led to, by and large, better 
relationships with the non-Indian community, and has also 
created an enormous number of jobs for non-Indian residents of 
our State, who live near these reservations, and who often also 
share in a lack of economic prosperity and opportunity.
    We need to have these oversight hearings. There may be ways 
that we can improve upon the regulatory structure, and we need 
to always be open to that.
    We also need, however, to recognize that we need to 
approach these issues in a partnership basis with the tribes 
themselves. It is not a question of our imposing solutions or 
strategies on the tribes, but that our working with the tribes, 
in a constructive fashion, is what we need to pursue in this 
committee. That is the approach that you have always taken, Mr. 
Chairman.
    So I look forward to the testimony here today, and I am 
very hopeful and very confident that these hearings will, in 
fact, be constructive toward our ultimate goal of creating more 
opportunity, more prosperity, and a larger private sector 
economy throughout Indian country in general.
    Thank you, Mr. Chairman.
    The Chairman. I thank you very much, Senator.
    We have eight witnesses, representing a wide spectrum of 
citizens who are interested in Indian gaming. I am certain that 
there are many, many others who are interested in gaming, and 
would like to have their views made known to us.
    Therefore, this committee will be pleased to receive 
written testimony, which will be incorporated in the record of 
the hearing, and the record will be kept open for this purpose 
until the end of August.
    May I now call upon the Deputy Commissioner for Indian 
Affairs, Department of the Interior, Sharon Blackwell. She will 
be accompanied by George Skibine, Director, Office of Indian 
Gaming Management, Department of the Interior; the Chairman, 
National Indian Gaming Commission, Montie R. Deer; the 
Commissioners of the Gaming Commission, Elizabeth Homer and 
Teresa Poust.
    Ms. Blackwell, it is always good to see you; welcome, 
again.

 STATEMENT OF SHARON BLACKWELL, DEPUTY COMMISSIONER OF INDIAN 
   AFFAIRS, DEPARTMENT OF THE INTERIOR ACCOMPANIED BY GEORGE 
     SKIBINE, DIRECTOR, OFFICE OF INDIAN GAMING MANAGEMENT

    Ms. Blackwell. Thank you and good morning, Mr. Chairman, 
Mr. Vice Chairman, and members of the committee.
    My name is Sharon Blackwell. I am the Deputy Commissioner 
of Indian Affairs. I have asked George Skibine, the Director of 
the Office of Indian Gaming Management, to sit here beside me.
    I am pleased to be here today to present an overview of the 
role of the Secretary of the Interior in the implementation of 
the Indian Gaming Regulatory Act of 1988.
    At the outset, let me state that the Department strongly 
supports the underlying purposes of the Indian Gaming 
Regulatory Act (IGRA) to provide a statutory basis for the 
operation of gaming by Indian tribes as a means of promoting 
tribal economic development, self-sufficiency, and strong 
tribal governments.
    Since the enactment of IGRA in 1988, many Indian tribes 
have come to consider gaming as an effective means of 
generating revenue, to fund tribal programs, and to stimulate 
economic development on depressed Indian reservations and in 
Indian communities.
    Although precise financial data may not be readily 
available, there is no question that Indian gaming is a working 
tool for tribal economic development, and as a matter of 
Federal policy, the department supports tribally-owned gaming 
under IGRA.
    Congress has placed regulatory and enforcement functions 
under IGRA with the National Indian Gaming Commission. The role 
of the Secretary is to implement specific residual statutory 
functions under that statute.
    Those functions, and they will be defined and their 
implementation will be described in greater detail, very 
briefly are the approval of class III gaming compacts between 
Indian tribes and States; the approval of revenue allocation 
plans for per capita payments of gaming net revenues to tribal 
members; for making a two-part determination, when newly 
acquired lands are sought to support Indian gaming ventures; 
promulgation of class III gaming procedures in circumstances 
where a tribe and a State cannot agree on the terms of a 
compact; and finally, the appointment of two Commissioners on 
the National Indian Gaming Commission.
    In addition, although IGRA does not refer to these 
functions specifically, the Secretary is also involved in 
reviewing applications to place lands in trust for gaming, 
reviewing gaming-related land leases, reviewing certain gaming-
related agreements for services relative to Indian lands under 
25 U.S.C. section 81, and making legal determinations regarding 
whether parcels of land qualify as Indian lands under IGRA.
    IGRA provides that class III gaming activities shall be 
lawful on Indian lands only if such activities are, among other 
things, conducted in conformance with a tribal State compact, 
entered into by an Indian tribe and a State, and approved by 
the Secretary. This remains one of the central roles of the 
Secretary of the Interior.
    The statute provides that the Secretary may only disapprove 
a compact, if the compact violates any provisions of IGRA, or 
any other provision of Federal law that does not relate to 
jurisdiction over gaming on Indian lands; or finally, if it 
would violate the trust obligations of the United States 
Government to Indians.
    The Secretary must approve or disapprove a compact within 
45 days of its submission, or the compact is considered to have 
been approved, but only to the extent that the compact is 
consistent with the provisions of IGRA.
    A compact takes effect when the Secretary publishes notice 
of its approval in the Federal Register. As of today, the 
Secretary has approved 212 compacts in 24 States for class III 
gaming between Indian tribes and States. The department also 
takes the position that amendments to compacts are subject to 
review and approval of the Secretary.
    If an Indian tribe and a State are unable to reach 
agreement during the negotiations of a compact, IGRA provides a 
statutory scheme that can result with the issuance of class III 
gaming procedures to be developed by the Secretary. To date, 
the Secretary has issued class III procedures for only one 
tribe.
    On April 12, 1999, at 25 CFR, part 291, the Secretary 
published rules which authorized the Department of the Interior 
to promulgate class III procedures in those circumstances when 
a State and a tribe are unable to voluntarily agree on a 
compact, and the State has asserted its immunity under the 11th 
amendment, in response to a suit brought by an Indian tribe.
    To date, seven tribes have filed an application with the 
Bureau of Indian Affairs [BIA] for class III gaming procedures. 
The BIA has rejected three of these applications, and we are 
still considering the application of four other tribes.
    The Secretary in response to a lawsuit which has challenged 
the authority to promulgate these regulations, will, of course, 
abide to a commitment made by her predecessor not to issue 
class III procedures for any tribe until a final judicial 
determination is rendered, in any lawsuit brought by a State 
challenging the authority of the Secretary to promulgate the 
regulations at part 291. The State of Florida and the State of 
Alabama have jointly filed a lawsuit against the Secretary 
regarding this matter.
    Very briefly, under IGRA, the Secretary is charged with the 
review and approval of tribal revenue allocation plans that 
relate to the distribution of net gaming revenues. Net gaming 
revenues from class II and class III gaming may be distributed 
in the form of per capita payments to members of an Indian 
tribe so long as the tribe has prepared a tribal revenue 
allocation plan, which has been approved by the Secretary.
    On March 17, 2000, the BIA published a rule at 25 CFR, part 
290, which established the procedures for the submission, 
review, and approval of tribal revenue allocation plans. To 
date, the BIA has approved 55 such revenue allocation plans.
    The decision to place land into trust for the benefit of an 
Indian tribe, and particularly where the use of that land will 
be used for gaming, is at the discretion of the Secretary, 
after consideration of the criteria for land acquisitions in 25 
CFR, part 151.
    When an acquisition is intended for gaming, consideration 
of the requirements of section 20 of IGRA also apply. Section 
20 of IGRA prohibits Indian tribes from conducting class II or 
class III gaming activities on lands acquired in trust by the 
United States after October 17, 1988, unless one of several 
statutory exceptions apply.
    To date, the department has approved 20 applications that 
have qualified under the legislative exceptions to the gaming 
prohibition contained in section 20.
    However, if none of the specific legislative exceptions in 
section 20 apply, an Indian tribe may still conduct gaming 
activities on newly-acquired trust lands, if it meets the 
requirements that are specifically set forth in 20(b)(1)(A) of 
IGRA, which provides that gaming can occur on the land if the 
Secretary, after consultation with appropriate State and local 
officials and officials of nearly Indian tribes, determines 
that a gaming establishment on the newly-acquired land will be 
in the best interests of the tribe and its members, and will 
not be detrimental to the surrounding community; but then only 
if the Governor of the State in which the gaming activities are 
to occur concurs with the Secretary's two-part determination.
    Since October 17, 1998, State Governors have concurred in 
only three two-part Secretarial determinations for off-
reservation gaming on trust lands that are newly-acquired.
    The department published a proposed rule in the Federal 
Register on September 14, 2000, which would set forth the 
procedures for an Indian tribe to follow in seeking a two-part 
Secretarial determination under section 20.
    The Secretary of the Interior is in the process of 
evaluating the merits of that proposed rule that had been 
issued by her predecessor.
    Finally, I would like to touch just very briefly on the 
role of the Secretary in approving gaming-related agreements 
under 25 United States Code Section 81. The National Indian 
Gaming Commission [NIGC] is charged under the Indian Gaming 
Regulatory Act with the review and approval of management 
contracts.
    As a matter of practice, all gaming-related agreements that 
are submitted to the BIA are referred to NIGC, the National 
Indian Gaming Commission. The National Indian Gaming Commission 
is charged under IGRA with review and approval of management 
contracts.
    As a practice for the BIA, any time a gaming-related 
agreement is submitted to us by a tribe or any other entity, we 
refer that agreement to the Gaming Commission for their review.
    If the Commission makes a determination that a gaming-
related agreement is not a management contract, or is not 
otherwise subject to the Commission's review and approval under 
IGRA, then the agreement is forwarded to the BIA for a 
determination as to whether or not that agreement is subject to 
the residual approval authority of the Secretary under 25 
U.S.C. section 81.
    The department then determines if it is subject to section 
81, and it, of course, begins the deliberations as to whether 
or not, under the Secretary's broad trust responsibilities, 
that agreement should be approved.
    Congress substantially amended section 81 last year, and 
the Department recently published regulations at 25 CFR, part 
84 to implement these amendmentsto section 81. The amendments 
that result in our authority for approval of agreements are 
limited to any agreements that would encumber trust or 
restricted land for a period of 7 years or more.
    This concludes my prepared statement. I am most happy to 
answer any questions that the committee may have of me, or I 
know Mr. Skibine would be most happy to answer any questions 
that you may have, with regard to the management of the BIA, 
Indian Gaming Office.
    Thank you.
    [Prepared statement of Ms. Blackwell appears in appendix.]
    The Chairman. I thank you very much, Commissioner 
Blackwell. Mr. Skibine, would you like to add anything?
    Mr. Skibine. No; I do not, thank you.
    The Chairman. Now it is my privilege to call upon the 
Chairman of the National Indian Gaming Commission, Chairman 
Deer.

 STATEMENT OF MONTIE R. DEER, CHAIRMAN, NATIONAL INDIAN GAMING 
                           COMMISSION

    Mr. Deer. Mr. Chairman, Mr. Vice Chairman, and members of 
the committee, my name is Montie Deer, and I am chairman of the 
National Indian Gaming Commission.
    Thank you for giving us the opportunity to appear before 
you today, to testify on the activities of the NIGC. I, along 
with Vice Chairman Elizabeth Homer and Commissioner Teresa 
Poust, thank you for your ongoing support and interest in 
tribal governmental gaming regulation and the NIGC.
    This statement will summarize my written submission and, 
therefore, reflect my three goals for this morning. First, I 
will highlight the magnitude of the rapid growth of the Indian 
gaming industry.
    Second, I will discuss the history, activities and 
accomplishments of the NIGC. Finally, I will summarize some of 
the more pressing challenging facing the NIGC in our attempts 
to keep up with this growing industry.
    Simply stated, the Indian gaming industry has experienced 
exponential growth since the passage of the Indian Gaming 
Regulatory Act of 1988, when annual gross revenues totalled 
$100 million. In the year 2000, the industry generated over 
$10.6 billion in gross gaming revenues.
    I would refer to chart number 1, which is the bar graph. It 
is included in the package. You will notice on the bar graph 
that in 1997, when we received the $8 million cap, that Indian 
gaming was at $7.451 million. In 1998, it goes up to $8.5 
billion. In 1999, it goes almost to $10 billion, and then it is 
over $10 billion in the year 2000, while we remain at a flat $8 
million budget.
    So at the same time the Commission's experiences are slow 
in proportion to little growth, we are increasing from a $3-
million per year operation to a $8-million per year operation, 
with 77 employees.
    After Congress authorized the additional resources in 1997, 
the Commission used those additional resources to build a 
structure for improved regulation and oversight of Indian 
gaming. Before the expansion, 20 percent of our employees were 
working in the field. Today, more than 45 percent of our 
employees work in the field.
    As I have noted previously, the 1997 increase in our budget 
authority occurred in an environment where the Indian gaming 
industry was growing at a very rapid rate.
    This growth, coupled with our $8 million cap fee means that 
we have been able to set fees at the modest rate of eight one-
hundredths of a percent of gross gaming, after allowing the 
tribe to exempt the first $1.5 million. Thus, a tribe that 
generates $11.5 million in gaming revenue would pay an annual 
fee to the NIGC of $8,000.
    Although the Commission has taken a careful and disciplined 
approach to expanding our institutional capacity and presence 
in Indian country, industry demands on the Commission resources 
are quickly exceeding our capacity to meet the regulatory needs 
effectively.
    We were especially hard hit by the explosion in gaming in 
California. As you know, California passed proposition 1A in 
the year 2000, in March. There are 109 federally-recognized 
tribes in California; 74 of the California tribes have approved 
gaming ordinances and 62 have approved compacts.
    This year, seven new gaming operations have opened and more 
are under construction. Our Sacramento office has been consumed 
by the demands on Commission resources to meet regulatory needs 
effectively.
    In addition to spending 60 percent of their time visiting 
sites, the region chief and our three field investigators in 
Sacramento are running weekly training sessions to help the 
tribes accomplish some of the basic regulatory functions such 
as licensing and background investigation.
    The other major impact on the Commission resulting from the 
change in California has been the wave of management contracts. 
Once the gaming industry satisfied itself that casino-style 
gaming in California was lawful, there was a rush to enter 
contracts with Indian tribes for the management of tribal 
gaming.
    The number of management contracts received in 1998 before 
proposition 1A was 17. The number received in 2000 was 27, an 
increase of nearly 60 percent.
    Industry predictions for California Indian gaming have 
ranged anywhere from $3 billion to $10 billion in annual 
revenues. We, at the Commission, are not sure where it will end 
up, but the impact of the industry, as a whole, and ultimately, 
this Commission, is undeniable.
    The Commission's 77 full-time employees are divided among 
office headquarters and five field offices, and I believe we 
remain a lean organization. We have divided the staff into 
seven divisions.
    If you will look at chart 3, you will see the 
organizational chart and where the folks are located. It is 
hard to read, I know, but you do have a copy. You will notice 
that in the compliance section is where most of our people are 
located.
    The Commission continues to place a high priority on 
encouraging and supporting strong, effective, independent 
tribal gaming Commissions. As governments, tribes provide the 
front-line, day-to-day regulation of tribal governmental gaming 
activities, and they generally do that through a tribal gaming 
Commission.
    The Commission, that is Commissioner Poust and Vice 
Chairman Home and I, have embarked on an aggressive training 
program initiative for tribal gaming Commissioners and 
regulators. Clearly, the integrity of Indian gaming depends, 
however, most heavily upon those efforts of tribal regulators 
who work with the operations on a daily basis.
    We, however, provide training in relatively formal 
sessions, where our representatives talk to gatherings of 
tribal representatives. We also do it on informal sessions, 
where field investigators or auditors work on-site with the 
tribe.
    It is probably safe to say that on almost every work day, 
somewhere a representative of the NIGC is providing face-to-
face advice or assistance on IGRA compliance to someone 
involved in the operation of regulation of an Indian gaming 
operation.
    I am also pleased to report that the Commission's 
partnership with the National Judicial College at the 
University of Nevada at Reno, to offer a course entitled, 
``Essential Skills for Tribal Gaming Commissions,'' has been 
successful. Ninety tribal gaming Commissioners have attended 
that course in the first two sessions.
    Vice Chairman Homer, Commissioner Poust, and I are deeply 
committed to the principles of government-to-government 
relationship with the tribes, and respect for tribal 
sovereignty. These principles are not always easily reconciled 
with our role as regulators, but we certainly have tried.
    Our rulemaking has been carried out using tribal advisory 
committees, and we hold public hearings on our proposed 
regulations in locations that are accessible to tribal 
representatives.
    Furthermore, the Commission has held quarterly 
consultations across the country, in order to obtain input from 
tribal gaming representatives and leaders. This Commission has 
conducted four government-to-government consultations with more 
than 60 tribes.
    The consultations consist of small meetings between the 
Commission and the leaders of the individual tribes. The 
process by which we conduct these consultations has become a 
hallmark of this Commission.
    In closing, the Commission finds itself at a critical 
juncture during this period of unprecedented growth in Indian 
gaming for all the reasons I have touched upon. Thus far, the 
Commission has been able to meet the challenges that we feel 
are presented by Indian gaming, although I am frankly concerned 
about our future, at this point.
    We have a staff of dedicated, skilled professionals, who 
are committed to the proposition that gaming revenue can make a 
positive different in Indian country, and that balanced, 
effective regulation is the key to keeping the Indian gaming 
industry healthy.
    With our current force of auditors, it will take between 20 
and 30 years to conduct an audit of the internal controls of 
every Indian casino. These audits should be occurring every 5 
years.
    While the background investigation work that we do on 
management contracts is covered by fees from the applicants, 
our financial analysts are stretched too thinly, and compliance 
with the National Environmental Policy Act has required us to 
divert staff members from other assignments and to expand 
scarce funds on expert consultants.
    We can and will continue to get the job done with the 
resource limits that Congress sets. But I would be remiss if I 
did not ensure that this committee understands how the NIGC is 
faring in this face of dynamic change in the Indian gaming 
industry.
    I hope this testimony and the written testimony has been 
responsive to your request. I thank you for your attention, and 
I will be happy to address any questions.
    [Prepared statement of Mr. Deer appears in appendix.]
    The Chairman. Thank you very much, Chairman Deer.
    Now may I call upon Vice Chair Homer.

  STATEMENT OF ELIZABETH HOMER, COMMISSIONER, NATIONAL INDIAN 
                       GAMING COMMISSION

    Ms. Homer. Thank you, Mr. Chairman. I just wanted to say to 
you this morning how much we appreciate this opportunity to 
raise our concerns with committee, and to emphasize again the 
points that the Chairman has made this morning with regard to 
issues confronting the National Indian Gaming Commission.
    We work very hard, Mr. Chairman, to ensure that we have 
proper and ongoing communications and input from the tribal 
leadership and from the tribal gaming associations around the 
country, and with NIGA, in particular. We work very hard to 
understand what the tribes are confronting in their attempts to 
comply with our regulatory efforts. We thank this committee for 
this opportunity to be here this morning.
    The Chairman. I think you very much.
    May I now call on Commissioner Poust.

STATEMENT OF TERESA POUST, COMMISSIONER, NATIONAL INDIAN GAMING 
                           COMMISSION

    Ms. Poust. Thank you very much, Mr. Chairman. I would just 
like to echo Chairman Deer and Vice Chairman Homer in thanking 
you all for giving us the opportunity to be here today. I 
really have nothing to add to the previous testimony. It is 
always difficult coming third with these two remarkable 
individuals. So I would be more than happy to answer any 
questions that you may have.
    The Chairman. Thank you very much.
    May I proceed questioning first with the Chairman, if you 
do not mind?
    You have testified that the gross revenue for Indian gaming 
is in excess of $10 billion. What is the gross revenue 
nationally for all gaming in the United States?
    Mr. Deer. I do not have that fact in my brain this morning, 
but I will get it to you. I do not know.
    The Chairman. I have been told, and I have no 
documentation, that Indian gaming consists of about 10 percent 
of the national gross?
    Mr. Deer. I have been told seven percent.
    The Chairman. Mr. Chairman, could you describe the process 
that the Commission follows in carrying out its 
responsibilities under the act to review all management 
contracts and collateral agreements?
    Mr. Deer. I would be happy to, Mr. Chairman. When a 
contract is received by the NIGC, if it says it is a management 
contract, it goes directly to the management contract division. 
If it is not designated as to what it is calling itself, it 
goes to the Office of General Counsel for legal review.
    If the document is said by General Counsel that it is, in 
fact, a management contract, then General Counsel notifies the 
parties that we find that, regardless of what you have called 
the document, it is a management contract, and you are going to 
have to resubmit it to the management contract division.
    There are other contracts that we do not consider to be 
management contracts. When we get that type of a contract, one 
of three things occurs. We send it back and we say, this is not 
a management contract, by our definition and under the act.
    We will forward it to the BIA for their review, and if we 
think there are problems with it, then what we say is, we find 
some concerns about this contract that you have with the tribe. 
Would you please address the following things and items that we 
have placed in the letter, and we wait for a response.
    If we say we really do not know, but we have our concerns 
that it might be a management contract, we are going to give 
this to enforcement for their review by auditors and field 
investigators, et cetera.
    Now the interesting thing, Mr. Chairman, is that any 
contract entered by a company with a tribe that is found to be 
a management contract without approval is a void contract. They 
are also subject to enforcement by us for management without a 
contract.
    We have had two recent ones; one against JPW, that went all 
the way to the 11th Circuit, in which our fine of $3.4 million 
was upheld, that they were actually managing without a 
contract.
    So it behooves both parties to make sure that we review all 
documents, and it does behoove them to provide us with the 
information that we have requested.
    Now let us go back to whether it is a management contract. 
Three things occur there. We first look at the contract itself 
to see if it follows what is found in IGRA, the details of the 
contract.
    Second, we do background investigations, both criminally 
and financially, of the parties, if it is a class II and class 
III management contract. Under IGRA, we do not have the right 
to ask for resources or repayment for the investigation of 
backgrounds of financial and criminal matters, when it only is 
a class III contract. But rest assured, if we have any 
information, we spend our own money to do that.
    Finally, we have NEPA, which is giving us a large problem 
in California, because it is new construction, and we have to 
approve of any problem that might occur with an environmental 
impact with that contract.
    So if it is a contract, three things occur. We look through 
it. We compare it to the act. We do the background 
investigations, which are paid for by the persons submitting 
the contract.
    We probably get 80 to 95 percent of that, because we use 
those people for other jobs, as well, who do that background 
investigation, such as training. Then, of course, we have NEPA. 
I do not know if that answered your question.
    The Chairman. I am asking that because many Indian nations 
have complained about the over-regulation and the commission's 
heavy hand, as some have described it. I realize that every 
application is unique and different. But on an average, how 
long does that process take?
    Mr. Deer. It is all different, because of the fact that we 
do not always necessarily get all the things that we need to 
look at. So on our web site, we actually have prepared by Fred 
Stuckwich a list of items which we tell the tribes that they 
need to submit to us before we can continue with it. I would 
defer to staff as to what an average time is.
    The Chairman. Are you satisfied with the relationship that 
has developed between your Commission and the Interior 
Department? I ask this question because I realize that the law 
requires close collaboration and work.
    Mr. Deer. Yes; we have a very good relationship. George's 
committee and our people meet probably at least once a month. 
We have a MOU on land issues at this time.
    The Chairman. Does the department advise the Commission of 
its disposition on the contracts submitted to the department by 
the Commission?
    Mr. Deer. Could you say that again?
    The Chairman. Once you submit a contract to the Interior 
Department, do they advise you as to what they did with it?
    Mr. Deer. Not in a formal manner, but I understand that Mr. 
Skibine does tell our people in the informal meetings what they 
have done with them, if anything.
    The Chairman. Why not in a formal manner?
    Mr. Deer. That I do not know. You would have to probably 
ask Interior. I do not know.
    The Chairman. I notice the Vice Chairman is eager to 
respond.
    Ms. Homer. I was going to actually whisper to the Chairman 
that it is our understanding that those contracts may be 
reviewed in the regional offices of BIA, and sometimes that 
information may not come back.
    The Chairman. Does the Commission believe that it has the 
authority, or is required by the act, to review a contract that 
terminates a management contract?
    Mr. Deer. Mr. Chairman, if you will look at 2711, and I 
think it is B(6), it talks about termination in regard to 
contracts. In that regard, it specifically says that the 
Chairman does not approve a termination contract. Yet, at the 
same time, it says that we must make sure that there is a 
termination clause in the contract.
    The Chairman. Would you advise the committee why the 
Commission is proposing to make a change to the regulations, 
which address the definitions of electronic or electro-
mechanical facsimiles of a game of chance?
    Mr. Deer. With all due respect, that was a 2-to-1 vote, Mr. 
Chairman, and I did not vote on that proposal in the 
affirmative. So I would ask that either one of my colleagues 
make their remarks toward that.
    If you would like to know my position of why I voted no, I 
would be more than happy to give it to you in written form.
    The Chairman. That is fine, sir.
    Vice Chair?
    Ms. Homer. Thank you, Mr. Chairman.
    Let me just say that in attempting to provide a meaningful 
distinction between technical aids and electronic facsimiles, 
the first permitted and the second prohibited under IGRA, and 
to make sense of the latter term, the Commission promulgated 
regulations in 1992, defining electronic facsimile as any game 
of chance, as any gambling device, as defined by the Federal 
Gambling Devices Act, also known as the Johnson Act.
    While this definition was convenient, it was also very 
broad, and this has resulted in a significant amount of 
litigation over time.
    Some of this litigation has recently culminated in a series 
of Federal Circuit Court decisions, in which the Courts have 
generally ignored the NIGC definition; preferring, instead, a 
plain meaning approach to the term. Please note that these 
courts, arguably, would have been obliged to reach a different 
conclusion, had they applied the NIGC definition.
    We now find ourselves in a situation where the Commission's 
own rule is inconsistent with the legal interpretation of IGRA 
by three separate Federal Circuit Court of Appeals. Obviously, 
this presents a serious impediment to the effective regulation 
of gaming, which is why the Commission has published for 
comment a proposed amendment of this definitional regulation.
    The proposal would enable the Commission to apply the term 
according to its plain meaning, as the Courts have uniformly 
done. This approach will have two clear benefits. First, the 
Commission, in applying its expertise in any given case, will 
be using the standard likely to be used when and if the case is 
appealed to the Courts, leading to a greater consistency and 
greater deference to Commission determinations.
    Second, this will remove the potential for the Commission's 
classification decisions to foreclose Johnson Act enforcement 
actions or otherwise create confusion with regard to Federal 
criminal law.
    Because the Commission need not necessarily make a Johnson 
Act determination to determine whether a game is within class 
II or class III of IGRA, some would argue that incorporation of 
the Johnson Act has injected needless confusion into what 
should be a simple term, by its own plain meaning.
    The Chairman. I will have to analyze that. [Laughter.]
    It takes a little while to get here. [Laughter.]
    I will come back to questioning again, but I have just one 
last question for you, Mr. Chairman, if I may. You have 
indicated that as the growth of the industry can be described 
as being exponential, I think is the word you used, the amount 
that you are budgeted to receive has remained constant.
    What would you consider to be a reasonable amount, that 
would provide you enough so that you can carryout your 
responsibilities in the best way possible?
    Mr. Deer. We have had skull sessions about that, and I 
think probably somewhere in the range of $12 million would be 
appropriate.
    The problem is, you see, Mr. Chairman, at some point, there 
is going to reach a plateau, and there is not going to be any 
more Indian tribes to have gaming. So the growth is going to 
have to level off, too. When that occurs, would that occur 
after California; who knows?
    The Chairman. May I now call upon the vice chairman? Thank 
you very much, sir.
    Senator Campbell. Thank you, Mr. Chairman.
    I am going to have to analyze Ms. Homer's testimony, too. 
But as I remember, it was one of the things that I asked the 
Commission to do, so I thank you for looking into that.
    You know, Mr. Chairman, most of the testimony that we have 
heard, I think just at first blush, a person that has never 
watched these proceedings before would get the impression that 
the only people that regulate Indian gaming are working at the 
NIGC, which is far from the case, as you know.
    I was looking at some of the other testimony, which is yet 
to be presented, and I noticed, in fact, the Oneida Nation is 
an example. That Commission, the Oneida Gaming Commission, 
spends approximately $8.8 million every year to regulate and 
protect its gaming operation.
    That cost enables the nation to pay for 206 employees that 
are engaged in regulating gaming operations at Turning Stone 
Casino and Resort, which includes audits and all the other 
things that go with the regulatory process. So I think it needs 
to be said for the record that the NIGC is not the only body 
that is involved in this regulatory business.
    Let me ask a few questions, and maybe I will start it with 
Sharon Blackwell. Sharon, as I understood your testimony, since 
IGRA has been enacted, a total of three applications for off-
reservations have been approved by the department, which is 
roughly one every four years or so. Clearly, there is not a big 
rush to do those.
    Do you think that process needs to be overhauled? I want to 
tell you, I think it is probably good that we are very careful 
in doing it. You mentioned the input needed from local 
communities and the Governor, and I think that is all really 
important when you talk about non-contiguous land that may be 
put in trust for the purpose of gaming.
    It is a really dicey thing that we get into, with local 
government, as you know. We talk about overruling local zoning 
and land use policies and so on. But I wonder with the slowness 
of processing, if we need to make changes to improve that?
    Ms. Blackwell. There have been three such processes. Of the 
two-part determination that required concurrence by the 
Governor, there have been three that have received the 
Governor's concurrence.
    Senator Campbell. How many applicants are you processing 
now or looking at?
    Ms. Blackwell. How many?
    Senator Campbell. Mr. Skibine.
    Mr. Skibine. How many have we considered since the 
enactment of IGRA?
    Senator Campbell. Yes.
    Mr. Skibine. I think probably a dozen or so. I do not have 
the figure right here.
    Ms. Blackwell. The process is time consuming. It involves, 
as the committee knows, consultation, and the consultation 
involves discrete groups. Nearby tribes are consulted with.
    Senator Campbell. I support that.
    Ms. Blackwell. The department strives to achieve some kind 
of consensus, and in many instances, the consultation fosters 
side negotiations.
    I do not know how you would speed up that process, without 
setting some kind of artificial timeframes on it. We would be 
happy to work with the committee, however, on any ideas you may 
have.
    Senator Campbell. Well, do you think you need any 
legislative authority to do that, or is there a way you can 
streamline the process within your existing authority?
    Ms. Blackwell. It depends, in large part, on the will of 
the people that we are consulting with.
    Senator Campbell. I see. Let me ask you one other thing, 
too. As I understand it, after Seminole v. Babbitt, you are 
looking at an alternative procedure for compacting. What is the 
status of the Seminole application for that so-called 
alternative compacting procedure?
    Ms. Blackwell. I am going to ask Mr. Skibine to answer 
that. He has been working on that particular case.
    Senator Campbell. Okay.
    Mr. Skibine. The department is currently considering the 
application of the Seminole Tribe and also the Miccosukee Tribe 
of Florida. Both applications are pending in our office.
    On January 19 of this year, the department issued a scope 
of gaming decision which was, by agreement of the parties, the 
first issue to be resolved since the dispute between the tribe 
and the State, resolving the scope of the gaming decision.
    The new Administration, as you may know, has withdrawn that 
opinion, in order to give the new Administration and the new 
assistant secretary, who just came on board, and the new 
solicitor, who will be on board shortly, the opportunity to 
review the complex legal issues that are involved in this 
process.
    Senator Campbell. All right, that will do; thank you.
    Let me ask Montie Deer several questions, too. The 
Commission has cited explosive growth in California as the main 
reason it needs more funds, but there are limited duties.
    Have you calculated how many operations will begin 
operating in California over the next few years, and how that 
is going to affect the Commission?
    Mr. Deer. Yes, we have, Mr. Vice Chairman. Prior to 
proposition 1A, there were 39 gaming operations. Today, there 
are 46. The best estimate, through 2003, is 60. I told you, I 
think, that approved gaming ordinances approached 74, and 
tribes with tribal State compacts in California is 62.
    Senator Campbell. The IGRA does not delegate the 
responsibility of regulating class III gaming to NIGC, does it?
    Mr. Deer. Well, I think there might be a difference of 
opinion there. In the past, if I can refer to class III and 
what has been said by this Commission in the past, and where we 
feel we get the authority, you might say that it is apparent on 
the face of the 1988 act.
    When you enacted IGRA in Congress, among other things, it 
was to protect gaming as a means of generating tribal revenue. 
Congress explicitly created the Commission to establish Federal 
standards for gaming on Indian lands. Congress provided that 
the Commission would approve tribal gaming ordinances for class 
II and class III gaming.
    Congress provided that net revenues from tribal gaming will 
be used only for specified purposes. Congress specified that 
annual outside audits must be conducted over both class II and 
class III, and provided to the Commission. I would assume that 
this presumes that the Commission would bear some 
responsibility for protecting the integrity of their revenue 
stream that underlies the audits in revenue allocation plans.
    So in light of the expressed Congressional purposes, it 
follows that there must exist some rules for handling of cash 
and the tracking of transactions which occur with great 
frequency in a gaming operation. There appears to be no good 
reason perhaps to think that only exists for class II.
    Second, in 1997, when you all amended IGRA, we were told 
that we could now collect fees from gaming from class III. I do 
not think it stands to reason that we should be able to collect 
fees from class III, with no authority to regulate.
    That has been the position of the Commission in the past. 
Of course, there is also 2713, that gives us authority to issue 
notice of violation, fines, and closure orders, for violation 
of our regulations, and so on and so forth.
    Senator Campbell. Let me refer to the committee report that 
was processed when we passed IGRA in the first place. On page 
3. Let me just read it to you.

    S. 555 recognizes primary tribal jurisdiction over bingo 
and card parlor operations, although oversight and certain 
other powers are vested in the federally-established National 
Indian Gaming Commission.
    For class III casinos, parimutuel, and slot machine gaming, 
the bill authorizes tribal governments and State governments to 
enter into tribal State compacts to address regulatory and 
jurisdictional issues.

    Mr. Deer. I know that is in there, and I have read it 
before. You must remember, too, when you look at the act, we 
have no authority to do backgrounds for those compacts for the 
class III gaming, because it was assumed that the compacts 
would cover background investigations, both financial and 
criminal. They do no all do that.
    Senator Campbell. I see. Thank you for clarifying that.
    Let me go to your pie charts here, since we had talked once 
before about increasing the authority to collect $16 million up 
from the $8 million.
    I am looking at your own pie chart. I have a small one up 
here. Seventy-three percent of the allocation for 2001 goes to 
salaries. Is that correct?
    Mr. Deer. That is correct. That is for 77 employees.
    Senator Campbell. Okay, if you divide the 77 employees by 
the 73 percent, which is $5.4 million, it comes out to $75,800 
per employee annually, as a salary.
    If your authority was increased to $16 million to collect 
from the tribes, can the committee assume then that the 
proportionate amount of the additional $8 million would also be 
the $75,800 per employee average?
    Mr. Deer. Well, of course, if Congress gives everybody that 
is a Federal employee a raise, I have a little problem saying 
that, probably.
    Senator Campbell. Let me just ask maybe one or two more 
questions. You have testified that NIGC was ``unaware'' of the 
great potential for industry growth in California. Now I 
understand that. Nobody has a crystal ball.
    But as I recall, in November 1998, is when the California 
voters authorized tribal gaming. Is that correct?
    Mr. Deer. That is correct.
    Senator Campbell. Well, that is the same month that I, 
along with the help of Senator Inouye, introduced an amendment 
to increase the budget from $2 million to $8 million. How is it 
that you did not start planning at that time, when we 
quadrupled the budget, if we knew, by the vote of California, 
that there was going to be an increase of gaming?
    Mr. Deer. Of course, I was not at the Commission then. But 
if you will recall, there was a letter sent, I believe, to the 
committee from former Vice Chairman Phil Hogan, in which we 
outlined what we thought the growth and procedure would be.
    Then I recall meeting with all of you, and I remember 
Senator McCain asked me the question of whether I thought the 
$8 million would be enough. I told him, well, we had not got 
there, yet, and I really honestly do not know.
    That was when we decided to get the field investigators out 
of the back seats of their cars and trunks of their cars, and 
put them in buildings where the tribes knew where they could 
find them.
    Senator Campbell. Considering the growth in California, 
have you done some kind of a detailed strategic plan, which 
contains some performance goals and projects, how they will be 
reached by your agency?
    Mr. Deer. We are working on that at the present time. The 
problem we are having in California, as you know, internally, 
we do not know with the California compacts, when they are 
going to be implemented, and what is going to happen.
    For example, with licensing, under their compacts, we do 
not like to interpret that. But yes, we have a long term going 
on with our field investigators in enforcement to do that. We 
will be more than happy to supply that to you when it is 
completed.
    Senator Campbell. Thank you, Chairman Deer, and thank you, 
Mr. Chairman.
    Before I yield, may I ask unanimous consent to introduce 
into the record an article that came out in the Investor's 
Daily on July 24. It is entitled, ``Punishing Success; Feds 
Should Remove Barriers to Indian Wealth.''
    I thought it was a very good article, talking about the 
successes that Indian tribes have had with gaming, and I would 
like to introduce that into the record.
    The Chairman. Without objection, so ordered.
    [Referenced document appears in appendix.]
    Senator Campbell. I thank the Chairman, and yield my time.
    The Chairman. Thank you very much.
    Now may I call upon Senator McCain.
    Senator McCain. Thank you, Mr. Chairman.
    Ms. Blackwell, we are aware that the growth of Indian 
gaming has been accompanied by a growth in applications for 
Federal recognition of Indian tribes. Would you agree?
    Ms. Blackwell. Senator, I had an opportunity to look at the 
applications for recognition. We had provided, I believe, the 
committee with some of those statistics.
    Senator McCain. Have you seen a growth or not, Ms. 
Blackwell?
    Ms. Blackwell. Well, yes, there is.
    Senator McCain. Thank you very much.
    Are you aware of a Wall Street Journal story, and I would 
like to quote from it, on July 18, it says,

    What this currently entails is evident in the controversy 
over Clinton Administration decisions by then-BIA Director 
Kevin Gover and Deputy Director Michael Anderson.

    The decisions were documented in a Boston Globe expose that 
was not widely reported.
    On his last day in office, Mr. Gover rejected staff 
findings and granted Federal recognition to the Chinook Indians 
of Washington State. Mr. Gover personally rewrote the staff's 
findings, the Globe's reporter, Shawn Murphy, reported, 
inserting his own conclusions to affirm the tribe's 
authenticity, while editing out years of work by Government 
historians, anthropologists, and genealogists.
    Mr. Gover stepped aside on January 3, and named Mr. 
Anderson as Acting Director. Mr. Anderson then recognized the 
Suquamish of Seattle as a tribe, reversing an earlier Interior 
Department finding.
    On President Clinton's last day in office, Mr. Anderson 
recognized the Nipmuc of Massachusetts as a tribe, rejecting 
the findings of Interior Department historians, according to 
the Globe. Is that accurate?
    Ms. Blackwell. The information or the facts are that there 
were positive proposed findings for, I believe, the Nipmuc 69a, 
and that would have subjected the proposed findings for 
publication in the Federal Register for an 180-day comment 
period. It was not a final determination.
    For Nipmuck 69b, my recollection is that was a negative 
determination. Then finally for Duwamish, it was a proposed 
positive final determination, which would be published in the 
Federal Register, and subject to a 90-day period for 
reconsideration.
    Senator McCain. Let me ask you then, Mr. Gover rejected the 
staff's finding, and granted Federal recognition to the Chinook 
Indians from Washington State; true or false? Did he reject 
staff's findings and grant Federal recognition to the Chinook 
Indians of Washington State?
    Ms. Blackwell. The staff made a recommendation. Mr. Gover 
did not follow the recommendation.
    Senator McCain. Thank you; did he personally rewrite the 
staff's findings?
    Ms. Blackwell. I am unaware of that.
    Senator McCain. On the Globe's inserting his own 
conclusions, he did not insert his own conclusions, to affirm 
the tribe's authenticity, while editing out years of work, by 
Government historians, anthropologists, and genealogists. You 
do not know if that is true or false?
    Ms. Blackwell. I am aware that the Assistant Secretary has 
the authority to make a determination.
    Senator McCain. Are you aware of whether he rewrote and 
inserted his own conclusions?
    Ms. Blackwell. I am unaware of any actual rewriting.
    Senator McCain. Well, the staff should know, should they 
not, whether their conclusions and recommendations were 
rewritten and edited out?
    Ms. Blackwell. That would be in the file, and I would be 
more than happy to supply copies of our files to you for the 
record.
    Senator McCain. I would like for you to ask the staff 
members who wrote the recommendations, as to whether their 
findings were rejected and rewritten. Can you do that?
    Ms. Blackwell. I certainly can.
    Senator McCain. All right, now did Mr. Anderson reverse an 
earlier Interior Department finding, by recognizing the 
Duwamish of Seattle; yes or no?
    Ms. Blackwell. Mr. Anderson made the positive final 
determination. I am unaware of the exact facts, and I am very 
sorry. I am unprepared to respond to acknowledgment issues.
    Senator McCain. Are you aware of whether he reversed an 
earlier Interior Department finding, in recognizing the 
Duwamish tribe of Seattle?
    Ms. Blackwell. There was a recommendation that had been 
made from the staff earlier.
    Senator McCain. When you recognized the Nipmuc of 
Massachusetts, did he reject the findings of Interior 
Department historians?
    Ms. Blackwell. Again, there were recommendations made by 
Interior Department historians. I would be happy to supply 
those.
    Senator McCain. Do you know what those recommendations 
were?
    Ms. Blackwell. It is my distinct recollection that they 
were against the positive finding.
    Senator McCain. Do you think this is a little unusual?
    Ms. Blackwell. It may be unusual. The regulations provide 
that the Assistant Secretary ultimately is responsible for 
making these determinations, for reviewing staff work, and for 
making these determinations.
    I think that the comment period is a very strict comment 
period, in which members of the public, peer review, and others 
outside the Department of the Interior are given an opportunity 
to comment.
    Senator McCain. Are you aware of previous cases where 
either the Director or the Acting Director have reversed the 
recommendations of the staff and historians, and 
anthropologists and geologists?
    Ms. Blackwell. I am unaware of any cases that I could cite 
to the Senator now. I will say that there is extensive 
discussion among the historians and the anthropologists that 
are at the BIA before its recommendations are made.
    Senator McCain. That is a great answer, but it is not my 
question.
    Ms. Blackwell. I am unaware of any cases specifically, 
right now.
    Senator McCain. Thank you very much.
    Mr. Deer, the Mohegan leaders gave investors Trading Cove 
Associates, headed by Saul Kirschner, creator of the Sun City 
Casino and Resort, 40 percent of gaming revenues, but also 
exclusive rights to develop and manage a hotel at the casino 
site.
    The deal never got scrutiny from the National Indian Gaming 
Commission, because of a disputed interpretation of a portion 
of the regulations. The rights were later bought back from 
Kirschner trading for a whopping $430 million. Then there was 
an additional amount for the development of the hotel, that 
totalled $800 million in compensation, that was paid to Mr. 
Kirschner and Trading Cove Associates.
    Is that a normal kind of thing that takes place in these 
contracts, Mr. Deer?
    Mr. Deer. I would say it is not normal.
    Senator McCain. Do you think that it might be described as 
disturbing or even outrageous?
    Mr. Deer. You know, Senator, hindsight is a great animal 
that we have. Today, we might say that. But I was not there at 
the time, and I have no comment. I think the law was followed, 
as it is written in the act.
    Senator McCain. So you have no comment?
    Mr. Deer. That is correct.
    Senator McCain. Let me just followup for 1 second.
    Mr. Deer. Sure.
    Senator McCain. The intent of the law was that a maximum 30 
percent, and in some cases, a maximum 40 percent, of revenues 
would be given to outside sources. Do you think that, at least, 
is keeping with the spirit of the law?
    Mr. Deer. Senator, under 2711(b)(6), there is a section 
called termination clause.
    Senator McCain. I am not asking about the legal part of it, 
Mr. Deer. I am asking whether you think that this was an 
appropriate thing to happen or not.
    Mr. Deer. Well, you know, tribes also looked this over, 
too. This is a policy call. If the tribes had very good 
attorneys there, and I believe they did, and tribes wanted this 
deal, it then becomes a policy call of the Congress of the 
United States to decide, at what point does the trust 
relationship cease, and the tribes have the right to make their 
own decisions?
    Senator McCain. So then we probably should not have had the 
30-percent requirement, according to your logic that you are 
using right now, Mr. Deer.
    You said you voted against the decision on Internet 
gambling, and you said you wanted to submit it in writing. 
Maybe you could tell us verbally.
    Mr. Deer. Sure, it is not Internet gaming. It is on the 
definition of a facsimile. It is a question of separation of 
power from my judicial experience.
    I believe if one reads the Cabazon case out of this 
district, and one reads the colloquy between, for example, 
Senators Inouye and Reid, that the Johnson Act means exactly 
what it means.
    When a judge tells us that is the only definition possible 
under the act and there is no ambiguity, so Chevron does not 
apply, then I think it behooves us to leave it alone.
    Senator McCain. Ms. Blackwell, we will be submitting 
additional questions on these decisions. A lot of interesting 
things happened in the last days of the Clinton administration, 
and this is one of them. We intend to get some more answers on 
this issue.
    I thank you, Mr. Chairman.
    Ms. Blackwell. If I may, Senator McCain, the Inspector 
General of the Department of the Interior is also conducting an 
investigation.
    Senator McCain. Thank you very much, and I thank the 
witnesses.
    The Chairman. Thank you very much, Senator McCain.
    Chairman Deer, there have been many, many articles over the 
past decade suggesting that organized crime has been deeply 
involved in Indian gaming. In your experience as Chairman of 
the Commission, have you found infiltration of Indian gaming by 
elements of organized crime?
    Mr. Deer. As you are aware, we have civil enforcement. If 
we find something, we turn it over. You have read the report 
from Justice that says, they have heard of nothing, and I have 
heard of nothing.
    The Chairman. Yes; I am glad you brought that up, because 
we invited the Department of Justice to appear this morning to 
testify, but they declined, stating that they are not fully 
staffed.
    However, they did submit a statement, and I am quoting from 
that statement.

    The department has found no evidence of a systematic 
infiltration of Indian gaming by elements of organized crime.

    Do you find that that conclusion is not farfetched?
    Mr. Deer. I do not find it farfetched.
    The Chairman. Ms. Blackwell, if I may follow the 
questioning of Senator McCain, who has the authority to review 
and approve these applications, the staff or the Assistant 
Secretary?
    Ms. Blackwell. The Assistant Secretary for Indian Affairs 
has that authority under our regulations.
    The Chairman. Does the law require the Assistant Secretary 
to abide with the findings of the staff?
    Ms. Blackwell. I am unaware of any specific requirement 
that requires the Assistant Secretary to abide by the 
recommendations of the staff. That would, of course, rob that 
position of the discretion to make a determination that is 
lodged in the Assistant Secretary's office.
    The Chairman. The decision made by the Secretary is public, 
is that not so?
    Ms. Blackwell. There are a number of steps during the 
Federal recognition process, which require publication in the 
Federal Register and an invitation to members of the public and 
interested parties to opine, to scrutinize the information 
included in petitions, and, in essence, provide a push back 
from the community with regard to the very awesome and 
important decision to acknowledge a group as a federally-
recognized tribe.
    The Chairman. Before I proceed with the questioning, I have 
been advised, Chairman Deer, that you have another engagement 
that you must attend to. If you must, you are free to go.
    Mr. Deer. I believe so, yes.
    The Chairman. Then we thank you very much for your presence 
here.
    Mr. Deer. Thank you, Mr. Chairman.
    The Chairman. Ms. Blackwell, does the Indian Gaming 
Commission ever submit contracts or agreements that have been 
submitted to the Commission by tribal governments to the 
Interior Department for the Secretary's review under section 
81?
    Ms. Blackwell. Yes, Mr. Chairman; it is quite common for 
the Commission to send agreements to us, after the Commission 
has determined that the agreements are not management 
contracts, and thus are termed related gaming agreements, 
generally.
    The Chairman. Does the department notify the Commission of 
the disposition or the determination that the department has 
made?
    Ms. Blackwell. Not as a formal matter; as was stated 
earlier before this committee, there is ongoing, informal 
communication between the BIA and the Office of Gaming 
Management, and the Commission and their staff. For many years, 
that has been on a monthly basis. There is no formal report 
back to the Commission. I believe that Ms. Homer flushed that 
out a little bit.
    As a matter of fact, the BIA, when the gaming-related 
agreements are submitted to us from the Commission, we 
scrutinize them, first of all, at the Indian Gaming Office, 
with the assistance of our attorneys.
    Then a determination is made with the regional directors in 
the 12 regional offices out in Indian country, whether or not 
with those agreements, it would be more appropriate for the 
regional director and their staff to do the approval authority 
under 25 U.S.C. 81.
    The Chairman. Now on the term ``encumber,'' if a contract 
encumbers Indian land, it must be reviewed by the department. 
Is that not so?
    Ms. Blackwell. That is correct under the amendment to 25 
U.S.C. 81.
    The Chairman. What is your interpretation of the term 
``encumber?''
    Ms. Blackwell. Well, Mr. Chairman, in proposed regulations, 
we have defined ``encumber'' to mean a claim, a lien, a charge, 
a right of entry or liability, to real property. The examples 
that are given are leasehold mortgages, easements, and other 
contracts or agreements that, by their terms, could give to a 
third party exclusive or nearly exclusive proprietary control 
over tribal land.
    The Chairman. Under that interpretation, as an Indian 
leader, I could submit a contract to the Interior Department to 
build a hotel, because it encumbers tribal lands. Is that not 
so?
    Ms. Blackwell. That is correct.
    The Chairman. Then I would submit a management contract to 
the Commission, because I am going to have a gambling operation 
in that hotel. Is that not so?
    Mr. Deer. Correct.
    The Chairman. And if you are not informing each other of 
your decisions, is it not possible that the fee might exceed 40 
percent, because the same manager is handling gaming and hotel?
    Mr. Deer. I think, Mr. Chairman, if I could break in, it 
comes to us first. If we determine that it is a management 
contract, then it is subject to the 30 percent, or perhaps even 
as high as 40 percent, et cetera.
    If we find that it is not a management contract, and we 
have no jurisdiction, then it is sent to BIA for their use of 
the term ``encumbered.''
    The Chairman. But what about a hotel that they determine is 
encumbering, but you handle not the hotel portion, but just the 
gaming portion?
    Mr. Deer. If we found it to be a management contract, then 
we could hold them to IGRA. But if it is not a management 
contract, there are many things out there, Mr. Chairman, called 
lease agreements on machines.
    There are matters all over the book of what innovative 
lawyers call these agreements. Many times, they do not fit the 
category of a management contract.
    If we still have problems, if we have questions, we can 
find out who is really calling the shots here. If it is a 
consulting agreement, can the tribe automatically turn down 
whatever the consultant says that they should be doing?
    So there are other things that we look at. That is what has 
happened in the past with JPW and Pan American. We spent a lot 
of money and a lot of time, but we were able to prove that they 
were managed without a contract; but that is time intensive.
    The Chairman. So under the process that is being 
implemented, Indian tribes could be paying much more than they 
should be?
    Mr. Deer. Under the act, yes.
    The Chairman. Do you have any proposal to make that would 
clarify this, so that Indian nations are not snookered?
    Mr. Deer. Well, I would hope that we are becoming more 
astute, in that the tribes with the good lawyers that they have 
are looking over these other agreements that are not 
``management contracts.'' But there are some loopholes there.
    That goes back to the policy issue, Mr. Chairman. At what 
point do we let tribes conduct their own businesses, and at 
what point are we the trustee of that business?
    You had put in the act the management contract. But there 
are exceptions to that. I want you to know that we are diligent 
at my business, at our place, and we look over those matters 
that say they are simply not a management contract. We have 
legally gone after at least two, and they resulted in large 
fines.
    Ms. Blackwell. Mr. Chairman, if I may, I would just to 
clarify this.
    The Chairman. Yes.
    Ms. Blackwell. All agreements are submitted to the Gaming 
Commission first, and they make the determination. They cull 
out those that fall under their jurisdiction. If at any time 
during the process we receive an agreement that we feel may be 
subject to their jurisdiction, we submit it to them 
independently, and ask for their review.
    Essentially, when we receive the gaming-related contracts 
and agreements, the transmittal to us makes it clear that those 
are subject, as determined by the Commission, to our review 
under residual trustee authority, 25 U.S.C. 81.
    I would agree with Mr. Deer that in large part, it depends 
upon the imagination of attorneys in writing agreements that 
would escape management contracts, and would also now escape 
the limitations in 25 U.S.C. 81; that such agreements must 
encumber the land, and the term must be for more than 7 years.
    The Chairman. It has been noted, Ms. Blackwell, that there 
have been many, many articles suggesting that groups of people, 
Indians, have been applying for only one purpose, to carryout a 
gaming operation.
    However, is it not true that there have been many, many 
applications that have been filed, and still pending 
applications, before the Cabazon decision?
    Ms. Blackwell. Yes, Mr. Chairman; and thank you for this 
opportunity to clarify some statistics that my staff has 
quickly pulled together.
    That is, prior to the enactment of IGRA in 1988, we had 
received letters of intent from 116 Indian groups seeking 
Federal recognition. Since that time, after the enactment of 
IGRA, an additional 133 groups applied.
    There has been somewhat of a larger number that have 
letters of intent that we have received, but not an appreciable 
large number, since the passage of IGRA.
    I think it might also be important to point out that 
Federal recognition as an Indian tribe by the United States 
does not automatically, in and of itself, give such a tribe a 
land base, or any kind of land holdings.
    The determination as to whether or not land is to be taken 
in trust for a tribe depends, in part, on this Congress, on 
legislation that this Congress has passed over time that sets 
aside land bases when they congressionally recognize tribes, or 
through our land acquisition program, and the regulations that 
are set forth in 25 CFR, part 151; nor does, necessarily, 
acquisition of land or a land base for a newly-recognized tribe 
imply that they can conduct gaming on those newly-acquired 
lands. That is a separate third and equally rigorous process.
    The Chairman. Just as a matter of curiosity, of the 116 
that had applied before IGRA, how many have been approved?
    Ms. Blackwell. Prior to the enactment of IGRA in 1988, 
there were seven tribes that achieved Federal recognition. 
Post-IGRA, following the enactment of IGRA in 1988, Mr. 
Chairman, there have been seven tribes that have achieved 
Federal recognition through our Federal regulatory process.
    The Chairman. So that is seven out of 130-something?
    Ms. Blackwell. There were 116 letters of intent received 
before the passage of IGRA. There have been 133 received since 
the passage of IGRA.
    We analyzed some of the jumps. One jump was between 1994, 
in which there were 9 letters of intent received at that time; 
and in 1995, in which there were 17 letters of intent received.
    Our analysis reveals that that was probably due, in large 
part, to the White House Conference on Federal Recognition, and 
then the publication of our guidelines and our revised 
regulations. So there was more information out there.
    The Chairman. So out of the total 249 applications, you 
have approved 14?
    Ms. Blackwell. We have approved 14, pursuant to the 
department's process.
    The Chairman. So it is not an avalanche?
    Ms. Blackwell. As I had mentioned earlier before this 
committee, there has been an increase. I believe that was in 
response to Senator McCain's question, and indeed, there is an 
increase. I could not characterize it as an avalanche.
    The Chairman. Are there any further questions?
    Mr. Vice Chairman.
    Senator Campbell. Thank you, Mr. Chairman.
    I note that we will be having a vote in about another 25 
minutes, so I will not prolong the questions. But this has been 
a very interesting discussion, and I appreciate some of your 
questions of Ms. Blackwell, too.
    Some of those applicants, though, have waited 25 or 30 
years. Is that not correct?
    Ms. Blackwell. Mr. Vice Chairman, as this committee knows 
we have received approximately 256 letters of intent since 
1979. In short, there have been a number of applicants that 
have been pending in excess of 5 years or more.
    We do have a GAO report that is due by late August, which 
examines the process and looks generally at the issues of how 
Federal recognition is achieved.
    Senator Campbell. Well, I will be looking forward to that 
report. I know there has been an increase, and there is no 
question in my mind that money has something to do with it.
    We are seeing now, in some cases, where groups of people 
who want to be recognized as tribes because of this detailed 
process that they have to go through in Interior, they will get 
a friendly Senator or Congressman to introduce a bill for 
legislative relief and try and do an end run around the whole 
thing, which I do not support.
    But I know we have dealt with that a couple of times. I 
mentioned one hearing that I sat in on some years ago, when one 
group was applying and had a bill introduced to recognize them 
as a tribe.
    I remember asking them some questions about things that 
anybody that is close to their own culture would know. I asked 
them about their stories of creation, as they are called. They 
said they did not know that. They did not have that.
    I asked them about their traditional tribal dress, and they 
did not know that. I asked them about their songs and their 
dance and their art styles, and they did not know that.
    After about 10 questions in which they said they did not 
know any of that, I asked them, well, what do you have that 
makes you a tribe? They said ``we have got a corporation.'' I 
did not think that qualified, but that was it. [Laughter.]
    That did not get through, by the way. That was a long time 
ago, and I will not mention who it was.
    But there is no doubt about it, you know, in Indian 
country, you probably know that there is kind of a joke that 
years and years ago, it was not nearly so in vogue to be 
Indian. I think there has been much more interest, now that 
there is a possibility of getting per capita if you can get on 
a roll or getting recognized.
    But the joke, of course, was in the old days, even when the 
Indian kids played cowboys and Indians, they all wanted to be 
the cowboys. Nobody wanted to be the Indians. [Laughter.]
    Well, it is certainly changing, and I think to the good, in 
some respects. But I really am almost gun-shy about groups that 
want recognition, when behind the scenes, you know that some of 
them, and certainly not all, are cutting deals to get a casino, 
and they are going to enter all these agreements.
    I know in my own case in my own hometown, where I was born 
and raised in Auburn, CA, I knew many of the Indian people who 
lived there, the Mountain Mowoks and the Pomos. They lost their 
Federal recognition in the 1950's, during the Termination Acts.
    Ms. Blackwell. Yes.
    Senator Campbell. They came back to see me about getting 
some help with being reinstated. I knew them when I was in high 
school, some of these very same people that came to talk to me.
    I said, do you want to be re-recognized so you can get a 
casino? They said no. It is just cultural identity.
    This kind of interests me, because certainly in the 
Chairman's ancestry, or in a Black American's ancestry and so 
on, we do not expect the Government to give us each a number in 
those minorities: Hispanic American, Black American, Japanese 
American, or whoever. We do not expect the Federal Government 
to identify each one of us and give us a number to keep track 
of us.
    Years ago, there was some resentment in some circles in 
Indian country about being identified and kept track of, too, 
as you know.
    Ms. Blackwell. That is right.
    Senator Campbell. I have one last comment. As a policy 
matter when we talk about whether tribes should be able to 
negotiate their own deals or not, I am inclined to think they 
ought to, even if they negotiate a bad deal.
    I mean, we all do that. In a free enterprise system, it 
comes with the territory. You have got to read the legal 
contracts. If you cannot, you have got to get somebody that 
will read them for you. You have to be able to live up to the 
parameters of those contracts.
    If you, as a tribe, knowingly sign an agreement, where 
somebody is going to get 40 percent out of the deal, then I 
would say, you may have made a mistake. But if that is what you 
want and that is your mistake as a tribe, then you ought to go 
with it.
    We should not try to oversee it and tell them, well, you 
poor innocent people, you made a bad deal, and we are going to 
try and bail you out now. That is part of the learning process, 
but that seems to me that is what real sovereignty and self-
determination is all about.
    Well, I have no further questions, Mr. Chairman, but I look 
forward to the next panel.
    The Chairman. Thank you very much.
    Because of the complexity of the matter under discussion, 
may we submit questions to you for your response?
    Mr. Deer. You certainly may.
    Ms. Blackwell. Absolutely, yes.
    The Chairman. It has been a long morning for you, Mr. 
Chairman, and Ms. Blackwell. Thank you very, very much.
    Mr. Deer. Thank you.
    Ms. Blackwell. Thank you.
    The Chairman. Our next panel consists of the following 
people: Ernie Stevens, Jr., chairman of the National Indian 
Gaming Association, accompanied by Mark Van Norman, the 
executive director of the National Indian Gaming Association; 
Keller George, president, United South and Eastern Tribes of 
Nashville; Daniel J. Tucker, chairman, California Nations 
Indian Gaming Association of Sacramento; David LaSarte, 
executive director, Arizona Indian Gaming Association of 
Phoenix; and Tracy Burris, executive director, Oklahoma Indian 
Gaming Commission, Norman, OK.
    Gentlemen, I welcome you. I know you have been waiting a 
long time. I will be sitting here to listen to all of your 
testimony, but we may be interrupted by votes.
    So may I now call upon the chairman of the Indian Gaming 
Association, Mr. Stevens.

  STATEMENT OF ERNIE STEVENS, Jr., CHAIRMAN, NATIONAL INDIAN 
 GAMING ASSOCIATION, ACCOMPANIED BY MARK VAN NORMAN, EXECUTIVE 
                            DIRECTOR

    Mr. Stevens. Good morning, Mr. Chairman, it is an honor to 
be here before you. I will try to summarize my comments as best 
I can. Obviously, our full testimony is available and has been 
submitted.
    The Chairman. All of your complete statements will be made 
part of the record.
    Mr. Stevens. Good morning, Mr. Chairman and Vice Chairman 
Campbell. As the chairman of the National Indian Gaming 
Association, it is my honor to be here before you. I thank you 
for the opportunity. Joining me today is Mark Van Norman, our 
executive director.
    The National Indian Gaming Association is a non-profit 
association of 168 Indian tribes dedicated to preserving the 
tribal sovereignty and inherent right of tribal governments to 
operate gaming enterprises to raise governmental revenue.
    Thank you for this opportunity to testify once again, Mr. 
Chairman. This morning I will touch on four points: The 
benefits of tribal governmental gaming; tribal regulatory 
systems; the NIGC and its regulations; and some concerns that 
NIGA member tribes have with IGRA.
    Regarding the benefits of tribal gaming, the United States 
has consistently recognized that Indian tribes are sovereigns 
with governmental authority over their members and their 
territories. Through IGRA, Congress sought to promote tribal 
economic development and recognize that Indian tribes have the 
inherent authority to engage in gaming for governmental 
purposes.
    The results achieved by Indian tribes through gaming have 
been amazing. Indian gaming provides jobs and economic 
development for Indian tribes and their non-Indian neighbors. 
Indian gaming has been an important source of employment and 
economic development for Indian tribes, generating 250,000 jobs 
nationwide.
    In Wisconsin and other areas, Indian gaming has proven to 
be the best welfare-to-work program. In some cases, welfare-to-
work has put some people in situations where they go to work, 
but cannot pay for their child care and related bills. Indian 
gaming provides good pay, good benefits, and in some cases, 
even child care, for all of our employees, Indian and non-
Indian, alike.
    Indian tribes use gaming revenue to build schools, health 
clinics, water systems, and roads; and to fund education, 
health care, child care, and elder services.
    The Oneida Nation is particularly proud of our Turtle 
School, an elementary school where our Indian youth go to 
school. They learn their language and learn a good quality 
education in a brand new, state-of-the-art school. We are very 
excited about that, and we are also very proud of the services 
offered to our elders.
    In addition, gaming has provided tribal governments with 
the capital necessary to develop new enterprises. More 
recently, we worked with the National Indian Business Leaders, 
small business vendors in Indian country, and are currently 
working to try to promote their efforts out there in Indian 
country.
    Tribal gaming benefits neighboring communities with jobs 
for State residents, and revenue for State and local 
governments through payroll and other taxes.
    NIGA recently did a study of charitable giving, and found 
that Indian tribes gave $68 million to charity, including 
donations on off-reservation hospitals, schools, law 
enforcement vehicles, and other local needs.
    Many Indian tribes use gaming revenue to help other tribes. 
For example, the Forest County Potawatomi Tribe assists the Red 
Cliff Band and the Sakaogon Band of Chippewa on an ongoing 
basis, and funds a Milwaukee Indian school for the benefit of 
all Indians in Milwaukee.
    I have asked to submit this for the record. It is a 
pictorial tour that I did with the Potawatomi casino, 
throughout their casino and one quadrant of the community which 
they support.
    It is a community where I grew up in, and a lot of poverty, 
crime, and violence exists. They funded several organizations, 
and this is just one of four quadrants that they support in 
Milwaukee.
    It is an outstanding note of what the Indian gaming is 
doing to help enhance the services and the safety in the city 
of Milwaukee.
    Of course, we know that tribes have a lot of work to do. 
Tribes continue to have serious unmet needs, and many of our 
people live in poverty, and face diabetes and heart and liver 
disease.
    We know we still have a long ways to go to catchup with the 
rest of America, and it is our commitment to continue those 
efforts.
    On tribal regulatory systems, I would like to point out 
that Indian gaming is the most highly regulated form of gaming 
in the Nation. It is subject to the regulation of three 
jurisdictions: Tribal, Federal, and State.
    Tribes regulate their own gaming through tribal gaming 
commissions and tribal justice systems. States regulate tribal 
gaming at a level negotiated through tribal State compacts. The 
Federal Government regulates tribal gaming on several levels. 
The NIGC is main regulator at the Federal level.
    In addition, the Department of Justice, through the FBI; 
the Interior, through the BIA; and the Treasury, through the 
IRS and FINSIN, all have a role in regulating tribal gaming.
    Under IGRA, tribes serve as the primary regulators of 
Indian gaming, and over the past decade, tribes have developed 
world-class regulatory systems.
    In addition, we are very proud that we have an outstanding 
check and balance system within our tribes. I can only speak of 
one tribe in this brief time that I have to speak to you. 
Obviously, my tribe, the Oneida in Wisconsin, has an audit 
committee. They have an internal audit that oversees the entire 
tribe, and then they have internal auditors within the gaming 
operation.
    In addition to that, they have the Gaming Commission. They 
have their own investigators. We have tribal police who also 
have their own investigators.
    In addition, to expand from that, we have associations, 
regional, local, and State associations, that tribes, working 
together, have helped do a lot of service in helping to 
regulate our casinos and fight crime in Indian Country. I think 
they have done a really good job, and we are very proud of 
them.
    The tribes realize that good regulation is the cost of a 
successful gaming operation. We have made regulation a 
priority, and we can demonstrate that.
    In 1998, a NIGA survey indicated that 147 tribes spent over 
$127 million on tribal regulation in Indian gaming. Based on 
NIGA's current survey, we estimate that this year, the tribes 
will spend $150 million to regulate Indian gaming operations. 
In addition, we estimate that tribes will pay over $30 million 
for State regulation of their operations.
    Against the backdrop of comprehensive regulation, the 
Justice Department has repeatedly reported that there has been 
no infiltration of organized crime on Indian gaming. A national 
gambling impact study commission confirmed this finding.
    As I stated above, the NIGC is the main Federal regulator 
of Indian gaming. The Commission's $8 million budget is funded 
entirely by tribal governments. Over the past 3 years, NIGC's 
personnel increased over 200 percent. With 77 employees and 5 
field offices, the National Indian Gaming Commission is fully 
equipped to provide a secondary level of oversight to Indian 
gaming.
    Regarding their proposed environmental health and safety 
regulations, in our view, the NIGC should stay close to its 
core mission of regulating Indian gaming. However, the 
Commission's proposed environment, public health, and safety 
regulations go beyond its core mission.
    We already work with the EPA on environment issues. We have 
our own building codes, and we work with our own fire 
departments, or work with local departments, to address safety 
issues. We do not need another layer of Federal bureaucracy in 
this area.
    On the proposed definition changes, in its initial 
definition regulations, the NIGC wrongly defined the term 
``facsimile'' as any gambling device, as defined under the 
Johnson Act. The NIGC recently decided to remove that reference 
to the Johnson Act. We ask you to support the NIGC's efforts to 
correct its earlier mistake.
    On the concerns with IGRA, the Indian Gaming Regulatory Act 
has generally worked for Indian tribes. However, the Supreme 
Court decision in the Seminole case severely tipped the balance 
of the compacting process in favor of the States. This leaves 
the tribes with the right to good faith negotiations, but no 
way of enforcing that right.
    In 1999, the Secretary of the Interior enacted regulations 
that permit tribes to request alternative class regaming 
procedures. We ask this committee to support and ratify these 
regulations, which restore the balance between tribes and the 
States that IGRA envisioned. The committee never intended the 
States to have a veto power over the compacting process.
    I would like to say a few words about the Federal 
acknowledgement process. Recent reports wrongly characterize 
the process as a gaming issue. It is not.
    Many of the tribes that have petitioned for recognition did 
so 10 years before the enactment of IGRA. Most of the tribes 
that have been recognized since 1988 do not engage in gaming.
    I struggle, Mr. Chairman, with my emotions, when we talk 
about the Indian people, that have survived the attempts to 
eliminate the genocide against my people, and try to make that 
a gaming issue.
    We know and we have been able to highlight where there are 
serious difficulties for people trying to get recognition, and 
we know who Indian people are.
    We talk about the Duwamish and Chief Seattle. He said this 
is where we come from, the land, from our Mother Earth, and the 
city of Seattle is named after him. So I really struggle with 
that. I do not want to cloud my testimony, but I think if they 
are Indian people, we will know who they are, and they know how 
to explain who they are.
    I also know there are so many things like those tribal 
songs, tribal regalia, their traditional customs. That was all 
part of the genocide which was taken from them. In more 
contemporary times, we have tried really hard to regain those.
    So that is always a struggle, and we appreciate that, Mr. 
Vice Chairman, that scrutiny; because the last thing we want is 
people who are not Indian to be recognized. At the same time, 
we want to recognize Indian people that fought back through so 
much genocide, to stand up as who they are, as Native people 
from this land.
    In conclusion, Mr. Chairman and Mr. Vice Chairman, I just 
wanted to say that. I apologize, but it is a very emotional 
thing for me and my people.
    Regarding the Wolfe/Shays bill, you know, we are a little 
bit disturbed about that. We are prepared to step up to the 
plate and answer all those questions again, if we have to.
    We believe the Impact Study Commission has done that. We 
believe our brother and sister tribes out there have done that. 
We will do it again if we have to, but we have a lot of 
important things on our plate, and we would like to work on 
those.
    So in conclusion, I believe tribal gaming is fully 
regulated, and it is working to benefit both the tribal 
governments and the surrounding communities.
    I would like to thank you at this time for allowing me to 
testify. I appreciate it very much. As I said, we have 
submitted our testimony, and we are definitely here to answer 
any questions that you may have, Mr. Chairman.
    [Prepared statement of Mr. Stevens appears in appendix.]
    The Chairman. Mr. Chairman, I thank you very much for your 
statement. I can only say that if a people cannot be described 
with emotion and passion and pride, those people will 
disappear.
    Now may I call upon President George of the United South 
and Eastern Tribes.

STATEMENT OF KELLER GEORGE, PRESIDENT, UNITED SOUTH AND EASTERN 
                             TRIBES

    Mr. George. Mr. Chairman, I appreciate the opportunity of 
being able to come here and give testimony before this 
committee again. I have submitted quite a large written 
testimony, trying to cover all the issues that all of the 
tribes within USET have to deal with.
    We have 24 federally-recognized tribes in our organization. 
We come from Maine all the way to Florida, as far west as 
Texas, comprising 12 States.
    Some tribes are large, some tribes are small, and some 
tribes are in the middle. So we have various different degrees 
of success in our gaming operations.
    Within the Eastern Region, we have probably two of the most 
successful tribes, the Mashantucket Pequot and the Mohegan 
Tribe in Connecticut.
    USET has played an integral role in these tribes and things 
that have been going on in the States that we have our tribes 
reside in. In USET, we have nine tribes that are in class III 
gaming. We have six tribes that conduct class II gaming.
    For example, the Penobscots in Maine conduct a bingo 
operation, but only on weekends, on like Friday or Saturday 
nights. So there is not a large amount of revenue that is 
generated from that gaming operation.
    The Miccosukee and the Seminole in Florida conduct class II 
gaming, because they have not been able to get a compact. We 
all know of the Supreme Court decision in the Seminole case. 
Also, the Poarch Band of Creeks in Alabama come under that same 
category.
    However, we do have tribes in the State of Louisiana, for 
example, where we have three tribes that have gaming 
operations. One tribe that has been recognized, the Gina Band 
of Choctaws, has been denied getting into class III gaming, 
basically because the Governor will not sit down at the table 
and negotiate with them, because of the Seminole decision, 
where the tribes can no longer take the States to Federal 
Court.
    We have the same thing in Massachusetts. They did manage to 
get a compact negotiated. The Governor was willing to sign it, 
but the legislature stepped in and said they had to approve it, 
and they chose not to approve it.
    With the Narragansett Tribe in the State of Rhode Island, 
they had been prohibited on a rider that was introduced in the 
Senate on an Appropriations bill that prohibited the 
Narragansetts from going into gaming.
    All of their attempts to get into gaming have been 
thwarted, and there are numerous other tribes that would like 
to get into gaming, but because of the situations there, and 
the ruling on their territories in Maine, it is just not 
feasible for them to do that.
    However, in the USET area, there have been a lot of 
benefits of gaming for the nine tribes that have class III 
gaming operations. They vary in size, again, the Mashantucket 
Pequot, and the Mohegan being the largest; and some of the 
smaller operations such as Chitimacha, Tunica-Biloxi, and 
Oneida. We have been very successful in some of those 
operations that we have had.
    I would point out that as far as IGRA, in our opinion in 
the East, the Indian Gaming Regulatory Act is working. 
Sometimes, it may be not as fast as we would like it to, but 
the reason for the act was to promote tribal economic 
development, tribal self-sufficiency, and strong tribal 
governments. We believe that act is doing that.
    One of the former Assistant Secretaries recently called 
gaming, ``The only Federal Indian economic initiative that ever 
worked,'' and we believe that is correct.
    Prior to the advent of Indian gaming, many Indian Nations, 
while legally recognized as sovereign governments, they were 
not able to provide basic governmental services to their 
people. They had all the legal attributes of sovereign nations, 
but did not have the practical ability to be an effective 
government for their members.
    At the Oneida Indian Nation, our children were facing a 
future consisting of food stamps, minimum wage, broken down 
trailer homes, and our once expansive homelands in Central New 
York were reduced over the years from 6 million acres to 32 
acres.
    The Mississippi Band of Choctaws also, before their 
economic development, were considered one of the poorest of the 
poor tribes, when unemployment was over 80 percent.
    Tribal gaming, for many, has reversed a cycle of poverty. 
But I would like to point out at this time, the Oneida Nation 
has been successful, but those 8 years of success do not 
outweigh over 200 years of poverty that we have endured.
    So that is one of the things that we would like to point 
out, because most of the tribes now that have been successful 
in gaming for over 200 years, existed in poverty and alcoholism 
and all of that.
    Even with all of the success that we have had over the 
years, Indian people are still not on the level as others in 
this great country that we call America, because of diabetes, 
alcoholism, child abuse, spousal abuse, and all of those things 
that are things that we need to work on. That is where the 
revenues that have been generated for gaming are going, to the 
most part.
    My nation does not issue or does not give per capita 
payments from gaming revenues. We have decided to do it in 
other ways, by providing full scholarships to our Indian people 
to go to any university or school that they would like to go 
to; by initiating a health care insurance policy for each and 
every member.
    No matter where they live, on the reservation, or if it is 
in California or Washington, DC or wherever they are, they are 
given that ability to access this insurance policy that covers 
them on health care.
    In Oneida, we have over 3,000 employees, of which 86 
percent are non-American Indian. Proceeds of gaming go directly 
to providing governmental services. We have our own home 
ownership programs. We do not use HUD anymore. We have 
affordable housing. As I mentioned, we have the health care 
insurance program.
    We have our own police force, that is one of the few police 
forces in the entire country that has Colea certification. 
There are not that many police forces, Indian or non-Indian, 
that have that.
    We have our own legal department and our tribal court 
system. We have a very active language and cultural retention 
program. We have even extended our language program this year 
to include house visits. For whatever reason, if the family 
members cannot attend the sessions in the evening or during the 
day, we now go to the homes and attempt to teach the language 
of the Oneidas.
    Now we are having more of our youngsters, in particular, 
that are communicating in our Native language, that somehow 
almost died out. It is coming back strong, and we believe that 
the money that has been used is a good thing.
    The Mashantucket Pequot Nation has built one of the best 
state-of-the-art museums and research centers in the country, 
along with the Cherokees in North Carolina, that have revamped 
their museum in Cherokee, NC, to tell the story of their tribe. 
It teaches some of the culture of the Cherokees.
    The Choctaws have built a health care, hospital, boarding 
high school. They have law enforcement and tribal courts, and 
they also just unveiled the state-of-the-art fire protection 
where they do mutual aid to the counties around them; because I 
think there are eight different distinct communities that 
comprise eight different counties, that their checkboarded 
reservation involves. So they provide fire protection, not only 
to the reservations, but to the local communities around them, 
with mutual aid agreements.
    Mr. Chairman, we talk a lot about economic development.
    The Chairman. Mr. President, I will have to leave to vote. 
So can we resume this upon my return?
    Mr. George. Yes, sir.
    The Chairman. We will stand in recess for 10 minutes.
    [Recess.]
    The Chairman. The hearing will please come to order.
    May we now resume our hearing. President George, you were 
not quite finished yet.
    Mr. George. Thank you, Senator.
    I would like to get into how some of the local economies 
benefit from Indian gaming. At Turning Stone Casino Resort, 
payroll exceeds $63 million. Payments to vendors exceeded $123 
million. Capital expenditures are about $20 million. This is 
over the 8-year period that we have been open, since 1993.
    We have a economic development report that is done by Zogby 
International, who is a renowned pollist that does a lot of 
political reporting.
    We have that available that I would like to enter into the 
record. Also, we have an economic development report that has 
been done for the Mississippi Band of Choctaws. This is done by 
the Southern Mississippi School. We would also like to include 
this in the record.
    The Chairman. It will be received.
    Mr. George. Thank you.
    [Referenced documents appears in appendix.]
    Mr. George. The Oneida Nation has over 3,000 employees. 
About 86 percent of those people that we employ are non-Natives 
in our casino, because we are a small nation, and we do not 
have the labor force that we need. Therefore, 86 percent of our 
employees are non-Native.
    Also, the Mohegan Tribe, for example, has approximately 
8,500 employees, or will reach that figure in a couple of 
months, when their expansion hits full gear.
    As Senator Campbell points out, the Oneida Nation spends 
$8.8 million in regulation every year. That is only one casino. 
I know there was an article that I read that Nevada spends 
about $80 million.
    But if you will take into consideration that in the Eastern 
Region of the nine casinos, we spend in excess, conservatively, 
$50 million a year in regulation of the nine casinos in our 
Eastern Region.
    I do not know about the other areas, but I do know about 
the Eastern Region. I have been a gaming commissioner and 
chairman of our Gaming Commission for 8 years. Prior to that, I 
was in the area of learning how to be a gaming commissioner, 
and studying the issues. I also was on the Negotiating 
Committee that negotiated our Nation's State compact for my 
tribe.
    Also, I would like to point out, at Choctaw, they have 
2,243 Indian employees, and they have 3,570 non-Indian 
employees, which gives them a total of 5,822 employees. At the 
end of 2002, when their new Pearl River Casino Resort is 
finished, that will probably double.
    So Indian gaming has been beneficial to not only the 
tribes, but the surrounding communities. In our area, in 1993, 
when we were going to open our casino, Griffith Air Force Base 
closed. That meant there was a loss of over 4,000 jobs. We 
stepped in and provided jobs for some with that kind of help 
with that job crunch of losing that many jobs at one time.
    Also, we have provided moneys for the local governments 
around us and the schools around us. For example, we have given 
over $7 million to build a water and sewer line, and turned it 
over to the town of Verona for administrating.
    We gave them $350,000 for a new town hall, and also over $2 
million in grants to education. This is where we give money to 
the local schools, not to the counties, but to the local school 
boards, to use in whatever way that we see fit.
    In Cheryl, they have used that money to buy computers. 
Another school district has put on teachers in special 
education for those children that need that extra help. We do 
not put any strings on it. They can use those moneys for 
whatever projects that they want to use them for. In our mind, 
Indian gaming is a win/win situation for tribes and our 
neighbors.
    There is a lot of talk also about regulation. You know, I 
have been President of USET for going on eight years now, and 
over 8 years, as I mentioned, as a gaming commissioner. I think 
I know a little bit about the regulations that we have to go 
through.
    Under my gaming commission, we have a staff in the Internal 
Audit Division of six people that audit internal controls. We, 
by law, have to submit a audit of the entire operation to the 
NIGC annually. So, yes, we are providing those audits on a 
timely basis, and that is what a large portion of those moneys 
that we spend go to.
    We support strict regulations because when we negotiated 
our compact, and we welcomed that. We have the New York State 
Racing and Wagering Board, which is the entity that co-
regulates on our reservation all of the tenants of the compact, 
to make sure that we are not in violation, and we welcome that.
    Also, the New York State Police Department does all of the 
background checks, and we have to pay them for all of this. So 
part of that $8.8 million in regulation is because we have to 
reimburse the State. Last year, it was $3.5 million that we 
reimbursed the State for their part in the regulation of the 
casino.
    So we feel like we have been doing a really good job on 
regulation. We also have, in our compact, the criteria that any 
non-gaming vendor that comes in, if it is the trash haulers or 
whatever their job is, that if they do $50,000 or more business 
with us in a calendar year, we do a background check on those 
companies, to make sure there is no organized crime element 
coming into the casino.
    With all of the vendors that provide gaming-related 
services, we do what we call GER, gaming registrants for those 
companies. We do a strict background check on the principles of 
those companies, no matter which company it is; if it is Polsom 
or any of the vendors that we use for gaming-related items and 
supplying gaming-related materials for us or services. That is 
in our compact that we negotiated.
    So in that area of regulation, this is the compact and the 
gaming regulations that we use. It is quite a thick document. 
So there are a lot of things that are very specific that we 
have to do.
    I would also like to submit this to the committee as an 
attachment for what our regulation is about. This document 
right here spells out, from A to Z, what the regulation is, 
including the rules of the game, all of the appendices that we 
have to be in compliance with.
    The Chairman. That will be received for the file.
    [Referenced document appears in appendix.]
    Mr. George. Thank you.
    Some of the benefits of Indian gaming, as I mentioned one 
time before, are that we do not give per capita payments, but 
do it in other services for our tribal members: Education, 
scholarship money, health insurance, social services, natural 
resources, police, fire protection. All of these, we do with 
our own dollars.
    We are in the third year now of moneys that we have, the 
TPA, the Tribal Protection Allocation moneys, that were getting 
from the BIA. We turn that back each year to the BIA to be used 
in the Eastern Region of some of those tribes that may not be 
doing as well as we are.
    To date, that totals approximately $5 million that we have 
turned back to the BIA, and have been redistributed among the 
23 other tribes, paying more attention to some of the tribes 
that need that help that do not have any type of economic 
development. So we are very proud of the fact that we have been 
able to do that.
    In conclusion, Mr. Chairman, I would just like to say that 
we have really appreciate the opportunity to come before you. 
One of the sessions that I would like to just say a little bit 
about, that we went into detail in our written testimony, was 
about the recognition process.
    USET is on record saying that we believe that the process 
should stay within the BIA and the Assistant Secretary for this 
particular reason because the criteria that they used, and I 
know people have mentioned this before, is that the only reason 
the tribes are petitioning for recognition is because of 
gaming.
    But I must point out, Mr. Chairman, that gaming is not one 
of the criteria that the BIA uses under their bar process for 
recognition of Indian tribes. In the Eastern Region, there has 
only been one tribe that was recognized after 1988, that is in 
gaming.
    So although we do know that is the motivation of some 
tribes that have petitioned for it, we feel that the process is 
working. It may need a little tweaking and revising, to make it 
not as lengthy, because as was noted earlier, there are 
petitions that have been presented to the BIA for recognition 
for over 30 years that still have not been dealt with.
    So that is the reason why we think it is in the best 
interests to keep it at the BIA and under the Assistant 
Secretary, and just refine it so that it will be easier to 
tribes to access.
    But I still think, as Vice Chairman Campbell has pointed 
out, that some of the criteria used is the songs, the culture, 
the language, and all of these types of things. They are very 
important to us, as Indian people.
    Because of the dollars that we have been able to generate 
through gaming, as I mentioned, it has enabled us to build a 
big cultural center. Now we have displays where the outside 
communities come in, and in agreement with the school systems, 
we now have materials that we can easily give to the teachers.
    This was the biggest problem that they had, because the 
research materials that they need to teach about the Iroquois 
Confederacy were very hard to get. But now we are putting 
together those types of things that can be used in the school 
systems.
    By New York State law, for 2 weeks, they have to teach 
about the Iroquois Confederacy in the New York school system. 
So now we are able to get some of those material available to 
the teachers that are teaching those.
    Keeping all of what we have talked about in context, while 
Indian gaming has worked for many tribes, it has not solved all 
of our problems; far from it. According to the U.S. Census 
Bureau, American Indians are still nearly 2\1/2\ times as 
likely to be living below the poverty line as the rest of the 
U.S. population.
    Infant mortality rates, alcoholism, and diabetes are 
proportionately higher among Native Americans than other 
groups. Unemployment on Indian reservations is four times the 
national average.
    So, yes, Indian gaming has been very successful for some of 
us, but we still have got a long way to go. As I said earlier, 
the few years of success do not outnumber the 200 years of 
poverty that we have been suffering through.
    Thank you, Mr. Chairman, and we will be glad to answer any 
questions.
    [Prepared statement of Mr. George appears in appendix.]
    The Chairman. Thank you, President George.
    Now may I call upon Chairman Tucker.

  STATEMENT OF DANIEL J. TUCKER, CHAIRMAN, CALIFORNIA NATIONS 
                   INDIAN GAMING ASSOCIATION

    Mr. Tucker. Good morning Mr. Chairman and Mr. Vice 
Chairman. It is an honor for me to be here. I really enjoy 
being here and talking with you.
    My name is Daniel Tucker. I am the chairman of the 
California Nations Indian Gaming Association out of Sacramento, 
CA. There are 109 federally-recognized tribes in California; 76 
of those tribes are members of the California Nation's Indian 
Gaming Association.
    Although we have been very successful in a lot of tribes in 
the gaming process out there, there are still some who have not 
been successful. But on the other hand, our success has not 
been without its detractors, however.
    Try as we might, through organizations like California. 
NIGA, to get the facts before the public, false impressions 
continue to be spread about the ability of tribal governments 
to regulate gaming.
    Millions of dollars that could be used for basic tribal 
needs are put right back into regulations, because we recognize 
it is important. It is sad, then, that after all these years, 
all the significant legislation, every regulatory development, 
and millions of dollars expended for regulatory costs, that we 
still hear reports that paint a landscape that is generally 
uninformed and misleading about our ability to regulate gaming 
on our lands.
    But we will persist in our efforts to correct those 
misimpressions and, therefore, welcome the opportunity do so 
today in this hearing. I believe that under the existing 
system, under IGRA, regulation of tribal government gaming has 
been very effective.
    With respect to the gaming operations themselves, the NIGC 
has enacted extensive regulations setting minimum internal 
control standards, which tribal gaming projects must meet or 
exceed.
    In addition, tribes must also abide by titles 12 and 31 of 
the United States Code, which govern specific procedures and 
reporting requirements for cash transactions.
    Among the results of this commitment to regulation and 
compliance, the Justice Department has testified before this 
committee on many occasions about the virtual absence of 
organized crime in tribal gaming operations.
    Concerning regulation of the California compacts, this is 
very important, Senator. Sixty-one California tribes have 
entered into virtually identical compacts with the State of 
California.
    I would note that earlier it was testified that there are 
39 tribes before Proposition 1(A) that were in gaming, and we 
talked about the explosion in gaming in California. But there 
were only five other tribes after proposition 5 has been 
passed, which means there are 44 tribes that have gaming right 
now.
    There are 61 with compacts, but yet those tribes have not 
gone into gaming, as of yet. You know, we said we have the 
revenue sharing process, which I will be bringing out further 
in my report here.
    To facilitate that process, California tribal governments 
are required to maintain independent tribal gaming agencies or 
tribal gaming commissions at the first line of regulations. The 
new compacts provide for a more explicit process for licensing 
and performing background checks that are set out in Federal 
law.
    Our new compacts flush out construction, environmental, 
health, safety, and other issues related to the facility. Our 
compact also details requirements for lenders, investors, and 
gaming suppliers.
    Compliance with procedures and laws that minimize 
opportunities for fraud, theft, skimming, or money laundering 
are a must.
    The compacts provide specific requirements for tribal 
gaming regulators, including who can serve, freedom from 
conflicts of interest, and require prompt removal of any member 
violating those rules.
    The compacts also provide for the meaningful participation 
by State regulators in the regulation of tribal governmental 
gaming, including State inspections and auditing rights, as 
well as a process for State review; as suitability 
certifications for critical employees and others associated 
with the gaming projects.
    The State has the use of both the State Attorney General's 
Office, through the Division of Gambling Control, for 
investigative and enforcement purposes, and the independent 
Gaming Control Commission for appeals and policy matters.
    Unfortunately, the division of authority and the actual 
practice between those two State agencies still seem somewhat 
blurred. They have been charged with uncertainty about whether 
there will be duplicative and, therefore, inefficient and 
cumbersome regulation by the State.
    Tribes, therefore, have been addressing that issue in 
various ways, including appearing at hearings before the State 
legislature, holding meetings with the State officials, and 
seeking dialog through the compact's own mechanisms.
    The tribes' dedication to regulation is not in doubt. As 
already noted, tribes spend millions of dollars a year on 
regulating their operations, and contemplate regulatory 
participation by the State and Federal Government.
    The tribal/State association is a unique element of the 
California compact. Further demonstrating the focus that tribes 
have placed on regulation is the compact's creation of a 
tribal/State association.
    The association is made up two representatives from each 
California compact tribe's Gaming Commission, and two delegates 
each from the State's Division of Gambling Control and Gambling 
Control Commission.
    State regulations in respect to tribal gaming operations 
are subject to a review and approval process through the 
association that that body offers an ongoing opportunity for 
dialog between the State and tribal regulators. It has been 
meeting regularly since the compacts went into effect.
    This is important; the tribal revenue sharing and sharing 
with other tribes. This is based on tribes not going into 
gaming, per se, because we do not want them to, because of the 
expansion of gaming in California, the explosion that was 
testified to earlier.
    This kind of confuses me, because most tribes, or about 80 
percent of the tribes, will gain revenue sharing from the 
tribes will have gaming, and will get those funds, whether they 
go in gaming or not, under the compact. So those tribes who do 
not get into gaming are still getting the benefits from the 
tribes that do. This is a first for this process in this 
country.
    A stark feature of the California compacts are the 
provisions for sharing gaming revenues with tribes that are 
either not in gaming or have limited operations.
    Under the compacts, revenue sharing provisions, fees for 
licenses to operate slot machines in excess of the base 
allowance under the compact, are paid to the State in trust for 
the tribes eligible to share in that fund. To date, more than 
$40 million has been set aside for distribution to non-gaming 
tribes, or those with limited operations that qualify to share 
in the fund.
    With me, I have a report from the California Gaming Control 
Commission. This is from the supplemental distribution of funds 
from the Indian gaming revenue sharing trust fund. In the May 9 
report, it said that there are only 68 tribes who are eligible 
for profit sharing.
    They came back with a supplemental report, and I would like 
to put this in the record, that now there are 84 tribes that 
are eligible for the profit sharing in California. Another note 
is that the tribes in California who have facilities, who can 
handle the machines that they have, are only allowed up to 
2,000 machines.
    There are only a handful of tribes who have that right now. 
Because some of the tribes are so far out, they maybe have 500 
or maybe 700 machines at the most, because the market allows it 
to be that.
    So it is a market driven policy, and the people who can 
afford the 2,000 will do so. Those who cannot, will not have 
2,000 machines. So we are limited. We have a peak right there, 
but we cannot go any further than 2,000 machines at this time.
    The situation in California, whether you have 2,000 
machines or 500 machines, we still turn our audits into the 
NIGC every year. It may be a little more expensive for us to 
do, but we cannot see why it would be more expensive for the 
NIGC, needing more people, because the audits are the same, but 
the numbers are just bigger. Yes, the numbers are bigger, and I 
am not going to deny that. The numbers are bigger, but the work 
is still the same.
    On sharing with the local communities, the California 
tribes enter into numerous agreements with local governments to 
lessen the off-reservation impacts of gaming operations. These 
efforts have included strengthening tribes' own services, to 
extend them to local communities.
    Additionally, tribes have helped with funding fire engines, 
squad cars, extra law enforcement personnel, installing traffic 
lights, contributing to air quality enforcement resources, 
providing support for mental health and gambling addiction 
programs, and meeting the other needs of local governments and 
communities directly. Added to that has been a tradition of 
making substantial charitable contributions, totalling in the 
millions each year.
    In conclusion, I hope that by our testimony, we have 
demonstrated the priority that we give to gaming regulation and 
sharing the benefits of tribal government gaming. Indian tribes 
are effective regulators, successful operators, and are making 
historic strides as governments.
    On behalf of the California Nations Indian Gaming 
Association and California tribes, we thank you for this 
opportunity to testify today.
    If there are any questions, I would really love to answer 
those for you. I have also our executive director from Cal. 
NIGA, Jacob Drine, here to help answer those questions, if 
allowed. Thank you.
    [Prepared statement of Mr. Tucker appears in appendix.]
    The Chairman. Thank you very much, Chairman Tucker.
    Now may I call upon Mr. LaSarte.

STATEMENT OF DAVID LaSARTE, EXECUTIVE DIRECTOR, ARIZONA INDIAN 
                       GAMING ASSOCIATION

    Mr. LaSarte. Mr. Chairman, Mr. Vice Chairman, my name is 
David LaSarte, and I am an enrolled member of the Couer d'Alene 
Tribe of Northern Idaho. But I am here today as the executive 
director of the Arizona Indian Gaming Association, representing 
17 sovereign tribal governments. On their behalf, I thank you 
for the opportunity to speak today.
    In the interest of time, I am only going to highlight 
certain sections of my written testimony, in order to provide 
you with a brief snapshot of Indian gaming in Arizona, as it 
exists today.
    In Arizona, as elsewhere, tribal governments have 
historically not had any significant source of governmental 
revenue that they need to provide services for their people.
    However, since the Indian Gaming Regulatory Act was put 
into place, tribal gaming in Arizona has provided a critical 
revenue stream for tribal governments to provide essential 
services to their people, as well as develop their 
infrastructure and jump start their economies.
    When we speak about essential services to their people, we 
are talking about things that most Americans take for granted. 
We are taking about things like paved roads, electricity, 
running water, indoor plumbing, police and fire protection, 
medical clinics, and adequate schools.
    While the level of unmet need in tribal communities in 
Arizona, as well as the rest of the country, continues to be 
staggering, gaming has allowed some tribes to make great 
strides in addressing these problems.
    In South Arizona, the Tohono O'odham Nation lies along the 
Mexican border. It has responsibility for 2.86 million acres of 
reservation land, and it has responsibility for 24,000 enrolled 
tribal members. Its gaming operation currently provides 50 
percent of its total governmental revenues for tribal 
operations.
    Tribal departments of fire safety, health care, economic 
development, and education are all 100 percent funded by gaming 
revenues.
    The tribal fire department now employees 37 employees, 16 
fire trucks, and four substations that serve the reservation. 
For health care, there is a new medical clinic to serve the 
rural western part of the reservation. There is a new on-
reservation 60 bed nursing home, so that tribal elders can 
spend their golden years in their own communities, and there is 
a new kidney dialysis center.
    For economic development, there has been $15 million in 
small business grants made to over 150 recipients. In 
education, the tribes have given over $24 million in 
scholarships, and it has also started the Tohono O'odham 
Community College, so that tribal members can achieve their 
educational goals in their own community.
    In addition, gaming provides two-thirds of the budget for 
the Tohono O'odham police department, which employees 213 
employees. That police department in the year 2000 intercepted 
13 tons of illegal drugs and 20,000 undocumented aliens 
crossing the U.S./Mexican border. It provided benefits not just 
to the tribe, but to the State and to the nation, in general.
    Before gaming, these programs simply did not exist in many 
cases, and in other cases, they existed, but at a much 
diminished capacity.
    It is important to realize that even now with these 
significant efforts that have been made, and even now with 
Tohono O'odham being one of the most successful gaming 
operations in Arizona, there are still communities on that 
reservation who were living without the basic necessities of 
running water, electricity, and phone service.
    This just goes to illustrate what has already been said 
today by other people, that the level of unmet need that 
continues to exist in tribal communities is truly overwhelming, 
but at least in the last 8 years, the tribes have been able to 
begin addressing those serious problems, that historically, 
they were not able to address.
    In Central Arizona, the Salt River Pima-Maricopa Indian 
community is located right in the midst of the metropolitan 
Phoenix area. They have only had gaming since 1998. But in that 
short time, they have cut their tribal unemployment from 32 
percent to approximately 15 percent. It is still well above the 
national average, but it is a great improvement.
    The most pressing needs for that reservation are a $100-
million project to upgrade and install a public water system, 
and another $57 million to plan, design, and implement a new 
sewer system.
    Finally, that tribe has purchased their own telephone 
company, so that for the first time, all tribal members on the 
reservation have access to phone service.
    Again, we are talking about essential services and needs: 
Running water, adequate sewage, the ability to use a telephone. 
It is important to note that even the Salt River Indian 
community, which is surrounding on three sides by the affluent 
communities of Phoenix, Scottsdale, and Mesa, that there are 
still people on this reservation who do not have access to 
those essential services.
    These infrastructure requirements, which are obviously 
vital for the quality of life for tribal members on the 
reservation, are even more necessary if these tribes are going 
to be able to attract off-reservation businesses, and to 
diversity their economies, which is the ultimate long-term 
goal, I believe, of all the gaming tribes.
    In Northern Arizona, the Yavapai-Apache Nation has turned 
around their tribal economy to become the largest employer in 
the Verde Valley, with over 750 people working for the casino 
and various other tribal programs.
    Every tribal member now, for the Yavapai-Apache Nation, who 
wants a job, can have one. The tribe can now provide in-house 
training, educational assistance, and has founded a corporate 
university to provide skills for the tribal members that will 
be needed, as that tribe also seeks to diversity their economy, 
now having over seven tribally-owned enterprises that are non-
gaming.
    After years and years of substandard housing on that 
reservation, over 80 percent of the homes have been able to be 
renovated in the last years. The tribes also establish their 
own police and fire departments, their own roads and public 
works departments, and finally, their own tribal court, which 
comes complete with legal services, treatment, and 
rehabilitation programs.
    Finally, that nation has been able to increase the number 
of members that they have in college, from less than 20 to over 
130 today.
    That information that I gave you is deliberately brief in 
the interest of time. I have more extensive information on each 
of those tribes that I would like to submit for the record.
    In addition to all the benefits that are taking place in 
the tribal communities, in the non-Indian communities in the 
State of Arizona, there are significant positive impacts, as 
well.
    Over 9,000 employees work for tribal gaming in Arizona. 
Over one-half of those are non-Native; although in the rural 
areas, where the tribes need the most help, the percentage of 
tribal members as employees goes as high as 84 percent.
    The tribes in Arizona spend over $254 million in goods and 
services. They pay over $28 million in Federal and State 
payroll taxes, and they generate an additional $40 million in 
additional State and local taxes, indirectly.
    Finally, the Udall Center for Public Policy Studies 
estimates that the indirect economic impacts simply of tribal 
gaming operations approaches half a billion dollars in economic 
activity in the State.
    None of this would be possible, the impacts on the tribal 
communities or the impacts on the non-tribal communities, 
without strong public confidence in the integrity of Indian 
gaming operations in the State.
    In Arizona, we currently have 19 tribal gaming operations 
operating, and I believe we have two more that are in the 
design and planning stages. To my knowledge, at this point, 
only one of those tribes, operating one gaming facility, uses 
outside management to run their facility. All the rest of them 
are owned and operated completely by the tribe.
    In Arizona, as in other States, independent tribal 
regulatory commissions take the primary responsibility, and are 
on the front line to regulating Indian gaming in the State, 
subject to the oversight of the Arizona State Department of 
Gaming.
    Over 515 people in the State and $25 million are dedicated 
annually to regulating Indian gaming in the State of Arizona. 
It is important to realize again, when looking at that 515 
people and that $25 million, combined between the tribes and 
the State, that gaming operations in Arizona are subject to 
more strict limitations than many of the States in the country.
    Casinos are not allowed to have more than 500 slots, and 
there are strict limits on the number of slots per tribe. So in 
many ways, the operations are smaller than the rest of the 
country.
    To provide an objective assessment, an independent 
assessment, of the regulatory efforts in the State, the Arizona 
State Auditor General reviewed the performance of the Arizona 
Department of Gaming 2 years ago, and the adequacy of tribal 
State regulatory efforts.
    The State Auditor General identified three primary goals 
for regulation of Indian gaming: To ensure the fairness of 
gaming activities; to ensure the safety of patrons; and to 
prevent any infiltration of organized crime into tribal gaming.
    They issued a 40-page report, but it basically summarized 
into three points: That the regulation of Indian gaming in the 
State of Arizona, between the tribal regulatory entities and 
the State, is extensive, well defined, consistently 
implemented, and effective in achieving those goals; that 
tribal and State activities are consistent with the best 
regulatory practices used nationally, including in the States 
of New Jersey and Nevada; and indeed, the State Auditor General 
found that the regulatory approach in the State was so 
extensive and so effective, and there was so much overlap 
between tribal and State regulation, that one of the 
alternatives that the Auditor General proposed to the State 
legislature was that the State activities be streamlined.
    Although the legislature did not ultimately adopt that 
approach, I do think it is indicative of the level of comfort 
that the State and tribes have with the regulatory structure in 
the State of Arizona.
    In summary, Arizona Indian gaming is providing invaluable 
assistance to the tribal governments in providing for the needs 
of their people and for rebuilding their economies which, as 
has been pointed out, have been destroyed in the last 200 
years. Second, they provide a significant, positive economic 
impact to the State of Arizona.
    Third, it is extensively and effectively regulated with 
such public integrity that over two-thirds of the people in 
Arizona have consistently supported Indian gaming in Arizona by 
tribal governments on tribal lands. They have been supported in 
numerous public hearings, numerous polls, and at the ballot 
box, and we expect that support to continue.
    Thank you for your time, and I, too, am willing to answer 
any questions about Indian gaming in Arizona.
    [Prepared statement of Mr. LaSarte appears in appendix.]
    The Chairman. I thank you very much, Mr. LaSarte.
    Mr. Burris.

  STATEMENT OF TRACY BURRIS, CHAIRMAN, OKLAHOMA INDIAN GAMING 
                          ASSOCIATION

    Ms. Burris. [Greeting in Native tongue.] Greetings, Mr. 
Chairman and Mr. Vice Chairman. I am Tracy Burris. I am the 
chairman of the Oklahoma Indian Gaming Association.
    I am a member of the Chickasaw Nation of Oklahoma. I also 
serve as the Gaming Commissioner of the Chickasaw Nation. I 
have been involved in Indian gaming in Oklahoma for more than 
12 years. I started as a floor worker in a tribal gaming 
facility. Now, I serve as a regulator for my tribe.
    Today, no tribe in Oklahoma has been successful in entering 
into a meaningful compact with the State of Oklahoma. As a 
result, tribal gaming facilities in Oklahoma derive nearly all 
of their revenues from Class II gaming, which is limited to 
bingo and other games like bingo.
    Our tribal governments largely depend on these revenues to 
pay for tribal governmental programs. Our survival is dependent 
on making bingo profitable.
    One of the primary issues that Indian tribes in Oklahoma 
face is determining whether a particular game is class II or 
class III. The Indian Gaming Regulatory Act defines class II 
gaming as bingo and other similar games to bingo, as well as 
certain non-banking card games that are permitted under State 
laws.
    It allows the use of technological aids to play bingo and 
similar games, while also expressly prohibiting the play of 
facsimiles of any game of chance.
    Without a compact determining the difference between a 
Class II technological aid and a class III facsimile, it has 
been a source of great confusion.
    Most of the confusion comes from the National Indian Gaming 
Commission's definitions regulations. The regulations define 
the term ``facsimile'' so broadly that it is almost any 
electronic bingo or pull tab game that meets the definition of 
a Johnson Act device.
    To address this problem, the National Indian Gaming 
Commission has issued a proposed rule that would rescind the 
NIGC's current definition of facsimile. The Oklahoma Indian 
Gaming Association strongly supports this action as a step 
toward bringing the National Indian Gaming Commission's 
regulation out of conflict with IGRA and recent Federal Court 
decisions.
    The decisions of three Federal Courts of Appeal made clear 
the need for the National Indian Gaming Commission to reform 
its definition regulations. The Washington, DC Circuit Court of 
Appeals recently ruled that the Lucky Tab II is a class II 
machine, without the benefit of clearly articulating 
classification standards from the National Indian Gaming 
Commission.
    On behalf of the Oklahoma Indian Gaming Association, I want 
to thank the National Indian Gaming Commissioners for taking 
the first step toward bringing some common sense to the issue. 
I also want to thank the members of the committee, who have 
been supportive of our efforts to clarify the standards of 
class II gaming.
    To bring greater clarity to this issue, we believe that the 
National Indian Gaming Commission should take the additional 
step of revisiting its definition of a technical aid, and 
engage in a negotiated rulemaking with the appropriate parties, 
to develop a criteria for classifying games.
    Mr. Chairman and Mr. Vice Chairman, you know from your good 
work the value Indian people place upon the sovereignty of 
their tribes. In Oklahoma, the spirit and the sanctity of 
tribal sovereignty remains very strong. It is with this 
principle that we find it difficult to accept the National 
Indian Gaming Commission's classification of games regulations.
    These regulations require the National Indian Gaming 
Commission to prove each game before tribes could offer the 
game for play.
    Under current law, the NIGC has an oversight role, but the 
Tribal Gaming Commissions, whose authority comes only from the 
inherent sovereignty of the tribes, are the first line of 
regulation, and have the primary jurisdiction over these 
issues.
    While we understand the need for the National Indian Gaming 
Commission to develop a formal process for classifying games, 
one that takes away the sovereign authority of the Tribal 
Gaming Commissions is unacceptable.
    Another example of a Tribal Gaming Commission at work is 
that of the Cherokee Nation of Oklahoma. It spent thousands of 
dollars on two independent testing laboratories, to test the 
technical components of a magical Irish bingo pull tab machine.
    Both the independent laboratories and the Tribal Gaming 
Commission concluded that the machine met the definition of a 
class II device. The Tribal Gaming Commission then gave its 
approval to play the game at their facilities.
    Soon after, the National Indian Gaming Commission 
determined that the machine was a class III game. A Federal 
Court in Oklahoma did rule that the Cherokee National Gaming 
Commission was correct.
    Classification of regulations can only be successful if the 
Tribal Gaming Commissions have a meaningful role in their 
implementation.
    I hope this committee would encourage the National Indian 
Gaming Commission to work with Tribal Gaming Commission, before 
it initiates a rule on this issue.
    Mr. Chairman and members of the committee, we want to work 
with the committee and the NIGC to bring greater clarity to the 
class II definition, and to make the classification on 
regulations workable in Indian country.
    Again, on behalf of the Oklahoma Indian Gaming Association, 
I want to thank you for the opportunity to appear before you. I 
would like to take this time to answer any question that you 
may have.
    [Prepared statement of Ms. Burris appears in appendix.]
    The Chairman. Thank you very much, Mr. Burris.
    Before I proceed, I would like to just make one 
observation. I have participated in dozens of hearings relating 
to gaming. As I recall, in the early days, the panel would 
almost consistently and uniformly be very critical of the 
activities of the Gaming Commission, and it was a hearing of 
complaints.
    But today, I think the tone has changed a little. I note 
that the Commission has received much praise for its 
activities, its steadfastness, its integrity, and I am very 
pleased with that.
    Because of the complexity involved, and because of the 
nature of the issue, I will be, on behalf of the committee, 
submitting several questions to all of you. These are questions 
on things such as criminal activities.
    I am certain you have noted that whenever the press speaks 
on Indian gaming, 9 times out of 10, they are speaking of 
syndicates of crime, skimming, laundering, and such.
    So I will be asking you specifically, have you experienced 
any infiltration by organized crime into your gaming 
operations, or have you experienced any attempt for such 
infiltration, and if so, how did you address this problem? What 
is your experience with skimming? What is your experience with 
money laundering? What is your experience with crimes within 
the operation?
    Then I will be asking questions on what are the benefits? 
All of you have touched upon these benefits. But what the 
committee will try to do is to maintain sufficient resource 
material, so that if questions arise on criminal activity or 
benefits from gaming, we would have these things ready.
    I would hope that all of you will help us in responding to 
these questions. We will have a whole series of questions. 
Obviously, we will have questions on your relationship with 
your community, your relationship with non-gaming Indian 
nations, your relationship with the Commission, your 
relationship with the Interior Department, and your assessment 
of such relationships.
    So it will be a very comprehensive questionnaire, and I 
hope that you will respond to them.
    Mr. Vice Chairman.
    Senator Campbell. Thank you, Mr. Chairman.
    I am sorry that I got back a little late, too. I do not 
know which door you use to get over there and vote and get back 
here so quickly, but I need to follow you more often. Indians 
are never supposed to be lost. [Laughter.]
    I appreciate your testimony. For those of you who I did not 
hear, I will read your testimony carefully. But let me just 
say, first, to my friend, Ernie Stevens, I think one of the 
reasons that I always enjoy hearing you talk is because you 
know the context of what happened, in the olden times before 
now.
    I would tell you that sometimes when you speak, if you have 
tears in your heart, I would worry if you did not, very 
frankly, knowing what Indian people have gone through.
    In that context, when we talk about crime and talk about 
gaming now, and where this whole thing is going with modern 
Indian America, I think it is really important to remember 
where you came from and where we have been.
    I would say to Mr. George, that if the Indians of New York 
had known better when they sold Long Island for $26 bucks of 
beads, they probably would not have done it.
    But thinking in terms of crime, I will bet there is more 
crime in that same piece of land now than all of Indian country 
combined, in any 24-hour period.
    It kind of amazes me, I guess as it does the Chairman, that 
so much focus has been put on the potential crime, when the 
Department of Justice says there is not a big problem, and 
tribes themselves say there is not a big problem. But we keep 
focusing on that. I guess that is because it is an easy target. 
They ought to focus more on Long Island, if they want to talk 
about crime.
    But I did want to ask maybe just one question of all of you 
because, as the Chairman has indicated, a lot of the statements 
that we were getting and letters we were getting, were pretty 
upset about the Indian Gaming Commission, and that seems to 
have moderated a little bit now.
    I do not know if that is because they are doing a better 
job, or you are communicating better with them, or what. But 
the bottomline still remains that they want to be able to 
assess $16 million in assessments, up from the $8 million that 
they have now.
    I would like to just know your opinion on that.
    Mr. Stevens. I am just going to make sure I review my 
testimony here. The IGRA intends that Indian tribes and States 
are to establish the regulatory framework for class III gaming 
and the compacting process. The NIGC is intended to play a 
support role by reviewing audits and management contracts, and 
approving tribal ordinances.
    Tribes will invest $150 million this year in tribal 
regulatory systems, and over $30 million for the State 
regulatory systems. Given that background, we believe the 
current level of resources of NIGC is about right.
    NIGC, the Federal regulator, needs to respect the tribal 
and State regulators, and avoid a duplication of services. NIGC 
is the third level of jurisdiction, and it should stay close to 
IGRA terms.
    From my perspective, again, you know, I have the utmost 
respect for those regulators, and I have made that clear to 
them. I have interacted early on in my term as the Chairman of 
NIGA with Commissioner Liz Homer.
    So we respect them, but at the same time, as I stated in my 
oral testimony, we think we have an outstanding lineup of 
checks and balances in the tribal systems, and I used my tribe 
as an example.
    But those systems are throughout Indian country, and we 
strengthen those systems by working together through our 
associations and through our groups, through the National 
Indian Gaming Association. We worked together to strengthen 
those associations.
    That is what I think you will see, and we appreciate that 
line up of questions that we will answer. But, you know, we 
will continue to assert that we have a strong, strong body of 
regulators, and checks and balances in Indian country.
    Senator Campbell. I assume that is a no?
    Mr. Stevens. Yes, sir.
    Senator Campbell. All right, how about Mr. LaSarte, when we 
talk about increasing their ability to assess?
    Mr. LaSarte. As I described, I think that the tribes in 
Arizona are happy and content with the current regulatory 
structure. The subject of NIGC increasing their funding is 
something that we have not discussed as a group, and I could 
not really comment on what our 17 members would want us to pay.
    Senator Campbell. Okay, Mr. Tucker, we need your thinking.
    Mr. Tucker. Well, we need to know what the work plan is. We 
do not know what that is. It could be $8 million; it could be 
$10 million. We do not know that. It could be $6 million.
    Senator Campbell. Yes.
    Mr. Tucker. But until we find out what their work plan is, 
we really cannot say what it should actually be. But, you know, 
we are highly regulated. There are tribes out there in 
California right now, who spend almost $4 million a year, just 
on their own regulations.
    So with more regulations, personally, I think it could be 
pretty close to what it is. But, like I said, until we find out 
their work plan, I going to have to say that I could not tell 
you right now.
    Senator Campbell. Okay, thanks; Mr. George.
    Mr. George. My vote would be a resounding no.
    Senator Campbell. That is pretty clear. Other than that, do 
you have strong feelings about it? [Laughter.]
    Mr. George. We do, because you may know that a few years 
ago, we sued the NIGC over the fee structure, because of the 
language at that particular time, that said self-regulated 
tribes, like the Mississippi Band of Choctaws, and according to 
our compact, we feel that if any tribe is a self-regulating 
tribe, the Oneida Nation of New York certainly is.
    What we would like to see is more of that self-regulation 
for the tribes in class III gaming, as well as those in class 
II. As you will note, in 1988, it said that the NIGC would 
issue self-regulatory certificates for tribes in class II. 
Well, they did not even have those regulations until just 
recently.
    So we feel like with the amount of money that we spend on 
regulation, because the legislation, the statute, is very clear 
on the nation/State compact, whatever is negotiated is what 
regulates a gaming operation. In our State, as I stated before, 
we are very strict. We are spending a lot of money.
    Senator Campbell. What do you pay in fees now to NIGC?
    Mr. George. Approximately $80,000 a year.
    Senator Campbell. I notice your total regulatory budget is 
$8.8 million, which is roughly the same, but just a little more 
than NIGC's budget. But you employ 206 people, which is about 
three times as many as NIGC. What is the average salary for 
them, if I might ask?
    Mr. George. Oh, it probably is in the neighborhood of 
$50,000 to $60,000, except for the few professionals that we 
have on the Gaming Commission and executive directors.
    Senator Campbell. I have maybe one last question. I noticed 
with interest, and I read the sports pages all the time, that 
the Oneida Nation is hosting boxing matches. One of the reasons 
that it was big time news was because Joe Frazier's daughter 
and Mohammed Ali's daughter were two of the boxers.
    Many tribes are doing that now. There are a number of them 
in California and other places that are hosting boxing. Have 
you had to deal with State or Federal boxing authorities? That 
is a little bit away from the question of gaming, but there is 
a component in boxing, obviously.
    Mr. George. Yes; the ABC, the Association of Boxing 
Commissioners, with Greg Serb from the New Jersey Boxing 
Commission as the chairman of that organization, this is an 
organization of all of the State Boxing Commissioners.
    There are five tribes, so far, that are members of the ABC. 
We have created our own Boxing Commissions to regulate the 
fights on Indian land.
    I am a former member of our Boxing Commission. I was one of 
the first Commissioners. We have promulgated the regulations 
that are as stringent as New York State's Boxing Commission.
    The Chairman. Does each tribe have its own Boxing 
Commission?
    Mr. George. Not every tribe has, but a lot of them are 
going into it now. In fact, there is a meeting of the 
Association of Boxing Commissioners, beginning today in New 
Orleans, Louisiana, that we are sending delegates to, that will 
go over some of the things.
    There are five tribes that are members of the ABC. One is 
Pablo from Arizona. I am not so sure of the name, but 
Miccasookie are members of that organization, Pequot, Mohegan, 
and also the Oneida Indian Nation. I believe Cherokee is 
getting ready to submit an application. You have to be voted in 
by a panel.
    Senator Campbell. The question that I was going to ask is 
that in Las Vegas, of course, there are books made on boxing 
matches. Is there any connection with the boxing?
    Mr. George. No; there is no gaming on the outcome of a 
boxing match.
    Senator Campbell. I see, good, thank you.
    I might also commend you on passing up the TPA. That is not 
done too often.
    That has been one of the things that we have wrestled with 
for a number of years here, on how to make TPA more equitable 
to the tribes that really need it, without trying to take away 
from any rights that other tribes have. But I think that is a 
great gesture, and something that other tribes ought to look 
at.
    Mr. George. Well, this goes back to our people. If it was 
up to me, I probably would not have agreed with it. [Laughter.]
    I would have probably tried to point out the fact that it 
was one of the things that in payment of our land, it was 
something that we had due and coming to us.
    But the people of the Oneida Nation said, when we entered 
into gaming, that as soon as we were able to, we want to be 
self-sufficient. At a general council meeting, we were 
questioned about our ability, if we were to give up those TPA 
dollars, could we do it. Our answer had to be yes.
    Senator Campbell. But that goes to other Indian people in 
need.
    Mr. George. It goes to the other people, the other tribes 
within the Eastern Region to use, depending on what level they 
are at, and the amount that they received.
    We have a tier methodology that was introduced by Tim 
Martin to the budget committee, that we used to re-distribute 
those funds that were turned back. I should point out that the 
Mohegan Tribe has also followed suit in doing that.
    Senator Campbell. That is very good.
    I have just one last question, Mr. Chairman, if I might, to 
Mr. LaSarte. As I understood your testimony, and I was jotting 
some notes here, the Indian Gaming Commission of Arizona gives 
small business loans to who, to tribal members that are trying 
to open a small business?
    Mr. LaSarte. I believe you are referring to the Tohono 
O'odham Nation, which I was discussing at the time.
    Senator Campbell. Oh, maybe it was.
    Mr. LaSarte. The Tohono O'odham Nation's Tribal Department 
of Economic Development has given out over $15 million in small 
business grants to over 150 recipients.
    Senator Campbell. Okay, well, I was going to ask you how 
they determine the recipients. You probably would not know that 
if it is a tribal decision; but thank you.
    Mr. Chairman, thank you for giving me the time to ask these 
questions.
    The Chairman. Thank you very much.
    Senator Campbell. I will also have a few in writing, too.
    The Chairman. I would like to make an observation before we 
bring this hearing to a close. In the years that I have served 
on this committee, two elements have been extremely important.
    No. 1, is sovereignty. Very little has been said about 
sovereignty today, but I am certain we understand that without 
sovereignty, you will not be sitting here. No. 2, is the 
government-to-government relationship. Very little has been 
said about that today.
    I would just like to remind all of us here, that when we 
entered into this chapter, the Federal Government, the 
Government of the United States, adamantly refused to involve 
itself in gaming operations. They wanted no part of it.
    We had to, on our own initiative, set up this Commission. 
One of the fundamental reasons for establishing this Commission 
was a very simple one: To maintain the sovereign relationship 
between the Government of the United States and the governments 
in Indian country.
    Now we could have said, okay, you leave it up to 
yourselves. You set up your own regulatory Commission and do it 
on your own; or let the States do it, as they are doing under 
the compact.
    By doing that, I was afraid that you may be slowly 
whittling away this government-to-government relationship with 
the Federal Government. Remember, your treaties are not with 
the State government. They are with the Federal Government. So 
I would think that it would be in your best interests to make 
certain that this relationship remains strong.
    The last observation is the one that President George 
addressed. You know, I think he is correct. We laughed at him, 
and we chuckled when he said he would have been against it.
    Keep in mind, that whatever the Federal Government is 
providing, we are not giving anything. We owe you that, by 
treaty provisions.
    I am not an Indian chief. But if I were a leader of one of 
the Indian nations, a nation that has done well and is 
successful in gaming, I would not give that TPA money back to 
the Government. I would, on my own initiative, decide who to 
give it to. You are the sovereign. I would not return it to 
them. I would insist that whether I am wealthy or poor, a 
contract is a contract.
    When we make a treaty agreement with another country to 
provide them with certain assistance, if that is the contract, 
we follow that, even if that country gets wealthy.
    So if you want to maintain your sovereign status, and 
maintain a strong government-to-government relationship, little 
things like that should be taken into consideration. That is my 
view.
    Senator Campbell. Mr. Chairman, I would just like to ask 
one thing to clarify, because I am a little bit lost here. On 
the TPA, I agree with the Chairman, that that is something that 
the Federal Government owes and needs to keep up.
    But do you turn that back into the Federal Government, and 
then it is redistributed, or do you have a formula where you 
get it, and then redistribute it among tribes that need it 
more?
    Mr. George. No; it has been allocated to us, and we have 
notified by letter where we wanted that money to go and the 
type of methodology that was used. That is because it actually 
has not gotten to us, yet, for fiscal year 2002.
    But when we first approach this, and we approach our 
attorneys, it is, could we do it? Well, we probably could not 
do it by just accepting the money, because they had a certain 
criteria that we had to use that money for. We could not just 
give it to another tribe that maybe was in need of it. That is 
what our attorneys told us.
    So when we went to the BIA and talked about returning those 
dollars, they said, well, we do not know if that is legal or 
not. They did not know either, because it never had happened 
before.
    But since that time, we have worked with them, and come up 
with a criteria or a methodology to use in redistributing that 
money.
    So, for example, in the Eastern Region, we tell them how 
much money we think should go to each tribe, and they do that, 
according to the methodology that we determine, and so they 
include it.
    It is not a reoccurring thing. This happens every year. 
That is the way that we see it, to make sure that the tribes 
that need it.
    Senator Campbell. So each year, you determine for that 
year, where you want it to go?
    Mr. George. Well, if something happens to gaming, we may 
have to say, okay, we will have to accept those TPA funds. It 
is not that we just said, we do not want it anymore. It is 
allocated every year, but then it is used to help those tribes 
that may not be as fortunate as we are.
    Senator Campbell. I understand, thank you.
    Thank you, Mr. Chairman.
    The Chairman. Well, with that, once again, thank you very 
much. This committee will stand in recess until the next 
hearing.
    [Whereupon, at 2 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
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                            A P P E N D I X

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              Additional Material Submitted for the Record

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   Prepared Statement of Hon. John McCain, U.S. Senator from Arizona

    Mr. Chairman, I thank you and Vice Chairman Campbell, for 
scheduling this committee hearing today. This committee has an 
important oversight responsibility with regard to the implementation of 
the Indian Gaming Regulatory Act of 1988 and related tribal gaming 
issues.
    As I understand it, this hearing is the first in a series of 
hearings that the Chairman intends to hold on Indian gaming issues in 
the 107th Congress. It has been my pleasure to work with the Chairman 
on this issue for over 15 years herein the Senate and with our dear 
friend and former colleague from Arizona, Mo Udall, before that. There 
are few issues that are of more significance for Indian communities.
    Let me start by emphasizing the congressional declaration of policy 
from the act which states that a key purpose of the Indian gaming law 
is to:
    ``Provide, a statutory basis for the operation of gaming by Indian 
tribes as a means of promoting tribal economic development, self-
sufficiency, and strong tribal governments.''
    This fundamental principle is the focal point of this hearing 
today, and that is the need to ensure that the framework of the act to 
regulate Indian gaming is sound and keeps pace with the growth of the 
industry. Because Indian gaming is also part of a high-profile 
financial and patron oriented industry, the committee is also compelled 
to ensure the general public that Indian gaming remains generally free 
from criminal activity or other regulatory problems.
    Since the passage of the Indian Gaming Regulatory Act more than 12 
years ago, the Indian gaming industry has grown beyond most 
expectations:

   \\\\\\At the time the Indian gaming law was enacted, an 
        estimated 100 tribes operated some form of gaming, with 
        estimated revenues ranging around $100 million.

   \\\\\\Today, approximately 196 tribes are operating 309 
        gaming facilities with revenues exceeding $10 billion. 
        Approximately 212 tribal/State compacts have been federally 
        approved in 24 States for class III gaming.

    As Chairman Montie Deer of the National Indian Gaming Commission 
points out in his testimony, this is a 2,000-percent growth over the 
12-year period.
    And, the industry is still growing. Currently, other tribes are 
seeking to expand their existing gaming operations while still more 
tribes are seeking new or modified compacts.
    In my home State of Arizona, 17 tribes currently manage tribal 
casinos. Income from Arizona Indian gaming has been reported to support 
more than $250 million, in purchases of goods and services in the 
Arizona.
    Today's hearing will no doubt highlight the economic benefits of 
Indian gaming, both to tribal and neighboring communities. Tribal 
gaming revenues provide an economic boost where it did not exist 
before, particularly in areas where the Federal Government itself 
failed to uphold its responsibilities to foster economic development 
for tribes. Social services, hospitals, community centers, schools, and 
successful diversified economic activities are all an outcome of tribal 
gaming revenues.
    From time to time, we also hear about controversies in, Indian 
gaming, alleged misconduct of gaming officials or managers, or other 
problems with the implementation of the. Act that potentially interfere 
with a responsible and sound regulatory structure.
    These are important issues that should be raised and discussed 
before this committee.
    It's also important to recall that the Indian Gaming Regulatory Act 
is in place due to years of extraordinary efforts in the Congress to 
establish a regulatory and statutory structure where none had 
previously existed. Before the. Indian gaming law, the 1987 Cabazon 
decision made clear that tribes could operate gaming unfettered from 
State regulation.
    There may be areas which require improvement, but we should clarify 
for the record the status of regulation among the three regulatory 
entities under IGRA--tribal, State and Federal. In this hearing today 
and those to come in the months ahead, I hope, to hear about the 
following:

   \\\\\\The adequacy of the Federal regulatory structure and 
        whether the existing structure is adequate to deal with the 
        existing gaming industry and its potential growth;

   \\\\\\Areas where the law might need improvement; and,

   \\\\\\Investment by the tribes in their regulatory 
        structures.

    Many assumptions were made about how Indian gaming would be 
regulated when the 1988 law passed. We are in a much different position 
now. I believe that Senator Inouye and I would agree that we should do 
everything necessary to protect the integrity of the Indian gaming 
industry. and that is why we are here today.
    While we could not invite every gaming tribe to testify today, or 
all those who may be concerned about Indian gaming, I want the 
committee to be aware that I wrote to every Indian gaming tribe to seek 
their comments and ask for their views about the effectiveness of their 
own tribal gaming regulatory structure and that of the Federal 
Government. Tribes are often not credited for the amount of investments 
they make to improve their own regulatory structures. I think we will 
learn a great deal about the current status of gaming regulation from 
these comments.
    I know that tribal leaders will agree that an appropriate 
regulatory structure is an important component of self-sufficiency--
whether it is for their government operations, general business 
enterprises, or Indian gaming.
    Indian gaming also has its share of critics. Despite readily 
visible benefits, the force of economic competition and growth concerns 
neighboring communities and States. I hope that the critics will 
remember that it is the tribes, that have the most to lose if the 
Indian gaming law is found to be inadequate in any way, and the most to 
gain from ensuring that the act keeps pace with the ever changing 
Indian gaming industry.
    Again, I thank the committee for accommodating my request to 
schedule this hearing and I look forward to the testimony from today's 
witnesses and further comments from the tribes.
                                 ______
                                 

   Prepared Statement of M. Sharon Blackwell, Deputy Commissioner of 
  Indian Affairs, Bureau of Indian Affairs, Department of the Interior

    Good Morning Mr. Chairman and members of the committee. My name is 
Sharon Blackwell, deputy commissioner of Indian Affairs. I am pleased 
to be here today to present an overview on the role of the Secretary of 
the Interior [Secretary] in the implementation of the Indian Gaming 
Regulatory Act of 1988 [IGRA].
    At the outset, let me state that the Department strongly supports 
the underlying purpose of the IGRA to provide a statutory basis for the 
operation of gaining by Indian tribes as a means of promoting tribal 
economic development, self-sufficiency, and strong tribal governments. 
Since the enactment of IGRA in 1988, many Indian tribes have come to 
consider gaming as an effective means of generating revenue to fund 
tribal programs and to stimulate economic development on economically 
stagnant or depressed Indian reservations. Although precise financial 
data may not be readily available, there is no question that Indian 
gaming is working as a tool for tribal economic development, and as a 
matter of Federal policy, the Department supports tribally owned gaming 
under IGRA.
    As you know, Congress has placed regulatory and enforcement 
functions under IGRA with the National Indian Gaming Commission [NIGC], 
and the role of the Secretary is to implement specific residual 
statutory functions under the act. These functions are as follows: (1) 
Approval of class III gaming compacts between Indian tribes and States; 
(2) Approval of revenue allocation plans for per capita payments of 
gaming net revenues to tribal members; (3) two-part determinations 
under section 20(b)(1)(A) of IGRA; (4) Promulgation of class III gaming 
procedures in circumstances where a tribe and a State cannot agree on 
the terms of a compact, and (5) the appointment of the two associate 
members of the National Indian Gaming Commission. In addition, and 
although IGRA does not refer to these functions specifically, the. 
Department is also involved in reviewing applications to place land 
into trust for gaming, reviewing gaming-related land leases, reviewing 
certain gaming-related agreements for services relative to Indian lands 
under 25 U.S.C. section 81, and making legal determinations regarding 
whether parcels of land qualify as ``Indian lands'' under IGRA.
    I will now turn to an overview of how the Department has 
implemented some of these functions.
    IGRA provides that class III gaming activities shall be lawfull on 
Indian lands only if such activities are, among other things, conducted 
in conformance with a tribal State compact entered into by an Indian 
tribe and a State and approved by the Secretary. The Secretary may only 
disapprove a compact if the compact violates (i) any provisions of 
IGRA; (ii) any other provision of Federal law that does not relate to 
jurisdiction over gaming on Indian lands; or (iii) the trust 
obligations of the United States to Indians. The Secretary must approve 
or disapprove a compact within 45 days of its submission, or the 
compact is considered to have been approved, but only to the extent the 
compact is consistent with the provisions of IGRA. A compact takes 
effect when the Secretary publishes notice of its approval in the 
Federal Register. As of today, the Department has approved 212 compacts 
in 24 States for class III gaming between Indian tribes and States. The 
Department takes the position that amendments to compacts are subject 
to the review and approval of the Secretary under IGRA.
    If an Indian tribe and a State are unable to reach agreement on the 
negotiation of a compact, IGRA provides a statutory scheme that can 
result with the issuance of class III gaming procedures by the 
Secretary. To date, the Secretary has issued class III procedures for 
only one tribe: The Mashantucket Pequot Tribe of Connecticut on May 31, 
1991.
    The statutory framework for the issuance of class III procedures 
under IGRA was destabilized when the Supreme Court, in 1996, ruled, in 
Seminole Tribe v. State of Florida, that the State may assert an 11th 
amendment immunity defense to avoid a lawsuit brought by a tribe 
alleging that the State did not negotiate in good faith. After the 
Seminole decision, States were left with the power to veto IGRA's 
dispute resolution scheme, and hence with the ability to stalemate the 
compacting process. To provide a remedy to the problem created by the 
Seminole decision, the Department published a rule on April 12, 1999, 
at 25 CFR part 291, authorizing the Secretary to promulgate class III 
procedures in limited circumstances when a State and a tribe are unable 
to voluntarily agree to a compact, and the State has asserted its 
immunity from suit brought by an Indian tribe under IGRA. To date, 
seven tribes have filed an application with the Bureau of Indian 
Affairs [BIA]. The BIA rejected three of these applications, and is 
still considering the applications of the other four tribes [Seminole 
Tribe of Florida, Miccosukee Tribe of Florida, Santee Sioux Tribe of 
Nebraska, and the Confederated Tribes of the Colville Reservation of 
Washington]. The Secretary, of course, will abide by the commitment of 
her predecessor not to issue class III procedures for any tribe until a 
final decision is rendered on any lawsuit brought by a State 
challenging the authority of the Secretary to promulgate the 
regulations in 25 CFR part 291. Currently, the State of Florida and the 
State of Alabama have jointly filed a lawsuit against the Secretary 
regarding this matter.
    Under IGRA, the Secretary is charged with the review and approval 
of tribal revenue allocation plans relating to the distribution of net 
gaming revenues. Net gaming revenues from class II and class III gaming 
may be distributed in the form of per capita payments to members of an 
Indian tribe provided the Indian tribe has prepared a tribal revenue 
allocation plan which is approved by the Secretary. Absent an approved 
revenue allocation plan, IGRA constrains the use of net revenues to the 
following purposes: (i) to fund tribal government operations and 
programs; (ii) to provide for the general welfare of the Indian tribes 
and its members; (iii) to promote tribal economic development; (iv) to 
donate to charitable organizations; or (v) to help fund operations of 
local government agencies. On November 10, 1999, the BIA moved the 
authority to approve revenue allocation plans from the 12 regional 
directors to the deputy commissioner of Indian Affairs to provide more 
uniformity in the review process, and on March 17, 2000, the BIA 
published a rule at 25 CFR part 290 establishing procedures for the 
submission, review, and approval of tribal revenue allocation plans. To 
date, the BIA has approved 55 revenue allocation plans. The Department 
takes the position that amendments and modifications to an approved 
plan must be submitted for approval to the Secretary under IGRA.
    The decision to place land into trust for the benefit of an Indian 
tribe is usually at the discretion of the Secretary after consideration 
of the criteria for land acquisitions in 25 CFR part 151. When an 
acquisition is intended for gaming, consideration of the requirements 
in section 20 of IGRA also apply. Section 20 prohibits Indian tribes 
from conducting class II or class III gaming activities on lands 
acquired in trust after October 17, 1988, unless one of several 
exceptions applies. To date the Department has approved 20 applications 
that have qualified under an exception to the gaming prohibition 
contained in section 20. However, if none of the specific exceptions in 
section 20 applies, an Indian tribe may still conduct gaming activities 
on after-acquired trust lands if it meets the requirements of section 
20 (b)(1)(A) of IGRA which provides that gaming can occur on the land 
if the Secretary, after consultation with appropriate State and local 
officials, and officials of nearby Indian tribes, determines that a 
gaming establishment on newly acquired land will (1) be in the best 
interest of the tribe and its members, and (2) not, be detrimental to 
the surrounding community, but only if the Governor of the State in 
which the gaming activities are to occur concurs in the Secretary's 
two-part determination. Since October 17, 1988, State Governors have 
concurred in only three positive two-part Secretarial determinations 
for off-reservation gaming on trust lands [Forest County Potawatomi 
gaming establishment in Milwaukee, WI, Kalispel Tribe gaming 
establishment in Airway Heights, WA, and Keweenaw Bay Indian Community 
gaming establishment near Marquette, MI]. The BIA has followed a 
``Checklist'' for gaining acquisitions issued on February 21, 1997, to 
inform its review of two-part determinations under section 20(b)(1)(A) 
of IGRA, and published a proposed rule in the Federal Register on 
September 14, 2000 (25 CFR part 292). The proposed rule established 
procedures that an Indian tribe must follow in seeking a two-part 
Secretarial determination under section 20(b)(1)(A). The Secretary is 
in the process of evaluating the merits of the proposed rule issued by 
her predecessor.
    Finally, I will touch briefly on the role of the Secretary in 
approving gaming-related agreements under 25 U.S.C. section 81. The 
NIGC is, of course, charged under IGRA with the review and approval of 
management contracts. As a matter of practice, all gaming-related 
agreements are submitted to the NIGC for their review. If the NIGC 
makes a determination that a gaining-related agreement is not a 
management contract or otherwise subject to its review and approval 
under IGRA, it will forward the agreement to the BIA for a 
determination of whether the agreement is subject to the residual 
approval authority of the Secretary under 25 U.S.C. section 81. The 
Department will then determine whether the agreement is subject to 
approval under section 81, and, if a determination is made that it is 
subject to review and approval, will determine, as trustee for the 
tribe, whether it should be approved. Congress substantially amended 
section 81 last year, and the Department recently published regulations 
at 25 CFR part 84 to implement these amendments to section 81.
    This concludes my prepared statement. I will be happy to answer any 
questions the committee may have.
                                 ______
                                 

    Prepared Statement of Bruce G. Ohr, Chief, Organized Crime and 
     Racketeering Section, Criminal Division, Department of Justice

    Thank you, Mr. Chairman, Mr. Vice Chairman, and members of the 
Senate Committee on Indian Affairs for the opportunity to provide a 
written statement on Indian gaming and the Indian Gaming Regulatory Act 
[IGRA]. Specifically, I will address the issues of the infiltration of 
tribal gaming by members of organized crime and the Department of 
Justice's role in the contracting process under IGRA. My name is Bruce 
G. Ohr and I am the chief of the Organized Crime and Racketeering 
Section in the Criminal Division of the Department of Justice [the 
Department].

Issue of Infiltration of Indian Gaming by Organized Crime

    We understand that the committee is chiefly interested in whether 
the Department has any evidence that supports the perception that 
organized crime has successfully infiltrated Indian gaming. The 
committee's interest is based, in part, upon a July 18, 2001, 
commentary in the Wall Street Journal which referred to a letter from 
Representatives Shays and Wolf to President Clinton in which the 
Congressmen noted that ``the influence of organized crime on Indian 
gambling is alarming. Tribal leaders often find themselves forced into 
affiliations with members of organized crime rings. This stems directly 
from the lack of Federal oversight for Indian gambling operations.'' 
The Department also is aware that a pending bill, H.R. 2244, the Tribal 
and Local Communities Relationship Improvement Act, would establish a 
Commission on Native American Policy, which would study, among other 
topics, the influence of organized 2 crime on Indian gaming. The 
Department is reviewing this legislation but has not yet developed a 
position.
    The Department has found no evidence of a systematic infiltration 
of Indian gaming by elements of organized crime. There have been 
isolated incidents of organized crime attempting to infiltrate Indian 
gaming. For example, members of a Chicago organized crime family 
attempted to gain control over, and skim profits from, a casino 
operated by a California tribe called the Rincon Indian Band. A 1993 
criminal prosecution arising from this incident resulted in numerous 
convictions. When the Rincon casino reopened, members and associates of 
Pittsburgh and Ohio organized crime attempted to infiltrate the same 
casino. In 1997, the Department successfully prosecuted 17 defendants, 
which resulted in numerous criminal convictions.
    When information about possible organized crime involvement in 
tribal gaming is received, the Department investigates these 
allegations. I cannot comment on or provide you with any information 
concerning any pending or planned investigations. Further, if any 
tribal gaming operations believe that organized crime elements have 
tried to infiltrate their operations, the Department strongly 
encourages the tribal gaming operation to report such activity to 
Federal law enforcement.
    The Department routinely monitors activities of organized crime. 
For example, the U.S. Attorneys' Offices annually submit organized 
crime assessments, which outline organized crime problems in each 
district, to the Criminal Division. Further, the Criminal Division 
coordinates with the Department of Labor to gather intelligence on 
whether organized crime has infiltrated the Indian gaming industry via 
the services industries, such as construction or food and beverage 
services. Additionally, the Federal Bureau of Investigation routinely 
assists the National Indian Gaming Commission with conducting 
background checks of primary management officials and other key 
employees of Indian casinos.
    In March 2001, Congressman Wolf requested that the Department's 
Office of the Inspector General provide a report on prosecutions of 
Indian gambling operations, including the infiltration of organized 
crime. The Office of the Inspector General recently sent its letter 
report to Congressman Wolf. The Office of Inspector General reported 
that the Criminal Division, the Federal Bureau of Investigation, and 
the Office of Tribal Justice said that while there is an increasing 
potential for organized crime involvement due to growth of Indian 
gaming revenues, there is a lack of evidence that such involvement has 
occurred.

    The Department's Role in the Process for Approval of Contracts

    Finally, the committee has inquired about the role of the 
Department of Justice with respect to Indian gaming management 
contracts. I am happy to explain the Department's very circumscribed 
role in this area. The National Indian Gaming Commission [NIGC] 
decisions to approve management contracts, to impose civil 
administrative penalties, as well as its review of tribal ordinances 
and management contracts for compliance with IGRA are subject to 
judicial review in Federal district court. The Department represents 
the NIGC, when named as a defendant, in these lawsuits. The Department 
also represents the NIGC when its administrative actions require a 
judicial order to enforce.

    Conclusion

    Indian tribal gaming has proven to be a useful economic development 
tool for a number of tribes, who utilize gaming income to support a 
variety of essential services. While tribal gaming has become a 
lucrative industry and a potential target for organized crime, the 
Department has found no systematic attempts by organized crime groups 
to become involved in tribal gaming. We are unaware of any 
comprehensive studies or investigations into infiltration of Indian 
gaming by organized crime. However, there are several Federal and State 
agencies nationwide which are charged with the responsibility of 
monitoring Indian gaming operations.
    Mr. Chairman, I would like to thank you and the committee for 
asking for the Department's views on this issue. If we may be of 
additional assistance, we trust that you will not hesitate to call upon 
us.
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