[Senate Hearing 108-67]
[From the U.S. Government Publishing Office]



                                                  S. Hrg. 108-67, Pt. 2
 
                      INDIAN GAMING REGULATORY ACT
=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

OVERSIGHT HEARING ON INDIAN GAMING REGULATORY ACT; ROLE AND FUNDING OF 
                 THE NATIONAL INDIAN GAMING COMMISSION

                               __________

                              JULY 9, 2003
                             WASHINGTON, DC

                               __________

                                 PART 2

                               __________















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                      COMMITTEE ON INDIAN AFFAIRS

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

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

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

                                  (ii)

  













                            C O N T E N T S

                              ----------                              
                                                                   Page
Statements:
    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, 
      chairman, Committee on Indian Affairs......................     1
    Chaves, Frank, chairman, New Mexico Indian Gaming Association    25
    Demolli, Frank, general counsel, Pueblo of Pojoaque..........    13
    Dorgan, Hon. Byron L., U.S. Senator from North Dakota........    15
    Johnson, Pedro, executive director, Public Affairs, 
      Mashantucket Pequot Tribal Nation..........................    14
    Martin, Aurene, acting assistant secretary, Indian Affairs, 
      Department of the Interior, Washington, DC.................     2
    Pahmahmie, Zachariah, chairman, Prairie Band of Potawatomi 
      Nation.....................................................     8
    Rivera, George, Lieutenant Governor, Pueblo of Pojoaque......    13
    Skibine, George, director, Bureau of Indian Affair's Office 
      of Indian Gaming Management................................     2
    Soulliere, Brenda, chairperson, California Nations Indian 
      Gaming Association.........................................    23
    Viarrial, Jacob, Governor, Pueblo of Pojoaque................    13
    William, Jr., Herman A., chairman, Tulalip Tribes of 
      Washington.................................................    11

                                Appendix

Prepared statements:
    Chaves, Frank (with attachment)..............................    29
    Hunter, Priscilla, chairwoman, Coyote Valley Band of Pomo 
      Indians....................................................    36
    Johnson, Pedro (with attachment).............................    49
    Martin, Aurene (with attachment).............................    89
    Pahmahmie, Zachariah.........................................   155
    Soulliere, Brenda (with attachment)..........................   163
    Viarrial, Jacob (with attachment)............................   176
    Williams, Jr., Herman A......................................   188
Additional material submitted for the record:
    A History of Indian Gaming in New Mexico: 1985-2001, 
      memoradum to Governor Bruce Sanchez from Richard W. Hughes.   196
















                      INDIAN GAMING REGULATORY ACT

                              ----------                              


                        WEDNESDAY, JULY 9, 2003


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m. in 
room 106, Senate Dirksen Building, Hon. Ben Nighthorse Campbell 
(chairman of the committee) presiding.
    Present: Senators Campbell, Thomas, and Dorgan.

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

    The Chairman. Good morning, and welcome to the committee's 
second oversight hearing in the 108th Congress on the Indian 
Gaming Regulatory Act of 1988, known by its acronym of IGRA. By 
the way, Senator Inouye will not be able to be with us this 
morning. He's in a markup on appropriations and unfortunately 
will not be here. But any statement he sends in we'll include 
in the record.
    Congress enacted the IGRA in 1988 after the U.S. Supreme 
Court handed down the Cabazon case which confirmed that Indian 
tribes have inherent authority to conduct Indian gaming on 
their lands. I think it's fair to say that 15 years ago, no one 
could have seen that by 2002 Indian gaming revenues would grow 
to $14.5 billion, the most recent revenue data collected by the 
National Indian Gaming Commission.
    The growth of Indian casinos continues at a very fast pace 
and has caused some concerns in some areas in dealing with 
zoning, local land use planning, and things of that nature. But 
I'm still convinced that many of those disagreements are often 
worked out and can be worked out with a dialogue between people 
on both sides of the issue if they have good intentions and 
good will.
    What many didn't foresee back then was that States would 
try and exact their share of gaming revenues from the tribes. 
Anyone who reads the papers today realizes that with many 
States struggling to balance their own budgets, almost every 
one of them having a deficit, that day has come. In some cases, 
those same States that opposed IGRA in 1988 are now the most 
ardent supporters of Indian gaming, as long as they get their 
share.
    The IGRA does make it clear that Congress views gaming as 
an economic activity that Indian tribes can develop and that 
they should be the primary beneficiary of the efforts. The 
drive by States to get shares of tribal gaming revenues has 
only increased since the 1996 Seminole decision. Tribal leaders 
are informing this committee that many States will not even 
begin to negotiate without first getting an agreement on 
revenue sharing. We have asked the Department of the Interior 
to explain to the committee the authority and criteria it uses 
in approving compacts that contain revenue sharing components. 
We have also asked Indian tribes and tribal associations that 
conduct gaming to provide their experiences with the compacting 
process and demands for revenue sharing. They will also share 
with us the many good things that they have done with their 
gaming revenues.
    And with that, Senator Thomas, did you have an opening 
statement?
    Senator Thomas. Thank you, Mr. Chairman. Not really. I just 
am very interested in what's happening here. It's a big dollar 
issue. It's important to the tribes, of course. The role of the 
State is an interesting issue. Wyoming is involved, as a matter 
of fact, right now with the Secretary. Also the type of land on 
which gambling is initiated is interesting. So I'm more here to 
listen than anything. Thank you.
    The Chairman. Thank you. Then we'll start with Aurene 
Martin, deputy assistant secretary of Indian Affairs. Welcome, 
Ms. Martin. And by the way, thank you for attending the 
ceremony in Montana last week on commemorating the memorial for 
the American Indians who died at the Battle of the Little Big 
Horn. It was very well attended with, I understand, over 5,000 
people. I had to leave somewhat early, but I was delighted to 
see such great, overwhelming support for it. Thank you for 
being here. Go ahead.

  STATEMENT OF AURENE M. MARTIN, ACTING ASSISTANT SECRETARY, 
  INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC, 
   ACCOMPANIED BY GEORGE SKIBINE, DIRECTOR, BUREAU OF INDIAN 
          AFFAIR'S OFFICE OF INDIAN GAMING MANAGEMENT

    Ms. Martin. Thank you. I enjoyed the event as well. It was 
very moving.
    First of all, I'd like to thank you for the opportunity to 
appear here today to testify on this issue. My name is Aurene 
Martin. I'm the acting assistant secretary for Indian Affairs 
at the Department of the Interior.
    You've asked us to appear today to talk about the 
Department's role in reviewing revenue sharing provisions 
included in class III tribal-State gaming compacts. I'm here 
today to talk about that, and I'm accompanied by George 
Skibine, who is the director of our Office of Indian Gaming.
    As you're aware, such compacts are submitted to the 
Department for approval pursuant to the requirements of the 
Indian Gaming Regulatory Act, otherwise known as IGRA. IGRA 
provides that class III gaming activities are lawful on Indian 
lands only if they are, among other things, conducted in 
conformance with tribal-State compacts entered into by an 
Indian tribe in a State and approved by the Secretary.
    In reviewing a compact, the Secretary must ensure that 
three requirements are met. She must ensure that the compact 
does not violate any provision of IGRA. She must also ensure 
that the compact does not violate any other provision of 
Federal law that is not related to jurisdiction over gaming on 
Indian lands. Finally, she must ensure that the compact does 
not violate the trust obligations of the United States to 
Indian tribes.
    The secretary must approve or disapprove a compact within 
44 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.
    Since IGRA was passed in 1988, the Department of the 
Interior has approved approximately 250 class III gaming 
compacts between States and Indian tribes which are located in 
24 States throughout the country. Of those compacts, the 
Department has approved or deemed approved revenue sharing 
provisions between Indian tribes and the following States: 
Connecticut, New Mexico, Wisconsin, California, New York, and 
Arizona. In addition, several Michigan tribes are making 
revenue sharing payments to the State of Michigan under 
compacts that became effective by operation of law, and other 
Michigan tribes have made revenue sharing payments to the State 
under court approved consent decrees.
    Section 11(d)(4) of IGRA specifically provides that the 
compacting provisions of IGRA shall not be interpreted as 
conferring upon a State or any of its political subdivisions 
the authority to impose a tax, fee, charge or other assessment 
upon an Indian tribe, and that no State may refuse to enter 
into compact negotiations based upon the lack of authority in 
such State. However, since the Supreme Court's 1996 decision in 
Seminole v. Florida, more States have sought to include revenue 
sharing provisions in class III gaming compacts, resulting in a 
discernible increase in such provisions over the past 7 years.
    In general, the Department has attempted to apply the law 
to limit circumstances under which Indian tribes can make 
direct payments to a State for purposes other than deferring 
costs of regulating class III gaming activities. To date, the 
Department has only approved revenue sharing payments that call 
for tribal payments when the State has agreed to provide 
valuable economic benefit of what the Department has termed 
substantial exclusivity for Indian gaming in exchange for the 
payment. As a consequence, if the Department affirmatively 
approves a proposed compact, it has an obligation to ensure 
that the benefit received by the State is equal or appropriate 
in light of the benefit conferred on the tribe.
    Accordingly, if a payment exceeds the benefit received by 
the tribe, it would violate IGRA because it would amount to an 
unlawful tax, fee, charge or other assessment. Though there has 
been substantial disagreement over what constitutes a tax, fee, 
charge or other assessment within this context, we believe that 
if the payments are made in exchange for the grant of a 
valuable economic benefit that the Governor has the discretion 
to provide, these payments do not fall within the category of a 
prohibited tax, fee, charge or assessment.
    Revenue sharing has undoubtedly been approved by the 
Department. It has emerged as a result of the Department's 
review of each individual compact over the past several years, 
and it is contained in the letters that we have sent to both 
the States and tribes with regard to the results of our 
reviews. I have brought a copy of those letters and would like 
to submit them to the committee for inclusion in the record.
    The Chairman. They will be in the record.
    Ms. Martin. Thank you.
    As I stated earlier, States and tribes have increasingly 
agreed to revenue sharing provisions. As part of this overall 
trend, the Department has observed a number of other issues 
that have arisen in the context of revenue sharing and which 
may have serious consequences for Indian gaming in the future. 
These issues include an increase in the number of provisions 
authorizing off-reservation establishments for gaming, 
sometimes out of State. And these are often accompanied by high 
percentage revenue sharing provisions.
    There have also been some attempts by tribes to define 
zones of tribal exclusivity, most often around off-reservation 
sites. And again, these are often accompanied by high revenue 
sharing provisions as well.
    Finally, there are increasing concessions by States on 
issues related to gaming, but upon which the State may not be 
obligated to bargain. These are also accompanied by high 
revenue sharing provisions. An example of this is an expanded 
scope of gaming in a State where there might be a limited class 
III authorization within the State for gaming, but the tribe is 
bargaining for an expanded scope of gaming.
    IGRA doesn't give guidance on the legality of these issues 
in all cases, and the Department must determine how to address 
them as they are presented, which is most often within the 
context of a compact submitted by an individual tribe. Where 
these provisions appear to us to violate the purposes of IGRA 
or appear for other reasons contrary to basic issues of 
fairness, the Department feels limited in its ability to 
disapprove such compacts, given the charge of the Department to 
review compacts to determine only whether they violate Federal 
law; that is, whether they violate IGRA, other Federal law or 
they violate the trust obligation to Indian tribes.
    This concludes my remarks. I'd be happy to answer any 
questions.
    [Prepared statement of Ms. Martin appears in appendix.]
    The Chairman. I'm interested in hearing your views on a 
couple of things. I visit a lot of reservations and a lot of 
casinos in the process. Some are very, very successful. And if 
they have reached some kind of a revenue sharing agreement with 
States, and it was done without duress, done of their own 
volition, that's fine. But I've also visited some that are just 
barely making it. And there are some casinos that are a way, a 
long way from any metropolitan area, and frankly, there's 
nobody in them except a few of the Indian people that live on 
the reservation and maybe a few non-Indians who happen to work 
there. But there is clearly very, very little money from those 
casinos.
    Does the Department have a view on revenue sharing or the 
State's taking money from the casinos through revenue sharing 
when they're that desperate and destitute?
    Ms. Martin. We do have such a concern. Whenever we receive 
an individual compact, we look at the provisions of the compact 
and if it has a revenue sharing provision, we review it to find 
out if that particular tribe is able to make those payments. 
Oftentimes what we'll do is require or ask for financial 
statements from the tribe to find out if their projections and 
their operations support a revenue sharing payment and if in 
fact what they're getting in exchange for that payment is of 
substantial economic benefit to them.
    The Chairman. Have you found that, what would you term a 
``substantial economic benefit''? I can't imagine any for a 
couple of casinos that I visited, what benefits they're getting 
from the State. I don't see any at all, in fact.
    Ms. Martin. Up to now, the Department has only accepted one 
type of benefit as being sufficient to merit a revenue sharing 
payment, and that is substantial exclusivity. That is in a 
State where Class III gaming may be authorized but is not 
authorized for non-Indian persons to operate commercial 
enterprises, but the tribe is authorized to operate those 
enterprises. Then we would look at whether a revenue sharing 
payment is warranted and to what degree, given a particular 
tribe's circumstances.
    In many of the cases you're talking about these facilities 
are employment vehicles but they don't raise a lot of money for 
the tribe.
    The Chairman. And you said you've approved 250 compacts, 
and of that, 6 have been with revenue sharing compacts?
    Ms. Martin. Within six States and all of the tribes located 
within those States.
    The Chairman. What is the Department's role, in California 
now there's sort of an explosion of casinos, as you know. Are 
you dealing with them, tribe by tribe with the State? Because I 
know they're having some pretty fierce discussions with the 
State in California now about revenue sharing.
    Ms. Martin. California, and I guess you could say this 
about every State, has its own unique circumstances. They have 
a constitutional amendment which deals with Indian gaming. They 
have an existing compact that most of the tribes have with the 
State. Unless and until we start to receive those compacts for 
review, we don't really have a role in their ongoing 
discussions.
    The Chairman. How many compacts are being reviewed in 
California?
    Ms. Martin. I'm not aware of a specific number. The 
information we get is anecdotal, really.
    The Chairman. We've had some discussion, as you probably 
know, dealing with revenue sharing, that those tribes that are 
making a lot of money with tribal casinos should share with 
those tribes that are rather poor. In fact, in some cases they 
do this, they do it of their own volition. Would the Department 
favor some kind of tribal revenue sharing?
    Ms. Martin. I think that we have supported that type of 
revenue sharing in the case of California. We haven't had a 
larger discussion of whether tribes who were not willing to 
participate in such a revenue sharing program should be coerced 
into such a program. Obviously, it could be of tremendous 
benefit to some of the poorer tribes.
    The Chairman. Have you found that tribes that would see a 
benefit, for instance, if it went to the local communities or 
costs of police or fire or improving the roads to the casinos 
or something of that nature, have you found that there's less 
opposition to that?
    Ms. Martin. I'm sorry, I guess I didn't understand the 
question.
    The Chairman. I can see that if tribes were concerned about 
some of the funds going to something that they wouldn't see any 
benefits from, they would object. I guess what I'm trying to 
get to is if there was a way that if those funds were deposited 
in some kind of a development fund for the tribes, if they 
would see less opposition by the tribes.
    Ms. Martin. I can't speak for the tribes themselves, but I 
would think that given a choice between participating in a fund 
or making payments to a State where they don't see an actual 
benefit or they can't track the benefit to their own 
communities and contributing to a fund that would definitely 
benefit other Indian tribes and Indian people, they would want 
to contribute to such a fund.
    The Chairman. Your testimony said that the secretary may 
only disapprove a compact if it violates the provisions of IGRA 
or Federal law or trust obligations. Has a compact ever been 
disapproved for violating the trust obligations of the United 
States?
    Ms. Martin. Not that I'm aware of, no.
    The Chairman. Once dollars go into the State coffers, can 
they be used by the State for anything the State wants to use 
it for, or is there any provision in the agreements that you've 
seen that would allow that money to circulate and come back to 
help the communities around the casinos?
    Ms. Martin. Well, it really depends on the particular tribe 
at issue. I know that in some States, tribes have attempted to 
make agreements with the State where they agree to use the 
funds that are given to the State for specific purposes, such 
as education or to be used in communities that the tribe is 
located. But in other cases, there is no such tie or 
requirement for the moneys to be spent that way.
    The Chairman. I remember in the last oversight hearing, 
staff can remind me, but we had one tribe that told us of the 
millions of dollars they pay into the State, and then the State 
testified that that money was used for other things that had 
nothing to do with the area where the tribe was. Then there was 
some other testimony by local officials complaining of the need 
for road improvements and all the other stuff around the area 
where the tribe had built a casino. It was Connecticut, with 
the Pequots, as I'm reminded.
    And I remember telling them at the time what that local 
community needed really was a better lobbyist in their State 
capitol. They didn't need to go after the Indians any more. If 
that money was being paid into the State coffers and they 
weren't getting part of it back to the local communities, 
that's the responsibility of that local community, it would 
seem to me, to go to the State and demand some of that money be 
circulated back to their local concerns.
    The Department of the Interior policy on revenue sharing, 
concerning that, what basis is there in the law to approve 
compacts that allow revenue sharing for amounts far and above 
the cost of impacts on local infrastructure? Is there anything 
in the law now that allows them to demand excess money?
    Ms. Martin. Well, there's no specific provision that 
authorizes revenue sharing per se. It's a policy that has 
developed over the past several years in response to benefits 
that tribes have negotiated with States.
    The Chairman. So there is no statutory basis for your 
revenue sharing policy. And apparently no broad regulations 
that guide the Department either. So what gives you the 
guidance to determine your conclusions for it?
    Ms. Martin. Well, as I stated, over time the Department has 
reviewed these agreements on a case by case basis. In instances 
where a State has negotiated things that are within its 
discretion to negotiate and the tribes have been willing to pay 
for that, they come to us with an agreement that they've made 
through an arms length negotiation and they've asked us to 
approve that. Since the State is not obligated to negotiate 
those items and the tribe is not obligated to agree to them, we 
have approved those agreements.
    The Chairman. I see. Well, this hearing basically, it's not 
about off-reservation acquisitions, but as you probably know, 
almost, at least every week and sometimes on succeeding days, 
tribes are here. In fact, I talked to one this morning that 
wanted to expand their holdings, wanted to take some land into 
trust and want, if they're not doing it to the satisfaction and 
through the Bureau, they want us to run a bill or help with a 
bill to take off-reservation lands into trust. It just seems to 
me that there is some disconnect between how it's being 
administered and what they want from us.
    But as you said, it's tribe by tribe. I know with the 
advent of the casinos and the money that is flowing through the 
casinos now, there are many tribes who just a few years ago 
wouldn't have thought of gaming who see it as really an 
opportunity for jobs and to provide some benefits for their 
members. I generally am very supportive of that.
    Well, thank you very much for your appearance this morning, 
Ms. Martin. And I appreciate your testimony.
    Senator Thomas, did you have any questions for Ms. Martin?
    Senator Thomas. Just one, sort of a broad one.
    You sort of described your role and what you do. What would 
you say, or would you suggest any changes in the system? Do you 
have any particular problems in the system?
    Ms. Martin. Overall, the Indian Gaming Regulatory Act 
creates a delicate balance between tribes, States, and the 
Federal Government for the way that tribal gaming is operated. 
I think that there are some improvements we would make if we 
could, and we'd be happy to talk to you about what those might 
be.
    Senator Thomas. You can't share them with us now? We'd have 
to shoot you? [Laughter.]
    Ms. Martin. The first thing that comes to mind is that 44 
days, or 45 days, by 44 days we have to have a definitive 
answer on the approval or disapproval of a compact. And we 
would like to extend that amount of time.
    Also, because of the Seminole v. Florida Supreme Court 
decision, there is an unequal situation that's developed with 
regard to the ability of States and tribes to negotiate. I 
think that we would support trying to fix that situation in 
some way. Off the top of my head, those are a few things.
    Senator Thomas. If that doesn't work, it's between the 
States and the tribes then it moves on to the Secretary, is 
that right?
    Ms. Martin. The Secretary has promulgated regulations to 
address that situation and under those regulations, a tribe 
could come to the secretary and apply for procedures to operate 
class III gaming. But that regulation has been challenged by 
the States of Alabama and Florida. It's currently in 
litigation.
    Senator Thomas. I see. Thank you.
    The Chairman. Mr. Skibine, before I go on, did you have any 
comments to add to Ms. Martin's?
    Mr. Skibine. I just wanted to make one clarification, 
perhaps. With respect to the class III gaming procedures, we 
have those regulations in effect. But if a State does not raise 
an 11th Amendment defense to a good faith lawsuit by a tribe, 
then the process by which they develop procedures and those 
procedures end up with the secretary, like the case in Wyoming, 
not through our regulation but through the statutory process.
    Our regulations were meant to address the case where a 
State does raise an 11th Amendment defense to a good faith 
lawsuit so that the tribe essentially is left without any 
recourse. We decided that the secretary had the authority to 
promulgate regulations to entertain applications from these 
tribes. We have a few pending now before us. That's it, thank 
you.
    The Chairman. I thank you. Before you leave, I might tell 
you, Ms. Martin, I don't know how far away the Department is 
from picking a new assistant secretary, but you taking the 
reins in a rather sudden and unexpected turn when the last 
assistant secretary left, I just wanted to tell you, I think 
you're doing a very, very fine job in fulfilling a difficult 
job as acting assistant secretary. Thank you for being here.
    Ms. Martin. Thank you very much.
    The Chairman. We'll now move to the second panel, which 
will be Zach Pahmahmie, chairman of the Prairie Band of 
Potawatomis; and Herman Williams, chairman of the Tulalip 
Tribes; Jacob Viarrial, Governor of the Pueblo Pojoaque, Santa 
Fe, and they will be accompanied by George Rivera, the 
Lieutenant Governor of the Pueblo Pojoaque in Santa Fe, and 
Frank Demolli, the general counsel for the Pueblo. With that, 
your complete testimony will be included in the record. If 
you'd like to abbreviate, just speak your conscience rather 
than a written statement, that will be fine.
    We'll start with Chairman Pahmahmie.

  STATEMENT OF ZACHARIAH PAHMAHMIE, CHAIRMAN, PRAIRIE BAND OF 
                       POTAWATOMI NATION

    Mr. Pahmahmie. Good morning, Mr. Chairman and members of 
the committee. Again, my name is Zachariah Pahmahmie. I have 
the pleasure of serving as the chairman of the Prairie Band 
Potawatomi Nation.
    I want to first begin and express a point that I'd like to 
make, the ability of gaming to transform peoples' lives and 
create opportunity. I think personally I can speak of the fact 
that gaming has been a part of my presence before you here 
today. Gaming revenues have helped to finance our education 
department and helped pay for the cost of education, of 
attending Stanford University and in 2000 when I graduated from 
the University of Kansas School of Law. And at 28, I was 
elected the youngest chairman in the entire history of the 
Prairie Band Potawatomi, and I'm sure I'm one of the youngest 
tribal chairmen in the entire Nation.
    I want to thank you for the opportunity to testify today 
about the use and sharing of gaming revenues. I will discuss 
how our Nation has used gaming revenues to strengthen our well-
being, and how we have, in the absence of a formal revenue 
sharing agreement, shared the benefits of our gaming operation 
with Kansas and surrounding communities. I have submitted 
written testimony, which I request be included in the record. I 
also have a resource directory that I would like to be included 
in the committee file on today's hearing.
    The Chairman. It will be included in the record.
    Mr. Pahmahmie. Briefly, our reservation is an approximately 
76,000 acre reservation located 20 miles north of Topeka, KS, 
and our membership is approximately 4,900 people. In January 
1998, in partnership with Harrah's, we opened our current 
Harrah's Prairie Band Casino, which offers class III gaming 
with approximately 950 machines, a bingo operation, a hotel and 
soon we'll be adding a convention center.
    We do not have a formal revenue sharing provision as part 
of our compact. Revenue sharing, however, was not a make or 
break issue for the simple reason Kansas recognized that it 
would enjoy significant benefits from the increased economic 
activity of our nation's gaming enterprise. The compact itself 
states, the economic benefits from tribal gaming, including 
increased tourism and related economic development activities, 
would generally benefit all northeastern Kansas. And this 
prediction has proven to be true. Positive impacts of the 
casino for our nation, the State of Kansas and for local 
governments cannot be overstated.
    Our gaming enterprise has made significant contributions to 
the State and surrounding communities by creating hundreds of 
new jobs, generating millions of dollars in tax revenue and 
creating and unprecedented level of secondary economic 
activity. Our casino is the largest employer in Jackson County, 
with 916 employees, 91 percent of whom are non-tribal members. 
The current hotel and events expansion will be constructed by a 
Kansas owned and operated company, and will ultimately add 
roughly 150 new jobs.
    Job creation has also occurred in the areas of our nation 
such as in our roads and fire department and accounting and 
administrative offices that have positions held by non-members. 
Our progress has also spurred job creation off-reservation in 
Jackson County as well. In addition to the creation of jobs, 
from 1998 when we first opened our casino through 2002, we have 
purchased approximately $29 million worth of products from over 
500 Kansas vendors and suppliers, paid over $8.9 million to the 
State of Kansas in income taxes withheld from payroll of casino 
employees, paid $600,000 to the State of Kansas in unemployment 
taxes withheld from the payroll of casino employees, paid over 
$156,000 in State liquor taxes, paid over $856,000 to the State 
gaming agency.
    The casino has attracted more than 6 million visitors since 
its opening and has been the number one tourist destination in 
Kansas for the last 4 years. Our visitors, many of whom come 
from out of State, frequent local restaurants, shop at local 
businesses and stay at local hotels. We have helped revitalize 
the towns along the Route 75 corridor, which is the main north-
south route running from Kansas to Iowa. And this increased 
local activity has propelled Jackson County from the bottom 
half of Kansas' 105 counties when measured for economic 
performance to one of its top 10.
    At a time when States are experiencing budgetary crises, 
the Prairie Band Potawatomi Nation continues to provide a 
strong economic stimulus. We generate and share millions of 
dollars in increased economic activity, and this is happening 
in the absence of a formal revenue sharing agreement with the 
State. The benefits to the State, surrounding communities and 
our nation have naturally evolved from the opening and 
operating of our facility.
    I would next like to discuss what gaming has meant to the 
Prairie Band Potawatomi Nation itself. Our nation has used 
gaming revenues to exercise our sovereign rights of self-
determination and strengthened three core ingredients of a 
strong economy: A sound physical infrastructure, stable 
government institutions and a healthy, educated work force. In 
terms of our physical infrastructure, and this has been one of 
our highest priorities, financed by gaming revenues, we now own 
60 percent of our reservation land. Before, we only owned 18 
percent. This expanded ownership has translated into greater 
sovereign control over the development of our resources and 
increased opportunities for economic development.
    Until 1998, our nation lacked any paved roads. We now work 
under a 5-year road improvement plan and have 23 miles of 
blacktop and more to come. We also have been able to build 
seven new bridges to replace ones that were unsafe. Projects 
like these promote tourism, create jobs and enrich our business 
environment and quality of life. In addition, affordable 
housing has also been a priority for developing our 
infrastructure. Our people have long endured substandard 
housing conditions. Recently, by leveraging our gaming 
revenues, we have been able to provide new housing for our 
members and special housing for our elders. Our members can now 
move home to work and raise their families on the reservation.
    In addition to a sound infrastructure, successful economic 
development depends on strong and stable government 
institutions. To this end, we supplement our court budgets with 
gaming revenues to ensure that they function at their most 
effective level. Soon, our court system will conduct its first 
jury trial.
    Gaming revenues also support the education and well-being 
of our members. Thanks to gaming revenues, we expanded our 
early childhood education center so we can now serve 102 
children, whereas before we could only serve 20.
    In terms of education, we are now able to assist 140 of our 
students in pursuit of their college and graduate degrees. 
Previously, we could only afford to assist 30 to 40 per year.
    The impact of gaming on our nation extends far beyond the 
bottom line. These improvements have transformed the morale of 
our members, both young and old, and have solidified our 
community. Gaming revenues have provided us with a stable base 
upon which to chart our own future. Our success has expanded 
our vision of what is possible and given our citizens, 
especially our youth, the confidence to turn these visions into 
reality.
    In conclusion, even though no formal revenue sharing 
agreement exists between our nation and the State, we both, 
along with the surrounding communities, have benefitted from 
the substantial increase in jobs, business activity and tax 
revenues produced by our gaming enterprise. We are proud of our 
progress and we believe we are a good neighbor and a solid 
partner, and are confident that our strong relationship with 
the State and surrounding city and county governments will 
continue long into the future.
    Thank you.
    [Prepared statement of Mr. Pahmahmie appears in appendix.]
    The Chairman. Thank you.
    We will now go to Chairman Williams.

STATEMENT OF HERMAN A. WILLIAMS, Jr., CHAIRMAN, TULALIP TRIBES 
                         OF WASHINGTON

    Mr. Williams. Thank you, Chairman Nighthorse Campbell and 
other committee members, for being here today, and thank you 
for inviting me to make my short little brief comments.
    Washington State is one of the most robustly competitive 
gaming markets in the United States. We have many tribal 
casinos and what they call mini-casinos, horse racing, punch 
boards, pull tabs, and a heavily promoted State lottery. 
Washington State does not have a tribal-State casino revenue 
sharing, per se. Should the tribes be giving the State a 
percentage off the top? The answer: Tribes already support 
their local communities generously.
    Revenue sharing only makes sense if the tribes have an 
exclusivity. But with the wide variety of choices already in 
the market and constant pressure for more, it's hard to imagine 
how the clock could be turned back now, or at any point in the 
future. To be candid, Mr. Chairman, as you well know, Indians 
have quite enough experience in giving up things of value only 
to get little or nothing in return.
    Gaming compacts already require that tribes share revenue 
with our communities. Other non-tribal gaming operators in the 
State have no such requirements. Horse racing is barely taxed 
by the State, and the mini-casinos are not taxed at all. Tribes 
are allowed not more than two locations, but the State lottery 
is in nearly every grocery store and marketplace. There are no 
limits as to how many mini-casinos one person can own.
    But thanks to IGRA, tribes are now able to offer services 
to their members which simply did not exist prior to IGRA. And 
I'd like to thank everybody for the hard work that they did in 
getting IGRA passed. Education, housing, health care, elder 
care, child care, drug and alcohol treatment, as well as 
cultural restoration, law enforcement, fire suppression, 
emergency medical and many others are now funded with our 
gaming revenues. Not only do we fund services for tribal 
members and other Native Americans, we have also extended the 
benefit of our success to the surrounding communities and to 
the State itself. Nearly 60 percent of all Tulalip tribal 
employees are non-Indian, non-tribal. Last year, we paid nearly 
$45 million in salaries. Our gaming facility alone paid over 
$100 million for goods and services to vendors, which 75 
percent come from the State of Washington.
    Over the last few years, Tulalip has donated over $1 
million for charitable purposes. In 2003 alone, we will make 
another million dollars in payments to local city and county 
governments for community impacts. We also operate one of the 
most successful boys and girls clubs in the Nation and in our 
region. If you ever want to see America's melting pot in 
action, come to Tulalip and visit our facility. Children of 
every race and color are playing together in the gym, working 
together in the computer labs and eating together in the 
cafeteria, all built with tribal revenue.
    If you come to Tulalip, you will take an overpass from 
Interstate 5 which the tribe paid the majority of the cost to 
build--as we all know, overpasses are not cheap--despite the 
fact that over 70 percent of the traffic goes not into Tulalip 
but into the surrounding, into the neighboring community. 
Tulalip has also invested into much-needed infrastructure for 
our reservation, bringing services to our people and beginning 
to take steps necessary to establish a true economy by 
attracting business investment. I believe this was the true 
intent of IGRA.
    We have used lands adjacent to Interstate 5 to develop a 
tribal city, Quil Ceda Village. Quil Ceda contains many 
retailers, we have Home Depot, Wal-Mart and we just constructed 
a new casino as another anchor tenant for our Quil Ceda 
Village, as well as offices of the regional chamber of 
commerce. In the future, the Village will include a hotel, a 
convention center, more retail stores, office space, tribal 
administration buildings, manufacturing and distribution and 
hopefully, a university. We will need our gaming revenue 
dollars, because we've created a city but we have yet to gain 
any of the taxes that we generate. All those taxes still go to 
the State. We've been 5 years, we've been working down in the 
State legislature to get a tax bill passed. We haven't been 
successful to this date.
    Isn't the purpose of IGRA promoting economic opportunity or 
diversity for Indian tribes? After centuries of failed Federal 
policy toward Indian nations, gaming has finally provided a 
path to self-sufficiency. You gave us the opportunity and we, 
the Tulalip tribes, have endeavored to make the most of it. A 
large part of making the most of it has been to recognize that 
we must give back to the land and all of its people. We are 
doing this by investing in resources, creating good jobs and 
jobs that are environmentally friendly and supporting our local 
community's needs.
    So I've come here today, Senators, to tell you that in 
Washington State, Tulalip tribes and other tribes already share 
our revenue. In doing so, our tribes have lived up to the 
spirit of IGRA and then some.
    Thank you, Mr. Chairman, for this opportunity. If there are 
any questions, I hope I'm prepared to answer them.
    [Prepared statement of Mr. Williams appears in appendix.]
    The Chairman. We'll have some right after the conclusion of 
all the panelists.
    Chairman Viarrial, why don't you proceed.

  STATEMENT OF JACOB VIARRIAL, GOVERNOR, PUEBLO OF POJOAQUE, 
 ACCOMPANIED BY GEORGE RIVERA, LIEUTENANT GOVERNOR, PUEBLO OF 
  POJOAQUE FRANK DEMOLLI, GENERAL COUNSEL, PUEBLO OF POJOAQUE

    Mr. Viarrial. Mr. Chairman and Senators, thank you for 
allowing us to come here and give testimony in front of this 
committee.
    When this Senate Committee on Indian Affairs, the entire 
U.S. Senate, the House of Representatives and the President all 
agreed on the terms of this Indian Gaming Regulatory Act of 
1988, there was and still remains a strict prohibition against 
State taxation authority on Indian gaming. In fact, IGRA reads,

    Nothing in this section shall be interpreted as conferring 
upon a State authority to impose any tax, fee, charge or other 
assessments upon an Indian tribe to engage in a class III 
activity.

    Today, Senators we face the exact opposite of this national 
law. New Mexico and dozens of others States are in fact 
charging taxes, fees and other assessments under the guise of 
exclusivity or revenue sharing. Compact negotiations have 
become a smoke screen for extortion. This transparent guise of 
the Indian Gaming Act costs gaming tribes millions upon 
millions of dollars every year. The Indian gaming law you wrote 
has no mention of exclusivity or revenue sharing. Yet, there is 
a mechanism to theoretically make these tribal taxes legal, 
they do this in spite of your legal mandate to the contrary.
    In other words, Mr. Chairman, Congress told the States in 
the IGRA law that they could not impose any kind of assessment 
other than regulatory fees. What are the States doing? With the 
blessing of the Departmnet of the Interior officials, they are 
imposing new taxes on tribes. In New Mexico, it was 16 percent 
and now it's 8 percent.
    These taxes did not exist before 1988. The States have been 
imposing these taxes since 1988. And they plan to continue on 
violating IGRA by imposing multimillion dollar assessments 
across the country. I am here today, as my detailed testimony 
states, to object to this continuing and costly injustice 
against the tribes. I also believe, Mr. Chairman, that the 
interpretations of IGRA by the Department of the Interior go 
against the good wishes of Congress when IGRA was passed in 
1988.
    Despite these Department of the Interior obstacles, IGRA 
has become the only major successful economic engine for Indian 
tribes across this country. This has happened, Mr. Chairman, 
despite the good efforts of Congress to encourage other 
economic activity on Indian reservations. For their efforts to 
promote tribal economies, I offer a special thanks to Senators 
Domenici, Inouye, Campbell, McCain, Daschle, Dorgan, and 
Johnson. Pojoaque Pueblo will pursue this illegal revenue 
sharing in Federal courts.
    I only ask, Mr. Chairman, that you stand behind the 
original law Congress passed for Indian gaming. I hope you 
stand behind this law just as you passed it.
    Only you, Mr. chairman, the people here in Washington, DC, 
can protect us from the States'--I won't say inhumane 
treatment--the atrocities that the States are doing to the 
tribes across the Nation. And I'm again asking you to please, 
please support us. I think if there's going to be cure, I think 
that because we're so tied up in courts, almost every provision 
in IGRA has been violated and is being taken to court by State 
Governors, by State legislators, by individuals, and now we 
can't do anything because we're tied up in court. We just can't 
move forward.
    I think that a real quick cure is to get the States out of 
IGRA. In 1988, the tribes were against the States being part of 
IGRA. But the States managed to be part of the regulatory act 
at least. So they've done nothing, the States have done nothing 
but create lawsuits for us to tie us up, which cost us millions 
and millions of dollars. And in addition to those millions of 
dollars, they want the compacts to where they can charge us 
again hundreds of millions of dollars.
    We need your help and your support, Mr. Chairman. Thank 
you.
    [Prepared statement of Mr. Viarrial appears in appendix.]
    The Chairman. Thank you.
    Now we'll go to Mr. Johnson.

   STATEMENT OF PEDRO JOHNSON, EXECUTIVE DIRECTOR OF PUBLIC 
           AFFAIRS, MASHANTUCKET PEQUOT TRIBAL NATION

    Mr. Johnson. Good morning, Mr. Chairman and members of the 
committee. My name is Pedro Johnson, executive director of 
Public Affairs for the Mashantucket Pequot Tribal Nation of 
Mashantucket, Connecticut.
    I am here representing our tribal nation at the request of 
our chairman, Michael Thomas. I am a former three term member 
of tribal council, a retired police officer and a proud veteran 
of this country's military services, as are thousands of other 
Native Americans.
    I appreciate the work you have done on behalf of all Indian 
nations, and would like to thank you for giving me the 
opportunity to address a very important issue. At this time, I 
would like to submit my written remarks as part of the record. 
I would also like to focus on a few key points in my testimony.
    The Chairman. Your complete written testimony will be 
included.
    Mr. Johnson. Thank you.
    Mr. Chairman, in 1992, the State of Connecticut and the 
tribal nation worked out an historic government to government 
agreement which is known as the Slots Agreement. The tribal 
nation added slot machines to the casino and agreed to share 25 
percent of the slot revenues with the State. Since our slot 
agreement went into effect in January 1993, the Mashantucket 
Pequot Tribal Nation has sent more than $1.6 billion to the 
State of Connecticut.
    Today the revenue derived from the two Indian casinos make 
up 3 percent of the State's $13 billion budget. It's also very 
important to note that our agreement with the State allows for 
an extensive regulatory role of the State of Connecticut. The 
cost of this State regulation is paid entirely by the tribal 
nation, which is nearly $5 million per year. That covers the 
salaries of State police officers and liquor control agents 
stationed at the casino, as well as special revenue agents who 
license our management employees and vendors.
    Because this was one of the first agreements between the 
tribal government and the State government, and because of our 
success, the agreement has been scrutinized by many 
governments, tribal, State and Federal.
    Now I would like to discuss two important points about our 
revenue sharing arrangement with the State. The first point, 
how did we come up with 25 percent. The answer has many facets. 
We should look at the context in which this government to 
government agreement took shape. To begin with, Connecticut was 
in the midst of a deep economic recession which began in 1989. 
The State wanted revenue, a limit on casino gaming and a 
significant role in the regulation of tribal gaming facilities. 
The tribal nation wanted something that was going to be fair 
and honest for both governments. We wanted something that could 
hold up over time, exclusive slot gaming rights and no 
expiration date for the agreement.
    The second point about the 25 percent rate, this was 
dictated by our individual government to government 
relationship with the State. Just because 25 percent was 
appropriate for the tribal nation in Connecticut back in 1992 
doesn't mean it should be the norm for other State and tribal 
agreements today. In 2003, many States are again facing budget 
deficits. Connecticut is, too. But it's not turning to tribal 
nations to help balance the State deficit. And this is perhaps 
a lesson for other States. States should not balance their 
budgets on the backs of Indian governments. It's patently 
unfair. This goes against the entire history of Indian 
government sovereignty and our strive for self-sufficiency.
    If States wanted to derive more revenue from gaming, they 
have their own gaming to turn to, including lotteries and 
parimutuels. When my tribal nation was raising hogs and tapping 
maple trees for syrup, nobody else cared about our revenue 
stream. And then as now, we had to balance our government's 
budget, just like any other government. We are going to stand 
by our government to government relationships and agreements, 
as we always have, because we are proud of the respect and 
fairness they now afford us.
    Thank you. I'll be happy to answer of your questions.
    [Prepared statement of Mr. Johnson appears in appendix.]

  STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH 
                             DAKOTA

    Senator Dorgan [assuming Chair]. Thank you very much. The 
Chairman will return in just a moment.
    I was unable to be here for all of your presentations, but 
I've had a chance to read the presentations and appreciate your 
testimony. I'm the Ranking Democrat on the Interior 
Subcommittee for Appropriations, and we're going to mark up our 
bill in 5 minutes, so I also am going to be leaving, and the 
chairman, as I indicated, will return.
    Let me, if I might, just make a comment about the last 
piece of testimony that we heard. We know that there is a 
shortfall in funding for State governments. We know that this 
economy has provided significant problems for our Federal 
fiscal policy, but also for State governments. They face some 
very significant shortfalls.
    And during the go-go, turbo-charged 1990's, we saw State 
governments permanently reduce their tax base by tens of 
billions of dollars. And Governors and State legislators, quite 
predictably, enjoyed the opportunity to reduce taxes. But a 
permanent reduction in your tax base can cause some real 
problems. When the economy turns a bit south or a bit sour. So 
State governments have some very significant problems of their 
own to confront.
    When you talk about shortfalls in revenue, it seems to me 
that there is no shortfall quite as significant as the 
shortfall that exists on virtually all of our Indian 
reservations. We have, in my judgment, bona fide crises in 
housing, health care and education among Native American 
populations in most of our country. Because of that shortfall, 
we ought not, in my judgment, interrupt the first new stream of 
income that's been available to tribes to begin to amass some 
revenues with which to address these issues.
    I have often, Mr. Chairman, told the story of Tamara 
Demaris, the young 3 year old girl put in a foster home. The 
caseworker who put her in a foster home was handling 150 cases 
and did not, as a result, check out that foster home very 
carefully. Young Tamara at age 3 had her nose broken, her arm 
broken, her hair pulled out by the roots in a drunken party by 
the folks who were in custody of her. And why did that happen? 
It happened because the money wasn't available to provide the 
social workers to check out the places where they were putting 
children.
    That was on the Standing Rock Sioux Reservation. That 
problem is fixed. That young girl will perhaps be scarred for 
life from that experience, but that problem is fixed. We don't 
have one person handling 150 cases with respect to these 
significant issues affecting children.
    But whether it's children on that reservation or one 
dentist working in a trailer serving 5,000 people on that 
reservation, or I could describe all of the other issues of 
housing, health care and education, that represent the crisis. 
We have a serious shortfall of funding. Part of that we can 
resolve, in my judgment, through more appropriations here, by 
paying attention to the priorities, and we certainly should do 
that. And I'll be dealing with part of that in a couple minutes 
as we mark up the Interior Appropriations bill.
    But another part of it, it seems to me, can be addressed 
with this new source of revenue that in the last 10 or 15 years 
has become available through Indian gaming. And I would not 
want the States to very quickly try to grab a portion of that 
revenue to make up a shortfall that comes at least in part 
because they permanently reduced their tax base in the last 10 
to 15 years. The promise to begin to address these significant 
issues in health care, education and housing on reservations 
can come from the stream of income from Indian gaming.
    I know there are a lot of people out there who want to grab 
a portion of that stream of revenue. I for one believe, Mr. 
Chairman, that we ought to be very, very concerned about those 
who want to take that money away from what I think is the 
greatest shortfall in social progress in this country, and that 
is addressing the critical needs on Indian reservations.
    So I just wanted to make that comment. Again, I'm not able 
to stay for the rest of the hearing. But I think all of you at 
the witness table understand that the chairman of this 
committee, Senator Campbell, has probably unique and unusual 
insight to understand these issues. And the ranking member, 
Senator Inouye, has similar interests and background. We 
couldn't have in my judgment, two more appropriate people 
leading this committee than the chairman, Mr. Campbell, and the 
ranking member, Senator Inouye.
    And I look forward, along with many of my colleagues on 
this committee, to work through these issues that you have 
raised with respect to the Indian Gaming Regulatory Act. Mr. 
Viarrial, I appreciated your comments and Chairman Williams and 
Chairman Pahmahmie. I really appreciate your coming to 
Washington testify. I think it's very helpful and very 
important to us, Mr. Johnson.
    Mr. Chairman, I'm going to go run to the Appropriations 
Subcommittee. But these are important issues and thank you for 
letting me sit in for you.
    Senator Campbell [resuming Chair]. Thank you for your 
interest and your leadership on trying to make the lives of 
Indian people just a little better, too. Thank you, Senator 
Dorgan.
    I have to tell you that I wish that the Time Magazine that 
did a rather uncomplimentary series of articles a few months 
ago about Indian gaming, I wish they could have heard this 
panel. Because clearly you are some of the real success stories 
in Indian Country and have been willing to share those 
successes, too. I think we have to really recognize that those 
success stories still do not alleviate the problems we have 
with most Indian people that still face poverty and 
unemployment and many other problems.
    A friend of mine who's the chairman of the Southern Utes 
who, in fact, when he was born had only a dirt floor in his 
cabin and is now the chairman of a very, very successful tribe 
because of natural resources and a casino and business 
interests and so on, he once said in a committee, I can still 
remember him, he said, they liked us better when we were poor, 
when he was speaking about the opposition that seems to arise 
when Indians finally get up off their knees, as I call it, and 
make a living, find some opportunities. I remember somebody 
else telling me one time that ``now they are forcing us to 
share. What did they share with us except poverty and 
disease?''
    So there's some pretty strong feelings by some Indian 
people that if there's an opposition to some success among 
Indian people, maybe they ought to look at it from an historic 
standpoint and see what we lost. Because what Indian people 
lost in this country is still a great deal more than anything 
they've gained from economic development or casinos or any form 
of successes they've had.
    I was particularly interested in some of the comments, 
Zach, Mr. Chairman, you said that 91 percent of the casino 
workers are non-Indians with your casino. Is that correct, 91 
percent?
    Mr. Pahmahmie. That's correct.
    The Chairman. That's the largest number I have heard. Also 
you said that Harrah's was the major financial partner when you 
started?
    Mr. Pahmahmie. Yes; Harrah's. We initially sent out an RFP 
for three different companies to submit their bids and Harrah's 
was the final selection in that process. They've been our 
management company since.
    The Chairman. It's interesting, because when we were 
working on IGRA, I was in the House in those days, but many of 
us on the House and Senate side still can remember all the 
opposition we had from, in those days it was from the existing 
casinos and from the interests in Nevada, as you remember. Now 
some of the biggest supporters of Indian casinos are those very 
same people, because they are also becoming investors. They see 
the real potential with the growth of Indian casinos.
    Did you also say that you're the largest employer in the 
county?
    Mr. Pahmahmie. Yes; that's correct.
    The Chairman. That is the same where I live, with the 
Southern Utes. They are also the largest employers in the 
county, larger than the school boards, larger than the 
hospitals, larger than the county government. Your tribe began 
gaming in 1996. What was the unemployment rate, or give me a 
couple of comparative numbers, unemployment, high school 
dropout and so on, before you had the casino and the successes 
you've had?
    Mr. Pahmahmie. I'm not sure that I can give you exact 
numbers. But I think it would be comparable.
    The Chairman. You were still a little boy. [Laugher.]
    Mr. Pahmahmie. I was an undergraduate in 1996. But I would 
say that it's probably somewhere on the average, in terms of 
reservations in the country in terms of unemployment and 
dropout rate. It's something that we still struggle with today.
    The Chairman. Yes; as most tribes do. By the way, I was 
somewhat teasing a little bit when I said 28. I'm delighted to 
see such a young person in Indian country take the leadership 
of a tribe. I think that really bodes well not only for your 
tribe, but the example you can set for many others, too. We 
need new, young Indian leaders on the way up to do great 
things. So congratulations.
    Mr. Pahmahmie. Thank you.
    The Chairman. You also said 43 percent of the revenues were 
dedicated to economic development. Do you have some kind of a 
development fund, or how do you carry out those development 
activities?
    Mr. Pahmahmie. Currently our tribal council is the one that 
oversees much of that up to this point. We hope to have a CEO 
of economic development in place to take some of that workload 
off of us and devote full time efforts toward that end.
    The Chairman. You also, as I understand, have no revenue 
sharing with the State, and is your State of Kansas also 
suffering a deficit like most States are now?
    Mr. Pahmahmie. They are indeed.
    The Chairman. Have they made overtures to the tribe about 
any kind of a revenue sharing agreement?
    Mr. Pahmahmie. We've had casual conversations on that 
subject. But no substantial negotiations or discussion really 
to speak of.
    The Chairman. North of you, some of your neighbors in 
States north of you are very, very poor tribes. Do you have any 
system of sharing or helping poor tribes that are near you?
    Mr. Pahmahmie. We do not currently have that type of system 
in place, no.
    The Chairman. Would you be in favor of some kind of a 
tribal development fund, a voluntary tribal development fund 
between those tribes who have had a great deal of successes and 
those who are very poor?
    Mr. Pahmahmie. I think I would. I have witnessed some of 
the more isolated tribes, and I think it would be to the 
benefit of all Indian people certainly to have some sort of 
arrangement in place.
    The Chairman. That's something that's been talked about. I 
think the big glitch is some people have talked about it in the 
past here in the Senate and have wanted some kind of a 
mandatory fund. Most of us resist that and don't support that 
at all. But if it was some kind of a voluntary thing, I think 
most Indian people would recognize the importance of being able 
to share this traditional way of Indian thinking.
    Chairman Williams, as I understand your testimony, you're 
right off of I-5, is it?
    Mr. Williams. Yes, sir.
    The Chairman. That's a major thoroughfare, isn't it, 
between Los Angeles going up through California, Oregon and 
Washington?
    Mr. Williams. We are in a very good location. We're right 
40 miles north of Seattle and about 70 miles from the Canadian 
border.
    The Chairman. How far are you off of the interstate itself?
    Mr. Williams. A few hundred yards.
    The Chairman. I noticed you've had great success with your 
casino. But some of the tribes I have visited on interstates 
like I-10 and 40 and 80 and so on have developed some terrific 
travel centers, too, to encourage the retired people that are 
now traveling in the summer in their RVs to also stop. Do you 
have something of that nature?
    Mr. Williams. That is in the plan, sir. Right now we've 
cleared out about 40 acres behind the casino. And just a couple 
weeks ago, that had 175 fireworks stands in there. Those people 
are gone and that's where we're going to put our RV park.
    The Chairman. There's another, the ones that have done 
that, I visited the Ute Mountain Tribe a few weeks ago. They 
developed a travel center and an RV park and also tapped into 
the Federal laws about hours of driving for over the road truck 
drivers. With that travel center they have a place to park 
trucks, because they have to stop a certain number of hours 
during the day, as you know.
    Mr. Williams. Just about half a mile north of us, there is 
a truck stop. We get a lot of truckers that come in and use the 
casino.
    The Chairman. Good. You mentioned that you do not have 
revenue sharing but that your compacts do require charitable 
and community giving.
    Mr. Williams. Yes.
    The Chairman. Do you do that on a case by case thing, or do 
you have some kind of a specific percentage of giving? And what 
counts as ``charitable giving''?
    Mr. Williams. We have, there's a couple of different 
methods. We have several different charity accounts. We give to 
the Red Cross, YMCA, of course the Boys and Girls Club. We just 
developed a four member committee that will be doing all the 
reviews of all the requests that we get. It's stacks.
    The Chairman. I'll bet you get plenty.
    Mr. Williams. They'll be going through that and making 
recommendations to the board as to who we should fund.
    The Chairman. Very good. And you do that for Indian and 
non-Indian charities?
    Mr. Williams. Yes, sir.
    The Chairman. Very good.
    Mr. Williams. And another thing that we've done in our 
State, each tribe is only allowed 675 machines. But can have a 
total of, I believe it is 3,000. So the tribes that are in the 
rural areas and don't have the traffic, they negotiate a 
compact with the State and then we lease their 675 machines. So 
we're working with five different tribes back at home. And they 
get casino moneys when they don't operate or own a casino.
    The Chairman. I haven't heard that before in any of our 
hearings. I think it's a good idea.
    You mentioned the non-Indian mini-casinos. What kinds of 
games or machines can you offer that they can't offer?
    Mr. Williams. Right now, they have table games. As it 
stands today, they do not have any machines. But they are 
pushing the legislature very hard to get hold of the machines 
that we fought a long time to get.
    The Chairman. I'll be they are. Has the State tried to 
raise the taxes on those mini-casinos?
    Mr. Williams. We've met with one of the senators from the 
State a couple days before coming here, and I think they're 
going to try to push that issue.
    The Chairman. Chairman Viarrial, you used the word 
``atrocity''. That might have been a little stronger than I 
would have used. But I certainly understand your position and 
your feeling about it. In 1988, when we framed up IGRA, I think 
your concerns really were met in IGRA. But after the Seminole 
decision, it began to change, as you probably know. In 1988, 
between 1988 and 1996, most of the lawsuits were initiated by 
tribes against the States. After the Seminole decision it kind 
of went the other way, as you probably know.
    In the 1997 compact, as I read your testimony, your Pueblo 
is still operating under a compact agreed to in 1997. Other 
tribes and other pueblos in your State of New Mexico are 
operating under the new compacts that were agreed in 2002 or 
2001. That was brought about by an awful lot of pressure a 
couple years ago. I remember in fact a whole Governor's 
election hinged on that particular issue. I remember very 
distinctly how active the tribes were in that election.
    Other than the revenue sharing provisions of the 1997 
compact, which would have been a better deal for you, the 1997 
compact or this new one?
    Mr. Viarrial. The new one in 2001, because the past, the 
other one we would have had to pay 16. And off the top, before 
any expenses. So 8 percent would be a lot better.
    The Chairman. But you still operate under the 1997 one?
    Mr. Viarrial. Yes, sir.
    The Chairman. You're paying a bigger percent than you would 
under the other?
    Mr. Viarrial. We're still paying, a couple of years ago, 
about three years ago, mainly because for two reasons, because 
we knew it was an illegal payment, and the other one, see I 
lost my train of thought here.
    The Chairman. You stopped paying, you said?
    Mr. Viarrial. Right. And there's no exclusivity. And so we 
haven't paid anything to the State in about three years. What I 
was going to say that is in addition, our tribal programs 
suffered. So it was either give our money to the State or 
continue our tribal projects, our social services, all those 
things that are helped by the gaming revenue.
    The Chairman. Are you in some litigation now with the 
State?
    Mr. Viarrial. Yes, sir; most of the other tribes signed the 
compact in 1987, I mean 2001. But Pojoaque Pueblo chose not to. 
And the Attorney General was given the authority to negotiate 
with us.
    The Chairman. In that lawsuit, what has been the position 
of the Secretary of the Interior, the Department of the 
Interior? Have they helped your or interceded or taken a 
position in that lawsuit?
    Mr. Viarrial. Maybe I can ask Mr. Rivera. George is our 
Lieutenant Governor.
    The Chairman. Yes, Mr. Johnson.
    Mr. Rivera. Mr. Chairman, the Department of the Interior, 
we're trying to make the Department of the Interior part of the 
lawsuit for accepting the compacts and accepting the illegal 
provision. And it's all still it the process right now.
    The Chairman. And let me correct that for the record, 
you're Mr. Rivera.
    Mr. Rivera. Yes; the lawsuit was brought on by the State 
against the tribe for not paying the revenue sharing.
    The Chairman. When do you expect some final conclusion of 
that?
    Mr. Rivera. I don't have a date on that yet.
    Mr. Viarrial. May I add, Mr. Chairman, that Governor 
Richardson is trying to resolve the problems. But it's very new 
and we don't know how it's going to go.
    The Chairman. In that lawsuit, has the State been demanding 
back payments that you haven't paid?
    Mr. Viarrial. Yes; they are saying that we owe them $21 
million now. And if we continue until we negotiate with them, 
that's 16 percent, the clock on that continues. So let's say 
we're to settle next year or the year after that, we will owe 
them about $30 million.
    The Chairman. If you had to pay that, wouldn't that do some 
devastating harm to the tribe?
    Mr. Viarrial. Tremendous, tremendous harm.
    The Chairman. Have any other Pueblos, the tribes had to 
stop gaming because of the size of the revenue sharing 
provisions?
    Mr. Viarrial. I don't know, Mr. Chairman, I really haven't 
talked to them about it. But definitely, I'm sure everybody's 
suffering the way we are.
    The Chairman. Okay. Well, thank you. I hope that will be 
resolved to the tribe's benefit.
    Mr. Johnson, I think everybody is familiar with the success 
of the Pequots. And also familiar with the wonderful feeling of 
sharing. I'm well aware of the money that the Pequots have 
donated to the Museum of the American Indian, which is going to 
go a long way in helping them reach their goal of having their 
grand opening next year, September the 10th if I'm not 
mistaken. I know the Pequots will be there and should be there.
    You said, as I understood you, 3 percent of the whole State 
budget is now really made up with compact payments alone, is 
that correct?
    Mr. Johnson. Yes.
    The Chairman. And when you think in terms of the whole 
economic picture of the Pequots, the employment, the taxes the 
employees pay on income taxes and so on, do you have any kind 
of a ball park area of what that means to the State of 
Connecticut?
    Mr. Johnson. There was a study that was conducted by the 
University of Connecticut in, I believe, 2000 that I think 
you'd find very interesting. One of the points that the study 
brought out was that directly or indirectly, the tribe has been 
responsible for 43,000 jobs in the State of Connecticut. I 
think that speaks for itself.
    The Chairman. And 11,000 being with the----
    Mr. Johnson. With the enterprise itself.
    The Chairman. The ripple effect would be--43,000 jobs.
    Mr. Johnson. Right.
    The Chairman. Well, as I mentioned earlier in my opening 
statement, we've had some local elected officials come into 
this Committee and complain that you weren't doing enough. I 
told them they needed a better lobbyist in their State capital. 
I think you probably would agree with that, because it seems to 
me you're paying a lot.
    Mr. Johnson. yes.
    The Chairman. Your compact has no expiration date, is that 
correct?
    Mr. Johnson. That's correct.
    The Chairman. Is that one of the reasons the tribe felt 
that a 25 percent revenue sharing rate was appropriate? Because 
that's rather high compared to most of them.
    Mr. Johnson. Yes; back then that was the case. As I stated 
in the oral testimony, this was one of the primary factors. We 
wanted something that was going to be lasting.
    The Chairman. Sure. That wouldn't get jacked up at a later 
date as is being done in some States.
    Mr. Johnson. Right.
    The Chairman. Well, I have no further questions. We may 
have some questions in writing from some of the other members 
of the committee, and we'll send those to you if we do. But I 
want to thank this panel for appearing. You have some terrific 
success stories, and I wish you every continued success. Nice 
to see you.
    We'll now go to the last panel, which will be Brenda 
Soulliere, chairperson of the California Nations Indian Gaming 
Association, from Sacramento, my old hometown; and Frank 
Chaves, the executive director of the New Mexico Indian Gaming 
Association, from the Pueblo of Sandia in Bernalillo.
    Brenda, did I pronounce your last name correctly or wrong? 
It's pronounced like a French word?
    Ms. Soulliere. The political answer is closer than most. 
It's Soulliere. [Laughter.]
    The Chairman. Okay. Would you go ahead and proceed? Do you 
live in Sacramento, by the way?
    Ms. Soulliere. No; I don't. I'm from Southern California, 
I'm a member of the Cabazon Band of Mission Indians. But it 
feels like I live in Sacramento.
    The Chairman. Okay, the office is there. Go ahead and 
proceed.

STATEMENT OF BRENDA SOULLIERE, CHAIRPERSON, CALIFORNIA NATIONS 
                   INDIAN GAMING ASSOCIATION

    Ms. Soulliere. I just wanted to say thank you, Chairman 
Campbell, for the vision and insight, for having the panels and 
having this hearing.
    The Chairman. And I need to tell you that we've been 
notified that we're going to have two consecutive votes in 
about 10 to 15 minutes. So if you don't want to wait here for 
like an hour until I get back----
    Ms. Soulliere. In the interest of time I will summarize. 
And that's all I'm going to say on that. I've submitted written 
testimony.
    The Chairman. That will be included in the record.
    Ms. Soulliere. As I had said, I'm a member of the Cabazon 
Band of Mission Indians. I am the daughter of John James, who 
is the chairman of the Cabazon Band of Mission Indians. In a 
conversation we had the other day, I am about number six in 
generations of leadership in the Cabazon Band, just direct 
inheritance moving down the line.
    Just a little background, I chair the California Nations 
Indian Gaming Association based out of Sacramento. We have had 
a lot of interesting times in California. I'm sure everyone's 
heard many things about what's going on in California. So I 
don't need to cover that.
    But I think probably the biggest area or the biggest flag 
we can wave right now is that employment in California in 
tribal governments are the only double digit growth industry. 
And that's not just gaming, it's the tribal governments 
themselves, any kind of economic development the tribes have 
had in California, the only double digit growth. All the other 
industries are may 2 or 3 percent or completely even, or below. 
So we are already doing our fair share in trying to keep 
California's head above water.
    A couple of the things that we just needed to talk about 
real quick, about the revenue sharing, the problem with the 
process really is that since Seminole, tribes do not have any 
leverage. They don't have leverage in being able to compact. 
One of the examples right now that's going on in California, 
one of the extremes, actually, because there's kind of three 
levels, there's one extreme, the other extreme and then 
somewhere in the middle.
    The leverage, we have some tribes that cannot get the same 
compact that 62 tribes have signed. And there are some 10, 20 
tribes that want the exact same compact with the exact same 
terms. And the Governor won't sign them, he's been putting them 
off for about two or three years. And no one can really figure 
out why it's a different, I guess, excuse, every time he's 
asked. But as of last week, he came to our membership meeting 
and he said within 3 weeks he will have definitive answers. So 
we're not sure what that means, but we will find out in a 
couple more weeks.
    Recently, the Governor, I guess about 4 months ago, the 
Governor had requested $1.5 billion in renegotiations of the 
compacts which are due to happen some time this year. There 
were what I call horse laughs up and down the State when that 
number came out. It was just not possible. He was assuming that 
we were making $6 billion in California per year and he wanted 
the 25 percent of that which was the $1.5 billion. It was not 
going to happen, number one, that's not what we're making. The 
numbers came out for 2001 which was $2.9 billion. So that's 
rounded off to 3, he wants 1.5, he wants half of everything 
that we bring in. That's where the horse laughs came from.
    The recent one about 1 month ago, he came out and said that 
he wants $680 million from the tribes. I don't think that's 
going to work either. There are already two funds that the 
California tribes pay into. One is a revenue sharing trust fund 
which is moneys that are shared with the non-gaming tribes. 
Only half of the tribes in California game. We have 107 tribes 
and there's only 53 that have gaming establishments. And 
through their licensing procedures they're sharing revenues 
with the non-gaming tribes to help them, to strengthen their 
governments. That is situation specific to California.
    There's another fund which is a special distribution fund 
that has several different, what's the term I'm looking for, 
several different ways to use that fund. One of those ways is 
to backfill that fund. That is being considered in the State 
legislature right now. Another is for mitigation and those 
impacts. So we're waiting for that to be taken care of.
    Some of the problems that we've had is no consultation. The 
Governor just comes out, the $1.5 billion number was a problem 
of no consultation. He just came out and said, well, actually 
we read it in the paper. And then if there's an issue that we 
have with another entity or something, he's just put out 
executive orders without talking to tribes, without taking any 
determinations on what the real issues are. And that's been a 
problem for us.
    But what we have seen though, there are, we feel, ways to 
resolve these. We feel that the Federal Government has a 
fiduciary duty as a trustee and we believe that there should be 
some guidelines for approval or disapproval of the compacts. 
Things are just going around and around right now in 
California, and that has to do with the revenue sharing. 
Obviously that has to do with the budget deficit, which is 
approaching $40 billion in California. There's a big Governor 
recall issue going on in California. So everything is up in the 
air, the renegotiations basically have stalled. No one's 
talking right now, everybody's worried about the political 
climate.
    What we need is to get a little more from Washington to the 
Governors to encourage them to come together with tribes. There 
are--it just really gets old being looked at as a cash cow. And 
that's how tribes are getting looked at. I believe the other 
gentleman used the word extortion. And that's what's happening.
    Something I always like to say, we've gone from, and it's 
all stereotypical, we've gone from the drunken dumb Indian to 
the rich Indian. I don't think there's any other segment in 
society that's been able to do that. [Laughter.]
    The other has to do with the use, the other concern is that 
there should be a direct causal connection between the State 
and the revenue sharing and the Indian gaming. Now, that 
relationship has to do with exclusivity. The State wants us to 
pay revenue sharing for exclusivity. There's one little part 
that they forgot. They did not bargain exclusivity at all. We 
fought for that. We ran two State initiatives and we spent 
time, we spent money, we changed the constitution of California 
and we got our own exclusivity, and now the State wants funding 
to keep that exclusivity.
    If there's not that direct causal relationship, it creates 
cynicism. I myself have become cynical over some of the things 
that the State has done. For example, the California lottery, 
what they did is they are going to, they sold the lottery to 
the people and they're going to use that money to bolster 
education. And they did that. But underneath, they cut all the 
education and took it out of there.
    So they're basically, even with the schools growing, but 
then they took the money out from underneath. And that's made 
the people of California very cynical. We do still have a very 
good set of numbers for California Indian gaming, up in the 65 
percent approval rate. That's because the people of California 
feel that we've been responsible with our budgets, with our 
funding, with what we do with our tribal governments.
    The Chairman. Brenda, I hate to interrupt you. That was the 
first call to vote, which means we have about 15 minutes to get 
there. So I'm going to have to ask you to wrap it up so that we 
can at least hear from Mr. Chaves and I don't know whether I'll 
have time to ask questions or not.
    Ms. Soulliere. Okay, I will do that. Just real quickly, 
there are ways to make these things work without amending IGRA. 
One of my main points was why add to the law when the law is 
not being followed as it is. I think it needs a little bit more 
of a push toward the States. You need to be following what's 
going on here.
    The recommendation is that the Federal Government step up 
to the plate and take seriously its fiduciary duty to the 
tribes. Let the States know that they're going to take a 
proactive approach when it comes to this fiduciary duty to the 
tribes in relation to IGRA.
    Another recommendation is to adopt guidelines that 
demonstrate the revenue sharing and the mitigation demands and 
have a direct causal relationship toward that. And again, we 
can all do this without amending IGRA. If you look at the 
problems, this is something that we discovered, if you take a 
really good look at the problems and take time to analyze them, 
you will see the solutions of those problems within the 
problems themselves.
    So I want to thank you for the opportunity to be able to 
speak to the committee and I'll be happy to answer any 
questions, either today or in written followup. Thank you.
    [Prepared statement of Ms. Soulliere appears in appendix.]
    The Chairman. Thank you.
    Mr. Chaves.

 STATEMENT OF FRANK CHAVES, CHAIRMAN, NEW MEXICO INDIAN GAMING 
                          ASSOCIATION

    Mr. Chaves. Mr. Chairman, thank you for the opportunity to 
present testimony before you today. I appreciate this 
opportunity to talk about the negotiation process and its 
relationship to revenue sharing and the use of revenues by 
tribal governments.
    I have a written testimony that I'd like to make sure is 
submitted for the record.
    The Chairman. It will be included.
    Mr. Chaves. It includes a memo that was written about the 
history of gaming in New Mexico. I think it speaks to a lot of 
the trials and tribulations the perseverance of tribal leaders 
in New Mexico to try and secure their people's economic future. 
And that struggle continues, as Governor Viarrial has so stated 
in the prior panel.
    I am the Chair of the New Mexico Indian Gaming Association 
and have served with tribal leaders since 1986. So I've lived 
this history that you will read about in the attached 
statement. Compact negotiations that involve revenue sharing in 
New Mexico and across the Nation have obviously been very 
complex and controversial, sometimes very devisive. But our 
current position is that if we pay revenue sharing that it has 
to be in exchange for some consideration by the State. 
Currently, that consideration is exclusivity. The issue is, how 
exclusive is that ``exclusivity''. In New Mexico, that's the 
question which we still need to resolve.
    In our view, our bargaining position in the negotiation 
process and in revenue sharing has been limited by the lack of 
judicial and administrative forums, both at the State level and 
at the Federal level. That is due to our inability to sue the 
State and due to the fact that the Department of the Interior's 
class III gaming procedures have been challenged and remain not 
a feasible forum for our issues.
    As a result of this, this is a real problem, is that we are 
thrown into the political processes of the State, State 
political processes. And along with that, the influence of 
special interests. You will see in the compacts how this 
occurs. There are provisions in the compacts that were pushed 
very hard by special interest groups, trial lawyers, insurance 
agents, and so on.
    In 1987, and prior, when Congress was debating the Indian 
Gaming Regulatory Act, the States really demanded a voice in 
Indian gaming. And with that demand, and with Congress giving 
them consideration in the compacting process, that means that 
States should have a responsibility to respond as well in terms 
of trying to define a way to approach tribes and negotiate with 
them.
    In 1999, the State of New Mexico passed the Compact 
Negotiation Act. It was very helpful in defining a process and 
the authorities by which the State would negotiate with a tribe 
on a government-to-government basis. If it's carried out 
properly, the Compact Negotiation Act should provide an 
environment in which good faith, arms length negotiations 
should occur. However, it doesn't guarantee success. Part of it 
is again the political processes that we're thrown into, and 
sometimes with special interest groups.
    We do have a new administration in New Mexico and there's 
much hope for greater advancements in government to government 
relations and better policy for our tribes in New Mexico. We 
have had quite a history of compact negotiations. Just 
summarizing very briefly, from the point that the Indian Gaming 
Regulatory Act was passed in 1988, there simply no 
negotiations. We couldn't get any real responses to our 
negotiation requests.
    In 1995, we did negotiate with then Governor Gary Johnson. 
We were able to obtain a very favorable compact. The highlights 
of that compact are as follows. We had a 5 percent revenue 
sharing, but it had a local share to local governments. And 
that local share could go to those governments with the tribes 
choosing.
    There were limited numbers of slots at racetracks. 
Essentially that began the erosion of our exclusivity, so to 
speak. We thought it was reasonable at the time because the 
horse racing industry was really a dying industry and needed an 
injection of revenue and there were a lot of New Mexicans 
involved in support industries, agriculture and others. So the 
tribes, being somewhat generous, weren't really realizing the 
impact of that over the long term and how the race tracks would 
eventually really make inroads, gaining more and more gaming in 
the State.
    A very ideal term that these compacts had was automatic 
extensions. And this was very key because it provided an ideal 
structure for long term financing. As we look at the need for 
financing for infrastructure and economic diversification, 
these types of terms were very, very useful toward that.
    Immediately after these `95 compacts were actually approved 
by the Department of Interior, they were challenged first in 
the State courts and then ultimately defeated in Federal 
courts. This led then to a great deal of controversy and legal 
wrangling, until 1997, when we had 1997 compacts, which were 
essentially legislated, they were not negotiated. These are the 
compacts that contained the 16 percent revenue sharing demand. 
They had 9 year terms, therefore the potential for long term 
financing was lost. And there were no penalties for slot 
expansions at the race tracks.
    So we were beginning to see an erosion of the benefits of 
the 1995 compacts. We were beginning to see less and less 
benefit in the ability to finance over the long term.
    In addition to that, regulatory costs were added to the 
compacts. Again, as I say, they were legislated so the tribes 
were not at the table. They had to defend themselves through 
hearings and so forth. And one of the most onerous provisions, 
in addition to the 16 percent, was that regulatory costs were 
added to the revenue sharing, and this cost millions and 
millions of dollars to the tribes. Yet there was no relation to 
the actual cost to the State in the regulation process.
    In 1999, as I previously stated, the Compact Negotiation 
Act was enacted by the State legislature. I think it would be 
helpful to have the Congress take a look at examples like this 
and encourage States to look to forums or ways, processes and 
means by which a tribe may approach a State and really 
understand how that negotiation process happens with the State. 
It's been a very, very looming and large issue prior to 1999 
for tribal governments.
    As I said, in 1997, these compacts were legislated. And 
that led to a series of attempts to negotiate. The State would 
not respond to those negotiation requests, primarily because 
they were receiving 16 percent revenue, they had no fear of 
being sued and there were no forums to take them to. We tried 
using the arbitration provisions in the compacts themselves and 
the State supreme court basically quashed that effort.
    So we stopped making revenue sharing payments. That led to 
the State suing us on June 13, 2000. They demanded payment or 
they said, stop your operations. Shortly thereafter, there was 
a lot of controversy and evolving out of that litigation were 
the 2001 tribal-State compacts. These were negotiated under the 
Compact Negotiation Act.
    These current compacts have an 8-percent revenue sharing. 
There is a provision by which small casinos or operators making 
less than $12 million pay 3 percent of the first $4 million and 
8 percent thereafter. So we did try and negotiate for the 
smaller gaming tribes some relief, even at the 8-percent level.
    We do have what we term substantial exclusivity. It's a 
little soft in terms of what that means. But it is bargained 
for exclusivity. These compacts end on June 2015, which means 
that they're good in terms of trying to get some shorter term 
financing. But we still have the problem of trying to obtain 
long term financing, again, for that economic diversification 
and longstanding infrastructure needs and economic development.
    The revenue sharing dollars that go to the State go into 
the general fund and we're not quite sure beyond that where 
they go.
    [Prepared statement of Mr. Chaves appears in appendix.]
    The Chairman. My apology, I was just told that we only have 
5 minutes to get to the Floor for that first vote. So I'm going 
to have to finish up and just read your testimony as I have the 
time. But I wanted to thank you.
    I do have some questions for each of you. I'm going to 
submit those in writing to you, because I am interested in 
getting answers on it. Because the reason for these hearings 
really is to see if and how we can reform IGRA and whether we 
really want to open up the whole thing. Because there's always 
some kind of a backlash when you open it up. As you know, the 
States are going to have plenty to say, too.
    But I do want to thank you for appearing and apologize that 
I'm going to have to leave. Sometimes when there's two or three 
of us here, we kind of spell each other so one can go vote 
while the other one comes back. In this case I'm all alone, so 
I'll just have to stop it there and tell the people in the 
audience and the panelists too that we're going to keep the 
record open for two weeks, if you have any additional comments, 
or anyone else has some comments you'd like to submit, please 
do.
    With that, I will submit some questions in writing, and the 
Committee is adjourned. Thank you.
    [Whereupon, at 11:42 a.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
=======================================================================


                            A P P E N D I X

                              ----------                              


              Additional Material Submitted for the Record

=======================================================================


Prepared Statement of Frank Chaves, Chairman, New Mexico Indian Gaming 
                              Association

    Chairman Campbell, honorable members of the committee with special 
acknowledgement to our own Senator Pete Domenici, thank you for the 
opportunity to testify before you today regarding the Indian Gaming 
Regulatory Act (IGRA) with a focus on the process by which States and 
Indian tribes negotiate agreements on revenue sharing and the use of 
gaming revenue by tribal governments. The topic of negotiation of 
revenue sharing agreements is timely for certain tribal governments in 
New Mexico as we are likely to have further discussions with the State 
concerning the compacts negotiated in 2001 in the near future. In 
addition, we have two tribal governments engaged in litigation over 
1997 Compact revenue sharing terms.
    In New Mexico there are 22 tribal governments. Tribal communities 
in New Mexico remain a stronghold of traditional and cultural systems 
and beliefs. There are 19 Pueblo governments, the Jicarilla and 
Mescalero Apache Nations and the Navajo Nation. Thirteen of these 
tribal governments operate class III Indian gaming, 2 under the 1997 
Compacts and 11 under the 2001 Compacts.
    Compact negotiations for class III Indian gaming in New Mexico have 
a complicated and divisive past. In 1988 and 1989 the State did not 
respond to our request for compact negotiations. From 1990 to 1994 
negotiations failed to produce a compact. The 1995 compacts negotiated 
and approved in accordance with the IGRA were defeated in the courts 
first by the New Mexico Supreme Court and then by the Federal Courts. 
The 1997 compacts approved under the ``no action'' provisions of the 
IGRA were not negotiated but legislated by the New Mexico Legislature; 
the compacts remain subjects of litigation for two tribal governments 
and the state. Finally, the 2001 compacts evolved out of litigation 
initiated by the state to enforce revenue sharing payments; a fact that 
is acknowledged in the compact ``Purpose and Objectives'' Section H., 
``To settle and resolve certain disputes that have arisen between the 
Tribes and the State under the provisions of the Predecessor 
Agreements.'' Although they evolved out of litigation, they were the 
first compacts negotiated under the State's Compact Negotiation Act of 
1999 and were government-to-government negotiations. This complex 
history and controversy over compact negotiations and revenue sharing 
are in part related to IGRA's failure to secure a level bargaining 
position for tribes with states as contemplated by Congress. As a 
result, we are thrown into the State's political systems in the 
negotiation process.
    In our testimony we hope to impress upon the committee that in 
large part the IGRA and Indian gaming in New Mexico is working to 
provide a better quality of life for many Indian communities. Indian 
gaming is also making significant contributions to the larger New 
Mexico economy in the form of jobs, commerce and additional tax 
revenue. We are doing this without falling victim to the ills and 
accusations sensationalized in recent Time Magazine articles on Indian 
gaming.
    We have made significant progress in economic development and 
tribal state relations, but there is much to be done. We have a new 
administration in New Mexico that has manifested a policy willingness 
to work with tribal governments on a government-to-government basis. I 
hope we can benefit from this in securing our economic development 
foundation, which in my opinion is currently a soft foundation based on 
gaming compact term limits and the potential for state policy changes 
that could challenge tribal tax and other revenue streams.

Compact Negotiations and Revenue Sharing

    It is unlikely that anyone will ever be able to explain all the 
complexities and the incredible history of Indian gaming and compact 
negotiations in New Mexico. Since 1985 I have had the honor of working 
with many strong traditional tribal leaders, tribal councils, attorneys 
and consultants. I still cannot imagine the difficulty they have in 
taking all these complex issues and history and thoroughly relating 
them to a decision on a current gaining issue. But, just as Congress 
and state legislatures must keep abreast of issues so too must tribal 
leaders. I have included as an attachment to this written testimony, a 
memo written by a tribal attorney to a Pueblo Governor in just such an 
attempt to keep abreast of compact and revenue sharing issues in New 
Mexico. The memo is extensive but does not begin to exhaust all of the 
history or complex political, legal and policy questions tribal leaders 
had to face from 1995 to 2001. I hope it gives the committee a better 
understanding of the perseverance of New Mexico tribal leaders and what 
they continue to encounter in trying to secure their people's economic 
future.
    Our experience in revenue sharing began in 1995 with the first 
compacts approved by the Department of the Interior. The revenue 
sharing rate approximated the state's gross receipts rate at the time 
and was inclusive of a local government share that would go to local 
non-tribal units of government of the tribe's choosing. In the latter 
stages of completing the negotiations of the compacts slot machines at 
racetracks were put on the table and market exclusivity for tribes 
began to erode. Then New Mexico Governor Johnson wanted to provide a 
limited number of slot machines at horse racetracks because the pari-
mutual horse racing industry was dying and needed an injection of 
revenue to survive. This appeared reasonable to tribal leaders at the 
time since horse racing was associated with New Mexico agriculture and 
support industries. Tribes and the State agreed that revenue sharing 
would be reduced or eliminated if the limited slot machines at the 
racetracks were to increase. In addition, the compacts had in essence 
an automatic renewal provision giving them a near ideal structure for 
using gaming revenue for long term financing. Little was anticipated of 
the ability and the push in latter years by the racing industry to 
increase slot machine activities and compete with tribal government 
gaming operations and little was anticipated of the compromise of 
benefits found in the 1995 compacts.
    The 1995 compacts were immediately challenged in the state courts 
and ultimately were defeated in the Federal courts. The lawsuits and 
political activity that took place between 1995 and 1997 made Indian 
gaining in New Mexico the single most reported issue of that time. 
Indian gaming was gaining overwhelming support from the public but not 
from the legislature.
    In the 1997 compacts, the revenue sharing provisions were 
negotiated among legislators in a sort of bidding war and feeding 
frenzy among special interests with no place at the table for tribal 
leaders to negotiate on their people's behalf. It was only working 
through friendly and sympathetic legislators that the revenue sharing 
demands did not end up higher than the 16 percent of net win that the 
legislature eventually chose. While revenue sharing demands increased, 
gone were the market exclusivity provisions and gone was the potential 
to obtain long term financing for basic infrastructure and economic 
diversification. In addition the regulatory payments to the state, 
which had absolutely no relation to the State's cost of regulation, 
amounted to millions of dollars in added payment. Included in the 
compact was an arbitration provision that, to date has been ineffective 
in resolving revenue sharing issues. Tribal leaders and those 
representing tribal interests could only watch in anger and frustration 
as this process continued with no viable judicial or administrative 
forums available. The anger and frustration of this process was shared 
by many non-Indian employees, vendors, and many others who were opposed 
to the continuing assault on Indian rights and the economic 
discrimination that was taking place right before their very eyes.
    After the 1997 compacts were approved under the no-action 
provisions of the IGRA, tribes continued their attempts to regain 
reasonable compact terms by requesting negotiations. In addition, 
efforts to use the arbitration provisions in the 1997 compacts to 
address the 16 percent revenue sharing provision have to date been 
fruitless and furthered suspicion that the state's judicial forums were 
not exactly blind or unbiased. In 1999 the State did pass a law that 
was to become a means by which tribal leaders could negotiate with the 
State on a government-to-government basis. The Compact Negotiation Act 
of 1999 established a process and defined the authorities by which the 
State would address requests by tribes for negotiations of compacts. 
While it does not guarantee a successful negotiation it goes a long way 
in helping the tribal leaders understand just who the ``State'' is in 
negotiating a compact as required under the IGRA.
    When properly carried out, the Compact Negotiation Act of 1999 
should produce a compact negotiated in a bilateral good faith 
environment. Under the act, either the State or a tribe may initiate 
negotiations by providing notice. The Governor of the State can appoint 
a negotiator and the legislature must establish a joint committee on 
compacts. Negotiations are conducted with the Governor or the 
Governor's representative and taken to the joint committee on compacts 
for review and recommendations. The committee gives its recommendations 
to the full legislature and by joint resolution the full legislature 
may accept the proposed compact. There is a provision in the act that 
permits the Governor of the State to accept a compact or amendment to a 
compact from a tribe if the compact or amendment is the same as a 
compact or amendment that has been approved under the Compact 
Negotiation Act. What the 1999 Act did not do however was eliminate the 
involvement of special interests' influence which remains an unofficial 
part of the negotiation process.
    Unfortunately the negotiations under the act did not bear fruit in 
2000. As all of the attempts to negotiate were unsuccessful, and as the 
administrative and judicial forums simply became unavailable, the 
tribes decided that the only way to get the state to address the 
revenue sharing issue was to stop making revenue sharing payments. The 
Mescalero Apache Nation never made any payments under the 1997 compact 
and as frustrations mounted some Pueblos also decided to stop making 
payments. Finally in 2000 after negotiations failed under the Compact 
Negotiation Act, the remaining tribes that had been making payments 
stopped doing so. Shortly thereafter the Attorney General filed a 
lawsuit on June 13, 2000.
    Pojoaque Pueblo and the Mescalero Apache Nation remain litigants in 
the still unresolved suit over the 1997 compacts. Mescalero's response 
to the lawsuit was to ask the Court to force the arbitration proceeding 
but the Court has yet to respond and the arbitration provision of the 
1997 compact remains untested as a means to resolve revenue sharing 
questions. The lawsuit posed significant risk for both the State and 
tribes. These risks. were a factor in helping to move both the state 
and eleven tribes toward a successful negotiation in 2001.
    The 2001 compacts were negotiated under the provisions of the 
Compact Negotiations Act. Under these compacts the tribes enjoy the 
unrestricted right to engage in all forms of class III gaming and 
substantial market exclusivity. For this substantial market 
exclusivity, the tribes pay the state 8 percent of their net win on 
slot machines. If a tribe has a smaller casino generating less than $12 
million in net win annually, they pay 3 percent of their net win under 
$4 million. Under State statute limited operations of slot machines at 
horse racetracks and veteran/fraternal organizations is permitted, but 
these entities are not permitted to offer table games. The compacts 
terminate midnight, June 30, 2015.
    The State required affirmative Federal approval of the 2001 
compacts to ensure it would receive its future revenue sharing 
payments. First, the lawsuit filed by the State for payment of revenue 
sharing had to be settled and certified by the Attorney General. The 
certification requirement had to be met before the Governor of the 
State could send the compacts to the Secretary of the Interior for the 
Federal review process. Both of these requirements were met.
    In the recent 2003 State legislative session, non-tribal gaming 
interests at horse racetracks proposed state legislation to increase 
their market share through expanded hours of operations. This 
legislation did not pass in 2003 because tribes again entered the 
political arena to defend their limited market exclusivity. With the 
support of the Governor and other state legislative leaders this effort 
was turned back in favor of continuing to work together to improve 
Tribal State relations under the compact. Continued assaults on our 
market exclusivity and other factors will likely lead to negotiations 
to amend the 2001 compacts.
    There has been much controversy over the issue of revenue sharing. 
Questions and controversy still remain, yet it appears that revenue 
sharing is becoming a necessary ingredient in securing gaming compacts. 
And while the controversies remain, it is better to have controversy 
than poverty and neglect.

Indian Gaming is Working in New Mexico

    While the political and legal history of Indian gaming in New 
Mexico is remarkable in itself so too is the history of job creation, 
commerce and a better quality of life for many Indian communities. 
Historically New Mexico has performed poorly in many areas of economic 
development and educational attainment. According to the U.S. Census 
2000, New Mexico ranked 43d in the Nation average teacher salary, 3d in 
the Nation in violent crimes per 100,000 population, 47th in the Nation 
in per capita personal income, and 4th in the Nation in unemployment. 
The Native American population in New Mexico as a group is poorer, less 
educated and more affected by many of the social ills that result from 
poverty.
    In recent years tribal governments engaged in gaming have begun to 
move from the picturesque poverty so often seen in the cultural tourism 
promotions of the past toward prosperity and greater contributions to 
the state's economy. The level of success does vary from tribe to tribe 
as would be expected in different market areas, but progress large and 
small has made for a better quality of life. This progress is found in 
economic development and community development.
    Our gaming operations are economic engines providing jobs to many 
New Mexicans, Indian and non-Indian alike. In Indian communities where 
populations are relatively large and unemployment is high, gaming 
operations have provided jobs close to home permitting many to enter 
the job market for the first time and provide basic necessities of life 
for their families in Indian communities with smaller populations, a 
larger percentage of employees are drawn from surrounding communities, 
both Indian and non-Indian. In a representative year, tribal gaming 
enterprises paid out an estimated $91.7 million in direct gaming 
employment wages and about $16.7 million in added employee benefits. In 
this largely service industry wages are supplemented by tips that 
further increase job earnings. Indian gaining has provided 
approximately 6,000 direct gaming jobs. If this number is combined with 
the approximately 6,000 additional jobs in other tribal enterprises and 
tribal governments, tribal governments provide over 12,000 jobs. This 
makes tribal governments with gaming operations the third largest 
employer in the State behind Kirtland Air Force Base and the University 
of New Mexico.
    We have not estimated the economic spin-off effect in additional 
jobs and commerce created by our direct employment, but the 
contribution is significant. The gaming operations create additional 
commerce through the purchasing of goods, services and sponsorship of 
events in surrounding communities. In a representative year, more than 
$120 million was spent on the purchase of goods and services.
    Gaming revenues that flow to the tribal governments are used, as 
intended by Congress, for governmental purposes. Gaming revenues help 
tribal governments function. Funds are used for educational programs 
and scholarships, public safety, water and waste water management, the 
preservation and protection of land, environmental programs, health and 
health education, housing repair and development, care for the elderly, 
tribal court systems, programs for drug and alcohol abuse, culture and 
language preservation programs and capital improvement programs that 
are just beginning to address long neglected infrastructure needs. I 
have noted below just a few examples of the use of gaming revenue by 
tribal governments in New Mexico.
    At Tesuque Pueblo, the Bureau of Indian Affairs is responsible for 
a day school that teaches the elementary age students of that Pueblo. 
But the school, an aging adobe structure that is more than a century 
old, is in danger of falling apart, and only through continual 
maintenance provided by the Pueblo and the poorly funded BIA education 
department has the school stayed open. The BIA has a multi-billion 
dollar backlog on school repair and construction, and the Pueblo, tired 
of trying to wade through the bureaucratic backlog, decided to spend 
its own revenue on building a school that should have been provided by 
the Federal Government. Tesuque Pueblo also used gaining dollars to 
restore much of the historic and living central plaza area homes.
    At Isleta Pueblo, where health problems have troubled the community 
for decades, the Tribal Council created a wellness center and a 
recreation center to teach healthy lifestyles and a state-of-the-art 
health center to treat many problems of its people. Isleta health and 
recreation centers offer the hope that the children of Isleta learn 
healthy lifestyles and life choices early in life, and give seniors 
options for a healthier, active lifestyle well into their older years. 
This recreation center includes a full Olympic size swimming pool, 
which is used not only by those on the Pueblo but by neighbors in the 
surrounding area.
    At Sandia Pueblo, my Pueblo, we have also built a health center and 
a wellness center, but we are especially proud of our education 
program. Any family at Sandia Pueblo can send their children to any 
school, and the tribe pays for the cost of that education. This 
includes preschool through college. All that is required is that the 
students finish their schooling. We have used gaming revenue to 
establish education, health and housing trust funds for the long term; 
we also built a state-of-the-art wastewater treatment plant for our 
master planned development area and our residents. Just recently the 
Tribal Council approved the purchase of a computer for each household 
on the reservation for educational and communication enhancement.
    At Acoma Pueblo, the tribe has used its revenue to expand its 
economic base in the tourism industry. The Pueblo replaced the museum 
and cultural center, built a hotel and first class travel center, and 
purchased culturally sensitive land. Acoma is the largest employer in 
Cibola County, which is among the poorest counties in the State.
    At Laguna Pueblo, gaming revenues have been reinvested into a major 
expansion of the Pueblo's economic base, including two travel centers, 
a resort development project, and the revival of Laguna Industries. 
Laguna anticipates adding 1,000 jobs this by this fall. In addition, 
the Pueblo has spent funds on housing development sorely needed by its 
members.
    At Santa Clara Pueblo, the Tribe has reinvested revenue from its 
small casino operation into a championship golf course that just opened 
this spring, and in land acquisition in an effort to regain areas of 
the Pueblo that have been lost over the years.
    The Pueblo of San Juan has reinvested their gaming revenue into 
tourism, an expansion of their economic base, and much needed housing 
for their tribal members.
    San Felipe Pueblo has also invested their revenues in housing for 
Tribal members, and an education program for their young. They have 
expanded their economic base through the creation of a travel center 
and a car racetrack that draws fans from across the Southwest.
    Santa Ana Pueblo has reinvested their gaining revenues into a major 
expansion of the tourism industry. The Pueblo has created a world-class 
resort and golf center, and has spent millions of dollars on the 
environmental restoration of the bosque on their land. They have also 
reinvested their revenues by producing housing for their tribal 
members.
    The Jicarilla Apache tribe has spent gaming revenues on the renewal 
of their tourism industry. Their focus is on tourists who want to enjoy 
the beauty of their remote reservation. They offer guest lodges, and 
hunting and fishing opportunities.
    At the Mescalero Apache Tribe, gaming revenues have been used for 
tourism/hospitality expansion, housing, a school, a dialysis center, 
senior assisted living home, and reinvestment into the tribe's 
industrial base. Mescalero's tourism/hospitality expansion will add to 
its extensive workforce and make them the largest employer in Lincoln 
County.
    Pojoaque Pueblo has used its gaining revenues to start a museum, 
develop housing, build a wellness center, and expand their economic 
base.
    At Taos Pueblo, the casino operation has provided revenue for the 
tribe to protect its sacred Blue Lake. To stop encroachment or 
development of the area, the Tribe has purchased land surrounding their 
sacred area as a buffer zone. This goes directly toward retaining, and 
maintaining the history, culture, and traditions of this tribe as they 
move forward into this century.
    In preparation for economic development and economic 
diversification; tribes have invested in new construction. From 1999 to 
2001 we have estimated an investment in new construction of $350 
million dollars in gaming and hospitality related development. I am 
pleased that many of the Pueblos and tribes in New Mexico are beginning 
to prosper through tribal government gaming enterprises and are 
diversifying their economies. New Mexico's Tribes are on the verge of 
creating a world-class hospitality and entertainment industry complete 
with high class resorts, casinos, golf courses, fine dining and some 
the best entertainment acts in the country.
    I am proud that much progress has been made. This progress has been 
made without falling victim to the ills and sensationalized accusations 
of the recent Time Magazine articles. The Pueblos and tribes of New 
Mexico are among the most traditional communities in Indian country. We 
were never displaced from our land, and we have retained our culture, 
our languages, and our traditions. But we never could get a foothold 
into the economic world until Indian gaining. Our tribal leaders had to 
fight to get what we have, and we have continued to maintain our 
traditions and our culture even as we move forward economically. But 
this came about because of wise and careful decisions made by each of 
the tribal governments. Our governments have not issued per capita 
checks to members dividing up the proceeds from and to my knowledge 
there is no movement in that direction. We have chosen instead to use 
the gaming revenues to create programs that work for our people, and to 
continue to diversify our economies into other areas. There are no 
management companies taking huge cuts of the profits in New Mexico, and 
there are no lurking controversies over casino profits. Indian gaming 
is working in New Mexico, and this has created benefits for our tribes 
and our people that could not have been imagined before.
    These efforts have not gone unnoticed by the new administration in 
New Mexico or the private sector. We are forming new public and private 
partnerships to expand New Mexico's tourism industry. The state's 
Tourism Department is actively promoting Indian casinos and the world-
class entertainment being offered. We have formed partnerships with old 
adversaries as they see the benefits of cooperation to expand the 
hospitality markets for New Mexico.
    Yes; much progress has been made, but much must still be done to 
secure the economic future for tribes in New Mexico. A few years of 
success will not make up for the decades of neglect and not all tribes 
in New Mexico choose gaming or see gaming as a feasible undertaking for 
their circumstances. To secure our economic future tribal governments 
must find reliable sources of income upon which they may rely to 
finance development and operate tribal government over the long term.
    In closing I want to thank the committee for the time you have 
given to hear our compact and revenue sharing negotiations story and to 
hear how we use gaming revenue in New Mexico.
                                 ______
                                 

Frank Chaves, Chairman, New Mexico Indian Gaming Association, Questions 
                             with Responses

    Thank you for the opportunity to participate in the July 9, 2003 
hearings on the Indian Gaming Regulatory Act and for the opportunity to 
provide a written response to the following questions posed in your 
July 15, 2003 letter. Below I restate the issue and the question and 
provide a response. 1. From your testimony, it appears that many of the 
member tribes in your organization have agreed to the 2001 compacts. 
You state that, under these compacts, the tribes enjoy ``substantial 
market exclusivity.''
    Question. Is this ``substantial exclusivity'' guaranteed in your 
compacts?
    Response. The term ``substantial exclusivity'' is not contained in 
2001 Compacts but is a term used to describe the guarantee provided by 
the State in exchange for revenue sharing. The 2001 Tribal-State 
Compacts contain an agreement by which the tribal governments 
guaranteed revenue sharing payments to the State in exchange for the 
State's guarantee that it will not pass, amend or repeal any law or 
take action that would directly or indirectly attempt to restrict or 
has the effect of restricting the scope or extent of Indian gaming. 
Under these terms, the State cannot license or permit the operation of 
Gaming Machines for any person or entity other than horse racetracks 
and veterans and fraternal organizations as described by State statute. 
The State may not license, permit or otherwise allow any non-Indian 
person or entity to engage in any other form of class III gaming other 
than a state-sponsored lottery, pari-mutual betting on horse racing and 
bicycle racing, operation of Gaming Machines, and limited fundraising 
by non-profit organizations.
    Question. Can the state legislature increase the number of slot 
machines that horse racetracks can offer? Has it increased the number 
since your compacts were negotiated in 2001?
    Response. As a matter of State law, the State could increase the 
number of slot machines that horse racetracks can offer. However, it is 
the tribes' view that any increase in the number operating under State 
law as of 2001, when the tribes agreed to and the Secretary of the 
Interior approved the Compacts, would require a negotiated settlement. 
In addition, any action by the State that has a detrimental effect on 
the tribes' market share would require negotiations. This position is 
based on: (a) the agreement to make revenue sharing payments to the 
State in exchange for market exclusivity; (b) the ``substantial 
exclusivity'' provisions contained in the Compact, interpreted in 
accordance with applicable law; (c) the terms of the Secretary's 
approval of the Compact, and most importantly (d) the principles of 
comity, good faith, and fair dealing which apply to relations between 
the State and tribes. The State has not changed the laws on horse 
racetrack operations that affect competition since 2001. To the credit 
of the Governor and the legislative leadership, when a proposal to 
extend track hours of slot operation was introduced in the 2003 
legislative session, it was deferred to a future session to allow the 
matter to be discussed with tribes and amendments to the Compacts to be 
negotiated.
    Question. What are the consequences to the State if your 
``substantial exclusivity'' is lost?
    Response. If substantial exclusivity is lost, under the terms of 
the Compact revenue sharing ceases.
    2. I noted in your testimony that New Mexico tribes are building 
$350 million in gaming and hospitality-related development.
    Question. When calculating your revenue sharing, are those capital 
improvements costs deducted before calculating the State's share?
    Response. No; tribal government capital improvements costs are not 
deducted before calculating the State's revenue share.
    3. As I understand the situation, the New Mexico tribes were forced 
to pay the 16 percent revenue share before the State would agree to the 
2001 Compacts, even if that amount was illegal under the IGRA.
    Question. Did the Department of the Interior give you any guidance 
about the provision, and whether it violated IGRA?
    Response. The Secretary allowed the 1997 Compacts to go into effect 
by operation of law without affirmative approval. That action resulted 
in approval by the Secretary ``but only to the extent that Compact is 
consistent with [IGRA]''.
    25 U.S.C. Sec. 2710(d)(8)(C). In letters to the tribes explaining 
the basis of this action, the Secretary questioned the legality of the 
16 percent payment under IGRA based on the limited scope of exclusivity 
provided under the Compacts, particularly in light of the size of the 
payment, and the fact that the payment was effectively imposed on the 
tribes rather than agreed upon as the result of bilateral negotiations. 
The question of whether the 1997 Compact revenue sharing provision was 
consistent with IGRA led to tribal payments stopping and litigation 
between the tribes and State. As part of the negotiations that resulted 
in the 2001 Compact, the tribes agreed to a complete settlement of 
issues in dispute in that litigation as a condition precedent to the 
Compact. While questions regarding the linkage of the 2001 Compact and 
the litigation were raised, the Secretary recognized that the issue 
before her was the terms of the 2001 Compact and not the terms of 
settlement of litigation over the 1997 Compact. Although Interior had 
provided guidance regarding the legality of the 16 percent provision in 
1997, the issue of how the tribes and State chose to resolve litigation 
over that issue was outside the review and approval process to for the 
2001 Compact. Therefore, the Department of the Interior did not provide 
guidance with respect to that settlement.
    4. Without a doubt the 1996 Supreme Court decision in the Seminole 
case placed tribes in a very bad negotiating position.
    Question. Do you believe the New Mexico tribes would have had to 
``share'' their revenues, if they could still sue the State for ``bad 
faith'' as they could before the Seminole decision?
    Response. No; I do not believe the New Mexico tribes would have had 
to share their revenues if they could sue the State for bad faith. In 
1995, prior to the Seminole case, the New Mexico tribes chose, in a 
separate agreement from the Compact, to share their revenues in 
exchange for the significant benefits the State would provide in 
return. In 1995, at one of the final negotiation sessions, the Governor 
spoke directly to tribal leaders about the reasons he felt the tribal 
leaders should consider revenue sharing with the State. Initially, the 
tribal leadership resisted the concept but ultimately came to the 
conclusion that the reasons were convincing. In a post-Seminole 
environment, Seminole does significantly and adversely affect the 
tribes' bargaining leverage in the Compacting process. As seen in the 
complex and divisive history of New Mexico Compact negotiations, the 
tribal leaders are left to their own devices in a largely political 
process to the detriment of tribes. In this post-Seminole environment 
there is increased pressure to agree to revenue sharing amounts and 
other terms that tribal governments might not otherwise agree to.
    Thank you again for the opportunity to respond to committee's 
questions. Should you need anything further, I would be pleased to 
respond.




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