[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
__________
U.S. GOVERNMENT PRINTING OFFICE
88-290 WASHINGTON : 2003
_____________________________________________________________________________
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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
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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
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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.]
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A P P E N D I X
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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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