[Senate Hearing 115-150]
[From the U.S. Government Publishing Office]
S. Hrg. 115-150
DOUBLING DOWN ON INDIAN GAMING:
EXAMINING NEW ISSUES AND OPPORTUNITIES FOR SUCCESS IN THE NEXT 30 YEARS
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HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 4, 2017
__________
Printed for the use of the Committee on Indian Affairs
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COMMITTEE ON INDIAN AFFAIRS
JOHN HOEVEN, North Dakota, Chairman
TOM UDALL, New Mexico, Vice Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JOHN McCAIN, Arizona JON TESTER, Montana,
LISA MURKOWSKI, Alaska AL FRANKEN, Minnesota
JAMES LANKFORD, Oklahoma BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana HEIDI HEITKAMP, North Dakota
MIKE CRAPO, Idaho CATHERINE CORTEZ MASTO, Nevada
JERRY MORAN, Kansas
T. Michael Andrews, Majority Staff Director and Chief Counsel
Jennifer Romero, Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on October 4, 2017.................................. 1
Statement of Senator Cantwell.................................... 3
Statement of Senator Heitkamp.................................... 19
Statement of Senator Hoeven...................................... 1
Statement of Senator Udall....................................... 2
Witnesses
Chaudhuri, Hon. Jonodev Osceola, Chairman, National Indian Gaming
Commission..................................................... 4
Prepared statement........................................... 6
Escalanti, Hon. Keeny, President, Fort Yuma Quechan Indian Tribe. 23
Prepared statement........................................... 24
Forsman, Hon. Leonard, Chairman, Suquamish Tribe................. 31
Prepared statement........................................... 33
Frank, Hon. Harold ``Gus'', Chairman, Forest County Potawatomi
Community...................................................... 27
Prepared statement........................................... 29
Stevens, Jr., Ernest L., Chairman, National Indian Gaming
Association.................................................... 36
Prepared statement........................................... 38
Tahsuda, III, John, Principal Deputy Assistant Secretary, Indian
Affairs, U.S. Department of the Interior....................... 12
Prepared statement........................................... 14
Appendix
Allen, Hon. W. Ron, Tribal Chairman/CEO, Jamestown S'Klallam
Tribe, prepared statement...................................... 55
Cowan. Klint A., Shareholder, Fellers Snider, prepared statement. 58
Response to written questions submitted by Hon. Jerry Moran to
Hon. Jonodev Osceola Chaudhuri................................. 59
Response to written questions submitted by Hon. Tom Udall to John
Tahsuda III.................................................... 61
DOUBLING DOWN ON INDIAN GAMING:
EXAMINING NEW ISSUES AND
OPPORTUNITIES FOR SUCCESS IN THE NEXT 30 YEARS
----------
WEDNESDAY, OCTOBER 4, 2017
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:45 p.m. in room
216, Hart Senate Office Building, Hon. John Hoeven,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN HOEVEN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. Good afternoon. We will call this hearing to
order.
Today, the Committee will examine new issues and
opportunities in Indian gaming.
The tribal gaming industry has changed significantly since
President Reagan signed the Indian Gaming Regulatory Act into
law. The National Indian Gaming Commission recently announced
that tribal gaming brought in $31.2 billion in gross gaming
revenue for 2016, the largest amount in the history of Indian
gaming. This is critical funding for essential and necessary
tribal government services.
On July 22, 2015, the Committee last held an oversight
hearing which involved the GAO study on Indian gaming
regulation. Today, cyber security hacks, human trafficking,
safety and security take the headlines at Indian gaming
facilities. For example, in 2015, nearly 85,000 customers'
personal data was compromised at the Firekeepers Casino in
Battle Creek, Michigan as hackers accessed customer credit and
debit card information.
Just last week, at the Committee hearing on human
trafficking, witnesses noted that these despicable activities
occurred at Indian casinos. For example, in my home State of
North Dakota, the U.S. Attorney's office successfully
prosecuted an adult predator who had been running a sex
trafficking operation out of the Four Bears Casino in New Town,
North Dakota.
This individual was sentenced to 45 years in prison or sex
trafficking, sexual abuse and drug trafficking. In an interview
with investigators, one of the victims disclosed that she had
been sold for sex multiple times at the Four Bears Casino.
I look forward to hearing from our witnesses on how these
types of threats and criminal activities are prevented or
addressed, as well as other new issues and opportunities in the
tribal gaming industry.
Before turning to the witnesses, I would again ask the Vice
Chairman for his opening statement.
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. Thank you, Chairman Hoeven. Thank you for
holding today's oversight hearing to discuss Indian gaming.
Before I address today's agenda, I want to convey my grief
and sadness of the mass shooting that occurred in Las Vegas on
Sunday night. My heart goes out to all the victims and their
families. I know many tribal members were in Las Vegas on that
night to attend a global gaming expo. My thoughts and prayers
are with all the victims of this terrible and inexcusable
tragedy.
For today's hearing, I hope that we recognize the
achievements of the Indian Gaming Regulatory Act and also look
ahead to the challenges confronting tribes that must compete in
a constantly evolving economy with emerging technologies in the
industry. Importantly, we must look ahead for future
opportunities for tribes. We have seen Indian gaming make great
impacts for tribes in the 29 years since Congress IGRA. I am
honored to serve alongside one of the architects of that Act,
Senator John McCain.
Senator McCain worked with my uncle, Mo Udall, who led the
legislative effort on the House side. Together, they ushered in
a new era for tribal self determination with a law that
continues to provide economic opportunities to Indian Country
that, prior to its passage, were unimaginable.
Senator McCain and Uncle Mo's efforts to pass this landmark
legislation were a true showing of bipartisanship, one we need
to see more of today.
Indian gaming has stood the test of time as a proven
economic driver. Consider this, when Congress passed IGRA in
1988, gaming revenues were measured by the tens of millions.
Nearly 30 years later, revenues are over $31 billion. Tribal
enterprises can have a transformative effect by promoting
tribal self sufficiency and strong tribal governments.
As Chairman Forsman of the Suquamish Tribe, will testify,
the revenue flowing from gaming activities not only creates
jobs and stimulates tribal economy, but also goes a long way to
supplement the massive shortfalls left by the Federal
Government's failure to appropriate adequate funding to meet
Indian Country's needs. Unlike commercial casinos that generate
revenue for shareholders, gaming revenue provides essential
government services for tribal citizens, services like housing,
health care, education, public safety and general social
services.
The benefits of Indian gaming also go beyond reservation
boundaries. According to the National Indian Gaming
Association, tribal gaming has created nearly 700,000 jobs and
generated more than $10 billion in revenue for Federal, State
and local governments in 2015 alone.
Gaming revenue also supports tribal economic sovereignty. I
have seen firsthand the impacts of gaming for the 15 tribes in
New Mexico that operate gaming facilities. Tribes use gaming
revenues to leverage and invest in new and diversified
businesses from hotels to wineries. Tribes are launching and
acquiring enterprises and industries that run the gamut from
technology and advanced manufacturing to commercial real
estate.
This durable economic cycle from gaming generated seed
money to the diversified economic portfolios and strengthened
tribal governments is one that we should look to help, not
hinder.
While the benefits of gaming revenue to tribal governments
are significant and have been the key to revitalizing some
tribal economies, it is not the panacea for all. In fact, most
tribes are not gaming tribes. Of the 567 federally-recognized
Indian tribes, only 246 operate gaming facilities. Of those
facilities, fewer still generate enough revenue to
significantly reduce poverty rates in Indian Country that go
beyond the national average.
There is still much work to be done to truly achieve tribal
self determination and sufficiency. Indian gaming is certainly
not the end of the story. What does the future of Indian gaming
and IGRA hold? What is the next chapter?
I look forward to hearing how our witnesses answer those
questions. It is clear to me that we, in Congress, must
continue to work towards IGRA's goals, to foster tribal
economic development, tribal self sufficiency and strong tribal
governments.
Thank you, Mr. Chairman. I look forward to today's
testimony.
The Chairman. Thank you, Vice Chairman Udall.
I, too, want to express my concern and prayers for all
impacted by the terrible tragedy in Las Vegas.
I would also turn to Senator Cantwell for any opening
statement she might have.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Mr. Chairman. Thank you for
the opportunity.
I want to say that I want to introduce the second panel and
Chairman Forsman from the Suquamish Tribe. He has been the
chairman since 2005 and has overseen, as my colleague just
said, some economic and cultural revitalization of that tribe.
We so appreciate him being here to testify today.
Under his leadership, it has grown as mentioned in the
Ranking Member's testimony, as a vital employer in the region,
gaming, seafood, construction, retail, entertainment. We
appreciate the diversification. He is also an archeologist by
training and was appointed by the last Administration as a
tribal representative to our Advisory Council on Historic
Preservation.
Last year, I had the privilege of being there as he was
sworn in as the first Native American to serve on that Advisory
Council as Vice Chairman. This past September, he was elected
to the Affiliated Tribes of the Northwest which represents 57
different tribes from Alaska to California, Idaho, Nevada,
Montana, Oregon and Washington. I know we will hear a lot from
him on the second panel.
Thank you for allowing me to say a few words about him as
we move through our witnesses today.
The Chairman. Thank you, Senator.
On our first panel, we will hear from The Honorable Jonodev
Osceola Chaudhuri, Chairman, National Indian Gaming Commission
in Washington, D.C. and also from Mr. John Tahsuda, Principal
Deputy Assistant Secretary, Indian Affairs, U.S. Department of
the Interior.
Please proceed.
STATEMENT OF HON. JONODEV OSCEOLA CHAUDHURI, CHAIRMAN, NATIONAL
INDIAN GAMING COMMISSION
Mr. Chaudhuri. Thank you, Chairman Hoeven, Vice Chairman
Udall and members of the Committee, for inviting me to testify
today. It is an honor to appear before you as Chairman of the
National Indian Gaming Commission.
[Greeting in Native tongue.]
Mr. Chaudhuri. Greetings and may Creator bless us today and
Muscogee Creek.
All of the NIGC's hearts were broken on Sunday by the
pointless, monstrous, mass shooting in Las Vegas. I cannot
begin to comprehend the pain felt by the victims' families and
loved ones. Along with the sorrow we felt, I think we also
shared a feeling of anger toward the cowardice of the act and
the desire to do anything we can to help.
Many of us were on the Las Vegas strip to attend the G2E
Conference, as were many, many people in the Indian gaming and
global gaming communities. We immediately reached out to our
partners to offer logistical support. I, myself, just returned
from Las Vegas and many of my teammates are still there.
When I was originally drafting this testimony, I was
prepared to talk about the NIGC's proactive approach to
regulation, about how we strive to not wait for potential
problems to become crises but instead, look for areas of
opportunity that allow us, within our statutory authorities, to
leverage our relationships to bolster public safety and protect
tribal interests.
I planned on discussing how the strong regulatory footing
and sophisticated security infrastructure of Indian gaming
present excellent opportunities to proactively attack safety
and security risks, even where such risks are not unique to or
especially prevalent in Indian Country.
Among the areas of opportunity we have identified, I
planned to discuss our anti-human trafficking efforts under the
leadership of our Vice Chair, Kathryn Isom-Clause, our IT
vulnerability assessments created under the leadership of our
technology director, Travis Waldo, that mitigate cyber security
threats, and our active shooter training which, under the
leadership of our training manager, Steve Brewer, represents an
excellent partnership between the NIGC and DHS.
However, in light of recent horrific events in Las Vegas,
our efforts feel less a success and more a mere drop in the
ocean of what needs to be done. That said, narrow as our Indian
gaming lane may be, the NIGC, as do all agencies, can and must
focus on what we can and must do to make all of us safer within
our respective missions.
This is our regulatory philosophy: proactive performance of
our regulatory duties without unnecessarily inhibiting the
entrepreneurial spirit of tribes. Details of our agency
activity, our commitment to tribal consultation and our core
initiatives are outlined in my written testimony.
As today's hearing is on issues and opportunities for the
future, however, I think it is appropriate to reflect upon
lessons learned since the Cabazon decision, and indeed, lessons
learned from the history of Federal Indian policy. As
regulators of the Indian gaming industry, the NIGC is uniquely
situated to share our observations gleaned over the last 30
years. In that vein, let me discuss some 30,000 foot points.
Special care must be taken to ensure any future legislation
or regulation related to IGRA that impacts gaming such as those
related to taking land into trust or those that alter Federal
responsibilities to tribes builds on the success of Indian
gaming and provides ample flexibility for tribes to continue to
strengthen their governments, including through the rebuilding
of economically viable land bases.
As a general matter, I stress that we must be mindful of
unintended consequences. Rather than evaluate any proposed
revision or potential improvement to IGRA in a vacuum, I would
encourage the Committee to test each idea against the backdrop
of foundational principles of longstanding Federal Indian
policy.
These foundational principles include: sound Federal
policies of tribal self determination; respect for inherent
tribal sovereignty; the adherence to and upholding of Federal
trust responsibilities flowing from the United States' special
relationship with tribal Nations and the flexibility of land
policy to account for the diverse histories and land bases of
the 567 federally-recognized tribes.
No one-size-fits-all approach will work in the pursuit of
tribal economic development, self sufficiency and strong tribal
governments--principal goals of Federal policy that IGRA
explicitly and wisely recognizes.
Looking to the future, IGRA's purpose remains as relevant
as ever. As regulators of Indian gaming, we recognize the
overall success of Indian gaming, both in terms of regulation
and economic impact. We also recognize that success is due, in
large part, to IGRA's acknowledgement of tribes as primary
regulators and primary beneficiaries of their operations and
the previously mentioned foundational principles.
We believe an adherence to these principles as good policy
and must be central in any forward looking discussions. We also
note that Indian Country has uniformly made clear that the
issues caused by the Seminole decision must be addressed before
any amendments to IGRA are considered.
As Chairman, I stand ready to make available the expertise
of the NIGC to weigh in on any IGRA-related matters. I
appreciate dialogue on what improvements, if any, should be
considered to strengthen the legal framework within which
Indian gaming operates.
Thank you for the opportunity to address this Committee. I
am happy to answer any questions you may have.
[The prepared statement of Mr. Chaudhuri follows:]
Prepared Statement of Hon. Jonodev Osceola Chaudhuri, Chairman,
National Indian Gaming Commission
I. Introduction
Thank you Chairman Hoeven, Vice Chairman Udall, and members of the
Committee for inviting me to testify today. It is an honor to appear
before you as Chairman of the National Indian Gaming Commission.
Today I will provide an overview of the evolution of Indian gaming;
the current state of the industry and our responsive initiatives; as
well as some thoughts on the future of Indian gaming.
II. Evolution of Indian Gaming
Tribal gaming, as we think of it today, dates back to the 1970s
when a number of Indian tribes established bingo operations as a means
of raising revenue to fund tribal government operations and realize the
goals of tribal self-determination.
The California vs. Cabazon Band of Mission Indians decision
affirmed a tribe's right to regulate gaming on tribal lands. In that
case, the United States Supreme Court recognized that a tribe may
engage in gaming if it is located within a state that permits such
gaming for any purpose by any person, organization, or entity. The
Court also found the tribal and federal interests supporting gambling--
tribal self-determination and economic self-sufficiency--preempted the
state interest in regulating gaming. The Court emphasized the
compelling need in Indian Country for economic development and that the
gaming operations were a major source of employment.
Soon after the Cabazon decision, Congress took up the issue of
tribal gaming and conducted a series of hearings, ultimately
culminating in the passage of the Indian Gaming Regulatory Act of 1988.
In addition to providing a statutory basis for gaming on Indian lands,
the Act incorporates the very same reasons the Court identified in
Cabazon as compelling: to promote economic development, self-
sufficiency, and strong tribal governments. The tribes' role as primary
regulators and primary beneficiaries, as well as their sovereign right
to pursue gaming on their lands, was left intact, with general
regulatory oversight at the federal level to be provided by the newly
created National Indian Gaming Commission.
The NIGC has several specific responsibilities that it carries out
pursuant to IGRA, including approving tribal gaming ordinances and
management contracts with third parties and reviewing tribal gaming
license decisions. We are funded entirely by fees paid by tribal gaming
operations, and the current fee rate is at its lowest adopted amount
since 2010. Our regulatory role is carried out at the NIGC's
headquarters, located in Washington, D.C., and our seven regional
offices located in: Portland, OR; Sacramento; Phoenix; St. Paul; Tulsa;
Oklahoma City; and Washington, D.C. The NIGC's region offices house
NIGC staff in the Compliance Division, making it possible to develop a
strong working relationship with tribal gaming authorities, be
accessible, and have regular contact with tribes at their gaming
locations.
The NIGC is committed to fulfilling its tribal consultation
obligations by adhering to the consultation framework described in the
Tribal Consultation Policy. The Commission has committed to consulting
with tribes before taking any action that may have a substantial direct
effect on an Indian tribe on matters including, but not limited to, the
ability of an Indian tribe to regulate its Indian gaming, an Indian
tribe's formal relationship with the Commission, or the consideration
of the Commission's trust responsibilities to Indian tribes. In fact,
the Commission just completed a series of five consultations on a
variety of matters, and will be engaging in another consultation at the
end of October.
III. State of the Industry
Indian gaming is conducted in 28 states by 246 of the 567 federally
recognized tribes. When the NIGC began tracking industry-wide gross
gaming revenues in 1997, Indian gaming generated approximately $7.4
billion. In the years since, the industry has grown tremendously, with
gross revenues for fiscal year 2016 reaching $31.2 billion. Gross
revenue, though, does not include the costs of running a casino,
including debt service. In other words, 31.2 billion, while an
impressive number, does not equate to revenues making it to tribes.
And, although one of the purposes of IGRA is to promote tribal self-
sufficiency, gaming revenues do not supplant other federal programs,
services, and obligations, but rather allow tribes to generate jobs and
revenue which enable tribal governments to provide fundamental services
to their communities. Many tribes have used gaming profits to fund
education, improve health and elder care, enhance police and fire
departments, build houses and roads, develop environmental programs,
launch commercial ventures, and buy lands.
A. Success
The NIGC takes seriously its role in safeguarding the integrity of
Indian gaming. Through IGRA, Indian gaming continues to support tribal
economic development, self-sufficiency, and strong tribal governments.
Indian gaming has an undeniable impact on Indian Country programs,
services, and infrastructure affecting the lives of millions of Native
peoples and citizens of local communities. Across the board, Indian
gaming has infused tribal program budgets with crucial funding and has
allowed tribes to provide vital services to their members.
1. Economic and Community Impact
Small and medium tribal gaming operations (those earning less than
$25 million in gross gaming revenues) drive much of the industry,
making up 57 percent of all gaming operations. Indian gaming has been a
lifeline for these communities, supplementing funding the federal
government provides. And, although tribal gaming varies in size and
revenue, even the smallest gaming operations derive benefits from the
industry, including much needed jobs for tribal and local community
members. Gaming has also served as a catalyst for tribes to diversify
their economic portfolios and has led to success in industries that
were initially not available to them. Through these economic successes,
tribes have been able to direct funding to other important tribal
priorities such as healthcare, education, and infrastructure.
Tribes have always been the architects of their own success in the
industry. As expertise and experience have developed, more and more
tribes are looking beyond their own facilities to the tribal gaming
landscape as a whole. The Indian gaming industry has provided a
powerful platform for tribes to share their expansive knowledge,
enhancing inter-tribal relations and further bolstering the well-being
of Indian Country at large.
Indian gaming has an undeniably positive impact on local and state
economies. It provides opportunities in some of the most economically
depressed areas in the country. Indian gaming allows tribes to create
and support thousands of direct and indirect jobs, to make charitable
contributions, and to support local emergency services, truly impacting
many lives. Its role in Indian Country as well as in surrounding
communities cannot be overstated.
2. Regulatory Framework
IGRA's framework--with tribes as the primary regulators--works.
Tribes themselves have the greatest interest in protecting their
resources and their communities. It is a testament to the leadership of
tribal governments, the regulators, and the work of their dedicated
employees that the Indian gaming industry has continued to maintain
security and stability. NIGC support includes working with tribal
governments and their employees to ensure they have the tools necessary
to protect their assets and the integrity of the industry through
diligent, professional oversight and enforcement.
The NIGC remains strongly committed to upholding the statutory
authority and responsibilities outlined in IGRA. We carry out these
responsibilities through a comprehensive compliance approach and do not
take lightly the crippling effects that closure of a casino could have
on a tribe and the surrounding communities. Before the Chair takes an
enforcement action, we work with tribes and our regulatory partners to
address areas of concern using a variety of tools outlined in the
visual below. It is worth noting that the majority of tribes achieve
compliance voluntarily. This is reflective of the good work and sound
partnerships the NIGC has with tribes and regulators on the ground.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
We approach our regulatory role through a multi-faceted
comprehensive compliance approach of technical assistance, training,
and enforcement. And, with the assistance of Indian Country through
consultation, we focus on regularly improving the effectiveness of our
regulations. Fiscal Year 2016 has proven to be a robust year of
engagement with Indian country.
Below is a list highlighting some of our fiscal year 2016
regulatory activities:
599 Site Visits
474 audit statement reviews
226,857 FBI fingerprint and name checks
185 Surveillance Reviews
314 Tribal Licensing issuance reviews
6 Internal Control Assessments (ICA)
2 Internal Audit Reviews
33 trainings events to 1,662 participants
18 IT Vulnerability Assessments (ITVA)
3. NIGC Initiatives
The NIGC stresses strong partnerships and consistent communication
with tribal gaming operations to achieve compliance with IGRA. The
Commission works with tribes to ensure they have the tools necessary to
effectively regulate their operations and meet IGRA's requirements.
With its statutory mission in mind, the NIGC has focused on four
initiatives, which comprise the Agency's strategic plan.
Through our initiatives, we have been able to protect the integrity
of Indian gaming, expand outreach, and develop new services that
support gaming operations and its staff.
Protecting against anything that amounts to gamesmanship on the
backs of tribes
The Commission is committed to preventing non-tribal government
interests from manipulating relationships to benefit themselves to the
detriment of tribal gaming operations. Ensuring tribes are the primary
beneficiaries of their gaming activities lies within the core mission
of the NIGC, and preventing ``gamesmanship'' underpins all of the
Agency's activities. A recent example of protecting against
gamesmanship is outlined in a settlement agreement I entered into with
the Cheyenne and Arapaho Tribes of Oklahoma on April 11, 2017. After
identifying, self-reporting, and providing documentation of potential
gamesmanship involving a casino parking lot to the NIGC, the Tribes and
NIGC entered into a settlement agreement acknowledging that there was
sufficient evidence to support an enforcement action for misuse of
gaming revenue and violation of the sole proprietary interest
requirement.
Staying ahead of the technology curve
The Commission created its first technology division which has
spearheaded numerous projects, including providing technical assistance
to tribes to better evaluate and manage their security and
technological vulnerabilities. As part of this initiative, the NIGC
offers no-cost IT vulnerability assessments (ITVAs) for tribes and
tribal regulators, which provide a tribal gaming facility with a
vulnerability analysis of its IT system. An ITVA is a high level tool
that assists a tribe's IT security posture relative to its gaming
systems and provides a solid base-line for internal mitigation of any
risk found and assists in justifying funding for third-party
assistance. In fiscal year 2017, the NIGC has conducted 19 ITVAs.
IT vulnerability assessment testing consists of two types of tests:
external and internal. The external test provides an overview of
security vulnerabilities, which are visible from outside the gaming
system network. The scan takes into account all security layers on the
network between the scanner machine and the target system. The internal
network test provides an overview of vulnerabilities, which are visible
from the local network, taking into account host-based security
controls on the target system.
The technology division is also leading the Commission's
consideration of regulatory updates to better address mobile gaming
devices. Mobile gaming devices are handheld electronic devices that
allow casino patrons to play anywhere within the casino or potentially
other locations within a tribe's gaming eligible lands, such as
restaurants and hotels.
Developing effective rural outreach to smaller gaming
establishments in rural areas
The focus of the Commission's Rural Outreach Initiative is to
develop an effective and responsive program to support tribes with
small, rural gaming operations whose needs are unique from larger
tribal gaming operations near cities. Regional staff manages the
initiative and engages in direct outreach. Budget and staff constraints
can make attending training away from the workplace difficult. Due to
this, the Commission has added virtual training sessions to its
Regional Training Courses to benefit rural gaming operations that
cannot always attend in person. Through the initiative, the NIGC is
increasing its communications and enhancing its regulatory partnerships
with tribes with small rural gaming operations.
Supporting a strong workforce both within NIGC and among regulatory
partners
The Commission has enhanced regional trainings to include more
hands-on learning and is leveraging technology to receive feedback. The
NIGC training program seeks to improve the content and style of its
training courses and is currently revising all of its training
materials. For 2017, the NIGC training program has developed a two-day
workshop for internal audit and internal controls development.
Additionally, the NIGC has developed training to assist tribes in
recognizing ``gamesmanship''. The NIGC's new classes are designed to
provide ``how-to,'' hands-on learning with real-life scenarios,
exercises and examples, and shared best practices. Ideally, tribal
leadership, tribal regulators, and operators will not only better
understand the regulations but will have the tools necessary to
effectively measure and maintain compliance in their operations.
The agency also recognized that due to operational demands and
staffing size, attending Regional training courses may be difficult for
some tribes. In fiscal year 2017, virtual training was introduced,
allowing participants to register for select courses broadcast live
from the regional training location. This interactive approach allows
participants to ask presenters questions and actively engage in group
discussions and breakouts. The NIGC is also in the early stages of
rolling out a learning management system, which will provide on-line
training courses and webinar-type training to tribal leadership, gaming
commissioners, regulators, and operators. In 2016, the NIGC instituted
knowledge reviews in certain audit related classes. The knowledge
reviews seek to test the participant on how well they have learned the
material and assist the NIGC in determining the efficacy of its
training. The testing is done after the class is completed, and then
repeated ninety days later.
4. Regulatory Review
As part of any regulatory agencies' obligation to maintain the
effectiveness of its regulations, the Commission is contemplating
changes to its regulations.
Draft Guidance on the Class III Minimum Internal Control Standards
The NIGC's Class III Minimum Internal Controls Standards (MICS)
were promulgated in 1999 and last substantively revised in 2005. In
2006, the D.C. Circuit Court of Appeals held that NIGC lacked authority
to enforce or promulgate these regulations. Since that time, the Class
III MICS have remained unaltered in the federal register, but not
enforced by the Agency. Technology has advanced rapidly, making some
standards obsolete and introducing new areas of risk not contemplated
by the outdated standards. In addition, tribal-state compacts--even
those entered into since 2006--continue to adopt NIGC Class III MICS by
reference. Recognizing the industry's need for updated standards, and
after consultation with tribes, the Commission is developing updated,
non-binding guidance for Class III MICS and a proposed rule that will
address the outdated standards still remaining in the regulations.
Management Contract Regulations and Procedures
Pursuant to IGRA, Indian tribes may enter into management contracts
for the operation and management of their gaming activity subject to
the approval of the NIGC Chair. The Agency's regulations govern the
review and approval of management contracts, including background
investigations of entities and individuals with an interest in the
management contract. These regulations are intended to protect the
integrity of the Indian gaming industry and ensure that the tribe is
the primary beneficiary of its gaming operation. The Commission
recently consulted with tribes and sought industry feedback on any
recommended changes to our regulations and procedures that may improve
the NIGC's efficiency in processing management agreements and
background investigations. Comments are being reviewed to determine
next steps.
As part of its review of the management contract process, the
Commission recently streamlined its National Environmental Policy Act
(NEPA) process by creating a Categorical Exclusion for management
contracts that do not include new construction. With the categorical
exclusion in place, most contracts to manage existing facilities and
most contract renewals will not be required to go through the time
consuming and expensive process of obtaining an Environmental
Assessment or Environmental Impact Statement. The Agency recognizes and
supports the important environmental protections that NEPA provides.
However, in the case of most management contracts, there simply are no
environmental implications that are brought to bear by a new person or
company taking over the day-to-day management of a casino. And, where
construction is part of the agreement, the categorical exclusion will
not be applied and the NEPA process will proceed as normal.
Fees
The Commission is considering amending the language of our fee
regulations to improve the fee rate analysis and to allow publication
of the rate to coincide with the completion of our budget for the
fiscal year and the annual release of the industry's Gross Gaming
Revenue. Additionally, we anticipate this amendment would reduce the
margin of error for fee calculations as the rate would be set only once
within a fiscal year.
25 C.F.R. Part 547 Class II Gaming Systems
The NIGC initially implemented Technical Standards in 2008
requiring that before a Class II gaming system may be placed on the
floor and offered to the public for play, it must be submitted to an
independent gaming laboratory which would test the system against the
Technical Standards.
It was recognized by tribes, the industry, and NIGC that
implementation of the Technical Standards would come at a financial
cost to tribes. Of particular concern however, was the potential
financial burden on bringing gaming systems that had already been
manufactured and/or put into play--and ``compliant'' with applicable
law in the absence of the Technical Standards--into compliance with the
new 2008 rule. Thus, to reduce that cost, the NIGC provided that gaming
systems manufactured prior to issuance of the standards in 2008 could
be certified to an alternate minimum standard, but made fully compliant
or removed from the gaming floor within five years. In 2012, that
``sunset provision'' was extended another five years, to November 10,
2018. After extensive internal review of the technical standards and
consultation with the industry, the Commission determined that it was
appropriate to remove this deadline, provided that such systems are
subject to additional annual review by tribal gaming regulators and
with certain records and information regarding that review to be made
available to the NIGC. The Commission carefully considered comments
received on the issue and published a Notice of Proposed Rulemaking in
the Federal Register on September 28, 2017.
5. Developing Partnerships to Stamp Out Human Trafficking
The NIGC had forged partnerships to enhance its proactive
regulatory approach to educate and provide resources to combat human
trafficking. While the NIGC is not aware of any data suggesting human
trafficking is any more rampant in Indian gaming than any other large
commercial activity with heavy customer movement, we recognize the
industry's strong regulatory structure that provides the agency an area
of opportunity to support broader efforts to stamp out human
trafficking. Beginning in January 2017, the Agency's forward-looking
approach allowed the Commission to partner with the Bureau of Indian
Affairs, the Department of Homeland Security, the Department of
Justice, the National Human Trafficking Hotline and other federal and
non-profit organizations to provide engagement, tools and resources at
our regional training conferences.
B. Challenges
While Indian gaming continues to be successful, it is not without
its challenges. To that end, NIGC receives input from tribes and
stakeholders through consultation efforts, daily interactions, site
visits, and by observing the work of other agencies supporting Indian
Country.
As we see the tremendous growth of the Indian gaming industry, it
is more important than ever to not lose sight of the policies
underlying IGRA. Indian gaming, while potentially lucrative, is a
governmental activity, not a mere commercial enterprise. This simple
idea is sometimes forgotten, but crucial when discussing Indian gaming.
IGRA requires that gaming revenues are owned by, and benefit, the
entire tribe rather than any particular individual; tribes may only use
net revenues from their IGRA gaming for five limited governmental
purposes.
Related to the misperception that IGRA gaming is a commercial,
rather than a governmental, endeavor is the notion that gaming on
Indian lands not within the narrow limitations of reservation
boundaries is somehow inconsistent with IGRA. The narrative of ``off-
reservation gaming'' has the potential to distract from the underlying
principle behind Indian gaming--that Indian gaming development is an
expression of a tribe's sovereignty and desire to provide governmental
services to its people. Gaming on Indian lands, which can include
reservation, trust, and restricted fee land, is what IGRA contemplates.
That being said, the NIGC understands concerns may arise when a tribe
decides to open a casino on a particular parcel of land. As a
regulatory agency, however, our role is limited to ensuring gaming
takes place on eligible Indian lands. And, although the definition of
Indian lands includes reservation land, it also includes non-
reservation trust and restricted fee lands over which the tribe
exercises governmental power. While IGRA also prohibits gaming on trust
lands acquired by tribes after 1988, it does provide for measured
flexibility allowing for gaming on eligible Indian lands, besides
reservation lands, in clear recognition of the diversity of histories
and land bases in Indian country. This flexibility supports the goals
of tribal economic development and strong tribal governments (through
the rebuilding of land bases) and is consistent with the principal
goals set forth in its findings.
IV. Thoughts on the Future
IGRA's purpose remains as relevant as ever for the future of Indian
gaming, with its inevitable technological evolution and expansion. The
policies of IGRA have provided tribes with the support, guidance, and
protection to develop a healthy, robust gaming industry. The NIGC will
continue to adapt to industry advancements and work to ensure a well-
regulated gaming industry that supports tribal economic development,
tribal self-sufficiency, and strong tribal governments. The NIGC is
unique in its expertise and great working relationships with tribal
regulators and operations. Any new technology or advancement in gaming
such as i-gaming, fantasy sports, or mobile gaming will have a learning
curve, but the NIGC's knowledgeable and dedicated staff is up to the
task of addressing those issues without undermining the intent of IGRA.
The success of the Indian gaming industry is due in large part to
the expertise tribes have developed in running and regulating their
operations. The Commission believes any potential legislation related
to gaming must include tribes and provide a level playing field of
opportunity for Indian country. Potential legislation addressing new
gaming markets, such as Internet gaming or the increased availability
of sports betting, etc., must include dialogue with State, industry,
and other stakeholders in considering regulatory structures for
emerging markets and IGRA's foundational principle of supporting tribal
economic development, self-sufficiency, and strong tribal governments
must be the primary guide. The federal government's special
relationship with tribes is a bedrock of federal law and policy. IGRA's
tribal self-determination principles have resulted in the integrity and
economic success of Indian gaming thus far, and should inform future
dialogue regarding national gaming policy. Congress can ensure that the
benefits of Indian gaming are preserved and not lost in an on-line
environment in which a handful of first-to-market interests dominate.
Although technologic advancements and the face of gaming is very
much on everyone's minds as IGRA approaches its thirtieth anniversary,
we must also be mindful of other aspects of the Act. For example, we at
the NIGC have repeatedly heard from Tribes that the issue created by
the United States Supreme Court case, Seminole Tribe of Florida v.
Florida must be addressed. In that case, the United States Supreme
Court concluded that in IGRA, Congress did not waive States' immunity
from suit by Indian Tribes. Thus, tribes are unable sue states for
failing to negotiate compacts in good faith, thus shifting the balance
of power in tribal-state compact negotiations to states. We agree that
without a Seminole fix, the intended parity between Class III tribal
gaming and commercial gaming may further deteriorate. And, as with any
proposed legislation or new developments with Indian gaming, NIGC
stands ready to work with Congress, tribes, and other stakeholders to
uphold the foundational principles of IGRA.
With any changes to IGRA, though, special care must be taken to
ensure any future legislation or regulation related to IGRA that
impacts gaming such as those related to taking land into trust or that
alter federal responsibilities to tribes, builds on the success of
Indian gaming and provides ample flexibility for tribes to continue to
strengthen their governments, including through the rebuilding of
economically-viable land bases. As a general matter, I stress that we
must be mindful of unintended consequences. Some of the most disastrous
federal policies from the perspective of tribal nations were the
product of the good intentions of purported advocates of Native
peoples. IGRA, however, does not fall into that category. And rather
than evaluate any proposed revision or potential improvement to IGRA in
a vacuum, I would encourage the Committee to test each idea against a
backdrop of the foundational principles of longstanding federal Indian
policy.
As regulators of Indian gaming, we recognize the overall success of
Indian gaming over the last 30 years, both in terms of regulation and
economic impact. We also recognize that that success is due in large
part to IGRA's acknowledgment of the tribes' sovereign right to pursue
gaming on their lands, its preservation of their role as primary
regulators and primary beneficiaries of their operations, and its
protection of varied avenues to allow tribes with diverse histories,
land bases, and capacities to pursue gaming. We believe an adherence to
these self-determination principles and flexibility that accounts for
historic realities is good policy and must be central in any forward-
looking discussions. As Chairman, I stand ready to make available the
expertise of the NIGC to weigh-in on any IGRA-related matters, and I
appreciate dialogue on what improvements, if any, should be considered
to strengthen the legal framework within which Indian gaming operates.
V. Conclusion
In the nearly 30 years since the Indian Gaming Regulatory Act was
passed, the Indian gaming industry has grown, matured, and evolved in
ways that almost no one could have predicted at the time. And while
that growth is due primarily to the ingenuity and hard work of the
tribal communities that built the industry, it has occurred in the
context of a piece of legislation that was enacted with core goals in
mind--to promote tribal economic development, tribal self-sufficiency,
and strong tribal governments. The NIGC takes seriously its role to
regulate the Indian gaming industry to ensure these goals are achieved.
These efforts in conjunction with IGRA's sound principles will continue
guiding Indian gaming into a bright and prosperous future.
The Chairman. Thank you.
Mr. Tahsuda.
STATEMENT OF JOHN TAHSUDA, III, PRINCIPAL DEPUTY
ASSISTANT SECRETARY, INDIAN AFFAIRS, U.S.
DEPARTMENT OF THE INTERIOR
Mr. Tahsuda. Good afternoon, Chairman Hoeven, Vice Chairman
Udall and members of the Committee.
My name is John Tahsuda and I am the Acting Assistant
Secretary for Indian Affairs at the Department of the Interior.
Thank you for the opportunity to testify before this Committee
on the department's role in Indian gaming. You have my full
written testimony. I will offer some more brief oral remarks.
The passage of the Indian Gaming Regulatory Act, IGRA,
provided a means of promoting tribal economic development, self
sufficiency and strong tribal governments through well
regulated gaming. Indian gaming has resulted in considerable
financial resources for a wide range of tribal services and
programs from education and housing to law enforcement and
health care and has bolstered jobs in local and tribal
communities.
That said, the Department is mindful that while gaming has
great potential to improve economic conditions for tribal and
non-tribal communities, it could also introduce new
complications to communities, including drain on local
resources, increased traffic, visitation and crime, such as
drugs and prostitution.
The Department, under Secretary Zinke's leadership, firmly
believes there needs to be thoughtful and thorough
consideration of all factors relating to gaming applications.
Given our commitment to being a good neighbor and steward, we
believe local voices must have a fair opportunity to provide
insight and input into these decisions.
That is why an in-depth and balanced consideration of all
factors will be at the core of the department's decision-making
process for any off-reservation gaming or land-into-trust
applications. We will closely adhere to the law when reviewing
tribal gaming matters as detailed in IGRA, but also plan to put
more emphasis on all of the applicable criteria.
No single criteria by itself will be considered dispositive
in these intricate proposals. Nor will local communities be
denied an opportunity to voice their concerns. We are committed
to striking a balance between differing interests which we
fully recognize are prevalent in these matters while following
the provisions of the law.
In addition to being more thoughtful when considering
gaming and fee-to-trust proposals, Interior is also committed
to providing tribes realistic expectations during the formal
review process. For instance, in the case of off-reservation
land into trust efforts, the commitment of time and resources
required can be exorbitant, particularly if that proposal is
denied.
Therefore, we believe it is important to be upfront about
proposals that may not be acceptable and, as a result, we are
considering changes to our land-into-trust process to provide
feedback earlier in the process.
The Department does recognize that equities may be
different for restored and landless tribes when it comes to
off-reservation gaming and land-into-trust proposals. Interior
is committed to reviewing all the factors and seeking broad
input in its decision-making process for these applications.
In conclusion, the Department is committed to being
thorough and balanced in our considerations for both trust land
acquisitions and gaming proposals. We will closely adhere to
the law when reviewing these matters, putting emphasis on all
the applicable criteria and ensuring that local communities
will not be denied an opportunity to voice concerns.
I, along with our team at Interior, welcome the opportunity
to work with this Committee and Congress on Indian gaming
matters, recognizing the plenary authority Congress holds in
all tribal matters.
Thank you for the opportunity to testify today. I am
pleased to answer any questions you may have.
[The prepared statement of Mr. Tahsuda follows:]
Prepared Statement of John Tahsuda, III, Principal Deputy Assistant
Secretary, Indian Affairs, U.S. Department of the Interior
Good afternoon Chairman Hoeven, Vice Chairman Udall, and Members of
the Committee. My name is John Tahsuda and I am the Acting Assistant
Secretary for Indian Affairs at the Department of the Interior
(Department or Interior). Thank you for the opportunity to testify
before this Committee on the Department's role in Indian gaming.
The framework for Indian gaming both on and off reservation was
established by Congress with the passage of the Indian Gaming
Regulatory Act (IGRA) [Pub.L. 100-497, 25 U.S.C. 2701 et seq.] in
1988. The regulatory scheme codified into law assigns the Department
certain responsibilities for regulating gaming on Indian lands. As laid
out in IGRA, Class I gaming is regulated exclusively by Indian tribal
governments; Class II gaming regulation is reserved to tribal
governments in cooperation with the Federal Government; and, Class III
gaming is regulated primarily by tribal governments in cooperation with
the federal government and, to the extent negotiated in an approved
compact, a state government. Under IGRA, Interior reviews and
determines whether to approve tribal-state gaming compacts and fee-to-
trust applications for gaming.
The passage of IGRA serves as recognition on behalf of Congress
that well-regulated gaming provided a means of promoting tribal
economic development, self-sufficiency, and strong tribal governments.
Indian gaming has resulted in considerable financial resources for a
wide range of tribal services and programs, from education and housing
to law enforcement and health care, and has bolstered jobs in local and
tribal communities.
That said, the Department is mindful that, while gaming has great
potential to improve economic conditions for tribal and non-tribal
communities, it can also introduce new complications to communities,
including a drain on local resources, increased traffic, visitation,
and crime, such as drugs and prostitution. The Department, under
Secretary Zinke's leadership, firmly believes there needs to be a
thoughtful and thorough consideration of all factors relating to gaming
applications. Given our commitment to being a good neighbor and
steward, we believe local voices must have a fair opportunity to
provide insight and input into these decisions.
This emphasis on a balanced process is also critical for the
acquisition of trust lands located off reservation, which the
Department firmly believes should move forward in tandem with federal
consideration of tribal gaming. The Department previously testified
during the 115th Congress about its role in the fee-to-trust process,
which can be further complicated by the prospect of off reservation
gaming. Off-reservation lands that are acquired through the Fee-to-
Trust process have the potential to raise jurisdictional uncertainties
in local communities, as well as complicating land-use planning and the
provision of services. Moreover, non-Indian communities may experience
tax revenue consequences if payments in lieu of taxes are not agreed
upon. Ultimately, the Department has received comments that taking land
located off reservation into trust for gaming can introduce economic or
other conditions that can have significant impacts on the immediate and
surrounding communities. As a result, the Department's off-reservation
trust regulations require particular attention to issues of
jurisdiction and taxation.
Off-reservation trust acquisitions also raise the possibility that
a tribe may initiate gaming operations once the land is held in trust
by the federal government, even though that was not in the original
plan. This matter continues to complicate and isolate some communities
near these facilities. In those instances, local communities that may
have offered support or participated in the process could now need to
engage in a new public input process.
Collectively, this is why an in-depth and balanced consideration of
all factors will be at the core of the Department's decisionmaking
process for any off reservation gaming or land into trust applications.
The Department will closely adhere to the law when reviewing tribal
gaming matters as detailed in IGRA, but also plans to put more emphasis
on all of the applicable criteria. No single criteria by itself will be
considered dispositive in these intricate proposals, nor will local
communities be denied an opportunity to voice their concerns. We are
committed to striking a balance between differing interests, which we
fully recognize are prevalent in these matters, while following the
provisions of the law.
In addition to being more thoughtful when considering gaming and
fee-to-trust proposals, Interior is also committed to providing tribes
realistic expectations during the formal review process. For instance,
in the case of off reservation land into trust efforts, the commitment
of time and resources required can be exorbitant, particularly if that
proposal is denied. Therefore, we believe it is important to be upfront
about proposals that may not be acceptable. As a result, we are
considering changes to our land-into-trust process [25 CFR 151] to
provide feedback earlier in the process.
The Department recognizes that the equities may be different for
restored tribes and landless tribes when it comes to off reservation
gaming and land into trust proposals. For example, the Department is
currently reviewing the Shawnee Tribe of Oklahoma's fee-to-trust. The
Shawnee are a landless tribe and, given the unavailability of land in
close proximity to its members, the Tribe elected to explore other
alternatives. They have worked closely in collaboration with other
Oklahoma tribes, the Governor of Oklahoma, the local community, and a
number of Members of the Congressional delegation to identify and
secure a potential location. While a decision on that acquisition is
pending with the Department, Interior is committed to reviewing all
factors and seeking broad input in its decision making.
As this Committee looks ahead at the next thirty years of Indian
gaming, the Department sees an opportunity to think strategically about
its own role. Our commitment is to be thorough and balanced in our
considerations for both trust land acquisitions and gaming proposals.
The Department will closely adhere to the law when reviewing these
matters, putting emphasis on all the applicable criteria and ensuring
that local communities will not be denied an opportunity to voice
concerns. The Department welcomes the opportunity to work with this
Committee and the Congress on Indian gaming matters, recognizing the
plenary authority Congress holds in all tribal matters. If there is
interest in further discussing these issues, we stand ready and able to
work with you.
This concludes my written statement. Thank you for the opportunity
to testify today and I am pleased to answer any questions you may have.
The Chairman. Thank you to you both.
I am going to begin with Chairman Chaudhuri.
In 2015, this Committee held an oversight hearing to
receive testimony on the GAO report, Indian Gaming, Regulation
and Oversight by the Federal Government, States and Tribes.
More recently, the GAO confirmed that as of December 2016, the
NIGC has yet to comply with all of their recommendations
outlined in that report.
Would you please give us an update, Chairman, as to where
you are with the GAO recommendations from that report?
Mr. Chaudhuri. Thank you, Chairman.
As we mentioned at that time, we absolutely welcomed GAO's
inquiry. We also welcomed their ongoing work with us to
identify areas of opportunity for us to improve our services.
We were actually ahead of GAO in some of the
recommendations regarding some of the knowledge reviews that we
are in the process of implementing to tie our trainings to
actual efficacy of our regulatory approach. Those knowledge
reviews, frankly, came from discussions between our staff and
members of the Committee.
I am actually thankful for some of the work that
collectively we are doing together to make sure we are having
the most efficient trainings possible.
The GAO mentioned a few areas of opportunity. One in
particular was working to have deadlines attached when we tried
to provide technical assistance to tribes identified as having
compliance issues. Since the GAO report, we have put firm
deadlines into each and every letter of concern and awareness
that we provided to our regulatory partners.
We have also instituted metrics tracking with our
trainings. That again flows from the GAO report and our
discussions with the Committee.
Finally, we are actively involved in measuring our ability
to provide resources to facilities with some of the most
challenging capacity issues. Those all relate to the GAO's
recommendations.
As a final note, outreach was part of GAO's report. I am
pleased to say in our last attempt to provide clarity to the
industry involving trying to develop non-binding Class III mix
in light of the CRIT decision, we have made special efforts to
reach out to our State partners to loop them in on our draft
language.
We are sensitive to GAO's findings, but I do want to say
the overall thrust of GAO's report was that the industry
overall was healthy and the regulatory structure overall was
strong. There were, of course, recommendations, as there are
with any report, but we very much appreciated the overall
thrust of the report.
The Chairman. You do not anticipate any problem meeting the
recommendations they made in the report?
Mr. Chaudhuri. None whatsoever.
The Chairman. Thank you.
Last month, the Securities and Exchange Commission
acknowledged that it had been hacked. Under the previous
Administration, the Office of Personnel Management, as you will
recall, exposed millions of Federal employees' personal
information to cyber criminals.
My question is, what is the Commission doing to ensure that
the critical information tribes report to you is secure and
have you been subject to any type of software or cyber security
breaches?
Mr. Chaudhuri. Thank you Chairman, cyber security is a
concern for the gaming industry as it is for all industries and
governmental agencies. This is the age we live in. There is one
report that said if you leave an unsecured device exposed to
the Internet, you are guaranteed not just dozens, not just
hundreds, but potentially thousands of attacks in a short
amount of time if you do not have sufficient firewalls and
safety measures in place. This is the reality of the arena in
which we live.
Recognizing that and recognizing our role as supporting our
regulatory partners, each tribe having its own regulatory body,
we have looked at our internal capabilities to figure out where
we can be of the most help. Through our recently created
technology division to stay ahead of the technology curve, I
think we developed a pretty innovative approach to this
challenge.
We developed what are called IT vulnerability assessments
by which we will go to any tribe that requests it and perform a
360 review of cyber vulnerabilities for that tribe. This is a
relatively new program but since starting, I have some numbers
here that are pretty good.
Since starting, this is a year and a half old, the program
has hit the ball out of the park and 19 ITVAs were performed
this year alone. There is a waiting list now, not a long
waiting list but it has been very well received in Indian
Country.
We need to distinguish between cyber vulnerabilities and
cyber compromises. Cyber attacks are always ongoing. I
mentioned the idea about an unprotected system. All the time
there are cyber attacks.
In terms of cyber compromises, fortunately because of the
work of tribal regulators with supportive agencies such as
ours, examples of actual cyber compromises are relatively few
and far between.
The Chairman. That is encouraging to hear.
I am going to a little bit more time hoping to get this
done in one round. I will provide the same courtesy to my
fellow Senators. I think that might save having to have two
rounds because we do have a vote at 3:15 p.m.
For Secretary Tahsuda, the Indian Gaming Regulatory Act is
a delicate balance between Federal, State and tribal interests.
Your written testimony indicated that evaluating off-
reservation gaming and land into trust, in doing so, the
department was ``committed to striking a balance between
differing interests which we fully recognize are prevalent in
these matters while following the provisions of the law.''
Can you explain how you intend to strike that balance in
terms of your application for these compacts?
Mr. Tahsuda. When we say considering all the factors, I
think that includes both if there is a compact under
consideration as well as land and the consideration of factors
there and in consideration of the factors under the land
decision as well.
Some of those overlap but we believe that in the past,
there have been times when greater consideration has been given
to one set of factors over others. Our commitment is to weigh
all the relevant factors and come to a fair and balanced
conclusion based on the totality of the factors.
The Chairman. Do you intend to utilize a commutability
standard for off-reservation acquisitions for gaming?
Mr. Tahsuda. When it comes to land into trust, we are
required by our regulations to consider the distance from the
reservation for off-reservation applications. We also are
required by IGRA to consider the positive impacts to the tribe
if there is going to be gaming on that land which we believe
must mean something more than mere financial gain. Things like
employment opportunities, ability to host cultural activities,
and community activities in the facility should all be part of
the considerations impacted by the distance from the
reservation.
The Chairman. Thank you.
Vice Chairman Udall.
Senator Udall. Thank you, Mr. Chairman.
IGRA's goals of promoting tribal economic development,
tribal self sufficiency and a strong tribal government are
rooted in the recognition of formal government-to-government
relations between the Federal Government and the tribes, as
both of you know.
Every President since Nixon has embraced those goals.
President Clinton specifically recognized the Federal
Government's responsibility to coordinate and consult with
tribal governments by issuing Executive Order 13175. President
Bush issued a memorandum supporting that Executive Order as did
President Obama.
For Assistant Secretary Tahsuda, will President Trump issue
any Executive Memorandum or Guidance that continues the
important commitments contained in Executive Order 13175?
Mr. Tahsuda. I cannot answer that question. I think that is
in the President's prerogative. What I do know is that he and
Secretary Zinke have impressed upon us that we are to be guided
by respect for tribal sovereignty. We have in place our
consultation policies and we closely follow those and fully
intend to do that through the future.
Senator Udall. Can I have your commitment that you, as the
highest ranking political appointee in Indian Affairs at
Interior, that you will ensure meaningful tribal consultations
occur in the spirit of that Executive Order?
Mr. Tahsuda. Yes. Our goal is to have effective
consultation with the tribes so that we can provide better
outcomes as we perform our services to the tribes.
Senator Udall. We would like it in writing at any point if
you decide to issue an Executive Order on that and be notified
of that.
Mr. Tahsuda. Certainly, Senator.
Senator Udall. Thank you.
I was hoping both of you would shed some light on IGRA's
intent regarding parity between tribes and States in
negotiating compacts. Do you think that balance is tipping in
any way that the law did not intend?
Mr. Chaudhuri. Thank you, Vice Chairman.
In terms of the balance and thorough approach, I would say
a couple things. First of all, IGRA is specifically intended to
benefit Indian tribes for the Federal policy purposes set forth
in IGRA of strong tribal governments, self sufficiency, and
economic development. It is legislation specifically intended
to benefit tribes.
Furthermore, in terms of considering balancing
considerations, there is a long recognized special relationship
between the Federal Government and tribal nations as recognized
in the long history of Federal case law, as well as the
congressional record.
Prior to IGRA, the Cabazon decision acknowledged the
tribes' inherent authority to regulate their own gaming
activities. IGRA, in many ways, can only be described as an
infringement on the inherent authority of tribes to regulate
their own activities. It was an infringement that brought with
it a very special balancing of various interests, State
interests and tribal interests but it protected tribal
sovereignty to ensure that if that balance was ever tilted too
far in one direction, for instance, where a State were not to
negotiate in good faith with a tribe, a tribe would have
recourse to restore that balance. That recourse would be
litigating over the State's actions and negotiations,
litigating over good faith.
That balance was changed dramatically by the Seminole
decision so that the carefully crafted balance of sovereign
interests that IGRA sought to establish has forever since been
impacted. I think Indian Country has been very clear and very
thankful for today's discussion if any potential changes to
IGRA are on the table, and restoring the balance that IGRA
established between States and tribes needs to be the first
point of discussion. Indian Country's perspective on that
matter, given IGRA's intent, appears reasonable.
Senator Udall. Mr. Secretary, your thoughts on that?
Mr. Tahsuda. It is my understanding, I was not here at the
time, but Congress is the one that sought to achieve a balance
through IGRA itself. That is reflected in the statute. The
statute directs us to take certain actions, to make certain
reviews and consider certain criteria. We do that to the best
of our ability.
It is true that the Supreme Court has its opportunity to
weigh in on legislation that Congress passes and when those
decisions affect longstanding practices held by our department,
it does create complications for us, but it is Congress' job
ultimately to simplify or clarify that if it feels the need to
do that. Otherwise, it is our responsibility to apply the law
the best we can.
Senator Udall. As I mentioned in my opening, Indian gaming
is an important economic engine. In New Mexico, for example the
Pueblos of Santa Clara and the Ohkay Owingeh casinos employ
more than 1,000 people in the Espanola Valley. The President
has spoken at length about creating jobs and cutting red tape,
yet Interior just released an advance notice of rulemaking that
suggests Interior may revisit regulatory obstacles from the
Bush years.
Mr. Assistant Secretary, in your written testimony, you
state that ``local voices must have a fair opportunity to
provide insight and input in land-into-trust decisions.'' Can
you elaborate and how do the current regulations fail in this
regard, specifically focusing on how you believe those current
regulations fail?
Mr. Tahsuda. I did not intend, at least in my statement, to
imply that our current regulations fail that. I think it is our
belief that past actions by the department over the past few
years did not adequately apply our regulations as they should
have so that all the factors and criteria to be considered were
not adequately considered. As I said earlier, some were given
greater priority over others.
It is our commitment to consider all the factors we are
required to consider by the law and by our regulations and
apply those to the factual situation in front of us.
Senator Udall. Interior owes Indian Country no less than to
meet in and with communities that will be hardest hit by this
Administration's proposed changes. What is Interior's plan to
consult with tribes on the Part 151 proposal? Does it go beyond
ordinary APA notice or comment such as conducting regional
consultations?
Mr. Tahsuda. It is our intent, if we move forward with
changing the regulations to hold a consultation schedule. We
actually should have out within the next day or so a Dear
Tribal Leader letter which will identify a meeting to discuss
in broad terms what we are thinking. Then we will lay out a
schedule of tribal consultations in different regions around
the Country. I am happy to share that with you, Mr. Vice
Chairman.
Senator Udall. Thank you very much.
The Chairman. Senator Heitkamp.
STATEMENT OF HON. HEIDI HEITKAMP,
U.S. SENATOR FROM NORTH DAKOTA
Senator Heitkamp. Thank you, Mr. Chairman.
If I could just take a minute to talk about an issue we had
a hearing on last week, Mr. Chairman, I appreciate your
response to the letter that I and other members of this
Committee sent on human trafficking and I am glad to hear that
the National Indian Gaming Commission is doing its job to
educate and provide resources to combat human trafficking.
You mentioned in your testimony that your organization is
not aware of any data that suggests human trafficking is more
rampant in Indian gaming than other similar industries. How do
you think we can collect the data so that we can be better
informed and don't you think it would be valuable to have that
information?
Mr. Chaudhuri. Absolutely, and we stand ready to work with
any partners to collect data as broadly as possible. As I
mentioned in my oral testimony, our regulation philosophy is
one of proactive regulation. While we absolutely support the
gathering of data that will help target effective regulatory
action, I do not think an agency needs to wait for the data to
come in to recognize there are opportunities to help stamp out
human trafficking as they exist.
In this regard, I really have to thank our Vice Chair,
Kathryn Isom-Clause, who within the agency, has taken the
leadership position to get each and every one of us on board to
work with Federal partners, tribal partners, industry partners
to do whatever we can.
It starts with data. We are here to work with data
collection agencies that have better tools than we do as
regulators but that does not mean we cannot start doing what we
can now. We are doing it through our trainings and we are doing
it through our participation with the Tribal Gaming Protection
Network. We have the National Indian Gaming Association here
and the American Gaming Association is involved with that. We
are active but data is absolutely needed.
Senator Heitkamp. We know that events and the hospitality
industry are particularly targets for this kind of behavior and
criminal activity. We want to make sure all of the people
involved in your industry, whether it is the hotel that is
attached or people on the floor watching what is going on, are
well trained and can recognize the signs of human trafficking,
especially when it involves small children.
Mr. Assistant Secretary, as we talk about combating drug
and human trafficking and domestic violence in the context of
gaming, I think it is extremely important that law enforcement
has enough resources to effectively respond to these cases.
All across our region, we are seeing more and more law
enforcement jails, more and more detention centers being shut
down by order of various Federal agencies. That creates a real
void in Indian Country in terms of access to resources,
especially as it requires cooperation given jurisdictional
challenges and the customers of gaming associations.
What are you doing to build more momentum for additional
law enforcement resources both in terms of personnel and in
terms of jail capacity?
Mr. Tahsuda. Good question, Senator. I thought you were
going to ask me something about gaming.
Senator Heitkamp. I think this is about gaming. I think
that when we are looking at the additional challenges that
gaming brings to Indian Country, if you take an isolated
reservation in North Dakota, you are not going to see a lot of
people the tribal court would not have jurisdiction over. But
once you have gambling, that hopefully is bringing more people
who are going to enjoy the hospitality, but it has challenges.
There are two sides to this. I just have to tell you I
think that these are issues that are associated and could, in
fact, be exacerbated by Indian gaming and casino gambling in
Indian Country.
Mr. Tahsuda. Let me do my best to answer your question and
ask that you bear with me. I am still pretty new in the job and
trying to get a handle on everything we are doing. I still
receive briefings nearly every day from our various offices and
bureaus.
I do know that some of our staff came before you last week
to talk about the human trafficking issue. Based on that, you
probably have as good or better information than I do on that.
I do know that they are actively engaged both with sort of
the industry side, with the tribal casino folks and with tribal
law enforcement to try to get training for them to identify
both the related drug trafficking and the human trafficking
issues and to help them learn to identify situations when these
may arise whether at a tribal gaming facility, tribal
hospitality or any other location like a truck stop. I know
that is also a big source of concern. We are actively working
on that.
It is true that an activity like gaming brings a lot of
people and traffic to an area that otherwise would not come
there. As I referenced earlier, those are complications for the
community they are required to deal with. To the extent
possible, we have long been proponents of the tribes working
cooperatively with local law enforcement, cross deputizing
agreements to help them work through those and where
appropriate, to bring Federal resources to those.
Senator Heitkamp. I am out of time but I do want you to
know that I consider the lack of law enforcement resources in
Indian Country, especially for our gaming tribes, to be one of
the most critical issues Indian Country is confronting.
We have longstanding, historic socioeconomic issues we need
to address but if people are not safe, if people are not
protected, this has to be one of your top priorities in your
Acting role. We do not want to waste anymore time waiting for
someone who is not Acting. I think it is critically important
that law enforcement be a top priority.
Thank you, Mr. Chairman.
Mr. Chaudhuri. Senator, if I may add one point on that. One
of the master strokes of IGRA was preserving the tribes' place
as the primary regulators of their gaming activity. That was
important because of all people who have the strongest interest
in protecting their communities, tribes have the strongest
interest in protecting the health and welfare of their members
as well as their patrons.
We see our work, in terms of human trafficking, as doing
whatever we can to support tribal regulator efforts on the
ground. Tribes are on it. I had a conversation with my good
friend, Jamie Hummingbird, who heads the National Tribal Gaming
Commissioners and Regulators. We spoke about this very issue.
Thank you so much for your attention to this very, very
important issue.
The Chairman. I have one final question for the Chairman. I
am asking this on behalf of Senator Udall who had to go vote.
He had one other question for you and a follow up question.
The Tenth Circuit issued two opinions that affect the
Pueblo of Pojoaque. One decision validated Part 291 which means
that tribes in the Tenth Circuit can no longer look to Interior
if a State decides it does not want to negotiate a compact.
The other Tenth Circuit decision now allows States to
regulate vendors in a way that disrupts tribal gaming
operations.
If Interior cannot issue secretarial procedures, what
options do tribes have now? Does that outcome reflect IGRA's
intent to put tribes and States on equal footing during the
compact negotiation process?
Mr. Chaudhuri. Thank you, Chairman, and by extension, thank
you to the Vice Chair. I have two things very briefly.
The compacting analysis affects Class III gaming. Class II
gaming is always within the purview of tribal communities.
The second point, it is a great question, especially given
the Tenth Circuit decisions. Our role, as an agency, was to try
to promote our statutory mission as best we could, given the
complexities of matters on the ground with Pojoaque. In other
words, we made sure that operations were safe, that assets were
protected, while these matters played out.
It raises a larger question that was alluded to in the Vice
Chairman's previous dialogue regarding the balance between
tribal and State interests. IGRA contemplated a very delicate
balance between tribes and States, one in which States would
negotiate in good faith with tribes and tribes would have
recourse to bring an action when that good faith did not occur.
The Seminole decision complicated that. As regulators, with
an eye towards integrity and fairness, we cannot help but
recognize that has created complications within the regulatory
landscape. Seminole has created complications in terms of the
relationship between tribes and States and it has had
regulatory impacts.
In terms of how that is played out with vendors, when
tribes do not have that recourse, States are free to leverage
their position with tribes much more freely and are becoming
more and more creative about how to leverage those positions
such as bringing pressure on vendors.
The Chairman. I would like to thank both witnesses on our
first panel. That will conclude our first panel and we will
move to our second panel.
Thank you.
Mr. Chaudhuri. Thank you very much, Chairman.
Mr. Tahsuda. Thank you, Chairman.
The Chairman. We will proceed with the second panel. I
would like to thank all of the witnesses.
First, we will hear from the Honorable Keeny Escalanti,
President, Fort Yuma Quechan Indian Tribe, Yuma, Arizona. Then
we will hear from: the Honorable Harold ``Gus'' Frank,
Chairman, Forest County Potawatomi, Crandon, Wisconsin; the
Honorable Leonard Forsman, Chairman, the Suquamish Tribe,
Suquamish, Washington; and my old horseback riding partner,
Ernest L. Stevens, Jr., Chairman, National Indian Gaming
Association. Thanks to all of you for being here.
Mr. Escalanti, if you will start.
STATEMENT OF HON. KEENY ESCALANTI, PRESIDENT, FORT YUMA QUECHAN
INDIAN TRIBE
Mr. Escalanti. Good afternoon, Chairman Hoeven, Vice
Chairman Udall and members of the Committee.
My name is Keeny Escalanti, Sr., President of the Quechan
Indian Tribe of the Fort Yuma Indian Reservation. I thank you
for the opportunity to testify today on behalf of our 3,900
members regarding benefits of gaming to our community.
According to our creation story, our people, pronounced
KWAT'SAN, have lived along the Colorado River near the
confluence of the Gila River. We are well known for our
distinct language, the Yuman, which is a native dialect of the
Hokan. Our reservation encompasses approximately 45,000 acres
with a land base that is located in both California and
Arizona, which shares a border with Mexico.
Our tribe is an agricultural community. We also rely on
tourism and, of course, gaming to augment our economy. Our
tribes operate two casinos, the Quechan Casino Resort located
in Imperial County, California and Paradise Casino located in
Yuma County, Arizona.
The revenues derived from these two casinos have allowed
our tribe to invest in our local community and has strengthened
our relationship with the local government and improved the
livelihoods of our tribal and non-tribal residents.
The tribe signed our first gaming compact with the State of
California in 1999 and amended it in 2006. To alleviate the
financial hardship from the 2006 amendment, we recently
negotiated a new compact with Governor Brown. We are grateful
for the hard work of Governor Brown's Administration in this
process.
The new compact recognized the benefits of investing gaming
revenues in the local community and acknowledges the tribe as a
significant contributor to the local economy. Under the new
compact, the tribe is relieved from burdensome revenue-sharing
requirements. Now the tribe can invest gaming revenues and
provide important programs to its tribal membership and local
residents.
Gaming has improved the well being of the tribe and the
surrounding area through job creation, local investments and
inter-government collaboration, improving the safety and
security of the entire community.
Gaming has created significant employment opportunities.
For example, the Quechan Casino Resort in Imperial County,
which has an unemployment rate of 24 percent, employs over 500
individuals. Paradise Casino in Yuma County, which has an
unemployment rate of 16 percent, has over 150 employees.
In addition to job creation, gaming has allowed the tribe
to create essential community and social services programs. For
example, we offer scholarships and grants for post secondary
education and vocational programs.
We also operate a senior citizen center that offers meals,
recreation and activities of the tribe and non-Native
residents.
Our tribe is especially proud of the new Ft. Yuma Health
Care Center. Construction will be completed in March 2018. The
new facility will be utilized jointly by the Quechan and the
Cocopah Tribes. The facility will offer a clinic, dental and
optical services to both tribe and non-Native residents.
Finally, gaming has fostered strong, intergovernmental
relationships ensuring the safety and well being of the
surrounding communities. In California, we have a strong
relationship with Imperial County law enforcement and the fire
prevention agency.
At the Federal level, we are one of only two tribes that
has a port of entry. The Andrade Port of Entry is located on
our reservation. Our Tribal Fish and Game Department and Tribal
Police Department work collaboratively with the United State
Border Patrol on issues of border protection and homeland
security.
Looking ahead at the next 30 years, our tribe is hopeful
that more States will appreciate the opportunities created
through the use of gaming revenues by rural tribes.
I thank you for your time and will be happy to answer any
of the Committee's questions.
[The prepared statement of Mr. Escalanti follows:]
Prepared Statement of Hon. Keeny Escalanti, President, Fort Yuma
Quechan Indian Tribe
Introduction
My name is Keeny Escalanti, Sr., and I serve as the President of
the Quechan Tribe of the Fort Yuma Indian Reservation (``Tribe''). I
would like to thank the Committee for the opportunity to share our
perspective on how Indian gaming has furthered the Tribe's right to
sovereignty, self-governance and self-determination and at the same
time provided an avenue for building stronger partnerships with local
governments and members of our local communities.
The Fort Yuma Reservation encompasses approximately 45,000 acres
(approximately 68.7 square miles) with a land base that is located in
both California and Arizona, and which shares a border with Mexico. Our
Tribal enrollment is approximately 3,900 members.
According to our creation story, our people pronounced
``KWAT'SAN'', have lived in the Southwest's Colorado River Valley since
time immemorial. We are well known for our distinct language, the
Yuman, which is a native dialect of the HOKAN Language from modern day
California and Arizona. Our Tribe's governing body--the Tribal
Council--consists of a President, Vice-President, and five Council
Members at large. The President and Vice-President serve four-year
terms and the Council Members serve two-year terms.
Our Tribe is largely an agricultural community, driving economic
development, in part, through the lease of thousands of acres of Tribal
land for agricultural purposes. In addition to agriculture, our Tribe
relies on tourism and, of course, gaming to augment our economy.
Our rural location presents unique issues that historically we have
struggled to address. We have limited economic opportunities as well as
limited access to social services programs that are readily available
and accessible to tribes in metropolitan areas. However, with gaming,
we have witnessed an increase in the opportunities that we can offer
not only to our Tribal members, but also to the non-native residents of
our local communities. We have witnessed how the revenue generated from
our gaming operations has allowed our Tribe to invest in our local
community, thereby fortifying the partnerships the Tribe maintains with
our local governments and improving the livelihood of non-member
residents. We are not alone, as states are also beginning to recognize
how tribes are becoming the strongest allies and benefactors to both
local governments and local residents. The Tribe's new Compact with the
State of California exemplifies this shift in thought.
Tribal-State Compacts: Recognizing the Importance of Reinvesting in
Local Communities
In an effort to strengthen the Tribe's social and economic
conditions on our reservation, the Tribe entered into gaming compacts
with both California and Arizona pursuant to the Indian Gaming
Regulatory Act (IGRA). Today, the Tribe operates one casino in each of
these states.
In California, the Tribe controls and operates the Q Casino Resort
located near the township of Winterhaven in Imperial County,
California. The Q is a state-of-the-art casino resort featuring 1,000
slot machines, 15 table games, live poker, a high limits room, and 166
resort guest rooms.
The Tribe entered into its first compact with California in 1999,
authorizing the operation of our first California casino. This compact
authorized a relatively modest gaming operation consisting of up to 350
gaming devices. Due to the success in this endeavor, the Tribe moved
forward with a resort expansion plan, relocating from the original
building to a new facility constructed along Interstate 8 (I-8) highway
approximately 1 mile from the Andrade Port of Entry, also located on
the reservation.
To that end, in 2006, the Tribe negotiated an amendment to the
existing 1999 compact which was signed by then California Governor Gray
Davis (the ``2006 Amendment''). The 2006 Amendment was signed by
Governor Arnold Schwarzenegger. This Amendment authorized the expansion
of our California casino, permitting up to 1,100 devices. However, even
though the 2006 Amendment authorized the operation of additional
devices in our California casino and propelled its relocation, the 2006
Amendment included some unfavorable revenue-sharing provisions which
caused the Tribe financial distress. The unfavorable revenue-sharing
provisions, coupled with the significant debt we incurred to finance
the construction of the new casino facility, deprived our Tribe of the
ability to provide essential services to our members and, furthermore,
restricted any significant investment in the communities surrounding
our reservation.
To alleviate the financial hardship that we experienced under the
2006 Amendment, our Tribe recently negotiated a new Tribal-State
Compact with Governor Edmund G. Brown (``2017 Compact''). Governor
Brown's administration worked tirelessly to finalize our new compact,
allowing the parties to reach an agreement in August 2017, in time for
the California Legislature to ratify the compact before the end of this
year's legislative session. The Tribe commends and is grateful for the
hard work exhibited by Governor Brown and his administration. We are
pleased with the terms of our new compact, as it allows for an
expansion of gaming devices while offering up more favorable revenue-
sharing provisions for the Tribe that will allow it to improve its
financial status and augment services that we can provide its
membership.
The 2017 Compact is unique in that the State recognizes the
benefits of reinvesting gaming revenues in the local community and
recognizes the Tribe as a significant contributor to the local economy.
For example, under the new provisions, the Tribe is exempt from certain
burdensome and counterproductive state based revenue-sharing
contributions, allowing the Tribe to reinvest their resources to
provide programs to tribal members and local non-native residents, as
was expressly recognized during the ratification process the Governor's
office as well as members of the California State Legislature.
In addition to removal of certain revenue sharing requirements, the
2017 Compact provides credits counted against required payments to the
State if the Tribe invests in certain local programs. For example, the
Tribe received credits for non-gaming related capital investments and
economic development on or off tribal trust lands, including lands
which border the State and also for payments to support operating
expenses and capital improvements for non-tribal governmental agencies
or facilities operating within Imperial County. Thus, rather than
having gaming revenue go to the State, the Tribe, which is in a much
better position to understand the unique needs of Imperial County and
the surrounding areas, can make a determination as to how to invest
gaming revenue into specific County programs and economic development
projects around its reservation.
What is particularly striking about the 2017 Compact is that the
State seems to recognize, particularly with rural tribes, that
boundaries separating local, state and tribal jurisdictions become less
relevant as residents travel long distances, often traversing state
boundaries, in search of economic and social opportunities--those being
scarcer in agricultural communities. The new compact recognizes that
the Tribe's economic investments in say, Yuma, Arizona, could have a
beneficial impact on those residents of Imperial County. For example,
the City of Yuma offers, among other activities, the Yuma Art Center
and Historic Yuma Theater, as well as shops, restaurants, wineries and
breweries located in Historic Downtown Yuma; all are potentially
investment opportunities that the Tribe wishes to pursue, and is now
incentivized to pursue, under the more favorable provisions of the 2017
Compact. The Tribe's economic investments in Yuma will benefit the
residents of Imperial County because they, having limited options,
regularly avail themselves of the opportunities and benefits Yuma has
to offer.
In Arizona, the Tribe owns and operates the Paradise Casino,
located in Yuma County, Arizona. The Tribe negotiated its Tribal-State
Compact with Arizona in 2002 (``2002 Compact''). The 2002 Compact
authorized the operation of 566 gaming devices. Paradise Casino
currently offers Class III gaming with 480 slot machines, restaurant,
bars and an event center which is also used as an emergency shelter in
those instances.
The Tribe is currently in the process of negotiating a new compact
with State of Arizona, and is hopeful that Arizona will also continue
to recognize and appreciate the beneficial impact gaming revenues have
on local rural communities.
Strengthening Bonds: Building Stronger Partnerships With Local
Governments and Improving Our Local Communities
Gaming is a critically important component of the Tribe's economy.
Indeed, gaming has directly or indirectly improved the Tribe's well-
being by nearly every measurable standard, thereby furthering the
longstanding federal interest in promoting tribal self-determination
and economic self-sufficiency. More broadly, gaming has also improved
the well-being of the surrounding area--on- and off-reservation--
through job creation and local investment, as well as through providing
the Tribe with resources to collaborate with local, state and federal
agencies to improve the safety and security of the entire community.
Our gaming enterprises have provided significant employment
opportunities for both Tribal members and local community members,
making our Tribe a significant contributor to the local economy. The
Quechan Casino employs over 500 individuals from Imperial County,
California, which has a relatively high 24 percent unemployment rate.
It attracts employees from as far as Las Vegas, Nevada and San Diego,
California. Meanwhile, the Paradise Casino in Yuma, Arizona employs
over 150 people from Yuma County, which has an unemployment rate of 16
percent. As the Senator sponsoring the Tribe's California Compact
stated, ``any job is gold,'' and the Quechan Tribe is creating work
where there was none before.
Gaming has been instrumental in allowing the Tribe to implement
community and social services programs for Tribal and community
members. Educational programs, for instance, have benefited
significantly from gaming revenues, as the Tribe is able to use those
revenues to fund scholarships and grants for post-secondary education
and vocational programs. The Tribe has also supplemented tribal funding
to a program called the Alcohol Drug Abuse Prevention Program (ADAPP),
which provides services such as individual treatment plans, clinical
assessments, individual sessions, youth group outreach, assistance with
special court appearances and transportation.
The Tribe has also implemented programs designed to assist with
elder care. The Tribe operates a Senior Center that offers meals and
recreational activities to elderly members of the Tribe, other Native
Americans in the community, and non-tribal members. The recreational
activities that are offered include: Quechan language lessons, sewing,
food demonstrations, movies, dancing, exercise classes, local field
trips and monthly birthday celebrations. The Tribe also has an Elder
Family Services Program, which offers a network of resources for frail
elderly and handicapped clients. The program provides support services
for the elderly and their families through resource referrals,
advocacy, client transportation, case management and family counseling.
The program works collaboratively with federal, state, county and city
offices and includes a network of the following: Senior Nutrition;
Social Services; Indian Health Services; One Stop for Imperial County;
Cash Aid Assistance & Food Stamp Program; Social Security; Arizona
Native Health Program; and Imperial County Social Services.
Our Tribe is especially proud that we have taken initiative to
build the Fort Yuma Health Care Center--which will be operated jointly
with the Cocopah Indian Tribe and is scheduled to open in March 2017.
The facility will be approximately 76,000 square feet with 22 primary
care exam rooms. It will offer clinical, dental and optical health
services to both tribal and non-tribal members. It also has the
capacity to employ over 176 individuals, although increased federal
funding will be necessary to fully staff the facility.
Aside from these economic benefits, the Tribe has also been able to
utilize gaming as a springboard to establish strong intergovernmental
relationships to ensure the safety and well-being of the broader
community. At the local level, in California, the Tribe has a strong
relationship with Imperial County's law enforcement and fire prevention
agencies, and the strength of that relationship is attributable to the
parties' commitment to improving the safety and protection of the local
community through frequent communication and financial assistance
provided by the Tribe. Pursuant to certain Memoranda of Understanding
(``MOUs''), the Tribe pays approximately $400,000 annually to the
Imperial County Fire Department and $214,100 annually to the Imperial
County Sheriff Department. Gaming is a critically important
contributing factor to the success of this intergovernmental
relationship, as the Tribe's ability to meet its financial obligations
under these MOUs is dependent upon the success of its gaming
enterprises. Again, the California Compact recognizes this symbiotic
relationship by allowing the Tribe to credit its financial assistance
against monies otherwise due to the State.
At the federal level, the Tribe uses its unique location as an
opportunity to strengthen relations and opportunities with federal
government agencies. Our Tribe is one of only two tribes that has a
port of entry--the Andrade Port of Entry--on our reservation. Our
Tribal Fish and Game and Tribal Police Department works collaboratively
with the United States Border Patrol on issues of border protection and
homeland security. Public safety is the Tribe's highest priority
whereas our Tribal Federal Officers work closely with Border Patrol and
the revenue derived from our casinos may allow us to do more to further
this compelling security interest in the future.
Conclusion
In sum, tribal gaming revenue, when left in the tribal and
surrounding communities, creates far more opportunities to those
communities than it would through State-managed revenue programs. Rural
tribes are uniquely poised to understand the needs of their communities
and are thus in the best position to determine how to appropriately
invest gaming revenues to address those specific needs. In looking
ahead over the next 30 years, our Tribe is hopeful that more States
recognize the advantages from, and opportunities created through, the
use of gaming revenue by rural tribes--not only for tribal members, but
also for those local rural communities.
We thank the Committee for its consideration of these issues
important to the Quechan Tribe and to all of Indian Country. I would be
happy to answer any of the Committee's questions.
Senator Udall. [Presiding.] Thank you very much, President
Escalanti.
I see we have been joined in the audience by President
Begay. He represents the Navajo Nation, the biggest Indian
tribe area wise in the Country in three States, but we claim
him in New Mexico.
Chairman Frank, please proceed.
STATEMENT OF HON. HAROLD ``GUS'' FRANK, CHAIRMAN, FOREST COUNTY
POTAWATOMI COMMUNITY
Mr. Frank. Thank you. Good afternoon, Chairman Hoeven, Vice
Chairman Udall and other distinguished members of the
Committee.
Thank you for inviting me to speak today on behalf the
Forest County Potawatomi Community. I am Harold ``Gus'' Frank,
Chairman of the tribe.
We have a diverse set of businesses that allow us to create
opportunities for our people and local communities, including
two casinos. The Potawatomi Business Development Corporation,
our economic development and investment company.
We closely follow new trends and potential threats in the
business world. One of the greatest risks facing businesses,
including tribal gaming, is the growth of cyber crime. All
organizations and companies are at constant risk of cyber
theft. Tribal operations are no different.
Improving cyber security controls is crucial to the
continued success of Indian gaming. The integrity and future of
the gaming industry depends on protecting our systems. We need
to be proactive, not reactive, when it comes to defending
against cyber crime.
One of our tribe's most important investments over the last
several years has been the improvement of cyber security
protection at our tribal casinos. Although our casinos have
been compliant with applicable State and Federal regulations,
we feel the need to go beyond what is required by the minimum
standards to protect ourselves from cyber threats.
Therefore, we hired a third party security company to audit
our cyber security protection. Following the audit, we invested
millions of dollars to upgrade our systems. Some of the things
we did include: hiring a security consultant to help us improve
our systems and processes; upgrading all credit card machines,
ATMs and software to the latest pay card industry standards;
purchasing security software that constantly looks for and
addresses attacks; creating a new security director position to
monitor and safeguard our data; improving employee knowledge of
the risk of cyber attacks and teaching them how to spot and
respond to attacks; and planning regular security audits to
make sure our defenses are working while finding new ways to
improve.
We also have gained experience with the Potawatomi Business
Development Corporation. One of the company's we own through
the Development Corporation is Data Holdings, a leading data
center located in Milwaukee.
We store data for a wide range of companies which requires
the businesses to be compliant with various internal control
standards such as HIPPA and PCI standards.
In addition to the data center, PBDC also owns Redhawk
Network Security, a cyber security firm that monitors crime
networks and provides security support. Running the data center
and Redhawk has given us a valuable perspective on the level of
protection required to protect the tribe's businesses from
cyber threats.
At the end of the day, in order to preserve the integrity
of tribal gaming, our guest and our employee information must
be protected from cyber attack. Therefore, proactive measures
need to be taken by all tribal casinos. To assist tribes, the
National Indian Gaming Commission should provide guidance on
internal control standards for Class III gaming that reflects
the threats of today. NIGC has been working on this issue and
has asked tribes for input on the matter.
Our gaming commission has responded by providing specific
recommendations for NIGC to consider. With the growth of cyber
crime, we respectfully request that NIGC take special care to
examine controls over cyber security.
Concerning our expertise in managing the protection of data
for ourselves and others, we would like to offer any assistance
we can as the NIGC updates their guidelines. Indian Country and
regulators need to be proactive to protect against cyber crime.
Doing so will help tribal governments ensure their long term
success. Information security is crucial to the future of
tribal gaming. The time to act is now.
Thank you, Mr. Chairman and Mr. Vice Chairman, on behalf of
the Forest County Potawatomi.
[The prepared statement of Mr. Frank follows:]
Prepared Statement of Hon. Harold ``Gus'' Frank, Chairman, Forest
County Potawatomi Community
Good afternoon Chairman Hoeven, Vice Chairman Udall, and other
distinguished Members of the Committee. I am Harold Frank, Chairman of
the Forest County Potawatomi Community (FCPC). Thank you for the
invitation to appear before you on behalf of our Tribe. We appreciate
the Committee's initiative in examining and preparing for the future of
Indian Gaming.
The FCPC are one of eight Potawatomi bands in the United States.
Our ancestral and treaty territory homelands extend from about what is
now northern Indiana to the northern shores of Lake Michigan, through
present day Chicago and Milwaukee.
Through revenues from a wide array of business interests, we have
been fortunate enough to invest in the health, wellness, education,
environment and future of our people. Among the diverse set of
businesses we own are two casinos in Wisconsin and Potawatomi Business
Development Corporation (PBDC).
One of the FCPC's most significant and important investments in
recent years has been the modernization and enhancement of internal
controls regarding cybersecurity at our casinos. It seems that every
week we hear increasingly disturbing news of cyberattacks and data
breaches across all industries. All organizations are vulnerable to the
theft of confidential data, including casinos.
Improving controls related to cybersecurity is crucial to the
future success of Indian gaming. The cost of addressing a single data
breach has grown to around $4 million per incident. \1\ In addition to
the financial cost of being hacked, an immeasurable impact lies in the
shaking of consumer confidence. The integrity and future of the gaming
industry depends on mitigating the risks posed by cyber threats.
---------------------------------------------------------------------------
\1\ (June 15, 2016). IBM & Ponemon Institute Study: Data Breach
Costs Rising, Now $4 million per Incident. Press Release, IBM Security.
Retrieved from http://www.prnewswire.com/news-releases/ibm--ponemon-
institute-study-data-breach-costs-rising-now-4-million-per-incident-
300284792.html
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Cybersecurity Investments
Our casinos have always been compliant with the National Indian
Gaming Commission's (NIGC) regulations governing internal controls,
which include minimum standards for the security of sensitive data. \2\
In fact, our tribal-state compact with Wisconsin requires that our
minimum internal control standards (MICS) are at least as stringent as
the Commission's regulations.
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\2\ 25 C.F.R. Part 543. The Commission updated these regulations in
2012 and 2013.
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However, we recognize the wisdom of going beyond what is required
by law in order to protect ourselves and our patrons from cyber theft.
In these efforts, the FCPC took a large, proactive step to improve the
level of cybersecurity protection at our casino enterprises by hiring a
vendor to conduct a 3rd party security assessment to identify
vulnerabilities and consult on any potential risks. Following that
audit, our tribe invested millions of dollars to develop and implement
sophisticated protections against cybercriminals. The overall takeaway
was to move the network and infrastructure into high security zones
through modernization. We added layers of security protection to
address various threats and vulnerabilities. Some specific actions
taken as a result of the assessment include:
Hiring a 3rd party security consultant, to assist in
addressing areas of opportunity highlighted by the audit. The
FCPC hired a 3rd party security consultant to ensure that audit
takeaways were thoroughly evaluated and sufficient action taken
to protect from cyberattacks. The consultant has been closely
involved with developing standards for IT security personnel,
testing the efficacy of implemented controls and ensuring that
adequate measures are taken to protect against a breach. The
assistance of a 3rd party consultant has been crucial to
ensuring strong controls are implemented and updated.
Upgrading credit card machines, ATMs and associated
software to adhere to and comply with Payment Card Industry
(PCI) standards. When considering industry frameworks governing
the protection of sensitive data, we found that the greatest
level of protection can be achieved by adhering to PCI
standards. As a result, we've invested in hardware that is
compliant with PCI standards and offers the highest level of
protection to our patrons. All credit card machines now have
chip readers with encryption, per PCI requirements, whether
they are customer facing or used by employees.
Purchasing and implementing security monitoring software to
identify, isolate and address any attempts to compromise
company systems. Constant surveillance of company systems is
crucial to recognizing and foiling an attack. There are
numerous software-as-a-service vendors who offer products to
assist in this effort. Through these products, real-time
information is provided on attempts to breach company systems,
allowing security personnel to take immediate action. We ensure
that any vendor with which we partner is compliant with PCI
standards.
Creating a new Security Director position, dedicated to
safeguarding information technology and sensitive data. The
Security Director is a position dedicated to maintaining data
security and will play an important role in developing the
orientation curriculum and administering training to new and
current employees. The Director will also regularly perform
penetration testing, hold multiple security certifications and
monitor sensitive company data.
Improving new hire and current employee knowledge of the
risks of cyberattacks and strategies to defend against them. As
mentioned previously, the Security Director will play a large
role in improving the security IQ of new and current employees.
The majority of cyberattacks come through social engineering,
as criminals seek to identify and manipulate key people into
performing compromising actions or divulging confidential
information. Ensuring that employees are aware of the
strategies cybercriminals may use is an essential part of our
information security plan.
Planning follow-up IT security audits with a 3rd party to
ensure effectiveness of newly implemented security protocols.
An IT security audit involves analysis of procedure
documentation, technical controls, personnel interview,
physical security reviews among any other elements that affect
the effectiveness of an information security program.
Scheduling follow-up audits ensures that recently implemented
protocols are working properly and are effective. Cybersecurity
is an ongoing concern--there is no point at which an
organization is done updating systems, as more sophisticated
attacks are constantly being developed and executed.
Experience at Potawatomi Business Development Corporation (PBDC)
In addition to our experience operating our casinos, the Potawatomi
Business Development Corporation (PBDC) was established in 2002 as the
economic development and income diversification business of the FCPC.
Under the PBDC's umbrella of companies is Data Holdings, a leading
data center located in Milwaukee, Wisconsin. FCPC opened the $33
million data center in May of 2013 after recognizing the growing
importance and business opportunity of safely and securely storing
confidential data. We wanted to be industry leaders in the data
protection space, so developed the data center as the first wholesale,
Tier III Enhanced facility in Milwaukee. The data center is compliant
with Health Insurance Portability and Accountability Act (HIPAA) and
Payment Card Industry (PCI) standards, which establish minimum controls
for the protection of patient health data and the transmittal of credit
card information, respectively. This experience has given us a unique
and valuable perspective on the importance of internal control
standards and the level of protection we should strive for in our other
businesses, including our casinos.
In addition to owning and operating the data center in Milwaukee,
the PBDC also runs Redhawk Network Security, a cybersecurity firm
providing network monitoring and device support services. Redhawk
partners with clients to provide them with full-time security oversight
and expertise. As part of these ongoing efforts, Redhawk has been
developing a modular portal to perform penetration audits on client
systems and auto-generate a vulnerability report to identify and
address any IT security shortfalls. Our exposure to the unique demands
and ever-changing world of cyber security from a vendor's standpoint
has expanded and shaped our perspective of what is required to ensure
the protection of confidential information.
Recommendation
Among the greatest risks facing the future of Indian gaming is
cybercrime. Proactive measures should be taken by all tribal casinos to
safeguard valuable company and customer information. Indian gaming has
rapidly evolving digital gaming and business systems. As these systems
continue to grow, they are becoming ever more interconnected. In
addition, Internet-connected fixtures are becoming more common,
creating additional opportunities for hackers to gain access to
networks and exploit vulnerabilities.
Class II tribal gaming establishments are subject to updated NIGC
regulations. However, providing guidance on recommended minimum
internal control standards for class III gaming which reflect the
threats of today is an important step the NIGC can take to protect
against cybercrime and safeguard the future of Indian gaming.
In recent years the NIGC has consulted with tribes about drafting
voluntary guidance establishing minimum internal control standards for
class III gaming, which were last updated in 2006. \3\ The Forest
County Potawatomi Gaming Commission has responded to the NIGC's
solicitation of input, encouraging the development of current and up-
to-date NIGC recommended MICS. \4\ As we stated in our past
correspondence, the FCPC Tribal MICS are evaluated in comparison with
class III MICS adopted by the NIGC as required by our compact with the
state of Wisconsin. Therefore, it is in the FCPC's best interest to
have current and up-to-date MICS. We continue to support the revision
and updating of class III minimum internal control standards, though we
recognize that the standards will be considered recommended guidelines
rather than required MICS.
---------------------------------------------------------------------------
\3\ NIGC Consultation Topics, Draft Guidance on the Class III
Minimum Internal Control Standards, National Indian Gaming Commission,
Updated December 12, 2016. Retrieved from https://www.nigc.gov/images/
uploads/2016-0912-12%20Consultation%20Briefing%20clean.pdf
\4\ George, K. (Chairperson, Forest County Potawatomi Gaming
Commission). Letter to: Stevens, T. (Chairwoman, National Indian Gaming
Commission). February 7, 2011. Retrieved from https://www.nigc.gov/
images/uploads/Tribal%20Consultation/Regulatory%20Review%202010-2011/
ForestCountyPotawatominoicomments.pdf
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However, in the preparation of these guidelines, we respectfully
request that a particular focus is given to properly updating the
NIGC's recommended MICS regarding cybersecurity protections.
Encouraging tribes to be proactive rather than reactive with
cybersecurity will help protect the industry from the growing threat of
cybercrime. Developing and encouraging a strong security infrastructure
will help tribal organizations maintain independency and ensure long-
term success.
Information security is an important safeguard that will protect
tribal gaming from expanding threats in cybersecurity. Considering our
status as the operator of major class III gaming facilities and our
expertise in protecting and managing sensitive data for others, the
Forest County Potawatomi Community would like to offer any assistance
we can provide in the development of NIGC guidance regarding minimum
internal control standards on cybersecurity for class III gaming.
Thank you again for the opportunity to testify before the Committee
today.
Senator Udall. Thank you very much, Chairman Frank.
Next, we will go to Chairman Forsman. Senator Cantwell
speaks very highly of you. Please proceed.
STATEMENT OF HON. LEONARD FORSMAN, CHAIRMAN, SUQUAMISH TRIBE
Mr. Forsman. Thank you.
Good afternoon, Chairman Hoeven, Vice Chairman Udall and
honorable members of the Committee.
My name is Leonard Forsman and I have the honor of serving
as the chairman of the Suquamish Tribe. I appreciate this
opportunity to share Suquamish's story and perspective on
Indian gaming.
The Suquamish Tribe resides on the 7,000 acre Port Madison
Indian Reservation located on the shores of Puget Sound
directly across from Seattle, Washington. We have 1,200 tribal
citizens, about half of whom reside on the reservation.
The Tribe is the successor of the Suquamish and the
Duwamish people that signed the Treaty of Point Elliot in 1855,
which created our reservation. That treaty was signed by Chief
Seattle who is buried at the Suquamish.
Prior to gaming, unemployment on the reservation was high,
graduation rates were low and there were few economic
opportunities for the tribe. We had no tax base to fund
government programs and constantly had to find ways to make
ends meet because of the Federal Government's chronic under
funding of Indian programs.
I was on the tribal council when the tribe made the
decision to engage in gaming pursuant to IGRA. We identified a
parcel of land that would become the future home of the
Clearwater Casino Resort. The cost of that land was $74,000.
Fortunately for us, we had $76,000 in our bank account. This
decision was a bet the farm moment that has literally changed
my peoples' future.
The Clearwater Casino Resort and the revenue it produces
for the tribe has allowed us to reinvest in our people and
land. Before gaming, the tribe had very few citizens who held
higher degrees but today, I am proud to say that we currently
have 50 students in our higher education program.
The tribe has been able to create robust programming for
our elders, including housing, meals and health care. We
provide health insurance for all of our tribal citizens and
offer mental health and substance abuse programs.
We operate the Chief Kitsap Academy, a culturally-centered
middle and high school on the reservation. Gaming revenues have
allowed us to tackle the challenges that face our people,
including a new pilot program that is building tiny houses to
fight homelessness.
The tribe has been able to use our gaming revenues to
reacquire homelands and restore critical habitat. Like many
reservations, our reservation was allotted. In 1904, the tribe
held just 36 acres but with our gaming revenues, we have been
able to reacquire and place almost 1,300 acres back into trust.
Overall, 50 percent of the reservation is now held in trust
either by the tribe or tribal citizens.
The tribe also operates a salmon hatchery and invests in
rehabilitation of critical habitat which benefits the entire
Puget Sound ecosystem.
The Suquamish Tribe has invested our gaming revenues to
diversify our economy. Today, we operate a seafood company, an
8(a) construction firm, a golf course and several retail
stores. The tribe is now the second largest private employer in
Kitsap County. We employ 1,400 people between our government
and government-owned enterprises. Over 70 percent of these
employees are non-tribal and live off the reservation. All of
these employees are paid generous wages and benefits.
This story is similar for tribes across the State of
Washington where combined we contribute $3.5 billion to the
State's gross product and employ more than 27,000
Washingtonians. Indian gaming has also allowed the Suquamish
Tribe to take our place in the family of governments. The
revenues we created through gaming, the jobs we produce in the
community and the investments we have made in our neighbors
have helped to usher in a new era in intergovernmental
cooperation. We are at the table when important regional
decisions are being made and our neighbors welcome our
partnership.
Suquamish gaming, like all Indian gaming, is inherently
local. We will not pick up and relocate our businesses. We will
not abandon our region. We will always be here working to make
the regional economy better for our people and our neighbors.
IGRA imposed a structure on Indian gaming and tribes that
works. Indian gaming is the most heavily regulated gaming in
the United States with three different governments overseeing
it. The Suquamish Gaming Commission is the frontline regulator
followed by the NIGC and Washington State Gambling Commission.
In our experience, the three regulators have developed a
robust expertise to work together and ensure the integrity of
the Indian gaming industry. Any assertion that Indian gaming is
lawless or lacks regulation is inaccurate, dangerous and
undermines what tribes like mine have worked so hard to build.
While the Indian Gaming Regulatory Act is not perfect, it
is working for Indian Country. Gaming remains the cornerstone
of Suquamish's economic revival. We are building a sustainable
and diversified economy where our people, and the surrounding
community have the opportunity to thrive.
Thank you.
[The prepared statement of Mr. Forsman follows:]
Prepared Statement of Hon. Leonard Forsman, Chairman, Suquamish Tribe
Good afternoon Chairman Hoeven, Vice Chairman Udall, and Members of
the Committee. Thank you for the opportunity to testify at this
important hearing.
My name is Leonard Forsman and I serve as the chairman of the
Suquamish Tribe located in Washington state. The Suquamish Tribe is a
signatory to the Treaty of Point Elliot of 1855 and a federally
recognized Indian tribe. The Tribe has roughly 950 enrolled citizens,
half of whom reside on the Tribe's present day homeland on the Point
Madison Indian Reservation, which is located just west of Seattle, WA,
across Puget Sound.
I am here today to testify about how tribal governmental gaming is
working. For the Suquamish Tribe, gaming has helped to revitalize our
government, and enable us to invest in the Suquamish people and our
future.
Our tribe still faces many challenges, but governmental gaming has
brought greater tribal employment, education, economic development, and
reacquisition of our reservation lands. As one of the largest employers
in our region, government gaming has also given the Suquamish Tribe a
seat at the table with our neighboring jurisdictions and governments to
discuss shared interests and issues impacting our communities.
Tribal Background
The name Suquamish means ``people of the clear saltwater.'' We are
the successor to the Suquamish and Duwamish people.
Chief Seattle signed the Treaty of Point Elliot in 1855, on behalf
of the Suquamish and Duwamish--34 years before Washington became the
42nd state. Our people have engaged in commerce on the shores of the
Puget Sound since time immemorial.
As is true with many tribes, before we opened our gaming
operations, the Suquamish Tribe and our people had few resources and
depended almost entirely on the United States to fund our governmental
operations and the services we provided to our tribal citizens.
Despite our treaty, federal policies led to the early diminishment
of Suquamish landholdings. Beginning in 1886, nearly three-quarters of
the reservation was allotted to individual Indians--by 1904, only 36
acres remained in Suquamish tribal ownership, and by 1973, only 37
percent percent of the reservation remained in trust status.
Suquamish Gaming: Robustly Regulated, Government Gaming
Suquamish governmental gaming is subject to a complex regulatory
scheme. Unlike statesanctioned gaming, which is subject to regulation
by one government, under the Indian Gaming Regulatory Act (IGRA),
Indian gaming is regulated by at least two governments, often three.
This is substantially more regulation than any other gaming industry.
Suquamish governmental gaming is regulated by: (1) the Suquamish Gaming
Commission; (2) the National Indian Gaming Commission; and pursuant to
a Class III gaming compact with the state, (3) the Washington State
Gambling Commission.
In addition, other regulatory bodies regularly engage with
Suquamish gaming (FinCEN, IRS, etc.). Consistent with the policy goals
of IGRA, this robust regulatory regime ensures that Suquamish gaming is
shielded from organized crime and other corrupting influences, that the
Suquamish Tribe is the primary beneficiary of Suquamish governmental
gaming, and assures that Suquamish governmental gaming is conducted
fairly and honestly for both the Suquamish Tribe and consumers. Each of
the three regulating governments now have decades of experience
regulating Indian gaming and have largely worked harmoniously to ensure
that Suquamish governmental gaming is adequately protected, fair, and
honest.
Suquamish Government Gaming: Investment in the Future
The Suquamish Tribe has implemented a three-prong strategy for
utilizing our government gaming revenues: (1) economic security for the
Suquamish Tribe and our tribal citizens through diversification,
investments, and employment opportunities; (2) maintaining a strong
tribal government through the provision of programs and services to
tribal citizens, cultural enhancement, environmental restoration, and
reservation infrastructure; and (3) investment in the reacquisition and
restoration of tribal homelands.
Investments in Suquamish Economic Security
Suquamish government gaming is an investment in the Suquamish
Tribe, our citizens, and the surrounding community. We have invested
millions of gaming revenues into the diversification of Suquamish
economic endeavors. Through the Tribe's business arm, Port Madison
Enterprises, our economy has expanded beyond the hospitality industry
to include: owning and operating a golf course, a spa, and a stand-
alone historic banquet facility. This diversification also includes
several retail outlets on the reservation, an 8(a) construction
company, and a seafood company that is exporting our prized tribal
geoduck to markets around the world.
Economic and employment opportunities on the reservation were
almost nonexistent before Suquamish government gaming but now the
opportunity to earn a livable wage is available to our tribal citizens
as well as our neighbors. In addition, these investments also provide a
pathway for career advancement, which has a cascading effect throughout
the broader community.
Investment in Strong Government
As this Committee is well aware, the Federal Government chronically
underfunds programs that many tribal nations rely on to provide basic
services to their citizens. The Suquamish Tribe uses our government
gaming revenues to supplement insufficient federal funds to ensure that
Suquamish tribal citizens have access to basic services. This includes
funding community health representatives, mental health and wellness
services, and drug and alcohol abuse services. We also invest in our
elders by providing housing, meals, and health services. And last
month, we launched a trial project to provide temporary ``tiny homes''
for tribal members who otherwise would not have it and connecting them
with services provided by the Tribe. This is a more holistic approach
that fits with our cultural values and provides flexibility in
responding to emergency situations.
Suquamish government gaming revenue has contributed to our
longstanding commitment to protecting our treaty resources. This
includes operation of our hatcheries, habitat restoration and
protection, fin and shellfish monitoring, and other environmental
stewardship activities. These investments benefit the Suquamish Tribe
and the entire Puget Sound ecosystem.
Suquamish government gaming dollars also helps the Tribe meet our
commitment to Suquamish youth. In 2006 the Tribe used our gaming
revenues to partially fund the Marion Forsman- Bouchie Early Learning
center, which provides early childhood education and child care in a
culturally responsive environment for Suquamish and non-tribal
community children. We also operate Chief Kitsap Academy, a culturally-
centered middle and high school on the reservation. And we are proud
that this year more than 50 Suquamish students have enrolled in our
higher education assistance programs, which provide aid for students
seeking university and technical college degrees and certifications.
Suquamish government gaming revenue helps to continue our
connection to Suquamish history, language, and culture. We have been
able to fund the construction of a new Suquamish Museum and the House
of Awakened Culture, which is a community meeting facility on the
shores of Puget Sound. Last year, we opened a community recreation
center to foster our community and encourage healthy lifestyles.
Suquamish government gaming revenues helped facilitate the return of
the Old Man House property to the Tribe (the center of the Suquamish
winter village on Agate Pass and Chief Seattle's home that was burned
by the United States). In addition, government gaming revenues have
helped fund other cultural activities like the annual canoe journey,
repatriation of Suquamish remains, and other cultural education and
preservation activities
Investment in Suquamish Homeland Restoration
Suquamish government gaming has given the Tribe the opportunity to
begin to restore our checkerboarded homelands. Since 1999, the Tribe
has worked to consolidate our jurisdiction through acquisition of
reservation fee parcels and securing trust status for those parcels (as
well as acquiring fractional trust interests from willing sellers). The
Tribe now owns undivided interest in 1,331 acres in tribal trust or 17
percent of the reservation. Total trust ownership is 3,893 acres or
just over 50 percent of the reservation.
Suquamish Governmental Gaming Has Improved the Surrounding Community
In addition to bolstering the economic outlook for the Suquamish
Tribe and our people, Suquamish governmental gaming has proven to be a
valuable contributor to the local economy. After Naval Base Kitsap, the
Suquamish Tribe is the second largest employer in Kitsap County. The
Tribe and our enterprises employ almost 1,400 people. Over 70 percent
of those employees are non-tribal and live off the reservation. The
Suquamish Tribe provides our employees with generous wages and
benefits.
In addition, the Suquamish Tribe and our economic development
agency annually give hundreds of thousands of dollars to non-profit
organizations in the region. Over time this equates to millions of
dollars into local causes and charities.
Fostering Inter-Governmental Relationships
Prior to Suquamish government gaming, we often were ignored or
excluded from decisionmaking in the region. I am proud that today we
have taken our place at the table among the family of governments. The
Suquamish Tribe now regularly engages in regional and state-wide
partnerships to improve the lives of people living in our communities.
Tribal-State Relationships have Improved and Strengthened
When Indian gaming began in Washington state, the tribes and the
State were just emerging from years of litigation--and sometimes
violence--over tribal treaty fishing rights. IGRA prompted the
Suquamish Tribe and the State to engage on gaming issues on a
government-to-government basis.
In 1989, Washington and the tribes further improved their
relationship with the inking of the Centennial Accord. Now codified
into Washington law, the Accord sought to improve State- Tribal
relationships by providing a framework for government-to-government
interaction, including how state agencies, like the Washington State
Gambling Commission, engage with the tribes.
The improved relationship is also evident in the evolution of the
tribal gaming compacts with the State. Despite the fact that IGRA
intended for the tribes to be the ``primary regulators'' of gaming on
their lands, early compacts took a ``one size fits all'' approach which
often led to tension between the tribes and state regulators due to
overlapping regulations. By the late 1990s, the State took a new
approach to regulation that respected the distinct strengths and goals
of each sovereign, and many of the gaming compacts were amended to
reflect a changing approach to regulation.
This transition to mutual respect in regulation has laid the
foundation for strengthened government-to-government collaboration--in
gaming as well as other areas of mutual interest. For example, the
gaming compacts have laid the ground work in Washington for other
government-to-government agreements on areas where there had been
conflict, such as cigarettes, liquor, and fuel.
One thing we can all likely agree on is that Indian government
gaming has provided a strong and consistent source of revenue for
tribes to fund their governments and immense community needs.
Over time, the State has come to understand that what is good for
Indian gaming is good for the State of Washington. According to a 2010
Taylor Policy Group study, Washington Tribes (1) contribute more than
$3.5 billion to Washington's gross state product, (2) employ more than
27,000 Washingtonians in tribal casinos and tribal enterprises,
including 18,000 non-tribal employees, and (3) generate $255 million in
tax revenue for the State and local governments with taxes paid by
suppliers and employees.
Indian Government Gaming is an American Success Story
Indian government gaming is working for the Suquamish Tribe and is
benefiting our neighbors in Washington state. The Tribe is making
significant contributions to Washington's economy and our businesses
are eminently local. The Suquamish Tribe will not pick up and leave for
other states--we have always been here. There is no immediate need to
change IGRA or how it operates. While gaming remains a cornerstone of
Suquamish's economic revival, we continue to diversify our economic
footprint in the Puget Sound region. The next thirty years are as
unpredictable as the last thirty years since IGRA became law. But at
Suquamish, we are building a sustainable, successful economy where our
people, and the surrounding community have the opportunity to thrive.
Senator Udall. Thank you very much, Chairman Forsman for
that testimony.
Please proceed, Chairman Stevens.
STATEMENT OF ERNEST L. STEVENS, JR., CHAIRMAN, NATIONAL INDIAN
GAMING ASSOCIATION
Mr. Stevens. Thank you, sir.
I wanted to mention my father was the Mike Andrews of what
was then the Senate Select Committee on Indian Affairs many
years ago and a good friend of your Uncle Mo. I wanted to
mention that as we start.
Senator Udall. Thank you so much.
Mr. Stevens. Thank you for allowing me to testify here this
morning, Vice Chairman Udall and members of the Committee. I
understand they have a vote.
Before I start, I want to briefly reflect on the horrific
shooting in Las Vegas on Sunday, Mr. Vice Chairman. I was in
Vegas with dozens of tribal leaders there to attend the annual
Global Gaming Expo when the shooting occurred. Our chief of
staff was on the freeway for about two hours when that
happened. I only rested when we could account for her being in
her hotel room.
Most of Sunday night and Monday morning, we spent texting
and calling to check on our colleagues and also assuring our
loved ones that we were safe. I was fortunate to have my wife
with me, so I was safe. She told me to stay away from the
windows.
We know that at least two young ladies from Indian Country
were harmed. One young lady from the Lummi Nation and one from
the Salt River Tribe in Arizona both remain in serious
condition. NCAI President Brian Cladoosby remains by the
family's side in Las Vegas and gave a prayer at the opening of
the G2E Conference. Our hearts go out to them and their
families and all others afflicted.
From Indian Country perspective, we are sadly not strangers
to violence. To answer the violence, we are using technology
and improving coordination with State and Federal law
enforcement, not only on Indian lands, but in nearby
communities.
Our Tribal Gaming Protection Network, made up of tribal
gaming professionals, has been in place for ten years. The TGPN
has and will continue to provide active shooter training,
seminars on security and surveillance, human trafficking and
other courses on violence prevention. These trainings are
taking place this week at G2E as we speak and through our NIGA
Seminar Institute.
I have just a brief word on human trafficking, Mr. Vice
Chairman. I am a father of three grown daughters and I have
eight granddaughters, so I am particularly concerned about the
safety of any one of these young ladies in Indian Country.
I assure you our gaming industry does all it can to stamp
out this illegal and immoral activity. Indian Country will
remain on the frontlines on these issues.
Unlike the criminal justice system in place on Indian
lands, the Indian gaming regulatory system is the exact
opposite. It empowers tribes to serve as primary regulators and
first responders. Because of the multiple surveillance cameras
and security personnel in place, our Indian gaming operations
are often the safest locations in tribal communities. Again, we
can and we must do more to make our operations safe and secure
for our citizens and visitors.
With that, I want to thank you for this opportunity. I know
we are here today in part to acknowledge the 30th anniversary
of the Supreme Court's historic Cabazon and Morongo decision.
The Cabazon court affirmed the inherent right of tribes to
conduct gaming free of State interference.
A little more than 30 years later, Indian gaming has
responsibly grown into a $31 billion industry that is
rebuilding our communities, educating a generation of new
Native leaders and providing jobs to hundreds of thousands of
American families. I cannot say enough about the investments
tribes have made in education. Where 30 years ago, we relied on
outsiders to serve as doctors, lawyers and other professionals,
today we are educating our young leaders and they are returning
to serve their communities.
Just the other day, this girl did not look a day over 25
but was actually in her early thirties, was working on my
teeth. Believe me they need some work. I looked up and saw how
young she was and I asked where she was from. She told me who
her grandmother was. It was an Oneida Nation member. She was a
very fine dentist working in the Oneida Nation Health Center. I
am very proud of that.
Education is one key to making sure that Indian gaming
succeeds for the next 30 years. Another key is for Indian
Country to continue to do our job to protect our citizens, our
customers, our assets and the integrity of our operations.
Last year, tribes invested $450 million on regulation,
employing 7,000 regulators, surveillance officers, security
personnel and others. In the midst of a revolution that has
brought us FaceBook and Google, the tribal regulators are
working hard to stay ahead of the technology curve.
Safeguarding our IT infrastructure against cyber threats is
a critical part of tribal gaming operations. We are constantly
developing IT personnel to meet the challenges of the new
digital world.
Probably the most important key to our future success is
for this Committee to begin to debate the fix to the tribal-
State compacting process that has been broken for more than two
decades. We know this is not an easy fix but we call on your
leadership to begin a respectful debate to craft an alternative
method with which we can secure Indian gaming for the next 30
years.
Finally, Secretary Zinke has repeatedly said tribal
sovereignty must mean something. In some cases, sovereignty
means keeping the Federal Government out of the way by reducing
laws and regulations. This means respecting Indian tribes just
as other governments for the purposes of Federal labor laws.
We thank Senator Moran and this Committee for moving the
Tribal Labor Sovereignty Act and we look forward to working
with you to see it signed into law. Sovereignty also means
respecting tribal decision-making for the emerging gaming
markets, Internet, fantasy and sports betting.
Tribes should be free to make their own decisions to
legalize or prohibit these new markets and that decision cannot
be subject to veto by States. Recently, NIGA established the
Sports Betting Working Group that is developing a more detailed
position. I look forward to working with this Committee and
others on policy proposals as that moves forward. We anticipate
that group will be working by the end of the year.
In closing, to truly succeed over the next 30 years, we
have to work together in an open and honest dialogue. Indian
Country, this Committee, Secretary Zinke and the entire Trump
Administration must put our minds together to address the
challenges of technology, compacting and these emerging markets
so that we can build a better future for our children.
That is where I will leave it, Mr. Vice Chairman. I am
prepared to answer any questions. Thank you for your time.
[The prepared statement of Mr. Stevens follows:]
Prepared Statement of Ernest L. Stevens, Jr., Chairman, National Indian
Gaming Association
Introduction
Good afternoon Chairman Hoeven, Vice Chairman Udall, and Members of
the Committee. My name is Ernest Stevens, Jr. I am a citizen of the
Oneida Nation of Wisconsin and Chairman of the National Indian Gaming
Association (NIGA). NIGA is an intertribal association of 184 federally
recognized Indian tribes united behind the mission of protecting tribal
sovereignty and preserving the ability of tribes to attain economic
self-sufficiency through gaming and other endeavors. I appreciate this
chance to provide our views about issues and opportunities to ensure
the success of Indian gaming over the next 30 years.
February 25, 2017 marked the 30-year anniversary of the U.S.
Supreme Court's historic California v. Cabazon Band of Mission Indians
decision, which held that state governments could not impose their
regulatory gaming laws to stop tribal governments from engaging in
gaming to provide jobs and economic opportunity for their communities.
In the 30 years since Cabazon, Indian gaming has proven to be the
single most successful economic development tool for tribal governments
in more than two centuries.
As this Committee examines issues and opportunities to help Indian
gaming succeed over the next 30 years, we urge you to work with other
Committees of jurisdiction to closely examine emerging gaming markets
such as Internet gaming, daily fantasy sports, and sports betting.
These activities pose both potential expansion opportunities and
challenges to existing tribal gaming operations and tribal-state
compact agreements. Indian Country will continue to work in partnership
with federal and state regulators to stay ahead of the technology curve
to protect Indian gaming revenues and the integrity of our operations.
Finally, to help Indian Country achieve its full economic potential, we
call on Congress to extend the respect for tribal sovereignty and the
distinct status of Indian tribes in our federalist system to all areas
of federal law. This means treatment of Indian tribes for purposes of
federal labor laws, respect for tribes in the U.S. Tax Code, and direct
federal investments to address the more than $50 billion in unmet need
for infrastructure on Indian lands.
Native Nations In the U.S. Federalist System of Government
As noted above, the Supreme Court's 1987 California v. Cabazon
decision affirmed inherent rights Indian tribes, as distinct
governments, to engage in gaming on their lands free from state
interference--even those subject to the Termination era Public Law 83-
280. The Court acknowledged that Indian gaming was an exercise of
tribal government self-determination and noted that gaming provides the
sole source of governmental revenue for some tribes and is the major
source of employment for many.
The Cabazon Court also reasoned that tribal governments' exercise
of sovereignty through Indian gaming aligned with the now longstanding
federal policy supporting Indian self-determination and the goal of
encouraging economic self-sufficiency. \1\ The Court found particularly
persuasive statements from President Reagan's Interior Department
supporting tribal government gaming. The Court cited the Reagan
Interior Department's March 2, 1983 policy directive, which stated that
the Administration would ``strongly oppose'' any proposed legislation
that would subject tribes or tribal members to state gambling
regulation. ``Such a proposal is inconsistent with the President's
Indian Policy Statement of January 24, 1983.''
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\1\ President Nixon formally ushered in the federal policy
supporting Indian self-determination in a Special Message to Congress
on July 8, 1970. He stated, ``It is long past time that the Indian
polices of the Federal government began to recognize and build upon the
capacities and insights of the Indian people. . .. The time has come to
break decisively with the past and to create the conditions for a new
era in which the Indian future is determined by Indian acts and Indian
decisions.'' (Emphasis added).
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President Reagan's 1983 policy statement discussed the historical
recognition and treatment of Indian tribes as sovereigns and reaffirmed
the then-existing federal policy supporting Indian self-government:
When European colonial powers began to explore and colonize
this land, they entered into treaties with the sovereign Indian
nations. Our new nation continued to make treaties and to deal
with Indian tribes on a government-to-government basis.
Throughout our history, despite periods of conflict and
shifting national priorities, the government-to-government
relationship between the United States and Indian tribes has
endured. The Constitution, treaties, laws and court decisions
have consistently recognized a unique political relationship
between Indian tribes and the United States, which this
administration pledges to uphold.. The administration intends
to. . .remove[e] the obstacles to self-government [that] will
be charted by the tribes, not the Federal Government. . .Our
policy is to reaffirm dealing with Indian tribes on a
government-to-government basis and to pursue the policy of
self-government for Indian tribes without threatening
termination. . ..
President Ronald Reagan, Statement on Indian Policy (Jan. 24,
1983).
President Reagan's policy statement conforms with historical and
foundational treatment by the United States of Indian tribes as
separate distinct governments in our federalist system. When the United
States formed, it acknowledged Indian tribes as sovereign governments,
entering into hundreds of treaties with tribes to establish commerce
and trade agreements, form alliances, and preserve the peace. In so
doing, the U.S. followed the practice of the nations of England,
France, and Spain. The U.S. Constitution affirmed these treaties and
the sovereign authority of Indian tribes as separate governments. The
Constitution's Commerce Clause also expressly provides that ``Congress
shall have power to. . .regulate commerce with foreign nations, and
among the several states, and with the Indian tribes.'' \2\
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\2\ In addition, the U.S. Constitution refers to tribal citizens in
the Apportionment Clause, as ``Indians not taxed'', excluded from
enumeration for congressional representation. The 14th Amendment
repeats the original reference to ``Indians not taxed'' and
acknowledges that tribal citizens were not subject to the jurisdiction
of the United States. The Constitution also acknowledges that treaties
are the Supreme law of the land.
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Thirty years ago, the Cabazon Court also acknowledged the unique
position of Indian tribes as separate distinct governments in the U.S.
federalist system of government. Indian Country was encouraged to hear
the most junior Supreme Court Justice, Neil Gorsuch, give a nod to this
legal status during his confirmation hearings earlier this year.
Senator Sasse asked then-Judge Gorsuch a broad question about
federalism and the idea of separation of powers. Gorsuch replied as
follows:
We divide power in a way that was quite unique. Federalism. You
can think of separation of powers as having a horizontal axis
and a vertical axis. So that the federal government has certain
enumerated powers and authorities, and what the federal
government doesn't enjoy the states do, as sovereigns. In this
country as well, we have tribes which also bear sovereignty in
our part of the world, and bear recognition as such, and I'm
glad to have the opportunity to recognize that fact here as a
Westerner.
Statement of Neil Gorsuch before the Senate Judiciary Committee
(March 22, 2017).
The State of Indian Gaming: 30 Years Post-Cabazon
A handful of tribal governments in the late 1960s and early 1970s,
tired of waiting on the United States to fulfill its treaty and trust
obligations, took measures to rebuild their communities by opening the
first modern Indian gaming operations. These tribal governments used
the revenue generated from Indian gaming to fund essential tribal
government programs, cover the federal shortfalls, and to meet the
basic needs of their people. From this point forward, Indian tribes
began to take their rightful and historical place alongside the federal
and state governments, preserving tribal culture and way of life and
caring for and protecting tribal government citizens and residents.
Indian gaming operations were spurred by the forward-looking
policies of Presidents Nixon and Reagan. As Tribal Governments began to
use their gaming revenues to fund essential governmental services and
programs and make ``Indian decisions'' as President Nixon had foreseen,
reservation economies and opportunities began to increase. President
Reagan's policy statements and support of tribal economic self-
sufficiency helped persuade the Cabazon Court to uphold the tribal
government exercise of Indian gaming free of infringement from the
states.
After Cabazon, states and commercial gaming interests urged
Congress to reverse the decision. Their primary rationale for opposing
Indian gaming was the threat of organized crime. However, this
Committee found that after approximately fifteen years of gaming
activity on Indian reservations there had never been one proven case of
organized criminal activity. Senate Report No. 100-446 at 5 (Aug. 3,
1988). This Committee acknowledged that ``the interests of the states
and of the gaming industry extended far beyond their expressed concern
about organized crime. Their true interest was protection of their own
games from a new source of economic competition. . .. [T]he State and
gaming industry have always come to the table with the position that
what is theirs is theirs and what the Tribes have is negotiable.'' Id.
at 33 (Additional views of Senator McCain).
Prior to the Cabazon decision, in 1984, the Interior Department's
Deputy Assistant Secretary for Indian Affairs testified to this
Committee that approximately 80 tribal governments were engaged in
gaming with estimated revenues in the tens of millions. At the time,
most tribal gaming operations were run out of temporary pop-up
buildings or local tribal gyms. Over the past 30 years since the
Cabazon decision, Indian gaming has responsibly grown to provide a
steady source of governmental revenue for Indian tribes nationwide.
In 2016, 244 tribal governments operated 484 gaming facilities in
28 states, helping Indian gaming grow to $31.2 billion in direct
revenues (a 4.4 percent increase over 2015) and $4.2 billion in
ancillary revenues \3\ for a total of $35.4 billion in total revenues.
Without question Indian gaming has been and continues to be the most
successful tool for economic development for many Indian tribes in over
two centuries.
---------------------------------------------------------------------------
\3\ Ancillary revenues include hotels, food and beverage,
entertainment, and other activities related to a tribal government's
gaming operation.
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Many tribes have used Indian gaming revenue to put a new face on
their communities. Tribal governments have dedicated gaming revenues to
improve basic health, education, and public safety services on Indian
lands. We have used gaming dollars to improve tribal infrastructure,
including the construction of roads, hospitals, schools, police
buildings, water projects, communications systems, and so much more.
Indian Gaming and Job Creation
For many tribes, Indian gaming is first and foremost about jobs.
While Indian gaming has provided a significant source of revenue for
some tribal governments, many tribes engaged in Indian gaming continue
to face significant unmet needs in their communities. For these
communities, Indian gaming and its related activities have brought the
opportunity for employment to Indian lands that have been without such
opportunity in recent memory.
Nationwide, Indian gaming is a proven job creator. In 2016, our
industry generated more than 310,000 direct jobs. When indirect jobs
are included, Indian gaming employs nearly 700,000 Americans. Indian
gaming has provided many Native Americans with their first opportunity
at work at home on the reservation. Just as importantly, jobs on the
reservation generated by Indian gaming are bringing back entire
families that had moved away. Because of Indian gaming, reservations
are again becoming livable homelands, as promised in hundreds of
treaties. These American jobs go to both Indians and non-Indians alike.
Indian Gaming Regulation
Tribal governments realize that none of these benefits would be
possible without a strong regulatory system to protect tribal gaming
revenues and preserve the integrity of our operations. The regulatory
system established under IGRA vests local tribal government regulators
with the primary day-to-day responsibility for regulating Indian gaming
operations. No one has a greater interest in protecting the integrity
of Indian gaming and our assets than tribal governments. While tribes
take on the primary day-to-day role of regulating Indian gaming
operations, IGRA requires coordination and cooperation with the federal
and state governments to make this comprehensive regulatory system
work.
This comprehensive system of regulation is expensive and time
consuming, but tribal leaders know that a successful operation relies
on strong regulation. In 2016, tribes spent more than $449 million on
tribal, state, and federal regulation:
$336.5 million to fund tribal government gaming regulatory
agencies;
$90.4 million to reimburse states for state regulatory
activities negotiated and agreed to pursuant to approved
tribal-state class III gaming compacts; and
$22.2 million to fully fund the operations and activities
of the National Indian Gaming Commission.
Tribal, state, and federal regulators work together to maintain the
integrity of Indian gaming operations, the security of our patrons and
visitors, and Indian gaming revenues. There are approximately 6,000
tribal gaming regulators serving as the primary regulators of Indian
gaming. \4\ The number of personnel at the state level dedicated to
Indian gaming regulation varies from state to state, but it is
estimated that 24 states employ nearly 1,000 regulators at the state
level. \5\
---------------------------------------------------------------------------
\4\ NIGC Budget Justifications and Performance Indication FY18 at
NIGC-2; https://www.doi.gov/sites/doi.gov/files/uploads/
fy2018_nigc_budget_justification.pdf
\5\ At least four of the 28 states that have Indian gaming
operations within their borders have refused to negotiate a Class III
gaming compact with tribal governments, and thus, do not play a role in
regulating Class II gaming.
---------------------------------------------------------------------------
At the federal level, the NIGC employs approximately 131 regulators
and staff in Washington, D.C. and in their various field offices. In
addition to the NIGC, tribal governments work with the FBI and U.S.
Attorneys offices to investigate and prosecute anyone who would cheat,
embezzle, or defraud an Indian gaming facility--this applies to
management, employees, and patrons. 18 U.S.C. 1163. Tribal regulators
also work with the Treasury Department's Internal Revenues Service to
ensure federal tax compliance and the Financial Crimes Enforcement
Network (FinCEN) to prevent money laundering. Finally, tribes work with
the Secret Service to prevent counterfeiting.
Today, safeguarding gaming systems and supporting IT infrastructure
is a critical part of all tribal gaming operations. Our cybersecurity
challenges are essentially no different than other governments and
large businesses in that we must defend against a variety of cyber
threats on a daily basis-malware, ransomware, external attacks on our
networks, and potential malicious insiders. Indian gaming operations
employ and develop skilled and qualified IT professionals to manage our
IT environments. Many possess the same IT and security certifications
such as Network+ and CISSP required by DOD and other Federal Agencies.
We acknowledge the need to continually develop IT personnel to meet the
future challenges and threats of an increasingly digital world.
Technology also plays a major role in our capability to protect,
detect and respond to a variety of cybersecurity events. Like other
enterprises, our defenses also include a layered approach to protect
networks, servers, and data. Many fundamental controls such as patch
management, least privileged access controls, and network segmentation
continue to be very effective at protecting systems. However, we also
employ other technologies to enhance those protections such as
automated vulnerability scanning processes to identify and eliminate
security weaknesses. Tribal regulators are also utilizing next
generation firewalls and intrusion protection systems to automatically
detect and prevent malicious activities on the networks, as well as
active malware detection systems and advanced threat defenses to add
additional layers of protections to server based systems. Commercial
24x7 security operations centers that continuously analyze logs from
firewalls and other critical systems issue alerts whenever anomalous
activities are detected. In addition, critical systems are continuously
synchronized with redundant systems at hot-site locations to provide
high availability and a supplement to traditional backups. Indian
Country will continue to invest, adapt, and develop an increasingly
stronger and more resilient security posture in response to the current
and future cybersecurity threat environment.
NIGA applauds the NIGC and Chairman Chaudhuri for establishing its
Division of Technology and for the technical assistance that the
Commission provides to all tribal government gaming regulators to
identify and eliminate or reduce cybersecurity vulnerabilities. Working
together we are staying ahead of the technology curve to sustain
responsible growth and security of tribal gaming operations nationwide.
Finally, in light of the horrific shooting this past Sunday night
that involved the Mandalay Bay casino in Las Vegas, it seems
appropriate to briefly discuss the work that tribal governments and
regulators do to ensure the health and public safety of our patrons and
visitors. Of the thousands of personnel dedicated to Indian gaming
regulation, many are public safety and security officers. We cannot
stop every random senseless act of violence, but we acknowledge that
more can and must be done to prevent crime on Indian lands.
Sadly, Indian Country is no stranger to violence. Through more than
a dozen oversight hearings that led to the development of the Tribal
Law and Order Act of 2010 (TLOA), this Committee highlighted the
complex system of justice in place on Indian lands that has led to a
crisis of violent crime that has persisted for decades. The Committee
report to TLOA ``found that the divided system of justice in place on
Indian reservations lacks coordination, accountability, and adequate
and consistent funding.''
Indian Country is doing our part to improve coordination and
cooperation with state and federal law enforcement to protect our
communities. This coordination includes cross-deputization agreements
and special law enforcement commissions that empower officials to
investigate and make arrests of suspects regardless of their race or
which government's law is implicated.
IGRA vests local tribal government regulators with the primary day-
to-day responsibility for regulating Indian gaming operations. This
system stands in stark contrast to the failed system that continues to
plague criminal jurisdiction in Indian country, where Native
communities are often forced to rely on federal officials who are often
located hundreds of miles from the Indian lands they are sworn to
protect and serve. Despite reforms sought through TLOA, the system of
criminal justice in Indian Country is a proven failure. We call on the
United States to do more to provide all tribal governments with sorely
needed resources to hire tribal justice officials, including police
officers, court officials, detention personnel, and mental health
counseling to prevent crime on Indian lands--as well as the equipment
needed to do their jobs. \6\
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\6\ Indian Country fully supports the Department of Justice FY18
Budget, which proposes a 7 percent set aside for Indian tribes from all
DOJ Office of Justice Programs accounts and a 5 percent set aside for
tribes from the Crime Victims Fund to provide shelters, medical and
mental health counseling, and other services to the far too many
victims of crime on Indian lands.
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This system of comprehensive multi-layered system of regulation is
costly has proven itself year after year. The funding, equipment, and
personnel dedicated to Indian gaming regulation at the tribal, state,
and Federal Government levels far outpace state and commercial gaming
regulators. I challenge anyone to compare these numbers and resources
to any form of gaming worldwide.
The credit for this system goes to the tribal leaders who make the
decisions to fund this system and to the thousands of men and women who
have devoted their lives to protecting tribal assets and the integrity
of our operations.
Indian Gaming: The Next 30 Years--Issues and Opportunities
Issues and Ongoing Concerns
NIGA is confident that the next thirty years will see Indian gaming
maintain steady responsible growth that will further empower tribal
communities. Just as much has changed since the Supreme Court's
historic Cabazon decision in 1987, Indian Country will continue to
adapt, anticipate future changes, and make our own positive change to
advance tribal sovereignty and tribal government self-sufficiency. One
change that NIGA will continue to work for is the longstanding need to
restore balance to the IGRA tribal-state compacting process.
Restore Balance to the Tribal--State Compacting Process
As Congress debated IGRA in the mid-1980s, tribal-state relations
were combative, with state governments joining forces with commercial
gaming interests to limit or put a stop to Indian gaming through
legislation and litigation.
Many prominent tribal leaders opposed IGRA because of the class III
compacting process, which required tribal governments to engage in
negotiations with states in order to conduct Class III gaming. After
Cabazon, many tribal leaders viewed the compacting process as a
limitation on inherent tribal government rights to engage in Indian
gaming free of state control affirmed in the Supreme Court's 1987
decision.
In addition, many tribes did not trust that state governments would
respect their obligations to negotiate in good faith, or more
fundamentally-negotiate. Members of this Committee shared tribal leader
concerns. This Committee's Report on IGRA sought to alleviate these
concerns:
Under this Act, Indian tribes will be required to give up any
legal right they may now have to engage in class III gaming if:
(1) they choose to forgo gaming rather than to opt for a
compact that may involve State jurisdiction; or (2) they opt
for a compact and, for whatever reason, a compact is not
successfully negotiated. . .. Thus, given this unequal balance,
the issue before the Committee was how to best encourage States
to deal fairly with tribes as sovereign governments. The
Committee elected, as the least offensive option, to grant
tribes the right to sue a State if a compact is not negotiated
and chose to apply the good faith standard as the legal
barometer for the State's dealing with tribes in class III
gaming negotiations. . ..
Senate Report 100-446, at 15 (Aug. 3, 1988).
IGRA envisioned that tribal and state leaders would come together
in the best interests of their citizens and their governments to
negotiate and reach agreements on class III gaming compacts. In some
cases, these compact negotiations were exhaustive, time consuming and
costly to both parties. In some case, they have gone smoothly. In those
instances, the agreements reached have greatly benefitted the tribal,
state, and local governments involved.
In a few unfortunate cases, tribal-state compact negotiations have
yet to even take place.
This compromise and the balance that it struck were short-lived.
Eight years after enactment, the U.S. Supreme Court destroyed any
balance to the IGRA compacting process in its 1996 decision in Seminole
Tribe of Florida v. Florida. The Court held that Congress did not have
the power to waive the states' 11th Amendment sovereign immunity from
suit in federal court to enforce IGRA's good faith compact negotiation
obligation.
In large part because of the Seminole decision, we are concerned
that in some situations, the tribal-state compacting process is
beginning to deteriorate. Some states are using the imbalance to abuse
the compacting process beyond what this Committee intended. Without a
method to enforce the state's obligation to negotiate or renegotiate
compacts in good faith, many tribal governments are left with the no-
win proposition of either not moving forward on a project that could be
its only source of non-federal revenue or agree to compact provisions
that directly violate IGRA in the form of revenue sharing that amounts
to nothing more than direct taxation or concessions that go beyond the
regulation, licensing or enforcement of Indian gaming as set forth in
IGRA. \7\
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\7\ IGRA did not intend for Indian gaming to help balance state
budgets or impose state laws that go beyond the enforcement of gaming-
related activities. The Act expressly prohibits states from refusing to
enter into a compact ``based on the lack of authority to impose a tax,
fee, charge or other assessment.'' See 25 U.S.C. 2710(d).
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As former Assistant Secretary for Indian Affairs, Kevin Washburn,
stated, ``the Department reviews revenue sharing requirements in gaming
compacts with great scrutiny.'' Revenue sharing should only be
permitted where a state offers meaningful concessions--such as
exclusive rights to offer gaming that provide substantial economic
benefits to the tribe.
To prevent any further deterioration of the tribal-state compacting
process and to ensure that Indian gaming succeeds over the next 30
years, we urge this Committee to begin the debate to fix this crucial
process that has now been broken for more than two decades.
Ongoing Need for a Strong Class II Indian Gaming Industry
In large part because of the Supreme Court's 1996 Seminole Tribe
decision, Class II Indian gaming has grown in importance to tribal
governments nationwide.
Class II gaming is another aspect of Indian sovereignty that has
undergone continuous change and challenges from state governments to
the commercial gaming industry. Congress fully intended continuous and
positive changes to Class II Indian gaming. IGRA and NIGC regulations
define Class II games to include bingo and lotto, and if played in the
same location, games similar to bingo--which can be used in connection
with electronic, computer, or other technologic aids. Class II games
also include nonbanking card games that State law explicitly
authorizes, or does not explicitly prohibit, and are played legally
anywhere in the state.
This Committee's Report to IGRA clarifies its intent that the
definition of class II gaming is not static, and instead must be
flexible to enable tribal governments to employ advancements in
technology:
The Committee specifically rejects any inference that tribes
should restrict Class II games to existing game sizes, levels
of participation, or current technology. The Committee intends
that tribes be given the opportunity to take advantage of
modern methods of conducting Class II games and the language
regarding technology is designed to provide maximum
flexibility. In this regard, the Committee recognizes that
tribes may wish to join with other tribes to coordinate their
class II operations and thereby enhance the potential of
increasing revenues. For example, linking participant players
at various reservations whether in the same or different
States, by means of telephone, cable, television or satellite
may be a reasonable approach for tribes to take. Simultaneous
games participation between and among reservations can be made
practical by use of computers and telecommunications technology
as long as the use of such technology does not change the
fundamental characteristics of the bingo or lotto games and as
long as such games are otherwise operated in accordance with
applicable Federal communications law. In other words, such
technology would merely broaden the potential participation
levels. . ..
Senate Report 100-446, at 9 (Aug. 3, 1988).
From the early 1990s to the mid-2000s, the NIGC and the Justice
Department worked against tribal government interests to limit class II
Indian gaming in direct conflict with the above-stated congressional
intent. The NIGC's own economic impact review found that the
Commission's 2007 proposal ``would have a significant negative impact
on Indian tribes'', including decreases in gaming and non-gaming
revenue, Indian gaming facility closures, a decrease in jobs, and wide
range of broader negative impacts on Native economies. \8\
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\8\ Meister, ``The Potential Economic Impact of the October 2007
Proposed Class II Gaming Regulations'' submitted to the NIGC, February
1, 2008. Found at http://www.nigc.gov/Portals/0/NIGC%20Uploads/
lawsregulations/proposedamendments/MeisterReport2FINAL2108.pdf
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The NIGC and the Justice Department likewise engaged in a series of
federal court cases, seeking to limit the ability of Indian tribes to
utilize advanced technology in class II games. Federal courts uniformly
rejected these arguments. The Ninth Circuit in United States v. 103
Electronic Gambling Devices rejected the Justice Department's
antiquated reading of the scope of bingo under IGRA:
The Government's efforts to capture more completely the
Platonic `essence' of traditional bingo are not helpful.
Whatever a nostalgic inquiry into the vital characteristics of
the game as it was played in our childhoods or hometowns might
discover, IGRA's three explicit criteria, we hold, constitute
the sole and legal requirements for a game to count as class II
bingo. . .. All told. . ..the definition of bingo is broader
than the government would have us read it. We decline the
invitation to impose restrictions on its meaning besides those
Congress explicitly set forth in the statute. Class II bingo
under IGRA is not limited to the game we played as children.
U.S. v. 103 Electronic Gambling Devices, 223 F.3d 1091, 1101
(9th Cir. 2000).
The federal courts and public sentiment sufficiently put to rest
the NIGC's narrow proposed rule and the Justice Department's dangerous
legislative proposal to narrowly interpret class II Indian gaming. The
NIGC proposed rules were withdrawn and the DOJ proposal did not gain
traction in Congress.
However, as discussed above, the Seminole decision destroyed the
careful balance that IGRA struck in the class III tribal-state gaming
compacting process. This decision has resulted in a number of states
that condone and regulate other forms of gaming essentially exercising
veto authority over class III Indian gaming. As a result, some tribes
rely solely on class II gaming to generate governmental revenue to
provide essential services to meet the many needs of their communities.
Indian Country will remain vigilant to ensure that any changes to
class II Indian gaming are positive changes consistent with Congress'
intent that tribal governments take advantage of the advancing
technology to facilitate the play of such games. In recent years, the
NIGC and Tribal regulators have worked together to strengthen all
regulatory aspects of Indian Gaming. Indian gaming is the most
regulated industries in America and we are proud to stand on our record
of strong regulation, adaptive technologies, and revolutionary gaming
innovations. We look forward to further strengthening class II Indian
gaming, changing with advances in technology as this Committee intended
over the next thirty years under IGRA.
Emerging Gaming Markets
For nearly two decades, Congress has considered legislation to
either expand or prohibit various forms of gaming in the United States.
Most of the debate has focused on Internet gaming. However, in recent
years, the discussion has extended to daily fantasy sports wagering and
sports betting.
More than 240 tribal governments have made significant investments
in their gaming operations based in part federal laws that regulate or
prohibit certain forms of gaming. The great majority of these tribal
governments have entered into compacts with states that include
exclusivity provisions, most often promises on the part of the state to
not permit other forms of gambling within the state in return for a
portion of the tribal government's Indian gaming revenue.
NIGA, from an organization perspective, does not support or oppose
these new markets. However, if Congress does act to establish or
prohibit these emerging forms of gaming, we do ask that this Committee
work with other committees of jurisdiction over these activities to
first consider the impacts on Indian gaming, and work to limit impacts
on tribal Indian gaming operations.
While NIGA and our Member Tribes are developing a formal position
on sports betting, our existing position on Internet gaming is
instructive to all emerging gaming markets under consideration by
Congress.
NIGA's Internet gaming principles are directives from our tribal
leadership. They are guided by and grounded in NIGA's overall mission
to protect tribal sovereignty and to protect rights of all tribes to
shape their economic futures. In short, NIGA and our Member Tribes are
working to ensure that any federal legislation that authorizes a new
form of gambling in the new United States: acknowledge that tribal
governments have a right to legalize or prohibit the new activity--not
subject tribal eligibility in the new market to a state government's
decision to opt-out of the activity; provide all federally recognized
Indian tribes with equal access to the new market; acknowledge that
tribal government revenues generated from the new market are not
subject to taxation, as tribal government revenues are dedicated to the
benefit of our communities and thus are 100 percent taxed; and protect
existing tribal government rights under tribal-state compacts and IGRA.
This basic framework conforms with the U.S. Constitution's recognition
of Indian tribes as separate governments as well as the federal policy
supporting tribal government self-determination and economic self-
sufficiency.
Opportunities: Economic Development Beyond Indian Gaming
All of Indian Country has been and continues to strive for economic
self-sufficiency beyond Indian gaming. In my time as Chairman of NIGA,
I have worked with our Member Tribes to encourage economic
diversification beyond Indian gaming. NIGA is working with our Member
Tribes to further encourage tribe-to-tribe giving and lending. Through
our American Indian Business Network, we work to highlight Native owned
businesses and procurement of Native-produced goods and services.
Empowering tribal entrepreneurs and tribal government owned businesses,
will help shape our communities and empower the next generation of
Native leaders.
While Indian gaming has worked well to empower tribal governments,
provide reservation jobs and supplement basic governmental programs and
services, far too many tribal communities continue to suffer the
devastating impacts of the past failed federal policies. Too many of
our people continue to live with disease and poverty. Indian gaming is
part of the answer, but we all must do more to reverse these horrific
statistics and establish more opportunities for all residents of Indian
Country.
Tribal governments need help to fulfill Indian Country's full
potential. That potential can only be achieved by reforming and
aligning federal laws with the U.S. Constitution's acknowledgment of
Indian tribes as separate distinct governments in the United States'
federalist system of government. Federal laws and policies should
follow a dual purpose of respecting Indian tribes as governments while
also working to uphold the federal governments treaty and trust
obligations to Indian tribes. \9\
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\9\ Through treaties, tribal governments ceded hundreds of millions
of acres of tribal homelands to help build this great Nation. In
return, the United States incurred a solemn obligation to provide for
the education, health, public safety and general welfare of Indian
people. President Nixon embraced these obligations in his Special
Address to Congress in 1970 (``The special relationship between Indians
and the Federal government is the result of solemn obligations which
have been entered into by the United States Government. Down through
the years through written treaties and through formal and informal
agreements, our government has made specific commitments to the Indian
people. For their part, the Indians have often surrendered claims to
vast tracts of land and have accepted life on government reservations.
In exchange, the government has agreed to provide community services
such as health, education and public safety, services which would
presumably allow Indian communities to enjoy a standard of living
comparable to that of other Americans.'').
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The Tribal Labor Sovereignty Act
One of the most prominent examples of a federal law's failure to
acknowledge Indian tribes as governments is the National Labor
Relations Act (NLRA).
In 2004, the National Labor Relations Board (NLRB) reversed decades
of its own precedent to apply the NLRA to tribal government
enterprises. \10\ The NLRB has read the Act's governmental exemption to
cover the U.S. federal government, states and political subdivisions
(counties, cities, etc.), the District of Columbia, and U.S.
territories and possessions--and commercial enterprises owned and
operated by these entities. \11\ As a result of the NLRB's 2004
decision, Indian tribes are the only form of government in the United
States not exempt from the NLRA.
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\10\ See NLRB Opinion in Fort Apache Timber Co. and Construction
(Oct. 19, 1976)(Holding that a tribal government owned and operated
``commercial enterprise'' located on Indian lands is not an
``employer'' for purposes of the NLRA).
\11\ The NLRA was enacted in 1935 to address upheavals in private
industry. Government employers were expressly exempted from the Act.
Although the NLRA did not list all forms of government subject to the
exemption, the NLRB has consistently interpreted the government
exemption to include the District of Columbia, U.S. territories and
possessions, and--until 2004--tribal governments.
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The Board reasoned that ``tribal casinos and similar businesses are
commercial enterprises in direct competition with similar non-tribal
businesses.'' This is a dangerous misstatement of fact that disrespects
tribal sovereignty and ignores the economic realities facing many
tribal governments. Tribal Laws require, and Federal Law mandates, that
revenues generated from Indian gaming be used entirely for government
purposes. Commercial gaming enterprises conversely are for-profit
individually owned operations.
With specific regard to Indian gaming, tribal casinos are wholly
owned and operated by tribal governments. Tribal governments generally
lack an effective tax base--Indian lands are held in trust by the U.S.
and cannot be subjected to real estate taxation, high reservation
unemployment makes income taxation unworkable, and restrictive Supreme
Court rulings have severely limited tribal government sales taxes. For
many tribal governments, Indian gaming operations, tribal timber
operations, and other tribal government enterprises constitute the sole
source of governmental revenue that is used to fund tribal public
safety, education, health, housing and other essential services to
reservation residents. Ignoring the purpose of tribal government
enterprises subjects vital tribal government programs to shutdowns and
work stoppages.
Equating Indian gaming to commercial gaming also completely ignores
the text and intent of the Indian Gaming Regulatory Act (IGRA).
Congress imposed IGRA on Indian gaming operations to establish a system
of federal regulation and ``to provide a means of promoting tribal
economic development, self-sufficiency, and strong tribal
governments.'' IGRA mandates that tribes use revenues generated from
Indian gaming for one of five government purposes: to fund tribal
government operations, programs, and services; to provide for the
general welfare of the community; to promote tribal economic
development; to donate to charitable organizations; or to fund local
government operations.
NIGA thanks Senator Moran and the co-sponsors of S. 63, the Tribal
Labor Sovereignty Act, which would restore acknowledgment of Indian
tribes as governments for purposes of the NLRA. We also thank this
Committee for advancing the bill in February of this year.
NIGA has made clear from the beginning that this effort to amend
the NLRA to restore the longstanding treatment of Indian tribes as
other forms of governments is not anti-labor. This effort is purely
about respect for tribal sovereignty and the U.S. Constitution's
acknowledgement of Indian tribes as separate forms of governments
within our federalist system.
Comprehensive Tax Reform
The U.S. Tax Code is also rife with provisions that ignore the
federal government's treaty and trust obligation to Indian Country, the
federal policy supporting tribal government self-determination and
economic self-sufficiency, and the Constitution's recognition of Indian
tribes as separate sovereigns--all to the great detriment of Indian
Country employment and economic development.
Federal tax policy has a significant and in most cases positive
impact on the economies of state and local governments, and U.S.
territories. The U.S. Tax Code provides governmental entities with
preferred access to capital to finance infrastructure projects,
provides tax incentives to individuals and corporations to invest in
governmental and economic development projects. Many of these federal
tools for governmental economic development are not available to Indian
tribes, or require tribes to apply to state governments in order to
receive a portion of the benefit.
Rep. Ron Kind (D-WI) and Rep. Lynn Jenkins (R-KS) have sponsored
H.R. 3138, the Tribal Tax and Investment Reform Act. The bill
acknowledges that Indian tribes face historic disadvantages in
accessing the underlying capital to build the necessary infrastructure
for job creation, and recognizes that ``codifying tax parity with
respect to tribal governments is consistent with Federal treaties
recognizing the sovereignty of tribal governments.''
H.R. 3138 seeks to establish parity for tribal governments with
state and local governments for purposes of several provisions in the
Tax Code, including: the issuance of tax-exempt bonds for tribal
government projects; treatment of tribal government pensions; treatment
of tribal government foundations and charities; and acknowledgement of
tribal court/tribal government authorized adoptions for purposes of the
federal tax credit for the adoption of special needs children; among
other items.
The enactment of these provisions will reinforce the governmental
status of tribes, facilitate equal access to federal tax and financing
tools enjoyed by other governmental entities, and permit tribes to make
important investments in their own communities. We understand that a
companion bill is under consideration in the Senate and we urge Members
of this Committee to support that bill when it is introduced.
I want to highlight two additional glaring examples of the Tax
Code's lack of respect for the status of Indian tribes as governments:
the federal New Markets Tax Credit and the Low Income Housing Tax
Credit. While these federal programs have worked well to incentivize
outside investment in state, local, and territorial government housing
and economic development projects--they have fallen far short in Indian
Country.
For more than thirty years, the Low Income Housing Tax Credit
program (LIHTC) has been the most significant producer of affordable
housing in the United States. Congress enacted the LIHTC Program in
1986 to provide the private market with greater incentives to invest in
affordable rental housing. In 2014, the annual expense credits for the
LIHTC program was $6.7 billion, making the program one of the largest
corporate tax programs administered by the Federal Government.
All 50 states, the District of Columbia, Puerto Rico, American
Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands
receive direct LIHTC allocations, which they competitively issue to
developers who construct, rehabilitate, or acquire rental housing for
lower-income households. Indian tribal governments are the only
sovereign in the United States to not receive a direct LIHTC
allocation.
While the Indian Housing Block Grant program and federal housing
loan guarantee programs have worked to cut into the housing shortfalls
in Indian Country, these programs do not meet the significant housing
needs of Indian Country. \12\ Providing Indian Country with direct
access to LIHTC would significantly improve the ability of Indian
tribes to leverage capital from these existing programs and help
address the housing shortage on Indian lands.
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\12\ Over 90,000 American Indian families are homeless or under-
housed. More than 30 percent of American Indian families live in
overcrowded housing--a rate six times the national average.
Approximately 40% of Indian Country housing is inadequate according to
the federal definition, compared to only 6 percent nationwide. It is
estimated that it would take approximately 33,000 housing units on
Indian lands to alleviate overcrowding and an additional 35,000 units
to replace existing housing in grave condition--at an approximate cost
of $33 billion.
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While individual Native Americans are counted towards a state's
population for purposes of the tax credit, the housing projects that
stem from the credits have failed in many cases to reach Indian
Country. The most common reason that these credits do not reach Indian
Country is that state governments do not consider low income housing on
Indian lands as an affordable housing priority reflected in the state's
qualified allocation plan (QAP), or state QAPs establish criteria and
requirements that do not exist in most rural tribal communities--making
tribal housing project ineligible to even apply for the credit.
As Congress moves towards comprehensive tax reform this year, we
urge this Committee to work with the Senate Finance Committee and
others to reform the Tax Code to acknowledge the governmental status of
Indian tribes and align it with the federal policy supporting Indian
tribal self-government and economic self-sufficiency.
Conclusion
As the Cabazon Court acknowledged more than thirty years ago,
Indian gaming is Indian self-determination. Less than 18 months later,
Congress enacted IGRA in part to foster and strengthen these acts of
self-determination. The Act has generally delivered on its stated goals
of strengthening tribal governments and empowering Indian communities.
However, the careful balance struck in IGRA's compacting process is
broken and must be addressed to pave a path for the success of Indian
gaming's next 30 years.
Indian gaming is one tool that is helping tribal governments
overcome decades of injustice. In order to meet the needs of tribal
communities, Congress must work to empower tribes with the same tools
that other governments are provided under our federalist system, most
prominently respect for Indian tribes for purposes of federal labor
laws, and tax credits and other incentives to help tribal governments
reach their full economic potential.
Chairman Hoeven and Members of the Committee I again thank you for
this opportunity, and I am prepared to answer any questions.
Senator Udall. Thank you, Chairman Stevens, very much. I
think it was excellent that you reminded us of Cabazon because
that is really where we started. That was a historic opinion by
the Supreme Court. It affirmed the tribes' right to regulate
gaming on tribal lands. The Court recognized that a tribe may
engage in gaming if located within a State that permits such
gaming for any purpose.
They really recognized the economic part of this and the
tribal self sufficiency. In that ruling, which was interesting
to me, they preempted the State interest in regulating gaming.
That is where we started. Then we went to IGRA and we need to
remember that history because that was a very strong opinion by
the U.S. Supreme Court.
We heard the National Indian Gaming Commission testify
about the balance between States and tribes post-Seminole.
Chairman Stevens, in your written testimony you urged this
Committee to explore addressing the tribal-State compact
negotiation process. What specific recommendations do you have
to ensure that tribes and States are on equal footing as
intended under IGRA?
Mr. Stevens. I think we need to rely on our Administration
to try to find regulatory solutions for the compacting process.
I think it is important, especially with the Pojoaque Pueblo
and the Seneca in New York, that we move forward in a good,
strong proactive way.
I am glad you mentioned that original court case because we
have always worked and moved in good faith. We hope that the
States can continue to do that and we can build a stronger
relationship because I think we have proven we are safe and
secure and do a great job in Indian Country.
Senator Udall. Thank you so much for that answer.
I do not know if any of the other panelists want to comment
on that question? If not, I will move on to my next question.
[No audible response.]
Senator Udall. Let me move on.
This is for the entire panel. Can you describe how local
communities benefit from tribal gaming operations whether
through jobs or investment back into the community? Chairman
Frank?
Mr. Frank. Up in northern Wisconsin where our reservation
is located, we are the number one employer in the Forest county
area. We employ about 600 non-tribal employees out of a county
of probably less than 10,000 people combined.
I am proud to say that we are also a major employer in the
City of Milwaukee. Of all our employees in the City of
Milwaukee, about 80 percent of our employees are minorities.
About 65 percent of those minority employees, the other
minority group would be single mothers.
How does it benefit the communities? I think it speaks for
itself. The packages we have to offer our employees are second
to none. Health care is the number one concern. I think we have
mightily contributed to the economics of the community.
Senator Udall. Thank you.
Chairman Forsman.
Mr. Forsman. I think the biggest investments we have made
are not only in jobs and investments in local businesses, but
it is also our intergovernmental cooperation. We have strong
relationships with the county and the cities and with the
State. We are very active in that in a lot of different arenas,
habitat protection, water quality but also economic development
and trying to manage sprawl and things like that together as we
have more and more growth in our area. Those are some.
We also invest a lot in local non-profits in our charitable
contributions, as a lot of the tribes do, and are very active
in that as well. We are really proud of being able to be one of
those emerging and responsible governments looked upon for not
only our vision but our values.
Senator Udall. Thank you.
Mr. Stevens, please.
Mr. Stevens. Right off the top, 390,000 direct jobs in
Indian gaming are a clear reflection, especially in the economy
that had its ups and downs over the years. We continue to be
not just putting Indians to work but America to work in our
industry. If you include the indirect employment, it is well
over 700,000 jobs, and safety, education and training and our
service agreements that we have developed
My father taught me. I was the stern kid that was talked to
about taxation and how I understood sovereignty. My father
taught me that service agreements help us all understand one
another and help communities work together. It has been 20
years since I listened to my father. The conference that I had
to leave with your invitation to come here was my first
experience over 20 years ago talking about service agreements
and the communities working together.
Again, I have 15 grandchildren. They go to school in a
state-of-the-art school classroom and gymnasium. My late
grandmother taught there into her nineties. We are doing great
things and are a clear reflection of not just Indian Country
but the people around us are thriving as well.
Senator Udall. Thank you very much.
President Escalanti, please.
Mr. Escalanti. We too are a tribe that shares all our
revenues derived from our casinos. For example, the tribe
provides the local fire department with annual payments of
$400,000 and the local enforcement agencies with an annual
payment of $214,065.
We also provide health insurance for our employees. We are
a self insured type of organization that provides these health
care benefits to our employees. We are one of the rural tribes
that actually provides employment to the surrounding community
as far as Vegas, San Diego, El Centro, Calexico, even across
the border, Yuma County, so on and so forth.
Senator Udall. Thank you very much.
One of the things I think we should not forget, all these
good things we have talked about. I am going to ask a bit more
about that but we need to remember there is a Federal trust
responsibility. There are treaties out there and the Federal
Government needs to continue to do the good work there and
provide the resources to your tribes and the tribes across the
Country to make sure you can continue to improve the quality of
life in Indian Country.
I do not think we should ever want to hear the excuse that
tribes are doing well with gaming, now we do not need to help
them anymore.
We heard today about jobs generated directly from gaming
and the billions of dollars of revenue generated but I think we
also need to acknowledge that gaming can serve as a catalyst
for tribes to diversify their economic portfolios. Tribes are
now using the gaming revenue to branch out into other business
from cyber security like Forest County Potawatomi to hotels and
resorts like Laguna Pueblo in my home State of New Mexico.
This is for the entire panel. Can you discuss how your
tribes have used gaming revenues to diversify their business
interests?
Mr. Forsman. In Suquamish, we have been able to diversify
not only in our resort casino, which is becoming a regional
destination. We are trying to attract more business from
Seattle. We have also invested in purchasing a golf course
which was up for tax foreclosure. This was a failing business
and we were able to come in, purchase it and restore it to more
of a thriving business. There are a lot of residents around
there who are very grateful that we acquired it.
We built a brand new clubhouse there and are actually going
to host the Senior LPGA tournament there next year. We are
pretty excited about that. That should be a great experience
for us.
We also have an 8(a) construction firm which does a lot of
work for the tribe and also for our local military bases. We
have a number of naval bases in our area including Sub Base
Bangor and the Puget Sound Naval Shipyard which employs a lot
of our people and others in that respect as well.
We have three retail stores on our reservation that sell
gasoline, sundries and other products including gasoline and
liquor. We have compacts with the State which provides more
money for our government activities.
I think the Federal Government's investments in law
enforcement, the courts, environmental protection and all those
things are vital for us and I believe are some of the best
investments and return on the dollar I think the Federal
Government gets because the tribes use that money to perform a
lot of different services for everyone in our community.
Senator Udall. Chairman Frank.
Mr. Frank. How do we use our money to invest and diversify
our economy? If you don't mind, I have a little story to tell
on this one. Several years ago when we were sitting as the
executive council, a guy came in with a proposition to us about
a business venture.
I looked around at the executive council and said, how many
of us have ever sat and closed a business deal? Not one of us
had so we had no expertise on how to do business. We had an
attorney general named Jeff Crawford who is a pretty smart
fellow.
He said what we need is a business development corporation.
That is what got us going on the business development
corporation. That corporation is assigned the task that if
anything ever happens to gaming, we should be continuing to
provide the services a government should provide for its
citizens.
We invested in many things. I am glad the chairman
mentioned 8(a) because that is one of the things we invested
in. We also invested in a bank. There are a number of things we
invested in.
All these opportunities we invested in were opportunities
which we feel tribal members have an opportunity to work in.
With Indian gaming, yes, we have diversified our economy and
continue to look for new ventures and new fields to invest our
dollars in for our citizens.
The Chairman. [Presiding.] Mr. Stevens.
Mr. Stevens. To tag on to Vice Chairman Udall's last
question, thank you for your leadership, as he leaves. I just
talked about the non-gaming tribes and the non-market tribes. I
am glad that we continue to keep them in our hearts and our
minds. That is our obligation. For this last question, that is
a key component to helping those tribes. Thank you, Mr. Vice
Chairman.
I think economic development and individual businesses, tax
credits, all these things are key components to helping build a
better future for not just gaming but for all of our
communities, tribal enterprise or individual tribal businesses.
My daughter and son-in-law are a small business. They work
hard at it. It is not easy to do. Where tribes and government
can continue to support them, I don't know if it quite lies
under the trust responsibility Senator Udall talked a little
bit about, but I think it is in our best interest to help
create business, not just at the tribal enterprise level, but
for our individual tribal members.
We worked with the National Center for American Indian
Enterprise Development and the National Congress of American
Indians. It is really key. I mentioned we were all in Las
Vegas. The G2E is the biggest show in the world. That is where
we are exchanging ideas and thoughts and creating business and
opportunities for us to move Indian Country forward with and
beyond gaming.
You may have read where the Seminoles own the Hard Rock
brand and Mohegan is working in South Korea. We really have
those kinds of opportunities. If we can partner and help those
other tribes build, we can do great things for the next 30
years but we need Congress' support, we need this
Administration's support because too many people do not
understand Indian tribes as sovereign governments and what we
do. The impact we have goes far beyond our reservation
boundaries.
We keep helping economically in the United States of
America and our benefits go far beyond our reservation
boundaries. I wanted to say that regarding that question.
The Chairman. Certainly.
Chairman Escalanti, can you discuss how the National Indian
Gaming Commission has worked to address some of the unique
issues in regard to rural gaming, rural tribes?
Mr. Escalanti. Chairman Hoeven, it was just brought to my
attention yesterday as we were meeting with the congressional
leaders that there was a rural committee that actually can
assist rural tribes as far as assisting them on their issues
and concerns they had.
I really was not aware that the National Indian Gaming had
such a rural committee available to assist rural tribes.
Therefore, if there are these types of offices, I really do not
know where they are located. Most of the time, if we have an
issue, our regulatory body or the tribal council goes directly
to Indian Gaming headquarters with issues and concerns they
have back at home.
The Chairman. Chairman Frank, in your written testimony you
discussed the need for tribes to be proactive in establishing
measures to protect and safeguard valuable company and customer
information.
It appears it has been several years since your tribe
submitted draft cyber security guidance and standards to the
NIGC for their comments and feedback. Have you received their
comments and feedback on that draft policy that you submitted?
Mr. Frank. To the best of my knowledge, the answer would be
no.
The Chairman. So you are still looking for some follow-up
from the NIGC on your cyber security policy?
Mr. Frank. Yes.
The Chairman. Chairman Stevens, how has the continued delay
in passing the Tribal Labor Sovereignty Act impacted tribes? As
you know, it is legislation we are working on.
Mr. Stevens. I think it continues to impact us overall in
our rights as governments. It is something that is very
important to us and helps us to be able to have an even
relationship with all other entities.
We are probably the only government that has been subject
to this law. I think it kind of sets us back and keeps us kind
of treading upward. We continue to advocate that for many years
it was always recognized, tribes as governments, in the tribal
labor law. It is only recently that we have had to deal with
this.
We have been working on it for many years. Everything that
we explain to our lawmakers clearly identifies us as
governments, governments long before there was even the United
States Constitution. It continues to be an uphill struggle. We
deal with it proactively and we deal with it in a manner that
is non-anti-labor.
I have three uncles, maybe four, I have lost count, but
they helped build the Mackinac Bridge, they built the Sears
building in Chicago, New York, San Francisco, and Los Angeles.
There is a bunch of Native people that built America, so we are
not anti-union. We just want to be treated fairly as
governments.
The Chairman. Again, to all of our witnesses, to both the
first panel and this second panel, I would like to thank you
for being here. We appreciate your written testimony.
Also, we will have the record open for two weeks so that
members may submit any written follow up questions for the
record.
With that, thanks again not only for you being here but the
work you are doing in Indian Country. Thank you so much.
We are adjourned.
[Whereupon, at 4:25 p.m., the Committee was adjourned.]
A P P E N D I X
Prepared Statement of Hon. W. Ron Allen, Tribal Chairman/CEO, Jamestown
S'Klallam Tribe
Chairman Hoeven, Vice-Chairman Udall and distinguished members of
the Committee, on behalf of the Jamestown S'Klallam Tribe, I want to
thank you for the opportunity to submit this testimony for the record.
I am W. Ron Allen and I serve as the Tribal Chairman and CEO of the
Jamestown S'Klallam Tribe.
The Jamestown S'Klallam Tribe is located in northwestern Washington
State, approximately 70 miles west of Seattle on the Olympic Peninsula.
Our Tribal Governmental Campus encompasses an area of 13.5 acres, and
the Tribe has an additional 265 acres in trust. We have approximately
600 Tribal citizens.
The name S'Klallam means ``strong people'' in Coast Salish, and I
owe my own existence today to the strength of my ancestors, as well as,
the current membership of our Tribe, which embodies strength and
resilience. We live on a small amount of land in a rural location, but
our strength comes from our ancestral homelands and waters, including
the Puget Sound and Strait of Juan de Fuca region. Our Tribe is a
signatory to the Point No Point Treaty of 1855 and those lands and
waters were included in the negotiations of the Treaty as well as our
reserved rights to hunt and fish in our usual and accustomed places. In
order to preserve our sovereign rights and remain near our traditional
fishing areas, our ancestors purchased these lands in 1874 so that we
would not be displaced from our Tribal homelands.
Off-Reservation Fee to Trust Acquisitions and Indian Gaming
The Department of the Interior (the Department) has recently issued
an Advanced Notice of Proposed Rulemaking to amend the off-reservation
land acquisitions by creating a new two-step process that will require
Tribes to address numerous criteria, including gaming considerations
that is not currently required. It is a cumbersome and expensive
process to place lands into trust so this would be in fact doubling the
burden on Tribes in an already burdensome system. In addition, the
regulations are overly broad and would allow an opportunity for outside
interests to object for any reason at all so the process could be
dragged out for many years and cost Tribes an exorbitant amount of
money.
The original intent of the Indian Reorganization Act of 1934 (IRA)
is to restore Tribal homelands. Between 1887 and 1934, a hundred
million acres of Indian land was sold or stolen. The 1934 Act and the
intent of the Act should be the primary consideration and criteria that
the Department should consider for placing land into trust. The
proposed regulations would undermine the intent of the IRA by
empowering the State and local governments' interests at the expense of
Tribal sovereignty. Tribes can cite numerous instances where local
governments have taken active steps to delay and/or halt Tribal land
acquisitions and hinder or destroy economic development opportunities.
The Department's proposal improperly inserts gaming considerations
into the fee to trust process as prohibited by the Indian Gaming
Regulatory Act (IGRA). The Department does not have the necessary land
acquisition authority to include this gaming provision in the new
regulations. This is already covered by IGRA. It would insert gaming
into the 151 regulations and put new hurdles into place for land into
trust acquisitions.
Some Tribes, like Jamestown, have small reservations and
reservation land or adjacent land acquisitions are not always feasible.
Local entities often see our success and try to capitalize on it by
increasing the price of their land which essentially locks us out of
the market. We have had a lot of success reacquiring our Tribal
homelands for a variety of purposes, economic development and job
creation, infrastructure development, for cultural purposes and to
protect our sacred sites, and to secure our natural resources and
Treaty rights. We are excellent stewards of our lands and we don't need
other entities telling us what we can and cannot do with our property.
We deserve the same respect that is afforded to State and local
governments when they make land use decisions for development. The
Department should recognize our authority and trust us to carry out our
governmental responsibilities.
The Indian Gaming Regulatory Act and Jamestown S'Klallam Gaming
Our treaty is not a granting of rights from the Federal government
to the Tribe--it is an expression of sovereignty, a decision to cede
certain rights in certain areas in exchange for the reservation of all
inherent rights in another area. As a separate sovereign, our Tribe
exercises substantial undiminished powers, rights, and responsibilities
over its lands and peoples. That includes the right to exercise our
self-governing authority to conduct gaming on our land. The Jamestown
S'Klallam Tribe is a gaming Tribe.
In 1987 while advocating for the passage of IGRA, Jamestown and
seven other Tribes were also working on an initiative to restore
relations between Indian nations and the Unites States on a government-
to-government basis. Our call for government-to-government relations
did not represent any new assertion of Tribal rights. We were merely
trying to reclaim the rights reserved by us and guaranteed in treaties
with the U.S. government. The Self-Governance Demonstration Project,
Title III amendments to P.L. 93-638, the Indian Self-Determination and
Education Assistance Act of 1975 (ISDEAA), was that Tribally-driven
initiative made possible through Congressional authorization and
appropriation support. The amendments were structured to protect the
Trust relationship of the United States to Indian people. The goal of
the Project was to provide Indian Tribes with the tools and the
opportunity to exercise greater control over our affairs and government
responsibilities. As one of the original eight Self-Governance
Demonstration Tribes in the Department, for the past 30 years Jamestown
has administered and managed programs, activities, functions and
services more efficiently and effectively than the Bureau of Indian
Affairs to better address the local needs of the Tribal citizens, which
has also benefitted the surrounding communities. In June 1989, Congress
funded the participation of seven more Tribes in the Demonstration
Project.
Gaming is not a privilege that has been granted to our Tribe or,
Indian Tribes in general. The right to conduct gaming is an inherent
power of government. The 1987 United States Supreme Court decision in
the Cabazon case found that Indian gaming was an exercise and
expression of Tribal government and Self-Determination. In Cabazon, the
Court held that State governments could not impose their regulatory
gaming laws to stop Tribal governments from engaging in gaming
activities. Following that decision, Congress passed the IGRA in 1988
as a means of providing some Federal guidance on Tribal gaming. IGRA
created the National Indian Gaming Commission (NIGC) within the
Department, and tasked the Department with some authority to oversee
per capita payments (for the Tribes that make those payments from
gaming proceeds); as well as review authority for Tribal-State gaming
compacts. Very few Tribes provide their Tribal members per capita
payments. Jamestown does not provide per capita payments; instead, we
invest in opportunities for our members to better their lives through
programs that matter and make a difference--education; health; culture;
and jobs creating economic development.
The Department also retains authority for regulating gaming on
certain lands acquired in trust after Cabazon, as well as approval
authority for newly acquired and additional trust lands for gaming. But
it must be understood that these roles for the Department were not put
in place to create regulatory obstacles to Indian economic development.
In each case, the intent behind the Department's role is to maximize
the positive benefits of Indian gaming, whether it is for individual
Tribal members, or State and Tribal governments. There are many reasons
Tribes negotiate in good faith with states to enter into gaming
compacts, including, to create meaningful opportunities for economic
growth, invest in education and programs and services that promote the
health and welfare of our Tribal citizens, create jobs and
opportunities, assist in addressing the historic loss of Tribal
homelands and to acquire land for economic development.
The current Administration has vowed to thoroughly revamp the
Federal regulatory landscape in favor of reducing burdens and
limitations on economic development. However, some of the proposed
regulatory changes which will in fact increase bureaucratic oversight
and create additional burdens for Tribes, are contrary to Self-
Governance and Self-Determination, and impose barriers to economic
development, investment, and financial self-sufficiency. Tribes have
worked hard to encourage the Department to listen to Tribal leaders on
how to strike the right balance. In 2016, Tribes spent more than $449
million on Tribal, State and Federal regulations: $336.5 million to
fund Tribal Gaming Regulatory Agencies; $90.4 million to reimburse
states for State regulatory activities negotiated and agreed to
pursuant to Tribal/State compacts; and $22.2 million to fully fund the
operations and activities of the National Indian Gaming Commission.
Tribes have a vested interest in protecting the integrity of Indian
gaming. Tribal regulation ensures that our communities are shielded
from organized crime and other corrupt influences that could infiltrate
any economic development activity if left unchecked. Back in the 1990s,
the issue of organized crime was alleged but not one case of organized
crime has been proven on an Indian reservation. However, there are many
factors other than gaming that have attributed to the high incidence of
crime in many Tribal communities. The Indian Law and Order Commission,
which was established pursuant to the Tribal Law and Order Act, found
that a complex jurisdictional scheme, lack of coordination,
accountability and adequate and consistent funding resources led to a
crisis of crime on Indian reservations that have persisted for decades.
It is misleading to equate gaming with the high incidence of crime in
Indian country because there are many Tribes who do not have gaming
facilities who experience high crime in their communities. In our
community, Tribal resources and local collaboration have not only
improved the safety and security of our Tribal citizens but also the
surrounding local communities. We collect data and submit monthly crime
reports to the Department that is reflective of the low incidence of
criminal activity in our community. Tribal regulation of gaming also
mandates that the Tribal community is the primary beneficiary of
gaming, not some outside corporation, and that gaming is fair and
honest.
For my Tribe, gaming revenue provides diversification to our local
economy, employment opportunities for Tribal and non-Tribal citizens,
and funding to provide programs and services to our community
including: scholarships and education funding; healthcare/programs for
vulnerable citizens like our elders and children; cultural programs
that support language, arts, and cultural revitalization; environmental
restoration and preservation of our estuaries and resource habitat that
supports our fishing industry; and, community and local infrastructure,
including, building roads and bridges.
Facts about Indian Gaming
It is extremely important that Congress also understands the
national Tribal gaming picture. Not every Indian Tribe has a casino. In
2016, approximately 244 out of 567 Federally-recognized Tribal
Governments operated 484 gaming facilities in 28 states for a total of
$35.4 billion in revenues. In many cases, due to geographic location
and other limiting factors, those revenues are largely covering
expenses, paying wages and benefits to employees, and otherwise keeping
businesses afloat.
First and foremost, Indian gaming, wherever it is located is about
jobs. Many Tribes operate gaming to generate jobs for their Tribal
citizens and local community residents. In 2016, Indian gaming
generated more than 310,000 direct jobs and when you include indirect
jobs nearly 700,000 Americans are employed which is attributable to
Indian gaming. Our Tribe is one of the largest employers in our
community, which means that a substantial benefit of our Tribe building
a diverse economy is that all residents--Indian and non-Indian--benefit
through jobs and local economic development business enterprises.
Overall, up to 75 percent of the jobs in Tribal casinos go to non-
Indian employees, so the income generated by these enterprises has
substantial spillover effects for entire regions.
For the gaming Tribes that do generate profits, there are rules
about how Tribes may use those funds. What I see when I travel around
Indian Country are communities that use gaming profits to improve and
build their infrastructures, support educational opportunities and
social programs, decrease reliance on public and governmental programs,
and create substantial investments in health care systems, jobs
creation, and economic sustainability. In addition, lenders, States and
Tribes all share in the revenue generated at gaming facilities. Gaming
continues to be the most successful tool for economic development.
A fundamental goal for our Tribe is achieving economic self-
sufficiency/self-reliance through opportunities that enable us to
generate our own unrestricted revenues to address the unfulfilled
Federal obligations and unmet needs in our community. Until we achieve
tax parity we must rely on other sources of revenue, such as, gaming
revenue to support critical governmental services such as police, fire,
first responders, education, housing, and healthcare.
In closing, gaming has allowed us to invest in our local community
and create sustainable Tribal economies that promote economic
development and job creation and contribute to the economic well-being
of our Tribal citizens. It has also fortified our partnerships with
State and local governments and allowed us to make significant
contributions to their economies creating jobs and opportunities for
all Americans.
Thank you for the opportunity to submit this testimony.
______
Prepared Statement of Klint A. Cowan. Shareholder, Fellers Snider
Dear Mr. Chairman:
My name is Klint A. Cowan. I am a shareholder at Fellers Snider, a
law firm in Oklahoma City, Oklahoma. I represent Panhandle Citizens for
Truth in Gaming, Inc., a group of Oklahoma citizens from the Oklahoma
panhandle.
The purpose of my testimony is to address a substantial issue
involving my clients in relation to a proposed off-reservation casino
in Guymon, Oklahoma for the Shawnee Tribe of Oklahoma. Currently, the
Shawnee Tribe has an applicationl for off-reservation gaming and an
application \1\ for a land to trust acquisition pending before the
United States Department of the Interior (the ``Department'') in
relation to a proposed casino site in Guymon. The Shawnee Tribe is
located in Miami, Oklahoma, which is the extreme northeast corner of
Oklahoma. This particular proposed casino, if approved, carries the
substantial likelihood of detrimentally impacting the State of
Oklahoma, as well as any state in the United States, in part, by
setting an extremely dangerous precedent with respect to off-
reservation gaming. For this reason, as fully described below, I am
strongly advocating that clearer guidelines are put in place that will
ensure that both the Indian tribe and local governments and communities
are mutually benefited by any proposed off-reservation casino to ensure
the long-term success and sustainability of off-reservation gaming and
the local communities in which the off-reservation casino is located.
---------------------------------------------------------------------------
\1\ The Obama administration approved the off-reservation gaming
application at the ``midnight hour'' on January 19, 2017. Oklahoma
Governor Mary Fallin, despite the substantial opposition of the
citizens in the panhandle, concurred in the 2-Part Determination on or
about March 3, 2017. The land to trust application is currently pending
before the Department, and the 2-Part Determination is being reviewed
for potential reconsideration.
---------------------------------------------------------------------------
Guymon is located in the approximate middle of the Oklahoma
panhandle. The distance from the Shawnee Tribe's headquarters in the
extreme northeast corner of Oklahoma to Guymon is over four hundred
(400) miles. The Shawnee Tribe has no historical or modern connection
to the panhandle, and no Shawnee tribal members live in the panhandle.
The local governments and communities in the panhandle are strongly
opposed to the proposed casino. Thirty-Eight (38) local governmental
officials in the panhandle submitted letters of opposition to the
Department, while only two (2) governmental officials expressed
support. It is especially notable that the Guymon City Council formally
voted to oppose the proposed casino, and two (2) of three (3) of the
Texas County \2\ Commissioners sent letters of opposition. Moreover, in
addition to numerous letters of opposition, more than two thousand
(2,000) local citizens in the panhandle signed a petition in opposition
to the proposed casino. \3\ In addition, the Shawnee Tribe has not
entered into any agreements with the local governments, or even
attempted to negotiate any such agreements, in an attempt to mitigate
the adverse effects that a casino will have on the local government
budgets, programs and economy.
---------------------------------------------------------------------------
\2\ Guymon is located in Texas County, Oklahoma.
\3\ The petition contains an extraordinary number of signatures
given the sparse population in the panhandle area.
---------------------------------------------------------------------------
This particular set of facts carries a very dangerous precedent for
the State of Oklahoma, and for any state in our country. In the event
that an off-reservation casino is approved at such a substantial
distance from a tribe's headquarters, where the tribe has no historical
or modern connection whatsoever to the area and the local governments
and citizens are strongly opposed to the casino, an off-reservation
casino could be justified in virtually any location in the United
States. Taking the Shawnee Tribe's applications as an example, the
Cities of Omaha, Nebraska; Shreveport, Louisiana; St. Louis, Missouri;
and Memphis, Tennessee are closer to the Shawnee Tribe's headquarters
than the proposed casino site in Guymon, and would conceivably be in
play for a future casino. Much to the contrary, the Shawnee Tribe
claims jurisdiction over land in eastern Kansas and has a gaming
compact pending with the State of Kansas. This land seems imminently
more suitable for off-reservation gaming, as the Tribe has a historical
connection to the eastern Kansas area which is much closer to the
Tribe's headquarters.
It also must be observed that the Department has a history of
relying on precedent to justify off-reservation gaming. For example, in
a 2-Part Determination dated August 23, 2013, former Assistant
Secretary--Indian Affairs Kevin Washburn approved an off-reservation
casino for the Menominee Tribe which was approximately 162 miles from
the tribe's governmental headquarters. Assistant Secretary Washburn
noted that:
``Admittedly, allowing an off-reservation casino located more
than 150 miles from a reservation headquarters might not be
appropriate in any other state, but the Forest County
determination of 1990 is a very specific precedent for such an
action in Wisconsin.''
The proposed Guymon casino carries the substantial likelihood of
serving as precedent to justify an off-reservation casino virtually
anywhere.
Clearer guidance is necessary to foster off-reservation gaming that
will be mutually beneficial to Indian tribes and to local governments
and communities. The Department previously operated under a set of
guidelines known as the ``Artman Guidelines'' \4\ which clarified
certain regulatory limitations for land-to-trust acquisitions to ensure
a mutually beneficial relationship between Indian tribes and local
governments and communities. The Artman Guidelines defined an
appropriate distance between a tribe's headquarters and the proposed
trust acquisition land for the purposes of historical and modern
connection and employment of tribal members. Moreover, the Artman
Guidelines espoused that Indian tribes execute a memorandum of
understanding with the local governments, prior to obtaining approval
of the land-to-trust application. In this way, the Indian tribes and
local governments would be sure to ameliorate any adverse impacts on
the local communities in order to ensure a long-term mutually
beneficial and sustainable relationship.
---------------------------------------------------------------------------
\4\ The ``Artman Guidelines'' were officially known as ``Guidance
on taking off-reservation land into trust for gaming purposes,'' dated
January 3, 2008. Then Assistant Secretary--Indian Affairs, Carl Artman,
issued the guidelines.
---------------------------------------------------------------------------
Without clearer guidance limiting Indian tribes' off-reservation
gaming activities to areas which are proximately located to the tribe's
headquarters, to where the tribe has a historical and modern
connection, and to where the Indian tribes and local governments and
citizens are committed to working with each other to develop a mutually
beneficial and longterm relationship, off-reservation gaming will not
achieve optimal levels of success for Indian tribes and the United
States. I strongly recommend that this Committee pursue and/or mandate
clear guidance to ensure the long-term success and sustainability of
off-reservation gaming.
While I am not providing live-testimony to this Committee, I would
certainly invite any written or verbal questions and feedback from the
Committee members, and will make myself available through any medium
necessary. My contact information is provided in my letterhead. Thank
you for the opportunity to address this Committee.
______
Response to Written Questions Submitted by Hon. Jerry Moran to
Hon. Jonodev Osceola Chaudhuri
Question 1. Mr. Chaudhuri, in 2008, the National Indian Gaming
Commission (NIGC) promulgated technical standards governing Class II
gaming machines to ensure their security and integrity. At the time,
there were concerns that these particular machines were susceptible to
security risks like hacking. Given the prevalence of such risks across
society today, is it fair to assume that such risks have increased
significantly since 2008? If so, how have those risks changed in recent
years?
Answer. As stated in the preamble to the final rule promulgated on
October 10, 2008, the Commission developed the minimum technical
standards ``to ensure the security and integrity of Class II games
played with technologic aids, to ensure the auditability of the gaming
revenue that those games earn, and to account and allow for evolving
and new technology.'' The Commission developed the technical standards
to provide minimum design, construction, and implementation
requirements for Class II gaming systems while the companion internal
control standards were developed to provide minimum controls for the
operation of such systems, as well as the authorization, recognition,
and recordation of gaming and gaming-related transactions. Together,
the technical standards and internal control standards make meaningful
the Commission's monitoring, inspection, and examination authority.
These minimum standards further IGRA's goal of ensuring that gaming is
conducted fairly and honestly, both by operators and by the public,
while leaving specific implementations designed to meet these
regulatory goals to the tribal gaming regulatory authorities and
industry. The Commission thereby sought to build into the technical
standards the flexibility to respond to risks that may change over time
and to implement future technologies unforeseen and undeveloped when
the rule was first promulgated. Finally, the technical standards
expressly provide that they are minimum standards--tribal gaming
regulatory authorities may add additional or more stringent
requirements for manufacturers to implement before a Class II gaming
system may be authorized for use by the tribal gaming operation.
Question 2. Along these same lines, would such improved standards
help preserve the integrity of these Class II machines by minimizing
error and variance rates? If so, please explain further. If not, are
you of the belief that the older technology provides the same levels of
protection against any such errors?
Answer. As noted above, the minimum technical standards were
intended to leave the specific implementations of the standards to the
tribal gaming regulatory authorities and industry. Thus, rather than
requiring the specific use of a particular form of technology, the
technical standards require the implementation of certain features
which may be implemented by a wide array of technology. For example,
the technical standards require components that store financial
instruments and that are not operated under the control of a gaming
operation employee ``shall be located within a secure and locked area
or in a locked cabinet or housing that is of a robust construction
designed to resist determined illegal entry and to protect internal
components.'' How exactly ``robust construction'' is to be implemented
is left to industry to develop, independent testing laboratories to
review, and tribal gaming regulatory authorities and operations to
authorize for use. The standard, however, is clear--assets held in
gaming equipment are to be secure from theft and tampering.
Question 3. Despite the noticeable need for implementing such
security standards for Class II machines in 2008, the NIGC implemented
a five-year ``grandfather period,'' temporarily exempting older gaming
systems to ``avoid any potential significant economic impact'' of
requiring immediate compliance. Another five-year period was granted
again in 2012 and lasts through November of 2018. Given the current
positive economic health of Indian gaming, is it fair to state that
requiring the implementation of such standards at this time would not
cause economic harm to either the tribes or the manufacturers? If not,
please elaborate.
Answer. It is important to note that the economic health of Indian
gaming as a whole, which includes both Class II and Class III gaming,
is not necessarily representative of the economic health of Indian
gaming operations that would be affected by changes to the
implementation requirements of the Class II minimum technical
standards. When the minimum technical standards were implemented in
2008, the Commission recognized that some existing Class II gaming
systems did not meet all of the requirements of the technical standards
and that requiring immediate compliance could have a significant
economic impact. Gaming systems manufactured before the effective date
of the Commission's minimum technical standards (2008 Systems) were
therefore permitted to continue in operation provided that such systems
were submitted to an independent testing laboratory and reviewed for
compliance with standards for, among others, random number generation,
minimum probabilities, and game software verification. Gaming systems
manufactured after the effective date of the Commission's minimum
technical standards are required to be submitted to a testing
laboratory and reviewed for compliance with all applicable technical
standards. In addition, minimum internal control standards apply
uniformly to the operation of all Class II gaming systems, irrespective
of manufacture date. This year, the Commission consulted extensively
with the tribal gaming industry on the continued use of 2008 Systems
and received many comments asserting that there was no evidence that
such systems posed a threat to the integrity of gaming and that
requiring their removal from play would cause significant economic harm
to tribes. Subsequently, after conducting an internal analysis of the
potential issues associated with the continued use of 2008 Systems, the
Commission issued a proposed rule which allows such use provided that
the systems are subject to additional annual review by tribal gaming
regulatory authorities.
Question 4. By not adopting more modern standards with regard to
technology used in Class II machines, do we risk impeding innovation
within the Class II gaming manufacturer community? If so, is it fair to
say that this lack of innovation negatively impacts the tribes
themselves as any potential gamers may stay away due to either security
or integrity concerns?
As noted above, the minimum technical standards were intended to
leave the specific implementations of the standards to the tribal
gaming regulatory authorities and industry. Thus, rather than requiring
the specific use of a particular form of technology, the technical
standards require the implementation of certain features which may be
implemented by a wide array of technology. In addition, the minimum
technical standards allow Class II gaming systems to be modified over
time as manufacturers innovate new implementations of the required
features. Tribes and tribal gaming regulatory authorities may also add
additional or more stringent requirements for manufacturers to
implement. The technical standards, in conjunction with internal
control standards, ensure that security concerns are identified and
mitigated, thereby meeting the goal of ensuring that Class II gaming is
conducted fairly and honestly, both by operators and by the public.
______
Response to Written Questions Submitted by Hon. Tom Udall to
John Tahsuda III
Question 1. The Administration recently published an advance notice
of proposed rulemaking \1\ indicating its intent to revise the off-
reservation land into trust process for parcels that could later be
eligible for gaming.
---------------------------------------------------------------------------
\1\ Off-Reservation Trust Acquisitions and Action on Trust
Acquisition Requests, available at https://www.reginfo.gov/public/do/
eAgendaViewRule?pubId=201704&RIN=1076-AF36
Question 1a. In the 29 years since the passage of IGRA, a governor
concurred in a positive two part determination only 10 times. And of
the over 1,700 successful trust acquisitions processed from 2008 to
2014, fewer than 15 acquisitions were for gaming purposes, with even
fewer for off-reservation gaming purposes. What is the Administration's
impetus for revising the regulations regarding off-reservation
acquisitions?
Answer. As a point of clarification, the Department did not issue
an advance notice of proposed rulemaking; rather, on October 4, 2017,
the Department distributed a draft of possible revisions to tribal
leaders for consultation purposes. The Department withdrew the draft
and then sent a revised consultation schedule to tribal leaders on
December 6, 2017, with questions for discussion at the consultation
sessions. The purpose of the consultation is to clarify the land into
trust process and to seek ways to save tribal resources.
With regard to your question, the application process for taking
land into trust for gaming purposes can be costly and time consuming,
particularly when compared to non-gaming applications. Currently,
tribal applicants must submit all the application information,
including certain resource-intensive application information, before
the Department will consider the trust application. Rather than
requiring tribes to expend much-needed resources pursuing a trust
acquisition with no certainty of the outcome, the Department is
considering ways to revise the existing regulations to reduce the
burden on tribal applicants. The Department is also open to considering
other revisions to the regulations and the land-into-trust process and
criteria and has requested input from tribes for their ideas.
Question 1b. In your written testimony, you noted that gaming can
introduce ``new complications'' to local communities, such as ``a drain
on local resources'' due to crime. Given that IGRA and its implementing
regulations already require Interior to conclude that an acquisition
would not be detrimental to the surrounding community, how does
Interior intend the new regulations to give greater consideration of
impacts to communities than the existing requirements?
Answer. Local communities are often in the best position to assess
potential impacts from off-reservation gaming that would affect them.
Off-reservation lands taken in trust can potentially create
jurisdictional impacts in local communities, complicate land-use
planning, and affect the provision of local services such as law
enforcement. The Department is considering whether the regulations
should request evidence of any cooperative efforts to mitigate impacts
to the local community, including copies of any intergovernmental
agreements negotiated between the Tribe and state and local
governments, if any, or an explanation as to why no such agreements or
efforts exist. In this way, the Department would be better able to
determine potential impacts to the surrounding communities. In
practice, tribal applicants often provide information about their
cooperative agreements even though it is not specifically required by
the existing Part 151 regulations.
Question 1c. The Administration proposes to give greater weight to
local concerns the further away the proposed acquisition is from the
Tribe's reservation. This seems to be a thumb on the scales in a manner
not intended by the statute. What is the Department's reasoning?
Answer. Part 151 currently requires that as the distance between a
tribe's reservation and the land to be acquired increases, the
Secretary shall give greater scrutiny to the tribe's justification of
anticipated benefits from the acquisition, and greater weight to
concerns raised by state and local governments as to the acquisition's
potential impacts on regulatory jurisdiction, real property taxes, and
special assessments. See 25 C.F.R. 151.11(b). The Department is
considering whether greater clarity on what factors would provide
evidence to support a decision on the relative justifications and
concerns would be helpful to the tribe and surrounding communities.
Question 1d. You testified that the Department had not adequately
applied the Part 151 regulations in the past few years. Please provide
the specific trust acquisitions to which you referred in your testimony
where the Department believes it had not previously considered the
factors in an adequate manner.
Answer. As stated in my verbal response to this question at the
oversight hearing on October 4, 2017, ``I think that it is our [the
Department's] belief that past actions over the years did not
adequately apply our regulations as they should have so that all
factors and criteria to be adequately considered were not adequately
considered. . .some were given greater priority over others.''
It is our commitment to consider all the factors we are required to
consider by the law and by our regulations and apply those to the
factual situation in front of us.
Question 1e. We understand that the Department intends to hold
tribal regional consultation sessions on the draft regulations. Will
the Department conduct similar consultations once the regulations are
formally issued? In other words, will tribes have additional
opportunities to comment as the proposal advances toward final?
Answer. On December 6, 2017, the Department advised tribes that it
would be consulting on a list of questions related to the fee-to-trust
process, and announced six consultations for January and February. The
Department will determine next steps following those consultation
sessions, in compliance with the Administrative Procedure Act and the
Department's consultation policy.
Question 1f. In the draft regulations, Interior proposes a new
requirement that a tribe demonstrate a historic or modern connection to
the land for off-reservation acquisitions. What is the statutory basis
for this requirement?
Answer. Section 5 of the Indian Reorganization Act provides the
general authority for the Secretary to acquire land in trust for
Tribes. The Secretary has the authority to promulgate regulations, as
found in Part 151, to implement the statutory grant of discretionary
authority in Section 5.
The draft changes reflect the Department's continued interest in
balancing tribal interests. In practice, tribal applicants often
provide information on their historic or modern connection to the land
even though it is not specifically required by the existing Part 151
regulations.
Question 1g.The last time an administration imposed a
``commutability requirement'' like the kind reflected in Interior's
recently circulated draft--tribes objected on the grounds that such a
rule prejudiced tribes with reservations away from population centers
and ignored historical facts regarding where the federal government
created reservations. What is the Administration's response?
Answer. The draft revisions did not impose a specific distance
requirement in recognition that each Tribe's circumstances may differ.
Rather, the draft revisions reflected factors, like those in the
existing Part 151 regulations, which analyzed the anticipated benefits
to the Tribe from the acquisition and the concerns of local
governments.
Question 2. The Tenth Circuit recently held that Part 291 is
inconsistent with IGRA, leaving tribes in the 10th Circuit without
administrative redress if a state decides it does not want to negotiate
a compact. If Interior cannot issue Secretarial procedures, what
options do tribes have now, given IGRA's intent to give tribes at least
some bargaining power relative to the states during the compact
negotiation process?
Answer. Tribes are authorized by the ``good faith lawsuit''
provision of IGRA to file suit against a state that has not negotiated
in good faith. \2\ A state may, however, raise an Eleventh Amendment
defense to such a lawsuit which would then be dismissed due to the non-
waiver of the state's sovereign immunity. \3\ Secretarial Procedures
promulgated pursuant to 25 C.F.R Part 291 would be a Tribe's only other
recourse to engage in class III gaming in circuits other than the Tenth
and Fifth. \4\ In circuits where states have refused to negotiate with
Tribes and have invoked their Eleventh Amendment rights, Tribes retain
the ability to conduct class II gaming on Indian lands without a
tribal-state compact.
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\2\ See 25 U.S.C. 2710 (d)(7)(A)(i).
\3\ See Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996).
Only California has a waiver of sovereign immunity for tribal-state
compacts.
\4\ See Texas v. U.S., 497 F.3d 491 (5612007); and New Mexico v.
Zinke, Nos. 14-2219 # 14-222 (10th April 21,2017).
Question 3. As a part of the advance notice of proposed rulemaking
referenced above, the Administration proposed a 30-day delay before
finalizing trust acquisitions. In light of Match-E-Be-Nash-She-Wish
Band of Pottawatomi Indians v. Patchak, in which the Supreme Court
found that challenges to trust acquisitions are ``garden-variety
[Administrative Procedure Act] claim[s]'' subject to a six-year statute
of limitations and preliminary injunctions, what is the purpose of a
30-day stay?
Answer. As a point of clarification, the Department did not issue
an advance notice of proposed rulemaking; rather, on October 4, 2017,
the Department distributed a draft of revisions to tribal leaders for
consultation purposes. The Department then sent a revised consultation
schedule to tribal leaders on December 6, 2017, with questions for
discussion at the consultation sessions.
With regard to the 30-day stay that was included in the draft
revisions distributed October 4, the Department is interested in
tribes' input on the stay. Currently, there is no general authority for
the executive branch to take lands out of trust. The authority to take
trust lands out of trust status rests with Congress and potentially the
judicial branch. The draft revisions would reinstate the 30-day waiting
period to enable potential litigants to file during that 30-day period
before title is transferred into trust. The 30-day waiting period is
intended to help prevent situations where title is transferred into
trust, and a Tribe expends resources developing that land, only to face
protracted litigation and the possibility of having the land be taken
out of trust.
Question 4. When an Indian tribe and a state submit a Class III
gaming compact or compact amendment to the Secretary for review,
Congress authorized the Secretary to take only one of two actions:
approve the compact amendment, or disapprove the compact amendment. If
the Secretary fails to take either action within 45 days of submittal,
Congress mandated that the compact or amendment will be ``considered to
have been approved,'' a directive that is also reflected in Interior's
regulations. Recently, the Secretary ``returned'' a compact amendment
to the Mohegan Tribe of Connecticut and to the Mashantucket Pequot
Tribal Nation of Connecticut, rather than taking action on it.
Question 4a. Can you indicate where in IGRA Congress authorized the
Secretary to ``return'' a submitted compact amendment without
triggering IGRA's deemed approved requirement?
Answer. The Department did not act on the proposed compact
amendments because there was insufficient information to determine
whether they fell within the Secretary's jurisdiction pursuant to IGRA
and whether the Secretary had authority to approve or disapprove them.
Question 4b. Given that the compact amendment is now deemed
approved by operation of IGRA and its implementing regulations, when
will the Secretary publish notice of the approval in the Federal
Register?
Answer. The Department did not have sufficient information to
determine whether the proposed compact amendments fell within the
Secretary's statutory authority pursuant to IGRA. The Department
specifically rejected the deemed approved option, therefore there are
no plans to publish a notice of approval in the Federal Register for
the proposed compact amendments.
[all]