[Senate Report 108-380]
[From the U.S. Government Publishing Office]
Calendar No. 739
108th Congress Report
SENATE
2d Session 108-380
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A BILL TO AMEND THE INDIAN GAMING REGULATORY ACT TO INCLUDE PROVISIONS
RELATING TO THE PAYMENT AND ADMINISTRATION OF GAMING FEES, AND FOR
OTHER PURPOSES
_______
September 28, 2004.--Ordered to be printed
_______
Mr. Campbell, from the Committee on Indian Affairs; submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 1529]
The Committee on Indian Affairs, to which was referred the
bill (S. 1529) to amend the Indian Gaming Regulatory Act to
include provisions relating to the payment and administration
of gaming fees, and for other purposes, having considered the
same, reports favorably thereon with an amendment in the nature
of a substitute and recommends that the bill (as amended) do
pass.
Purpose
The primary purpose of S. 1529, the Indian Gaming
Regulatory Act Amendments of 2004, is to clarify and amend the
provisions of the Indian Gaming Regulatory Act of 1988, Pub. L.
100-497, 25 U.S.C. Sec. 2501 et seq. (``IGRA''), applicable to
the Department of Interior (``DoI''), the National Indian
Gaming Commission, and the Indian tribes. This legislation is
necessary to make amendments to the IGRA so that Indian tribes
may continue to be the primary beneficiaries of gaming
operations conducted on Indian lands, and to reaffirm and
further the original goals of the IGRA.
Background
1. Indian Gaming Pre-IGRA
Indian gaming began in earnest in the late 1970s with
several tribes, from New York to Florida conducting ``high-
stakes'' bingo operations. Other tribes quickly followed suit,
and by the mid-1980s over 100 tribes were conducting bingo
operations, which generated more than $100 million in annual
revenues. Some states, particularly Florida and California,
attempted to assert jurisdiction over these tribes. The tribes
resisted strenuously, citing long-standing Federal law and
policy which provided for Federal and tribal jurisdiction over
Indian lands, instead of state jurisdiction.
2. Supreme Court Cabazon Decision
These legal disputes culminated in a ruling by the Supreme
Court in California v. Cabazon Band of Mission Indians, 480
U.S. 202 (1987) (``Cabazon''). In that decision, the Supreme
Court, using a balancing test between Federal, state, and
tribal interests, found that tribes, in states that otherwise
allow gaming, had a right to conduct gaming activities on
Indian lands largely unhindered by state regulation.
Specifically, the Cabazon Court held that Pub. L. 83-280 states
that laws that regulated, but did not criminally prohibit all
forms of gaming within their borders, could not regulate gaming
conducted by Indian tribes on Indian lands in those states. In
reaching this decision, the Court also emphasized the Federal
government's policy of Indian tribal self-governance, including
the policy of encouraging tribal self-sufficiency and economic
development.
3. IGRA
The Cabazon decision engendered a great deal of discussion
regarding the need for Federal legislation to address Indian
gaming and its regulation. Tribes, satisfied with the Cabazon
decision, saw no need for Federal legislation. States sought
Federal legislation overruling Cabazon and providing an
extension of state jurisdiction over Indian lands for gaming
regulation. Some in Congress, including current and past
members of this Committee, saw wisdom in creating a
comprehensive regulatory framework under Federal law, that
would bring some order to the complex relationship between the
Federal government, tribes and states as it related to the
conduct and regulation of Indian gaming.
The result of those discussions was the IGRA, enacted a
year after the Cabazon decision, which established a
comprehensive framework for the operation of Indian tribal
gaming across the United States. The primary purpose of the
IGRA, as stated by Congress was ``to provide a statutory basis
for the operation of gaming by Indian tribes as a means of
promoting tribal economic development, self-sufficiency, and
strong tribal governments.'' \1\ The secondary purpose was ``to
provide a statutory basis for the regulation of gaming by an
Indian tribe adequate to shield it from organized crime and
other corrupting influences, to ensure that the Indian tribe is
the primary beneficiary of the gaming operation, and to assure
that gaming is conducted fairly and honestly by both the
operator and players.'' \2\
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\1\ Pub. L. 100-497, 102 Stat. 2467, Sec. 3 (1988).
\2\ See id.
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In enacting the IGRA, Congress expressly rejected arguments
by states for abrogating tribal sovereignty and imposing state
regulation of tribal gaming. Instead, the IGRA established
three different categories of gaming and a regulatory system
applicable to each. The IGRA also established a Federal
regulatory commission, the National Indian Gaming Commission
(``NIGC''), to provide Federal oversight over certain forms of
tribal gaming.
The three categories of gaming established by the IGRA, and
the regulatory system for each, are:
Class I, which refers to traditional and
ceremonial games conducted by tribes, and for which the
IGRA provides exclusive regulatory jurisdiction by the
tribes;
Class II, which refers primarily to bingo,
games like bingo, pulltabs, and some non-banked card
games, and for which the IGRA provides primary
regulatory jurisdiction by the tribes and secondary
regulatory jurisdiction by the NIGC; and
Class III, which refers to all other types
of gaming, and for which the IGRA provides a unique
method of shared jurisdiction between tribes and states
through mutually agreed upon compacts, and over which
the NIGC exercises oversight.
The IGRA created the NIGC, a 3-member independent Federal
regulatory agency charged with secondary regulation of Class II
gaming and oversight of Class III gaming. Under its mandate,
the NIGC is charged with approving management contracts; \3\
conducting background investigations; \4\ approving tribal
gaming ordinances; \5\ reviewing and conducting audits of the
books and records of Indian gaming operations; \6\ and
enforcing violations of the IGRA, its own regulations, and
approved tribal gaming ordinances.\7\
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\3\ See id., Sec. 6(a)(4).
\4\ See id., Sec. 11(b)(2)(F).
\5\ See id., Sec. 6(a)(3).
\6\ See id., Sec. 7(b) (4) and Sec. 11(b)(2)(C).
\7\ See id., Sec. 14.
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With regard to Class III gaming, it should be noted that
many Indian tribes, working in tandem with the states where
they are located, have developed sophisticated regulatory
frameworks for their operations. Pursuant to joint tribal-state
compacts, these tribes have put in place effective standards
for the conduct of their games, as well as financial and
accounting standards for their operations. The need for
intrusive oversight in these instances is lessened because
tribal regulatory bodies and those of their respective states
have created effective oversight for tribal gaming operations.
4. The Seminole Decision
Unfortunately, the compacting process, originally
envisioned as an opportunity for tribes and states to enter
into mutually beneficial agreements addressing legitimate
issues of concern to each, became an area of significant
discord. Several states, including Florida, refused to enter
into negotiations with tribes, choosing instead to assert legal
challenges to the IGRA. These challenges culminated in a
decision by the U.S. Supreme Court in Seminole Tribe v.
Florida, 517 U.S. 44 (1996) (``Seminole''). In that decision,
the Court held that provisions in the IGRA which authorized
tribes to bring suit in Federal court for ``bad faith refusal
to negotiate'' were unconstitutional infringements on the State
of Florida's 11th Amendmentimmunity to suit.
Following the Seminole decision, the Secretary of the
Interior, using authority provided by IGRA, promulgated
regulations pursuant to which a tribe can request
``procedures'' for regulation of Class III gaming. Despite
requests from several tribes, to date the Secretary has not
issued such ``procedures'' for any tribe.
5. The Indian Gaming Industry in 2004: A Snapshot
At the time the IGRA was enacted, Indian gaming was a
relatively modest industry consisting mainly of what are now
known as ``class II'' high-stakes bingo operations. At that
time, virtually no one contemplated that gaming would become
the $16.7 billion \8\ industry that exists today. Indian gaming
is providing tribes with much-needed capital for development
and employment opportunities where few previously existed.
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\8\ See National Indian Gaming Commission, July 13, 2004.
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Though gaming revenues have grown exponentially in the last
sixteen years, the IGRA has been amended only one time. In
1997, Committee on Indian Affairs Chairman Campbell introduced
an amendment that authorized the NIGC to collect increased fees
which would fund the Commission's regulatory efforts in Indian
Country.\9\ Before the change in the fees structure, the NIGC
was funded almost exclusively with Federal appropriations, and
was barely able to keep up with the ever-growing number of
tribal gaming operations and its statutorily mandated duties
under the IGRA.
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\9\ Prior to the 1997 amendment, the NIGC budget was limited to
Federal appropriations which could match fees collected from the tribes
based on their ``class II'' gaming revenues. The cap on those class II
fees was set at $3,000,000.
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Since 1997, the NIGC has made significant strides in its
role as the Federal regulatory body charged with oversight in
the field of Indian gaming, having opened five field offices
and employing additional necessary staff to oversee tribal
gaming operations across the country and fulfill the NIGC's
monitoring responsibilities.\10\
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\10\ See e.g. Hearing to Provide Information on the Activities of
the National Indian Gaming Commission, Before the Senate Committee on
Indian Affairs, S. Hrg. 106-730, 106th Cong., at p. 3 (2000) (Testimony
of Montie Deer, Chairman, National Indian Gaming Commission). See also
Hearing on Indian Gaming Regulatory Act: Role and Funding of the
National Indian Gaming Commission, Before the Senate Committee on
Indian Affairs, S. Hrg. 108-67, Pt. 1, 108th Cong., at p. 3-4 (2003)
(Testimony of Phil Hogen, Chairman, National Indian Gaming Commission).
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Statement of Policy
The regulation of gaming activities has been the subject of
much controversy since the formation of the United States.
Policies at the Federal and state level have swung widely
between outright bans, to encouragement and expansion of gaming
by individual states. Many states now participate in gaming
through lotteries, which provide significant revenues for state
coffers. A number of states have legalized commercial gaming,
from full-scale ``Las Vegas''-style casinos, to slot machines
at horse racing tracks, called ``racinos''.
When enacting the IGRA, Congress acknowledged the ``long-
and well-established principle of Federal-Indian law as
expressed in the United States Constitution, reflected in
Federal statutes, and articulated in decisions of the Supreme
Court, that unless authorized by an act of Congress, the
jurisdiction of State [sic] governments and the application of
state laws do not extend to Indian lands.'' \11\ Indeed, this
Committee expressly ``recognize[d] and affirm[ed] the principle
that by virtue of their original tribal sovereignty, tribes
reserved certain rights when entering into treaties with the
United States, and that today, tribal governments retain all
rights that were not expressly relinquished.'' \12\ For over
half-a-century, this
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\11\ S. Rep. 100-446, at p. 5 (1988).
\12\ Id.
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principle has only been modified in those instances where the
limited application of state law on Indian lands was
conditioned upon the consent of tribal governments.
The IGRA, is one such instance. Only through the mutual
negotiation of a ``tribal-state compact'' for Class III gaming,
can the tribe and state agree upon a division of regulatory
jurisdiction between their governments. The division of
jurisdiction authorized by the IGRA was strictly limited to the
regulation of gaming activities, and did not open the door to a
broad invasion of tribal jurisdiction. This Committee noted the
unusual nature of the tripartite division of gaming regulation
between tribes, states and the Federal government, and
expressed its intent that the IGRA ``provide a means by which
tribal and State governments can realize their unique and
individual governmental objectives, while at the same time,
work together to develop a regulatory and jurisdictional
pattern that will foster a consistency and uniformity in the
manner in which laws regulating the conduct of gaming
activities are applied.'' \13\
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\13\ Id., at p. 6.
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Through the IGRA, it was also the express intent of
Congress that Indian tribes be the primary beneficiaries of
gaming activities on Indian lands.\14\ First and foremost,
Indian gaming was intended to benefit Indian tribes by
promoting economic development, self-sufficiency, and strong
tribal governments.\15\
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\14\ See supra note 1, Sec. 3.
\15\ Id.
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The Committee views these original purposes of the IGRA to
continue to be the guiding principles of Federal policy dealing
with Indian gaming. It is the intent of this Committee that
these original purposes guide the reading and interpretation of
the amendments to the IGRA embodied in S. 1529.
An Overview of the Provisions of S. 1529
On May 14, 2003, and July 9, 2003, the Committee held
oversight hearings on the IGRA, receiving testimony from the
DoI, NIGC, and Indian tribes engaged in gaming. S. 1529 was
introduced on July 31, 2003, by Senator Campbell, for himself
and Senator Inouye. On March 24, 2004, the Committee held a
legislative hearing on S. 1529.
The hearings held in 2003 provided the Committee with
significant information on much-needed updates and necessary
improvements to the IGRA. S. 1529 was drafted based upon that
information, and additional information received from other
parties. The legislative hearing held on S. 1529, provided
critical feedback on the bill language.
As approved by the Committee, 5.1529 provides several
amendments to the IGRA, including additional resources and
accountability for the NIGC, parameters and guidance for
revenue sharing discussions, and several technical
clarifications.
1. AMENDMENTS IMPACTING THE NATIONAL INDIAN GAMING COMMISSION
Funding and the Role of the NIGC
Since Fiscal Year 1998, no Federal funds have been
appropriated for the operation of the NIGC. Rather, the agency
has been funded solely with fees assessed against tribal gaming
operations. The IGRA currently caps those fees at $8 million
annually. According to the NIGC, the growth of the Indian
gaming industry is such that fees paid will be reduced over
time, and will continue to be reduced if growth continues at
the current rate.\16\
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\16\ See National Indian Gaming Commission, Press Release, August
17, 2004.
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The Fiscal Year 2003 Omnibus Appropriation Act, Pub. L.
108-7, provided no Federal funds for the NIGC, but did provide
a 50% increase in assessable fees--from $8 million to $12
million--and authorized the NIGC to levy $12 million in fees on
tribal gaming operations. The fee hike is effective in Fiscal
Year 2004. Similarly, the Fiscal Year 2004 Interior
Appropriations Act, Pub. L. 108-108, authorizedthe NIGC to levy
$12 million in fees effective in Fiscal Year 2005.
S. 1529 makes permanent increases in fees assessable by the
NIGC, and raises the statutory fee cap from the current $8
million to $13 million over five years. The Committee takes
this action with some trepidation, however. Since the fee
structure was changed in 1997, the Committee has held a number
of legislative and oversight hearings on the issue of
regulation, fees for the NIGC, and related matters. During the
last several years, several themes have emerged.
Tribes have expressed increasing alarm with what they
perceive as the explosive growth and activity of the Commission
since the fee increase was enacted in late 1997. In hearings
before this Committee during the 106th Congress, the National
Indian Gaming Association (``NIGA'') testified that--
NIGA remains supportive of a respected, independent,
objective and efficient NIGC, yet no communications
have been shared with us regarding how the NIGC plans
to meet those goals. Instead we face a number of new
regulatory initiatives that infringe upon Indian
nations' governmental authority and are duplicative of
existing regulatory structures.\17\
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\17\ ``See Hearing on the Indian Gaming Regulatory Act, Before the
Senate Committee on Indian Affairs, 106th Cong., S. HrG. 106-730 at p.
49 (2000) (Testimony of Richard G. Hill, Chairman, National Indian
Gaming Association).
Tribes have also raised concerns regarding new regulatory
initiatives pursued by the NIGC since the 1997 fee increase.
The Committee notes that no new regulatory powers are granted
to the NIGC by S. 1529. While it encourages the NIGC to fulfill
its statutory duties and regulatory responsibilities, the
Committee also strongly encourages the NIGC to respect the
primary regulatory role of tribes and states through tribal-
state compacts.
In response to these concerns, S. 1529 places a formal
consultation responsibility on the NIGC with new IGRA Sec. 19.
The Committee is encouraged by the NIGC's recent action to
promulgate a formal government-to-government consultation
policy. The Committee strongly believes that justification for
the activities of the NIGC should be more transparent to the
tribes to whom they are charged with providing services and
regulation and to the public. It is the considered opinion of
the Committee that public trust is best achieved through the
development of strategic and performance plans by the NIGC,
consistent with Sec. 19, reported to Congress and made
available to the regulated industry and the public, even when
prepared no less often than biennially.
S. 1529 requires that the fees assessed by the NIGC be
related to the statutory authorities and duties delegated to
the NIGC under the IGRA.This limitation is designed to address
tribal concerns that fees paid to the NIGC be used only for the
purposes of the IGRA, and not for other Federal purposes.
In establishing this fee structure, and in conjunction with
the consultation requirements in S. 1529, adding a new Sec. 19
to the IGRA, it is the Committee's intent that the Commission
consult with tribes on a government-to-government basis in
setting fees each year.
Expanding the Reporting Requirements of the NIGC
S. 1529 makes the NIGC responsible for the submission of
additional information not currently required by the IGRA.
Specifically, Sec. 2(c) of the bill requires the NIGC to submit
strategic and performance plans to Congress biennially. It is
the Committee's belief and intent that this provision will
provide the transparency and accountability needed between the
regulator, the NIGC, and the regulated, the tribal gaming
operations.
This Committee has previously proposed that the NIGC be
subject to the requirements of the Government Performance and
Results Act of 1993 (``GPRA''),\18\ a position supported by
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\18\ See Pub. L. 103-62, 107 Stat. 285 (1993).
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the General Accounting Office.\19\ Further consultation with
the NIGC, however, has led the Committee to believe that the
detailed annual reporting required by GPRA may be too onerous
for the NIGC, a relative small Federal agency. The Committee
believes strongly, however, that the planning and operations of
the NIGC should be more accessible to the Congress and the
regulated community.
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\19\ See Letter from General Accounting Office to Rep. Dick Armey,
Rep. Dan Burton, and Sen. Fred Thompson, p. 10 (July 20, 1999) (``While
this may not be a major activity within Interior, the sensitivities of
Indian gaming issues and the potential for criminal activities related
to Indian gaming, would seem to indicate that Indian gaming is an
important area in which to develop performance goals and measures to
explain what it [NIGC] plans to accomplish with these funds.'').
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In striking a delicate balance on this score, the language
in S. 1529 has been changed to require the Commission to
prepare and submit biennial reports to Congress and incorporate
its strategic and performance plans into each report. The
language of GPRA has been used as a model for the requirements
of the strategic plan, which is to include a performance plan
similar to performance plans under GPRA.
The Committee is strongly encouraged by the support of the
Administration for strategic planning by the NIGC, as evidenced
by S. 2232, a bill introduced on behalf of the Administration
by Chairman Campbell on March 25, 2004. This position is a
welcome change from prior opposition to such reporting
requirements by the NIGC.\20\
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\20\ See Letter from National Indian Gaming Commission Chairman
Montie Deer to Sen. Ben Nighthorse Campbell, p. 4 (Sept. 14, 2000)
(``The resources of a small agency that would be directed to
development of performance plans outweigh the benefits to be
achieved.'').
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2. THE USE OF TECHNOLOGICAL AIDS IN ``CLASS II'' GAMING
A major concern, especially to tribes that do not offer
Class III, ``casino-style'' gaming, is the continued conflict
between the Gambling Devices Act, also known as the Johnson
Act,\21\ and the use of technological aids in the operation of
Class II gaming. The language of the IGRA is unambiguous in
that technological aids may be used by a tribe to conduct Class
II gaming and not run afoul of the Johnson Act. Similarly,
report language accompanying the IGRA provides clear
Congressional intent to authorize Indian tribes to maximize
Class II operations through the use of technological advances.
The report states in pertinent part that,
\21\ See 15 U.S.C. Sec. Sec. 1171-1178 (2004).
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[t]he Committee intends that tribes should 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.\22\
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\22\ See supra note 10 at p. 9.
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Additionally, the Committee specifically stated its intent
with regard to the application of the Johnson Act
The phrase ``not otherwise prohibited by Federal
Law'' refers to gaming that utilizes mechanical devices
as defined in 15 U.S.C. 1175 [the Johnson Act]. That
section prohibits gambling devices on Indian lands but
does not apply to devices used in connection with bingo
and lotto. It is the Committee's intent that with the
passage of this act, no other Federal statute, such as
those listed below, will preclude the use of otherwise
legal devices used solely in aid or conjunction with
bingo or lotto or other such gaming on or off Indian
lands.\23\
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\23\ See supra note 10 at p. 12 (emphasis added).
Despite clear Congressional intent, the United States
Department of Justice (``DoJ'') has taken a different view and
has embarked on a series of actions in the Federal
courtsagainst tribes who use technological aids in the conduct of Class
II gaming.\24\ These lawsuits allege that tribes operating Class II
games which use technological aids are violating the Johnson Act. All
of these actions have been unsuccessful at the Federal District Courts,
Courts of Appeal, and recently at the Supreme Court.\25\
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\24\ See e.g. United States of America v. 103 Electronic Gambling
Devices, 223 F.3d. 1091 (9th Cir. 2000), and United States v. 162
Megamania Gambling Devices, 231 F.3d 713 (10th Cir. 2000) (Where the
game at issue was a bingo game played at an electronic terminal that
connected the player with other players at other terminals, all playing
against one another for the first ``bingo'', both circuit courts
unequivocally found that the terminal was not a Johnson Act device or a
Class III game.). See also Diamond Game Enterprises, Inc. v. Reno, 230
F.3d 365 (D.C. Cir. 2000).
\25\ See Ashcroft, et al. v. Seneca-Cayuga Tribe of Oklahoma, et
al., 72 U.S.L.W. 3550, 72 U.S.L.W. 3551, 72 U.S.L.W. 3372, 124 S.Ct.
1505, 158 L. Ed. 2d. 153 (U.S. Mar. 1, 2004), cert. denied 327 F.3d
1019 (10th Cir. 2003) (In its opinion, the 10th Circuit held ``that if
a piece of equipment is a technologic aid to an IGRA Class II game, its
use, sale possession or transportation within Indian country is then
necessarily not proscribed as a gambling device' under the Johnson Act
. . . [and] a court need not assess whether, independently of IGRA,
that piece of equipment is a `gambling device, proscribed by the
Johnson Act.'' Id. at 1035). See also related case U.S. v. Santee Sioux
Tribe, 324 F.3d 607 (8th Cir. 2003) (In its opinion, the 8th Circuit
found ``that nothing in the statute proscribes the use of technological
aids for any games, so long as the resulting exercise falls short of
being a fascimile.'' Id at 613).
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The Committee, a number of whose members either actively
sponsored or were involved in the consideration of the original
legislation that was enacted as the IGRA, intends to clarify
what it already believes to be the law--that the Johnson Act
does not apply to technological aids used in connection with
Class II games.
It is the intent of the Committee to affirm its position
with regard to Class II games and express its agreement with
the Federal courts' interpretation of the IGRA in the cases
cited above. Indeed, it is the considered opinion of this
Committee that further litigation of the applicability of the
Johnson Act to Class II games and technologic aids is not an
efficient use of tribal and Federal resources.
The Committee does acknowledge, however, legitimate
concerns raised by the NIGC and the DoJ regarding gaming
devices that are not legally considered Class II technologic
aids. To assist the NIGC in its enforcement efforts 2(d)(2) of
S. 1529 adds a new subsection (d) to Sec. 7 of the IGRA which
provides for registration and tracking of Class II technologic
aids manufacturers and transporters similar to the regime
provided by the Johnson Act.\26\
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\26\ See 15 U.S.C. Sec. 1173.
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Under this new subsection, manufacturers and dealers of
technologic aids must annually register with the NIGC. The
scope of persons and entities subject to this provision is
intentionally broad, excluding only Indian tribes. It is the
Committee's belief that every person or entity making,
repairing, or dealing with tribes in Class II gaming aids
should be able and required to register and keep records of
such technologic aids. The new subsection also requires that
every Class II technologic aid handled by a registrant will be
required to have a serial number attached to it.
S. 1529 places on the NIGC the responsibility to regulate
and enforce these new requirements. It is the considered
opinion of the Committee that the NIGC, not the DoJ, has
developed the necessary regulatory expertise to most
effectively implement this provision, and has informally
acknowledged its capacity to assume these new responsibilities.
To better implement these provisions, the Committee
encourages the NIGC, consistent with new Sec. 19, to develop
effective guidelines to aid tribal regulatory agencies in
regulating the manufacture and use of Class II technologic
aids. Ideally, such regulations will provide a consensus
onindustry guidelines that will provide for uniform and consistent
application by tribal regulatory agencies. In so doing, the Committee
reaffirms its intent that tribal governments have the primary
regulatory responsibility for Class II gaming.
3. LICENSING OF TRIBAL GAMING COMMISSIONERS
S. 1529 requires that tribes must address, in addition to
key employees and primary management officials, the background
checks of tribal gaming commissioners and tribal gaming
commission employees.
The specific language of Sec. 2(f) of S. 1529 requires
tribes to address the background checks of tribal gaming
commissioners and their employees on a regular basis. This
language does not require a tribe to have a tribal gaming
commission, nor does it prohibit a tribe from determining the
makeup of those commissions. It merely requires that, where
tribal gaming commissions have been established, that those
commission members and commission employees meet the standards
applicable to the employees they are responsible for licensing
so that the appearance of impropriety is avoided.
A number of comments have been received from tribes
disputing the necessity of background checks for these
individuals and the possible negative effects of this new
requirement on tribal sovereignty.
Indian tribal gaming has come under increasingly virulent
attacks in recent years, and it has become a prime target for
accusations that it is not sufficiently regulated. This section
is designed to address a key concern regarding the operation of
tribal gaming commissions--that the regulators themselves meet
the criteria imposed on the individuals they regulate.
The Committee believes that this section provides an
appropriate balance between respect for tribal sovereignty and
the Congress' trust responsibility to tribes. This provision
does not mandate the use of tribal gaming commissions, nor does
it allow the NIGC to mandate the makeup of those commissions,
but provides a guideline for tribal gaming commissions, much
the same as the background check language currently provides
for primary management and key employees.
Since IGRA has been enacted, the Committee has not received
any testimony from tribes showing that the required background
checks for primary management and key officials have hindered
tribal sovereignty by dictating who a tribe may hire. The
section simply provides guidance where a tribe has determined
to operate Class II or Class III gaming and to operate a tribal
gaming commission. It is the Committee's belief that a similar
provision related to tribal gaming commissions will be
similarly useful.
The Committee does note that this provision of S. 1529 does
not delegate to either the NIGC or the Secretary of the
Interior any authority to set standards regarding tribal gaming
commissioners. The specific amendment to the IGRA made by
Sec. 2(f) requires that a tribe address the issue of background
checks for tribal gaming commissioners and employees in its
gaming ordinance. The standard a tribe adopts for the tribal
gaming commission is within the sovereign jurisdiction of the
tribe.
4. REVENUE SHARING
Revenue sharing does not have a statutory basis in the
IGRA. Indeed, one of the primary purposes of the IGRA is ``to
provide a statutory basis for the operation of gaming by Indian
tribes as a means of promoting tribal economic development,
self-sufficiency, and strong tribal governments.'' \27\
Additionally, the IGRA expressly prohibits any attempts by the
states to impose ``any tax, fee, charge, or other assessment''
on the revenues generated by tribal governments from their
gaming operations.\28\
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\27\ See supra note 10, Sec. 3(1).
\28\ See supra note 10, Sec. 11(d)(4).
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However, pursuant to the IGRA, in order to conduct Class
III gaming, tribes must enter into compacts withstates within
which their gaming operations are located.\29\ The Secretary of
Interior is required to review the compacts for compliance with Federal
law, including the IGRA.\30\ The Secretary has 45 days within which to
approve or disapprove the compacts or the compacts are deemed approved,
but only to the extent that the compact is consistent with the
IGRA.\31\
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\29\ See supra note 10, Sec. 11(d)(1).
\30\ See supra note 10, Sec. 11(d)(8)(A).
\31\ See supra note 10, Sec. 11(d)(8)(C).
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Despite the lack of a statutory basis for revenue sharing,
the DoI has repeatedly found justification for revenue sharing
in the notion of a ``bargained-for-exchange'' between the
respective state and tribe. Essentially, if a state had
something of value to offer in the compact negotiations, the
tribe could ``purchase'' that value without the exchange
violating the IGRA's prohibition on state taxation of tribal
gaming revenues.\32\
---------------------------------------------------------------------------
\32\ See Letter from Ada E. Deer, Assistant Secretary, Indian
Affairs, Dept. of Interior, to Ralph Sturges, Chief Mohegan Tribe of
Indians of Connecticut (Dec. 5, 1994).
---------------------------------------------------------------------------
Following the Supreme Court decision in Seminole, some
states began refusing to negotiate tribal-state compacts,
unless the tribe agreed to pay substantial amounts--some would
say usurious amounts--of their gaming revenues to their state
negotiating counterparts. Most tribes, uncertain of their legal
remedies in light of the 11th Amendment bar imposed after
Seminole, have reluctantly agreed to these demands.
July 9, 2003, Hearing: On July 9, 2003, the Committee held
an oversight hearing on the IGRA, focusing on tribal-state
gaming compacts and ``revenue sharing''.
The DoI testified regarding the difficulties encountered by
tribes seeking compacts in the wake of the Seminole decision,
which held as unconstitutional certain provisions in the IGRA
that authorized tribes to bring lawsuits against states in
Federal court. One of the most significant impacts in the wake
of Seminole noted by the DoI was the sharp spike in demands by
states for revenue sharing and the dollar amounts sought in
their compact negotiations with tribes.\33\
---------------------------------------------------------------------------
\33\ See Hearing on the Indian Gaming Regulatory Act, Before the
Senate Committee on Indian Affairs, S. Hrg. 108-67, 108th Cong. at p. 3
(2003) (Testimony of Aurene M. Martin, Acting Assistant Secretary,
Indian Affairs, Department of the Interior).
---------------------------------------------------------------------------
The DoI's testimony made clear that many states now view
revenue sharing as the most important topic when negotiating
compacts. Conversely, most tribes are loathe to share more than
minimal amounts, as every dollar shared with the state is one
less dollar available to dedicate to the provision of tribal
government services.
S. 1529 was drafted, in part, to amend Sec. 11 of the IGRA
and address the impacts of the Seminole decision on state
demands for revenue sharing. These amendments to the IGRA are
consistent with and meant to further the original intent of the
IGRA to provide strong tribal governments and improve
reservation economies. S. 1529 accomplishes this goal by
providing a statutory framework for revenue sharing, and
placing limitations on unreasonable demands by states for a
sharing of tribal revenues.
March 24, 2004 Hearing: On March 24, 2004, the Committee
held a legislative hearing on S. 1529. At that hearing the DoI
testified regarding Sec. 2(f) of S. 1529, which amends Sec. 11
of the IGRA, to deal with revenue sharing.
In its testimony, the DoI again expressed its concern about
the lack of statutory guidance for revenue sharing, and support
for the proposal in S. 1529 to provide a statutory framework.
The DoI restated its view that state demands for revenue
sharing have significantly increased in dollar amount since the
Seminole decision.\34\
---------------------------------------------------------------------------
\34\ See Legislative Hearing on S. 1529, the Indian Gaming
Regulatory Act Amendments of 2003, Before the Senate Committee on
Indian Affairs, S. Hrg. 108-67, 108th Cong. at p. 33 (2004) (Testimony
of George Skibine, Acting Deputy Assistant Secretary for Policy and
Economic Development, Indian Affairs, Department of the Interior).
---------------------------------------------------------------------------
To deal with the unfair pressure placed on tribes to agree
to substantial revenue sharing, the DoI strongly expressed its
agreement with the principles espoused in S. 1529:
That gaming revenues should primarily
benefit Indian tribes; and
That substantial economic benefits should be
conferred from states to tribes before revenue sharing
is allowed.
The DoI did state its preference for a ``hard cap'' on the
percentage of revenue that a state could negotiate in return
for substantial economic benefits. It also expressed its
preference for a statutory list of ``substantial economic
benefits'' that would be acceptable. In expressing these
preferences the DoI stated that it anticipated some
difficulties in measuring tribal needs and determining which
economic benefits would be acceptable.
The DoI also restated its concerns regarding attempts by
tribes to be approved for ``far-flung off-reservation'' gaming
lands, meaning lands not on or near current tribal reservation
lands. The DoI also noted increased attempts by tribes to carve
out anti-competitive geographic zones, preventing other tribes
from gaming in such zone. Although both of these recent
developments raise policy concerns, and appear to be
inconsistent with the original intent of the IGRA, the DoI
indicated that it does not believe either of these issues are
prohibited by the statutory language of the IGRA.
The Substitute Amendment: Sec. 2(f)(2)(A) of S. 1529, as
amended by the substitute, strengthens Sec. 11 of the IGRA by
essentially requiring that gaming revenues first meet the most
pressing needs of the tribe which has generated that revenue by
investing in and operating a gaming facility. Over the past
several years, testimony before this Committee by tribes has
shown that the most pressing needs usually relate to the
provision of tribal government programs and services, and
funding for new economic ventures, particularly non-gaming
ventures. If revenue sharing provisions in a compact do not
meet the parameters provided in S. 1529, those revenue sharing
provisions may not be approved by the Secretary.
The Committee acknowledges that local communities are often
the governments most significantly impacted by a tribal gaming
operation. Therefore, S. 1529 provides that, after the need for
tribal government programs and services are adequately
addressed with tribal gaming revenues, a tribal-state compact
can provide for payments to local governments to offset actual
costs incurred by local governments impacted by tribal gaming
activities.
The Committee also recognizes that some tribal reservations
are in geographic locations near large urban centers that can
provide significant potential consumer markets. For those
tribes, it may be appropriate to provide a state with whom its
compacts a share of revenue in return for ``substantial
economic benefits''. Thus, S. 81529 provides that, after any
payments to local governments, and provided that tribal
governments needs are met, including the provision of programs
and services and other non-gaming economic development, a
tribal-state compact may provide for revenue sharing in return
for ``substantial economic benefits''.
With regard to ``substantial economic benefits'', the
Committee declines to define that term, but rather it is the
Committee's intent that this requirement be the subject of
negotiations between tribes and states, so long as the
Secretary determines that the economic benefit is real and
measurable. Certainly, substantial exclusivity from competition
by non-Indian gaming, long term tribal-state compacts, and
expanded gaming opportunities are but three examples that would
likely meet this requirement.
The Committee also declined to establish a maximum
percentage cap on revenue sharing, a preference expressed by
the DoI. The Committee's primary concern is that such a cap
does not prevent a state from seeking revenue sharing that is
small in terms of percentage of revenue, but may stillprevent
the tribal government from adequately funding its programs and
services. It is the unwavering intent of this Committee that tribal
gaming revenues must primarily benefit Indian tribes.
Concerns have been raised by some tribes regarding the
limitations placed on revenue sharing, anticipating a refusal
by states to negotiate compacts. It is the Committee's intent
that the amendment made by Sec. 2(f)(2)(B) of S. 1529 address
this concern. This amendment provides a reasonable timeframe
for the Secretary to act. The Committee strongly encourages the
Secretary to exercise the authority granted by
Sec. 11(d)(7)(B)(vii) of the IGRA in those instances in which a
state refuses to negotiate a compact unless it contains revenue
sharing that exceeds the parameters prescribed in
Sec. (2)(f)(2)(A) of S. 1529.
It is also the Committee's belief that Sec. 2(f)(2)(C) will
provide additional flexibility to tribes and states that are in
the process of renegotiating compacts. The substitute amendment
changed the original language of this provision to address
constitutional concerns raised by the DoI.
Legislative History
S. 1529 was introduced on July 31, 2003, by Senator
Campbell for himself and for Senator Inouye, and was referred
to the Committee on Indian Affairs.
On March 24, 2004, the Committee held a legislative hearing
on S. 1529. Witnesses at the hearing included the Deputy
Assistant Secretary-Indian Affairs, on behalf of the DoI, the
Chairman of the NIGC, and the Chairman of the National Indian
Gaming Association, on behalf of its various Indian tribes and
tribal organizations. While each of the witnesses expressed
either suggestions for different legislative language or
concerns over particular provisions in the bill, all of the
witnesses were supportive of the overall purposes and intent of
S. 1529. Many of those suggestions and concerns were addressed
in the substitute amendment to the bill.
On July 14, 2004, at a business meeting duly noticed, the
Committee adopted a substitute amendment to S. 1529 and, as
amended, favorably reported the bill for consideration by the
full Senate, with a recommendation that the Senate pass the
bill.
Section-by-Section Analysis of the Substitute Amendment to S. 1529
Section 1. Short Title. The act may be cited as the
``Indian Gaming Regulatory Act Amendments of 2004''.
Section 2. Payment and Administration of Gaming Fees.
(a) Definitions. The bill amends Sec. 4(7) of the Indian
Gaming Regulatory Act (``IGRA'') clarifying the definition of
``Technological Aids'' to correspond with the original intent
of Congress in the IGRA, making the Johnson Act inapplicable to
technological aids used to operate class II games. This
interpretation has been universally supported by Federal court
decisions, and the bill contains very clear language that
guarantees this clarification cannot be used or construed to
apply to any game that is categorized as class III.
(b) National Indian Gaming Commission. The bill makes
technical amendments to Sec. 5 of the IGRA to clarify how
National Indian Gaming Commission (``NIGC'') vacancies and
successors are filled.
(c) Powers of Chairman. The bill makes technical amendments
to Sec. 6 of the IGRA to clarify how the NIGC Chairman may
delegate authorities to individual Commissioners.
(d) Powers of Commission. The bill makes amendments to
Sec. 7 of the IGRA to expand the reporting requirements for the
NIGC by requiring it to provide a biennial report to Congress
similar to the Executive Agency reporting mandated by the
Federal Government Performance and Results Act. The bill also
requires manufacturers and dealers of class II technologic aids
to register with the NIGC and maintain records of the
technologic aids.
(e) Commission Staffing. The bill makes technical
amendments to Sec. 8 of the IGRA and updates the statutory
rates of pay for NIGC Commissioners, staff and temporary
services to comport with the current Federal Executive and
General Schedule pay rates.
(f) Tribal Gaming Ordinances. The bill makes technical
amendments to Sec. 11, subsection (b)(2)(F) of the IGRA to
clarify that background investigations must be conducted for
tribal gaming commissioners and commission employees, as well
as key management and employees of the gaming enterprise.
The bill amends Sec. 11, subsection (d)(4) to clarify that
states may not tax tribal gaming operations, and to codify
``revenue sharing'' and the limited conditions under which it
may be appropriate. The amendment also requires the Secretary
of Interior to promulgate regulations within 18 months
providing guidance to tribes and states in implementing this
provision.
The bill further amends Sec. 11, subsection (d) (dealing
with gaming procedures issued by the Secretary in lieu of a
compact), by amending (d)(7)(B)(vii) to add a requirement that
the Secretary act within 180 days. Subsection (d) is further
amended by deleting paragraph (9) at the end of the subsection,
and replacing it with a new paragraph. The replacement
paragraph provides for an additional 180 day extension of
negotiating time, if a new tribal-state compact cannot be
negotiated prior to the official expiration date of the current
compact, during which time tribal gaming activities may legally
continue.
(g) Management Contracts. The bill makes technical
amendments to Sec. 12 of the IGRA by clarifying that the
oversight responsibilities of the NIGC include conducting
background information reviews on outside ``managers'' of class
III facilities.
(h) Commission Funding. The bill makes technical amendments
to Sec. 18 of the IGRA by raising the cap on aggregate fees
imposed on class II and III gaming operations from the current
$8 million to $11.5 million in FY2005, to $12,000,000 in
FY2006-7, and to $13 million in FY2008-9. The amendments
further provide for the NIGC to promulgate regulations to carry
out the new provisions.
(i) Additional Amendments. The bill amends the IGRA by
deleting current Sec. 19. A new ``Section 19. Tribal
Consultation'' requires the Secretary of Interior, the
Secretary of Treasury and the Chairman of the NIGC to consult
with Indian tribes, to the maximum extent practicable, and in a
manner consistent with the government to government
relationship that exists between Indian tribes and the Federal
government.
Section 23 is amended by combining that section with the
language of the current Section 24.
Section 24 is then amended by inserting a new ``Section 24.
Authorization of Appropriations'', which provides for
appropriations to be authorized in an amount equal to the
amount of funds derived from fees collected. It also provides
for additional amounts to be appropriated as necessary to fund
the operations of the NIGC. Currently, the NIGC is not funded
by any federal appropriations and the enactment of this section
is not expected to have an effect on the federal budget.
Committee Recommendation and Tabulation of Vote
On July 14, 2004, the Committee, in an open business
session, considered S. 1529 and approved a substitute amendment
to the bill, and ordered S. 1529, as amended, favorably
reported to the full Senate with a recommendation that the bill
do pass. Senator Reid was recorded as a nay vote.
Cost and Budgetary Considerations
The cost estimate for S. 1529 as calculated by the
Congressional Budget Office, is set forth below:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 10, 2004.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1529, the Indian
Gaming Regulatory Act Amendments of 2004.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Elizabeth Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
S. 1529--Indian Gaming Regulatory Act Amendments of 2004
S. 1529 would amend the Indian Gaming Regulatory Act (IGRA)
to change the operations of the National Indian Gaming
Commission (NIGC) and the regulation of gambling on Indian
reservations. The legislation would increase the fees paid to
the commission by tribal gambling operators; require the
commission to prepare a strategic planning report; revise the
salary schedules, procedures, and authorities of the
commission; expand the use of background checks for personnel
involved in tribal gambling; and require manufacturers and
dealers of electronic gambling aids to register with the NIGC.
The legislation also would impose new requirements on certain
tribal and state compacts.
CBO estimates that implementing S. 1529 would cost $10
million over the 2005-2009 period, assuming appropriation of
the amounts authorized by the bill. In addition, S. 1529 would
increase the current limitation ($8 million) on the NIGC's
annual assessment on Indian gambling operations. Because the
NIGC has authority to spend such assessments without further
appropriation, however, any increase in fee collections would
not have a significant net impact on the federal budget.
S. 1529 contains intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA), but CBO cannot
determine whether the total cost of these mandates would exceed
the annual threshold established in that act ($60 million in
2004, adjusted annually for inflation). The bill would impose
new requirements for compacts between tribes and states, which
must be approved by the Department of the Interior (DOI) before
tribes can open casinos. CBO has no basis for estimating the
impact of this mandate on state, local, and tribal governments.
The bill also would place some additional administrative duties
on tribes with gaming operations and would increase the fees
they must pay to the NIGC, and CBO estimates that the cost of
those mandates would be about $5 million per year.
S. 1529 also contains private-sector mandates as defined in
UMRA. The bill would impose private-sector mandates on
individuals selling or leasing certain gambling devices to
Indian casinos and on private-sector entities that operate
those gambling devices under tribal management contracts. CBO
estimates that the direct cost of mandates in the bill would
fall well below the annual threshold established by UMRA for
private-sector mandates ($120 million in 2004, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1529 is shown in the following table.
The costs of this legislation fall within budget function 800
(general government).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\
Authorization Level................................................ 2 2 2 2 2
Estimated Outlays.................................................. 2 2 2 2 2
----------------------------------------------------------------------------------------------------------------
\1\ Enacting this bill also would increase revenues and direct spending, however, CBO expects the net budgetary
impact of these increases would be negligible in each year.
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted near the start of fiscal year 2005, that
the authorized amounts will be provided for each year, and that
spending will follow historical patterns for the NIGC and its
programs.
The bill would authorize the appropriation of $2 million
annually for the operations of the NIGC. There was no
appropriation for the NIGC in fiscal year 2004. Appropriation
of the authorized amounts would cost a total of $10 million
over the 2005-2009 period.
Estimated impact on state, local, and tribal governments:
S. 1529 contains several intergovernmental mandates as defined
in UMRA. Because of uncertainty about the cost of one mandate
affecting state and tribal gaming compacts, CBO cannot
determine whether the total cost of these mandates exceeds the
annual threshold established in that act ($60 million in 2004,
adjusted annually for inflation). We estimate that the total
cost of other mandates in the bill would be about $5 million
per year.
STATE-TRIBAL COMPACTS
S. 1529 would add new requirements for compacts between
states and tribes that govern gaming activities on tribal land.
Such compacts must be approved by DOI before tribes can operate
casinos. The new requirements would limit the extent to which
tribal gaming revenues could be shared with affected state and
local governments. This change would not affect existing
compacts. Under current law, tribes and states are under a
mandate to negotiate these compacts before tribes may operate
casinos, and a change in the standards governing those compacts
could alter the cost of that mandate. However, because of great
uncertainty about how those changes would be interpreted and
implemented by DOI and because of the complex nature of
negotiations between states and tribes, CBO cannot estimate how
the new requirements would affect either total revenues from
tribal gaming or the distribution of those revenues between
tribes and other governments.
NIGC FEES
IGRA currently imposes a mandate on tribes with gaming
operations to pay fees to the NIGC. This bill would require
NIGC to establish a new rate structure and would increase the
annual cap on total fees. By increasing the cap, the bill would
increase the cost of the mandate by about $5 million a year
over the next five years. The new fee schedule would result in
a reallocation of the burden of this mandate among gaming
tribes.
OTHER ADMINISTRATIVE MANDATES
S. 1529 would require tribes to conduct background
investigations of tribal gaming commissioners and employees of
tribal gaming commissions and to register with the NIGC if they
use certain types of electronic gambling machines--both are
mandates as defined by UMRA. Under current law, tribes must
conduct background investigations of a large number of gaming
officials and employees. Based on information provided from the
NIGC, CBOestimates that the additional number of investigations
required as a result of this bill would be small. The cost of each
investigation would be no more than $50, so the cost of complying with
the first mandate would not be significant. The registration
requirement would primarily apply to electronic bingo machines. Based
on information from the NIGC and the National Indian Gaming
Association, CBO estimates that this mandate also would impose no
significant costs on the tribes.
Estimated impact on the private sector: S. 1529 contains
private-sector mandates as defined in UMRA. The bill would
require sellers, dealers, buyers, and lessors to register class
II gambling devices with the National Indian Gaming Commission.
Class II gambling devices include devices used to play games
such as electronic bingo. The bill would impose mandates on
individuals selling or leasing class II gambling devices to
Indian casinos and on private-sector entities that enter into
contracts with tribes to manage those casinos. CBO estimates
that the direct cost of mandates in the bill would fall well
below the annual threshold established by UMRA for private-
sector mandates ($120 million in 2004, adjusted annually for
inflation).
S. 1529 would require sellers, dealers, buyers, and lessors
of class II gambling devices to number and label the devices
and maintain monthly records for the devices. The monthly
records must include the number of the device, the
manufacturer's legal and trade name, the date of manufacture,
and, in the case of transfer, the name of the person to whom
the device is transferred and the date of transfer. According
to the NIGC, the gaming companies that currently provide class
II gambling devices to Indian casinos already have the
infrastructure necessary for this. Under current law, those
companies are subject to similar registration requirements for
class III gambling devices, and thus, the costs for registering
the class II gambling devices are estimated to be minimal. Some
gaming companies already may be registering class II devices.
Private-sector entities managing Indian casinos that
operate class II devices also would be subject to the
registration requirements of S. 1529. The cost for registration
and recordkeeping for class II gambling devices is expected to
be minimal for tribes that operate casinos. Since a smaller
number of Indian casinos are run by private contractors, CBO
expects that the cost of this mandate would be minimal for
those entities, as well.
Estimate prepared by: Federal Costs: Matthew Pickford;
Impact on State, Local, and Tribal Governments: Marjorie
Miller; and Impact on the Private Sector: Selena Caledera.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Regulatory and Paperwork Impact Statement
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires that each report accompanying a bill to
evaluate the regulatory and paperwork impact that would be
incurred in carrying out the bill. The Committee has concluded
that S. 1529 will reduce regulatory or paperwork requirements
and impacts.
Executive Communications
The Committee has received no communications from the
Executive Branch regarding S. 1529.
Committee Correspondence
Department of Justice,
Office of Legislative Affairs,
Washington, DC, June 15, 2004.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: This presents the views of the
Department of Justice on S. 1529, the ``Indian Gaming
Regulatory Act Amendments of 2003.'' We generally defer to
other, more directly concerned parties regarding the need for,
or desirability of, enactment of this legislation. We do,
however, oppose enactment of section 2(a) of S. 1529.
Section 2(a) of S. 1529 would amend section 4(7) of the
Indian Gambling Regulatory Act (IGRA) (25 U.S.C. Sec. 2703(7))
to provide that no provision of the Gambling Devices Act, 15
U.S.C. Sec. Sec. 1171-1177, shall apply to ``any gambling
described in subparagraph (A)(i) [Class gaming] for which an
electronic aid, computer, or other technological aid is used in
connection with gaming.'' The Department of Justice enforces
the Gambling Devices Act.
The issue of the application of the Gambling Devices Act to
Class II gaming under IGRA was the subject of two recent
appellate court decisions, United States v. Santee Sioux Tribe
of Nebraska and Ashcroft v. Seneca-Cayuga Tribe of Oklahoma,
that reached differing conclusions. In both of these cases, the
United States argued that under existing law the Gambling
Devices Act does apply to Class II gaming with technological
aids. The Supreme Court recently denied certiorari in these
cases. The denial of certiorari, however, does not clarify the
issue, and a conflict still exists between the Circuit Courts
of Appeal. The Department of Justice believes that
clarification of this issue is needed, but would favor an
amendment clarifying that the Gambling Devices Act does apply
to Class II gambling, rather than the approach taken in S.
1529.
The approach to clarifying this issue taken by S. 1529
provides that the Gambling Devices Act does not apply to Class
II gambling. Section 2(a) of S. 1529 thus authorizes the use of
gambling devices, as that term is defined in 15 U.S.C.
Sec. 1171 of the Gambling Devices Act, for Class II gaming. The
Department believes that this amendment may well result in more
lucrative Class II gaming with the use of high speed machines
that are virtually indistinguishable to a player from machines
used in Class III gaming. When IGRA was first enacted, Class
III gaming was viewed as including more lucrative forms of
gambling, including high-speed machine gaming. In order to
avoid criminal influences and corruption, Congress required
increased regulation over Class III gaming. Included in the
enhanced regulatory scheme was the necessity of a tribal-state
compact that balanced the interests of the affected tribe and
state and required the approval of the Secretary of the
Interior. Since IGRA's enactment, the technology has changed
substantially, so that machines used in Class II gaming can be
as fast and as lucrative as Class III machines and, from a
player's perspective, may be virtually indistinguishable.
Because the machines used in Class II and Class III gaming are
becoming increasingly indistinguishable in their play, they
should be subject to the same or similar levels of regulation
and approval.
The Department of Justice cannot support this amendment to
IGRA, as it removes the current restrictions on the use of
gambling devices in Class II gambling without substituting an
increased level of regulation and approval that at least
approximates that surrounding the use of similar machines in
the Class III context. As noted above, in examining the
alternative ways in which the issue of the application of the
Gambling Devices Act to Class II gaming can be clarified, the
Department of Justice favors amending IGRA to clarify that the
Gambling Devices Act does apply, and that, therefore, gambling
devices could only be used in conjunction with gaming
authorized pursuant to a valid tribal-state compact. That being
said, the Department of Justice might support an amendment that
removes the Gambling Devices Act's prohibition on the use of
gambling devices in Class II gaming, if that prohibition were
replaced with adequate approval and regulation that recognizes
the concerns raised by the high speed and lucrative nature of
the gambling. The Department of Justice would be happy to work
with the Committee in order to devise appropriate regulation.
In addition, S. 1529 would create a blanket repeal of the
Gambling Devices Act's prohibitions pertaining to Class II
gaming. We oppose the blanket repeal of all of the provisions
of the Gambling Devices Act for ``technological aids'' for
Class II gaming. As drafted, Section 2(a) would go further in
its repeal of the Gambling Devices Act than what IGRA currently
provides for Class III gaming. IGRA currently provides repeal
of Section 1172's transportation prohibition and Section 1175's
prohibition on possession and use of gambling devices for Class
III gaming. The other provisions of the Gambling Devices Act,
such as Section 1173's requirement to register annually with
the Attorney General and Section 1174's shipping requirements,
remain in effect for Class III gaming under IGRA. S. 1529
should not provide a broader repeal of the Gambling Devices Act
for Class II gaming with technological aids than what IGRA
currently provides for Class III gaming.
Finally, S. 1529 creates additional confusion as to which
machines should be considered Class II gaming and which should
not be. Section 2703(7) of IGRA states that Class II gaming
does not include ``a slot machine of any kind'' while another
provision will state that the prohibition against the use of
gambling devices, including slot machines, does not apply to
Class II gaming ``for which an electronic aid, computer, or
other technological aid is used with the gaming.'' Class II
gaming with technological aids, in some cases, falls within the
term ``a slot machine of any kind.'' Enacting S. 1529 with this
provision will not help clarify what Congress intends to
constitute Class II gaming. Instead, it will add to the
confusion by creating conflicting provisions within the same
statute.
Thank you for the opportunity to comment on this
legislation. Please do not hesitate to call on us to answer any
questions you might have regarding the suggestions discussed in
this letter, or if you would like the Department of Justice to
provide any additional assistance. We look forward to
discussing this matter with you further. The Office of
Management and Budget has advised us that there is no objection
from the standpoint of the Administration's program to the
presentation of this report.
Sincerely,
William E. Moschella,
Assistant Attorney General.
MINORITY VIEWS OF SENATOR REID
As one of the original authors of the Indian Gaming
Regulatory Act of 1988 (IGRA), Pub. L. 100-497, 25 U.S.C.
Sec. 2501 et seq., I was proud of the balance we achieved among
the different interests in Indian gaming. Tribes, local, State
and the federal governments all have legitimate interest in
this subject, and the concerns of each were accounted for in
that original legislation. The Indian Gaming Regulatory Act
Amendments of 2004 (S. 1529), however, fundamentally upsets
that balance and fails to account for the significant State and
local concerns that have arisen as Indian gaming has grown
dramatically in the years since IGRA's passage. For the reasons
explained below, I oppose S. 1529. I hope to work with my
colleagues to address the concerns I raise in this report
before further action.
It should be noted at the outset that while the Committee
report characterizes the changes to IGRA's Class II and Class
III regulatory structure as ``technical'' and portrays federal
court cases on the subject as settled, that is not the case. In
fact, there is a split in federal circuit court cases on the
Class II/Class III issue addressed by S. 1529, and no Supreme
Court disposition has been rendered on that subject. In
addition, while the report notes that no Executive Branch
communications were received on S. 1529, I have included a
letter from the U.S. Department of Justice to the Chairman
expressing the Department's opposition to this legislation.
Finally, the Committee's characterization of Congressional
intent regarding the Johnson Act is not accurate. A plain
reading of IGRA confirms that Congress did not waive the
Johnson Act for Class II games.
CONCERNS WITH S. 1529
There are three main problems with S. 1529 and each are
explained in turn below. First, S. 1529 makes it easier to
conduct Class II gaming that is effectively the same as Class
III. This enables the evasion of Class III compacting and
thereby the prime vehicle for the consideration and
satisfaction of State and local concerns. Second, S. 1529 would
make it difficult, if not impossible, for State and local
governments to recover costs associated with Class III gaming
as provided for under current law. Third, S. 1529 does nothing
to deal with the increasing propensity of some Tribes to seek
far-flung, non-reservation lands on which to conduct gaming
free of regulation to the detriment of State and local
governments and established Tribes in those areas.
I. Class II and Class III Gaming
As the Committee report notes, IGRA created a fundamental
legal distinction between Class II and Class III games. Under
the law, Tribes were permitted to engage in Class II gaming,
defined as bingo and like games, with modest oversight. Class
III gaming, defined as fast-paced games like slots and other
casino games, would be more heavily regulated by permitting
their use only when the subject of a Tribal-State compact. This
process was intended to provide the State with the opportunity
to regulate Tribal enterprises that were functionally
equivalent to casinos. It was also intended to provide an even
playing field, prevent organized crime, ensure consumer
protection, and guarantee the consideration of State and local
impacts of full-fledged gaming operations.
The greater rigor of Class III regulation, however,
provided a strong incentive to design and characterize bingo
and similar machines which fundamentally played like slot
machines as Class II machines so as to avoid such regulation.
The financial incentive to do so is great. Slot machines and
games made to play like them represent roughly 70% of an
average casino's profit.
One disincentive to blurring the lines between Class II and
Class III is the Johnson Act. Enacted in the 1950s, the Johnson
Act prohibits the use of ``gambling devices'' on Tribal
lands.\1\ While IGRA lifted this Johnson Act limitation for
Class III games, it did not do so for Class II games. The
statute itself, the Senate Report accompanying IGRA, and my
colloquy with Senator Inouye at the time IGRA was debated all
confirm that IGRA only repealed the Johnson Act prohibition for
Class III games. For example, the Senate Report confirms that
IGRA only permitted the use of Class II games on reservations
if those games were ``not otherwise prohibited by federal law''
and specifically cited ``15 U.S.C. 1175'' (the Johnson Act) as
such a restriction. S. Rept. No. 100-446.
---------------------------------------------------------------------------
\1\ A ``gambling device'' under Johnson Act is ``any so-called
`slot machine' or any other machine or mechanical device an essential
part of which is a drum or reel with an insignia thereon and . . .
which when operated may deliver, as the result of the application of an
element of chance, any money or property, or . . . by the operation of
which a person may become entitled to receive, as the result of the
application of an element of chance, any money or property. . . .''
---------------------------------------------------------------------------
In the colloquy on the topic, Senator Inouye responds to my
question asking the Senator to confirm the understanding that
the Johnson Act would still apply to limit Class II gaming by
saying: ``The bill as reported by the Committee would not alter
the effect of the Johnson Act except to provide for a waiver of
its application in the case of gambling devices operated
pursuant to a compact with the state in which the tribe is
located [i.e., class III]. The bill is not intended to amend or
otherwise alter the Johnson Act in any way.'' Cong. Rec. 24024
(September 15, 1988).
Accordingly, the Committee's assertion that Congress
intended to waive the Johnson Act for Class II games is both
inconsistent with the statute and its legislative history.
As interpreted by the Department of Justice, the Johnson
Act interacts and may be harmonized with IGRA's authorization
of Class II games by prohibiting the use of electronic slot-
machine equivalents, but enabling Tribes to use technological
aids like telecommunicationstechnology to enable bingo players
to play bingo against one and other at different locations. The
Committee Report on IGRA lends credence to this view.\2\
---------------------------------------------------------------------------
\2\ ``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, televison 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. . . . S. Rept. No. 100-446 at 9.
---------------------------------------------------------------------------
Despite this clarity, the Committee is correct that federal
courts have found that Congress must have meant to waive the
Johnson Act for Class II games. What the report fails to note
is that another federal circuit court has decided the issue the
other way, finding that the Johnson Act does indeed apply.\3\
The Supreme Court has not stepped in to resolve the conflict
between circuits.
---------------------------------------------------------------------------
\3\ The U.S. Federal Court of Appeals for the Eighth Circuit--after
a review of the express text of IGRA and the legislative history--
determined that the Johnson Act prohibition on gambling devices and
IGRA's sanctioning of Class II devices could be read together. In this
court's view, IGRA did not impliedly repeal the Johnson Act. The court
determined that you could have a bingo-type class II device that did
not fall within the gambling device definition (and prohibition) of the
Johnson Act. U.S. v. Santee Sioux Tribe of Nebraska, 324 F. 3d 607 (8th
Cir. 2003). See also Cabazon Band of Mission Indians, 14 F.3d 633, 635,
n. 3 (D.C. Cir. 1994) (IGRA did not repeal the Johnson Act for class II
games). For example, the use of telecommunications equipment to connect
electronic bingo players could be both a permissible Class II game and
not fall within the Johnson Act.
---------------------------------------------------------------------------
S. 1529's repeal of the Johnson Act's limitation on Class
II games is the source of the Department of Justice's
opposition to the bill. In the Department's June 15, 2004
letter to the Chairman, they put it this way: ``[Justice]
cannot support this amendment to IGRA, as it removes the
current restrictions on the use of gambling devices in class II
gambling without substituting an increased level of regulation
an approval that at least approximates that surrounding the use
of similar machines in the class III context.''
That is, the bill removes regulation of Class II machines
and doesn't replace it with anything. It breaks down the
fundamental policy trade off in IGRA between Class II and Class
III to the detriment of State and local governments.
II. State and local impacts in Class III Compacting
After liberalizing the definition of Class II gaming, S.
1529 weakens the requirements for Class III compacting. IGRA
provides that compacts may provide for revenue sharing
agreements between the Tribe and the compacting State. Such
agreements allow for the consideration and resolution of State
and local cost and other impacts. As Tribal gaming has
dramatically increased over the last twenty years, the need for
these agreements is greater, not smaller.
Accordingly, S. 1529 goes in the wrong direction by placing
new restrictions on revenue sharing agreements, making it more
difficult for State and local governments to form these
agreements. More specifically, S. 1529 provides that the
Secretary ``shall not'' approve a compact providing for such
assessments unless a number of Tribal fiscal considerations are
met first, including a catchall that the ``general welfare'' of
the tribe is first satisfied.
III. Reservation Shopping
While S. 1529's repeal of the Johnson Act and weakening of
Class III compacting would greatly ease the requirements on
Indian gaming to the detriment of State and local governments,
the bill is silent on one of their most significant concerns:
reservation shopping. Over the last decade, the propensity for
reservation shopping has grown in tandem with the profitability
of certain Indian gaming enterprises.
Tribes seeking lands with speculative connection in areas
where a casino might be profitably run have increased
dramatically. One of the most notable current disputes involves
and Oklahoma Tribe seeking land in Denver for the operation of
a casino. That effort is strongly opposed by State and local
officials. In addition, many Tribes oppose these efforts, as
reservation shopping threatens to bring gaming enterprises near
well-established Tribes and their reservations.
Any amendment to IGRA must deal with this new phenomena to
address significant Tribal, State, Federal and local concerns.
IV. Conclusion
Since the passage of IGRA almost twenty years ago, the
explosion of Indian gaming has benefitted Tribes throughout the
nation, providing a critical avenue for economic development
which should be supported. With this great growth, however,
have come concerns with how and where such gaming is conducted.
I look forward to working with the Committee to ensure that S.
1529 is amended to follow in the example of its predecessor by
carefully balancing the important Tribal, local, State and
federal concerns at issue here.
Harry Reid.
Changes in Existing Law
In compliance with subsection 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 1529, as ordered reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
Public Law 100-497
AN ACT To regulate gaming on Indian lands
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
* * * * * * *
DEFINITIONS
Sec. 4. For purposes of this Act--* * *
(7) * * *
(E) Notwithstanding any other provision of
this paragraph, the term ``class II gaming''
includes, during the 1-year period beginning on
the date of enactment of this subparagraph
[enacted Dec. 17, 1991], any gaming described
in subparagraph (B)(ii) that was legally
operated on Indian lands in the State of
Wisconsin on or before May 1, 1988, if the
Indian tribe having jurisdiction over the lands
on which such gaming was operated requested the
State, by no later than November 16, 1988, to
negotiate a Tribal-State compact under section
11(d)(3) [of the Indian Gaming Regulatory Act
(25 U.S.C. 2710(d)(3))].
(F) If, during the 1-year period described in
subparagraph (E), there is a final judicial
determination that the gaming described in
subparagraph (E) is not legal as a matter of
State law, then such gaming on such Indian land
shall cease to operate on the date next
following the date of such judicial decision.
(G) Technological aids.--Notwithstanding any
other provision of law, sections 1 through 7 of
the Act of January 2, 1951 (commonly known as
the ``Gambling Devices Transportation Act'')
(15 U.S.C. 1171 et seq.), shall not apply to
any gaming described in subparagraph (A)(i) for
which an electronic aid, computer, or other
technological aid is used in connection with
the gaming.
* * * * * * *
NATIONAL INDIAN GAMING COMMISSION
Sec. 5. * * *
[(c) Vacancies occurring on the Commission shall be filled
in the same manner as the original appointment. A member may
serve after the expiration of his term of office until his
successor has been appointed, unless the member has been
removed for cause under subsection (b)(6).]
(C) Vacancies.--
(1) In general.--A vacancy on the Commission shall be
filled in the same manner as the original appointment.
(2) Successors.--Unless a member of the Commission is
removed for cause under subsection (b)(6), the member
may--
(A) be reappointed; and
(B) serve after the expiration of the term of
the member until a successor is appointed. * *
*
(e) The Commission shall select, by majority vote, one of
the members of the Commission to serve as Vice Chairman. The
Vice Chairman shall serve as Chairman during meetings of the
Commission in the absence or disability of the Chairman.
* * * * * * *
POWERS OF THE CHAIRMAN
Sec. 6. * * *
(c) Delegation.--The Chairman may delegate to an individual
Commissioner any of the authorities described in subsection
(a).
(d) Applicable Authority.--In carrying out any function
under this section, a Commissioner serving in the capacity of
theChairman shall be governed by--
(1) such general policies as are formally adopted by
the Commission; and
(2) such regulatory decisions, findings, and
determinations as are made by the Commission.
POWERS OF THE COMMISSION
Sec. 7. * * *
(c) Strategic Plan.--
(1) In general.--The Commission shall develop a
strategic plan for use in carrying out activities of
the Commission.
(2) Requirements.--The strategic plan shall include--
(A) a comprehensive mission statement
describing the major functions and operations
of the Commission;
(B) a description of the goals and objectives
of the Commission;
(C) a description of the general means by
which those goals and objectives are to be
achieved, including a description of the
operational processes, skills, and technology,
and the human resources, capital, information,
and other resources required to achieve those
goals and objectives;
(D) a performance plan for achievement of
those goals and objectives that is consistent
with--
(i) other components of the strategic
plan; and
(ii) section 1115 of title 31, United
States Code;
(E) an identification of the key factors that
are external to, or beyond the control of, the
Commission that could significantly affect the
achievement of those goals and objectives; and
(F) a description of the program evaluations
used in establishing or revising those goals
and objectives, including a schedule for future
program evaluations.
(3) Biennial plan.--
(A) Period covered.--The strategic plan shall
cover a period of not less than 5 fiscal years
beginning with the fiscal year in which the
plan is submitted.
(B) Updates and revisions.--The strategic
plan shall be updated and revised biennially.
(d) Registration of Technological Aids.--
(1) In general.--The Commission shall require the
registration of--
(A) any electronic aid, computer, or other
technological aid described in section 4(7)(G)
that is intended for use on Indian land, and
(B) any manufacturer, seller, dealer, buyer,
lessor, or any other person that is engaged in
the business of repairing, reconditioning, or
reprogramming such technological aids.
(2) Registration of manufacturers and dealers.--A
manufacturer, seller, dealer, buyer, lessor, or any
other person that intends to be engaged in the business
of repairing, reconditioning, or reprogramming any
electronic aid, computer, or other technological aid
described in section 4(7)(G) that is intended for use
on Indian land in a calendar year shall register with
the Commission not later than November 30 of the
preceding calendar year.
(3) Numbering and records for technological aids.--
(A) Manufacturers.--A manufacturer of an
electronic, computer, or other technological
aid described in section 4(7)(G) shall--
(i) sequentially number each
technological aid; and
(ii) permanently affix to the
technological aid, so as to be clearly
visible, the serial number, legal and
trade name of the manufacturer, and
date of manufacture of the
technological aid.
(B) Persons required to register.--
(i) Numbering.--A person required to
register under paragraph (2) shall--
(I) sequentially number each
electronic aid, computer, or
other technological aid within
the physical possession of the
person, if a manufacturer's
serial number has not been
previously affixed pursuant to
paragraph (A); and
(II) permanently affix to the
technological aid, so as to be
clearly visible, the serial
number, legal name and trade
name of the registrant, and the
date on which the serial number
is affixed.
(ii) Records.--A person required to
registerunder paragraph (2) for any
calendar year shall, on and after the date of registration or the first
day of that year (whichever occurs later), maintain a record by
calendar month, for all periods thereafter in the year, of each
electronic aid, computer, or other technological aid within the
possession of the registrant that discloses--
(I) the information required
by subparagraph (A) and clause
(i); and
(II) on transfer of
possession of the technological
aid, the legal and trade name
of the person to which
possession is transferred and
the date of the transfer.
(4) Civil penalties.--A person that fails to comply
with this subsection shall be subject to the penalties
prescribed in section 14 as if the person were a
management contractor engaged in gaming.
[(c)] (e) The Commission shall submit a report with
minority views, if any, to the Congress on December 31, 1989,
and every two years thereafter. The report shall include
information on--
(1) whether the associate commissioners should
continue as full or part-time officials;
(2) funding, including income and expenses, of the
Commission;
(3) recommendations for amendments to [the Act; and]
this Act;
(4) the strategic plan for activities of the
Commission described in subsection (c); and
[(4)] (5) any other matter considered appropriate by
the Commission.
COMMISSION STAFFING
Sec. 8.(a) The Chairman shall appoint a General Counsel to
the Commission who shall be paid at the annual rate of basic
pay payable for [GS-18 of the General Schedule under section
5332] level IV of the Executive Schedule under section 5318 of
title 5, United States Code.
[(b) The Chairman] (b) Staff.--
(1) In general.--The Chairman shall appoint and
supervise other staff of the Commission without regard
to the provisions of title 5, United States Code,
governing appointments in the competitive service.
[Such staff shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter
53 of such title relating to classification and General
Schedule pay rates, except that no individual so
appointed may receive pay in excess of the annual rate
of basic pay payable for GS-17 of the General Schedule
under section 5332 of that title.]
(2) Compensation.--
(A) In general.--Staff appointed under
paragraph (1) shall be paid without regard to
the provisions of chapter 51 and subchapter III
of chapter 53, of title 5, United States Code,
relating to General Schedule pay rates.
(B) Maximum rate of pay.--The rate of pay for
an individual appointed under the paragraph (1)
shall not exceed the rate payable for level IV
of the Executive Schedule under section 5315 of
title 5, United States Code.
[(c) The Chairman may procure temporary and intermittent
services under section 3109(b) of title 5, United States Code,
but at rates for individuals not to exceed the daily equivalent
of the maximum annual rate of basic pay payable for GS-18 of
the General Schedule.]
(c) Temporary Services.--
(1) In general.--The Chairman may procure temporary
and intermittent services under section 3109 of title
5, United States Code.
(2) Maximum rate of pay.--The rate of pay for an
individual for service described in paragraph (1) shall
not exceed the daily equivalent of the maximum rate
payable for level IV of the Executive Schedule under
section 5318 of title 5, United States Code.
* * * * * * *
TRIBAL GAMING ORDINANCES
Sec. 11. * * *
(b) * * *
(2) The Chairman shall approve any tribal ordinance
or resolution concerning the conduct, or regulation of
class II gaming on the Indian lands within the tribe's
jurisdiction if such ordinance or resolution provides
that-- * * *
(F) there is an adequate system which--
[(i) ensures that background
investigations are conducted on the
primary management officials and key
employees of the gaming enterprise and
that oversight of such officials and
their management is conducted on an
ongoing basis; and]
(i) ensures that--
(I) background investigations
are conducted on the tribal
gaming commissioners, key
tribal gaming commission
employees, and primary
management officials and key
employees of the gaming
enterprise; and
(II) oversight of primary
management officials and key
employees is conducted on an
ongoing basis; and * * *
(d) * * *
[(4) Except for any assessments that may be agreed to
under paragraph (3)(C)(iii) of this subsection, nothing
in this section shall be interpreted as conferring upon
a State or any of its political subdivisions authority
to impose any tax, fee, charge, or other assessment
upon an Indian tribe or upon any other person or entity
authorized by an Indian tribe to engage in a class III
activity. No State may refuse to enter into the
negotiations described in paragraph (3)(A) based upon
the lack of authority in such State, or its political
subdivisions, to impose such a tax, fee, charge, or
other assessment.]
(4) Revenue apportionment.--
(A) In general.--Except for any assessments
that may be agreed to under paragraph
(3)(C)(iii) , nothing in this section confers
on a State or any political subdivision of a
State authority to impose any tax, fee, charge,
or other assessment on an Indian tribe or on
any other person or entity authorized by an
Indian tribe to engage in a class III activity.
(B) Negotiations.--No State may refuse to
enter into the negotiations described in
paragraph (3)(A) based on the lack of authority
in a State, or political subdivision of a
State, to impose such a tax, fee, charge, or
other assessment.
(C) Apportionment of revenues.--The Secretary
may not approve any Tribal-State compact or
other agreement that includes an apportionment
of revenues with a State or local government
unless--
(i) in the case of apportionment with
local governments, the total amount of
net revenues exceeds the amounts
necessary to meet the requirements of
subsection (b)(2)(B)(i), but only to
the extent that the excess revenues
reflect the actual costs incurred by
affected local governments as a result
of the operation of gaming activities;
or
(ii) in the case of apportionment
with a State--
(I) the total amount of net
revenues--
(aa) exceeds the
amounts necessary to
meet the requirements
of clauses (i) and
(iii) of subsection
(b)(2)(B) and clause
(i) of this
subparagraph, if
applicable; and
(bb) is in accordance
with regulations
promulgated by the
Secretary under
subparagraph (D); and
(II) a substantial economic
benefit is rendered by the
State to the Indian tribe.
(D) Regulations.--Not later than 18 months
after the date of enactment of this
subparagraph, the Secretary shall promulgate
regulations to provide guidance to Indian
tribes and States on the scope of allowable
assessments negotiated under paragraph
(3)(C)(iii) and the apportionment of revenues
negotiated in accordance with subparagraph (C).
(E) No effect on existing agreements.--
Nothing in this paragraph affects any existing
Tribal-State compact or other agreement
providing for an apportionment of revenues with
a State, local government, or other Indian
tribe. * * *
(7) * * *
(B) * * *
(vii) If the State does not consent
during the 60-day period described in
clause (vi) to a proposed compact
submitted by a mediator underclause
(v), the mediator shall notify the Secretary and the Secretary shall
prescribe not later than 180 days after notification is made, in
consultation with the Indian tribe, procedures--
(I) which are consistent with
the proposed compact selected
by the mediator under clause
(iv), the provisions of this
Act, and the relevant
provisions of the laws of the
State, and
(II) under which class III
gaming may be conducted on the
Indian lands over which the
Indian tribe has jurisdiction.
* * *
[(9) An Indian tribe may enter into a management
contract for the operation of a class III gaming
activity if such contract has been submitted to, and
approved by, the Chairman. The Chairman's review and
approval of such contract shall be governed by the
provisions of subsections (b), (c), (d), (f), (g), and
(h) of section 12.]
(9) Extension of negotiating timeframe.--Class III
gaming activities conducted by an Indian tribe on
Indian land shall be lawful under this Act for up to
180 days after expiration of a Tribal-State compact if
the Indian tribe signatory to the compact certifies to
the Secretary that--
(A) the Indian tribe requested a new compact
not later than 90 days before expiration of the
compact; and
(B) a new compact has not been agreed on.
[MANAGEMENT CONTRACTS
[Sec. 12. (a)(1) Subject]
SEC. 12. MANAGEMENT CONTRACTS.
(a) Class II Gaming and Class III Gaming Activities;
Information on Operators.--
(1) Gaming activities.--Subject to the approval of
the Chairman, an Indian tribe may enter into a
management contract for the operation and management of
a [class II gaming activity that the Indian tribe may
engage in under section 11(b)(1)] class II gaming
activity in which the Indian tribe may engage under
section 11(b)(1), or a class III gaming activity in
which the Indian tribe may engage under section 11(d),
but, before approving such contract, the Chairman shall
require and obtain the following information--
(A) the name, address, and other additional
pertinent background information on each person
or entity (including individuals comprising
such entity) having a direct financial interest
in, or management responsibility for, such
contract, and, in the case of a corporation,
those individuals who serve on the board of
directors of such corporation and each of its
stockholders who hold (directly or indirectly)
10 percent or more of its issued and
outstanding stock;
(B) a description of any previous experience
that each person listed pursuant to
subparagraph (A) has had with other gaming
contracts with Indian tribes or with the gaming
industry generally, including specifically the
name and address of any licensing or regulatory
agency with which such person has had a
contract relating to gaming; and
(C) a complete financial statement of each
person listed pursuant to subparagraph (A).
[(2) Any person] (2) Requirement to respond.--Any
person listed pursuant to paragraph (1)(A) shall be
required to respond to such written or oral questions
that the Chairman may propound in accordance with his
responsibilities under this section.
[(3) For purposes] (3) References to management
contracts.--For purposes of this Act, any reference to
the management contract described in paragraph (1)
shall be considered to include all collateral
agreements to such contract that relate to the gaming
activity.
* * * * * * *
[COMMISSION FUNDING
[Sec. 18. (a)(1) The Commission shall establish a schedule
of fees to be paid to the Commission annually by each gaming
operation that conducts a class II or class III gaming activity
that is regulated by this Act.
[(2)(A) The rate of the fees imposed under the schedule
established under paragraph (1) shall be--
[(i) no more than 2.5 percent of the first
$1,500,000, and
[(ii) no more than 5 percent of amounts inexcess of
the first $1,500,000, of the gross revenues from each activity
regulated by this Act.
[(B) The total amount of all fees imposed during any fiscal
year under the schedule established under paragraph (1) shall
not exceed $8,000,000.
[(3) The Commission, by a vote of not less than two of its
members, shall annually adopt the rate of the fees authorized
by this section which shall be payable to the Commission on a
quarterly basis.]
SEC. 18. COMMISSION FUNDING.
(a) Fees.--
(1) Fee schedule.--
(A) In general.--Except as provided in this
section, the Commission shall establish a
schedule of fees to be paid annually to the
Commission, on a quarterly basis, by each
gaming operation that conducts a class II
gaming or class III gaming activity that is
regulated, in whole or in part, by this Act.
(B) Rates.--The rate of fees under the
schedule established under subparagraph (A)
that are imposed on the gross revenues from
each operation that conducts a class II gaming
or class III gaming activity described in that
paragraph shall be (as determined by the
Commission)--
(i) a progressive rate structure
levied on the gross revenues in excess
of $1,500,000 from each operation that
conducts a class II gaming or class III
gaming activity; or
(ii) a flat fee levied on the gross
revenues from each operation that
conducts a class II gaming or class III
gaming activity.
(C) Total amount.--Notwithstanding any other
provision of law, the total amount of all fees
imposed during any fiscal year under the
schedule established under subparagraph (A)
shall not exceed--
(i) $11,500,000 for fiscal year 2005;
(ii) $12,000,000 for each of fiscal
years 2006 and 2007; and
(iii) $13,000,000 for each of fiscal
years 2008 and 2009.
[(4)] (2) Failure to pay the fees imposed under the
schedule established under paragraph (1) shall, subject
to the regulations of the Commission, be grounds for
revocation of the approval of the Chairman of any
license, ordinance, or resolution required under this
Act for the operation of gaming.
[(5)] (3) To the extent that revenue derived from
fees imposed under the schedule established under
paragraph (1) are not expended or committed at the
close of any fiscal year, such surplus funds shall be
credited to each gaming activity on a pro rata basis
against such fees imposed for the succeeding year.
[(6)] (4) For purposes of this section, gross
revenues shall constitute the annual total amount of
money wagered, less any amounts paid out as prizes or
paid for prizes awarded and less allowance for
amortization of capital expenditures for structures.
(b) Fee Procedures.--
(1) In general.--By a vote of not less than 2 members
of the Commission, the Commission shall adopt the
schedule of fees provided for under this section.
(2) Fees assessed.--In assessing and collecting fees
under this section, the Commission shall take into
account the duties of, and services provided by, the
Commission under this Act.
(3) Regulations.--The Commission shall promulgate
such regulations as are necessary to carry out this
subsection.
[(b)] (c)(1) The Commission, in coordination with the
Secretary and in conjunction with the fiscal year of the United
States, shall adopt an annual budget for the expenses and
operation of the Commission.
(2) The budget of the Commission may include a request for
appropriations, as authorized by [section 19] section 24, in an
amount equal the amount of funds derived from assessments
authorized by subsection (a) for the fiscal year preceding the
fiscal year for which the appropriation request is made.
(3) The request for appropriations pursuant to paragraph
(2) shall be subject to the approval of the Secretary and shall
be included as a part of the budget request of the Department
of the Interior.
[AUTHORIZATION OF APPROPRIATIONS
[Sec. 19(a) Subject to section 18, there are authorized to
be appropriated, for fiscal year 1998, and for each fiscal year
thereafter, an amount equal to the amount of funds derived from
the assessments authorized by section 18(a).
[(b) Notwithstanding section 18, there are authorized to be
appropriated to fund the operation of the Commission,
$2,000,000 for fiscal year 1998, and $2,000,000 for each fiscal
year thereafter. The amounts authorized to be appropriated in
the preceding sentence shall be in addition to the amounts
authorized to be appropriated under subsection (a).]
SEC. 19. TRIBAL CONSULTATION.
In carrying out this Act (including the use of negotiated
rulemaking with tribal governments and the use of tribal
advisory committees in developing regulatory policies,
standards, and definitions), the Secretary, Secretary of the
Treasury, and Chairman of the Commission shall involve and
consult with Indian tribes to the maximum extent practicable,
as appropriate, in a manner that is consistent with the Federal
trust and the government-to-government relationship that exists
between Indian tribes and the Federal Government.
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[CRIMINAL PENALTIES
[Sec. 23. Chapter 53]
SEC. 23. CRIMINAL PENALTIES.
(a) In General.--Chapter 53 of title 18, United States
Code, is amended by adding at the end thereof the following new
sections:
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[CONFORMING AMENDMENT
[Sec. 24. The table]
(b) Conforming Amendment.--The table of contents for
chapter 53 of title 18, United States Code, is amended by
adding at the end thereof the following:
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SEC. 24. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--Subject to section 18, there is authorized
to be appropriated to carry out this Act, for fiscal year 1998
and each fiscal year thereafter, an amount equal to the amount
of funds derived from the assessments authorized by section
18(a).
(b) Additional Amounts.--Notwithstanding section 18, in
addition to amounts authorized to be appropriated by subsection
(a), there are authorized to be appropriated $2,000,000 to fund
the operation of the Commission for fiscal year 1998 and each
fiscal year thereafter.
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