[Federal Register Volume 63, Number 48 (Thursday, March 12, 1998)]
[Rules and Regulations]
[Pages 12312-12317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6282]



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Part IV





National Indian Gaming Commission





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25 CFR Part 514



Annual Fees Payable by Indian Gaming Operations; Final Rule

Fee Rates; Notice

25 CFR Part 518



Issuance of Certificates of Self-Regulation to Tribes; Proposed Rule

25 CFR Chapter III



Self-Regulated Class III Gaming Operations; Advance Notice of Proposed 
Rulemaking

  Federal Register / Vol. 63, No. 48 / Thursday, March 12, 1998 / Rules 
and Regulations  

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NATIONAL INDIAN GAMING COMMISSION

25 CFR Part 514

RIN 3141-AA18


Annual Fees Payable by Indian Gaming Operations

AGENCY: National Indian Gaming Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The National Indian Gaming Commission is amending its fee 
regulations to add class III gaming revenues to the assessable gross 
revenue base, increase the total amount of fees that can be imposed, 
and provide for an exemption for self-regulated tribes such as the 
Mississippi Band of Choctaw. This action is being taken pursuant to 
recent amendments to the Indian Gaming Regulatory Act. The primary 
effect of this action is to increase the funding for the National 
Indian Gaming Commission. This rule provides direction and guidance to 
Indian gaming operations (activities) to enable them to compute and pay 
the annual fees as authorized by the Indian Gaming Regulatory Act 
(IGRA) as amended. The computation and payment of annual fees are to be 
self-administered by each gaming operation that is subject to the 
jurisdiction of the Commission.
    The proposed rule was published in the Federal Register on December 
16, 1997. The 30-day comment period ended on January 15, 1998.

DATES: Effective April 13, 1998.

FOR FURTHER INFORMATION CONTACT:
Fred W. Stuckwisch, National Indian Gaming Commission, 1441 L Street, 
N.W., Suite 9100, Washington, D.C. 20005; telephone 202/632-7003; fax 
202/632-7066 (these are not toll-free numbers).

SUPPLEMENTARY INFORMATION: The Indian Gaming Regulatory Act (IGRA), 
enacted on October 17, 1988, established the National Indian Gaming 
Commission (Commission). The Commission is charged with, among other 
things, regulating gaming on Indian lands. These amendments to the fee 
regulations are issued pursuant to the IGRA, as amended.

Purpose

    The purpose of the fee regulations is to implement those portions 
of the IGRA that provide for the payment of fees by gaming operations 
and for the collection and use of such fees by the Commission. Gaming 
operations are the economic entities licensed by a tribe that operate 
the games, receive the revenues, issue the prizes, and pay the 
expenses. Gaming operations may be operated by a tribe directly, by a 
management contractor, or under certain conditions, by another person 
or other entity.
    These regulations are being amended to:
    (1) Add class III gaming revenues to the assessable gross revenue 
base,
    (2) Increase the total amount of fees that can be imposed,
    (3) Eliminate the requirement that a minimum fee be assessed on 
tier 1 revenues, and
    (4) Provide an exemption for self-regulated tribes such as the 
Mississippi Band of Choctaw.
    As a result, gaming operations offering only class II games must 
continue reporting and paying fees, gaming operations offering only 
class III games must begin reporting and paying fees, and gaming 
operations offering both class II and III games must begin reporting 
and paying fees on their class III revenues.

Starting Date

    This rule will become effective for calendar year 1998 which means 
that all gaming operations within the jurisdiction of the Commission 
must self-administer the provisions of these amended regulations and 
must report and pay any fees that are due to the Commission for the 
first quarter of 1998 by the end of the first quarter of 1998 (March 
31), or no later than April 13, 1998, the date these regulations become 
effective.

System Self-Administered

    These regulations provide for a system of fee assessment and 
payment that is self-administered by the gaming operations. Briefly, 
the Commission adopts and communicates the assessment rates; the faming 
operations apply those rates to their revenues, compute the fees to be 
paid, and report and remit the fees to the Commission quarterly.

Fees Based on Assessable Gross Revenues

    Annual fees are payable quarterly each calendar year based on the 
previous calendar year's assessable gross revenues from the gaming 
operations. For this purpose, all revenues from gaming operations 
determined by the licensing tribe to be Class II or III are included.

Adoption of Fee Rates

    The Commission will adopt preliminary annual fee rate(s) during the 
first quarter of each calendar year and final annual fee rate(s) for 
that year during the fourth quarter. Separate rates may be set for 
assessable gross revenues of $1,500,000 (1st tier) and for revenues 
over $1,500,000 (2nd tier). When adopted, the Commission will publish 
the rates in the Federal Register as a Notice.

Fee Rates for Current Year

    The Commission has adopted a preliminary fee rate of 0.00% for 
assessable gross revenues of $1,500,000 1st tier) and 0.00% for 
revenues over $1,500,000 (2nd tier) for use beginning with the first 
quarter (January 1--March 31) of the current calendar year (1998). The 
Commission may change this rate during subsequent quarters when more 
information about the assessable gross revenue base becomes available. 
The last or final rate adopted will ultimately determine the amount of 
fees paid during the year. The Commission is publishing a Notice 
announcing this preliminary rate simultaneously with these regulations 
in the Federal Register.

Self-Regulation

    If a tribe has a certificate of self-regulation, the rate of fees 
imposed shall be no more than .25 percent of class II assessable gross 
revenues and 0% of class III assessable gross revenues. Later 
rulemakings will add the requirements for obtaining a certificate of 
self-regulation. The Commission is publishing in the Federal Register 
today its proposed rules for self-regulation of class II operations.

Reports and Payments

    Gaming operations compute their fee payments by applying the rates 
adopted to their assessable gross revenues from the preceding calendar 
year. Gaming operations report their assessable gross revenues, fees, 
and calculations to the Commission with their quarterly payments. 
Payments and reports must be received by the Commission no later than 
March 31, June 30, September 30, and December 31, of each calendar 
year, beginning in 1998. As previously noted, payments and reports for 
the first quarter of 1998 will be due no later that 30 days following 
publication of this rule in the Federal Register, or April 13, 1998.

Computations

    Briefly, the computations required for each quarter are:
    (1) Multiply the previous calendar year's 1st tier assessable gross 
revenues by the rate for those revenues adopted by the Commission.

[[Page 12313]]

    (2) Multiply the previous calendar year's 2nd tier assessable gross 
revenues adopted by the Commission.
    (3) Add (total) the results (products) obtained in steps (1) and 
(2) above.
    (4) Multiply the total in (3) by the fraction representing the 
applicable quarter of the calendar year: 1st quarter--\1/4\; 2nd 
quarter--\1/2\ (\2/4\); 3rd quarter--\3/4\; and 4th quarter--1 (\4/4\).
    (5) Subtract the amounts already paid by the operation for the 
current year and credits, if any, due for any previous year's 
overpayment from the amount determined in (4). (The Commission will 
compute and tell the gaming operations the amounts of deductible 
``credits.'')
    (6) The gaming operation should pay the amount computed in (5) for 
the quarter.

Examples

    The regulations include examples of the computations at 
Secs. 514.1(b)(3) and 514.1(c)(7).

Use of Adjusted Numbers

    Basing the fees on the previous year's assessable gross revenues 
provides enough time to the gaming operations to finalize and submit 
adjusted numbers before the end of the third quarter of the calendar 
year. Furthermore, the use of preliminary and final rates by the 
Commission is intended to provide enough time for the Commission to 
determine the assessable gross revenue base before finalizing the rates 
for each calendar year.

Applicability

    These regulations apply to all gaming operations under the 
jurisdiction of the Commission. New gaming operations (with no gaming 
revenues generated in the previous calendar year) must file reports 
quarterly although no fees will be due. Gaming operations of tribes 
with certificates of self-regulation are not required to file quarterly 
reports if no fees are payable.

Penalties and Interest

    Penalties and interest may apply for failures to file quarterly 
statements and to pay fees when due. The Commission may withhold, deny 
or revoke required approvals for failures to pay fees, penalties and 
interest. Furthermore, the failure of a gaming operation to pay the 
annual fee required is a substantial violation and may subject the 
operation to an order of temporary closure of all or part of the gaming 
operation pursuant to Sec. 573.6(a). Procedures for appealing such 
adverse actions are found at Sec. 577.

Public Comments and Responses

    The Commission received eighteen separate communications about the 
proposed rule during the 30 day comment period. The comments ranged 
from simple requests for more time to comment to comprehensive analyses 
of the contents of parts of the proposed rule. The Commission has 
thoroughly considered these comments and its decisions are set forth in 
the paragraphs that follow.

Extension of the Comment Period

    One commenter requested that the comment period for the proposed 
rule be extended to allow time for additional comments.
    Response: The NIGC decided not to extend the comment period 
because:

--Many thoughtful, substantive comments were received during the 
comment period provided,
--No new concerns about the proposed rules were presented in the 
request to extend the comment period, and
--The Commission must begin collecting additional fees to continue 
operating at its current level and begin its expansion.

Funding Increase

    One commenter wrote that the Tribe supports an increase in funding 
for the NIGC because it understands that effective regulation is a key 
to continued strong support for Native American Gaming and to protect 
the integrity of Native American Gaming. Two writers said they fully 
support the NIGC having the resources necessary to do a complete and 
thorough job of regulating and, more importantly, assisting the Tribes 
in the regulation of the Indian gaming industry. Another commenter 
pointed out that without viable enabling legislation, the NIGC may have 
little choice other than to impose a uniform fee across the board on 
all class III gaming operations and hope that enough tribes fail to 
meet or exceed the ``Choctaw'' standard, such that the needed revenue 
comes into the NIGC.
    Response: The NIGC acknowledges and appreciates the positive 
support for the funding increase. It too wants to do a complete and 
thorough job of regulating and, more importantly, assisting the Tribes 
in the regulation of the Indian gaming industry. As to the enabling 
legislation, the NIGC is also concerned. It is presently reviewing its 
options.

NIGC Budget

    One commenter stated that the NIGC should not be able to 
unilaterally set its own budget.
    Response: The NIGC does not unilaterally set its own budget. NIGC's 
annual budget, pursuant to, and limited by, the IGRA, must be 
coordinated with the Secretary of the Interior and included with the 
budget of the Department of the Interior in the President's budget. Any 
request for appropriated funds is subject to the Secretary's approval. 
Furthermore, the Commission's budget is reviewed by subcommittees and 
committees of the U.S. Senate and House of Representatives.

Fee Assessment Revenues

    One commenter noted that all fee assessment revenue must fund only 
NIGC activities.
    Response: Fee assessment revenue is used to fund NIGC activities 
only. Amounts not used in one year are carried forward to subsequent 
years and used then to fund NIGC activities.

Phase-In

    Several commenters suggested that the NIGC should establish rates 
which will achieve the ceiling gradually, because doing so will not 
only allow tribes to budget for anticipated increases in fees but will 
allow the NIGC to determine over a period of time whether or not it in 
fact requires the maximum amount of fees to fulfill its regulatory 
obligations. The NIGC should work with the tribes to assess what 
regulatory services are necessary.
    Response: The regulations do not require that the Commission 
increase the fees to $8 million in the first fiscal year. The NIGC 
agrees that the amounts of fees assessed should be increased 
incrementally to meet the growing needs of the Commission. However, the 
reader should also understand that while the fee cap was raised from 
$1.5 million to $8 million, the funding for the Commission is being 
increased from about $4.4 million to a maximum of $8.5 million. This is 
because the Commission is currently being funded by a combination of 
fees, savings and appropriations, and in 1999 it will be funded by fees 
alone.

Assessment Base

    One commenter suggested that the assessment should not be based on 
gross revenues. Another commenter said the ``assessable gross 
revenues'' should include an allowance for salaries and other regular 
business expenses.
    Response: IGRA specifically provides for the assessment to be based 
on gross revenues. The only deductible operating expense provided by 
the IGRA is the allowance for the amortization of structures. 
Regulation and the cost of

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such regulation should be proportionate to the volume of gaming, rather 
than its profitability.

Fee Rates

    Several commenters said that fee rates should reflect the services 
provided by the NIGC. Some of those suggested that the rates should be 
set equally among the number of tribes engaged in class II and class 
III gaming while another said that the NIGC should differentiate 
clearly between class II gaming and class III gaming.
    Response: The NIGC believes that the fee rates will relate to the 
services provided by the NIGC--to the Indian gaming industry as a whole 
as well as to the individual operations. When the Congress amended the 
IGRA, it authorized the assessment of fees on class II and III gaming 
revenues. It did not distinguish between class II and III and did not 
require different assessment on each. The NIGC has likewise decided not 
to distinguish between class II and class III revenues at this time. 
Should there be some basis to do so in the future, the NIGC will 
consider amending these regulations at a later date.

Range of Authorized Fee Rates

    One commenter said that the rate imposed on the ``assessable gross 
revenues'' is troubling. Such a rate on the gross revenues may, in 
fact, result in a higher dollar amount than net revenues. Other 
commenters pointed out that the IGRA amendments provide for maximum 
fees of 2.5% on the first 1.5 million of ``assessable gross revenues'' 
and 5% on the amount above 1.5 million of ``assessable gross 
revenues.'' These percentages strike them as being very high.
    Response: The ranges of rates set forth in the regulations are the 
rates that are authorized, not necessarily the rates that will be 
assessed. There is an $8 million limit on the amount the NIGC can 
assess. Assuming the industry has assessable gross revenues of $6 
billion and that class II and class III revenues are assessed at the 
same rate, the actual rate of assessment to collect $8 million would be 
0.133%. An operation with $100 million of assessable gross revenues 
would pay $133,333 in fees while an operation with $10 million of 
assessable gross revenues would pay $13,333 in fees.

Tiers

    One commenter stated that it is a good idea to have a ``tier'' 
structure for fees. A second commenter wrote that it is clear that 
Congress intends the Commission to continue the ``sliding fee'' system. 
A third commenter noted that Congress, in establishing the tiered fee 
structure, and in eliminating the minimum fee under the 1st tier, has 
authorized progressive rates that would impose a greater burden on 
larger, and presumably more profitable, operations. NIGC should change 
from the current flat-rate fee to a progressive fee structure. Further, 
nothing precludes the NIGC from setting progressive rates within the 
2nd tier, so long as the maximum rate does not exceed 5%. Three other 
commenters contend that the two tier process is no longer relevant as a 
direct result of the addition of class III revenues and should be re-
examined.
    Response: The NIGC has decided to leave the tier structure in place 
without modification at this time. It provides flexibility in that it 
allows different rates for different groups of operations based on size 
and allows both a progressive and a regressive structure. While the 
NIGC has no immediate plans to use multiple rates within the second 
tier, it does believe that it may have the authority to do so.

Allowance for Amortization

    Two commenters urged that in defining what is a proper allowance 
for amortization in arriving at assessable gross revenues, the NIGC 
should include such facilities as entertainment centers, hotels, and 
other ancillary facilities that clearly are designed to enhance gaming 
revenue but the revenue from which is not directly assessable by the 
NIGC.
    Response: The regulations provide for the use of generally accepted 
accounting principles which require the matching of revenues and 
expenses. To allow the deduction of costs unrelated to the revenues 
being assessed would not be in accordance with generally accepted 
accounting principles. Furthermore, the revenues being assessed are the 
revenues of the gaming operation. The costs in question are not the 
costs of the gaming operation as defined in the regulations.
    Another commenter believes that the regulations should clarify how 
the ``allowance for amortization of capital expenditures for 
structures'' will be determined.
    Response: The regulations at Sec. 514.1(b) (2) and (3) provide both 
the rules and an example.

Reporting Requirements

    One commenter feels that the reporting requirements should not 
apply to self-regulated tribes inasmuch as they are exempt from 
Commission fees. In addition, the Commission should require information 
to be maintained and available for inspection rather than require 
submission of that information to the Agency.
    Response: The Commission agrees that gaming operations of tribes 
with certificates of self-regulation that exempt entire operations from 
paying any fees should not be required to file the quarterly reports 
that support the fee payments and has revised its regulations 
accordingly. However, operations must submit quarterly reports even if 
no fees are due until the Commission determines that they are exempt 
from paying fees. The Commission does require, where appropriate, that 
gaming operations maintain and make available for inspection certain 
information. For example, Sec. 571.14 requires a tribe to reconcile its 
quarterly fee assessment reports with its audited financial statements 
and make available such reconciliation upon request by the Commission's 
authorized representative.

Tribal Cap on Fees Payable

    One commenter believes that a cap should be placed on the amount of 
fees which any tribe should pay to NIGC.
    Response: There are already caps on the amounts of fees the gaming 
operations can be assessed. There are both the range of rates and the 
overall $8 million caps.

Duplication

    One Tribe commented that Tribes will now be paying double for 
regulation of class III gaming. They point out that many Tribes are 
already paying fees to States for regulation and/or other purposes 
pursuant to their Tribal-State Compacts. Now NIGC will be assessing 
fees on class III revenues for regulation as well. Another Tribe 
commented that the proposed fee would cause them to be paying triple 
for the same services. Still another Tribe stated that Tribes should 
not pay for NIGC services that are already provided for by the Tribe 
and/or the state agencies.
    Response: The NIGC agrees that tribes should not be paying more 
than once for the same services. Each of the various entities 
involved--the tribes, the states, the federal government--have a role 
to play in the regulation of Indian gaming. Those roles and 
responsibilities should not be redundant. The federal government serves 
a role separate from that of the tribes and states. It provides overall 
oversight for all Indian gaming, intervenes when state and/or tribal 
intervention is inappropriate, and takes action for violation of 
Federal laws. The three levels of government must, however, continue to 
work together to avoid overlap and duplication.

[[Page 12315]]

Credit for Other Costs of Regulation

    Several commenters suggested that the Tribes should be given credit 
against their fees for regulation and other services provided by local 
governments. They pointed out that Tribal gaming operations pay 
substantial fees to fund state compact, IGRA and Tribal regulations and 
these fees should be credited against any fees paid to the NIGC.
    Response: As discussed above, several entities have a role to play 
in the regulation of Indian gaming. Their roles and responsibilities 
are, or should be, complementary, not redundant. The work of each is 
measured and paid for in a unique manner. The work and cost of one 
tribal or state entity does not necessarily reduce the work and cost of 
the NIGC. The Tribe regulates the individual gaming operation; pursuant 
to a Tribal-State compact, the state may participate in the regulation 
of the Indian gaming industry of the state; and the NIGC focuses on the 
overall Indian gaming industry.

Economic Impact

    One commenter thinks the proposed fee schedule will close down many 
marginal gaming operations and that the impact of the Fee Regulations 
on marginal gaming operations may be exacerbated by the exodus of 
``self-regulated'' tribes from the fee paying pool and will eventually 
impose severe economic hardship on those Tribes which are not able to 
achieve this self-regulated status. Two other commenters pointed out 
that only those tribes that cannot afford regulatory schemes that equal 
or exceed the system used by the Mississippi Choctaw will be stuck with 
the entire $7 million price tag.
    Response: The Commission acknowledges that more of a burden may be 
placed on ``marginal'' tribes if there is an exodus of self-regulated 
tribes from the fee structure. To mitigate that burden, the NIGC has 
initially decided to impose a fee on only the second tier, those 
revenues over $1.5 million. On the other hand, the Commission must 
implement and carry out the provisions of the IGRA as amended. To this 
end it is publishing in the Federal Register today an Advance Notice of 
Proposed Rulemaking to implement the self-regulation provision added to 
the IGRA by Public Law 105-83.

Hardship Exception

    One commenter strongly urged the Commission to include another tier 
or an exception to the fee where the assessment would be greater than 
the net revenues. Another commenter urged that the non-compacted tribe, 
which is faced with a disproportionate burden in payment of the fee, 
should not be unfairly penalized.
    Response: The Commission is sympathetic to the situations 
described, but the IGRA does not provide for such individual 
exceptions. The Commission's use of the tier system should provide some 
help in this regard.

Impact on Small Business Entities

    One commenter believes that the Commission is incorrect in stating 
that the proposed rule will not have a significant impact on a 
substantial number of small business entities. He thinks that this rule 
will shut them and many other small tribal gaming operations down.
    Response: The Commission does not believe that the impact will be 
grater that great given the $8 million cap. Only if the bulk of the 
Indian gaming industry becomes exempt from paying fees will the burden 
on the small business entities become so great.

Timing of Exemption From Fee Assessments

    One commenter claimed that the NIGC has entirely failed to consider 
a critical element of fee assessment, i.e., a present exemption from 
fee assessments. It is not only unreasonable and unfair, but also 
arbitrary and capricious and clearly erroneous for the Commission to 
impose only that portion of the Congressional mandate that raises 
tribal fees and increases Commission revenues but delays until a later 
date, if at all, and abrogates, the tribal statutory entitlement to a 
present exemption from payment of the fees. Another commenter said that 
the NIGC should promulgate the rules governing the exemption prior to 
imposing fees on tribes that are indistinguishable from the Mississippi 
Choctaw. Yet another commenter argues that the NIGC must first allow 
the tribes the opportunity to apply for and receive a certificate of 
self-regulation before the subject fees may be lawfully assessed. Other 
commenters asserted that if the Mississippi Choctaw will be immediately 
exempt from application of the assessed fees, all tribes similarly 
situated should also be immediately eligible for this exemption. To do 
otherwise would lead to unfair preferential treatment which is 
discriminatory in nature. Several commenters said that the NIGC should 
issue regulations governing self-regulation as soon as possible.
    Response: The NIGC agrees that if self-regulatory status is made 
available to one tribe, it should be made available to all tribes in a 
timely manner. In fact, it is publishing today proposed rules governing 
self-regulation of class II operations. The NIGC does not agree that 
self-regulatory status has been, or should be, made available 
automatically. Self-regulation status is an exception (exemption) to 
the general rule and any tribe seeking such status should be required 
to demonstrate its qualifications for such classification.

Scope of Exemption From Fee Assessments

    One commenter suggested that the NIGC is now prohibited from 
assessing class II or class III fees against self-regulated gaming 
operations, that Section 2710(c)(5) of the IGRA was not expressly 
repealed by Congress but in effect has been superseded by Public Law 
105-83. Another commenter asserted that new Section 18(a)(2)(C) of IGRA 
supersedes the old procedures under Section 11(c)(3) for a tribe to 
petition for a certificate of self-regulation from the Commission and 
thereby obtain a partial exemption from Commission fees.
    Response: The NIGC does not agree with those interpretations. 
First, Section 2710(c)(5) and Section 11(c)(3) of the IGRA deal with 
class II while the provision in Public Law 105-83 and Section 
18(a)(2)(C) of the IGRA deal with tribes such as the Mississippi 
Choctaw, who currently have only a class III operation. The NIGC 
believes that the Congress has authorized separate class II and class 
III self-regulation provisions. Consequently, the NIGC is publishing in 
the Federal Register today its proposed rules for self-regulation of 
class II operations and the Advance Notice of Proposed Rulemaking for 
class III operations.

Determination of Self-Regulation

    One commenter contends that until the Commission determines which 
tribes are self-regulated and which are not, it may not properly assess 
any fees on Indian tribes.
    Response: The Commission disagrees. The Commission's authority to 
assess fees is separate from its authority to determine which tribes 
are self-regulating. Furthermore, although class III self-regulated 
tribes may be exempt from the obligation to pay fees, that provision is 
not self implementing. Thus, regulations must be promulgated to 
determine which tribes are self-regulating.

NIGC's Class III Responsibilities

    Two commenters stated that the NIGC has very few statutory duties 
or

[[Page 12316]]

responsibilities for class III gaming and what activities the NIGC does 
undertake for class III (such as approval of management contracts) are 
usually covered by fees paid by applicant tribes. Another commenter 
said that NIGC's only class III obligation is to receive the annual 
audits. And yet another commenter suggested that the Commission clarify 
in its regulations that it is authorized only to regulate class II 
gaming.
    Response: The NIGC's responsibilities for class III gaming are 
considerably broader than these commenters suggest. Among other things, 
the NIGC is charged with:

--Determining whether the gaming operation is complying with all 
provisions of IGRA, any regulation prescribed by the Commission 
pursuant to the IGRA, or tribal regulations, ordinances, or resolutions 
approved under section 11 or 13 of the IGRA;
--Assure that the tribe has sole proprietary interest and 
responsibility for the conduct of the gaming activity;
--Assure that the net revenues from all tribal gaming are used for the 
specified purposes;
--Assure that the construction and maintenance of the gaming facility, 
and the gaming itself is conducted in a manner which adequately 
protects the environment and the public health and safety; and
--Determine that any class III gaming is conducted in conformance with 
a Tribal-State compact entered into by the Indian tribe and the State 
that is in effect.

Texas Rather Than User Fees

    One commenter suggested that the fee regulations proposed by the 
Commission provide for taxes rather than user fees.
    Response: The Commission disagrees. The fee assessments relate to 
the regulation of the Indian gaming industry and the provision of 
services to individual operations and the industry as a whole.

Class II and Class III Operation

    Response: A gaming operation that conducts both class II and class 
III gaming is subject to the provisions applicable to class II, class 
III, and both class II and class III. There may be class II provisions 
that do not apply to the class III portion of the operation and there 
may be class III provisions that do not apply to the class II portion 
of the operation.

Negotiated Rulemaking

    One commenter suggested that negotiated rulemaking should be used 
for the fee formula, self-regulating tribes, and other issues.
    Response: The Commission agrees that negotiated rulemaking should 
always be considered but in the situations at hand, it believes that 
negotiated rulemaking is not practicable for the fee and self-
regulating regulations. The Commission's budgetary needs required 
immediate decisions to implement the change in fees. Furthermore, the 
Commission concurred with commenters that regulations on self-
regulation should be finished as soon as practicably possible. As a 
result, interested parties have been given ample opportunity to review, 
comment on, and discuss with Commissioners and staff the Commission's 
thinking with respect to the proposed regulations.

Regulatory Procedures

Regulatory Flexibility Act

    This proposed rule will not have a significant economic impact on a 
substantial number of small business entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.). The additional entities 
becoming subject to these regulations as a result of the changes now 
being made are generally larger than those entities presently covered. 
Furthermore, the fees that will be paid by the entities presently 
covered will be less than the fees they are presently paying.

Paperwork Reduction Act

    The information collection requirements contained in paragraph (c) 
of this regulation have been approved by the Office of Management and 
Budget under 44 U.S.C. 3501 et seq. and assigned clearance number 3141-
0007. The information is being collected to determine the assessable 
gross revenue of each gaming operation and the aggregate assessable 
gross revenues of all gaming operations. The information will be used 
to set and adjust fee rates and to verify the computations of fees paid 
by each gaming operation. Response is mandatory.

National Environmental Policy Act

    The Commission has determined that this rule does not constitute a 
major Federal action significantly affecting the quality of the human 
environment and that no detailed statement is required pursuant to the 
National Environmental Policy Act of 1969.
Larry D. Rosenthal,
Chief of Staff, National Indian Gaming Commission.

List of Subjects in 25 CFR Part 514

    Gambling, Indians-lands, Reporting and recordkeeping requirements.

    Accordingly, 25 CFR Part 514 is amended as follows:

PART 514--FEES

    1. The authority for Part 514 continues to read as follows:

    Authority: 25 U.S.C. 2706, 2708, 2710, 2717, 2717a.

    2. Section 514.1 is amended by revising paragraphs (a) introductory 
text, (a)(4), (b) introductory text, (b)(4), (c) introductory text, 
(c)(1), (c)(2), (c)(5) introductory text, (c)(8), and (d) introductory 
text, by removing paragraph (g), and by adding paragraph (a)(6), to 
read as follows:


Sec. 514.1  Annual fees.

    (a) Each gaming operation under the jurisdiction of the Commission 
shall pay to the Commission annual fees as established by the 
Commission. The Commission, by a vote of not less than two of its 
members, shall adopt the rates of fees to be paid.
* * * * *
    (4) The rates of fees imposed shall be--
    (i) No more than 2.5 percent of the first $1,500,000 (1st tier), 
and
    (ii) No more than 5 percent of amounts in excess of the first 
$1,500,000 (2nd tier) of the assessable gross revenues from each gaming 
operation subject to the jurisdiction of the Commission.
* * * * *
    (6) If a tribe is determined to be self-regulated pursuant to the 
provisions of 25 U.S.C. 2717(a)(2)(C), no fees shall be imposed.
    (b) For purposes of computing fees, assessable gross revenues for 
each gaming operation are the annual total amount of money wagered on 
class II and III games, admission fees (including table or card fees), 
less any amounts paid out as prizes or paid for prizes awarded, and 
less an allowance for amortization of capital expenditures for 
structures.
* * * * *
    (4) All class II and III revenues from gaming operations are to be 
included.
    (c) Each gaming operation subject to the jurisdiction of the 
Commission and not exempt from paying fees pursuant to the self-
regulation provisions shall file

[[Page 12317]]

with the Commission quarterly a statement showing its assessable gross 
revenues for the previous calendar year.
    (1) These quarterly statements shall show the amounts derived from 
each type of game, the amounts deducted for prizes, and the amounts 
deducted for the amortization of structures;
    (2) These quarterly statements shall be filed no later than--March 
31, June 30, September 30, and December 31, of each calendar year the 
gaming operation is subject to the jurisdiction of the Commission, 
beginning in September 1991. For calendar year 1998, the quarterly 
statement for the first quarter shall be filed no later than April 13, 
1998. Any changes or adjustments to the previous year's assessable 
gross revenue amounts from one quarter to the next shall be explained.
* * * * *
    (5) Each gaming operation shall determine the amount of fees to be 
paid and remit them with the statement required in paragraph (c) of 
this section. The fees payable shall be computed using--
* * * * *
    (8) Quarterly statements, remittances and communications about fees 
shall be transmitted to the Commission at the following address: Office 
of Finance, National Indian Gaming Commission, 1441 L Street, N.W., 
Suite 9100, Washington, DC 20005. Checks should be made payable to the 
National Indian Gaming Commission (do not remit cash).
* * * * *
    (d) The total amount of all fees imposed during any fiscal year 
shall not exceed $8,000,000. The Commission shall credit pro-rata any 
fees collected in excess of this amount against amounts otherwise due 
at the end of the quarter following the quarter during which the 
Commission makes such determination.
* * * * *
[FR Doc. 98-6282 Filed 3-11-98; 8:45 am]
BILLING CODE 7565-01-M