[Federal Register Volume 71, Number 101 (Thursday, May 25, 2006)]
[Proposed Rules]
[Pages 30232-30235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7873]



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Part II





Department of the Interior





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National Indian Gaming Commission



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25 CFR Part 502



 Definition for Electronic or Electromechanical Facsimile; Proposed 
Rule

  Federal Register / Vol. 71, No. 101 / Thursday, May 25, 2006 / 
Proposed Rules  

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DEPARTMENT OF THE INTERIOR

NATIONAL INDIAN GAMING COMMISSION

25 CFR Part 502

RIN 3141-AA31


Definition for Electronic or Electromechanical Facsimile

AGENCY: National Indian Gaming Commission (``NIGC'' or ``Commission''), 
Interior.

ACTION: Proposed rule.

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DATES: Submit comments on or before August 23, 2006.
    Consultation: The Commission will be conducting government-to-
government consultations with Tribes on this proposed rule at the 
following times:


July 10-11 Minneapolis, Minnesota.
July 12-13 Denver, Colorado.
July 18-19 Washington, DC.
July 24-25 Tacoma, Washington.
July 26-27 Ontario, California.
August 8-9 Oklahoma City, Oklahoma.

Invitations will be mailed out to Tribal leaders in the coming weeks. 
These consultation meetings will be transcribed. To schedule a 
consultation please contact Natalie Hemlock, Special Assistant to the 
Commission, at (202) 632-7003.

ADDRESSES: Mail comments to ``Comments on Electronic or 
Electromechanical Facsimile definition'' National Indian Gaming 
Commission, Suite 9100, 1441 L Street, NW., Washington, DC 20005, Attn: 
Penny Coleman, Acting General Counsel.'' Comments may be transmitted by 
facsimile to 202-632-0045, or mailed or submitted to the above address.

FOR FURTHER INFORMATION CONTACT: Penny Coleman or John Hay, Office of 
General Counsel, Telephone 202-632-7003. This is not a toll free call.

SUMMARY: The proposed rule revises the definition of a term Congress 
used to define Class II gaming under the Indian Gaming Regulatory Act, 
25 U.S.C. 2701, et seq. (``IGRA'' or ``Act''). Specifically, the 
proposed rule revises the definition for ``electronic or 
electromechanical facsimile'' that appears in part 502 of the 
Commission's regulations (25 CFR part 501 et seq.). The Commission 
defined these terms in 1992 and revised the definitions in 2002. The 
proposed rule offers further revision.

SUPPLEMENTARY INFORMATION:

Background

    IGRA, 25 U.S.C. 2701-21, enacted by the Congress in 1988, 
establishes the NIGC and sets out a comprehensive framework for the 
regulation of gaming on Indian lands. The Act establishes three classes 
of Indian gaming.
    ``Class I gaming'' means social games played solely for prizes of 
minimal value or traditional forms of Indian gaming played in 
connection with tribal ceremonies or celebrations. 25 U.S.C. 2703(6). 
Indian tribes regulate Class I gaming exclusively.
    ``Class II gaming'' means the game of chance commonly known as 
bingo, whether or not electronic, computer, or other technologic aids 
are used in connection therewith, including, if played in the same 
location, pull-tabs, lotto, punch boards, tip jars, instant bingo, and 
other games similar to bingo, and various card games so long as they 
are not house banking games. 25 U.S.C. 2703(7)(A). Specifically 
excluded from Class II gaming, however, are banking card games such as 
blackjack and electronic or electromechanical facsimiles of any game of 
chance or slot machines of any kind. 25 U.S.C. 2703(7)(B). Indian 
tribes and the NIGC share regulatory authority over Class II gaming. 
Indian tribes can engage in such gaming without any state involvement.
    ``Class III gaming'' includes all forms of gaming that are not 
Class I gaming or Class II gaming. 25 U.S.C. 2703(8). Class III gaming 
thus includes all other games of chance, including most forms of 
casino-type gaming such as slot machines of any kind, electronic or 
electromechanical facsimiles of any game of chance, roulette, banking 
card games such as blackjack, and pari-mutuel wagering. Class III 
gaming may be conducted lawfully only if the state in which the tribe 
is located and the tribe reach an agreement called a tribal-state 
compact. Alternatively, a tribe may operate Class III gaming under 
gaming procedures issued by the Secretary of the Interior if the tribe 
and the state have not reached agreement or if the state has refused to 
negotiate in good faith toward an agreement. The tribal-state compact 
or Secretarial procedures may contain provisions for concurrent state 
and tribal regulation of Class III gaming. In addition, the NIGC also 
exercises regulatory authority over Class III gaming under IGRA, and 
the United States Department of Justice and United States Attorneys 
possess exclusive criminal jurisdiction over Class III gaming on Indian 
lands and also possess certain civil jurisdiction over such gaming.
    As a legal matter, Congress defined the parameters for game 
classification when it enacted IGRA. As a practical matter, however, 
the congressional definitions were general in nature and specific terms 
within the broad gaming classifications were not explicitly defined. 
The Commission adopted regulations in 1992 that included definitions 
for many terms used in the statutory classification scheme, including 
``electronic or electromechanical facsimile'', 25 CFR 502.7, and 
``electronic computer or other technologic aid'', 25 CFR 502.8. The 
Commission revised the definitions in 2002. See 67 FR 41166 (June 17, 
2002) for an extensive discussion of the reasons for the Commission's 
decision to revise these key terms.
    A recurring question as to the proper scope of Class II gaming 
involves the use of electronics and other technology in conjunction 
with bingo and lotto as well as pull tabs, instant bingo, and other 
games similar to bingo that may be Class II if played in a location 
where Class II bingo is played. In IGRA, Congress recognized the right 
of tribes to use ``electronic, computer or other technologic aids'' in 
connection with these forms of Class II gaming. Congress provided, 
however, that ``electronic or electromechanical facsimiles of any game 
of chance or slot machines of any kind'' constitute Class III gaming. 
Because a tribe wishing to conduct Class III gaming may do so only in 
accordance with an approved tribal-state compact, it is important to 
distinguish the two classes.
    As the Commission worked through a process to develop 
classification standards, it became apparent that the revised 
definitions issued by a divided Commission in June 2002, See 67 FR 
41166, did not provide the clarity that had been a goal in that 
rulemaking. Accordingly, the Commission proposes to revise the 
definition of the term ``electronic or electromechanical facsimile.''

Development of the Proposed Rule Through Consultation With Indian 
Tribes

    In recognition of tribal sovereignty and the fundamental importance 
of game classification to the operation and regulation of gaming on 
Indian lands under IGRA, the Commission developed a policy and process 
for consultation with Indian tribes that would provide opportunity for 
early and meaningful tribal input regarding formulation of the change 
to this regulation.
    In particular, while initially advising tribes of the Commission's 
intention to develop these Class II Game Classification Standards, the 
Commission also actively consulted with tribes regarding formulation of 
the Commission's first-ever official government-to-government tribal

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consultation policy. After several months of consultation with tribes, 
the Commission's official tribal consultation policy was adopted and 
published in the Federal Register on March 31, 2004. See 69 FR 16973. 
The Commission purposely established this policy in order to have 
consultation policy guidelines in place for pre-rulemaking tribal 
consultation on the Class II classification standards and other planned 
Commission rulemaking initiatives.
    The Commission's tribal consultation policy calls for the 
Commission, to the extent practicable and permitted by law, to engage 
in regular, timely, and meaningful government-to-government 
consultation with Indian tribes when formulating proposed new or 
revised administrative regulations that may substantially affect the 
operation or regulation of gaming on Indian lands. To fulfill this 
policy commitment to consult with tribes on these proposed Class II 
regulations, the Commission devised a three-part plan to afford tribes 
a reasonable and practicable opportunity to consult with the Commission 
and to provide early input in formulation of the regulations, before 
they were published as proposed rules in the Federal Register and the 
actual rulemaking process began.
    First, the Commission endeavored to consult in person at least 
twice with each gaming tribe between May 2003 and March 2006 regarding 
development of these proposed regulations. During this time period, the 
Commission sent out over 500 separate invitations to individual tribes 
to consult with the Commission and provide input. Many tribes accepted 
one or more of the Commission's invitations to consult during this pre-
rulemaking period and participated in separate government-to-government 
consultation meetings with the Commission regarding the proposed 
regulations and other matters. While some tribes declined the 
Commission's invitation(s) to consult, between May 2003 and March 2006, 
the Commission conducted over 300 separate government-to-government 
consultation meetings with individual tribes and their leaders or 
representatives regarding development and formulation of these proposed 
regulations.
    Second, the Commission established a joint Federal-Tribal advisory 
committee on March 31, 2004, composed of both Commission and tribal 
representatives to assist the Commission in formulating these proposed 
Class II gaming regulations. In January 2004, the Commission requested 
all gaming tribes across the country to nominate tribal representatives 
to serve on this advisory committee. From the tribal nominations 
received, the Commission selected the following seven tribal 
representatives on March 31, 2004, to serve on the committee: Norm Des 
Rosiers, Gaming Commissioner, Viejas Band of Kumeyaay Indians; Joseph 
Carlini, Gaming Commission Executive Director, Agua Caliente Band of 
Cahuilla Indians; Kenneth Ermatinger, Gaming Commission Executive 
Director, Sault Ste. Marie Tribe of Chippewa Indians of Michigan; Jamie 
Hummingbird, Gaming Commission Director, Cherokee Nation, Oklahoma; 
Mark Garrow, Gaming Commission Inspections Manager, St. Regis Mohawk 
Tribe; Melvin Daniels, General Manager, Muckleshoot Indian Bingo, 
Muckleshoot Indian Tribe; Charles Lombardo, Sr. Vice-President for 
Gaming Operations, Seminole Tribe of Florida.
    To date, the advisory committee has held six (6) meetings: May 13, 
2004 in Washington, DC; August 2-3, 2004, Washington, DC; September 13-
14, 2004, Cherokee, North Carolina; December 1-3, 2004, Oklahoma City, 
Oklahoma; January 12-13, 2005, Palm Springs, California; and March 11, 
2005, Chicago, Illinois. During these meetings, all of which were open 
to the public, the committee discussed the various characteristics of 
Class II and Class III games of chance, their play, and related gaming 
technology and methods. In addition, the committee also discussed, 
reviewed, critiqued and commented on four (4) different, successive 
preliminary working drafts of the proposed Class II classification 
standards, which were prepared by the Commission representatives on the 
committee.
    The seven tribal committee representatives provided early tribal 
input and valuable insight, advice, and assistance to the Commission in 
developing each of the respective working drafts, as well as the 
current proposed regulations. Although there were many instances of 
accord, there were also many times during the development of the 
proposed regulations that the tribal committee representatives strongly 
disagreed with decisions made by the Commission.
    In particular, tribal representatives strongly advocated no change 
to the current regulation definition of ``electronic or 
electromechanical facsimile'' of games of chance. While understanding 
the tribal representatives' position on this issues, the Commission is 
bound by Congress's intent, as expressed in IGRA, to promulgate rules 
that clearly distinguish technologically-aided Class II games from 
Class III ``electronic or electromechanical facsimiles of any game of 
chance'' or ``slot machines of any kind.'' Accordingly, the Commission 
concluded that it could not accept some of the tribal representatives' 
recommendation in formulating the proposed rule.
    The Commission's establishment of the joint Federal-Tribal advisory 
committee was the subject of a legal challenge while the Commission was 
preparing the proposed rule for publication. On March 10, 2005, nearly 
one year after the Commission established the committee, the 
Confederated Salish and Kootenai Tribes of the Flathead Nation and the 
Santa Rosa Rancheria Indian Community filed suit against the Commission 
alleging that several of the committee members were not eligible to 
participate on the committee. Following a hearing in federal court at 
which the request for temporary restraining order was denied, the 
Commission determined that it should proceed to publish the proposed 
rule for comment while the legal standing of the committee was further 
litigated. The Commission also sought clarification from those tribes 
that nominated the Committee members concerning the member's role as an 
official representative of the Tribe. As a result of this 
clarification, and, out of an abundance of caution, the Commission 
regretfully requested that two members of the Committee step down.
    The third component of the Commission's effort to consult with 
tribes during the development of these proposed regulations was to make 
the various preliminary working drafts of the proposed regulations 
available to all tribes and their leaders for review and comment 
independent of the joint Federal-Tribal advisory committee. All four 
preliminary drafts were published on the Commission's website. In 
addition, the third and fourth preliminary drafts were successively 
mailed to each tribe inviting written comment. Many tribes and the 
public submitted written comments on these respective working drafts. 
The tribal comments were shared with the members of the advisory 
committee for their review and carefully considered by the Commission 
in formulating these proposed regulations.
    In addition to forming the Advisory Committee, scheduling and 
conducting individual tribal consultation meetings and Advisory 
Committee meetings, and requesting and considering written tribal 
comments on preliminary drafts of the proposed regulations, the 
Commission also facilitated further pre-rulemaking consultation with 
tribes by

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other means. In particular, the Commission attended and addressed 
several different assemblies of tribal leaders and tribal gaming 
operators and regulators at meetings and conferences between January 
2003 and March 2006 organized by state and regional tribal gaming 
associations, the National Indian Gaming Association, and the National 
Congress of American Indians. At these meetings and conferences, the 
Commission advised tribal leaders of its intention and plan to develop 
these regulations and provided periodic updates regarding the progress 
and status of the regulations development. The Commission also made 
itself available at these meetings to answer any questions from tribal 
leaders regarding the proposed regulations.
    In addition, the Commission also met individually with several 
tribes and their leaders in its Washington, DC, offices, at each 
tribe's request, to discuss these proposed regulations and their 
formulation and implementation.
    Through each of these various means, the Commission actively 
endeavored to provide all tribes with a reasonable and practical 
opportunity over the past twenty-two months to meet and consult with 
the Commission on a government-to-government basis and provide early 
and meaningful tribal input regarding the formulation and 
implementation of these proposed regulations. This proposed change to 
the definition of ``electronic or electromechanical facsimile'' was 
part of the process outlined above.
    By April of 2005, the Commission was prepared to send the fifth 
draft to the Federal Register for publication as a proposed rule. 
However, the Department of Justice (DOJ) contacted the Commission and 
expressed concern that the draft regulations might not be consistent 
with the Johnson Act. The Commission spent five months meeting with DOJ 
to resolve its concerns. As a result of these meetings, the DOJ drafted 
amendments to the Johnson Act. Following several consultation sessions 
with Tribes, the DOJ sent the draft amendments to the Office of 
Management and Budget earlier this year. So much time has elapsed that 
it is not likely that the proposed legislation will pass during the 
109th Congress. The need to regulate Class II technologic aids has not 
diminished and the Commission is compelled to proceed with these 
regulations. The proposed regulations differ from the fifth draft that 
was provided to the public in April of 2005. From a procedural 
standpoint, as previously explained, the definition of ``electronic or 
electromechanical facsimile'' has been placed in regulations separate 
from the classification standards. The changes to that draft are a 
result of the Commission addressing the concerns of DOJ that these 
regulations clearly distinguish between Class II and Class III games. 
The only change to these definitions is the addition of the word 
``fundamental.''

Purpose and Scope

    The definition for ``electronic or electromechanical facsimile'' 
has been misconstrued by some as allowing for bingo facsimiles. Under 
IGRA, a facsimile is Class III. The proposed change to the definition 
for the term ``electronic or electromechanical facsimile'' will clarify 
that facsimiles of bingo are not permissible Class II games under IGRA.

Changes to the Definition of ``Electronic or Electromechanical 
Facsimile'' in Part 502

a. ``Electronic or Electromechanical Facsimile''

    The Commission proposes to revise the definition for ``electronic 
or electromechanical facsimile'' contained in Sec.  502.8. Some have 
misinterpreted the 2002 revision and argued that facsimiles of bingo 
were properly classified as Class II. The revision makes clear that all 
games including bingo, lotto and ``other games similar to bingo,'' when 
played in an electronic medium, are facsimiles when they incorporate 
all of the fundamental characteristics of the game. In making this 
change, the Commission also wishes to emphasize that even bingo, lotto, 
and ``other games similar to bingo'' are ``electronic or 
electromechanical facsimiles'' of a game of chance when the format for 
the game either has players playing against a machine rather than 
broadening participation among multiple players, or fully incorporates 
the fundamental characteristics of these games electronically and 
requires no competitive action or decision making.

Regulatory Flexibility Act

    This proposed rule will not have a significant economic effect on a 
substantial number of small entities as defined under the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq. Indian Tribes are not considered 
to be small entities for the purposes of the Regulatory Flexibility 
Act.

Small Business Regulatory Enforcement Fairness Act

    This proposed rule is not a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act. This rule does not 
have an annual effect on the economy of $100 million or more. This rule 
will not cause a major increase in costs or prices for consumers, 
individual industries, Federal, state or local government agencies or 
geographic regions and does not have a significant adverse effect on 
competition, employment, investment, productivity, innovation, or the 
ability of U.S.-based enterprises to compete with foreign-based 
enterprises.

Unfunded Mandates Reform Act

    The Commission has determined that this proposed rule does not 
impose an unfunded mandate on state, local, or tribal governments or on 
the private sector of more than $100 million per year. Thus, it is not 
a ``significant regulatory action'' under the Unfunded Mandates Reform 
Act, 2 U.S.C. 1501 et seq. The Commission has determined that this 
proposed rule may have a unique effect on tribal governments, as this 
rule applies to tribal governments, whenever they undertake the 
ownership, operation, regulation, or licensing of gaming facilities on 
Indian lands as defined by the Indian Gaming Regulatory Act. Thus, in 
accordance with section 203 of the Unfunded Mandates Reform Act, the 
Commission implemented a small government agency plan that provides 
tribal governments with adequate notice, opportunity for meaningful 
consultation, and information, advice, and education on compliance.
    The Commission's plan includes the formation of a Tribal Advisory 
Committee and request for input from tribal leaders through government-
to-government consultations and through written comments to draft 
regulations that are provided to the tribes. Section 204(b) of the 
Unfunded Mandates Reform Act exempts from the Federal Advisory 
Committee Act (5 U.S.C. App.) meetings with tribal elected officials 
(or their designees) for the purpose of exchanging views, information, 
and advice concerning the implementation of intergovernmental 
responsibilities or administration. In selecting Committee members, 
consideration was placed on the applicant's experience in this area, as 
well as the size of the tribe the nominee represented, geographic 
location of the gaming operation, and the size and type of gaming 
conducted. The Commission attempted to assemble a committee that 
incorporates diversity and is representative of tribal gaming 
interests. The Commission will meet with the Advisory Committee to 
discuss the public comments that are received as a result of the 
publication of this proposed rule and make

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recommendations regarding the final rule. The Commission also plans to 
continue its policy of providing technical assistance, through its 
field offices, to tribes to assist in complying with classification 
issues.

Takings

    In accordance with Executive Order 12630, the Commission has 
determined that this proposed rule does not have significant takings 
implications. A takings implication assessment is not required.

Civil Justice Reform

    In accordance with Executive Order 12988, the Office of General 
Counsel has determined that the proposed rule does not unduly burden 
the judicial system and meets the requirements of sections 3(a) and 
3(b)(2) of the Executive Order.

Paperwork Reduction Act

    This proposed rule does not require information collection under 
the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq., and is 
therefore not subject to review by the OMB.

National Environmental Policy Act

    The Commission has determined that this proposed 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 (42 U.S.C. 
4321 et seq.).

List of Subjects in 25 CFR Part 502

    Gambling, Indian-lands, Indian-tribal government, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, the 
Commission proposes to amend its regulations in 25 CFR part 502 to read 
as follows:

PART 502--DEFINITIONS OF THIS CHAPTER

    1. The authority citation for part 502 continues to read as 
follows:

    Authority: 25 U.S.C. 2071 et seq.

    2. Revise Sec.  502.8 to read as follows:


Sec.  502.8  Electronic or electromechanical facsimile.

    (a) Electronic or electromechanical facsimile means a game played 
in an electronic or electromechanical format that replicates a game of 
chance by incorporating the fundamental characteristics of the game.
    (b) Bingo, lotto, and other games similar to bingo are facsimiles 
when:
    (1) The electronic or electromechanical format replicates a game of 
chance by incorporating all of the fundamental characteristics of the 
game, or
    (2) An element of the game's format allows players to play with or 
against a machine rather than broadening participation among competing 
players.

    Dated: May 18, 2006.
Philip N. Hogen,
Chairman.
Cloyce V. Choney,
Commissioner.
 [FR Doc. E6-7873 Filed 5-24-06; 8:45 am]
BILLING CODE 7565-01-P