89–010

Calendar No. 948

106TH CONGRESS REPORT

2d Session " ! SENATE 106–498

AMENDING THE INDIAN GAMING REGULATORY ACT, AND

FOR OTHER PURPOSES

OCTOBER 11 (legislative day, SEPTEMBER 22), 2000.—Ordered to be printed

Mr. CAMPBELL, from the Committee on Indian Affairs,

submitted the following

REPORT

[To accompany S. 2920]

The Committee on Indian Affairs, to which was referred the bill

(S. 2920) to amend the Indian Gaming Regulatory Act, 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 purpose of S. 2920 is twofold: to assure that the primary

purposes of the Indian Gaming Regulatory Act are fulfilled in the

operation of tribal gaming and to ensure that the Indian tribal

gaming industry is properly regulated by providing guidance to the

National Indian Gaming Commission on issues related to regulation.

BACKGROUND

The existing Federal law regarding Indian tribal gaming was enacted into law more than ten years ago. The Indian Gaming Regulatory Act of 1988 (‘‘IGRA’’), P.L. 100–497, 25 U.S.C. § 2501 et seq.,

established a comprehensive framework for the operation of Indian

tribal gaming across the United States. This framework attempts

to bring some order to the complex relationship between the Federal government, Indian tribes and the states in relation to gaming

by establishing three different categories of gaming and a regulatory system which applies to each. IGRA also established a Federal regulatory commission, the National Indian Gaming Commission or ‘‘NIGC’’, to provide Federal oversight over tribal gaming.

2

1Prior 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.

At the time the IGRA was passed by Congress, gaming was a

small 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 multi-billion dollar industry that exists today, providing tribes with much-needed capital for

development and employment opportunities where few previously

existed.

Even though gaming revenues have grown exponentially in the

last ten years, the Indian Gaming Regulatory Act has been amended only one time. In 1997, Chairman Campbell introduced an

amendment that authorized the NIGC to collect increased fees

which would fund its regulatory efforts in Indian Country.1 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.

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.

The increased funding which Congress endorsed in 1997 has allowed the NIGC to take steps to increase its regulation and enforcement efforts. Last year it promulgated minimum internal control standards to provide a minimum regulatory standard below

which no Indian gaming operation may be conducted. Those standards became final in April, 1999. Additionally, the Commission has

been able to hire much-needed field investigators who are responsible for monitoring tribal gaming operations. The Commission

should be applauded for these activities.

It should also 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 regarding rules of play for their games, as well as financial and accounting standards for their operations. The need for intense oversight in these instances is lessened because tribal regulatory bodies and those of their respective states have created effective oversight for tribal gaming operations.

Not all tribal gaming ordinances and tribal-state compacts address the need for such sophisticated regulatory frameworks, and

it is for these tribes and states that the NIGC can provide the most

effective assistance.

Since the fee structure was changed in late 1997, the Committee

has held a number of legislative and oversight hearings on the

issue of regulation and related matters. During the last two years,

several themes have emerged.

First, 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. The National Indian Gaming Association (‘‘NIGA’’) noted in its testimony before the

Committee on March 24, 1999, that,

3

2Statement of Richard G. Hill, President, National Indian Gaming Association, before the

Senate Committee on Indian Affairs, March 24, 1999, page 9. 3Statement of Richard G. Hill, President, National Indian Gaming Association, before the

Senate Committee on Indian Affairs, July 26, 2000, page 2. 4Letter dated July 20, 1999, from the General Accounting Office to the Representative Dick

Armey, Representative Dan Burton, and Senator Fred Thompson, page 10.

Indian Country and NIGA have yet to see a coherent plan from the NIGC documenting an increased need, the level of need, a plan for growth

or any other basis for an increase in funding authority to $8 million. Indian Country recognizes

that a need for increased funding does exist. We

just want to know, and we deserve to know, that

our money is being spent in the best possible manner.2

These concerns were not alleviated by the NIGC between March

of 1999 and July of 2000. At an oversight hearing conducted by the

Committee on July 26, 2000, NIGA testified that—

I appear before you today, nearly two years later, and I

must tell you that we are not at all comfortable with the

actions taken by the NIGC in that time span. 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.

The failure to communicate has not resulted from inaction from NIGA or its Member Indian nations. We have

made repeated requests for budget projections and work

plans, with no response. In January of this year NIGA facilitated a meeting between the NIGC and over 70 Indian

nation leaders, the sole purpose of which was to promote

communication between the NIGC and NIGA’s Member Indian nations. Specifically our Member Indian nations

sought some insight regarding the NIGC’s recent actions

and its plans to implement the new resources at its disposal. To date no satisfactory explanation has been given.3

It should be noted that the NIGC has been responsive to requests from Congress for information. The Committee, however, intends that justification for the activities of the NIGC should be

more apparent to the tribes to which they are charged with providing services and regulation and the public, through the development of strategic and performance plans which are to be included

in its biennial reports to Congress. The requirement to have NIGC

submit this type of report has been supported by the General Accounting Office.4

Tribes have also requested that their regulatory efforts be recognized in relation to the fees imposed on class III gaming tribes.

This concept was generally endorsed by Congress when it passed

the IGRA. Section 11(c) of IGRA, 25 U.S.C. § 2710(c), addressed

tribal self-regulation and directs the NIGC to promulgate regulations that would allow a tribe that meets criteria set by the NIGC

4

5S25 CFR Part 518, General Comments.

to be certified as a self-regulating tribe and to provide its own regulation for class II gaming. In addition to carrying out most of its

own regulatory duties, a tribe would receive a corresponding fee reduction.

The NIGC reports that since September of 1998, when the regulations became final, only five tribes have applied for the certification, but that only one of those tribes fully completed an application. The NIGC also states that three tribes have withdrawn their

applications and the fifth abandoned the application process before

completing its application. Tribes claim that the NIGC has discouraged potential applicants and that applicants have been presented

by the NIGC to withdraw their applications.

In publishing the regulations dealing with the self-regulated status of tribes, the NIGC stated,

The Commission agrees, as a general matter, that tribes

with certificates should pay a lower fee than tribes without

certificates. The IGRA provides that the Commission may

not assess a fee on the class II gaming activity of a tribe

with a certificate in excess of 0.25 percent. 25 U.S.C.

2710(c)(5)(C). Therefore, the Commission plans to establish

fee rates for self-regulated tribes through the annual fee

notice which will recognize and reward self regulated status.5

The Committee notes that the NIGC adopted regulations on implementation of the self-regulation policy on September 8, 1998,

but to-date no tribe has been certified as self-regulating and consequently received a reduction in fees.

While the inauguration of the self-regulatory program remains to

be seen, the Committee believes it important to provide the NIGC

with the discretion to reduce fees for tribes according to a regime

which has been adopted through regulation and contains objective

criteria, which may not necessarily be tied solely to the accomplishment of tribal regulation.

Additionally, tribes remain concerned with the segregation of

fees paid to the NIGC. There is some uneasiness among tribes

about what they perceive as potential for NIGC accounts to be misused, either by the NIGC itself or the by the Federal government.

It is felt that because the IGRA does not address the segregation

of NIGC accounts nor is there a limit on the use of funds in the

accounts, the accounts are vulnerable to appropriation by the Federal government or misuse. To address these concerns, the Committee has limited the use of funds by the NIGC to IGRA-related

responsibilities and required the NIGC to establish and use segregated accounts for fees collected from tribes and civil forfeitures

collected by the NIGC.

Also of major concern, especially to tribes which do not offer class

III (‘‘casino-styled’’) gaming, is the continued conflict between the

Johnson Act, 15 U.S.C. 1171–1178, and the use of technological

aids in the operation of class II gaming. The IGRA is unambiguous

in its statement that technological aids may be used by a tribe to

conduct class II gaming and report language accompanying IGRA

provides clear Congressional intent to authorize Indian tribes to

5

6Senate Rep. 100–446 (Aug. 3, 1998), p. 9.

7 Ibid, p. 12.

8 United States of America v. 103 Electronic Gambling Devices, 2000 WL 1218766 (9th Cir.

Aug. 29, 2000), and United States v. 162 Megamania Gambling Devices, No. 97–C–1140–K, 1998

U.S. Dist. LEXIS 17293 (N.D. Okla. Oct. 23, 1998). 9 United States of America v. 103 Electronic Gambling Devices, 2000 WL 1218766 (9th Cir.,

Aug. 29, 2000). In this case, 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’’. The appellate court was unequivocal in its ruling that the terminal

was not a Johnson Act device or a class III game as defined by IGRA, ‘‘* * * the MegaMania

is not a ‘facsimile of any game of chance,’ 25 U.S.C. § 2703(7)(A)(ii), or indeed, a facsimile of

anything. Rather, the terminal is merely an electronic aid to human players of bingo, something

like electronic mail with a graphic user interface. And, while the government has argued that

MegaMania resembles a slot machine in certain limited respects, there has been no argument

that the terminal is a ‘slot machine’, id., which it plainly is not.’’

The trial court in United States of America v. 162 Megamania Gambling Devices, No. 97–C–

1140–K, 1998 U.S. Dist. LEXIS 17293 (N.D. Okla. Oct. 23, 1998), was equally clear in its ruling,

‘‘In sum, the Court finds it an absurd result that Congress would classify ‘‘paper’’ bingo as Class

II gaming, but classify electronic bingo, at least as embodied by MegaMania, as Class II gaming.’’ 10Seneca-Cayuga Tribe of Oklahoma v. NIGC, No. 00–CV–609–BU (N.D. Okla. Aug. 30, 2000)

(Transcript of Court’s Ruling). In interpreting IGRA and the definition of class II gaming, the

Court states, ‘‘Congress did not intend to allow the Johnson Act to reach bingo aids. The statute

provides that bingo using ‘electronic, computer, or other technological aids’ is class II gaming,

and therefore permitted in Indian Country. Reading the Johnson Act to forbid such aids would

render the quoted language a nullity. Why would Congress carefully protect such technological

aids through the text [the quoted language], yet leave them to the wolves of a Johnson Act forfeiture action? We cannot presume that enacting IGRA, Congress performed such ‘a useless

act’.’’

maximize class II operations through the use of technological advances. The report states in part that,

[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.6

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. That section prohibits gambling devices

on Indian lands but does not apply to devices used in connection with bingo and lotto. [emphasis added]. 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.7

The United States Department of Justice has taken a different

view and has embarked on a series of actions against tribes who

use technological aids in the conduct of class II gaming in at least

two Federal circuit courts.8 These actions allege that tribes operating class II games which use technological aids are violating the

Johnson Act. Both actions were unsuccessful at the trial level and

in one case the tribe prevailed over the Department of Justice on

appeal.9 The other appeal is still pending. In a third case, no final

decision has been entered, but a review of the transcripts from the

bench ruling on a preliminary injunction motion would suggest

that the Judge’s intention is to rule against the United States.10

The Committee, a number of whose members either actively

sponsored or were involved in the consideration of the original

IGRA bill, intends to clarify what it already believes to be the

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law—that the Johnson Act does not apply to technological aids

used in connection with class II games.

One other issue of particular importance to the Committee is the

need to ensure that all Indian tribal gaming is conducted in a safe

and fair manner. The Committee believes that tribes and states

continue to make impressive efforts in this area, but that all operations should adhere to a uniform set of minimum industry standards. It is of paramount importance to tribal gaming that games

are conducted fairly. Accordingly, the Committee believes it is important that minimum standards be adhered to by all gaming operations.

The NIGC, in April of 1999, promulgated regulations which established regulatory standards to which all Indian tribal gaming

operations must adhere. However, NIGA and individual tribes have

questioned the NIGC’s authority to promulgate and enforce these

regulations. It is the Committee’s intention to clarify its position on

the authority of the NIGC to promulgate minimum internal control

standards by specifically authorizing the NIGC to promulgate and

enforce those regulations, within the jurisdictional framework established by IGRA.

Tribes have expressed concern with the language contained in

the bill regarding minimum internal control standards and the

interplay and role of tribal regulation with those sections. In keeping with the original intent of IGRA, the Committee continues to

stress that tribes are the sovereign entities primarily responsible

for the regulation of their facilities and that the authorization for

the promulgation of the minimum internal control standards is in

no way intended to change primary jurisdiction over regulation of

gaming on tribal lands.

Finally, the NIGC informed the Committee late last year that it

has been collecting forfeitures of considerable amounts through enforcement actions against parties who are in violation of IGRA, but

that those funds were not used to fund NIGC operations (which

could result in a reduction of fee for tribes), but were turned over

to the Treasury Department’s general fund to be used for Federal

purposes.

Since the NIGC is now entirely funded by the collection of fees

paid by tribes, it follows that tribes should benefit from the collection of the civil forfeitures made against tribal gaming operators as

well. However, it is problematic to fund the NIGC with monies it

has collected through enforcement actions against tribes, as it appears to give the NIGC an incentive to bring enforcement actions

to fund the Commission’s operations. The Committee intends for

these funds to be used in a way that benefits tribes, but that does

not appear to create an incentive to penalize tribes. Accordingly, S.

2920 proposes the development of a tribal grant program which

would be distributed pursuant to regulations and criteria promulgated by the Commission.

THE USE OF TECHNOLOGICAL AIDS IN ‘‘CLASS II’’ GAMING

In clarifying the use of technological aids in conjunction with

‘‘class II’’ games, the Committee is cognizant of the position of the

Senate in 1988 regarding the use of technological aids. The report

is very clear in its statement that tribes should have maximum

7

11Senate Rep. 100–466 (Aug. 3, 1988). 12Pub.L. 103–62. 13Letter dated September 14, 2000, from Montie Deer to Senator Ben Nighthorse Campbell,

page 4. 14Letter dated July 20, 1999, from General Accounting Office to the Representative Dick

Armey, Representative Dan Burton, and Senator Fred Thompson, page 10.

flexibility to use technological aids and that the Committee did not

intend the Johnson Act to apply to technological aids.11

Recent case law has upheld the intent of Congress in regard to

this particular issue, and it is the intent of the Committee to affirm

its position with regard to class II games and express its agreement with the courts’ interpretation of the IGRA in the cases cited

above.

EXPANDED REPORTING REQUIREMENTS BY THE NIGC

Section 2 of S. 2920 makes the NIGC responsible for the submission of additional information not currently required by IGRA. Specifically, the bill requires the NIGC to submit strategic and performance plans to Congress with its required biennial report. The

bill initially proposed that the NIGC be subject to the requirements

of the Government Performance and Results Act of 1993 (GPRA),12

but after consultation with the NIGC, it was determined that the

detailed annual reporting required by GPRA may be too onerous

for the NIGC. The Committee believes strongly, however, that the

planning and operations of the NIGC should be more available to

the Congress and the regulated community.

As a compromise, the language has been changed to require the

Commission to prepare and submit additional material in its biennial reports to Congress and incorporate its strategic and performance plans into that report. The requirements of the report remain

largely the same. The language of GPRA has been used as a model

for the strategic plan, and the requirement for consultation with

the Congress and the affected community is nearly identical to

GPRA. Additionally, the NIGC is directed to develop its performance plans with a view toward the GPRA requirements for those

plans.

The NIGC suggested in a position paper circulated to Committee

staff that administrative costs in developing the GPRA report could

be a factor in determining larger fees, but the Committee does not

find that assertion to be persuasive. Additionally, the NIGC states,

The resources of a small agency that would be directed

to development of performance plans outweigh the benefits

to be achieved.13

The Committee also disagrees with this assertion. Clearly, the

regulated community has expressed a number of concerns with the

NIGC in regard to performance and planning. Perhaps most persuasive is the opinion of the GAO that—

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.14

8

15Letter dated September 5, 2000, from Montie Deer to Senator Ben Nighthorse Campbell,

page 3. 16Letter dated September 14, 2000, from Montie Deer to Senator Ben Nighthorse Campbell,

page 3.

Finally, the NIGC has stated that it does operate ‘‘within the

principles of performance-based management’’.15 It should not be

difficult then, for the NIGC to reduce and commit those principles

and its strategic objectives to writing.

The Committee notes that Committee staff have not been able to

verify that any IGRA-mandated report has been submitted by the

NIGC to Congress since 1996, although the NIGC has stated that

such a report is forthcoming.

LICENSING OF TRIBAL GAMING COMMISSIONERS

Section 2(3) provides 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.

Many comments have been received 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 attack in the past few

years, and it has become a prime target for accusations that it is

unregulated. 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 specific language of the bill 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 and that the appearance of impropriety is avoided.

The Committee believes that this section respects tribal sovereignty, because it does not mandate the use of tribal gaming commissions, nor does it mandate the makeup of those commissions,

but provides a guideline for the tribal gaming commissions, much

the same as the background check language currently provides. It

is doubtful that tribes would argue that the required background

checks for primary management and key officials have hindered

tribal sovereignty by dictating who a tribe may hire, which is a

tribe’s sovereign right. The section simply provides guidance where

a tribe has determined to operate class III gaming and to operate

a tribal gaming commission.

The NIGC has noted that it is unclear whether the NIGC or the

Secretary of the Interior should set the standard for tribal officials

and employees of the tribal government pursuant to this section.16

Neither the NICG nor the Secretary of the Interior have been delegated any authority to set these standards within this legislation.

The specific amendment to IGRA made by section 2(3) requires

that a tribe addresses the issue of background checks for tribal

9

gaming commissioners and employees in its ordinance. The standard a tribe adopts for the tribal gaming commission is within the

tribe’s discretion.

FEE ASSESSMENTS

The fee-levying provision in S. 2920, section 22, authorizes the

Commission to establish a schedule of fees to be collected from Indian tribes operating class II or class III gaming. This section incorporates two concepts: (1) how fees are assessed; and (2) the segregation of those fees in Commission accounts.

According to the NIGC, the growth of the Indian tribal 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. Currently, the NIGC is limited by the terms of IGRA in the amount

of fees it can collect from tribes to $8 million annually.

S. 2920 requires that the fees assessed by the NIGC are related

to the statutory authorities and duties delegated to the NIGC

under the Act. This limitation is designed to address tribal concerns that funds paid to the NIGC be used only for purposes of

IGRA, and not for other Federal purposes.

This provision requires the budget developed by the NIGC and

the corresponding fee assessment be related to the purposes of

IGRA. Additionally, it is not the intent of this provision to limit the

collection of fees to specific ‘‘services’’ provided by the NIGC to each

individual tribe, but is meant to extend to all compliance, regulation, training, and other indirect costs (such as administrative costs

and other costs associated with NIGC operations, including such

items as utilities and rent) associated with the statutory duties and

requirements of carrying out IGRA for all tribes. To limit the fees

collected for use only in the provision of direct ‘‘services’’, and excluding the availability of those funds for duties, such as enforcement, regulation and other related needs is contrary to the intent

of the Committee.

In establishing this fee structure, it is the Committee’s intent

that the Commission continue to consult with tribes consistent

with the NIGC’s current consultation policy, as well as Executive

Order 13084, dated May 14, 1998.

The Fee Reduction section provides the NIGC with the discretion

to review the fee structure for any given year and determine

whether or not to provide for fee reduction(s). This decision is completely within the discretion of the NIGC.

The Fee Reduction section, section 22(b)(3), states that the

NIGC, in determining the amount of fees to be assessed for either

class I or class III gaming, may provide for a reduction in the

amount of fees that would otherwise be collected based on a number of factors. The factors are quite broad, and are meant to provide the NIGC with the maximum discretion to make a determination (1) whether or not to provide fee reduction(s); and (2) whether

the fee reduction(s), when and if appropriate, should be applied to

all tribes, or specific tribes (based on objective criteria developed by

the NIGC).

This section is a compromise between the requirement that the

NIGC establish a self-regulatory system for class III tribes and the

current flat fee system. Additionally, the Committee is cognizant of

the myriad situations which exist for each individual tribal gaming

10

17Letter dated September 14, 2000, from Montie Deer to Senator Ben Nighthorse Campbell,

page 2.

operation and is mindful that fee reductions may be necessary or

desirable for any number of reasons other than self-regulation and

this section is designed to provide discretion to the NIGC in those

instances as well.

The Committee is also aware of the overarching policy implications of any system which would award self-regulation. It is quite

obvious that tribes who will be awarded for extensive efforts toward self-regulation will generally be tribes who have larger and

more profitable operations and which pay the largest fees. These

operations are more likely to be able to pay for the expensive infrastructure required for comprehensive self-regulation. According to

NIGC reports, only twenty tribes pay fees in excess of $88,650.00

(the calculated fee on gross revenues of $100 million during one

year). It is these tribes that provide the majority of fees for the

NIGC’s operation and who are most likely to benefit from a reduction in fees provided for by self-regulation.

Finally, the NIGC has expressed concerns with what it terms fee

rates which are determined on a ‘‘tribe-by-tribe basis’’—and suggests that such determination will lead to an unworkable system.17

Again, if the NIGC decides to provide a fee reduction pursuant to

the authorization provided in section 22, the Committee expects

that the NIGC would promulgate regulations to provide for a fair

and uniform process for individual fee reductions. The Committee

would also expect that

the NIGC would establish uniform criteria which each tribe requesting such a fee reduction would be required to meet. The Committee is confident in the ability of the NIGC to establish an equitable and workable system for providing fee reductions, should it

determine to provide such reductions.

SEGREGATED ACCOUNTS

Section 22 also requires segregated accounts to be maintained by

the NIGC for the holding of fees collected from tribes. Similar language is contained in new section 24, regarding the use of NIGC

civil fine assessments. Originally, section 22 provided that NIGC

funds would be placed in trust accounts maintained by the Secretary of the Treasury, out of which funds would be released to the

NIGC on a quarterly basis.

The proposal was based on language incorporated from previous

bills which addressed tribal concerns about the use of fees paid by

tribes to the Federal government. In short, tribes were apprehensive about the placement of fees paid into the general fund of the

Treasury being used for general Federal purposes not related to the

operation of the NIGC. The trust fund language was developed to

address this problem.

However, the mechanisms for depositing and withdrawing funds

from the trust fund are considered unwieldy and new language has

been developed to require the NIGC to maintain accounts which

are segregated from other federal accounts and which hold the fees

collected from the tribes and the civil fines collected from enforcement actions brought by the NIGC.

11

This language is not specific with regard to the number of accounts the NIGC must maintain, or whether the NIGC must maintain an account for each tribe from which it collects fees or civil

fines. These decisions are within the discretion of the NIGC.

Finally, section 22 also provides the NIGC with the limited ability to invest the fees it collects and which are not immediately

needed for expenditure. The section also provides the NIGC with

the ability to dispose of investments it makes.

This section is intended to increase the earning power of the fees

collected and spent by the NIGC on annual basis. The NIGC reports that it collects fees and spends them in the same year. The

provision authorizing investment is meant to allow the NIGC to

conservatively invest fees received for short periods of time, thus

optimizing the earning potential of the funds.

These sections combine to guarantee that funds collected by the

NIGC will not be used for purposes other than those in IGRA, and

maximize the potential of the funds held in accounts which are not

immediately needed for use by the NIGC.

USE OF NATIONAL INDIAN GAMING COMMISSION CIVIL FINES

Section 24 outlines a new procedure for the use of civil forfeitures collected by the NIGC. The NIGC approached the Committee

regarding the use of civil forfeitures and noted that those funds are

deposited into Federal accounts and used for whatever purposes

the Federal government deems necessary. The NIGC noted that

these funds may be better utilized by tribes, since the funds originate from Indian gaming. The Committee agrees.

Section 24 establishes a grant program which would fund applicants for projects that would provide technical assistance to tribes

to strengthen the regulatory integrity of gaming, assist tribes in

determining the feasibility of non-gaming economic development

activities, provide assistance to tribes for the development and implementation of programs to treat problem gamblers, and other

forms of assistance not inconsistent with IGRA.

To carry out this section, the NIGC is authorized to establish

regulations as necessary.

LEGISLATIVE HISTORY

S. 2920 was introduced on July 25, 2000 by Chairman Campbell

and referred to the Committee on Indian Affairs. On September 27,

2000, the Committee considered S. 2920 and ordered it to be favorably reported to the full Senate.

SECTION-BY-SECTION ANALYSIS

Section 1. The short title of this Act is the ‘‘Indian Gaming Regulatory Improvement Act of 2000’’.

Section 2. Amendments to the Indian Gaming Regulatory Act.

Subsection (1) provides that the definition of class II gaming contained in IGRA is clarified to state that the Johnson Act, 15 U.S.C.

1171–1177, does not apply to technologic aids used in the operation

of class II games.

Subsection (2) provides that the National Indian Gaming Commission shall provide detailed strategic and performance plans in

its biennial reports to Congress. The strategic plan shall include a

12

comprehensive mission statement, general goals and objectives, a

description of goals are to be achieved, a performance plan, identification of external factors affecting the Commission, a description

of program evaluations to be used by the Commission. The strategic plan shall cover at least a five year period, and shall be revised at least every four years. In developing the performance plan,

the Commission should make a plan consistent with the requirements of the Government Performance and Results Act of 1993

(‘‘GPRA’’) and must consult with Congress and other affected parties.

Subsection (3) provides that tribal gaming ordinances shall provide for an adequate system that ensures that background investigations are conducted on tribal gaming commissioners, tribal

gaming commission employees, primary management officials and

key employees.

Section (4) adds three new sections to the Indian Gaming Regulatory Act.

Section 22. Establishment of Fees.

Subsection (a) provides that the Commission establish a schedule

of fees to be paid annually by each gaming operation that conducts

class II or class III gaming activities. It also establishes that the

fees may not be assessed at more than 2.5% of the first $1,500,000

of gross revenues, or 5% of gross revenues in excess of $1,500,000.

The Commission may not collect more than $8,000,000 in total fees.

Subsection (b) provides that by a vote of not less than two members, the Commission shall adopt a schedule of fees, to be payable

to the Commission quarterly. The aggregate amount of fees assessed shall be reasonably related to the cost of responsibilities and

services the Commission is required to carry out pursuant to IGRA.

The Commission shall take these responsibilities and services into

consideration when assessing and collecting fees under IGRA.

The Commission may, when assessing fees, determine in its discretion whether to provide a fee reduction for one or all tribes. This

fee reduction is not mandated, and when determining whether to

provide such a reduction, the Commission should consider the following factors: 1) the extent of regulation of the gaming activity by

the tribe or the state in which the tribe is located; 2) the extent

of self-regulating activities, as defined by IGRA, conducted by the

tribe; 3) other factors, including the unique nature of tribal gaming,

the broad variations in tribal gaming activity, the inherent sovereign rights of tribes, the findings and purposes of IGRA, the

amount of interest or income derived from the investment of the

previous year’s fees, and any other matter consistent with the policy of IGRA, as stated in section 3 of that Act. In determining its

annual schedule of fees, the Commission shall consult with tribes.

Subsection (c) provides that all fees and forfeitures collected by

the Commission shall be maintained in segregated accounts and

used only for purposes set out in IGRA. The Commission may invest funds collected, if the Commission deems that they are not

needed to meet immediate expenses, but may only invest such

funds in interest bearing obligations of the United States or in obligations which guarantee both principal and interest by the United

States. Any obligation acquired by the Commission may be sold by

the Commission, except special obligations, which may be redeemed at par plus accrued interest. All proceeds from the sale or

13

redemption of any obligation held in the Indian gaming regulation

accounts shall be credited and form a part of those accounts.

Section 23. Minimum Standards.

Subsection (a) provides that Class I gaming shall remain within

the exclusive jurisdiction of the Indian tribes.

Subsection (b) provides that Indian tribes shall retain primary

jurisdiction over the regulation of class II gaming, as long as they

meet minimum standards established under section 11 of IGRA regarding the monitoring and regulation of class II gaming, the conducting of background checks and the establishment and regulation

of internal control systems.

Subsection (c) provides that where an Indian tribe and a state

have entered into a compact for class III gaming, an Indian tribe

shall retain primary jurisdiction over regulation of class III gaming

as long as the tribe meets minimum standards established by the

Commission, pursuant to section 11, to monitor and regulate class

III gaming, conduct background investigations and establish and

regulate internal control systems.

Subsection (d) provides the Commission may promulgate regulations as are needed to augment current regulations regarding minimum internal control systems which are necessary to carry out

this section.

Section 24. Use of Civil forfeitures.

Subsection (a) provides that all funds collected by the Commission shall be deposited in an Indian Gaming Regulation Account.

Subsection (b) authorizes the Commission to provide grants and

technical assistance to Indian tribes from any funds secured by the

Commission pursuant to section 14, which shall be used for the following purposes; 1) to provide training and technical assistance to

tribes to strengthen the regulatory integrity of Indian gaming; 2)

to provide assistance to tribes to assess the feasibility of non-gaming economic development activities on Indian lands; 3) to provide

assistance to tribes to develop and implement programs and treatment for individuals who are problem gamblers; 4) other purposes

not inconsistent with the Indian Gaming Regulatory Act.

Subsection (c) provides that in carrying out this section, the

Commission shall consult with tribes.

Subsection (d) provides that the Commission may promulgate

regulations as necessary to carry out this section.

COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

On September 13, 2000, the Committee on Indian Affairs, in an

open business session, considered S. 2920. The bill, with amendment in the nature of a substitute, was ordered favorably reported

with a recommendation that the bill do pass.

14

COST AND BUDGETARY CONSIDERATIONS

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, October 6, 2000.

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. 2920, the Indian Gaming

Regulatory Improvement Act of 2000.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contacts for this estimate are John

R. Righter (for federal costs), who can be reached at 226–2860, and

Marjorie Miller (for the impact on state, local, and tribal governments), who can be reached at 225–3220.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

S. 2920—Indian Gaming Regulatory Improvement Act of 2000

S. 2920 would provide new direct spending authority to the National Indian Gaming Commission (NIGC), which would supplement its appropriations. The bill would authorize the commission

to invest the unspent portions of the fees it collects each year from

Indian gaming operations in interest-bearing obligations of the

United States or in obligations guaranteed by the United States.

The commission could spend interest earned on such amounts without further appropriation action. S. 2920 also would require that

the NIGC submit a strategic planning report to the Congress every

two years, require background checks for tribal gaming commissioners and employees, change the NIGC’s fee schedule from a flatrate to a cost-based system, and allow the NIGC to spend the civil

penalties it collects from Indian gaming operations on grants and

technical assistance to tribes without further appropriation action.

Impact on the Federal budget

CBO estimates that enacting this bill would increase direct

spending, on average, by about $2 million each year. Because the

bill would affect direct spending, pay-as-you-go procedures would

apply. The estimated costs include annual spending of about $2

million from allowing the NIGC to spend the civil penalties it collects each year and less than $500,000 from allowing it to spend

the interest earned on balances invested in Treasury obligations.

(Our estimate of the amount of new spending from civil penalties

is based on the average amount of such penalties collected by the

NIGC in recent years.) CBO estimates that implementing the provisions to change NIGC’s fee schedule from a flat-rate to a costbased system and to prepare a biennial strategic and performance

plan would increase its administrative costs by less than $500,000

each year.

15

Intergovernmental and private-sector impact

S.2920 contains an intergovernmental mandate as defined in the

Unfunded Mandates Reform Act (UMRA) because it would require

tribes to conduct background investigations of tribal gaming commissioners and employees of tribal gaming commissions. Information from the Indian Gaming Association suggests that most tribes

would pay a nominal fee (less than $50) to the NIGC to collect information for those investigations. (The NIGC, along with the FBI,

currently collects such information for use by gaming operations

when they conduct background investigations.) CBO estimates that

the total number of commissioners and employees requiring investigations would be small (fewer than 2,000) and that less than one

staff-year per tribe would be required to complete the investigations. Based on this information, we estimate that the cost of complying with this mandate would fall well below the annual threshold established in that act ($55 million in 2000, adjusted annually

for inflation). The bill contains no private-sector mandates as defined in UMRA.

Enactment of S. 2920 would have other impacts on Indian tribes

that conduct gaming operations. The bill would require the NIGC

to establish a new fee schedule for the tribes it regulates. The commission collects fees from the tribes under current law, but this

provision could result in a reallocation of those fees among the

tribes, though it would not change the total amount of fees collected. The bill also includes explicit authority for the commission

to establish minimum internal control standards for tribes. Such

standards have already been established by the commission under

current law, but this provision would clarify its authority and could

prevent legal challenges to the existing standards.

The CBO staff contacts for this estimate are John R. Righter (for

federal costs) and Marjorie Miller (for the impact on state, local,

and tribal governments). This estimate was approved by Robert A.

Sunshine, 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 believes that S. 2920 will have

minimal regulatory or paperwork impact.

EXECUTIVE COMMUNICATIONS

The following letter on the provisions of S. 2920 was received

from the National Indian Gaming Commission.

NATIONAL INDIAN GAMING COMMISSION,

Washington, DC, September 14, 2000.

Hon. BEN NIGHTHORSE CAMPBELL, Chairman, Committee on Indian Affairs,

U.S. Senate, Senate Hart Building, Washington, DC.

DEAR SENATOR CAMPBELL: Your staff has indicated that you

would like the Commission to review and comment on S. 2920, the

‘‘Indian Gaming Regulatory Improvement Act of 2000.’’ I, along

with Vice-Chair Elizabeth Homer and Commissioner Teresa Poust

16

appreciate the opportunity to provide the views of the Commission

on this important bill. As introduced, the Commission has significant concerns and questions regarding the bill and opposes passage.

FEE FOR SERVICE

By way of background, the Commission’s current proposed fee assessment for the year 2000 is .09 percent of 9⁄100th of one percent on all gaming revenue over $1.5 million which is exempt—about 60

times less than 5 percent authorized by IGRA. By way of example,

a tribe that grosses $10 million a year will pay $7,650 in fees to

the Commission. In 1999, 120 tribes made less than $10 million.

By contrast, a tribe that grosses $100 million will pay $88,650.

Only 20 tribes made that amount in 1999.

This section is unclear as to whether it is intended to supplement

or supplant the current fee structure which is not deleted under S.

2920 and thus the bill could be interpreted to require the National

Indian Gaming Commission (‘‘Commission’’) to collect fees twice

under two different fee structures.

Furthermore, this section appears to be unnecessary since the

Commission currently establishes an aggregate fee rate that is

‘‘reasonably related’’ to the costs of services, enforcement and compliance efforts and other statutorily required activities. The Commission does not and would not, collect or spend fees that are not

reasonably related to the cost of carrying out its statutorily required duties under the Indian Gaming Regulatory Act (IGRA).

Under the ‘‘Factors for Consideration’’ section, the Commission

strongly recommends that enforcement and compliance efforts be

included among the factors. While enforcement work may be not

properly characterized as a service, the Commission expends considerable funds to carry out this statutorily required duty. The

Commission’s policy is to obtain voluntary compliance with the law

but often it is required to enforce the law, which requires a significant amount of funding.

The Commission is not certain as to the intent of this section and

believes that it should be made clear that fee rates are not to be

determined on a tribe-by-tribe basis—rather the Commission is to

determine an aggregate fee rate as it does currently. Individual calculations (and reductions based on services) of fee rates would require the Commission to collect fees at a much higher rate and that

the burden of those higher fees will fall upon the less wealthy

tribes. In addition, a tribe-by-tribe determination substantively deviates from a fee assessment based on business volume to one that

will require an examination of the gaming operation of each tribe

before a fee can be assessed for that tribe. This will inevitably lead

to challenges of arbitrary action if one tribe perceives that another

has received a more favorable rate. The system becomes unworkable.

While the Commission has committed itself to keeping the fee assessment rate low, the $8 million cap on fee collections contained

in IGRA provides an additional legal constraint to an increase in

fee assessment rates. So long as we continue to assess fees evenly

on all gaming operations and the industry continues to grow, it is

unlikely that we would ever need to raise our fees to a rate higher

than 12⁄100th of a percent. In fact, given the growth in the industry,

17

it is possible that we may lower the percentage rate of collection

from the .09% rate at which we are currently collecting.

CONSULATION

The consultation requirement in establishing fees is also troublesome. The Commission currently carries out its business in accordance with President Clinton’s Executive Order on Coordination and

Consultation. The consultation requirement contained in S.2920

does not indicate whether something more is required. Furthermore, the provision contains no guidance on what issues are to be

the subject of the consultation. For example, will the Commission

be required to come up with alternative schedules, and then put it

to a vote among the regulated tribes?

TRUST FUND

In the Commission’s testimony on S.399, in which the trust fund

concept was introduced, we explained that we are able to assess

fees based on current information—assessing, collecting and using

fees in the same fiscal year. With the Trust Fund, presumably the

Commission will have to assess and collect fees well in advance of

when they are needed so that we can request that they be appropriated for our use during the subsequent fiscal year. This will result in a sizable increase in the amount of gaming industry funds

being held by the federal government. We have no objection to the

fact that the earnings on those funds would go to the Commission

rather than the Treasury. However, the same result could be obtained by appropriating funds equivalent to the Treasury’s earnings for use by the Commission. If this concept is one in which the

Committee is committed to pursuing, the NIGC would welcome the

opportunity to work with your staff on this issue.

LICENSING OF TRIBAL GAMING COMMISSIONERS AND EMPLOYEES

The Commission supports the policies of those tribes that have

established independent regulatory agencies that require regulators to undergo a background check. Regulators have important

responsibilities and must deal with confidential and sensitive material in carrying out their duties. The application of appropriate

suitability standards confirmed through a thorough background

check is the best step toward ensuring a sound regulatory system.

We would note, however, that there is no requirement that tribal

governments form a tribal gaming commission. An unintended consequence of this provision would be for tribes to abolish tribal gaming commissions to avoid this requirement. Also, there are tribes

that designate their council as a gaming commission and this provision could result in a situation where the need for a completed

background investigation could impact tribal elections. Furthermore, unless those employees are functioning as key employees or

primary management officials, FBI policy prohibits the processing

of their fingerprint cards and the Commission does not initiate a

background check.

Generally, background investigations are conducted to determine

whether the individuals or entities meet established standards.

Here, standards have not been included. Furthermore, it is not

18

clear whether the NIGC or the Secretary should set the standards

for tribal government officials and employees.

MINIMUM STANDARDS

This section is unclear as to what is meant by ‘‘federal standards.’’ This section can only add confusion since it is not clear how

it impacts the rest of IGRA.

NEGOTIATED RULEMAKING FOR GAME CLASSIFICATION

It is not clear how a negotiated rulemaking would be of benefit

in this area and the section overrides the requirement that the

head of an agency find that the negotiated rulemaking would be ‘‘in

the public interest’’ after applying the factors specified. Also, the

amendment has a technical defect, as it appears to engage the Secretary of the Interior in the process when the prerogatives on game

classification are with the NIGC.

Under IGRA, the Commission has the responsibility of interpreting the Act’s definitions of class II and class III gaming. Tribes

that have been unsuccessful in attempts to obtain Tribal-State

compacts are limited to class II gaming. One way we have sought

to provide certainty is to issue game classification decisions. As you

may know, we have issued a proposed rule that, if made final, will

result in procedures whereby all games and gaming machines must

be reviewed by the NIGC before they may be lawfully played as

class II gaming. The procedures will allow for adjudication and appeal, which should benefit the regulated community.

As is the case with all major NIGC rulemaking, there has been

extensive public involvement in the development of these game

classification regulations, including a lengthy comment period and

a public hearing. Because the rule is, ultimately, a procedural device that must be implemented with the Commission’s existing limited resources, and because the regulated community and other interested parties have had ample opportunity to provide input, we

do not consider this an appropriate subject for negotiated rulemaking.

We understand there is some legal controversy over the scope of

the definition of class II gaming. As indicated in my letter to you

dated July 21, 2000 the Commission is pleased to assist in any way

with this issue. We encourage the Committee to seek the assistance

of all interested parties such as the tribes and the Department of

Justice in addressing this issue.

APPLICATION OF GPRA

The provisions of S. 2920 would make the Commission subject to

the Government Performance and Results Act of 1993 (‘‘GPRA’’). In

a letter to Congress dated July 20, 1999, the General Accounting

Office suggested that the Interior Department should include a section on the Commission in its strategic and performance plan. It

reasoned that since the Commission was established as an independent agency within the Department of the Interior, and given

the importance of its mission, the Department’s plan should include the Commission notwithstanding its small size and limited

spending authority. Size and spending authority, incidentally, are

relevant to the applicability of GPRA, which provides for an exempVerDate 11-MAY-2000 01:10 Oct 14, 2000 Jkt 089010 PO 00000 Frm 00018 Fmt 6659 Sfmt 6602 E:\HR\OC\SR498.XXX pfrm06 PsN: SR498
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tion for those Executive agencies with spending authority under

$20,000,000, such as the Commission.

As drafted, the bill would mandate NIGC participation even

though other small regulatory agencies with limited resources may

be excluded. If enacted, the bill should also reference Section 1117.

The intent of the exclusion under 31 U.S.C. § 1117 is obvious. The

resources of a small agency that would be directed to development

of the performance plans outweigh the benefit to be achieved. Also,

since the NIGC is essentially funded from tribal gaming revenues,

this amounts to the use of those tribal contributions to fulfill a

seemingly bureaucratic requirement.

As a general matter, the Commission supports the goals and purposes of the GPRA and already operates within the principles of

performance-based management. While the Commission does not

object to inclusion of its goals in the Department of Interior’s

GPRA plan, it is worth noting that IGRA contains an alternative

reporting requirement and specifies a biennial report as the mechanism through which the Commission is to report its activities and

accomplishments to the Congress. Since this is the reporting mechanism expressly mandated by the Congress in IGRA, the Commission prefers its continued use. Moreover, it is a much more manageable mechanism given the Commission’s size and resource limitations.

The Department of the Treasury has advised us that it supports

our recommendation that appropriations be made to the Commission in lieu of the proposed investment authority for the Trust

Fund. Moreover, the Department recommends that any amount so

provided should be based on an analysis of how much money is

needed to fund the proposed program purposes, rather than be

based solely on the happenstance of interest rate changes occurring

during the period of investment.

The Department of the Treasury questions what appropriations

would be deposited to the Trust Fund under subsection 22(c)(1)(b).

The Department recommends excluding appropriations from being

invested under that section because an appropriation is simply a

limit on the amount of money that a government agency or account

may spend for its authorized purpose and is not a sum of cash that

is available to be invested.

Additionally, the Department of the Treasury is concerned that

22(c)(2) places the responsibility for determining estimated revenues from the fees on the Secretary of the Treasury. As these fees

and the payment schedule are determined and assessed by the

Commission, and not Treasury, it would be more appropriate for

the Commission to determine when the funding would be available.

The Office of Management and Budget advises that from the

standpoint of the Administration’s program, there is no objection to

the presentation of this report.

I trust these comments are responsive to your staff’s request for

comments. Should you have questions or require further information, please do not hesitate to contact me or Kyle Nayback of my

staff at (202) 632–7003.

Kind regards.

Sincerely yours,

MONTIE R. DEER,

Chairman.

20

CHANGES IN EXISTING LAW

In compliance with subsection 12 of rule XXVI of the Standing

Rules of the Senate, the Committee states that enactment of S.

2920 will result in the following changes in the following statutes

as noted below, with existing language which is to be deleted in

brackets and the new language which is to be added in italic:

(1) Section 2703 of Title 25, United States Code:

(7)(A) The term ‘‘class II gaming’’ means—

* * * * * * *

(G) Notwithstanding any other provision of law, sections

1171 through 1177 of Title 15 shall not apply to any gaming described in subparagraph (A)(i) as ‘‘class II gaming’’,

where technologic aids are used in connection with any

such gaming.

(2) Section 2706 of Title 25, United States Code:

SEC. 2706. POWERS OF COMMISSION.

(c) REPORT.—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 chapter; [and]

(4) the strategic plan for Commission activities.

(A) This plan shall include—

(i) a comprehensive mission statement covering the

major functions and operations of the Commission;

(ii) general goals and objectives, including outcomerelated goals and objectives, for the major functions

and operations of the Commission;

(iii) a description of how the goals and objectives are

to be achieved, including a description of the operational processes, skills and technology, and the

human, capital, information, and other resources required to meet those goals and objectives;

(iv) a performance plan, which shall be related to the

general goals and objectives of the strategic plan;

(v) an identification of those key factors external to

the Commission and beyond its control that could significantly affect the achievement of the general goals

and objectives; and

(vi) a description of the program evaluations used in

establishing or revising general goals and objectives,

with a schedule for future program evaluations.

(B) The strategic plan shall cover a period of not less

than five years forward from the fiscal year in which it is

submitted. The strategic plan shall be updated and revised

at least every four years.

(C) The performance plan shall be consistent with the

Commission’s strategic plan. In developing the performance

plan, the Commission should look to the requirements of

section 1115 of Title 31, United States Code (the Government Performance and Results Act (Public Law 103–62)).

21

(D) When developing a strategic plan, the Commission

shall consult with the Congress, and shall solicit and consider the views and suggestions of those entities potentially

affected by or interested in such a plan.

(5) any other matter considered appropriate by the Commission.

(3) Section 2710(b)(2)(F)(i), United States Code:

SEC. 2710. TRIBAL GAMING ORDINANCES.

* * * * * * *

(b) Regulation of class II gaming activity; net revenue allocation;

audits; contracts

* * * * * * *

(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 øprimary management officials and key

employees of the gaming enterprise and the oversight

of such officials¿ tribal gaming commissioners, tribal

gaming commission employees, and primary management officials and key employees of the gaming enterprise and that oversight of primary management officials and key employees and their management is conducted on an ongoing basis; and

(4) Section 2721 of Title 25, United States Code:

SECTION 2721. FEE ASSESSMENTS.

(a) ESTABLISHMENT OF SCHEDULE OF FEES.— (1) IN GENERAL.—Except as provided in this section, the Commission shall establish a schedule of fees to be paid annually

to the Commission by each gaming operation that conducts a

class II or class III gaming activity that is regulated by this

Act.

(2) RATES.—The rate of fees under the schedule established

under paragraph (1) that are imposed on the gross revenues

from each activity described in such paragraph shall be as follows:

(A) A fee of not more than 2.5 percent shall be imposed

on the first $1,500,000 of such gross revenues.

(B) A fee of not more than 5 percent shall be imposed on

amounts in excess of the first $1,500,000 of such gross revenues.

(3) TOTAL AMOUNT.—The total amount of all fees imposed

during any fiscal year under the schedule established under

paragraph (1) shall not exceed $8,000,000.

(b) COMMISSION AUTHORIZATION.—

(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. Such fees shall be payable to

the Commission on a quarterly basis.

22

(2) FEES ASSESSED FOR SERVICES.—The aggregate amount of

fees assessed under this section shall be reasonably related to

the costs of services provided by the Commission to Indian

tribes under this Act (including the cost of issuing regulations

necessary to carry out this Act). 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) FACTORS FOR CONSIDERATION.—In making a determination of the amount of fees to be assessed for any class II or class

III gaming activity under the schedule of fees under this section, the Commission may provide for a reduction in the

amount of fees that otherwise would be collected on the basis

of the following factors:

(A) The extent of the regulation of the gaming activity involved by a State or Indian tribe (or both).

(B) The extent of self-regulating activities, as defined by

this Act, conducted by the Indian tribe.

(C) Other factors determined by the Commission,

including—

(i) the unique nature of tribal gaming as compared

to commercial gaming, other governmental gaming,

and charitable gaming;

(ii) the broad variations in the nature, scale, and size

of tribal gaming activity;

(iii) the inherent sovereign rights of Indian tribes

with respect to regulating the affairs of Indian tribes;

(iv) the findings and purposes under sections 2 and

3; and

(v) the amount of interest or investment income derived from the Indian gaming regulation account(s);

and

(vi) any other matter that is consistent with the purposes under section 3.

(4) Consultation.—In establishing a schedule of fees under

this section, the Commission shall consult with Indian tribes.

(c) INDIAN GAMING REGULATION ACCOUNTS.—All fees and civil

forfeitures collected by the Commission pursuant to this Act shall be

kept in separate, segregated accounts, and shall only be expended

for purposes set forth in this Act.

(1) IN GENERAL.—It shall be the duty of the Commission to

invest such portion of the Indian gaming regulation accounts as

are not, in the judgment of the Commission, required to meet

immediate expenses. The Commission shall invest the amounts

deposited under this Act only in interest-bearing obligations of

the United States or in obligations guaranteed as to both principal and interest by the United States.

(2) SALE OF OBLIGATIONS.—Any obligation acquired by the

Indian gaming regulatory accounts, except special obligations

issued exclusively to the Indian gaming regulatory accounts,

may be sold by the Commission at the market price, and such

special obligations may be redeemed at par plus accrued interest.

(3) CREDITS TO THE INDIAN GAMING REGULATORY ACCOUNTS.—The interest on, and proceeds from, the sale or reVerDate 11-MAY-2000 01:10 Oct 14, 2000 Jkt 089010 PO 00000 Frm 00022 Fmt 6659 Sfmt 6603 E:\HR\OC\SR498.XXX pfrm06 PsN: SR498
23

demption of any obligations held in the Indian gaming regulatory accounts shall be credited to and form a part of the Indian Gaming regulatory accounts.

SECTION. 2722. MINIMUM STANDARDS.

(a) CLASS I GAMING.—Notwithstanding any other provision of

law, class I gaming on Indian lands shall be within the exclusive

jurisdiction of the Indian tribes and shall not be subject to the provisions of this Act.

(b) CLASS II GAMING.—Effective on the date of enactment of this

section, an Indian tribe shall retain the rights of that Indian tribe,

with respect to class II gaming and in a manner that meets or exceeds the minimum Federal standards established under section 11,

to—

(1) monitor and regulate that gaming;

(2) conduct background investigations; and

(3) establish and regulate internal control systems.

(c) CLASS III GAMING UNDER A COMPACT.—With respect to class

III gaming that is conducted under a compact entered into under

this Act, an Indian tribe or a State (or both), as provided for in such

a compact or a related tribal ordinance or resolution shall, in a

manner that meets or exceeds the minimum Federal standards established by the Commission under section 11—

(1) monitor and regulate that gaming;

(2) conduct background investigations; and

(3) establish and regulate internal control systems.

(d) RULEMAKING.—The Commission may promulgate such additional regulations as may be necessary to carry out this section.

SECTION 2723. USE OF NATIONAL INDIAN GAMING COMMISSION CIVIL

FINES.

(a) IN GENERAL.—All funds secured by the Commission pursuant

to section 14 shall be deposited in the Indian gaming regulation accounts, as provided in section 22(c).

(b) USE OF FUNDS.—The Secretary may provide grants and technical assistance to Indian tribes from any funds secured by the

Commission pursuant to section 14, which funds shall be made

available only for the following purposes:

(1) To provide technical training and other assistance to Indian tribes to strengthen the regulatory integrity of Indian gaming.

(2) To provide assistance to Indian tribes to assess the feasibility of non-gaming economic development activities on Indian

lands.

(3) To provide assistance to Indian tribes to devise and implement programs and treatment services for individuals diagnosed as problem gamblers.

(4) To provide other forms of assistance to Indian tribes not

inconsistent with the Indian Gaming Regulatory Act.

(b) CONSULTATION.—In carrying out this section, the Secretary

shall consult with Indian tribes and any other appropriate tribal or

Federal officials.

(c) REGULATIONS.—The Secretary may promulgate such regulations as may be necessary to carry out this section.

(5) Section 2721 of Title 25, United States Code.

24

SECTION 272ø1¿5. SEVERABILITY.

In the event that any section or provision of this chapter, or

amendment made by this chapter, is held invalid, it is the intent

of Congress that the remaining sections or provisions of this chapter, and amendments made by this chapter, shall continue in full

force and effect.

Æ