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[Senate Report 109-261]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 466
109th Congress                                                   Report
                                 SENATE
 2d Session                                                     109-261

======================================================================
 
            INDIAN GAMING REGULATORY ACT AMENDMENTS OF 2006

                                _______
                                

                  June 6, 2006.--Ordered to be printed

                                _______
                                

    Mr. McCain, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2078]

    The Committee on Indian Affairs, to which was referred the 
bill, (S. 2078), to amend the Indian Gaming Regulatory Act to 
clarify the authority of the National Indian Gaming Commission 
to regulate Class III gaming, to limit the lands eligible for 
gaming, and for other purposes, having considered the same, 
reports favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill (as amended) do pass.

                                Purpose

    The primary purpose of S. 2078, the Indian Gaming 
Regulatory Act Amendments of 2006, is to clarify and amend 
provisions of the Indian Gaming Regulatory Act of 1988, Public 
Law 100-497, 25 U.S.C. Sec. 2501 et seq. (``IGRA''), applicable 
to the Department of Interior (``DoI''), the National Indian 
Gaming Commission (``NIGC''), and the Indian tribes. This 
legislation is necessary to make amendments to the IGRA so that 
Indian tribes may continue to be the primary beneficiaries of 
gaming operations conducted on Indian lands, and to reaffirm 
and further the original goals of the IGRA.

                               Background

1. Indian gaming pre-IGRA

    Indian gaming began in earnest in the late 1970s with 
several tribes, from New York to Florida conducting ``high-
stakes'' bingo operations. Other tribes quickly followed suit, 
and by the mid-1980s over 100 tribes were conducting bingo 
operations, which generated more than $100 million in annual 
revenues. Some states, particularly Florida and California, 
attempted to assert jurisdiction over these tribes. The tribes 
resisted strenuously, citing long-standing Federal law and 
policy which provided for Federal and tribal jurisdiction over 
Indian lands, instead of state jurisdiction.

2. Supreme Court Cabazon decision

    These legal disputes culminated in a ruling by the Supreme 
Court in California v. Cabazon Band of Mission Indians, 480 
U.S. 202 (1987) (``Cabazon''). In that decision, the Supreme 
Court, using a balancing test between Federal, state, and 
tribal interests, found that tribes, in states that otherwise 
allow gaming, had a right to conduct gaming activities on 
Indian lands largely unhindered by state regulation. 
Specifically, the Cabazon Court held that Public Law 83-280 
states with laws that regulated, but did not criminally 
prohibit, all forms of gaming within their borders, could not 
regulate gaming conducted by Indian tribes on Indian lands in 
those states. In reaching this decision, the Court also 
emphasized the Federal government's policy of Indian tribal 
self-governance, including the policy of encouraging tribal 
self-sufficiency and economic development.

3. IGRA

    The Cabazon decision engendered a great deal of discussion 
regarding the need for Federal legislation to address Indian 
gaming and its regulation. Tribes, satisfied with the Cabazon 
decision, saw no need for Federal legislation. States sought 
Federal legislation overruling Cabazon and providing an 
extension of state jurisdiction over Indian lands for gaming 
regulation. Some in Congress, including current and past 
members of this Committee, saw wisdom in creating a 
comprehensive regulatory framework under Federal law, that 
would bring some order to the complex relationship between the 
Federal government, tribes and states as it related to the 
conduct and regulation of Indian gaming.
    The result of those discussions was the IGRA, enacted a 
year after the Cabazon decision, which established a 
comprehensive framework for the operation of Indian tribal 
gaming across the United States. A primary purpose of the IGRA, 
as stated by Congress, was ``to provide a statutory basis for 
the operation of gaming by Indian tribes as a means of 
promoting tribal economic development, self-sufficiency, and 
strong tribal governments.''\1\ Another purpose was ``to 
provide a statutory basis for the regulation of gaming by an 
Indian tribe adequate to shield it from organized crime and 
other corrupting influences, to ensure that the Indian tribe is 
the primary beneficiary of the gaming operation, and to assure 
that gaming is conducted fairly and honestly by both the 
operator and players.''\2\
---------------------------------------------------------------------------
    \1\ Pub. L. 100-497, 102 Stat. 2467, Sec. 3 (1988).
    \2\ See id.
---------------------------------------------------------------------------
    In enacting the IGRA, Congress expressly rejected arguments 
by states for abrogating tribal sovereignty and imposing state 
regulation of tribal gaming. Instead, the IGRA established 
three different categories of gaming and a regulatory system 
applicable to each. The IGRA also established a Federal 
regulatory commission, the NIGC, to provide Federal oversight 
over certain forms of tribal gaming.
    The three categories of gaming established by the IGRA, and 
the regulatory system for each, are:
           Class I, which refers to traditional and 
        ceremonial games conducted by tribes, and for which the 
        IGRA provides exclusive regulation by the tribes;
           Class II, which refers to bingo, games 
        similar to bingo, pulltabs, and some non-banked card 
        games, and for which the IGRA provides primary day-to-
        day regulation by the tribes and regulatory oversight 
        and enforcement by the NIGC; and
           Class III, which refers to all other types 
        of gaming, and for which the IGRA provides a unique 
        method of shared regulation between tribes and states 
        through mutually agreed upon compacts, and over which 
        the NIGC exercises oversight and enforcement.
    The IGRA created the NIGC, a 3-member independent Federal 
regulatory agency charged with oversight of Indian gaming. 
Under its mandate, the NIGC is charged with approving 
management contracts; \3\ conducting background investigations; 
\4\ approving tribal gaming ordinances; \5\ reviewing and 
conducting audits of the books and records of Indian gaming 
operations; \6\ and enforcing violations of the IGRA, its own 
regulations, and approving tribal gaming ordinances. \7\
---------------------------------------------------------------------------
    \3\ See id., Sec. 6(a)(4).
    \4\ See id., Sec. 11(b)(2)(F).
    \5\ See id., Sec. 6(a)(3).
    \6\ See id., Sec. 7(b)(4) and Sec. 11(b)(2)(C).
    \7\ See id., Sec. 14.
---------------------------------------------------------------------------
    Pursuant to the compact provisions of the IGRA, many Indian 
tribes and states developed sophisticated regulatory frameworks 
to oversee tribal gaming operations. These tribes and states 
have put in place effective standards for the conduct of Class 
III games, as well as financial and accounting standards for 
their operations.

4. The Seminole decision

    The compacting process, originally envisioned as an 
opportunity for tribes and states to enter into mutually 
beneficial agreements addressing legitimate issues of concern 
to each, became an area of significant discord soon after 
enactment of the IGRA. Several states, including Florida, 
asserted legal challenges to the IGRA rather than enter into 
good faith negotiations for compacts. These challenges 
culminated in a decision by the U.S. Supreme Court in Seminole 
Tribe v. Florida, 517 U.S. 44 (1996) (``Seminole''). In that 
decision, the Court held that provisions in the IGRA which 
authorized tribes to bring suit in Federal court for ``bad 
faith refusal to negotiate'' were unconstitutional 
infringements on the State of Florida's 11th Amendment immunity 
to suit. Following the Seminole decision, the Secretary of the 
Interior, using authority provided by IGRA, promulgated 
regulations pursuant to which a tribe can request 
``procedures'' \8\ for the regulation of Class III gaming in 
states where such gaming is permissible. Several states have 
challenged the constitutionality of the Secretary's authority 
to issue such procedures. To date the Secretary has not issued 
procedures for any tribe.
---------------------------------------------------------------------------
    \8\ See infra Note 1, Sec. 11(d)(7)(B)(vii).
---------------------------------------------------------------------------

5. The Indian Gaming industry in 2006: A snapshot

    At the time the IGRA was enacted, Indian gaming was a 
relatively modest industry consisting mainly of what are now 
known as ``Class II'' high-stakes bingo operations. At that 
time, virtually no one contemplated that Indian gaming would 
become the nearly $20 billion \9\ industry that exists today. 
Indian gaming is providing tribes with much-needed capital for 
development and employment opportunities where few previously 
existed.
---------------------------------------------------------------------------
    \9\ See National Indian Gaming Commission, Press Release, July 13, 
2005.
---------------------------------------------------------------------------
    Though gaming revenues have grown exponentially in the last 
eighteen years, the IGRA has been amended only once. In 1997, 
Committee on Indian Affairs Chairman Campbell introduced an 
amendment that authorized the NIGC to collect increased fees 
including, for the first time, fees from Class III operations, 
which would fund the Commission's regulatory efforts in Indian 
Country.\10\ Before the change in the fees structure, the NIGC 
was funded almost exclusively with Federal appropriations, and 
was barely able to keep up with the ever-growing number of 
tribal gaming operations and its statutorily mandated duties 
under the IGRA.
---------------------------------------------------------------------------
    \10\ Prior to the 1997 amendment, the NIGC budget was limited to 
Federal appropriations which could match fees collected from the tribes 
based on their Class II gaming revenues. The cap on those Class II fees 
was set at $3,000,000.
---------------------------------------------------------------------------
    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. It has opened five field offices 
and employed additional staff to oversee tribal gaming 
operations across the country and fulfill the NIGC's monitoring 
responsibilities.\11\
---------------------------------------------------------------------------
    \11\ See e.g. Hearing to Provide Information on the Activities of 
the National Indian Gaming Commission, Before the Senate Committee on 
Indian Affairs, S. Hrg. 106-730, 106th Cong., at p. 3 (2000) (Testimony 
of Montie Deer, Chairman, National Indian Gaming Commission). See also 
Hearing on Indian Gaming Regulatory Act: Role and Funding of the 
National Indian Gaming Commission, Before the Senate Committee on 
Indian Affairs, S. Hrg. 108-67, Pt. 1, 108th Cong., at pp. 3-4 (2003) 
(Testimony of Philip Hogen, Chairman, National Indian Gaming 
Commission).
---------------------------------------------------------------------------
    Most recently, on May 12, 2006, the President signed Public 
Law 109-221, which contained the operative provisions of S. 
1295, the National Indian Gaming Commission Accountability Act 
of 2005. S. 1295 was introduced by Senator McCain on June 23, 
2005, to amend Section 18 of the IGRA to authorize the NIGC to 
collect fees from all Class II and Class III operations at a 
rate not to exceed .08 percent of the gross revenues from each 
such operation. As a result, for a year in which the Indian 
gaming industry has gross revenues of $20 billion, the new fee 
structure provides the NIGC with potential funding of $16 
million.

                An Overview of the Provisions of S. 2078

    On April 27, 2005, Chairman John McCain held an oversight 
hearing on Indian gaming. At that hearing, Senator McCain 
stated that the IGRA had not been substantively amended since 
its enactment in 1988, nearly 17 years before, and expressed 
his intention to conduct a series of oversight hearings into 
the IGRA, its implementation and the status of the Indian 
gaming industry. Subsequently, on May 18, July 27, and 
September 21, 2005, the Committee held additional oversight 
hearings on the IGRA, receiving testimony from the DoI, NIGC, 
local government officials, local community groups, and Indian 
tribes engaged in gaming.
    On November 18, 2005, S. 2078 was introduced by Senator 
McCain. Following introduction of the bill, the Committee held 
additional oversight hearings on February 1, and February 28, 
2006. On March 8, 2006, the Committee held a legislative 
hearing on S. 2078.
    The hearings held in 2005 provided the Committee with 
significant information on much-needed updates and necessary 
improvements to the IGRA. S. 2078 was drafted based upon that 
information and information received from other parties. The 
legislative hearing held on S. 2078 provided additional 
critical feedback on the bill language. Based on this feedback, 
on March 29, 2006, the Committee approved a substitute 
amendment which addressed concerns raised about the bill's 
language by Committee Members.
    As approved by the Committee, S. 2078 provides several 
amendments to the IGRA, including clarifications of the 
authorities and responsibilities of the NIGC, additional 
oversight over significant gaming contracts (and parties to 
those contracts), and several clarifications and amendments to 
the provisions providing eligibility for gaming under the IGRA 
on lands acquired after 1988.

1. Amendments impacting the National Indian Gaming Commission

    A. Minimum Internal Control Standards. S. 2078 amends 
Sec. 7 of the IGRA to provide express authority for the NIGC to 
promulgate and enforce Minimum Internal Control Standards 
(``MICS'') as to Class III gaming. These standards regulate the 
day-to-day operations of gaming facilities, including the rules 
that designate requirements for cash handling, surveillance 
over game play, and auditing procedures, among other things. 
Essentially these standards insure the fairness of play for 
gaming customers and the integrity of operations for the casino 
owner.
    The wisdom of implementing MICS in Indian gaming has long 
been accepted by Indian tribes. However, consensus on what the 
actual minimum standards should be was not universal. 
Therefore, in 1999 the NIGC began the process of promulgating 
regulations establishing MICS. A tribal advisory committee 
assisted the NIGC in drafting the MICS, which were published as 
final regulations in 2000. To fulfill its oversight 
responsibilities the NIGC beganauditing tribal gaming 
facilities for effective implementation of the MICS.
    Despite agreeing substantively on the advisability of MICS, 
some Indian tribes disagreed with the NIGC promulgating the 
standards as regulations. They felt that establishing internal 
control standards should be a regulatory role left to tribal 
and state regulation through compacts and tribal law. This 
disagreement came to a head when NIGC officials sought access 
to the Class III gaming operations of the Colorado River Indian 
Tribes to review and audit the Tribe's conformity with MICS. 
The Tribe filed for an injunction in the United States District 
Court for the District of Columbia (the ``District Court''), 
claiming that the IGRA did not grant to the NIGC the authority 
to enforce MICS on its Class III gaming operations. In an 
August 24, 2005, decision the Court ruled that the Commission 
did not have authority to audit the tribe for compliance with 
Class III MICS.
    On September 21, 2005, shortly after the District Court's 
ruling, the Committee held a hearing addressing the need for 
oversight of Class III gaming. Testimony at that hearing made 
clear that the District Court's ruling could create a large 
hole in the regulatory structure of Indian gaming. While some 
states actively enforce internal control standards over Class 
III, many have not exercised this authority. In fact, many 
states rely on the NIGC both to issue and enforce MICS in order 
to assure that, in addition to tribes, there is governmental 
oversight over the flow of money in Indian casinos. Subsequent 
to the hearing, the NIGC has presented evidence that some 
tribes are invoking the court decision as a basis for 
prohibiting NIGC from conducting oversight of their Class III 
facilities. In the opinion of the Committee, these actions will 
seriously detract from the strong regulatory structure created 
when the IGRA was enacted and that is necessary for the 
industry today.
    Therefore, it is the intent of the Committee that S. 2078 
clarify the IGRA to assure that the NIGC has authority to issue 
and enforce Class III MICS. Section 5 of the bill amends the 
authorities of the NIGC contained in Sec. 7 of IGRA to 
expressly provide oversight and auditing responsibilities with 
regard to Class II and III gaming operations, including 
promulgation of MICS. The Committee encourages NIGC to exercise 
this authority both actively and judiciously. Where tribes and 
states are adequately enforcing appropriate internal control 
standards, NIGC may not need to engage as actively in 
enforcement. The Committee intends that the Commission will 
focus its oversight energies where they are most necessary.
    The Committee acknowledges that some tribes and states have 
raised concerns from time to time regarding new regulatory 
initiatives pursued by the NIGC that may infringe on tribal 
regulatory powers or tribal-state compacts. In the opinion of 
the Committee the amendments to Sec. 7 of the IGRA do not 
infringe on tribal-state compacts, nor do the amendments 
authorize the NIGC to regulate as to any matters within tribal 
government jurisdiction that are not gaming-related activities. 
While the Committee encourages the NIGC to fulfill its 
statutory duties and regulatory responsibilities, including 
oversight of MICS, the Committee also strongly encourages the 
NIGC to respect the primary day-to-day regulatory role of 
tribes and states through tribal-state compacts for Class III 
gaming. It is the intent of the Committee that the NIGC, in 
implementing these amendments, interpret S. 2078 consistent 
with the IGRA's fundamental purpose to encourage strong tribal 
governments, while protecting the integrity of the industry.
    B. Requiring Consultation by the NIGC. S. 2078, through the 
substitute amendment approved by the Committee, requires that 
the NIGC maintain a formal consultation policy. It is the 
Committee's belief and intent that this provision will 
encourage a level of cooperation and engagement between the 
regulator, the NIGC, and the regulated, the tribal gaming 
operations, that will provide the best environment for insuring 
the continuing effectiveness of regulation and success for the 
industry.
    It is the considered opinion of the Committee that 
regulatory matters affecting the industry nationwide, such as 
minimum internal control standards and background checks on 
major investors, should reflect consideration of the impact on 
the regulated community. Consultation is the most effective 
means of achieving that goal. While consultation does not mean 
capitulation by the NIGC to every demand by tribes or even 
necessarily agreement between the agency and tribes, opinions, 
views and proposals by tribes should receive significant 
consideration by the NIGC, particularly in the area of 
rulemaking. Therefore, the agency must balance those 
considerations with its responsibilities as the Federal 
regulator in order to protect the integrity of the industry and 
maintain public trust in it.
    While previous Commissioners disagreed with this 
Committee's views that a consultation policy was needed, the 
Committee is strongly encouraged by the commitment of the 
current Commissioners to consulting with affected Indian 
tribes, including adoption of a Commission consultation policy. 
Therefore, it is not the Committee's intent that the Commission 
rewrite its current policy, only that a policy be maintained 
and effectuated by future Commissioners and their 
administrations.
    C. Revenue Allocation Plan Enforcement. Section 7 of the 
substitute amendment to S. 2078 amends Sec. 11 of IGRA by 
adding a new subsection (f) requiring the DoI to provide to the 
NIGC notice of approval of a revenue allocation plan (``RAP''), 
including any amendments or revisions, and copies of the plan 
and information used to approve the plan. The DoI Inspector 
General reported to the Committee that there has been a lack of 
enforcement of RAPs by DoI or NIGC.\12\ The NIGC has testified 
before the Committee that it cannot effectively enforce RAPs 
due to a lack of information. S. 2078 addresses this technical 
challenge by requiring the DoI to provide relevant information 
to the NIGC, the agency with enforcement responsibility, and 
expects that the NIGC will henceforth enforce those provisions 
of IGRA dealing with RAPs.
---------------------------------------------------------------------------
    \12\ See Oversight Hearing on the Regulation of Indian Gaming. 
Before the Senate Committee on Indian Affairs, S. Hrg. 109-50, Pt. 1, 
109th Cong., at p. 9 (2005) (Testimony of Earl E. Devaney, Inspector 
General, Department of the Interior).
---------------------------------------------------------------------------

2. Background checks on tribal gaming commissioners

    Section 7 of S. 2078, as amended by the substitute 
amendment, requires that tribes must conduct background checks 
on tribal gaming commissioners and tribal gaming commission 
employees on a regular basis, in addition to key employees and 
primary management officials as required by the IGRA. This 
amendment to Sec. 11 of IGRA is designed to address a key 
concern regarding the operation of tribal gaming commissions: 
that the regulators themselves meet substantially the same 
criteria imposed on the individuals they regulate.
    The Committee notes that this provision does not delegate 
to either the NIGC or the Secretary of the Interior any 
authority to set standards regarding tribal gaming 
commissioners. This amendment requires that a tribe address the 
issue of background checks for tribal gaming commissioners and 
employees in its gaming ordinance. The actual standards a tribe 
adopts for its tribal gaming commission remain within the 
sovereign jurisdiction of the tribe. The Committee believes 
that this section provides an appropriate balance between 
respect for tribal sovereignty and the Congress' desire to 
protect the integrity of Indian gaming. Since IGRA has been 
enacted, the Committee has not received any testimony from 
tribes indicating that the required background checks for 
primary management and key officials have hindered tribal 
sovereignty by dictating who a tribe may hire. Like that 
provision, the provision in S. 2078 does not give NIGC 
authority over who the tribe hires or appoints. It does not 
mandate the use of tribal gaming commissions, nor does it allow 
the NIGC to mandate the makeup of those commissions. The 
section simply requires that tribes collect appropriate 
information so that--as with primary management officials and 
key employees--they know the background of potential tribal 
regulators and, thus, are able to make informed decisions about 
who should occupy those positions.

3. Gaming-related contracts and contractors

    A. In the Beginning. When Congress enacted the IGRA in 
1988, among the stated purposes of the law were to provide for 
tribal economic development and create strong tribal 
governments. These purposes were accomplished by providing 
within the IGRA several provisions that would ensure that 
tribes were the primary beneficiaries of their 
gamingoperations.
    At the same time, in 1988, a number of Indian gaming 
operations were managed by non-Indian ``management 
contractors.'' Many of these management contractors were 
entrepreneurs willing to accept the risks of investing in a 
very uncertain venture. For many Indian tribes, this opened a 
positive avenue for capital investment. However, in some 
instances, this Committee found that the contract terms were 
clearly unconscionable, and given Congress' plenary power over 
Indian affairs, statutory protections were needed to ensure 
that Indian tribes received the primary economic benefit from 
the gaming activity.\13\ These statutory protections included 
mandatory management contract terms, review of the management 
contracts by the NIGC, and background checks on the principal 
officers and shareholders of the management contractors.
---------------------------------------------------------------------------
    \13\ See Senate Report 100-446, pg. 15.
---------------------------------------------------------------------------
    For several years, these statutory provisions had the 
desired result. Eventually, however, enterprising investors 
sought to avoid the scrutiny required of management contracts 
and contractors by engaging in so-called consulting agreements, 
development agreements or financing agreements. While these 
contracts did not contain indicia of management contracts, they 
still exerted significant influence over the operation of 
tribal gaming facilities and provided for compensation that 
equaled or exceeded that allowed for management contracts; yet 
they legally escaped review by the NIGC.
    B. The Need for Expanded Contract Review. During 
discussions with gaming tribes and gaming industry officials, 
including the NIGC, the Committee has been made aware of two 
primary reasons that gaming investors have sought to avoid 
having their gaming contracts reviewed by the NIGC. The first, 
and most obvious reason, is that some individuals do not want 
to disclose their business dealings and associations. While 
reluctance to disclose private business matters does not of 
itself connote criminal associations, the unique history of the 
casino industry has led to the conclusion that regulatory 
review and oversight of the individuals engaged in the gaming 
business is the most effective manner of preventing 
infiltration by organized crime and other unwanted elements.
    The Committee has been informed by the Department of 
Justice that, since the enactment of the IGRA, it has 
discovered no evidence of systematic infiltration of organized 
crime into the Indian gaming industry.\14\ The ability of 
tribes to protect their gaming operations from organized crime, 
in the opinion of the Committee, has been due in no small part 
to the unique tripartite regulatory structure enacted in the 
IGRA, including review and approval of management contracts by 
the NIGC. This rigorous regime has ensured that Indian tribes 
are the primary beneficiaries of their gaming operations. It 
has also protected both Indian gaming customers, by ensuring 
the fairness and integrity of games, and the general public, by 
preventing criminal syndicates from using gaming revenues to 
fund other criminal endeavors. It is the express intent of the 
Committee that this rigorous protection be continued and 
strengthened by S. 2078.
---------------------------------------------------------------------------
    \14\ See Letter from William E. Moschella, Assistant Attorney 
General, Office of Legislative Affairs, U.S. Department of Justice, to 
the Hon. John S. McCain, Chairman, Committee on Indian Affairs, U.S. 
Senate (July 18, 2005), attachment p. 3.
---------------------------------------------------------------------------
    The Committee has also been made aware, however, that there 
is another, purely economic reason that gaming contractors 
often seek to avoid the review of the NIGC: the significant 
review period allowed under the IGRA, and the even longer 
review timeframes often demanded by the NIGC. The IGRA provides 
for an initial 180 day review period, with an extension allowed 
for up to an additional 90 days. This minimum of six to nine 
months for approval of a contract, on top of the time spent 
negotiating a deal, would be unacceptable in most business 
environments. The Committee has been informed that some 
approvals have taken as long as two years or more. A 
significant number of tribes have informed the Committee that 
these extremely long time frames have resulted in greatly 
inflated costs for them, including higher interest rates, 
increased material costs, and delays in opening facilities.
    In amending Section 12 of the IGRA, the Committee has 
sought to balance these two competing, but not mutually 
exclusive goals: to provide the tools for the NIGC and tribes 
to continue to effectively monitor the industry and exclude 
unwanted elements; and to smooth or streamline the contract 
review and approval process to allow for more efficient 
business dealings. To effectuate these goals the Committee has 
amended the definitions of contracts requiring review and 
approval, and the actual review and approval process through 
stricter timelines.
    C. Definitions. The substitute amendment to S. 2078 
approved by the Committee expands the types of contracts 
requiring approval to include consulting, development, 
financing, and participation contracts, as well as management 
contracts. Each definition provides authority for the NIGC to 
establish by regulation, categorical exclusions for contracts 
that fall within the definition but do not involve either 
subject matters or dollar amounts that are of significance to 
the NIGC's oversight. The Committee does not believe that such 
NIGC authority impairs in any way the authority of Indian 
tribes, or states through compacts, to review contracts or 
background checks, or to license persons doing business with 
tribal gaming operations.
    Management Contracts: It is the intent of the Committee 
that the NIGC, upon passage of S. 2078, continue to interpret 
the term ``management contract'' consistent with the use of the 
term within NIGC administrative rulings, guidelines, and 
regulations, as well as any federal court precedent that may be 
relevant. Consistent with that intent, the definition 
categorically excludes employment contracts, except those that 
provide for compensation based on a share or percentage of 
profits from the casino.
    Consulting Contracts: In oversight hearings held by the 
Committee over multiple congresses, testimony has been provided 
by the NIGC regarding a growing practice by non-Indian 
investors of avoiding the review and scrutiny of the NIGC by 
entering into so-called ``consulting'' contracts.\15\ While the 
investor would be involved in the planning, financing, 
development or operation of an Indian gaming facility, and 
compensated handsomely therefor, no contract would be submitted 
to the NIGC because this involvement was purported to be merely 
for ``consulting'' services. The NIGC would only be made aware 
of such agreements after the fact, often after the gaming 
facility was operational. It is the intent of the Committee 
that these contracts be subjected to review by the NIGC, and 
the non-tribal parties to such contracts be subjected to the 
background checks required by IGRA.
---------------------------------------------------------------------------
    \15\ See, e.g., Senate Committee on Indian Affairs Oversight 
Hearing on Indian Gaming, April 27, 2005, pg. 14.
---------------------------------------------------------------------------
    Development Contracts: The Committee has also been informed 
that, with increasing frequency, non-Indian investors have also 
sought to avoid the review and scrutiny of the NIGC by entering 
into so-called ``development'' contracts. Many of these 
``development'' contracts provide for the planning, financing 
and construction of Indian gaming facilities. These types of 
contracts may not formally involve management or consulting on 
management of operations; however, compensation for these 
investors is usually taken from later operations, and that 
compensation is often far in excess of the market value of the 
services provided. Additionally, the Committee has been made 
aware that some developers, who would not be able to survive 
the scrutiny of background checks, actively market their 
development of ``turnkey'' facilities to other investors, for 
often exorbitant compensation. While the Committee is concerned 
with the involvement of these ``unsuitable'' investors in the 
Indian gaming industry, it is primarily concerned that the true 
loser in these scenarios are the tribes who are not receiving 
the full benefit of their gaming operations.
    The Committee recognizes that there are many types of 
construction and other contracts that might be considered 
``development'' contracts, but are tangential to gaming 
activities and do not need scrutiny by the NIGC, including 
professional services contracts such as the architectural and 
engineering services integral to any construction project. It 
is the considered opinion of the Committee that only contracts 
for major gaming or gaming-related projects should be covered 
by this definition, particularly those for which compensation 
will be contingent upon gaming revenues derived from the new 
development.
    Financing Contracts. The Committee has been informed, 
through media reports and various government agencies, of 
concerns regarding the backgrounds and associations of some 
persons that have financed the building or expansion of Indian 
gaming facilities or operations. While the Committee does not 
intend to restrict the ability of tribes to access investment 
capital, it is concerned that tribes may unknowingly receive 
funding from organized crime or other unsuitable sources. 
Consistent with those concerns, the definition of financing 
contract approved by the Committee in the substitute amendment 
to S. 2078 is narrowly drafted to exclude contracts with 
entities regulated by other arms of the Federal government, 
including federally-chartered banks and companies regulated by 
the Securities and Exchange Commission. Also excluded are 
intergovernmental financial arrangements, either between 
tribes, or between tribes and states as is provided in some 
compacts. It is the intent of the Committee that the NIGC 
exercise its authority to approve finance contracts primarily 
with regard to private, unregulated sources of capital.
    Participation Contracts. The NIGC has long raised concerns 
regarding contracts for various services related to gaming 
operations or facilities where the compensation is based on 
receipt of a significant percentage of revenues, not on the 
actual value of the services performed. While the opportunity 
to participate in the success of a gaming operation via a 
percentage of revenues provides increased incentives for 
investors to commit capital to developing tribal casinos, it 
has also long been an area easily open to exploitation. It is 
the intent of the Committee that the NIGC rigorously review 
contracts and background checks on investors seeking 
participation contracts. The Committee expects that such 
increased scrutiny will likely discourage those seeking to 
obtain exorbitant profits at the expense of tribes. The 
Committee does not intend that the NIGC unnecessarily seek 
review of participation contracts that reflect common gaming 
industry practice, so long as such agreements provide services 
commensurate with the compensation provided and are in keeping 
with common industry standards or practices.
    D. Categorical Exclusions and Timelines. For each of the 
defined gaming-related contracts, the substitute amendment to 
S. 2078 provides authority to the NIGC to promulgate 
regulations, in consultation with tribes, that will 
categorically exclude contracts that fall within the broad 
statutory definitions provided, yet do not involve either 
subject matters or dollar amounts that are of significance to 
the NIGC's oversight. It is the express intent of the Committee 
that, in expanding the authority of the NIGC to review and 
approve a broader range of gaming-related contracts, the 
increased regulatory oversight necessarily accompanying such 
expansion shall not overburden the industry and thereby 
artificially inflate otherwise routine business expenses or 
economic costs.
    In order to fulfill the intent of the Committee, the 
substitute amendment to S. 2078 amends Sec. 12 of IGRA by 
adding a new paragraph (b)(5) which provides strict timelines 
for approval by the NIGC of gaming-related contracts. The 
Committee strongly encourages the NIGC to efficiently allocate 
personnel and resources needed to meet these new 
responsibilities and mandated deadlines. The Committee 
expressly intends that the NIGC not waste its resources 
unnecessarily on reviewing gaming-related contracts for which 
there is no danger of exploitation by unwanted or criminal 
persons, and that the NIGC, in consultation with tribes, 
exercise the authority given to promulgate regulations that 
will categorically exclude the more mundane types of gaming-
related contracts.
    E. Review and Approval of Gaming-Related Contracts. Section 
8 of the substitute amendment to S. 2078 replaces Sec. 12 of 
IGRA which currently governs the review and approval of 
management contracts. In updating and amending Sec. 12 to 
conform to the expanded definition of gaming-related contracts 
which will require review and approval by the NIGC, the basic 
statutory contract requirements needed for approval in the 
current law were carried forward. Similarly, the basic 
standards whereby the NIGC will review the backgrounds of the 
gaming-related contractors remain the same as currently 
provided in IGRA. It is the intent of the Committee that the 
basic procedures required of gaming-related contractors and the 
NIGC under Sec. 12 will continue to be utilized, consistent 
with the new timelines imposed by paragraph (b)(5) of amended 
Sec. 12.
    The Committee has provided the NIGC with additional 
flexibility under amended Sec. 12 to better balance the twin 
goals of rigorous regulatory enforcement and efficient business 
practices. In particular, the Committee strongly encourages the 
NIGC to utilize the authority given in new paragraphs (c)(3) 
and (c)(4) of Sec. 12 to contract with Indian tribes or 
establish alternative methods of determining suitability and 
categorical exclusions to process background checks and approve 
gaming-related contracts in a more timely and efficient manner 
than past history has indicated. The Committee also encourages 
the NIGC to make clear to tribes and gaming-related contractors 
the information which, when provided at the beginning of the 
review process, will constitute a complete submission and thus 
make approval a more efficient process.
    F. New Regulatory Authority for Additional Gaming-Related 
Contracts. Section 5 of the substitute amendment to S. 2078 
approved by the Committee provides amendments to Sec. 7(b)(10) 
of IGRA granting new substantive regulatory authority to the 
NIGC to identify by regulation gaming-related contracts that do 
not fall within the statutory definitions but are of concern. 
The Committee determined this provision was needed to guard 
against the ingenuity of gaming contractors in seeking ways to 
avoid the scrutiny of NIGC regulators in the future.
    The Committee expressly intends that this authority be 
forward-looking, and only be exercised after regulations have 
been duly promulgated for the defined gaming-related contracts 
pursuant to new Sec. 26 of IGRA, as mandated by Sec. 12 of the 
substitute amendment to S. 2078. The Committee further 
acknowledges that this authority is far-reaching, and thus 
mandated that this authority only be exercised through the 
NIGC's promulgation of regulations, in consultation with 
tribes.
    G. Implementation. Recognizing that substantial new 
responsibilities are placed on the NIGC by the expanded 
definitions of gaming-related contracts contained in the 
substitute amendment to S. 2078 approved by the Committee, a 
second degree amendment to the substitute amendment was also 
approved by the Committee during markup of the bill which added 
a new Sec. 26 to IGRA which would delay enforcement of the new 
gaming-related contract definitions until implementing 
regulations are promulgated.
    The provision provides a two-year timeframe for the NIGC to 
promulgate regulations, in consultation with tribes, which will 
provide needed categorical exclusions for the gaming-related 
contracts definitions and persons subjected to suitability 
determinations. The NIGC is required to provide a status report 
back to the Committee and the House Committee on Resources 
within one year of enactment on the progress in promulgating 
the regulations.
    The provisions express the Committee's intent that the NIGC 
shall continue to review and approve or disapprove management 
contracts using their current regulations until new regulations 
are developed. The Committee further intends that within the 
two-year timeframe, gaming-related contracts that are not 
management contracts may be entered into by tribes and 
contractors and will not be considered void or invalid by 
reason of not being approved by the NIGC. Conversely, the 
Committee does not intend to validate an otherwise void or 
invalid contract by reason of paragraph (c)(2) of Sec. 26.
    In addition, the Committee encourages the NIGC to carefully 
consider any current regulations that do not conflict with the 
amendments to IGRA embodied in the substitute amendment to S. 
2078, and, where appropriate, maintain those regulations in 
effect.

4. Indian lands eligible for gaming

    The IGRA generally prohibits gaming on lands acquired in 
trust outside of reservations after October 17, 1988, the date 
of enactment. However, Sec. 20 of the IGRA contains several 
exceptions to this general rule, some of which have engendered 
debate and controversy. S. 2078 addresses these exceptions by 
eliminating one of them, the two-part determination, and 
amending three others dealing with land claims, initial 
reservations and restored lands.
    A. The Two-part Determination. When enacted, the IGRA 
Sec. 20 included in subsection (b)(1)(A) an economic 
opportunity exception to the general ban on gaming on lands 
outside ofreservations. This so-called ``two-part 
determination'' allows gaming on land acquired after October 17, 1988, 
that is, on ``after-acquired lands'' if: (1) the Secretary finds that 
gaming would benefit the tribe and not be to the detriment of the 
surrounding community; and (2) the Governor of the state in which the 
land is located concurs. This provision is unique in that it allows a 
tribe and a state to essentially create a new reservation solely for 
gaming purposes, even on lands to which the tribe may not have an 
historical connection.
    While the general purposes of the IGRA were to create 
economic development on reservations and strong tribal 
governments, this provision provided an avenue through which 
tribes, unable to engage in viable gaming on their current 
reservations, might have the opportunity to receive the 
economic benefits of gaming off their reservations. 
Unfortunately, this well-intentioned provision has caused a 
great deal of controversy between tribes and states and local 
communities, and even among tribes.
    During the 109th Congress, this Committee held four 
hearings during which witnesses raised concerns about the two-
part determination. In testimony presented at these hearings, 
local governments, tribes and grassroots organizations 
expressed intense frustration with the process through which 
the Secretary and governors make decisions that allow tribes to 
site casinos off their reservations on lands to which they have 
no historical ties and that local communities and other 
impacted tribes did not foresee or do not want. These groups 
testified that they had insufficient input into the process of 
making a two-part determination, resulting in a lack of 
confidence that there were adequate limits to gaming by Indian 
tribes on lands far from existing reservations.
    Moreover, while the DoI testified that only three tribes 
have successfully navigated the two-part determination process, 
an increasing number of written requests for determinations 
have been filed and even more have been hinted at by tribes and 
developers. The costs to tribes, local communities, states and 
the Department of the Interior in investments of time, energy 
and money into these off-reservation endeavors are extremely 
high. The mere threat of off-reservation gaming to local 
communities and tribes that conduct gaming on their own nearby 
reservations engenders its own anxiety and consequent 
intangible costs.
    Based on the hearing record, and substantial information 
provided formally and informally from many interested parties, 
the Committee concludes that, as a matter of Federal Indian 
policy, there must be limits on where tribes can conduct gaming 
pursuant to the IGRA. Therefore, the Committee has determined 
that elimination of the two-part determination is the wisest 
policy choice among several. Consistent with the Committee's 
determination, S. 2078 eliminates the Secretary's authority to 
make the determinations contained in existing subsection 
20(b)(1)(A). This provision is not intended to affect the 
ability of a tribe to conduct commercial gaming activities off 
Indian lands and outside the authority of the IGRA.
    While committed to eliminating the two-part determination, 
the Committee is cognizant that there are some tribes that have 
already spent significant time, money, and energy into 
following the letter of the law to meet the two-part 
determination criteria. It is not the intent of the Committee 
to unfairly prevent these tribes from continuing through the 
process in which they are already deeply engaged. In fact, it 
is not uncommon for significant effort, resources, and time to 
be spent before an application is even filed. Therefore, 
Sec. 10 of S. 2078 provides a ``grandfather'' clause that 
allows written requests for specific parcels of land submitted 
to the U.S. Department of the Interior before April 15, 2006, 
to continue to be considered pursuant to current subsection 
(b)(1)(A) of Sec. 20, and in accordance with the DoI 
administrative processes implementing that provision.
    The Committee does expressly intend, however, that the 
inclusion of the ``grandfather'' provision is in no way to be 
interpreted as encouraging approval of any existing two-part 
determination request. The Department of the Interior must 
continue to be as rigorous in evaluating the benefits to the 
tribe and detriments to the surrounding community as it has 
been in the past.
    B. Land claims. S. 2078 also amends the exception contained 
in subsection (b)(1)(B)(i) of Sec. 20 of the IGRA addressing 
land claims. Generically, ``land claims'' refer to claims by 
tribes asserting legal title to real property pursuant to the 
Indian Trade and Intercourse Act.\16\ Settlements for such 
claims require congressional legislation. The amendment 
specifies that, to be eligible for gaming under the IGRA, lands 
taken into trust pursuant to a land claim must be within the 
state in which the tribe's reservation or last recognized 
reservation is located.
---------------------------------------------------------------------------
    \16\See 25 U.S.C. Sec. 177.
---------------------------------------------------------------------------
    Testimony received by the Committee during hearings on 
lands taken into trust for gaming purposes through ``land 
claims'' raised several concerns. Among those raised was the 
concern that land claims are not being pursued in order for 
tribal members to move back to the claimed lands, but solely to 
establish casinos. Locating casinos out-of-state affects not 
only in-state tribes, but also land owners in land-claim states 
who live and work on land that they could not have foreseen 
would be subject to a claim. Additionally, tribes with in-state 
reservations raised concerns that out-of-state tribes will 
negotiate compacts that give away governmental prerogatives and 
sovereign rights at the expense of in-state tribes. These in-
state tribes seek to protect the already existing and sometimes 
long-standing relationships between states and the tribes 
already within their borders.
    It is the considered opinion of the Committee that clear 
congressional direction is needed to address many of the 
concerns raised and to discourage those wishing to exploit 
ambiguities in the law. Therefore, Sec. 10 of S. 2078 amends 
clause (b)(1)(B)(i) of Sec. 20 of the IGRA to eliminate land 
claims that have been asserted by tribes for lands that are 
outside their current state, sometimes across the country, in 
order to find more lucrative gaming sites. This provision does 
not affect a tribe's ability to utilize lands obtained through 
land claims for purposes other than gaming. S. 2078 also 
codifies what has heretofore been done in practice but not 
required by Sec. 20, a mandate that there be Congressional 
approval of the land claim before gaming can be conducted.
    C. Initial reservations and restored lands. S. 2078 further 
amends clauses (b)(1)(B)(ii) and (iii) of Sec. 20 of the IGRA, 
which provide exceptions to the general ban on post-1988 lands 
for newly recognized or restored tribes. Clause (ii) applies to 
the ``initial reservation'' of tribes that successfully 
petitioned for acknowledgment through the DoI's Federal 
Acknowledgment Process. Clause (iii) applies to ``the 
restoration of lands for an Indian tribe that is restored to 
Federal recognition.''\17\
---------------------------------------------------------------------------
    \17\IGRA does not define ``restore'', ``restored'' or 
``restoration'', but several courts have provided guidance. These 
courts have looked to the ordinary dictionary meaning such as ``to give 
back, return, make restitution, reinstatement, renewal and 
restitution.'' See Grand Traverse Band v.United States (III), 369 F.3d 
960, 967.
---------------------------------------------------------------------------
    During hearings before the Committee, significant testimony 
was provided regarding the potentially high impact that gaming 
activities had on local communities. In their testimony, 
impacted communities and other nearby tribes raised concerns 
about the process whereby the DoI determines whether particular 
lands should be eligible for gaming for a newly recognized or 
restored tribe. Serious questions were raised regarding the 
transparency of the process and whether the Secretary was 
gathering sufficient information prior to making such a 
determination.
    Based on the hearings, several themes became clear: the 
fairness exceptions should not unfairly prejudice existing 
tribes; affected local communities and tribes must have a fair 
opportunity to present legitimate concerns; and, significant 
impacts to affected local communities and tribes should be 
addressed.
    To address these themes, S. 2078 significantly amends 
subsection (b)(1)(B) of Sec. 20 of the IGRA. First it provides 
that: (1) for initial reservations the tribe must have a 
historical and geographical nexus to the land being acquired, 
and (2) for restored lands for tribes restored to Federal 
recognition the tribe must have the historical and geographical 
nexus, plus a temporal connection must existbetween the 
acquisition of the land and the date of the tribe's restoration to 
Federal recognition. Second, the Secretary must consult with the tribe 
and local and tribal officials, provide public notice and an 
opportunity to comment and a public hearing. Third, the Secretary must 
determine that a gaming establishment on the land would be in the 
tribe's best interest and not create a significant, unmitigated impact 
on the surrounding community.
    The Committee notes that, for initial reservations, there 
is no requirement that there be a temporal connection between 
the land acquisition and tribe's recognition. In the view of 
the Committee, the timing of that acquisition should not be 
relevant when a tribe is acquiring its first land following 
acknowledgment through the Federal Acknowledgment Process. 
Similarly, while not directly stated in S. 2078, the Committee 
is of the opinion that the DoI should consider the challenges a 
tribe may have faced in acquiring land when applying the 
temporal connection requirement to the tribe's acquisition of 
its first restored lands following restoration.
    It is the intent of the Committee through S. 2078 to 
codify, for both initial reservations and restored lands 
exceptions, what has been done in practice, particularly in 
restored lands analyses, by requiring that tribes have a 
historical nexus to the land on which the gaming will be 
conducted. This nexus requirement is derived from case law on 
IGRA's restored land exception which indicates that restored 
lands cannot be all lands with which a tribe has had minimal 
contact. Case law articulates that, for restored lands, a tribe 
have a historical nexus to the land and that the restoration be 
sufficiently close in time to the date of recognition.\18\ It 
is the considered opinion of the Committee that codifying the 
historical nexus requirement, and for restored lands, the 
temporal connection requirement, will help to clarify to all 
interested parties the standard that must be met for land to be 
deemed eligible for gaming pursuant to these exceptions.
---------------------------------------------------------------------------
    \18\See Grand Traverse Band of Ottawa & Chippewa Indian v. United 
States Atty., 198 F. Supp. 2d 920, 937 (D. Mich. 2002) (``The Band has 
introduced substantial and uncontradicted evidence that the parcel is 
located in an area of historical and cultural significance to the Band 
that was previously ceded to the United States. The Band also has 
introduced uncontradicted evidence of the intent of the Band in 
acquiring properties between 1988 and 1990. Finally, it has introduced 
evidence supporting the temporal proximity of restoration of all 
reservation holdings to the time of acknowledgment and approval of the 
tribal constitution, together with the absence of any substantial 
restoration of lands preceding the property at issue.''); aff'd 369 
F.2d 960 (6th Cir. 2004).
---------------------------------------------------------------------------
    S. 2078 also amends subsection 20(b)(1)(B)(ii) and (iii) to 
require that there be public input into the process of 
determining whether gaming is an appropriate activity that may 
be conducted on lands acquired after October 17, 1988, even if 
there is a historical nexus between the tribe and the lands to 
be gamed upon. The Committee is very cognizant of the 
legitimate concerns raised by affected local communities and 
tribes that they had no input into the determination of whether 
gaming--a potentially high impact activity--should be conducted 
on nearby land. With these concerns in mind, the amendments in 
S.2078 require that the Secretary allow public comment and 
specify that a public hearing must be held. This language 
reflects the Committee's view that it is imminently fair to the 
people who may be most affected by a nearby gaming operation 
to: (1) be informed that a tribe is seeking to conduct gaming 
on nearby land; (2) have the opportunity to comment on 
significant impacts that the gaming may have on their 
community; and, (3) have this input be considered by the 
Secretary when making a determination that lands are eligible 
for gaming.
    Conversely, it is not the intent of the Committee that the 
Secretary treat community opposition to a tribal gaming 
operation as a veto over use of the land for gaming. Thus, 
opposition to, or controversy over, a proposal to use land for 
gaming does not constitute an impact. Rather, it is the express 
intent of the Committee that the Secretary carefully weigh 
whether the tribe can mitigate identifiable significant impacts 
that the proposed gaming would have on the affected 
communities. The Committee notes that this is a different 
standard than the one used in the past for the two-part 
determination and expects that the Secretary will interpret 
this provision accordingly. The Committee intends that, for 
initial reservations and restored lands, the Secretary evaluate 
the efficacy of mitigation that is offered by the tribe to 
lessen the impact of the gaming activity on the surrounding 
community. If impacted local communities and tribes reach a 
mutual agreement on mitigation, or, in the Secretary's 
estimation, the tribe has offered reasonable mitigation to 
identified significant impacts, the Secretary should determine 
that the gaming would not ``create significant, unmitigated 
impacts.''
    D. Determinations Regarding Land Eligibility for Gaming. In 
the past, both the Secretary and the NIGC have issued lands 
opinions regarding the eligibility of lands for gaming. Based 
on testimony presented during hearings on lands eligible for 
gaming, the Committee is of the considered opinion that the 
process of determining eligibility and acquiring land into 
trust should be streamlined at one agency. Therefore S. 2078 
provides that, after enactment, the Secretary and not the NIGC 
is to make initial reservation and restored lands 
determinations for land that has not been taken into trust or 
is in the process of being taken into trust. By designating the 
DoI as the agency responsible for these determinations, the 
Committee also imposes a responsibility on the agency to make 
these determinations in a timely manner.
    Notwithstanding that S. 2078 clarifies that the Secretary 
has sole responsibility for making Sec. 20 determinations, the 
Committee is aware that there are instances when the NIGC must 
make a determination, to meet its regulatory responsibilities, 
whether a given parcel of land is Indian land such that the 
agency has jurisdiction over the gaming activity on it. The 
Committee does not intend to preclude the NIGC from determining 
whether lands are Indian lands for the purposes of determining 
its jurisdiction.
    E. Prior Determinations. S. 2078 includes a provision 
stating that the amendments to Sec. 20 shall not affect the 
validity of any determination already made by the Secretary or 
Chairman. This is intended to preserve already-issued 
determinations by the Secretary or Chairman regarding 
eligibility of gaming on trust lands. The Committee does not 
intend the Secretary or Chairman to reconsider decisions they 
have already made. On the other hand, the Committee anticipates 
that opinions for restored lands and initial reservations that 
are pending at the time of enactment of S.2078 will in fact be 
subject to the amended subsection.

                          Legislative History

    S. 2078 was introduced on November 18, 2005, by Senator 
McCain and was referred to the Committee on Indian Affairs. 
Subsequent to introduction, hearings were held February 1, 
2006; February 28, 2006; and March 8, 2006.
    On March 29, 2006, at a business meeting duly noticed, the 
Committee considered S. 2078. During the business meeting 
Senator McCain introduced a substitute amendment. In addition 
to the substitute amendment, Senator McCain and several other 
Members of the Committee offered stand-alone amendments to the 
substitute amendment.
    By voice vote, the Committee adopted an amendment to the 
substitute amendment by Senator McCain changing the cut-off 
date for considering written requests for determinations under 
the two-part determination set forth in the existing Act at 
Section 20(b)(1)(A). Senator McCain's amendment changed the 
date in the substitute amendment from June 1, 2006, to March 
29, 2006. After discussion during which several senators 
expressed concern that tribes have an opportunity after the 
date of mark-up to submit requests for two-part determinations, 
Senator Dorgan offered a second degree amendment extending the 
time to file a request until April 15, 2006. Senator Dorgan's 
second degree amendment was adopted by a voice vote.
    A second amendment to the substitute amendment was offered 
by Senators McCain and Dorgan to add a new Section 26 to S. 
2078 providing that, after consultations with tribes and no 
later than two (2) years after the section's enactment, the 
Commission must promulgate regulations implementing the bill's 
definitions. The amendment also provides that, with respect to 
gaming-related contracts other than management contracts, the 
contracts section of the bill will not take effect until the 
Commission promulgates regulations. New Section 26(c)(2) would 
additionally provide that nothing in the contracts section of 
the bill affects the validity or invalidity of contracts 
already entered into prior to the effective date of this this 
new section. The amendment was adopted unanimously by voice 
vote.
    An amendment was offered by Senator Inouye which would 
amend Section 7(2) of Senator McCain's substitute amendment by 
imposing a time limit of 180 days on the Secretary's duty to 
prescribe procedures for Class III gaming. Following a 
discussion among the Members, a roll call vote was taken. With 
six (6) senators voting aye and six (6) voting nay, the 
amendment was not adopted.
    Senator Coburn offered an amendment inserting into Section 
5 of the substitute amendment the requirement that once a year 
the Commission submit to the Secretary a report, for 
publication, describing all revenues from Indian gaming for 
each Indian tribe engaged in gaming. Following discussion among 
the Members, Senator McCain offered a second degree amendment 
to clarify that the disclosures required by the amendment would 
only be provided to members of such tribe. The second degree 
amendment was adopted, and then the Coburn amendment was 
adopted by voice vote.
    Having considered all amendments offered to the substitute 
amendment, the Committee adopted the substitute amendment. The 
Committee then approved S. 2078, as amended, and agreed that 
the bill would be forwarded for consideration by the full 
Senate, with a favorable recommendation that the Senate pass 
the bill.

                      Section-By-Section Analysis

Section 1. Short title

    The act may be cited as the ``Indian Gaming Regulatory Act 
Amendments of 2006''.

Section 2. Definitions

    The bill amends Section 4 of the Indian Gaming Regulatory 
Act (``IGRA'') by adding several definitions needed for 
amendments made to operative sections of the IGRA, including: 
``Gaming-Related Contract''; ``Gaming-Related Contractor''; 
``Consulting Contract''; ``Development Contract''; ``Financing 
Contract''; ``Management Contract'' and ``Participation 
Contract''. The definitions of ``Consulting Contract''; 
``Development Contract''; ``Financing Contract''; ``Management 
Contract'' and ``Participation Contract'' expressly authorize 
the National Indian Gaming Commission (NIGC), by regulation, to 
provide categorical exclusions of certain contracts from the 
broader definition.

Section 3. National Indian Gaming Commission

    The bill makes technical amendments to Section 5 of the 
IGRA to clarify how NIGC vacancies are filled, and authorizing 
the Vice Chairman to act in the absence or disability of the 
Chairman.

Section 4. Powers of the Chairman

    The bill amends Section 6 of the IGRA by adding to the NIGC 
Chairman's authority the power to approve gaming-related 
contracts, and to conduct a background investigation and make a 
suitability determination as to any party to a gaming-related 
contract. The bill also makes technical amendments to Section 6 
of the IGRA to clarify how the NIGC Chairman may delegate 
authorities to individual Commissioners.

Section 5. Powers of the Commission

    The bill amends Section 7 of the IGRA to clarify the NIGC's 
oversight and auditing responsibilities with regard to Class II 
and III gaming operations. It also directs the NIGC to 
promulgate and enforce Minimum Internal Control Standards as to 
Class III gaming. This authority was recently called into 
question by a decision of the United States District Court for 
the District of Columbia.
    The NIGC is also directed to develop regulations 
determining other categories of contracts for goods and 
services directly related to tribal gaming activities that will 
require NIGC approval and background checks.
    The bill also requires that the NIGC submit to the 
Secretary of the Interior, at least once each year, a report 
describing aggregate revenues of each tribe's gaming 
activities. The Secretary shall develop regulations governing 
the provision of this information to individual tribal members.

Section 6. Commission staffing

    The bill makes technical amendments to Section 8 of the 
IGRA to update the statutory rates of pay for NIGC 
Commissioners, staff and temporary services to comport with the 
current Federal Executive and General Schedule pay rates.

Section 7. Tribal gaming ordinances.

    The bill amends Section 11(b)(2)(F) of the IGRA to require 
that tribal gaming ordinances provide that background 
investigations will be conducted for tribal gaming 
commissioners and key tribal gaming commission employees; 
primary management officials and other key employees of the 
gaming enterprise; and persons that provide goods or services 
directly relating to the tribal gaming activity. The bill 
clarifies that the background checks required on tribal gaming 
commissioners will not also require licenses (since the tribal 
commissioners issue these licenses, and it is unnecessary for 
them to license themselves).
    The bill further amends Section 11 by requiring the 
Secretary of the Interior to share information relating to 
approved tribal revenue allocation plans with the NIGC 
Chairman.

Section 8. Gaming-related contracts

    The bill substantially amends section 12 of the IGRA by 
extending the NIGC Chairman's authority to approve all gaming-
related contracts (defined in the bill as management, 
consulting, development, financing, participation, and other 
contracts as further defined by NIGC regulation). Gaming-
related contracts that are not approved by the NIGC Chairman 
under the bill would be void ab initio.
    The bill further requires that gaming-related contractors 
must be deemed ``suitable'' by the Chairman after conducting an 
appropriate background check. Under the bill, the Chairman is 
required to make the required suitability and contract 
determinations within specified timeframes: 30 days for 
consulting and financing contracts and 90 days for all other 
gaming-related contracts.
    The bill retains the same basic substantive requirements 
for contract approvals and background checks as are currently 
provided in IGRA; however, the Chairman is provided new 
flexibility to utilize alternative licensing or suitability 
findings, or categorically exclude certain persons or entities 
that are already licensed by government agencies or 
professional associations. The bill further requires the 
Commission to establish and maintain a registry of suitability 
determinations made by the Chairman and tribes.
    The bill also provides the Chairman authority to waive any 
requirement under this section for reasons of emergencies or 
imminent danger to the public health and safety.

Section 9. Civil penalties

    The bill amends Section 14 of the IGRA, which provides for 
civil penalties, to give NIGC authority to issue complaints and 
levy penalties against any individual or entity, not just 
against tribes or management contractors, that violate IGRA or 
federal regulations.

Section 10. Gaming on later-acquired land

    The bill amends Section 20 of the IGRA to further restrict 
tribes' ability to game on lands acquired after 1988 and to 
provide members of the local community more input into the 
process for allowing gaming on tribal lands.
    The bill eliminates the Secretary's authority to take land 
into trust pursuant to the so-called ``two-part determination'' 
contained in subsection 20(b)(1)(A) after the date of enactment 
of this bill, while ``grandfathering'' for consideration 
written requests to have lands deemed eligible for gaming that 
are submitted by tribes to the Secretary of the Interior by 
April 15, 2006. The bill further amends subsection 20(b)(1)(B) 
of IGRA by specifying that, to be eligible for gaming, lands 
taken into trust as part of a land claim must be approved by 
congressional action and cannot be outside of the state in 
which the tribe is located. The bill requires that lands taken 
into trust as part of an initial reservation have a historic 
and geographical nexus to the tribe, and that the Secretary of 
the Interior determine, after consultation with the tribe and 
appropriate local and tribal officials, and after providing 
public notice and an opportunity to comment, that a gaming 
establishment on that land would be in the best interest of the 
tribe and would not create significant, unmitigated impacts on 
the surrounding community.
    Lands taken into trust as part of a restoration of lands 
would, under the bill, have to meet the same requirements as 
lands taken into trust as part of an initial reservation, and 
there would have to be a temporal connection between the 
acquisition of the land and the date of restoration of the 
tribe.
    The bill does not affect the validity of any determinations 
made by the Secretary of the Interior or NIGC Chairman prior to 
enactment of the bill regarding the eligibility of land for 
gaming.

Section 11. Consultation policy

    The bill requires the NIGC to establish and maintain a 
consultation policy in accordance with the Federal trust 
responsibility and the government-to-government relationship 
with Indian tribes.

Section 12. Implementation

    The bill requires the NIGC to develop, no later than 2 
years from the date of enactment, rules and regulations 
implementing the definitions, authorities, responsibilities and 
restrictions set forth in the bill. The regulations are 
required to be developed in consultation with Indian tribes, 
and the NIGC must provide the Senate Committee on Indian 
Affairs and the House Committee on Resources with a report on 
the status of the regulations no later than one year after the 
date of enactment of the bill. The bill delays the effective 
date of the new provisions relating to gaming-related contracts 
until the date on which the NIGC promulgates rules and 
regulations implementing those provisions. The bill makes clear 
that current law regarding management contracts remains in 
effect until the NIGC promulgates rules and regulations 
implementing the new provisions relating to gaming-related 
contracts.
    The bill also validates otherwise legal gaming-related 
contracts entered into before the date of enactment of the 
bill.

Section 13. Conforming amendments

    The bill will amend Public Law 105-83, the Department of 
the Interior and Related Agencies Appropriations Act of 1998, 
by striking subparagraph (C). It also clarifies that all tribes 
are subject to the NIGC's fee structure if they conduct gaming.

            Committee Recommendation and Tabulation of Vote

    On March 29, 2006, the Committee, in an open business 
session, considered S. 2078, approved a substitute amendment 
and three additional amendments to the bill, and ordered S. 
2078, as amended, favorably reported to the full Senate with a 
recommendation that the bill do pass.

                   Cost and Budgetary Considerations

    The cost estimate for S. 2078 as calculated by the 
Congressional Budget Office, is set forth below:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 17, 2006.
Hon. John McCain,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed estimate for S. 2078, the Indian Gaming 
Regulatory Act Amendments of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Matthew 
Pickford (for federal costs), Marjorie Miller (for the impact 
on state, local, and tribal governments), and Craig Cammarata 
(for the impact on the private sector).
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

S. 2078--the Indian Gaming Regulatory Act Amendments of 2006

    Summary: S. 2078 would amend provisions of the Indian 
Gaming Regulatory Act (IGRA) to clarify and expand the 
authority of the National Indian Gaming Commission (NIGC) to 
regulate and oversee Indian gaming. In addition, S. 2078 would 
restrict off-reservation gambling. CBO estimates that 
implementing S. 2078 would not have a significant impact on the 
budget. Enacting the bill could affect revenues, but CBO 
estimates that any such effects would not be significant. 
Enacting the bill would not affect direct spending.
    S. 2078 contains intergovernmental mandates as denied in 
the Unfunded Mandates Reform Act (UMRA) because it would limit 
the ability of tribes to operate gaming on land put in trust 
after 1988 and increase federal regulation of tribal gaming 
operations. While the impact of these changes on tribes with 
such operations is very uncertain, CBO estimates that the 
aggregate costs probably would not exceed the annual threshold 
established in UMRA ($64 million in 2006, adjusted annually for 
inflation) in the next five years. Enacting this bill would 
impose no other significant costs on state, local, or tribal 
governments.
    S. 2078 would impose a private-sector mandate, as defined 
in UMRA, on certain contractors in the Indian gaming industry 
by making them subject to federal regulation of Class II and 
Class III gaming-related contracts. Based on information from 
industry and government sources, CBO estimates that the 
aggregate direct costs associated with complying with the 
mandate would fall below the annual threshold established by 
UMRA for private-sector mandates ($128 million in 2006, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The NIGC is 
authorized to collect and spend annual assessments on the 
revenues of tribal gaming operators. The NIGC is currently 
authorized to collect and spend up to 0.080 percent (80 cents 
per $1,000) of all tribal gaming revenues subject to NIGC 
regulation. Based on information from NIGC, CBO estimates that 
the agency's current collection and spending authority would be 
sufficient to accommodate the additional costs under the bill.
    Enacting S. 2087 could affect federal revenues because the 
legislation would amend civil penalties related to Indian 
gaming. Collections of the civil penalties are recorded in the 
budget as revenues. CBO estimates, however, that any change in 
revenues that would result from enacting the bill would not be 
significant.
    Estimated impact on state, local, and tribal governments: 
S. 2078 contains intergovernmental mandates as defined in UMRA 
because it would limit the ability of tribes to operate gaming 
on land put in trust after 1988 and increase federal regulation 
of tribal gaming operations. While the impact of these changes 
on tribes with gaming operations is very uncertain, CBO 
estimates that the aggregate costs probably would not exceed 
the annual threshold established in UMRA ($64 million in 2006, 
adjusted annually for inflation) in any of the next five years. 
Enacting this bill would impose no other significant costs on 
state, local, or tribal governments.

Off-Reservation gaming

    The bill would amend section 20 of the Indian Gaming 
Regulatory Act to further restrict the ability of tribes to 
establish gaming operations on lands taken into trust after the 
IGRA was enacted. That section generally prohibits gaming on 
lands placed into trust after October 17, 1988. It includes a 
number of exceptions to that rule, but this bill would further 
narrow those exceptions. First, the bill would eliminate the 
exception for a tribe that receives a special determination 
from the Department of the Interior and approval of the state's 
governor (referred to as two-part determinations) for all but 
those tribes that had an application pending before April 15, 
2006. Second, it would add new conditions to the exceptions for 
newly created or restored tribes.
    These changes would have limited impact on the ability of 
tribes to open gaming operations. Eliminating two-part 
determinations probably would affect few, if any, tribes in the 
next few years because, according to government officials, most 
tribes that had any plans to seek such a determination filed 
applications before the April 15 deadline. Further, the 
Department of the Interior has approved only three applications 
for two-part determinations since IGRA was enacted. The new 
conditions affecting newly created or restored tribes generally 
reflect those already imposed administratively by the 
Department of the Interior.

Additional oversight of tribal gaming

    Several provisions in S. 2078 would increase the National 
Indian Gaming Commission's role in regulating tribal gaming 
operations and so would impose further mandates on tribes. The 
bill would broaden existing requirements for NIGC review of 
tribal contracts and would require additional background checks 
of tribal gaming commissioners and contractors. It also would 
clarify the Commission's authority to oversee tribal gaming 
establishments that fall within Class III (generally, slot 
machines and other casino games) and to establish minimum 
standards for internal controls exerted by tribes over such 
operations. The impact of these new mandates is very uncertain 
and would depend to a great extent on the NIGC's implementing 
regulations.
    Some of the new requirements in this bill focus on 
oversight of gaming-related contracts and contractors. The law 
already requires that NIGC review contracts for managing tribal 
gaming operations, but S. 2078 would broaden the existing 
requirement to cover other types of gaming-related contracts 
and would make these additional contractors subject to NIGC 
background investigations. While these new requirements fall on 
both the tribes and businesses as parties to the covered 
contracts, the direct cost of these changes would fall 
initially on the businesses that contract with tribes. The 
direct costs incurred by tribes could include legal costs and 
delays in implementing new contracts. The tribes could also 
bear a substantial part of the costs initially incurred by 
contractors, however, if those costs are passed through under 
the terms of these contracts.
    Other requirements would fall entirely on the tribes with 
gaming operations. For example, the bill would require tribes 
to conduct background investigations of tribal gaming 
commissioners and key commission employees. CBO estimates that, 
even if tribes conduct relatively extensive background checks, 
the total cost of this mandate would not exceed $5 million per 
year, and the costs could be much less. The bill also includes 
explicit authority for NIGC to establish minimum standards for 
tribes' internal controls. Such standards have already been 
established by the NIGC under current law, but its authority to 
do so is currently under litigation. This provision would 
settle those legal challenges. While CBO cannot predict the 
outcome of the current litigation, we would not expect the cost 
of this provision to be significant in any case because most 
tribes have substantially adopted the standards. Finally, the 
bill would require all tribes with gang operations to pay fees 
to the NIGC, and remove an existing exception for certain 
tribes. This would not change the total amount of fees paid by 
tribes but would slightly reallocate the burden of those fees.
    Impact on the private sector: S. 2078 would impose a 
private-sector mandate, as defined in UMRA, on certain 
contractors in the Indian gaming industry by making them 
subject to federal regulation of Class II and Class III gaming-
related contracts. Based on information from industry and 
government sources, CBO estimates that the aggregate direct 
costs associated with complying with the mandate would fall 
below the annual threshold established by UMRA for private-
sector mandates ($128 million in 2006, adjusted annually for 
inflation).
    S. 2078 would clarify and broaden the National Indian 
Gaming Commission's authority to regulate all Class II and 
Class III gaming-related contracts. Currently, the Commission 
regulates all management contracts for Class II and Class III 
Indian gaming. The bill would expand the Commission's authority 
to regulate additional types of Class II and Class III 
contracts, including, but not be limited to: consulting 
contracts; development contracts; financing contracts; and 
participation contracts. By regulating the terms of such 
contract, the bill would impose a mandate on certain private 
contractors.
    The bill would require new gaming-related contracts and any 
changes in existing contracts to be approved by NIGC. Such 
gaming-related contracts would have to meet certain minimum 
standards outlined in the bill to be eligible for approval by 
the Commission. In approving such contracts, NIGC would have to 
determine if contractors or subcontractors are suitable to 
engage in business with Indian tribes. In addition, in the case 
of a change in a contract, the bill would require contractors 
to provide a notice to the NIGC if there is any change in the 
information they reported during a suitability determination. 
The bill would exclude from the suitability determinations any 
contractor that is either regulated, by the Securities and 
Exchange Commission (SEC) or wholly or partially owned by an 
entity regulated by the SEC.
    The cost of the mandate would be the incremental 
expenditures incurred in meeting the new requirements on 
gaming-related contracts. The bill would require that gaming-
related contractors pay the costs of any investigation 
activities carried out during the suitability determination. 
According to government sources, such activities would include, 
but may not be limited to, FBI background checks and 
fingerprinting procedures. Currently, NIGC only requires 
management officials and other key employees of gaming 
enterprises of Class II and Class III Indian gaming to be 
subject to background checks and fingerprinting. CBO estimates 
that the incremental costs associated with the additional 
background checks and fingerprinting for those entities would 
be minimal.
    Estimate prepared by: Federal Costs: Matthew Pickford. 
Impact on State, Local, and Tribal Governments: Marjorie 
Miller. Impact on the Private Sector: Craig Cammarata and Tyler 
Kruzich.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

               Regulatory and Paperwork Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill evaluate 
the regulatory and paperwork impact that would be incurred in 
carrying out the bill.
    S. 2078 would require additional parties seeking to do 
business with Indian gaming operations to submit their gaming-
related contracts to the NIGC for approval, and requires the 
parties to these contracts to undergo background 
investigations. The bill would also require tribal gaming 
commissioners and key commission employees to undergo 
background checks. These reviews could impose paperwork 
requirements on these parties to gaming-related contracts.
    S. 2078 provides that gaming-related contractors are to pay 
the cost of their background investigations. As for the cost to 
NIGC of reviewing additional contracts, the Committee 
anticipates that the NIGC will recover this through fees 
assessed on all Class II and III tribal gaming operations. 
Because of the fast turn-around times for reviews specified in 
the substitute amendment adopted by the Committee, the 
Committee does not expect the new regulatory requirements to 
result in significant indirect costs, such as loss of contract 
opportunities or increased costs of capital.
    The Committee believes that the regulation of additional 
parties seeking to do business in Indian gaming, and the 
attendant paperwork burden, is necessary, consistent with IGRA, 
to protect the integrity of Indian gaming operations and ensure 
that tribes are the principal beneficiaries of them.

                        Executive Communications

    The Committee has received the following communications 
from the Executive Branch regarding S. 2078.

                         National Indian Gaming Commission,
                                    Washington, DC, March 28, 2006.
Re Regulation of Indian Gaming.

Hon. John McCain, Chairman,
Hon. Byron Dorgan, Vice-Chairman,
Committee on Indian Affairs, U.S. Senate, Hart Office Building, 
        Washington, DC.
    Dear Senators: As the Senate Indian Affairs Committee 
prepares to mark up S. 2078 the NIGC observes that much of the 
information in the public and some in the testimony before the 
Committee does not portray a complete picture of Indian gaming. 
This letter is an attempt to give facts and examples, some of 
which has been previously provided to the Committee, that will 
help create a more comprehensive view of the opportunities and 
challenges facing Indian gaming.
    IGRA, in effect, anticipated the wide range of regulatory 
structures in the various Tribal-state compacts through the 
establishment of the NIGC as an independent federal regulatory 
authority for gaming on Indian lands. With respect to NIGC's 
regulatory oversight responsibilities, IGRA authorized the 
Commission to penalize violations of the Act, violations of the 
Commission's own regulations, and violations of the Commission-
approved tribal gaming ordinances by the way of imposition of 
civil fines and orders for closure of tribal gaming facilities.
    IGRA mandates that Tribes may conduct Class III gaming only 
in states where such activity is permissible under state law, 
and where the tribes enter into compacts with states relating 
to this activity, which compacts require approval of the 
Secretary of the Interior. Compacts might include specific 
regulatory structures and give regulatory responsibility to the 
tribe, to the state, or to both in some combination of 
responsibilities. Since the passage of IGRA, 232 tribes have 
executed 249 Class III compacts with 22 states, and the 
allocation of regulatory responsibility, if addressed at all, 
is as diverse as the states and Tribes that have negotiated 
them.
    Typically, the regulatory role a particular state 
undertakes in its compact was taken from and modeled on that 
state's experience with the regulation of its own legalized 
gaming at the time the compact was negotiated. Where such 
states develop effective regulatory programs, the need for NIGC 
oversight is greatly reduced. For example, in states where the 
tribal-state compacts call for regular state oversight, 
institute technical standards and testing protocols for gaming 
machines and establish internal control requirements, the 
NIGC's oversight role will be limited; such as in the case of 
Arizona. Some states, however, have assumed a minimal 
regulatory role, such as Michigan and North Dakota. In some 
cases compacts have become little more than a revenue sharing 
agreement between the state and the Tribe. Further, some 
compacts establish ineffective remedies for major violations. 
Consequently, under circumstances where the states do not have 
a significant regulatory presence, the NIGC must undertake a 
range of oversight activities.
    The oversight responsibilities of the NIGC give it a unique 
view from which to report the variety of challenges confronting 
Indian gaming in terms of regulatory violations and enforcement 
actions taken. It must be said that the primary responsibility 
for meeting these challenges ought to be on the shoulders of 
the Tribes. The NIGC encourages strong Tribal regulation and 
applauds the resources that Indian gaming currently applies to 
regulation and other oversight activities. As Indian gaming 
continues to grow and the sophistication of operations expands 
and as the levels of the revenues increase accordingly, 
regulation must stay ahead of this growth if the integrity of 
the industry is to be protected. It is in this context that the 
following examples of the numbers and types of violations the 
NIGC has uncovered are offered.

                   Minimum Internal Control Standards

    The NIGC has compiled the following review of Minimum 
Internal Control Standards (``MICS'') Compliance Audits--
January 2001 to February 2006. The number of tribal gaming 
operations is taken from those reporting financial information 
to NIGC.

Gaming Operations.................................................   367
Number of NIGC Audits.............................................    37
Total MICS Violations............................................. 2,355
Average MICS Violations...........................................    64

     In the past year the NIGC has completed 11 MICS 
audits with 559 violations.
     Findings common to most compliance audits:
          Lack of statistical game analysis;
          Ineffective key control procedures;
          Failure to secure gaming machine jackpot/fill system;
          Failure to effectively investigate cash variances/
        missing supporting documentation for the cage 
        accountability/failure to reconcile cage accountability 
        to general ledger on a monthly basis;
          Inadequate segregation of duties and authorization of 
        players tracking system account adjustments;
          Ineffective internal audit department audit programs, 
        testing procedures, report writing and/or follow-up;
          Deficient surveillance coverage and recordings;
          Noncompliance with Internal Revenue Service 
        Regulation 31 CFR Part 103;
          Failure to exercise technical oversight or control 
        over the computerized gaming machine systems, including 
        the maintenance requirements for personnel access;
          Failure to properly document receipt and withdrawal 
        transactions involving pari-mutuel patrons' funds and a 
        lack of a comprehensive audit procedure of all pari-
        mutuel transactions;
          Failure to adequately secure and account for 
        sensitive inventory items, including playing cards, 
        dice, bingo paper and keno/bingo balls; and
          Failure to adopt appropriate overall information 
        technology controls specific to hardware and software 
        access to ensure gambling games and related functions 
        are adequately protected.
    Although the NIGC identified the above violations, it is 
impossible to accurately determine the financial losses the 
tribes incurred because of not maintaining the minimum internal 
controls required by the NIGC standards. These violations show 
that certain tribes are not adequately protecting their gaming 
assets.

      Suitability of Key Employee and Primary Management Officials

    Since the inception of the NIGC we have encountered 178 
instances where Tribes licensed key employees or primary 
management officials over NIGC objections.

                         Regulatory Violations

    In the year the NIGC has identified the following 
violations:

Fee Submissions...................................................    92
Audit Submissions.................................................    30
MICs Report Submissions...........................................    24
Background Violations.............................................    20
Managing Without an Approved Contract--Investigations Pending.....    10
Misuse of Gaming Revenues--Investigations Pending.................     6
Health and Safety Violations......................................    16
Referrals of Possible Illegal Activity............................    25
                                                                  ______
      Total.......................................................   207

                     Breakdown in Tribal Regulation

    The NIGC oversight regularly uncovers serious breakdowns in 
regulation at Class II and Class III tribal gaming operations 
throughout the country. This is true even where there is 
apparent adequate tribal regulation and control is in place.
     Examples of instances where tribal gaming 
operational and regulatory efforts have been found deficient 
include the following:
          During the course of investigations and MICS 
        compliance audits, NIGC investigators and auditors 
        discovered that an extraordinary amount of money was 
        flowing through two off track betting (OTB) operations 
        on two reservations. The amount of money was so high in 
        comparison to the amount that could reasonably flow 
        through such OTB operations that our investigators 
        immediately suspected money laundering or similar 
        activities. These two operations were the first 
        referrals to the FBI's working group in which we 
        participate. The FBI investigations found they were 
        part of a wide spread network of such operations with 
        organized crime links and several federal criminal law 
        violations. Unfortunately, the tribes' gaming 
        management allowed them to gain access and operate as 
        part of their Class III tribal gaming operations, and 
        the tribes' gaming regulators completely failed to take 
        any action against these illegal OTB operations.
          There are also examples where tribes continued to 
        operate, without modification or correction, a gaming 
        facility that had long been identified as a serious 
        fire hazard; permitted gaming activities to be 
        conducted by companies owned by individuals with known 
        criminal associations; distributed large amounts of 
        gaming revenues without requisite approved revenue 
        allocation plans or the financial controls necessary to 
        account for them; knowingly operated gaming machines 
        that were plainly illegal; and appointed gaming 
        commissioners and regulatory employees and licensed and 
        employed gaming employees whose criminal histories 
        indicated that they were unsuitable and serious risks 
        to the tribes' gaming enterprise. An accurate 
        assessment of Indian gaming regulation must also 
        reflect the unfortunate examples of tribes that are so 
        politically divided that they are unable to adequately 
        regulate their gaming activities, as well as instances 
        where tribal officials have personally benefited from 
        gaming revenues at the expense of the tribe itself. In 
        addition, there have been many instances where apparent 
        conflicts of interest have undermined the integrity and 
        effectiveness of tribal gaming regulation. In all of 
        these troubling situations it was necessary for the 
        NIGC to step in to address the problems.
    The above examples illustrate that Indian gaming has many 
regulatory challenges that without comprehensive well informed 
oversight and enforcement the integrity of the industry would 
be in jeopardy.
    The NIGC has compiled a list of potential risks to Indian 
gaming if strong oversight is not maintained:
          Risk of not catching misuse of gaming revenues by 
        tribal officials;
          Risk of not catching employee embezz1ement;
          Risk of not catching manipulations and/or theft from 
        gaming machines;
          Less direct ways to investigate allegations of 
        criminal activity or the presence of organized crime 
        influence;
          Unable to determine whether third parties are 
        managing the gaming facility without an approved 
        contract;
          Unable to determine whether imminent jeopardy exists 
        with regard to the safety of employees and patrons of 
        the gaming establishment;
          Unable to determine whether individuals other than 
        the recognized tribal government are asserting 
        authority over the gaming operation;
          Unable to determine whether outside investors have 
        unduly influenced tribal decision-making or made 
        improper payments to tribal officials;
          Unable to perform operational audits, which track the 
        movement of money throughout the casino;
          Risk that tribal surveillance and gaming commission 
        funding could decrease rapidly, as these are expensive 
        and are not seen as increasing the casino bottom line.

                   Potential Impact of CRIT Decision

    Tribes argue that the CRIT decision should be read broadly. 
This interpretation may impact on the ability of the NIGC to 
enforce its regulations as follows:

------------------------------------------------------------------------
                 Activity                              Impact
------------------------------------------------------------------------
Bingo.....................................  Unchanged.
Pull-Tabs.................................  Unchanged.
Card Games................................  Unchanged.
Keno......................................  No enforcement.
Pari-Mutuel Wagering......................  No enforcement.
Table Games...............................  No enforcement.
Gaming Machines...........................  No enforcement.
Cage......................................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Inventory
                                             Items.
Credit....................................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Inventory
                                             Items.
Information Technology....................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Related
                                             Software and Hardware.
Complimentary Services and Items..........  Scope limited--Bingo/Pull-
                                             Tab/Card Transactions.
Drop and Count............................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Cash, Cash
                                             Equivalents and Documents.
Surveillance..............................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Areas.
Internal Audit............................  Scope limited--Bingo/Pull-
                                             Tab/Card Game Transactions.
------------------------------------------------------------------------

    The above examples illustrate that the regulation of Indian 
gaming is.. a complicated matter. At the Tribal level it can 
often be impacted by internal politics that may lead to uneven 
enforcement or at times little effect regulation regardless of 
overall intention. It is nevertheless clear that Tribes have a 
very strong interest in assuring that their operations are 
adequately regulated.

                 Lack of Independent Tribal Regulations

    Some gaming commissions are not sufficiently independent of 
the tribal governments or the managers that operate the gaming 
operation. In this connection the history of Nevada's 
regulatory structure may be instructive. Effective gaming 
regulatory authority in Nevada was a process that evolved over 
a forty year period and is continuing to improve and respond to 
change today. Only after creation of a separate gaming 
regulatory authority did oversight of the industry have an 
effective champion. Beginning in the late 70's, significant 
progress was made into the identification and removal of 
individuals and entities intent upon exploitation and 
corruption. Although many factors contributed to corruptive 
influences in Nevada, one aspect was key. At the time gaming 
was legalized in Nevada, the state and local governments were 
in a rather deprived financial position therefore the 
governmental agencies charged with regulatory oversight were 
also dependent, albeit desperate, for the potential revenues 
this growing industry could provide. The Nevada experience 
demonstrates a critical policy question when gaming regulations 
are considered: that as the government charged with regulation 
becomes increasingly dependent upon the profitability of the 
industry being regulated; the effectiveness of the regulatory 
effort may diminish.
    Generally, in tribal gaming, the tribal council is the 
ultimate governmental authority responsible for ensuring the 
gaming operation generates the greatest return on investment 
and that, in doing so, is effectively regulated. Such an 
organizational structure has challenges because the motivations 
lack congruity. Inevitably, from time to time, one objective 
may be foregone in pursuit of the other and, many times it is 
the oversight function. Although some tribes have recognized 
the organizational weakness and have installed procedures to 
counteract its effect, others have not and, as a result, the 
effectiveness of their regulatory processes is significantly 
diminished.
    In conclusion, for the many reasons stated above and the 
continued dramatic growth in Indian gaming (see Attachment #1), 
it seems to be abundantly clear that Indian gaming needs broad 
and effective oversight in order to continue growing and 
benefiting Indian communities.
    We appreciate your consideration of the above information 
and hope you find it helpful as the Committee marks up S. 2078 
preparing it for further consideration. We wish to thank you 
for your considerable hard work and leadership on all of these 
issues. We will remain available to you and your staffs 
regarding Indian gaming.
            Sincerely,
                                           Philip N. Hogen,
                                                          Chairman.

                             Attachment #1

Overview of Indian gaming

    Indian gaming has been the most effective economic 
development tool ever brought to Indian country. It is 
recognized that since the passage of the Indian Gaming 
Regulatory Act in 1988 the diversity and dramatic growth of 
Indian gaming is unprecedence. Indian gaming has grown from 
revenues $5.4 billion in 1995 to today over $20 billion in 
gross gaming revenues today.
    Revenue generation, of course, is not the only objective or 
benefit for tribes. In many instances, even small, rural tribal 
gaming operations have brought employment opportunities to 
tribal members where none existed before. For many, these 
employment opportunities were the first long-term jobs they 
ever held or had the prospect to hold.
    This gaming is conducted on Indian lands throughout the 
country by approximately 225 tribes. The diversity among these 
operations is dramatic. With this diversity in mind, it is 
instructive to examine how gaming revenue is distributed among 
the 367 tribal gaming operations reporting financial 
information to NIGC. The following chart gives the complete 
picture.

----------------------------------------------------------------------------------------------------------------
                                                                           Gross      Percent of   Median gross
                                               Number of    Percent of     gaming    total gross      gaming
         Gross gaming revenue ranges           operations     total       revenues      gaming       revenues
                                                            operations   (billion)     revenues      (million)
----------------------------------------------------------------------------------------------------------------
Over $100 million...........................           55         15.0       $13.47         69.5          $178.7
$25 million to $100.........................           93         25.3        $4.38         22.6           $43.5
$5 million to $25 million...................          103         28.1        $1.37          7.1           $1.32
Under $5 million............................          116         31.6         0.17          0.9            $.98
                                             -------------------------------------------------------------------
      Total.................................          367        100.0       $19.41        100.0  ..............
----------------------------------------------------------------------------------------------------------------

    As this demonstrates, a relatively small number of Tribes 
have very large gaming revenues, while a large number of Tribes 
have relatively small gaming revenues.
    At the time of IGRA's passage, the primary Indian gaming 
activity was bingo generally and high stakes bingo in 
particular, it would not be surprising if those in Congress 
that supported IGRA envisioned such Class II gaming to remain 
the dominant activity that would be conducted under IGRA. As we 
all know this has not been the case--over 80% of Indian gaming 
is now Class III.

                        Changes in Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 2078, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                           Public Law 100-497

               AN ACT To regulate gaming on Indian lands

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

           *       *       *       *       *       *       *

                              [DEFINITIONS

    [Sec. 4. For purposes of this Act--]

SEC. 4. DEFINITIONS.

    In this Act:

           *       *       *       *       *       *       *

          [(6)] (3) The term ``class I gaming'' means social 
        games solely for prizes of minimal value or traditional 
        forms of Indian gaming engaged in by individuals as a 
        part of, or in connection with, tribal ceremonies or 
        celebrations.
          [(7)] (4) (A) The term ``class II gaming'' means--

           *       *       *       *       *       *       *

                  (E) Notwithstanding any other provision of 
                this paragraph, the term ``class II gaming'' 
                includes, during the 1-year period beginning on 
                the date of enactment of this subparagraph 
                [enacted Dec. 17, 1991], any gaming described 
                in subparagraph (B)(ii) that was legally 
                operated on Indian lands in the State of 
                Wisconsin on or before May 1, 1988, if the 
                Indian tribe having jurisdiction over the lands 
                on which such gaming was operated requested the 
                State, by no later than November 16, 1988, to 
                negotiate a Tribal-State compact under section 
                11(d)(3)[ of the Indian Gaming Regulatory Act 
                (25 U.S.C. 2710(d)(3))].

           *       *       *       *       *       *       *

          [(8)] (5) The term ``class III gaming'' means all 
        forms of gaming that are not class I gaming or class II 
        gaming.
          [(3)] (6) The term ``Commission'' means the National 
        Indian Gaming Commission established pursuant to 
        section 5 of this Act.
          (7) Consulting contract.--The term `consulting 
        contract' means any contract or subcontract between an 
        Indian tribe and a gaming-related contractor, or 
        between a gaming-related contractor and a 
        subcontractor, that provides for advising or consulting 
        with a person that exercises management over all or a 
        significant part of a gaming operation, subject to such 
        categorical exclusions as the Commission may establish, 
        by regulation.
          (8) Development contract.--The term `development 
        contract' means any contract or subcontract between an 
        Indian tribe and a gaming-related contractor, or 
        between a gaming-related contractor and a 
        subcontractor, that provides for the development or 
        construction of a facility to be used for an Indian 
        gaming activity, subject to such categorical exclusions 
        as the Commission may establish, by regulation.
          (9) Financing contract.--
                  (A) In general.--The term `financing 
                contract' means any contract or subcontract 
                between an Indian tribe and a gaming-related 
                contractor, or between a gaming-related 
                contractor and a subcontractor--
                          (i) that is not a management 
                        contract, a consulting contract, a 
                        development contract, or a 
                        participation contract;
                          (ii) pursuant to which a gaming-
                        related contractor or subcontractor 
                        provides services or property of any 
                        kind, or financing of any nature, to be 
                        used for an Indian gaming activity; and
                          (iii) for compensation (including 
                        interest and fees), denominated in any 
                        manner--
                                  (I) of more than $250,000 
                                during the term of the contract 
                                or subcontract (as periodically 
                                adjusted for inflation in 
                                accordance with rules adopted 
                                by the Commission); and
                                  (II) that is provided by--
                                          (aa) loan;
                                          (bb) lease; or
                                          (cc) deferred 
                                        payments.
                  (B) Exclusions.--The term `financing 
                contract' does not include--
                          (i) a contract or agreement between 
                        an Indian tribe and--
                                  (I) a federally-chartered or 
                                State-chartered bank;
                                  (II) another Indian tribe;
                                  (III) another Indian tribe, 
                                or a State, pursuant to a 
                                Tribal-State compact; or
                                  (IV) an entity that is--
                                          (aa) regulated by the 
                                        Securities and Exchange 
                                        Commission; or
                                          (bb) wholly owned, 
                                        directly or indirectly, 
                                        by an entity that is 
                                        regulated by the 
                                        Securities and Exchange 
                                        Commission;
                          (ii) a contract or agreement that is 
                        subject to the Securities Exchange Act 
                        of 1934 (15 U.S.C. 78a et seq.); or
                          (iii) any other agreement or contract 
                        that the Commission, by regulation, 
                        determines should be categorically 
                        excluded from consideration as a 
                        financing contract.
          (10) Gaming-related contract.--The term `gaming-
        related contract' means any management contract, 
        consulting contract, development contract, financing 
        contract, participation contract, or other agreement 
        determined by the Commission pursuant to a rulemaking 
        under section 7 to be subject to the requirements of 
        section 12, and any collateral agreement related to any 
        of the foregoing.
          (11) Gaming-related contractor.--The term `gaming-
        related contractor' means an entity of person, 
        including an individual who is an officer, or who 
        serves on the board of directors, of an entity, or a 
        stockholder that directly or indirectly holds at least 
        5 percent of the issued and outstanding stock of an 
        entity, that enters into a gaming-related contract 
        with--
                  (A) an Indian tribe; or
                  (B) an agent of an Indian tribe.
          [(4)] (12) The term ``Indian lands'' means--

           *       *       *       *       *       *       *

          [(5)] (13) The term ``Indian tribe'' means any Indian 
        tribe, band, nation, or other organized group or 
        community of Indians which--

           *       *       *       *       *       *       *

          (14) Management contract.--
                  (A) In general.--The term `management 
                contract' means any contract or subcontract 
                between an Indian tribe and a gaming-related 
                contractor, or between a gaming-related 
                contractor and a subcontractor, that provides 
                for the management of all or a part of a gaming 
                operation, subject to such categorical 
                exclusions as the Commission may establish, by 
                regulation.
                  (B) Exclusions.--The term `management 
                contract' does not include a personal 
                employment contract under which compensation is 
                not based on a percentage of the revenues or 
                profit increases of an Indian gaming activity 
                or a prospective Indian gaming activity.
          [(9)] (15) The term ``net revenues'' means gross 
        revenues of an Indian gaming activity less amounts paid 
        out as, or paid for, prizes and total operating 
        expenses, excluding management fees.
          (16) Participation contract.--The term `participation 
        contract' means any contract or subcontract between an 
        Indian tribe and a gaming-related contractor, or 
        between a gaming-related contractor and a 
        subcontractor, under which compensation to the gaming-
        related contractor or subcontractor is based, in whole 
        or in part, on a percentage of the revenues or profit 
        increases of an Indian gaming activity or a prospective 
        Indian gaming activity, subject to such categorical 
        exclusions as the Commission may establish,by 
regulation.
          [(10)] (17) The term ``Secretary'' means the 
        Secretary of the Interior.

           *       *       *       *       *       *       *

                   NATIONAL INDIAN GAMING COMMISSION

    Sec. 5. * * *
    [(c) Vacancies occurring on the Commission shall be filled 
in the same manner as the original appointment. A member may 
serve after the expiration of his term of office until his 
successor has been appointed, unless the member has been 
removed for cause under subsection (b)(6).]
    (c) Vacancies.--
          (1) In general.--Except as provided in paragraph (2), 
        a vacancy on the Commission shall be filled in the same 
        manner as the original appointment.
          (2) Vice chairman.--The Vice Chairman shall act as 
        Chairman in the absence or disability of the Chairman.
          (3) Expiration of term.--Unless a member of the 
        Commission is removed for cause under subsection 
        (b)(6), the member may--
                  (A) serve after the expiration of the term of 
                office of the member until a successor is 
                appointed; or
                  (B) be reappointed to serve on the 
                Commission.

           *       *       *       *       *       *       *

    (e) The Commission shall select, by majority vote, one of 
the members of the Commission to serve as Vice Chairman. The 
Vice Chairman shall serve as Chairman during meetings of the 
Commission in the absence or disability of the Chairman.

           *       *       *       *       *       *       *

                         POWERS OF THE CHAIRMAN

    Sec. 6. (a) The Chairman, on behalf of the Commission, 
shall have power, subject to an appeal to the Commission, to--

           *       *       *       *       *       *       *

          (3) approve tribal ordinances or resolutions 
        regulating class II gaming and class III gaming as 
        provided in section 11; [and
          (4) approve management contracts for class II gaming 
        and class III gaming as provided in sections 11(d)(9) 
        and 12]
          (4) approve gaming-related contracts for class II 
        gaming and class III gaming under section 12; and
          (5) conduct a background investigation and make a 
        determination with respect to the suitability of a 
        gaming-related contractor, as the Chairman determines 
        to be appropriate.

           *       *       *       *       *       *       *

    (c) Delegation of Authority.--
          (1) In general.--The Chairman may delegate any 
        authority under this section to any member of the 
        Commission, as the Chairman determines to be 
        appropriate.
          (2) Requirement.--In carrying out an activity 
        pursuant to a delegation under paragraph (1), a member 
        of the Commission shall be subject to, and act in 
        accordance with--
                  (A) the general policies formally adopted by 
                the Commission; and
                  (B) the regulatory decisions, findings, and 
                determinations of the Commission pursuant to 
                Federal law.

                        POWERS OF THE COMMISSION

    Sec. 7. * * *
    (b) The Commission--
          (1) shall monitor class II gaming and class III 
        gaming conducted on Indian lands on a continuing basis;
          (2) shall inspect and examine all premises located on 
        Indian lands on which class II gaming or class III 
        gaming is conducted;
          (3) shall conduct or cause to be conducted such 
        background investigations as may be necessary;
          (4) may demand access to and inspect, examine, 
        photocopy, and audit all papers, books, and records 
        respecting gross revenues of class II gaming and class 
        III gaming conducted on Indian lands and any other 
        matters necessary to carry out the duties of the 
        Commission under this Act;
          (5) may use the United States mail in the same manner 
        and under the same conditions as any department or 
        agency of the United States;
          (6) may procure supplies, services, and property by 
        contract in accordance with applicable Federal laws and 
        regulations;
          (7) may enter into contracts with Federal, State, 
        tribal and private entities for activities necessary to 
        the discharge of the duties of the Commission and, to 
        the extent feasible, contract the enforcement of the 
        Commission's regulations with the Indian tribes;
          (8) may hold such hearings, sit and act at such times 
        and places, take such testimony, and receive such 
        evidence as the Commission deems appropriate;
          (9) may administer oaths or affirmations to witnesses 
        appearing before the Commission; and
          [(10) shall promulgate such regulations and 
        guidelines as it deems appropriate to implement the 
        provisions of this Act.]
          (10) shall promulgate such regulations and guidelines 
        as the Commission determines to be appropriate to 
        implement this Act, including--
                  (A) regulations addressing minimum internal 
                control standards for class II gaming and class 
                III gaming activities; and
                  (B) regulations determining categories of 
                contracts for goods and services directly 
                relating to tribal gaming activities that shall 
                be--
                          (i) considered to be gaming-related 
                        contracts; and
                          (ii) subject to the requirements of 
                        section 12.

           *       *       *       *       *       *       *

                          COMMISSION STAFFING

    Sec. 8.(a) The Chairman shall appoint a General Counsel to 
the Commission who shall be paid at the annual rate of [basic 
pay payable for GS-18 of the General Schedule under section 
5332 of title 5, United States Code] pay payable for level IV 
of the Executive Schedule under chapter 11 of title 2, United 
States Code, as adjusted by section 5318 of title 5, United 
States Code.
    (b) The Chairman shall appoint and supervise other staff of 
the Commission without regard to the provisions of title 5, 
United States Code, governing appointments in the competitive 
service. Such staff shall be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of 
such title relating to classification and General Schedule pay 
rates, except that no individual so appointed may receive pay 
in excess of the annual rate of [basic pay payable for GS-17 of 
the General Schedule under section 5332 of that title] pay 
payable for level IV of the Executive Schedule under chapter 11 
of title 2, United States Code, as adjusted by section 5318 of 
title 5, United States Code.
    (c) The Chairman may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, 
but at rates for individuals not to exceed the daily equivalent 
of the maximum annual rate of [basic pay payable for GS-18 of 
the General Schedule] pay payable for level IV of the Executive 
Schedule under chapter 11 of title 2, United States Code, as 
adjusted by section 5318 of title 5, United States Code.

           *       *       *       *       *       *       *

                        TRIBAL GAMING ORDINANCES

    Sec. 11. * * *
    (b)(1) An Indian tribe may engage in, or license and 
regulate, class II gaming on Indian lands within such tribe's 
jurisdiction, if--
          (A) such Indian gaming is located within a State that 
        permits such gaming for any purpose by any person, 
        organization or entity (and such gaming is not 
        otherwise specifically prohibited on Indian lands by 
        Federal law)[, and] ; and
          (B) the governing body of the Indian tribe adopts an 
        ordinance or resolution which is approved by the 
        Chairman.
A separate license issued by the Indian tribe shall be required 
for each place, facility, or location on Indianlands at which 
class II gaming is conducted.
    (2) The Chairman shall approve any tribal ordinance or 
resolution concerning the conduct, or regulation of class II 
gaming on the Indian lands within the tribe's jurisdiction if 
such ordinance or resolution provides that-- * * *
          (F) there is an adequate system which--
                  [(i) ensures that background investigations 
                are conducted on the primary management 
                officials and key employees of the gaming 
                enterprise and that oversight of such officials 
                and their management is conducted on an ongoing 
                basis; and]
                  (i) ensures that background investigations 
                and ongoing oversight activities are conducted 
                with respect to--
                          (I) tribal gaming commissioners and 
                        key tribal gaming commission employees, 
                        as determined by the Chairman;
                          (II) primary management officials and 
                        other key employees of the gaming 
                        enterprise, as determined by the 
                        Chairman; and
                          (III) persons that provide goods or 
                        services directly relating to the 
                        tribal gaming activity; and
                  (ii) includes--
                          (I) tribal licenses for [primary 
                        management officials and key employees 
                        of the gaming enterprise with] the 
                        individuals and entities described in 
                        subclauses (II) and (III) of clause 
                        (i), including prompt notification to 
                        the Commission of the issuance of such 
                        licenses; * * *
    (4) * * *
          (B)(i) The provisions of subparagraph (A) of this 
        paragraph and the provisions of subparagraphs (A) and 
        (B) of paragraph (2) shall not bar the continued 
        operation of an individually owned class II gaming 
        operation that was operating on September 1, 1986, if--
                          (I) such gaming operation is licensed 
                        and regulated by an Indian tribe 
                        pursuant to an ordinance reviewed and 
                        approved by the Commission in 
                        accordance with section 13 [of the 
                        Act,];
                          (II) income to the Indian tribe from 
                        such gaming is used only for the 
                        purposes described in paragraph (2)(B) 
                        [of this subsection,];
                          (III) not less than 60 percent of the 
                        net revenues is income to the Indian 
                        tribe[, and]; and
                          (IV) the owner of such gaming 
                        operation pays an appropriate 
                        assessment to the [National Indian 
                        Gaming] Commission under section 
                        18(a)(1) for regulation of such gaming. 
                        * * *
    (d)(1) Class III gaming activities shall be lawful on 
Indian lands only if such activities are--
          (A) authorized by an ordinance or resolution that--
                  (i) is adopted by the governing body of the 
                Indian tribe having jurisdiction over such 
                [lands,] lands;
                  (ii) meets the requirements of subsection (b) 
                [, and]; and
                  (iii) is approved by the Chairman[,];
          (B) located in a State that permits such gaming for 
        any purpose by any person, organization, or entity[, 
        and]; and
          (C) conducted in conformance with a Tribal-State 
        compact entered into by the Indian tribe and the State 
        under paragraph (3) that is in effect.
    (2)(A) If any Indian tribe proposes to engage in, or to 
authorize any person or entity to engage in, a class III gaming 
activity on Indian lands of the Indian tribe, the governing 
body of the Indian tribe shall adopt and submit to the Chairman 
an ordinance or resolution that meets the requirements of 
subsection (b).
    (B) The Chairman shall approve any ordinance or resolution 
described in subparagraph (A), unless the Chairman specifically 
determines that--
          (i) the ordinance or resolution was not adopted in 
        compliance with the governing documents of the Indian 
        tribe[, or]; or
          (ii) the tribal governing body was significantly and 
        unduly influenced in the adoption of such ordinance or 
        resolution by any person identified in section 
        12(e)(1)(D).
Upon the approval of such an ordinance or resolution, the 
Chairman shall publish in the Federal Register such ordinance 
or resolution and the order of approval.

           *       *       *       *       *       *       *

    (D) * * *
          (iii) Notwithstanding any other provision of this 
        subsection--
                  (I) any person or entity operating a class 
                III gaming activity pursuant to this paragraph 
                on the date on which an ordinance or resolution 
                described in clause (i) that revokes 
                authorization for such class III gaming 
                activity is published in the Federal Register 
                may, during the 1-year period beginning on the 
                date on which such revocation ordinance or 
                resolution is published under clause (ii), 
                continue to operate such activity in 
                conformance with the Tribal-State compact 
                entered into under paragraph (3) that is in 
                effect[, and]; and
                  (II) any civil action that arises before, and 
                any crime that is committed before, the close 
                of such 1-year period shall not be affected by 
                such revocation ordinance or resolution.

           *       *       *       *       *       *       *

    (7) * * *
          (B) * * *
                  (ii) In any action described in subparagraph 
                (A)(i), upon the introduction of evidence by an 
                Indian tribe that--
                          (I) a Tribal-State compact has not 
                        been entered into under paragraph (3)[, 
                        and]; and
                          (II) the State did not respond to the 
                        request of the Indian tribe to 
                        negotiate such a compact or did not 
                        respond to such request in good faith,
                the burden of proof shall be upon the State to 
                prove that the State has negotiated with the 
                Indian tribe in good faith to conclude a 
                Tribal-State compact governing the conduct of 
                gaming activities.
                  (iii) If, in any action described in 
                subparagraph (A)(i), the court finds that the 
                State has failed to negotiate in good faith 
                with the Indian tribe to conclude a Tribal-
                State compact governing the conduct of gaming 
                activities, the court shall order the State and 
                the Indian Tribe to conclude such a compact 
                within a 60-day period. In determining in such 
                an action whether a State has negotiated in 
                good faith, the court--
                          (I) may take into account the public 
                        interest, public safety, criminality, 
                        financial integrity, and adverse 
                        economic impacts on existing gaming 
                        activities[, and]; and
                          (II) shall consider any demand by the 
                        State for direct taxation of the Indian 
                        tribe or of any Indian lands as 
                        evidence that the State has not 
                        negotiated in good faith.

           *       *       *       *       *       *       *

                  (vii) If the State does not consent during 
                the 60-day period described in clause (vi) to a 
                proposed compact submitted by a mediator under 
                clause (v), the mediator shall notify the 
                Secretary and the Secretary shall prescribe, in 
                consultation with the Indian tribe, 
                procedures--
                          (I) which are consistent with the 
                        proposed compact selected by the 
                        mediator under clause (iv), the 
                        provisions of this Act, and the 
                        relevant provisions of the laws of the 
                        [State, and] State; and
                          (II) under which class III gaming may 
                        be conducted on the Indian lands over 
                        which the Indian tribe has 
                        jurisdiction.
    (8)(A) The Secretary is authorized to approve any Tribal-
State compact entered into between an Indian tribe and a State 
governing gaming on Indian lands of such Indian tribe.
    (B) The Secretary may disapprove a compact described in 
subparagraph (A) only if such compact violates--
          (i) any provision of this Act[,];
          (ii) any other provision of Federal law that does not 
        relate to jurisdiction over gaming on Indian lands[, 
        or]; or
          (iii) the trust obligations of the United States to 
        Indians.

           *       *       *       *       *       *       *

    [(9) An Indian tribe may enter into a management contract 
for the operation of a class III gaming activity if such 
contract has been submitted to, and approved by, the Chairman. 
The Chairman's review and approval of such contract shall be 
governed by the provisions of subsections (b), (c), (d), (f), 
(g), and (h) of section 12.]

           *       *       *       *       *       *       *

    (f) Provision of Information to Chairman.--Immediately 
after approving a plan (including any amendment, revision, or 
rescission of any part of a plan) under subsection (b)(3), the 
Secretary shall provide to the Chairman--
          (1) a notice of the approval; and
          (2) the plan, and any information used by the 
        Secretary in approving the plan.

                         [MANAGEMENT CONTRACTS

    Sec. 12(a)(1). Subject to the approval of the Chairman, an 
Indian tribe may enter into a management contract for the 
operation and management of a class II gaming activity that the 
Indian tribe may engage in under section 11(b)(1), but, before 
approving such contract, the Chairman shall require and obtain 
the following information:
          (A) the name, address, and other additional pertinent 
        background information on each person or entity 
        (including individuals comprising such entity) having a 
        direct financial interest in, or management 
        responsibility for, such contract, and, in the case of 
        a corporation, those individuals who serve on the board 
        of directors of such corporation and each of its 
        stockholders who hold (directly or indirectly) 10 
        percent or more of its issued and outstanding stock;
          (B) a description of any previous experience that 
        each person listed pursuant to subparagraph (A) has had 
        with other gaming contracts with Indian tribes or with 
        the gaming industry generally, including specifically 
        the name and address of any licensing or regulatory 
        agency with which such person has had a contract 
        relating to gaming; and
          (C) a complete financial statement of each person 
        listed pursuant to subparagraph (A).
    (2) Any person listed pursuant to paragraph (1)(A) shall be 
required to respond to such written or oral questions that the 
Chairman may propound in accordance with his responsibilities 
under this section.
    (3) For purposes of this Act, any reference to the 
management contract described in paragraph (1) shall be 
considered to include all collateral agreements to such 
contract that relate to the gaming activity.
    (b) The Chairman may approve any management contract 
entered into pursuant to this section only if he determines 
that it provides at least--
          (1) for adequate accounting procedures that are 
        maintained, and for verifiable financial reports that 
        are prepared, by or for the tribal governing body on a 
        monthly basis;
          (2) for access to the daily operations of the gaming 
        to appropriate tribal officials who shall also have a 
        right to verify the daily gross revenues and income 
        made from any such tribal gaming activity;
          (3) for a minimum guaranteed payment to the Indian 
        tribe that has preference over the retirement of 
        development and construction costs;
          (4) for an agreed ceiling for the repayment of 
        development and construction costs;
          (5) for a contract term not to exceed five years, 
        except that, upon the request of an Indian tribe, the 
        Chairman may authorize a contract term that exceeds 
        five years but does not exceed seven years if the 
        Chairman is satisfied that the capital investment 
        required, and the income projections, for the 
        particular gaming activity require the additional time; 
        and
          (6) for grounds and mechanisms for terminating such 
        contract, but actual contract termination shall not 
        require the approval of the Commission.
    (c)(1) The Chairman may approve a management contract 
providing for a fee based upon a percentage of the net revenues 
of a tribal gaming activity if the Chairman determines that 
such percentage fee is reasonable in light of surrounding 
circumstances. Except as otherwise provided in this subsection, 
such fee shall not exceed 30 percent of the net revenues.
    (2) Upon the request of an Indian tribe, the Chairman may 
approve a management contract providing for a fee based upon a 
percentage of the net revenues of a tribal gaming activity that 
exceeds 30 percent but not 40 percent of the net revenues if 
the Chairman is satisfied that the capital investment required, 
and income projections, for such tribal gaming activity require 
the additional fee requested by the Indian tribe.
    (d) By no later than the date that is 180 days after the 
date on which a management contract is submitted to the 
Chairman for approval, the Chairman shall approve or disapprove 
such contract on its merits. The Chairman may extend the 180-
day period by not more than 90 days if the Chairman notifies 
the Indian tribe in writing of the reason for the extension. 
The Indian tribe may bring an action in a United States 
district court to compel action by the Chairman if a contract 
has not been approved or disapproved within the period required 
by this subsection.
    (e) The Chairman shall not approve any contract if the 
Chairman determines that--
          (1) any person listed pursuant to subsection 
        (a)(1)(A) of this section--
                  (A) is an elected member of the governing 
                body of the Indian tribe which is the party to 
                the management contract;
                  (B) has been or subsequently is convicted of 
                any felony or gaming offense;
                  (C) has knowingly and willfully provided 
                materially important false statements or 
                information to the Commission or the Indian 
                tribe pursuant to this Act or has refused to 
                respond to questions propounded pursuant to 
                subsection (a)(2); or
                  (D) has been determined to be a person whose 
                prior activities, criminal record if any, or 
                reputation, habits, and associations pose a 
                threat to the public interest or to the 
                effective regulation and control of gaming, or 
                create or enhance the dangers of unsuitable, 
                unfair, or illegal practices, methods, and 
                activities in the conduct of gaming or the 
                carrying on of the business and financial 
                arrangements incidental thereto;
          (2) the management contractor has, or has attempted 
        to, unduly interfere or influence for its gain or 
        advantage any decision or process of tribal government 
        relating to the gaming activity;
          (3) the management contractor has deliberately or 
        substantially failed to comply with the terms of the 
        management contract or the tribal gaming ordinance or 
        resolution adopted and approved pursuant to this Act; 
        or
          (4) a trustee, exercising the skill and diligence 
        that a trustee is commonly held to, would not approve 
        the contract.
    (f) The Chairman, after notice and hearing, shall have the 
authority to require appropriate contract modifications or may 
void any contract if he subsequently determines that any of the 
provisions of this section have been violated.
    (g) No management contract for the operation and management 
of a gaming activity regulated by this Act shall transfer or, 
in any other manner, convey any interest in land or other real 
property, unless specific statutory authority exists and unless 
clearly specified in writing in said contract.
    (h) The authority of the Secretary under section 2103 of 
the Revised Statutes (25 U.S.C. 81), relating to management 
contracts regulated pursuant to this Act, is hereby transferred 
to the Commission.
    (i) The Commission shall require a potential contractor to 
pay a fee to cover the cost of the investigation necessary to 
reach a determination required in subsection (e) of this 
section.]

SEC. 12. GAMING-RELATED CONTRACTS.

    (a) Approval by Chairman.--
          (1) Gaming-related contracts.--To be enforceable and 
        valid, a gaming-related contract must be approved by 
        the Chairman under subsection (b).
          (2) Gaming-related contractors.--Each gaming-related 
        contractor shall be subject to a suitability 
        determination by the Chairman under subsection (c).
          (3) Failure to approve.--For any gaming-related 
        contract that is not approved by the Chairman under 
        subsection (b)--
                  (A) the gaming-related contract shall be void 
                ab initio; and
                  (B) any party to the gaming-related contract 
                shallbe subject to such civil penalties as the 
Chairman determines to be appropriate under section 14.
    (b) Contract Review.--
          (1) Minimum contract requirements.--A gaming-related 
        contract under this Act shall provide, at a minimum, 
        provisions relating to--
                  (A) accounting and reporting procedures, 
                including, as appropriate, provisions relating 
                to verifiable financial reports;
                  (B) the access required to ensure proper 
                performance of the gaming-related contract, 
                including access to--
                          (i) the daily operations of the 
                        gaming activity;
                          (ii) real property relating to the 
                        gaming activity;
                          (iii) equipment associated with the 
                        gaming activity; and
                          (iv) any other tangible or intangible 
                        property used to carry out the gaming 
                        activity;
                  (C) assurances of performance by each party 
                to the gaming-related contract, as the Chairman 
                determines to be necessary;
                  (D) the reasons for, and method of, 
                termination of the gaming-related contract; and
                  (E) such other provisions as the Chairman 
                determines to be necessary to ensure that the 
                Indian tribe will receive the primary benefit 
                as the sole proprietor of the gaming activity.
          (2) Term.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term of a gaming-related 
                contract shall not exceed 5 years.
                  (B) Exceptions.--
                          (i) Extraordinary circumstances.--
                        Notwithstanding subparagraph (A), a 
                        gaming-related contract may have a term 
                        of not more than 7 years if the 
                        Chairman determines the term is 
                        appropriate, taking into consideration 
                        any extraordinary circumstances 
                        relating to the gaming-related 
                        contract.
                          (ii) Financing contracts.--The terms 
                        described in subparagraph (A) and 
                        clause (i) shall not apply to a 
                        financing contract.
          (3) Fees.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the fee provided pursuant to 
                a gaming-related contract shall not exceed an 
                amount equal to 30 percent of the net revenues 
                of the gaming operation that is the subject of 
                the gaming-related contract.
                  (B) Exceptions.--
                          (i) Extraordinary circumstances.--The 
                        fee provided pursuant to a gaming-
                        related contract may be in an amount 
                        equal to not more than 40 percent of 
                        net revenues of the gaming operation 
                        that is the subject of the gaming-
                        related contract if the Chairman 
                        determines that such a fee is 
                        appropriate, taking into consideration 
                        any extraordinary circumstances 
                        relating to the gaming-related 
                        contract.
                          (ii) Financing contracts.--The 
                        limitations described in subparagraph 
                        (A) and clause (i) shall not apply to a 
                        financing contract.
          (4) Requirements for disapproval.--The Chairman shall 
        disapprove a gaming-related contract under this 
        subsection if the Chairman determines that--
                  (A) the gaming-related contract fails to meet 
                any requirement under paragraph (1), (2), or 
                (3);
                  (B) a gaming-related contractor that is a 
                party to the gaming-related contract is 
                unsuitable under subsection (c);
                  (C) a gaming-related contractor or 
                beneficiary of the gaming-related contract--
                          (i) unduly interfered with or 
                        influenced a decision or process of 
                        tribal government relating to the 
                        gaming activity; or
                          (ii) deliberately or substantially 
                        failed to comply with a tribal gaming 
                        ordinance or resolution;
                  (D) the Indian tribe will not receive the 
                primary benefit as the sole proprietor of the 
                gaming activity;
                  (E) a trustee would not approve the gaming-
                related contract because the compensation or 
                fees do not bear a reasonable relationship to 
                the cost of the goods or benefit of the 
                services provided; or
                  (F) a person or an Indian tribe would violate 
                a provision of this Act--
                          (i) on approval of the gaming-related 
                        contract; or
                          (ii) in carrying out the gaming-
                        related contract.
          (5) Timelines.--
                  (A) Submission of gaming-related contracts.--
                To be approved under this subsection, a gaming-
                related contract shall be submitted to the 
                Chairman by the appropriate Indian tribe by not 
                later than 30 days after the date on which the 
                gaming-related contract is executed.
                  (B) Determination of chairman.--
                          (i) In general.--Subject to clause 
                        (ii), the Chairman shall approve or 
                        disapprove a management contract, a 
                        development contract, a participation 
                        contract, or other gaming-related 
                        contract designated by the Chairman 
                        under section 7 by not later than 90 
                        days after the date on which such a 
                        contract is submitted under 
                        subparagraph (A).
                          (ii) Financing contracts and 
                        consulting contracts.--The Chairman 
                        shall approve or disapprove a financing 
                        contract or a consulting contract by 
                        not later than 30 days after the date 
                        on which such a contract is submitted 
                        under subparagraph (A).
                          (iii) Extensions.--The Chairman may 
                        extend a deadline under clause (i) or 
                        (ii) on approval of the Indian tribe 
                        that is party to the applicable 
                        contract.
          (6) Additional factors for consideration.--In 
        determining whether to approve a gaming-related 
        contract under this subsection, the Chairman may take 
        into consideration any information relating to the 
        terms, parties, and beneficiaries of--
                  (A) the gaming-related contract; and
                  (B) any other agreement relating to the 
                Indian gaming activity, as the Chairman 
                determines to be appropriate.
          (7) Modifications.--Notwithstanding an approval of a 
        gaming-related contract under this subsection, or a 
        determination of suitability of a gaming-related 
        contractor under subsection (c), if the Chairman 
        determines, based on information that was not disclosed 
        at the time of the approval or determination, that a 
        gaming-related contract violates this Act, or that a 
        determination of suitability should not have been made, 
        the Chairman, after providing notice and an opportunity 
        for a hearing, may--
                  (A) require any modification of the gaming-
                related contract that the Chairman determines 
                to be necessary to comply with this Act;
                  (B) suspend performance under the gaming-
                related contract;
                  (C) revoke a determination of suitability 
                under subsection (c); or
                  (D) void the gaming-related contract.
    (c) Suitability Determinations.--
          (1) In general.--Subject to paragraph (4), a gaming-
        related contract shall not be approved under subsection 
        (b) unless, on receipt of an application for a 
        determination of suitability, the Chairman determines 
        under this subsection that each applicable gaming-
        related contractor is suitable.
          (2) Standard.--The Chairman, by regulation, shall 
        establish a suitability standard under which a gaming-
        related contractor shall not be considered to be 
        suitable under this subsection if, as determined by the 
        Chairman--
                  (A) the gaming-related contractor--
                          (i) is an elected member of the 
                        governing body of an Indian tribe that 
                        is a party to an applicable gaming-
                        related contract;
                          (ii) at any time, was convicted of 
                        any felony or gaming offense; or
                          (iii) (I) has knowingly and willfully 
                        provided materially important false 
                        statements or information to the 
                        Commission or the Indian tribe under 
                        this Act; or
                          (II) has refused to provide 
                        information requested by the Commission 
                        under this Act;
                  (B) the prior activities, criminal record (if 
                any), reputation, habits, or associations of 
                the gaming-related contractor--
                          (i) pose a threat to--
                                  (I) the public interest; or
                                  (II) the effective regulation 
                                of gaming; or
                          (ii) create or enhance the risk of 
                        unsuitable, unfair, or illegal 
                        practices, methods, or activities with 
                        respect to--
                                  (I) a gaming activity; or
                                  (II) the operation of a 
                                gaming facility.
          (3) Agreements with indian tribes.--In carrying out 
        this subsection, the Chairman may enter into a contract 
        with any Indian tribe--
                  (A) to conduct a background investigation of 
                a gaming-related contractor;
                  (B) to assist in determining the suitability 
                of a gaming-related contractor; or
                  (C) to facilitate tribal licensing of a 
                person that provides goods or services directly 
                relating to the tribal gaming activity or a 
                gaming-related contractor in accordance with 
                the standards established under paragraph (2).
          (4) Alternative determinations and exclusions.--The 
        Commission, by regulation, may establish, as the 
        Commission determines to be appropriate--
                  (A) alternative methods of determining 
                suitability; and
                  (B) categorical exclusions for persons or 
                entities that are subject to licensing or 
                suitability determinations by--
                          (i) a Federal, State, or tribal 
                        agency; or
                          (ii) a professional association.
          (5) Registry.--The Chairman shall establish and 
        maintain a registry of--
                  (A) each suitability determination made under 
                this subsection; and
                  (B) each suitability determination of an 
                Indian tribe provided under section 11.
          (6) Responsibility of gaming-related contractor.--A 
        gaming-related contractor shall--
                  (A) pay the costs of any investigation 
                activity of the Chairman in carrying out this 
                subsection; and
                  (B) provide to the Chairman a notice of any 
                change in information provided during an 
                investigation on discovery of the change.
    (d) Conveyance of Real Property.--No gaming-related 
contract under this Act shall transfer or otherwise convey any 
interest in land or other real property unless the transfer or 
conveyance--
          (1) is authorized under law; and
          (2) is specifically described in the gaming-related 
        contract.
    (e) Contract Authority.--The authority of the Secretary 
under section 2103 of the Revised Statutes (25 U.S.C. 81) 
relating to contracts under this Act is transferred to the 
Commission.
    (f) No Effect on Tribal Authority.--This section does not 
expand, limit, or otherwise affect the authority of any Indian 
tribe or any party to a Tribe-State compact to investigate, 
license, or impose a fee on a gaming-related contractor.
    (g) Appeals.--The Chairman, by regulation, shall provide an 
opportunity for an appeal, conducted through a hearing before 
the Commission, of any determination of the Chairman under this 
section by not later than 30 days after the date on which the 
determination is made.
    (h) Emergency Waivers.--The Chairman may promulgate 
regulations providing for a waiver of any requirement under 
this section because of--
          (1) an emergency; or
          (2) an imminent threat to the public health or 
        safety.

           *       *       *       *       *       *       *

                            [Civil Penalties

    Sec. 14.(a)(1) Subject to such regulations as may be 
prescribed by the Commission, the Chairman shall have authority 
to levy and collect appropriate civil fines, not to exceed 
$25,000 per violation, against the tribal operator of an Indian 
game or a management contractor engaged in gaming for any 
violation of any provision of this Act, any regulation 
prescribed by the Commission pursuant to this Act, or tribal 
regulations, ordinances, or resolutions approved under section 
11 or 13.
    (2) The Commission shall, by regulation, provide an 
opportunity for an appeal and hearing before the Commission on 
fines levied and collected by the Chairman.
    (3) Whenever the Commission has reason to believe that the 
tribal operator of an Indian game or a management contractor is 
engaged in activities regulated by this Act, by regulations 
prescribed under this Act, or by tribal regulations, 
ordinances, or resolutions, approved under section 11 or 13, 
that may result in the imposition of a fine under subsection 
(a)(1), the permanent closure of such game, or the modification 
or termination of any management contract, the Commission shall 
provide such tribal operator or management contractor with a 
written complaint stating the acts or omissions which form the 
basis for such belief and the action or choice of action being 
considered by the Commission. The allegation shall be set forth 
in common and concise language and must specify the statutory 
or regulatory provisions alleged to have been violated, but may 
not consist merely of allegations stated in statutory or 
regulatory language.]

SEC. 14. CIVIL PENALTIES.

    (a) Penalties.--
          (1) Violation of act.--
                  (A) In general.--Except as provided in 
                subparagraph (B), an Indian tribe, individual, 
                or entity that violates any provision of this 
                Act (including any regulation of the Commission 
                and any Indian tribal regulation, ordinance, or 
                resolution approved under section 11 or 13) may 
                be subject to, as the Chairman determines to be 
                appropriate--
                          (i) an appropriate civil fine, in an 
                        amount not to exceed $25,000 per 
                        violation per day; or
                          (ii) an order of the Chairman for an 
                        accounting and disgorgement, including 
                        interest.
                  (B) Application to indian tribes.--
                Subparagraph (A)(ii) shall not apply to any 
                Indian tribe.
          (2) Appeals.--The Chairman shall provide, by 
        regulation, an opportunity to appeal a determination 
        relating to a violation under paragraph (1).
          (3) Written complaints.--
                  (A) In general.--If the Commission has reason 
                to believe that an Indian tribe or a party to a 
                gaming-related contract may be subject to a 
                penalty under paragraph (1), the final closure 
                of an Indian gaming activity, or a modification 
                or termination order relating to the gaming-
                related contract, the Chairman shall provide to 
                the Indian tribe or party a written complaint, 
                including--
                          (i) a description of any act or 
                        omission that is the basis of the 
                        belief of the Commission; and
                          (ii) a description of any action 
                        being considered by the Commission 
                        relating to the act or omission.
                  (B) Requirements.--A written complaint under 
                subparagraph (A)--
                          (i) shall be written in common and 
                        concise language;
                          (ii) shall identify any statutory or 
                        regulatory provision relating to an 
                        alleged violation by the Indian tribe 
                        or party; and
                          (iii) shall not be written only in 
                        statutory or regulatory language.
    [(b)(1) The Chairman] (b) Temporary Closures._
          (1) In general.--The Chairman shall have power to 
        order temporary closure of an [Indian game] Indian 
        gaming activity, or any part of such a gaming activity, 
        for substantial violation of the provisions of this 
        Act, of regulations prescribed by the Commission 
        pursuant to this Act, or of tribal regulations, 
        ordinances, or resolutions approved under section 11 or 
        13 [of this Act].
          [(2) Not later than thirty] (2) Hearings._
                  (A) In general.--Not later than 30 days after 
                the issuance by the Chairman of an order of 
                temporary closure, the Indian tribe or 
                [management contractor] party to a gaming-
                related contract involved shall have a right to 
                a hearing before the Commission to determine 
                whether such order should be made [permanent] 
                final or dissolved. [Not later than sixty]
                  (B) Determination of commission.--Not later 
                than 60 days following such hearing, the 
                Commission shall, by a vote of not less than 
                two of its members, decide whether to order a 
                [permanent] final closure of the gaming 
                operation.
    [(c) A decision] (c) Appeal of final determinations.--A 
determination of the Commission to give final approval of afine 
levied by the Chairman or to order a permanent closure pursuant to this 
section shall be appealable to the appropriate Federal district court 
pursuant to chapter 7 of title 5, United States Code.
    [(d) Nothing] (d) Effect on Regulatory Authority of Indian 
Tribes.--Nothing in this Act precludes an Indian tribe from 
exercising regulatory authority provided under tribal law over 
a gaming establishment within the Indian tribe's jurisdiction 
if such regulation is not inconsistent with this Act or with 
any rules or regulations adopted by the Commission.

           *       *       *       *       *       *       *

         [GAMING ON LANDS ACQUIRED AFTER ENACTMENT OF THIS ACT

    Sec. 20. * * *
    (b)(1) Subsection (a) will not apply when--
          [(A) the Secretary, after consultation] (A)(i) before 
        April 15, 2006 an Indian tribe has submitted to the 
        Secretary a written request to have land deemed 
        eligible for gaming under this subparagraph; and
                  (ii) the Secretary, after consultation with 
                the Indian tribe and appropriate State and 
                local officials, including officials of other 
                nearby Indian tribes, determines that a gaming 
                establishment on newly acquired lands would be 
                in the best interest of the Indian tribe and 
                its members, and would not be detrimental to 
                the surrounding community, but only if the 
                Governor of the State in which the gaming 
                activity is to be conducted concurs in the 
                Secretary's determination; or
          (B) lands are taken into trust as part of--
                  (i) a settlement of a land claim[,] under 
                Federal statutory law, if the land is within a 
                State in which is located--
                          (I) the reservation of such Indian 
                        tribe; or
                          (II) the last recognized reservation 
                        of such Indian tribe;
                  [(ii) the initial reservation of an Indian 
                tribe acknowledged by the Secretary under the 
                Federal acknowledgment process, or]
                  (ii) the initial reservation of an Indian 
                tribe acknowledged by the Secretary pursuant to 
                the Federal acknowledgment process, if--
                          (I) the Indian tribe has an 
                        historical and geographical nexus to 
                        the land, as determined by the 
                        Secretary; and
                          (II) after consultation with the 
                        Indian tribe and appropriate local and 
                        tribal officials, and after providing 
                        for public notice and an opportunity to 
                        comment and a public hearing, the 
                        Secretary determines that a gaming 
                        establishment on the land--
                                  (aa) would be in the best 
                                interests of the Indian tribe 
                                and members of the tribe; and
                                  (bb) would not create 
                                significant, unmitigated 
                                impacts on the surrounding 
                                community; or
                  [(iii) the restoration of lands for an Indian 
                tribe that is restored to Federal recognition.]
                  (iii) the restoration of land for an Indian 
                tribe that is restored to Federal recognition, 
                if--
                          (I) the Indian tribe has an 
                        historical and geographical nexus to 
                        the land, as determined by the 
                        Secretary;
                          (II) a temporal connection exists 
                        between the acquisition of the land and 
                        the date of recognition of the tribe, 
                        as determined by the Secretary; and
                          (III) after consultation with the 
                        Indian tribe and appropriate local and 
                        tribal officials, and after providing 
                        for public notice and an opportunity to 
                        comment and a public hearing, the 
                        Secretary determines that a gaming 
                        establishment on the land--
                                  (aa) would be in the best 
                                interests of the Indian tribe 
                                and members of the tribe; and
                                  (bb) would not create 
                                significant, unmitigated 
                                impacts on the surrounding 
                                community.

           *       *       *       *       *       *       *

    (4) Effect of subsection.--Nothing in this subsection 
affects the validity of any determination regarding the 
eligibility of land for gaming made by the Secretary or 
Chairman before the date of enactment of this paragraph.

           *       *       *       *       *       *       *

SEC. 25. CONSULTATION POLICY.

    In promulgating rules and regulations pursuant to this Act, 
the Commission shall establish and maintain a policy of 
consultation with Indian tribes in accordance with the Federal 
trust responsibility and the government-to-government 
relationship that exists between Indian tribes and the Federal 
Government.

           *       *       *       *       *       *       *

                           Public Law 105-83

 Making appropriations for the Department of the Interior and related 
 agencies for the fiscal year ending September 30, 1998, and for other 
                                purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

           *       *       *       *       *       *       *

    Sec. 123. Assessment of Fees. (a) Commission Funding.-- 
Section 18(a) of the Indian Gaming Regulatory Act (25 U.S.C. 
2717(a)) is amended--
          (1) in paragraph (1), by striking ``class II gaming 
        activity'' and inserting ``gaming operation that 
        conducts a class II or class III gaming activity''; and
          (2) in paragraph (2)--
                  (A) in subparagraph (A)(i), by striking ``no 
                less than 0.5 percent nor'' and inserting 
                ``no''; and
                  (B) in subparagraph (B), by striking 
                ``$1,500,000'' and inserting ``$8,000,000''[; 
                and].
                  [(C) nothing in subsection (a) of this 
                section shall apply to self-regulated tribes 
                such as the Mississippi Band of Choctaw.]

           *       *       *       *       *       *       *

                                  
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