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[Senate Report 106-498]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 948
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-498

======================================================================

 
   AMENDING THE INDIAN GAMING REGULATORY ACT, AND FOR OTHER PURPOSES

                                _______
                                

   October 11 (legislative day, September 22), 2000.--Ordered to be 
                                printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2920]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 2920) to amend the Indian Gaming Regulatory Act, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute, and recommends that the bill (as amended) do pass.

                                Purpose

    The purpose of S. 2920 is twofold: to assure that the 
primary purposes of the Indian Gaming Regulatory Act are 
fulfilled in the operation of tribal gaming and to ensure that 
the Indian tribal gaming industry is properly regulated by 
providing guidance to the National Indian Gaming Commission on 
issues related to regulation.

                               Background

    The existing Federal law regarding Indian tribal gaming was 
enacted into law more than ten years ago. The Indian Gaming 
Regulatory Act of 1988 (``IGRA''), P.L. 100-497, 25 U.S.C. 
Sec. 2501 et seq., established a comprehensive framework for 
the operation of Indian tribal gaming across the United States. 
This framework attempts to bring some order to the complex 
relationship between the Federal government, Indian tribes and 
the states in relation to gaming by establishing three 
different categories of gaming and a regulatory system which 
applies to each. IGRA also established a Federal regulatory 
commission, the National Indian Gaming Commission or ``NIGC'', 
to provide Federal oversight over tribal gaming.
    At the time the IGRA was passed by Congress, gaming was a 
small industry consisting mainly of what are now known as 
``class II'' high stakes bingo operations. At that time, 
virtually no one contemplated that gaming would become the 
multi-billion dollar industry that exists today, providing 
tribes with much-needed capital for development and employment 
opportunities where few previously existed.
    Even though gaming revenues have grown exponentially in the 
last ten years, the Indian Gaming Regulatory Act has been 
amended only one time. In 1997, Chairman Campbell introduced an 
amendment that authorized the NIGC to collect increased fees 
which would fund its regulatory efforts in Indian Country.\1\ 
Before the change in the fees structure, the NIGC was funded 
almost exclusively with Federal appropriations, and was barely 
able to keep up with the ever-growing number of tribal gaming 
operations.
---------------------------------------------------------------------------
    \1\ 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, having opened five field offices 
and employing additional necessary staff to oversee tribal 
gaming operations across the country.
    The increased funding which Congress endorsed in 1997 has 
allowed the NIGC to take steps to increase its regulation and 
enforcement efforts. Last year it promulgated minimum internal 
control standards to provide a minimum regulatory standard 
below which no Indian gaming operation may be conducted. Those 
standards became final in April, 1999. Additionally, the 
Commission has been able to hire much-needed field 
investigators who are responsible for monitoring tribal gaming 
operations. The Commission should be applauded for these 
activities.
    It should also be noted that many Indian tribes, working in 
tandem with the states where they are located, have developed 
sophisticated regulatory frameworks for their operations. 
Pursuant to joint tribal-state compacts, these tribes have put 
in place effective standards regarding rules of play for their 
games, as well as financial and accounting standards for their 
operations. The need for intense oversight in these instances 
is lessened because tribal regulatory bodies and those of their 
respective states have created effective oversight for tribal 
gaming operations.
    Not all tribal gaming ordinances and tribal-state compacts 
address the need for such sophisticated regulatory frameworks, 
and it is for these tribes and states that the NIGC can provide 
the most effective assistance.
    Since the fee structure was changed in late 1997, the 
Committee has held a number of legislative and oversight 
hearings on the issue of regulation and related matters. During 
the last two years, several themes have emerged.
    First, tribes have expressed increasing alarm with what 
they perceive as the explosive growth and activity of the 
Commission since the fee increase was enacted in late 1997. The 
National Indian Gaming Association (``NIGA'') noted in its 
testimony before the Committee on March 24, 1999, that,

          Indian Country and NIGA have yet to see a coherent 
        plan from the NIGC documenting an increased need, the 
        level of need, a plan for growth or any other basis for 
        an increase in funding authority to $8 million. Indian 
        Country recognizes that a need for increased funding 
        does exist. We just want to know, and we deserve to 
        know, that our money is being spent in the best 
        possible manner.\2\
---------------------------------------------------------------------------
    \2\ Statement of Richard G. Hill, President, National Indian Gaming 
Association, before the Senate Committee on Indian Affairs, March 24, 
1999, page 9.

    These concerns were not alleviated by the NIGC between 
March of 1999 and July of 2000. At an oversight hearing 
conducted by the Committee on July 26, 2000, NIGA testified 
---------------------------------------------------------------------------
that--

          I appear before you today, nearly two years later, 
        and I must tell you that we are not at all comfortable 
        with the actions taken by the NIGC in that time span. 
        NIGA remains supportive of a respected, independent, 
        objective and efficient NIGC, yet no communications 
        have been shared with us regarding how the NIGC plans 
        to meet those goals. Instead we face a number of new 
        regulatory initiatives that infringe upon Indian 
        nations' governmental authority and are duplicative of 
        existing regulatory structures.
          The failure to communicate has not resulted from 
        inaction from NIGA or its Member Indian nations. We 
        have made repeated requests for budget projections and 
        work plans, with no response. In January of this year 
        NIGA facilitated a meeting between the NIGC and over 70 
        Indian nation leaders, the sole purpose of which was to 
        promote communication between the NIGC and NIGA's 
        Member Indian nations. Specifically our Member Indian 
        nations sought some insight regarding the NIGC's recent 
        actions and its plans to implement the new resources at 
        its disposal. To date no satisfactory explanation has 
        been given.\3\
---------------------------------------------------------------------------
    \3\ Statement of Richard G. Hill, President, National Indian Gaming 
Association, before the Senate Committee on Indian Affairs, July 26, 
2000, page 2.

    It should be noted that the NIGC has been responsive to 
requests from Congress for information. The Committee, however, 
intends that justification for the activities of the NIGC 
should be more apparent to the tribes to which they are charged 
with providing services and regulation and the public, through 
the development of strategic and performance plans which are to 
be included in its biennial reports to Congress. The 
requirement to have NIGC submit this type of report has been 
supported by the General Accounting Office.\4\
---------------------------------------------------------------------------
    \4\ Letter dated July 20, 1999, from the General Accounting Office 
to the Representative Dick Armey, Representative Dan Burton, and 
Senator Fred Thompson, page 10.
---------------------------------------------------------------------------
    Tribes have also requested that their regulatory efforts be 
recognized in relation to the fees imposed on class III gaming 
tribes. This concept was generally endorsed by Congress when it 
passed the IGRA. Section 11(c) of IGRA, 25 U.S.C. Sec. 2710(c), 
addressed tribal self-regulation and directs the NIGC to 
promulgate regulations that would allow a tribe that meets 
criteria set by the NIGC to be certified as a self-regulating 
tribe and to provide its own regulation for class II gaming. In 
addition to carrying out most of its own regulatory duties, a 
tribe would receive a corresponding fee reduction.
    The NIGC reports that since September of 1998, when the 
regulations became final, only five tribes have applied for the 
certification, but that only one of those tribes fully 
completed an application. The NIGC also states that three 
tribes have withdrawn their applications and the fifth 
abandoned the application process before completing its 
application. Tribes claim that the NIGC has discouraged 
potential applicants and that applicants have been presented by 
the NIGC to withdraw their applications.
    In publishing the regulations dealing with the self-
regulated status of tribes, the NIGC stated,

          The Commission agrees, as a general matter, that 
        tribes with certificates should pay a lower fee than 
        tribes without certificates. The IGRA provides that the 
        Commission may not assess a fee on the class II gaming 
        activity of a tribe with a certificate in excess of 
        0.25 percent. 25 U.S.C. 2710(c)(5)(C). Therefore, the 
        Commission plans to establish fee rates for self-
        regulated tribes through the annual fee notice which 
        will recognize and reward self regulated status.\5\
---------------------------------------------------------------------------
    \5\ S25 CFR Part 518, General Comments.

    The Committee notes that the NIGC adopted regulations on 
implementation of the self-regulation policy on September 8, 
1998, but to-date no tribe has been certified as self-
regulating and consequently received a reduction in fees.
    While the inauguration of the self-regulatory program 
remains to be seen, the Committee believes it important to 
provide the NIGC with the discretion to reduce fees for tribes 
according to a regime which has been adopted through regulation 
and contains objective criteria, which may not necessarily be 
tied solely to the accomplishment of tribal regulation.
    Additionally, tribes remain concerned with the segregation 
of fees paid to the NIGC. There is some uneasiness among tribes 
about what they perceive as potential for NIGC accounts to be 
misused, either by the NIGC itself or the by the Federal 
government. It is felt that because the IGRA does not address 
the segregation of NIGC accounts nor is there a limit on the 
use of funds in the accounts, the accounts are vulnerable to 
appropriation by the Federal government or misuse. To address 
these concerns, the Committee has limited the use of funds by 
the NIGC to IGRA-related responsibilities and required the NIGC 
to establish and use segregated accounts for fees collected 
from tribes and civil forfeitures collected by the NIGC.
    Also of major concern, especially to tribes which do not 
offer class III (``casino-styled'') gaming, is the continued 
conflict between the Johnson Act, 15 U.S.C. 1171-1178, and the 
use of technological aids in the operation of class II gaming. 
The IGRA is unambiguous in its statement that technological 
aids may be used by a tribe to conduct class II gaming and 
report language accompanying IGRA provides clear Congressional 
intent to authorize Indian tribes to maximize class II 
operations through the use of technological advances. The 
report states in part that,

          [t]he Committee intends that tribes should be given 
        the opportunity to take advantage of modern methods of 
        conducting class II games and the language regarding 
        technology is designed to provide maximum 
        flexibility.\6\
---------------------------------------------------------------------------
    \6\ Senate Rep. 100-446 (Aug. 3, 1998), p. 9.

    Additionally, the Committee specifically stated its intent 
---------------------------------------------------------------------------
with regard to the application of the Johnson Act--

          The phrase `not otherwise prohibited by Federal Law' 
        refers to gaming that utilizes mechanical devices as 
        defined in 15 U.S.C. 1175. That section prohibits 
        gambling devices on Indian lands but does not apply to 
        devices used in connection with bingo and lotto. 
        [emphasis added]. It is the Committee's intent that 
        with the passage of this act, no other Federal statute, 
        such as those listed below, will preclude the use of 
        otherwise legal devices used solely in aid or 
        conjunction with bingo or lotto or other such gaming on 
        or off Indian lands.\7\
---------------------------------------------------------------------------
    \7\ Ibid, p. 12.

    The United States Department of Justice has taken a 
different view and has embarked on a series of actions against 
tribes who use technological aids in the conduct of class II 
gaming in at least two Federal circuit courts.\8\ These actions 
allege that tribes operating class II games which use 
technological aids are violating the Johnson Act. Both actions 
were unsuccessful at the trial level and in one case the tribe 
prevailed over the Department of Justice on appeal.\9\ The 
other appeal is still pending. In a third case, no final 
decision has been entered, but a review of the transcripts from 
the bench ruling on a preliminary injunction motion would 
suggest that the Judge's intention is to rule against the 
United States.\10\
---------------------------------------------------------------------------
    \8\ United States of America v. 103 Electronic Gambling Devices, 
2000 WL 1218766 (9th Cir. Aug. 29, 2000), and United States v. 162 
Megamania Gambling Devices, No. 97-C-1140-K, 1998 U.S. Dist. LEXIS 
17293 (N.D. Okla. Oct. 23, 1998).
    \9\ United States of America v. 103 Electronic Gambling Devices, 
2000 WL 1218766 (9th Cir., Aug. 29, 2000). In this case, the game at 
issue was a bingo game played at an electronic terminal that connected 
the player with other players at other terminals, all playing against 
one another for the first ``bingo''. The appellate court was 
unequivocal in its ruling that the terminal was not a Johnson Act 
device or a class III game as defined by IGRA, ``* * * the MegaMania is 
not a `facsimile of any game of chance,' 25 U.S.C. Sec. 2703(7)(A)(ii), 
or indeed, a facsimile of anything. Rather, the terminal is merely an 
electronic aid to human players of bingo, something like electronic 
mail with a graphic user interface. And, while the government has 
argued that MegaMania resembles a slot machine in certain limited 
respects, there has been no argument that the terminal is a `slot 
machine', id., which it plainly is not.''
    The trial court in United States of America v. 162 Megamania 
Gambling Devices, No. 97-C-1140-K, 1998 U.S. Dist. LEXIS 17293 (N.D. 
Okla. Oct. 23, 1998), was equally clear in its ruling, ``In sum, the 
Court finds it an absurd result that Congress would classify ``paper'' 
bingo as Class II gaming, but classify electronic bingo, at least as 
embodied by MegaMania, as Class II gaming.''
    \10\ Seneca-Cayuga Tribe of Oklahoma v. NIGC, No. 00-CV-609-BU 
(N.D. Okla. Aug. 30, 2000) (Transcript of Court's Ruling). In 
interpreting IGRA and the definition of class II gaming, the Court 
states, ``Congress did not intend to allow the Johnson Act to reach 
bingo aids. The statute provides that bingo using `electronic, 
computer, or other technological aids' is class II gaming, and 
therefore permitted in Indian Country. Reading the Johnson Act to 
forbid such aids would render the quoted language a nullity. Why would 
Congress carefully protect such technological aids through the text 
[the quoted language], yet leave them to the wolves of a Johnson Act 
forfeiture action? We cannot presume that enacting IGRA, Congress 
performed such `a useless act'.''
---------------------------------------------------------------------------
    The Committee, a number of whose members either actively 
sponsored or were involved in the consideration of the original 
IGRA bill, intends to clarify what it already believes to be 
the law--that the Johnson Act does not apply to technological 
aids used in connection with class II games.
    One other issue of particular importance to the Committee 
is the need to ensure that all Indian tribal gaming is 
conducted in a safe and fair manner. The Committee believes 
that tribes and states continue to make impressive efforts in 
this area, but that all operations should adhere to a uniform 
set of minimum industry standards. It is of paramount 
importance to tribal gaming that games are conducted fairly. 
Accordingly, the Committee believes it is important that 
minimum standards be adhered to by all gaming operations.
    The NIGC, in April of 1999, promulgated regulations which 
established regulatory standards to which all Indian tribal 
gaming operations must adhere. However, NIGA and individual 
tribes have questioned the NIGC's authority to promulgate and 
enforce these regulations. It is the Committee's intention to 
clarify its position on the authority of the NIGC to promulgate 
minimum internal control standards by specifically authorizing 
the NIGC to promulgate and enforce those regulations, within 
the jurisdictional framework established by IGRA.
    Tribes have expressed concern with the language contained 
in the bill regarding minimum internal control standards and 
the interplay and role of tribal regulation with those 
sections. In keeping with the original intent of IGRA, the 
Committee continues to stress that tribes are the sovereign 
entities primarily responsible for the regulation of their 
facilities and that the authorization for the promulgation of 
the minimum internal control standards is in no way intended to 
change primary jurisdiction over regulation of gaming on tribal 
lands.
    Finally, the NIGC informed the Committee late last year 
that it has been collecting forfeitures of considerable amounts 
through enforcement actions against parties who are in 
violation of IGRA, but that those funds were not used to fund 
NIGC operations (which could result in a reduction of fee for 
tribes), but were turned over to the Treasury Department's 
general fund to be used for Federal purposes.
    Since the NIGC is now entirely funded by the collection of 
fees paid by tribes, it follows that tribes should benefit from 
the collection of the civil forfeitures made against tribal 
gaming operators as well. However, it is problematic to fund 
the NIGC with monies it has collected through enforcement 
actions against tribes, as it appears to give the NIGC an 
incentive to bring enforcement actions to fund the Commission's 
operations. The Committee intends for these funds to be used in 
a way that benefits tribes, but that does not appear to create 
an incentive to penalize tribes. Accordingly, S. 2920 proposes 
the development of a tribal grant program which would be 
distributed pursuant to regulations and criteria promulgated by 
the Commission.

          the use of technological aids in ``class ii'' gaming

    In clarifying the use of technological aids in conjunction 
with ``class II'' games, the Committee is cognizant of the 
position of the Senate in 1988 regarding the use of 
technological aids. The report is very clear in its statement 
that tribes should have maximum flexibility to use 
technological aids and that the Committee did not intend the 
Johnson Act to apply to technological aids.\11\
---------------------------------------------------------------------------
    \11\ Senate Rep. 100-466 (Aug. 3, 1988).
---------------------------------------------------------------------------
    Recent case law has upheld the intent of Congress in regard 
to this particular issue, and it is the intent of the Committee 
to affirm its position with regard to class II games and 
express its agreement with the courts' interpretation of the 
IGRA in the cases cited above.

              expanded reporting requirements by the NIGC

    Section 2 of S. 2920 makes the NIGC responsible for the 
submission of additional information not currently required by 
IGRA. Specifically, the bill requires the NIGC to submit 
strategic and performance plans to Congress with its required 
biennial report. The bill initially proposed that the NIGC be 
subject to the requirements of the Government Performance and 
Results Act of 1993 (GPRA),\12\ but after consultation with the 
NIGC, it was determined that the detailed annual reporting 
required by GPRA may be too onerous for the NIGC. The Committee 
believes strongly, however, that the planning and operations of 
the NIGC should be more available to the Congress and the 
regulated community.
---------------------------------------------------------------------------
    \12\ Pub.L. 103-62.
---------------------------------------------------------------------------
    As a compromise, the language has been changed to require 
the Commission to prepare and submit additional material in its 
biennial reports to Congress and incorporate its strategic and 
performance plans into that report. The requirements of the 
report remain largely the same. The language of GPRA has been 
used as a model for the strategic plan, and the requirement for 
consultation with the Congress and the affected community is 
nearly identical to GPRA. Additionally, the NIGC is directed to 
develop its performance plans with a view toward the GPRA 
requirements for those plans.
    The NIGC suggested in a position paper circulated to 
Committee staff that administrative costs in developing the 
GPRA report could be a factor in determining larger fees, but 
the Committee does not find that assertion to be persuasive. 
Additionally, the NIGC states,

          The resources of a small agency that would be 
        directed to development of performance plans outweigh 
        the benefits to be achieved.\13\
---------------------------------------------------------------------------
    \13\ Letter dated September 14, 2000, from Montie Deer to Senator 
Ben Nighthorse Campbell, page 4.
---------------------------------------------------------------------------
    The Committee also disagrees with this assertion. Clearly, 
the regulated community has expressed a number of concerns with 
the NIGC in regard to performance and planning. Perhaps most 
persuasive is the opinion of the GAO that--

          While this may not be a major activity within 
        Interior, the sensitivities of Indian gaming issues and 
        the potential for criminal activities related to Indian 
        gaming, would seem to indicate that Indian gaming is an 
        important area in which to develop performance goals 
        and measures to explain what it [NIGC] plans to 
        accomplish with these funds.\14\
---------------------------------------------------------------------------
    \14\ Letter dated July 20, 1999, from General Accounting Office to 
the Representative Dick Armey, Representative Dan Burton, and Senator 
Fred Thompson, page 10.

    Finally, the NIGC has stated that it does operate ``within 
the principles of performance-based management''.\15\ It should 
not be difficult then, for the NIGC to reduce and commit those 
principles and its strategic objectives to writing.
---------------------------------------------------------------------------
    \15\ Letter dated September 5, 2000, from Montie Deer to Senator 
Ben Nighthorse Campbell, page 3.
---------------------------------------------------------------------------
    The Committee notes that Committee staff have not been able 
to verify that any IGRA-mandated report has been submitted by 
the NIGC to Congress since 1996, although the NIGC has stated 
that such a report is forthcoming.

                licensing of tribal gaming commissioners

    Section 2(3) provides that tribes must address, in addition 
to key employees and primary management officials, the 
background checks of tribal gaming commissioners and tribal 
gaming commission employees.
    Many comments have been received disputing the necessity of 
background checks for these individuals and the possible 
negative effects of this new requirement on tribal sovereignty.
    Indian tribal gaming has come under attack in the past few 
years, and it has become a prime target for accusations that it 
is unregulated. This section is designed to address a key 
concern regarding the operation of tribal gaming commissions--
that the regulators themselves meet the criteria imposed on the 
individuals they regulate.
    The specific language of the bill requires tribes to 
address the background checks of tribal gaming commissioners 
and their employees on a regular basis. This language does not 
require a tribe to have a tribal gaming commission, nor does it 
prohibit a tribe from determining the makeup of those 
commissions. It merely requires that, where tribal gaming 
commissions have been established, that those commission 
members and commission employees meet the standards applicable 
to the employees they are responsible for licensing and that 
the appearance of impropriety is avoided.
    The Committee believes that this section respects tribal 
sovereignty, because it does not mandate the use of tribal 
gaming commissions, nor does it mandate the makeup of those 
commissions, but provides a guideline for the tribal gaming 
commissions, much the same as the background check language 
currently provides. It is doubtful that tribes would argue that 
the required background checks for primary management and key 
officials have hindered tribal sovereignty by dictating who a 
tribe may hire, which is a tribe's sovereign right. The section 
simply provides guidance where a tribe has determined to 
operate class III gaming and to operate a tribal gaming 
commission.
    The NIGC has noted that it is unclear whether the NIGC or 
the Secretary of the Interior should set the standard for 
tribal officials and employees of the tribal government 
pursuant to this section.\16\ Neither the NICG nor the 
Secretary of the Interior have been delegated any authority to 
set these standards within this legislation. The specific 
amendment to IGRA made by section 2(3) requires that a tribe 
addresses the issue of background checks for tribal gaming 
commissioners and employees in its ordinance. The standard a 
tribe adopts for the tribal gaming commission is within the 
tribe's discretion.
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    \16\ Letter dated September 14, 2000, from Montie Deer to Senator 
Ben Nighthorse Campbell, page 3.
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                            fee assessments

    The fee-levying provision in S. 2920, section 22, 
authorizes the Commission to establish a schedule of fees to be 
collected from Indian tribes operating class II or class III 
gaming. This section incorporates two concepts: (1) how fees 
are assessed; and (2) the segregation of those fees in 
Commission accounts.
    According to the NIGC, the growth of the Indian tribal 
gaming industry is such that fees paid will be reduced over 
time, and will continue to be reduced if growth continues at 
the current rate. Currently, the NIGC is limited by the terms 
of IGRA in the amount of fees it can collect from tribes to $8 
million annually.
    S. 2920 requires that the fees assessed by the NIGC are 
related to the statutory authorities and duties delegated to 
the NIGC under the Act. This limitation is designed to address 
tribal concerns that funds paid to the NIGC be used only for 
purposes of IGRA, and not for other Federal purposes.
    This provision requires the budget developed by the NIGC 
and the corresponding fee assessment be related to the purposes 
of IGRA. Additionally, it is not the intent of this provision 
to limit the collection of fees to specific ``services'' 
provided by the NIGC to each individual tribe, but is meant to 
extend to all compliance, regulation, training, and other 
indirect costs (such as administrative costs and other costs 
associated with NIGC operations, including such items as 
utilities and rent) associated with the statutory duties and 
requirements of carrying out IGRA for all tribes. To limit the 
fees collected for use only in the provision of direct 
``services'', and excluding the availability of those funds for 
duties, such as enforcement, regulation and other related needs 
is contrary to the intent of the Committee.
    In establishing this fee structure, it is the Committee's 
intent that the Commission continue to consult with tribes 
consistent with the NIGC's current consultation policy, as well 
as Executive Order 13084, dated May 14, 1998.
    The Fee Reduction section provides the NIGC with the 
discretion to review the fee structure for any given year and 
determine whether or not to provide for fee reduction(s). This 
decision is completely within the discretion of the NIGC.
    The Fee Reduction section, section 22(b)(3), states that 
the NIGC, in determining the amount of fees to be assessed for 
either class I or class III gaming, may provide for a reduction 
in the amount of fees that would otherwise be collected based 
on a number of factors. The factors are quite broad, and are 
meant to provide the NIGC with the maximum discretion to make a 
determination (1) whether or not to provide fee reduction(s); 
and (2) whether the fee reduction(s), when and if appropriate, 
should be applied to all tribes, or specific tribes (based on 
objective criteria developed by the NIGC).
    This section is a compromise between the requirement that 
the NIGC establish a self-regulatory system for class III 
tribes and the current flat fee system. Additionally, the 
Committee is cognizant of the myriad situations which exist for 
each individual tribal gaming operation and is mindful that fee 
reductions may be necessary or desirable for any number of 
reasons other than self-regulation and this section is designed 
to provide discretion to the NIGC in those instances as well.
    The Committee is also aware of the overarching policy 
implications of any system which would award self-regulation. 
It is quite obvious that tribes who will be awarded for 
extensive efforts toward self-regulation will generally be 
tribes who have larger and more profitable operations and which 
pay the largest fees. These operations are more likely to be 
able to pay for the expensive infrastructure required for 
comprehensive self-regulation. According to NIGC reports, only 
twenty tribes pay fees in excess of $88,650.00 (the calculated 
fee on gross revenues of $100 million during one year). It is 
these tribes that provide the majority of fees for the NIGC's 
operation and who are most likely to benefit from a reduction 
in fees provided for by self-regulation.
    Finally, the NIGC has expressed concerns with what it terms 
fee rates which are determined on a ``tribe-by-tribe basis''--
and suggests that such determination will lead to an unworkable 
system.17 Again, if the NIGC decides to provide a 
fee reduction pursuant to the authorization provided in section 
22, the Committee expects that the NIGC would promulgate 
regulations to provide for a fair and uniform process for 
individual fee reductions. The Committee would also expect that
---------------------------------------------------------------------------
    \17\Letter dated September 14, 2000, from Montie Deer to Senator 
Ben Nighthorse Campbell, page 2.
---------------------------------------------------------------------------
the NIGC would establish uniform criteria which each tribe 
requesting such a fee reduction would be required to meet. The 
Committee is confident in the ability of the NIGC to establish 
an equitable and workable system for providing fee reductions, 
should it determine to provide such reductions.

                          Segregated Accounts

    Section 22 also requires segregated accounts to be 
maintained by the NIGC for the holding of fees collected from 
tribes. Similar language is contained in new section 24, 
regarding the use of NIGC civil fine assessments. Originally, 
section 22 provided that NIGC funds would be placed in trust 
accounts maintained by the Secretary of the Treasury, out of 
which funds would be released to the NIGC on a quarterly basis.
    The proposal was based on language incorporated from 
previous bills which addressed tribal concerns about the use of 
fees paid by tribes to the Federal government. In short, tribes 
were apprehensive about the placement of fees paid into the 
general fund of the Treasury being used for general Federal 
purposes not related to the operation of the NIGC. The trust 
fund language was developed to address this problem.
    However, the mechanisms for depositing and withdrawing 
funds from the trust fund are considered unwieldy and new 
language has been developed to require the NIGC to maintain 
accounts which are segregated from other federal accounts and 
which hold the fees collected from the tribes and the civil 
fines collected from enforcement actions brought by the NIGC.
    This language is not specific with regard to the number of 
accounts the NIGC must maintain, or whether the NIGC must 
maintain an account for each tribe from which it collects fees 
or civil fines. These decisions are within the discretion of 
the NIGC.
    Finally, section 22 also provides the NIGC with the limited 
ability to invest the fees it collects and which are not 
immediately needed for expenditure. The section also provides 
the NIGC with the ability to dispose of investments it makes.
    This section is intended to increase the earning power of 
the fees collected and spent by the NIGC on annual basis. The 
NIGC reports that it collects fees and spends them in the same 
year. The provision authorizing investment is meant to allow 
the NIGC to conservatively invest fees received for short 
periods of time, thus optimizing the earning potential of the 
funds.
    These sections combine to guarantee that funds collected by 
the NIGC will not be used for purposes other than those in 
IGRA, and maximize the potential of the funds held in accounts 
which are not immediately needed for use by the NIGC.

          Use of National Indian Gaming Commission Civil Fines

    Section 24 outlines a new procedure for the use of civil 
forfeitures collected by the NIGC. The NIGC approached the 
Committee regarding the use of civil forfeitures and noted that 
those funds are deposited into Federal accounts and used for 
whatever purposes the Federal government deems necessary. The 
NIGC noted that these funds may be better utilized by tribes, 
since the funds originate from Indian gaming. The Committee 
agrees.
    Section 24 establishes a grant program which would fund 
applicants for projects that would provide technical assistance 
to tribes to strengthen the regulatory integrity of gaming, 
assist tribes in determining the feasibility of non-gaming 
economic development activities, provide assistance to tribes 
for the development and implementation of programs to treat 
problem gamblers, and other forms of assistance not 
inconsistent with IGRA.
    To carry out this section, the NIGC is authorized to 
establish regulations as necessary.

                          Legislative History

    S. 2920 was introduced on July 25, 2000 by Chairman 
Campbell and referred to the Committee on Indian Affairs. On 
September 27, 2000, the Committee considered S. 2920 and 
ordered it to be favorably reported to the full Senate.

                      Section-By-Section Analysis

    Section 1. The short title of this Act is the ``Indian 
Gaming Regulatory Improvement Act of 2000''.
    Section 2. Amendments to the Indian Gaming Regulatory Act.
    Subsection (1) provides that the definition of class II 
gaming contained in IGRA is clarified to state that the Johnson 
Act, 15 U.S.C. 1171-1177, does not apply to technologic aids 
used in the operation of class II games.
    Subsection (2) provides that the National Indian Gaming 
Commission shall provide detailed strategic and performance 
plans in its biennial reports to Congress. The strategic plan 
shall include a comprehensive mission statement, general goals 
and objectives, a description of goals are to be achieved, a 
performance plan, identification of external factors affecting 
the Commission, a description of program evaluations to be used 
by the Commission. The strategic plan shall cover at least a 
five year period, and shall be revised at least every four 
years. In developing the performance plan, the Commission 
should make a plan consistent with the requirements of the 
Government Performance and Results Act of 1993 (``GPRA'') and 
must consult with Congress and other affected parties.
    Subsection (3) provides that tribal gaming ordinances shall 
provide for an adequate system that ensures that background 
investigations are conducted on tribal gaming commissioners, 
tribal gaming commission employees, primary management 
officials and key employees.
    Section (4) adds three new sections to the Indian Gaming 
Regulatory Act.
    Section 22. Establishment of Fees.
    Subsection (a) provides that the Commission establish a 
schedule of fees to be paid annually by each gaming operation 
that conducts class II or class III gaming activities. It also 
establishes that the fees may not be assessed at more than 2.5% 
of the first $1,500,000 of gross revenues, or 5% of gross 
revenues in excess of $1,500,000. The Commission may not 
collect more than $8,000,000 in total fees.
    Subsection (b) provides that by a vote of not less than two 
members, the Commission shall adopt a schedule of fees, to be 
payable to the Commission quarterly. The aggregate amount of 
fees assessed shall be reasonably related to the cost of 
responsibilities and services the Commission is required to 
carry out pursuant to IGRA. The Commission shall take these 
responsibilities and services into consideration when assessing 
and collecting fees under IGRA.
    The Commission may, when assessing fees, determine in its 
discretion whether to provide a fee reduction for one or all 
tribes. This fee reduction is not mandated, and when 
determining whether to provide such a reduction, the Commission 
should consider the following factors: 1) the extent of 
regulation of the gaming activity by the tribe or the state in 
which the tribe is located; 2) the extent of self-regulating 
activities, as defined by IGRA, conducted by the tribe; 3) 
other factors, including the unique nature of tribal gaming, 
the broad variations in tribal gaming activity, the inherent 
sovereign rights of tribes, the findings and purposes of IGRA, 
the amount of interest or income derived from the investment of 
the previous year's fees, and any other matter consistent with 
the policy of IGRA, as stated in section 3 of that Act. In 
determining its annual schedule of fees, the Commission shall 
consult with tribes.
    Subsection (c) provides that all fees and forfeitures 
collected by the Commission shall be maintained in segregated 
accounts and used only for purposes set out in IGRA. The 
Commission may invest funds collected, if the Commission deems 
that they are not needed to meet immediate expenses, but may 
only invest such funds in interest bearing obligations of the 
United States or in obligations which guarantee both principal 
and interest by the United States. Any obligation acquired by 
the Commission may be sold by the Commission, except special 
obligations, which may be redeemed at par plus accrued 
interest. All proceeds from the sale or redemption of any 
obligation held in the Indian gaming regulation accounts shall 
be credited and form a part of those accounts.
    Section 23. Minimum Standards.
    Subsection (a) provides that Class I gaming shall remain 
within the exclusive jurisdiction of the Indian tribes.
    Subsection (b) provides that Indian tribes shall retain 
primary jurisdiction over the regulation of class II gaming, as 
long as they meet minimum standards established under section 
11 of IGRA regarding the monitoring and regulation of class II 
gaming, the conducting of background checks and the 
establishment and regulation of internal control systems.
    Subsection (c) provides that where an Indian tribe and a 
state have entered into a compact for class III gaming, an 
Indian tribe shall retain primary jurisdiction over regulation 
of class III gaming as long as the tribe meets minimum 
standards established by the Commission, pursuant to section 
11, to monitor and regulate class III gaming, conduct 
background investigations and establish and regulate internal 
control systems.
    Subsection (d) provides the Commission may promulgate 
regulations as are needed to augment current regulations 
regarding minimum internal control systems which are necessary 
to carry out this section.
    Section 24. Use of Civil forfeitures.
    Subsection (a) provides that all funds collected by the 
Commission shall be deposited in an Indian Gaming Regulation 
Account.
    Subsection (b) authorizes the Commission to provide grants 
and technical assistance to Indian tribes from any funds 
secured by the Commission pursuant to section 14, which shall 
be used for the following purposes; 1) to provide training and 
technical assistance to tribes to strengthen the regulatory 
integrity of Indian gaming; 2) to provide assistance to tribes 
to assess the feasibility of non-gaming economic development 
activities on Indian lands; 3) to provide assistance to tribes 
to develop and implement programs and treatment for individuals 
who are problem gamblers; 4) other purposes not inconsistent 
with the Indian Gaming Regulatory Act.
    Subsection (c) provides that in carrying out this section, 
the Commission shall consult with tribes.
    Subsection (d) provides that the Commission may promulgate 
regulations as necessary to carry out this section.

            Committee Recommendation and Tabulation of Vote

    On September 13, 2000, the Committee on Indian Affairs, in 
an open business session, considered S. 2920. The bill, with 
amendment in the nature of a substitute, was ordered favorably 
reported with a recommendation that the bill do pass.

                   Cost and Budgetary Considerations

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 6, 2000.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2920, the Indian 
Gaming Regulatory Improvement Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts for this 
estimate are John R. Righter (for federal costs), who can be 
reached at 226-2860, and Marjorie Miller (for the impact on 
state, local, and tribal governments), who can be reached at 
225-3220.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 2920--Indian Gaming Regulatory Improvement Act of 2000

    S. 2920 would provide new direct spending authority to the 
National Indian Gaming Commission (NIGC), which would 
supplement its appropriations. The bill would authorize the 
commission to invest the unspent portions of the fees it 
collects each year from Indian gaming operations in interest-
bearing obligations of the United States or in obligations 
guaranteed by the United States. The commission could spend 
interest earned on such amounts without further appropriation 
action. S. 2920 also would require that the NIGC submit a 
strategic planning report to the Congress every two years, 
require background checks for tribal gaming commissioners and 
employees, change the NIGC's fee schedule from a flat-rate to a 
cost-based system, and allow the NIGC to spend the civil 
penalties it collects from Indian gaming operations on grants 
and technical assistance to tribes without further 
appropriation action.

Impact on the Federal budget

    CBO estimates that enacting this bill would increase direct 
spending, on average, by about $2 million each year. Because 
the bill would affect direct spending, pay-as-you-go procedures 
would apply. The estimated costs include annual spending of 
about $2 million from allowing the NIGC to spend the civil 
penalties it collects each year and less than $500,000 from 
allowing it to spend the interest earned on balances invested 
in Treasury obligations. (Our estimate of the amount of new 
spending from civil penalties is based on the average amount of 
such penalties collected by the NIGC in recent years.) CBO 
estimates that implementing the provisions to change NIGC's fee 
schedule from a flat-rate to a cost-based system and to prepare 
a biennial strategic and performance plan would increase its 
administrative costs by less than $500,000 each year.

Intergovernmental and private-sector impact

    S.2920 contains an intergovernmental mandate as defined in 
the Unfunded Mandates Reform Act (UMRA) because it would 
require tribes to conduct background investigations of tribal 
gaming commissioners and employees of tribal gaming 
commissions. Information from the Indian Gaming Association 
suggests that most tribes would pay a nominal fee (less than 
$50) to the NIGC to collect information for those 
investigations. (The NIGC, along with the FBI, currently 
collects such information for use by gaming operations when 
they conduct background investigations.) CBO estimates that the 
total number of commissioners and employees requiring 
investigations would be small (fewer than 2,000) and that less 
than one staff-year per tribe would be required to complete the 
investigations. Based on this information, we estimate that the 
cost of complying with this mandate would fall well below the 
annual threshold established in that act ($55 million in 2000, 
adjusted annually for inflation). The bill contains no private-
sector mandates as defined in UMRA.
    Enactment of S. 2920 would have other impacts on Indian 
tribes that conduct gaming operations. The bill would require 
the NIGC to establish a new fee schedule for the tribes it 
regulates. The commission collects fees from the tribes under 
current law, but this provision could result in a reallocation 
of those fees among the tribes, though it would not change the 
total amount of fees collected. The bill also includes explicit 
authority for the commission to establish minimum internal 
control standards for tribes. Such standards have already been 
established by the commission under current law, but this 
provision would clarify its authority and could prevent legal 
challenges to the existing standards.
    The CBO staff contacts for this estimate are John R. 
Righter (for federal costs) and Marjorie Miller (for the impact 
on state, local, and tribal governments). This estimate was 
approved by Robert A. Sunshine, Assistant Director for Budget 
Analysis.

               Regulatory and Paperwork Impact Statement

    Paragraph 11(b) of Rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill to 
evaluate the regulatory and paperwork impact that would be 
incurred in carrying out the bill. The Committee believes that 
S. 2920 will have minimal regulatory or paperwork impact.

                        Executive Communications

    The following letter on the provisions of S. 2920 was 
received from the National Indian Gaming Commission.

                         National Indian Gaming Commission,
                                Washington, DC, September 14, 2000.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Senate Hart Building, Washington, DC.
    Dear Senator Campbell: Your staff has indicated that you 
would like the Commission to review and comment on S. 2920, the 
``Indian Gaming Regulatory Improvement Act of 2000.'' I, along 
with Vice-Chair Elizabeth Homer and Commissioner Teresa Poust 
appreciate the opportunity to provide the views of the 
Commission on this important bill. As introduced, the 
Commission has significant concerns and questions regarding the 
bill and opposes passage.

                            Fee for service

    By way of background, the Commission's current proposed fee 
assessment for the year 2000 is .09 percent of \9/100th\ of one 
percent on all gaming revenue over $1.5 million which is 
exempt--about 60 times less than 5 percent authorized by IGRA. 
By way of example, a tribe that grosses $10 million a year will 
pay $7,650 in fees to the Commission. In 1999, 120 tribes made 
less than $10 million. By contrast, a tribe that grosses $100 
million will pay $88,650. Only 20 tribes made that amount in 
1999.
    This section is unclear as to whether it is intended to 
supplement or supplant the current fee structure which is not 
deleted under S. 2920 and thus the bill could be interpreted to 
require the National Indian Gaming Commission (``Commission'') 
to collect fees twice under two different fee structures.
    Furthermore, this section appears to be unnecessary since 
the Commission currently establishes an aggregate fee rate that 
is ``reasonably related'' to the costs of services, enforcement 
and compliance efforts and other statutorily required 
activities. The Commission does not and would not, collect or 
spend fees that are not reasonably related to the cost of 
carrying out its statutorily required duties under the Indian 
Gaming Regulatory Act (IGRA).
    Under the ``Factors for Consideration'' section, the 
Commission strongly recommends that enforcement and compliance 
efforts be included among the factors. While enforcement work 
may be not properly characterized as a service, the Commission 
expends considerable funds to carry out this statutorily 
required duty. The Commission's policy is to obtain voluntary 
compliance with the law but often it is required to enforce the 
law, which requires a significant amount of funding.
    The Commission is not certain as to the intent of this 
section and believes that it should be made clear that fee 
rates are not to be determined on a tribe-by-tribe basis--
rather the Commission is to determine an aggregate fee rate as 
it does currently. Individual calculations (and reductions 
based on services) of fee rates would require the Commission to 
collect fees at a much higher rate and that the burden of those 
higher fees will fall upon the less wealthy tribes. In 
addition, a tribe-by-tribe determination substantively deviates 
from a fee assessment based on business volume to one that will 
require an examination of the gaming operation of each tribe 
before a fee can be assessed for that tribe. This will 
inevitably lead to challenges of arbitrary action if one tribe 
perceives that another has received a more favorable rate. The 
system becomes unworkable.
    While the Commission has committed itself to keeping the 
fee assessment rate low, the $8 million cap on fee collections 
contained in IGRA provides an additional legal constraint to an 
increase in fee assessment rates. So long as we continue to 
assess fees evenly on all gaming operations and the industry 
continues to grow, it is unlikely that we would ever need to 
raise our fees to a rate higher than \12/100th\ of a percent. 
In fact, given the growth in the industry, it is possible that 
we may lower the percentage rate of collection from the .09% 
rate at which we are currently collecting.

                              Consulation

    The consultation requirement in establishing fees is also 
troublesome. The Commission currently carries out its business 
in accordance with President Clinton's Executive Order on 
Coordination and Consultation. The consultation requirement 
contained in S.2920 does not indicate whether something more is 
required. Furthermore, the provision contains no guidance on 
what issues are to be the subject of the consultation. For 
example, will the Commission be required to come up with 
alternative schedules, and then put it to a vote among the 
regulated tribes?

                               Trust Fund

    In the Commission's testimony on S.399, in which the trust 
fund concept was introduced, we explained that we are able to 
assess fees based on current information--assessing, collecting 
and using fees in the same fiscal year. With the Trust Fund, 
presumably the Commission will have to assess and collect fees 
well in advance of when they are needed so that we can request 
that they be appropriated for our use during the subsequent 
fiscal year. This will result in a sizable increase in the 
amount of gaming industry funds being held by the federal 
government. We have no objection to the fact that the earnings 
on those funds would go to the Commission rather than the 
Treasury. However, the same result could be obtained by 
appropriating funds equivalent to the Treasury's earnings for 
use by the Commission. If this concept is one in which the 
Committee is committed to pursuing, the NIGC would welcome the 
opportunity to work with your staff on this issue.

         Licensing of Tribal Gaming Commissioners and Employees

    The Commission supports the policies of those tribes that 
have established independent regulatory agencies that require 
regulators to undergo a background check. Regulators have 
important responsibilities and must deal with confidential and 
sensitive material in carrying out their duties. The 
application of appropriate suitability standards confirmed 
through a thorough background check is the best step toward 
ensuring a sound regulatory system.
    We would note, however, that there is no requirement that 
tribal governments form a tribal gaming commission. An 
unintended consequence of this provision would be for tribes to 
abolish tribal gaming commissions to avoid this requirement. 
Also, there are tribes that designate their council as a gaming 
commission and this provision could result in a situation where 
the need for a completed background investigation could impact 
tribal elections. Furthermore, unless those employees are 
functioning as key employees or primary management officials, 
FBI policy prohibits the processing of their fingerprint cards 
and the Commission does not initiate a background check.
    Generally, background investigations are conducted to 
determine whether the individuals or entities meet established 
standards. Here, standards have not been included. Furthermore, 
it is not clear whether the NIGC or the Secretary should set 
the standards for tribal government officials and employees.

                           Minimum Standards

    This section is unclear as to what is meant by ``federal 
standards.'' This section can only add confusion since it is 
not clear how it impacts the rest of IGRA.

             Negotiated Rulemaking for Game Classification

    It is not clear how a negotiated rulemaking would be of 
benefit in this area and the section overrides the requirement 
that the head of an agency find that the negotiated rulemaking 
would be ``in the public interest'' after applying the factors 
specified. Also, the amendment has a technical defect, as it 
appears to engage the Secretary of the Interior in the process 
when the prerogatives on game classification are with the NIGC.
    Under IGRA, the Commission has the responsibility of 
interpreting the Act's definitions of class II and class III 
gaming. Tribes that have been unsuccessful in attempts to 
obtain Tribal-State compacts are limited to class II gaming. 
One way we have sought to provide certainty is to issue game 
classification decisions. As you may know, we have issued a 
proposed rule that, if made final, will result in procedures 
whereby all games and gaming machines must be reviewed by the 
NIGC before they may be lawfully played as class II gaming. The 
procedures will allow for adjudication and appeal, which should 
benefit the regulated community.
    As is the case with all major NIGC rulemaking, there has 
been extensive public involvement in the development of these 
game classification regulations, including a lengthy comment 
period and a public hearing. Because the rule is, ultimately, a 
procedural device that must be implemented with the 
Commission's existing limited resources, and because the 
regulated community and other interested parties have had ample 
opportunity to provide input, we do not consider this an 
appropriate subject for negotiated rulemaking.
    We understand there is some legal controversy over the 
scope of the definition of class II gaming. As indicated in my 
letter to you dated July 21, 2000 the Commission is pleased to 
assist in any way with this issue. We encourage the Committee 
to seek the assistance of all interested parties such as the 
tribes and the Department of Justice in addressing this issue.

                          Application of GPRA

    The provisions of S. 2920 would make the Commission subject 
to the Government Performance and Results Act of 1993 
(``GPRA''). In a letter to Congress dated July 20, 1999, the 
General Accounting Office suggested that the Interior 
Department should include a section on the Commission in its 
strategic and performance plan. It reasoned that since the 
Commission was established as an independent agency within the 
Department of the Interior, and given the importance of its 
mission, the Department's plan should include the Commission 
notwithstanding its small size and limited spending authority. 
Size and spending authority, incidentally, are relevant to the 
applicability of GPRA, which provides for an exemption for 
those Executive agencies with spending authority under 
$20,000,000, such as the Commission.
    As drafted, the bill would mandate NIGC participation even 
though other small regulatory agencies with limited resources 
may be excluded. If enacted, the bill should also reference 
Section 1117. The intent of the exclusion under 31 U.S.C. 
Sec. 1117 is obvious. The resources of a small agency that 
would be directed to development of the performance plans 
outweigh the benefit to be achieved. Also, since the NIGC is 
essentially funded from tribal gaming revenues, this amounts to 
the use of those tribal contributions to fulfill a seemingly 
bureaucratic requirement.
    As a general matter, the Commission supports the goals and 
purposes of the GPRA and already operates within the principles 
of performance-based management. While the Commission does not 
object to inclusion of its goals in the Department of 
Interior's GPRA plan, it is worth noting that IGRA contains an 
alternative reporting requirement and specifies a biennial 
report as the mechanism through which the Commission is to 
report its activities and accomplishments to the Congress. 
Since this is the reporting mechanism expressly mandated by the 
Congress in IGRA, the Commission prefers its continued use. 
Moreover, it is a much more manageable mechanism given the 
Commission's size and resource limitations.
    The Department of the Treasury has advised us that it 
supports our recommendation that appropriations be made to the 
Commission in lieu of the proposed investment authority for the 
Trust Fund. Moreover, the Department recommends that any amount 
so provided should be based on an analysis of how much money is 
needed to fund the proposed program purposes, rather than be 
based solely on the happenstance of interest rate changes 
occurring during the period of investment.
    The Department of the Treasury questions what 
appropriations would be deposited to the Trust Fund under 
subsection 22(c)(1)(b). The Department recommends excluding 
appropriations from being invested under that section because 
an appropriation is simply a limit on the amount of money that 
a government agency or account may spend for its authorized 
purpose and is not a sum of cash that is available to be 
invested.
    Additionally, the Department of the Treasury is concerned 
that 22(c)(2) places the responsibility for determining 
estimated revenues from the fees on the Secretary of the 
Treasury. As these fees and the payment schedule are determined 
and assessed by the Commission, and not Treasury, it would be 
more appropriate for the Commission to determine when the 
funding would be available.
    The Office of Management and Budget advises that from the 
standpoint of the Administration's program, there is no 
objection to the presentation of this report.
    I trust these comments are responsive to your staff's 
request for comments. Should you have questions or require 
further information, please do not hesitate to contact me or 
Kyle Nayback of my staff at (202) 632-7003.
    Kind regards.
            Sincerely yours,
                                            Montie R. Deer,
                                                          Chairman.

                        Changes in Existing Law

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that 
enactment of S. 2920 will result in the following changes in 
the following statutes as noted below, with existing language 
which is to be deleted in brackets and the new language which 
is to be added in italic:
    (1) Section 2703 of Title 25, United States Code:
          (7)(A) The term ``class II gaming'' means--

           *       *       *       *       *       *       *

                  (G) Notwithstanding any other provision of 
                law, sections 1171 through 1177 of Title 15 
                shall not apply to any gaming described in 
                subparagraph (A)(i) as ``class II gaming'', 
                where technologic aids are used in connection 
                with any such gaming.
    (2) Section 2706 of Title 25, United States Code:

SEC. 2706. POWERS OF COMMISSION.

    (c) Report.--The Commission shall submit a report with 
minority views, if any, to the Congress on December 31, 1989, 
and every two years thereafter. The report shall include 
information on--
          (1) whether the associate commissioners should 
        continue as full or part-time officials;
          (2) funding, including income and expenses, of the 
        Commission;
          (3) recommendations for amendments to the chapter; 
        [and]
          (4) the strategic plan for Commission activities.
                  (A) This plan shall include--
                          (i) a comprehensive mission statement 
                        covering the major functions and 
                        operations of the Commission;
                          (ii) general goals and objectives, 
                        including outcome-related goals and 
                        objectives, for the major functions and 
                        operations of the Commission;
                          (iii) a description of how the goals 
                        and objectives are to be achieved, 
                        including a description of the 
                        operational processes, skills and 
                        technology, and the human, capital, 
                        information, and other resources 
                        required to meet those goals and 
                        objectives;
                          (iv) a performance plan, which shall 
                        be related to the general goals and 
                        objectives of the strategic plan;
                          (v) an identification of those key 
                        factors external to the Commission and 
                        beyond its control that could 
                        significantly affect the achievement of 
                        the general goals and objectives; and
                          (vi) a description of the program 
                        evaluations used in establishing or 
                        revising general goals and objectives, 
                        with a schedule for future program 
                        evaluations.
                  (B) The strategic plan shall cover a period 
                of not less than five years forward from the 
                fiscal year in which it is submitted. The 
                strategic plan shall be updated and revised at 
                least every four years.
                  (C) The performance plan shall be consistent 
                with the Commission's strategic plan. In 
                developing the performance plan, the Commission 
                should look to the requirements of section 1115 
                of Title 31, United States Code (the Government 
                Performance and Results Act (Public Law 103-
                62)).
                  (D) When developing a strategic plan, the 
                Commission shall consult with the Congress, and 
                shall solicit and consider the views and 
                suggestions of those entities potentially 
                affected by or interested in such a plan.
          (5) any other matter considered appropriate by the 
        Commission.
    (3) Section 2710(b)(2)(F)(i), United States Code:

SEC. 2710. TRIBAL GAMING ORDINANCES.

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (2) The Chairman shall approve any tribal ordinance 
        or resolution concerning the conduct, or regulation of 
        class II gaming on the Indian lands within the tribe's 
        jurisdiction if such ordinance or resolution provides 
        that--

           *       *       *       *       *       *       *

                  (F) there is an adequate system which--
                          (i) ensures that background 
                        investigations are conducted on the 
                        [primary management officials and key 
                        employees of the gaming enterprise and 
                        the oversight of such officials] tribal 
                        gaming commissioners, tribal gaming 
                        commission employees, and primary 
                        management officials and key employees 
                        of the gaming enterprise and that 
                        oversight of primary management 
                        officials and key employees and their 
                        management is conducted on an ongoing 
                        basis; and
          (4) Section 2721 of Title 25, United States Code:

SECTION 2721. FEE ASSESSMENTS.

    (a) Establishment of Schedule of Fees.--
          (1) In general.--Except as provided in this section, 
        the Commission shall establish a schedule of fees to be 
        paid annually to the Commission by each gaming 
        operation that conducts a class II or class III gaming 
        activity that is regulated by this Act.
          (2) Rates.--The rate of fees under the schedule 
        established under paragraph (1) that are imposed on the 
        gross revenues from each activity described in such 
        paragraph shall be as follows:
                  (A) A fee of not more than 2.5 percent shall 
                be imposed on the first $1,500,000 of such 
                gross revenues.
                  (B) A fee of not more than 5 percent shall be 
                imposed on amounts in excess of the first 
                $1,500,000 of such gross revenues.
          (3) Total amount.--The total amount of all fees 
        imposed during any fiscal year under the schedule 
        established under paragraph (1) shall not exceed 
        $8,000,000.
    (b) Commission Authorization.--
          (1) In general.--By a vote of not less than 2 members 
        of the Commission the Commission shall adopt the 
        schedule of fees provided for under this section. Such 
        fees shall be payable to the Commission on a quarterly 
        basis.
          (2) Fees assessed for services.--The aggregate amount 
        of fees assessed under this section shall be reasonably 
        related to the costs of services provided by the 
        Commission to Indian tribes under this Act (including 
        the cost of issuing regulations necessary to carry out 
        this Act). In assessing and collecting fees under this 
        section, the Commission shall take into account the 
        duties of, and services provided by, the Commission 
        under this Act.
          (3) Factors for consideration.--In making a 
        determination of the amount of fees to be assessed for 
        any class II or class III gaming activity under the 
        schedule of fees under this section, the Commission may 
        provide for a reduction in the amount of fees that 
        otherwise would be collected on the basis of the 
        following factors:
                  (A) The extent of the regulation of the 
                gaming activity involved by a State or Indian 
                tribe (or both).
                  (B) The extent of self-regulating activities, 
                as defined by this Act, conducted by the Indian 
                tribe.
                  (C) Other factors determined by the 
                Commission, including--
                          (i) the unique nature of tribal 
                        gaming as compared to commercial 
                        gaming, other governmental gaming, and 
                        charitable gaming;
                          (ii) the broad variations in the 
                        nature, scale, and size of tribal 
                        gaming activity;
                          (iii) the inherent sovereign rights 
                        of Indian tribes with respect to 
                        regulating the affairs of Indian 
                        tribes;
                          (iv) the findings and purposes under 
                        sections 2 and 3; and
                          (v) the amount of interest or 
                        investment income derived from the 
                        Indian gaming regulation account(s); 
                        and
                          (vi) any other matter that is 
                        consistent with the purposes under 
                        section 3.
          (4) Consultation.--In establishing a schedule of fees 
        under this section, the Commission shall consult with 
        Indian tribes.
    (c) Indian Gaming Regulation Accounts.--All fees and civil 
forfeitures collected by the Commission pursuant to this Act 
shall be kept in separate, segregated accounts, and shall only 
be expended for purposes set forth in this Act.
          (1) In general.--It shall be the duty of the 
        Commission to invest such portion of the Indian gaming 
        regulation accounts as are not, in the judgment of the 
        Commission, required to meet immediate expenses. The 
        Commission shall invest the amounts deposited under 
        this Act only in interest-bearing obligations of the 
        United States or in obligations guaranteed as to both 
        principal and interest by the United States.
          (2) Sale of obligations.--Any obligation acquired by 
        the Indian gaming regulatory accounts, except special 
        obligations issued exclusively to the Indian gaming 
        regulatory accounts, may be sold by the Commission at 
        the market price, and such special obligations may be 
        redeemed at par plus accrued interest.
          (3) Credits to the indian gaming regulatory 
        accounts.--The interest on, and proceeds from, the sale 
        or redemption of any obligations held in the Indian 
        gaming regulatory accounts shall be credited to and 
        form a part of the Indian Gaming regulatory accounts.

SECTION. 2722. MINIMUM STANDARDS.

    (a) Class I Gaming.--Notwithstanding any other provision of 
law, class I gaming on Indian lands shall be within the 
exclusive jurisdiction of the Indian tribes and shall not be 
subject to the provisions of this Act.
    (b) Class II Gaming.--Effective on the date of enactment of 
this section, an Indian tribe shall retain the rights of that 
Indian tribe, with respect to class II gaming and in a manner 
that meets or exceeds the minimum Federal standards established 
under section 11, to--
          (1) monitor and regulate that gaming;
           (2) conduct background investigations; and
          (3) establish and regulate internal control systems.
    (c) Class III Gaming Under a Compact.--With respect to 
class III gaming that is conducted under a compact entered into 
under this Act, an Indian tribe or a State (or both), as 
provided for in such a compact or a related tribal ordinance or 
resolution shall, in a manner that meets or exceeds the minimum 
Federal standards established by the Commission under section 
11--
          (1) monitor and regulate that gaming;
          (2) conduct background investigations; and
          (3) establish and regulate internal control systems.
    (d) Rulemaking.--The Commission may promulgate such 
additional regulations as may be necessary to carry out this 
section.

SECTION 2723. USE OF NATIONAL INDIAN GAMING COMMISSION CIVIL FINES.

    (a) In General.--All funds secured by the Commission 
pursuant to section 14 shall be deposited in the Indian gaming 
regulation accounts, as provided in section 22(c).
    (b) Use of Funds.--The Secretary may provide grants and 
technical assistance to Indian tribes from any funds secured by 
the Commission pursuant to section 14, which funds shall be 
made available only for the following purposes:
          (1) To provide technical training and other 
        assistance to Indian tribes to strengthen the 
        regulatory integrity of Indian gaming.
          (2) To provide assistance to Indian tribes to assess 
        the feasibility of non-gaming economic development 
        activities on Indian lands.
          (3) To provide assistance to Indian tribes to devise 
        and implement programs and treatment services for 
        individuals diagnosed as problem gamblers.
          (4) To provide other forms of assistance to Indian 
        tribes not inconsistent with the Indian Gaming 
        Regulatory Act.
    (b) Consultation.--In carrying out this section, the 
Secretary shall consult with Indian tribes and any other 
appropriate tribal or Federal officials.
    (c) Regulations.--The Secretary may promulgate such 
regulations as may be necessary to carry out this section.
    (5) Section 2721 of Title 25, United States Code.

SECTION 272[1]5. SEVERABILITY.

    In the event that any section or provision of this chapter, 
or amendment made by this chapter, is held invalid, it is the 
intent of Congress that the remaining sections or provisions of 
this chapter, and amendments made by this chapter, shall 
continue in full force and effect.

                                  
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