41960 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

revising § 5.20(h) to authorize the

Deputy Commissioner for Management

and Systems and the Director, Office of

Financial Management to perform the

functions of the Commissioner of Food

and Drugs under section 736(d)(c) of the

Federal Food, Drug, and Cosmetic Act

(21 U.S.C. 379h(d)(C)), as amended

hereafter, to waive or reduce

prescription drug user fees in situations

where it is determined that ‘‘the fees

will exceed the anticipated present and

future costs.’’ Further, this authority is

revoked from the delegations to the

Chief Mediator and Ombudsman/

Deputy User Fee Waiver Officer, the

Deputy Chief Mediator and

Ombudsman, and the Deputy User Fee

Waiver Officer, who previously had the

authority.

Further redelegation of this authority

is not authorized at this time. Authority

delegated to a position by title may be

exercised by a person officially

designated to serve in such position in

an acting capacity or on a temporary

basis.

List of Subjects in 21 CFR Part 5

Authority delegations (Government

agencies), Imports, Organization and

functions (Government agencies).

Therefore, under the Federal Food,

Drug, and Cosmetic Act and under

authority delegated to the Commissioner

of Food and Drugs, 21 CFR part 5 is

amended as follows:

PART 5—DELEGATIONS OF

AUTHORITY AND ORGANIZATION

1. The authority citation for 21 CFR

part 5 continues to read as follows:

Authority: 5 U.S.C. 504, 552, App. 2; 7

U.S.C. 138a, 2271; 15 U.S.C. 638, 1261-1282,

3701-3711a; 15 U.S.C. 1451-1461; 21 U.S.C.

41-50, 61-63, 141-149, 321-394, 467f, 679(b),

801-886, 1031-1309; 35 U.S.C. 156; 42 U.S.C.

241, 242, 242a, 242l, 242n, 243, 262, 263,

264, 265, 300u-300u-5, 300aa-1; 1395y,

3246b, 4332, 4831(a), 10007-10008; E.O.

11921, 41 FR 24294, 3 CFR, 1977 Comp., p.

124-131; E.O. 12591, 52 FR 13414, 3 CFR,

1988 Comp., p. 220-223.

2. Section 5.20 is amended by revising

paragraph (h) to read as follows:

§ 5.20 General redelegations of authority

from the Commissioner to other officers of

the Food and Drug Administration.

* * * * *

(h)(1) The Chief Mediator and

Ombudsman, designated as the User Fee

Waiver Officer; the Deputy Chief

Mediator and Ombudsman; and the

Deputy User Fee Waiver Officer are

authorized to perform the functions of

the Commissioner under the

Prescription Drug User Fee Act of 1992,

as amended by the FDA Modernization

Act of 1997 (21 U.S.C. 379h(d)), as

amended hereafter, relating to waiving

or reducing prescription drug user fees

except for the functions under 21 U.S.C.

379h(d)(C), which pertains to situations

where ‘‘the fees will exceed the

anticipated present and future costs.’’

These authorities may not be further

redelegated.

(2) The Deputy Commissioner for

Management and Systems and the

Director, Office of Financial

Management are authorized to perform

the functions of the Commissioner

under 21 U.S.C. 379h(d)(C), as amended

hereafter, to waive or reduce

prescription drug user fees in situations

where it is determined that ‘‘the fees

will exceed the anticipated present and

future costs.’’ This authority may not be

further redelegated.

(3) The Deputy Commissioner for

Operations, designated as the User Fee

Appeals Officer, is authorized to hear

and decide user fee waiver appeals. The

decision of the User Fee Appeals Officer

will constitute final agency action on

such matters.

* * * * *

Dated: July 29, 1998.

William K. Hubbard,

Associate Commissioner for Policy

Coordination.

[FR Doc. 98–20954 Filed 8–5–98; 8:45 am]

BILLING CODE 4160–01–F

NATIONAL INDIAN GAMING

COMMISSION

25 CFR Part 518

RIN 3141–AA04

Issuance of Certificates of Self

Regulation to Tribes for Class II

Gaming

AGENCY: National Indian Gaming

Commission.

ACTION: Final rule.

SUMMARY: The National Indian Gaming

Commission issues this rule which

provides a process for the review and

approval of petitions for tribal selfregulation of Class II gaming. This rule

implements the Class II self-regulatory

provisions of the Indian Gaming

Regulatory Act and will provide both a

financial benefit and reduction in

Federal regulations for tribes that obtain

certificates under this rule.

EFFECTIVE DATE: September 8, 1998.

FOR FURTHER INFORMATION CONTACT:

Maria Getoff, National Indian Gaming

Commission, 1441 L Street, NW, Suite

9100, Washington, DC 20036; telephone:

202–632–7003.

SUPPLEMENTARY INFORMATION: The

Indian Gaming Regulatory Act (IGRA, or

the Act), enacted on October 17, 1988,

established the National Indian Gaming

Commission (Commission). Under the

Act, the Commission is charged with

regulating class II gaming and certain

aspects of class III gaming on Indian

lands. On March 12, 1998, the

Commission proposed regulations for

the issuance of certificates of selfregulation for class II gaming to Tribes.

63 FR 12319–12323. The Commission

requested comments on those proposed

regulations. On April 1, 1998, the

Commission held a public hearing in

Portland, Oregon, on the proposed

regulations. Below is the Commission’s

analysis of the comments received both

in writing during the comment period,

and at the public hearing. In addition,

prior to the drafting of the proposed

rules, all gaming tribes were asked to

provide comments on the meaning of

the term, ‘‘self-regulating’’, which the

Commission has also considered. Below

is the Commission’s analysis of the

comments received during the comment

period and the text of the final

regulations.

General Comments

One commenter advocated for

negotiated rule making in the

promulgation of these regulations. The

Commission concluded that negotiated

rule making would not allow the

Commission to issue these regulations

in a timely manner. However, the

regulated community was provided

several opportunities to comment on

both the concept of self-regulation

generally and the proposed regulations

specifically. On November 13, 1997, the

Commission sent a ‘‘Notice to Interested

Parties’’ to all gaming tribes requesting

comments on the meaning of the term,

‘‘self-regulation.’’ In addition, on

November 18, 1997, NIGC Chairman

Tadd Johnson addressed a gathering of

tribes in Santa Fe, New Mexico, where

he discussed self regulation. Further, on

January 27, 1998, members of the

Commission staff met with tribal

representatives in Washington, D.C. to

discuss the concept of self-regulation. In

early February 1998, Commission staff

held an open meeting at the Gila River

reservation in Arizona for the purpose

of discussing self-regulation and other

regulations. Then, on April 1, 1998, the

Commission held a public hearing on

self-regulation in Portland, Oregon.

Seven witnesses testified, representing

tribes with both large and small gaming

operations.

Another commenter stated that ‘‘IGRA

prohibits the NIGC from regulating Class

II gaming by Tribes with certificates,
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41961

and regulations that provide for

continued NIGC regulation of Class II

gaming by certified tribes violate IGRA.’’

This and other commenters believe that,

at a minimum, the regulations should

spell out the powers of the Commission

that are not enforceable against certified

tribes.

The IGRA does not provide for a

blanket prohibition on the regulatory

power of the Commission with respect

to a self regulated tribe. The

Commission will continue to maintain

oversight, investigative, and

enforcement responsibilities with

respect to tribes that hold certificates of

self-regulation. The IGRA does limit the

powers of the Commission with respect

to self-regulating tribes, but does so in

very specific terms. It states that

‘‘During any year in which a tribe has

a certificate for self-regulation, the tribe

shall not be subject to the provisions of

paragraphs (1), (2), (3), and (4) of section

2706(b) of IGRA.’’ 25 U.S.C.

2710(c)(5)(A). Those sections direct the

Commission to monitor class II gaming

on a continuing basis; inspect and

examine class II gaming premises;

conduct or cause to be conducted

background investigations; and permit

the Commission to demand access to

and inspect, examine, photocopy and

audit all papers, books, and records

regarding revenues of class II gaming.

Therefore, while the IGRA exempts

certain self regulated tribes from these

provisions, other requirements of IGRA

and NIGC regulations still apply. The

Commission has added the following

language to § 518.9 , which provides

that the Commission retains

investigative and enforcement authority

over self regulated tribes: ‘‘Subject to the

provisions of 25 U.S.C. 2710(c)(5)(A).’’

One commenter suggested that

regulations are not required to

implement IGRA’s certificate of selfregulation provision. This commenter

expressed the opinion that the statute is

sufficient, wherein Congress set forth

the requirements for certificates, and

gave the Commission the power to hear

and adjudicate petitions.

The Commission disagrees. Section

2706(b)(10) of IGRA grants the

Commission the power to ‘‘promulgate

such regulations and guidelines as it

deems appropriate to implement the

provisions of the IGRA.’’ While the

statutory language in IGRA provides

some guidance on Congress’s intent

with respect to self-regulation, the

Commission must promulgate these

rules in order to establish a system by

which the Commission may evaluate

whether a tribe has met the statutory

criteria for the issuance of a certificate

of self-regulation.

Several commenters suggested that

the Commission should ensure that

tribes with certificates pay less fees than

tribes without certificates, and that the

regulations should reflect this. These

commenters believe that because the fee

rate for all class II gaming tribes is

currently set at .08%, well below the

.25% maximum allowed for a selfregulated tribe, there is no incentive to

become self-regulated.

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.

Another commenter suggested that

the following language in the preamble

to the proposed regulations is too

restrictive: ‘‘The regulatory entity

should have no involvement in the

operational or managerial decisions of a

gaming facility, except to the extent that

the regulatory body identifies violations

of federal or tribal law.’’ 63 FR 12319,

March 12, 1998.

Although this language may be

broader than intended, the Commission

wanted to clarify that the tribal

regulatory body should not operate or

manage the gaming facility. The tribal

regulatory body should be an arm of the

tribal government, established for the

exclusive purpose of regulating and

monitoring gaming on behalf of the

tribe. Effective regulatory oversight

requires that there be a separation

between the regulation and operation of

the tribal gaming activities. The tribal

regulatory body may monitor all

operating and management functions,

consistent with its regulatory

responsibilities.

Section 518.1 What Does This Part

Cover?

A commenter suggested that a

certificate should be issued to each

separate operation, not to the tribe as a

whole. The rationale behind this

suggestion is that one tribe may have

several operations which could cause

the delay of certification for all

operations due to problems with just

one.

The Commission disagrees. A

certificate of self-regulation issues to the

tribe, in recognition of their ability to

regulate effectively. If a tribe cannot

effectively regulate some portion of its

gaming operation, it has not

demonstrated that it is able to

effectively regulate all gaming

operations.

Section 518.2 Who May Petition for a

Certificate of Self-Regulation?

Two commenters suggested that

§ 518.2(a) would restrict self-regulation

status to only those specific class II

games actually played by the tribe for

three years prior to its petition, and

would effectively place a ban on new

games.

The Commission does not intend this

language to limit the introduction of

new games. The language in § 518.2(a)

mirrors the language in IGRA, which

provides, in relevant part, that ‘‘Any

Indian tribe which operates a class II

gaming activity and which has

continuously conducted such activity

for a period of not less than three years

* * *’’ may petition for a certificate of

self-regulation. 25 U.S.C. 2710(c)(3)(A).

Therefore, the petitioning tribe must

have operated some type of class II

gaming activity for the three year period

immediately preceding the date of the

petition. To interpret the statute to mean

that a self-regulating tribe could not

introduce new games that were not

offered during that three year period

would, as noted by the commenter, be

so impractical as to render certificates of

self-regulation useless. The Commission

does not believe that Congress intended

such a result. The Commission does not

believe that this section requires any

change.

One commenter stated that the word

‘‘continuously’’ in § 518.2(a) needs

clarification. This paragraph requires

that, in order to petition for a certificate,

the tribe has continuously conducted

the gaming activity for which it seeks

self-regulation. The commenter stated

that some tribes may temporarily shut

down their gaming operations due to

construction or to the seasonal nature of

their business.

The term ‘‘continuously’’ is taken

directly from IGRA at 25 U.S.C.

2710(c)(3)(A). The Commission will

implement the common sense definition

of the term ‘‘continuous’’. Webster’s

Ninth New Collegiate Dictionary defines

continuous as ‘‘marked by

uninterrupted extension in space, time,

or sequence’’. The Commission does not

believe that Congress intended to mean

that if a gaming operation closed for one

day or one week, that the tribe would

be precluded from obtaining a certificate

of self regulation. A tribe would,

however, be precluded if the operation

had closed for one year. The

Commission intends to look at each

situation on a case-by-case basis.
41962 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

Several commenters stated that

§ 518.2(b) and § 518.2(d), which require

all gaming engaged in by the tribe to be

legal under IGRA, unnecessarily place a

tribe’s class III gaming operation under

scrutiny.

The Commission disagrees. The

language of § 518.2(d) is taken verbatim

from IGRA, which requires, in relevant

part, that a tribe may petition the

Commission for a certificate of selfregulation if it ‘‘has otherwise complied

with the provision of this section.’’ 25

U.S.C. 2710(c)(3)(B). The statutory

language is clear. If Congress had

intended for a tribe to be able to petition

for a class II self-regulation certificate

regardless of whether it had complied

with the law with respect to its class III

gaming, it would have said so.

Section 518.3 What Must a Tribe Submit

to the Commission as Part of its

Petition?

One commenter suggested that the

petition should be approved by the

tribal regulatory body, not the governing

body of the tribe as required by

§ 518.3(a)(1), because the regulatory

functions of the tribal regulatory body

must be independent from the

influences of the tribal government.

The Commission agrees that the tribal

regulatory body must be independent

from the tribal government. However,

the tribal regulatory body is an arm of

the tribal government. The final

authority and responsibility over

gaming and its tribal regulation is vested

with the tribe. The authority to establish

a regulatory structure or tribal

regulatory body comes from the

sovereign powers of tribal governments.

Furthermore, a tribe’s qualification for

certification is dependent in part upon

whether it follows procedures which are

beyond the scope of the tribal regulatory

body. Therefore, the Commission does

not believe, as suggested by the

commenter, that the decision to submit

a petition for a certificate of selfregulation is a decision that should be

made by the tribal regulatory body. The

decision to petition for self-regulation

status is a decision to be made by the

tribe. The tribe may, however, delegate

such authority to the tribal regulatory

body.

One commenter stated that it was

unclear whether § 518.3(a)(1)(iii), which

requires a description of the process by

which positions on the tribal regulatory

body are filled, applies to positions for

Gaming Commissioners and Attorneys.

Another commenter recommended that

this paragraph be expanded to require

job descriptions and qualifications, as

well as any disqualifying criteria.

This paragraph requires a description

of the manner in which all positions on

the tribal regulatory body are filled,

including staff and higher level

regulators. Therefore, this provision

applies both to those who actually sit on

the regulatory body, such as the

Chairman, Gaming Commissioners or

the Executive Director, and to all staff

level employees, including

investigators, auditors, attorneys, etc. In

order to clarify this requirement, the

Commission has revised

§ 518.3(a)(1)(iii) to read as follows: ‘‘a

description of the process by which all

employee and regulator positions at the

independent tribal regulatory body are

filled, including qualifying and

disqualifying criteria.’’ During its

investigation, the Commission may

request job descriptions, but that

information is not required to be

provided with the petition.

The Commission has added the

following language to § 518.3(a)(1)(v):

‘‘and, if serving limited terms, the

expiration date of such terms.’’

One commenter questioned why the

Commission requires a list of current

gaming operation division heads to be

submitted with the petition under

§ 518.3(a)(1)(vi). This information will

identify for the Commission who is in

charge of each division so that the

Commission will know who to contact

for information during the course of the

investigation. In addition, the

Commission may check this against the

information the Commission has

previously received from the tribe.

One commenter noted that several

paragraphs of § 518.3 require the tribe to

include in its petition, or make available

to the Commission, information dating

back three years from the date of the

petition. This commenter suggested that

the IGRA only requires that certificates

be based on ‘‘available information’’, not

new special information designed solely

for certificates of self-regulation. This

commenter raised specific concerns

with respect to § 518.3(a)(2)(v). Another

commenter stated that to require tribes

to have reports on internal controls is

overburdensome and not required by

IGRA. Both commenters noted that the

three year requirement is retroactive and

therefore places an undue burden on

tribes because they will be denied self

regulation status if they are unable to

produce the reports. Another

commenter stated that § 518.3(a)(2)(v)

should be clarified to indicate what

constitutes a ‘‘report on internal

controls based on audits of the financial

statements.’’ This commenter

questioned whether this refers to

compliance reviews by the tribal

regulatory body, or to responses by the

operator to the annual financial audits.

The Commission believes that

generally, the information required by

§ 518.3 is not ‘‘new special information

designed solely for certificates’’, but is

information that should already be

maintained in the ordinary course of

business by a ‘‘self-regulating’’ class II

gaming tribe. For instance, if a tribe

does not ordinarily maintain

information on allegations of criminal

activity and information on

investigation and enforcement of tribal

gaming ordinance violations, the

Commission believes that such tribe is

not maintaining the type of system of

records that would allow the

Commission to make a determination

that such tribe is self-regulating. The

Commission agrees that tribes may not

receive or produce reports on internal

controls in the ordinary course of

business, and that it would be unfair to

make the existence of such reports a

prerequisite to self regulation. However,

the Commission believes that if such

reports do exist, they would provide an

indication that the tribe meets the

criteria for self regulation. Therefore, the

Commission has removed this as a

requirement under § 518.3, and has

added a new section (9) to § 518.4(b).

This new section provides that the

Commission will consider whether

reports are received or produced by the

tribe, the tribal regulatory body, or the

gaming operation based on an

evaluation of the internal controls of the

gaming operation during the three (3)

year period immediately preceding the

date of the petition. If such reports exist,

the Commission will review those

reports in the course of its investigation.

This new language should help to

clarify what constitutes a ‘‘report on

internal controls’’.

Several commenters questioned

whether the language in § 518.3(a)(2)

requires the tribe to list the documents

in the petition that would then be

available to the Commission to inspect

or whether those documents were to be

submitted to the Commission.

The Commission intends only for the

petition to include a descriptive list of

the documents or record keeping

systems described in §§ 518.3(a)(2)(i)–

518.3(a)(4) and an assurance that the

listed documents and records are

available for the Commission’s review.

(The documents mentioned in

§§ 518.3(a)(1)(i)–(vii), however, must be

included with the petition.) Therefore,

the Commission revises this section to

add ‘‘descriptive’’ before ‘‘list’’ and to

replace, ‘‘to which the Commission

shall have access’’ with ‘‘together with

an assurance that the listed documents
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41963

or records are available for the

Commission’s review.’’

One commenter was concerned about

§ 518.3(a)(2)(ii), and indicated that tribal

regulatory bodies are not ordinarily

involved in any way with a tribe’s

revenue allocation plan, and it is not

apparent how a tribe’s revenue

allocation plan bears on the

Commission’s evaluation of a tribal

regulatory body’s qualification for

certification.

It is the tribe, not the tribal regulatory

body, that is the petitioner and the

intended recipient of a certificate. For

the Commission to determine

adequately whether the gaming activity

has been conducted in full compliance

with IGRA, as required by § 518.4(a)(4),

the Commission must be able to

evaluate whether gaming revenues are

allocated in accordance with the law.

One commenter questioned whether

§ 518.3(a)(2)(iii) requires a description

of the accounting system from the

operation, the tribal government, or both

if two separate accounting systems exist.

This provision refers to the

accounting systems of both the gaming

operation and the tribe. The latter is

necessary to understand how the tribe

uses and accounts for the revenues

received from the gaming operation in

accordance with the purposes allowed

under IGRA. Because the proposed rule

may be confusing, the Commission

revises the language to read, ‘‘A

description of the accounting system(s)

at both the gaming operation and the

tribe that account for the flow of gaming

revenues from receipt to their ultimate

use, consistent with IGRA.’’

One commenter stated that a

definition of ‘‘records’’ is needed. This

commenter questioned whether, under

§ 518.3(a)(2)(vii), a summary of the

investigation/enforcement action would

be sufficient. This and other

commenters indicated that some

allegations are made outside tribal

jurisdiction, and that it would be

burdensome to require the tribal

regulatory body to assemble documents

from third parties. A commenter also

questioned the meaning of ‘‘records’’

under § 518.3(a)(2)(vii).

The Commission recognizes that

several paragraphs of § 518.3(a)(2) are

confusing in terms of what information

should be provided to the Commission.

First of all, the tribe is not required to

submit the actual documents, nor does

the Commission intend by this rule to

require a tribe to gather records from

other jurisdictions or parties. The rule

states that the documents that are to be

made available to the Commission are

documents that are maintained by the

tribe. With respect to the ‘‘records’’

language, the Commission made the

following changes: to § 518.3(a)(2)(vi),

delete ‘‘records of’’ and add, ‘‘a

description of the record keeping system

for’’ before the word ‘‘all’; to

§ 518.3(a)(2)(vii), delete ‘‘records of’’

and add, ‘‘a description of the record

keeping system for’’ before the word

‘‘all’’; and to § 518.3(a)(2)(viii) delete

‘‘records’’ and add, ‘‘a description of the

personnel record keeping system’’

before the word ‘‘of’’. Section

518.3(a)(2)(vii) includes all records

maintained by the tribe, not just by the

tribal regulatory body. This would

include records maintained by the tribal

prosecutor and tribal court.

To further clarify that the information

required under § 518.3(a)(2) is to be

provided by way of a list instead of the

actual documents, the Commission has

removed, ‘‘including the name, title,

and licensing status of each employee’’

from § 518.3(a)(2)(viii). The tribe is

required, under this paragraph, to

provide a description of its personnel

record keeping system, and is not

required to specifically provide the

names, titles, and licensing status of

each employee. This is information that

the Commission will gather when it

visits the tribe to conduct its

investigation, or will request at a later

date.

Additional clarification was made to

§ 518.3(a)(2)(vi) and § 518.3(a)(2)(vii). In

§ 518.3(a)(2)(vi), the language ‘‘for the

three (3)-year period immediately

preceding the date of the petition’’ was

removed from the beginning of the

paragraph and inserted after the word,

‘‘activity’’. In § 518.3(a)(2)(vii), the

language ‘‘for the three (3)-year period

immediately preceding the date of the

petition’’ was removed from the

beginning of the paragraph and inserted

after the word ‘‘regulations.’’ These

changes were made to clarify that the

three year period refers to the records

that the Commission will have access to,

and not to the description of the record

keeping system.

With respect to § 518.3(a)(2)(viii) one

commenter noted that while the IGRA

requires a tribe to license certain key

employees there is no requirement that

it maintain records of all employees as

required by § 518.3(a)(2)(viii). This

commenter believes that to require a

tribal regulatory body to gather this

information if it does not have it distorts

the Commission’s evaluation, in that the

Commission will not know if this

information is normally known to the

tribal regulatory body, as it should be,

or whether it was gathered in

preparation for the petition.

The purpose of this rule is to allow

the Commission to evaluate whether the

tribal gaming operation maintains an

adequate personnel system with records

of all employees, as well as whether the

tribe has complied with IGRA and NIGC

regulations which require the tribe to

submit to the Commission employee

applications and background

investigation reports for all key

employees and primary management

officials. The Commission must be able

to check the records of all current

employees against the employee

applications and background

investigation reports submitted to the

Commission to determine whether the

tribe has complied with IGRA. Although

only key employees and primary

management officials must be

investigated and licensed under IGRA,

the Commission believes the tribal

gaming operation should maintain an

adequate system of records for all

employees, and the tribe may license

other employees not specifically

required to be licensed under IGRA.

One commenter pointed out that

§ 518.3(a)(3), which requires the tribe to

submit a copy of the public notice

references an incorrect citation to the

provision which requires the public

notice.

The Commission agrees. The

reference to the public notice

requirement should read ‘‘25 CFR

518.5(d)’’ instead of ‘‘25 CFR 518.5(e).’’

The Commission will make this change.

In addition, the Commission has

removed the requirement that the tribe,

upon publication of the notice, submit

a copy of the notice. The final regulation

has been revised to require the tribe to

submit an affidavit of publication in lieu

of a copy of the publication.

One commenter stated, in regard to

§ 518.3(a)(4), that federal regulations

governing the audit of tribal general

funds and federal funds do not require

the auditor to express an opinion on

compliance with 25 U.S.C.

2710(b)(2)(B), and the proposed rule

does not expressly contain a new

substantive requirement for tribal

audits. In addition, such a requirement

could only be imposed prospectively.

The Commission agrees, and has

removed this paragraph from

§ 518.3(a)(4). However, 25 U.S.C.

2710(b)(2)(B) requires that tribal gaming

revenues be put to specific purposes.

Therefore, the Commission adds a new

paragraph to the section which

describes the documents that should

accompany the petition. The new

paragraph is § 518.3(a)(1)(vii), and states

‘‘A report, with supporting

documentation, including a sworn

statement signed by an authorized tribal

official, which explains how tribal net

gaming revenues were used in
41964 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

accordance with the requirements of 25

U.S.C. 2710(b)(2)(B).’’ Supporting

documentation would include copies of

pages from tribal accounting books

which record the flow of money from

the gaming operation to its ultimate use.

One commenter questioned why the

Commission would need to have access

to the tribal audit under § 518.3(a)(2)(xi)

in order to evaluate a tribe’s

qualification for certification. Because

the new paragraph at § 518.3(a)(1)(vii)

serves to inform the Commission of

information it intended to glean from

the tribal government audits, and

because the Commission does not

believe it necessary to review audits

prepared of the tribal regulatory body,

the Commission has removed

§ 518.3(a)(2)(xi) in its entirety.

Section 518.4 What Criteria Must a

Tribe Meet To Be Issued a Certificate of

Self-Regulation?

Several commenters pointed out that

the proposed regulations state that the

Commission ‘‘may issue a certificate of

self-regulation * * * .’’ whereas IGRA

provides that the Commission ‘‘shall

issue a certificate if the petitioning tribe

meets the requirements.

The Commission recognizes this error

and has changed the language in

§ 518.4(a) from ‘‘may issue’’ to ‘‘shall

issue’’.

One commenter questioned the use of

the words ‘‘honest’’ and ‘‘dishonest’’ in

§§ 518.4(a)(1)(i)–(iii), and stated that, by

this language, the Commission was

creating a subjective criteria. This

commenter questioned whether the

Commission would look at actual

criminal charges, or rely on mere word

of mouth.

The language of this paragraph was

taken verbatim from IGRA at 25 U.S.C.

2710(c)(4)(A). The Commission has

created, by these regulations, a system

for the evaluation of these and other

statutory criteria. Section 518.4(b)

provides several methods for

establishing, by supporting

documentation, that a tribe operates its

gaming in a manner that satisfies the

statutory criteria, including the

‘‘honesty’’ requirement mentioned in

the statute.

One commenter recommended that

the language of § 518.4(a)(2) be changed

from ‘‘Adopted and is implementing

adequate systems’’ to ‘‘Adopted and has

implemented adequate systems * * *’’

This commenter believes that a gaming

operation that has been in operation for

three years should be required to have

implemented the adequate systems, not

be in the process of doing so.

The language the Commission used in

§ 518.4(a)(2) was taken directly from

IGRA at 25 U.S.C. 2710(c)(4)(B). IGRA

requires that the tribe has conducted its

gaming for at least three years, and

further requires that the tribe has

adopted and is implementing adequate

systems for accounting of revenues,

investigation of violations, etc.

Therefore, it only makes sense that

those systems must have been in

operation for at least three years, and

that the tribe continues to implement

those systems. The Commission does

not read the language of the statute to

mean that the tribe can qualify for a

certificate if it is merely in the process

of developing and implementing

adequate control systems.

One commenter suggested that

§ 518.4(a)(4) could be construed to

suggest that a tribe may not qualify as

a result of a single minor violation, even

if tribal authorities took prompt

remedial action.

The Commission agrees that the

language of proposed § 518.4(a)(4)

creates an unreasonably high standard.

Therefore, ‘‘full’’ has been deleted from

this paragraph to allow the Commission

the authority to determine whether or

not violations are sufficiently serious to

prevent a determination that a tribe is

self-regulating.

One commenter suggested that the

language of § 518.4(b)(1) should be read

to mean that the tribally adopted

minimum internal control standards do

not necessarily have to be at least as

stringent as Commission standards, or

those of Nevada or New Jersey. This

commenter believes that the test for

receiving a class II certificate focuses on

whether a tribe has achieved substantive

compliance with IGRA, not on whether

the Tribe’s internal controls are at least

as stringent as an externally

promulgated standard adopted by the

Commission. This commenter further

believes that interim reliance on New

Jersey or Nevada standards is flawed

because those states did not adopt their

minimum internal control standards

based on IGRA’s requirements for selfregulation.

The Commission disagrees with the

commenter and believes that uniform

standards are necessary for the industry.

Minimum internal control standards

commonly address categories of games

and specific operational functions of

gaming operations. Therefore, there is

no immediate requirement for MICS

based on standards that are specifically

designed with IGRA in mind. The

Commission has chosen the Nevada and

New Jersey MICS as interim MICS

because both have been in existence for

a number of years and are regarded as

comprehensive and effective standards.

We note, however, that the State of

Nevada is exempt from the currency

transaction reporting required by the

Bank Secrecy Act. Therefore, if Tribes

adopt the Nevada MICS, they must

modify them to comply with that Act.

Furthermore, Commission regulations

adopting MICS are currently being

developed and promulgated by the

Commission.

Another commenter suggested that

the NIGC should include the minimum

internal control standards provided to

the NIGC by the National Indian Gaming

Association (NIGA) as standards that a

tribe may use until the Commission

promulgates its own standards.

NIGA and the National Congress of

American Indians have certainly set the

standard for promoting the concept of

internal controls and uniform MICS.

The Commission commends them on

the work done thus far in drafting

uniform MICS. Those MICS, however,

are still evolving and have not been

adopted in final form. Therefore, the

Commission believes it would be

inappropriate to rely on those MICS at

this time.

One commenter suggested that while

several paragraphs of § 518.4(b)(3)

indicate that the tribal regulatory body

should be adopting and establishing a

variety of standards for the operation of

the gaming activity, some tribal

regulatory bodies do not adopt these

types of standards, but that such

responsibility lies with the tribal

council. This commenter suggested

adding the language, ‘‘if it does not

already exist in the tribe’s gaming

ordinance’’ to each subsection of

§ 518.4(b)(3) that indicates that the tribal

regulatory body would be the entity to

adopt or establish standards.

The Commission generally believes

that the responsibility for the adoption

and establishment of rules and

standards for the operation of the

gaming activity should be a function of

the tribal regulatory body. Such

responsibility would be evidence that

the tribal regulatory body was

functioning independently of the tribal

council. In most governmental systems,

regulatory agencies promulgate their

own rules. However, the Commission

will not deny a petition solely because

a tribal council is responsible for the

adoption of gaming rules, so long as

there is evidence that the tribal

regulatory body is nonetheless

functioning independently. Because this

paragraph deals with ‘‘indicators’’ that a

tribe has met the self-regulation criteria,

and not requirements, the Commission

believes that revision is unnecessary.

One commenter noted that while

§ 518.4(b)(3)(iv) suggests that the tribal

regulatory body performs routine audits
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41965

of the gaming operation, some tribal

regulatory bodies may not perform

financial audits independently of the

annual audit required by IGRA, but may

perform operational audits on a periodic

basis. This commenter suggested adding

‘‘operation or other’’ after the word

‘‘routine’’.

The Commission agrees, and made the

following change: The Commission has

added ‘‘operational or other’’ after

‘‘routine’’.

One commenter suggested that some

tribes do not require non-gaming

employees to be licensed, and that the

use in § 518.4(b)(3)(ix) of the language,

‘‘all employees of the gaming activity’’,

suggests that all employees must be

licensed, regardless of whether they

work directly with the gaming activity.

This commenter suggested that the

language be amended to reflect that only

those employees required to be licensed

under IGRA or tribal law should be

required by the tribal regulatory body to

be licensed.

The Commission disagrees. Section

518.4(b) makes clear that the paragraphs

that follow describe ‘‘indicators’’ that

the Commission may evaluate to

determine whether a tribe has met the

criteria for self-regulation. These are not

requirements that must be met in every

instance. That said, the Commission

would prefer that a tribal regulatory

body, of its own accord, require licenses

for all employees involved in the

gaming activity, not just the key

employees and primary management

officials required by IGRA.

Vendor Licenses

A commenter suggested that

§ 518.4(b)(3)(xii) could be read to mean

that the Commission would consider

whether the tribal regulatory body

issues licenses to all vendors that it

deals with, including vendors of nongaming related services, equipment and

supplies. This commenter proposed

amending this paragraph to add, ‘‘on

matters that may affect the honesty and

integrity of the gaming activity’’ after

the word, ‘‘operation.’’

The Commission disagrees.

Corrupting influences, which the IGRA

was designed to prevent from

infiltrating Indian gaming, and which

can negatively affect the honesty and

integrity of the gaming activity, can get

a foothold through various vendor/

vendee relationships. The Commission

will consider, therefore, the extent to

which the tribe investigates and issues

licenses or permits to the people or

organizations it does business with.

This should not be read to mean that the

tribe must be in the practice of issuing

licenses to each and every entity it deals

with, such as utility companies, but

should have reasonable vendor

licensing standards in place.

Posting of Rules of Games

A commenter stated that

§ 518.4(b)(3)(xiii), which provides that

the Commission will consider whether

the independent tribal regulatory body

establishes or approves, and posts, rules

of games, it too stringent. First, it does

not recognize that some tribes require

the gaming operation, not the regulatory

body, to post rules, and second, that

some game rules are too lengthy to post,

but may be made available upon

demand.

The Commission agrees with the first

comment, and has revised the language

to read, ‘‘establishes or approves, and

requires the posting of, rules of games.’’

With respect to the second comment,

the Commission believes that all rules

should be posted, regardless of their

length. However, because the posting of

rules of the game is an indicator of self

regulation, and not a requirement, the

fact that a tribe does not post all rules,

but makes some lengthy rules available

upon demand, will not necessarily

result in the denial of a certificate.

Video Surveillance

A commenter stated that with respect

to § 518.4(b)(3)(xvi) some small

operations may not require video

surveillance, and that this paragraph

should be amended to read, ‘‘where

video surveillance is required.’’

As indicated earlier § 518.4(b) sets

forth indicators that the Commission

will consider when evaluating a

petition. The Commission recognizes

that operations vary in type and size,

and a rigid set of rules would be

unworkable. While the Commission

favors the use of video surveillance, the

small size of an operation, and its ability

to otherwise effectively regulate the

gaming activity, may mitigate against its

use of video surveillance. The

Commission will evaluate the need for

video surveillance on a case-by-case

basis.

Dispute Resolution Procedures

One commenter suggested that

§ 518.4(b)(3)(xviii), which provides that

the Commission will consider whether

adequate dispute resolution procedures

exist, would require a tribe to waive its

sovereign immunity. Another

commenter suggested that a regulation

requiring dispute resolution is not

appropriate at this time.

The Commission disagrees. The

Commission is not requiring that a tribe

consent to be sued in order to obtain a

certificate. The Commission will,

however, consider whether there is an

adequate system of dispute resolution.

This could involve mediation or

arbitration, in addition to a process for

hearings before the tribal regulatory

body, and a process for appeals to tribal

court. Tribes are already required by 25

CFR 522.2(f) to have a description of

procedures for resolving disputes

between the gaming public and the tribe

or the management contractor. Disputes

between gaming employees and tribes

has been an on going concern in

Congress and in the public. This

provision will enhance the perception

that the gaming operation is run fairly

and honestly. A dispute resolution

process in no way imperils the

sovereign immunity status of a tribe.

Furthermore, there are certain times

when a waiver of sovereign immunity

may be warranted. For example, the

United States has waived its immunity

from suit under the Federal Tort Claims

Act for suits against tortious acts of

federal employees and tribal employees

employed under the Indian SelfDetermination Act.

Financial Stability

A commenter stated that § 518.4(b)(6),

which provides that the Commission

will consider the financial stability of

the operation, is unworkable. This

commenter believes that financial

stability is not a useful measure of a

tribe’s ability to self-regulate because it

may reflect only fluctuations in the

market or changes in tribal policy to

achieve legitimate governmental

objectives, such as providing jobs for the

community.

The financial stability of the operation

is one of several indicators the

Commission will evaluate. The

Commission recognizes that the

economic impact of tribal gaming

operations can accrue to a tribe in

various ways. While in many cases the

primary economic benefit may be profits

generated for the support of the tribal

purposes specified in IGRA (25 U.S.C.

2710(b)(2)(B)), such as further economic

development or the general welfare of

the tribe, in other instances employment

generated for tribal members by the

gaming operation may be the primary

economic benefit. Notwithstanding the

extent of the operation’s profitability,

the operation must be adequately

funded, by gaming revenues or other

infusions the tribe may elect to provide,

so that all required safeguards are

maintained and standards are met.

While the temporary fluctuation of some

market conditions will be taken into

consideration, in instances where

financial instability poses a long-term

threat to compliance with required
41966 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

standards, self regulation certification

will be withheld.

Clarification of § 518.4(d)

The Commission has added the

language, ‘‘During the review of the

petition, ‘‘ to the beginning of § 518.4(d)

to clarify when the provisions of this

paragraph apply.

Section 518.5 What process will the

Commission use to review petitions?

One commenter suggested a peer

review process for the evaluation of

petitions, with a team of people

including those with Indian gaming

regulatory experience, Commission

staff, and outside auditors and

consultants.

A peer review process may be an

appropriate mechanism for evaluating

petitions. The regulations do not have to

mandate such a process, however,

before the Commission can implement

it. Furthermore, The Commission

anticipates that it can, with the

expansion of staff in the near future,

adequately evaluate petitions for selfregulation. If the Commission finds it

necessary and economical to contract

for outside assistance or expertise to

assist the Commission, it will do so.

A commenter stated that the NIGC

should provide consultation and

technical assistance to tribes to help

them through the process.

The Commission intends to assist

tribes in understanding and complying

with all Commission regulations.

Establishment of Office of Self

Regulation

To stream line the review process, the

Commission has created an ‘‘Office of

Self Regulation’’ (OSR). The Chairman

of the Commission shall appoint one

Commissioner to administer this office.

The OSR will be responsible for the

review and investigation process and

will issue a report of its findings to the

tribe. It will also issue certificates of self

regulation, conduct hearings and issue

decisions following those hearings.

Those decisions will then be appealable

to the full Commission, which shall

decide the appeal based on the record.

The tribe may request reconsideration

by the full Commission of a denial of a

petition. This process differs somewhat

from the process described in the

proposed rule. However, it provides an

additional opportunity for tribes to

challenge adverse decisions. The

proposed rule provided for all

determinations to be made by the

Commission after an opportunity for a

hearing, with the full Commission

issuing a final decision on the petition.

That decision was then subject to

reconsideration. The process in these

final regulations provides for initial

decisions to be made by the Office of

Self Regulation, after the opportunity for

a hearing. Those decisions are then

appealable to the full Commission,

whose decision is then subject to

reconsideration. Therefore, the tribe has

the benefit of three levels of scrutiny of

their petition instead of two.

Technical Changes

The Commission has combined the

provisions of proposed §§ 518.5(e) and

(f) into a new section 518.5 (e)(1) and (2)

and renumbered the subsequent

subsections. In addition, the

Commission has added language to

§ 518.5(e)(1) which clarifies that, if the

Office of Self Regulation determines that

the tribe has satisfied the criteria, it

shall so indicate in its report and shall

issue a certificate.

The Commission has also inserted

‘‘from the date of service of the report’’

into § 518.5(e)(1) after ‘‘the tribe shall

have 60 days’’. This relates to the

deadline for submission of the tribe’s

written response, and clarifies when the

60 day time period starts.

Commission Deadlines

Several commenters requested

express deadlines imposed on the

Commission to complete the

certification process. Commenters felt

that IGRA does not give the Commission

unlimited time to act upon a petition,

and to be consistent with IGRA,

regulations should impose meaningful

restrictions on the time allowed the

agency to decide petitions. A

commenter also feels that the

regulations should provide for a tribe to

request a hearing at the time of the

petition. One commenter suggested that

the hearing should be scheduled for

within 30 days of the request for a

hearing, while another commenter

suggested that the hearing should be

held within 60 days of the date the

Commission acknowledges the request

for a hearing. One commenter suggested

that § 518.5(i) should impose a deadline

of 30 days following the hearing for the

Commission to issue its decision, while

another commenter suggested a 60 day

deadline, and that if the Commission

does not issue a decision within 60

days, the petition should be deemed

approved. Without such a provision, the

commenter is concerned that the

Commission will not have incentive to

complete its review in a timely manner.

While time frames can sometimes

assure a more timely decision, the selfregulation process is a new, unique, and

very important process. Thus, the

Commission is not prepared to

determine that 30–60 day time periods

would be reasonable.

Timing of Request for Hearing

With respect to the right to a hearing,

the regulations provide that the hearing

can be requested at the time of a tribe’s

submission of its response to the

Commission’s report, instead of at the

submission of the petition. The

Commission designed the process this

way because if the Commission issues a

report that is favorable and indicates

that it will issue a certificate, a hearing

would be unnecessary. It is only after

the Commission’s report is issued that

the need for a hearing will be evident.

In the interest of time and expense for

both the tribe and the Commission, the

Commission will only honor a request

for a hearing after the issuance of the

Commission’s report.

Information From Interested Parties

Two commenters suggested that

§ 518.5(c), which provides that the

Commission may consider any evidence

submitted by interested parties, could

elicit a variety of inaccurate or

incomplete responses from third parties.

Both commenters further stated that any

information obtained must be available

for review by the Tribe, which should

also have an opportunity to respond and

to correct inaccurate or incomplete

information before the Commission

makes a final decision on the petition.

An important part of the process of

determining a tribe’s ability to selfregulate is the evaluation of information

provided by individuals and entities in

addition to information provided by the

Tribe. The Commission will fully

investigate any negative information,

and will afford the Tribe a timely

opportunity to respond to all such

information on which it relies in making

a determination. Therefore, the

Commission has added the following

language to § 518.5(c), ‘‘The

Commission shall make all such

information on which it relies in making

its determination available to the Tribe,

and shall afford the Tribe an

opportunity to respond.’’

Public Notice Requirement

One commenter stated that negative

backlash could result if the Tribe is

required to publish the notice required

by § 518.5(d) in a non-tribal newspaper.

This paragraph implements 25 U.S.C.

2710(c)(4)(A)(ii), which requires the

Commission to determine if the Tribe

has conducted its gaming in a manner

which has resulted in a reputation for

safe, fair, and honest operation of the

gaming activity. To determine

reputation, the Commission must
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41967

consider public opinion. The

Commission understands the concern

raised by this commenter and will give

each response to the public notice its

due weight. Sweeping criticism of

Indian gaming will not be considered by

the Commission in making its

determination. The Commission is only

interested in comment on specific issues

relative to the Tribe’s reputation for

providing a safe, fair, and honest gaming

environment.

Another commenter suggested that a

better source of information would be

the local United States Attorney for the

district where the tribal gaming is

operated, the Federal Bureau of

Investigation, local police and the

State’s gaming regulatory agency.

The Commission agrees that these

agencies may have information on the

effectiveness of a particular Tribe’s

gaming regulation. During the course of

its investigation of the petition, the

Commission may confer with these

agencies. Nonetheless, it is important

for the general public to be aware of the

Tribe’s petition and to afford the public

an opportunity to comment.

Final Agency Action

One commenter stated that § 518.5

should state expressly that the decision

of the Commission to approve or deny

a petition is a final agency action under

25 U.S.C. 2714.

The Commission agrees that the

decision to approve or deny a petition

is a final agency action, and that the

decision to deny a petition is appealable

under 25 U.S.C. 2714. The Commission

therefore adds a new section 518.5(j)

which states, ‘‘The decision of the

Commission to approve or deny a

petition shall be a final agency action.

A denial shall be appealable under 25

U.S.C. 2714, subject to the provisions of

§ 518.12. The Commission decision

shall be effective when the time for the

filing of a request for reconsideration

pursuant to § 518.12 has expired and no

request has been filed.’’

Section 518.6 When will a certificate of

self-regulation become effective?

Several commenters have argued that

to require tribes to wait until the

beginning of the next year for a

certificate is unfair. Several commenters

have argued that certificates should be

made effective immediately, and one

commenter has suggested a 30 day

effective date. Another commenter

suggested that certificates should

become effective on the first day of the

next quarter following the date the

petition is granted. Still another

commenter suggested that the Tribe

should be permitted to choose which

date their certificate becomes effective.

One commenter points out that IGRA

provides that ‘‘during any year in which

a Tribe has a certificate of selfregulation’’ it is not subject to 25 U.S.C.

2706(b) and, in addition, the

Commission may not assess a fee in

excess of one quarter of one percent.

This commenter believes that the

proposed regulations directly

contravene this language.

The Commission has concluded that

the approach most clearly aligned with

the statute is to provide for a January 1st

effective date, with all benefits inuring

to the tribe from that date forward. Self

regulation status confers two types of

benefits upon a tribe that holds a

certificate; financial and a reduced

regulatory role for the Commission with

respect to that tribe. IGRA provides that

‘‘during any year in which a tribe has a

certificate’’ it shall reap those benefits.

25 U.S.C. 2710 (c)(5). This language is

ambiguous, as the reduction in the

Commission’s regulatory role can only

apply prospectively, whereas the

financial benefit is capable of retroactive

application. The Commission powers

apply only prospectively because the

Commission will have already taken

action before the determination on self

regulation was made. Those actions can

not be undone. Although the ‘‘during

any year’’ language can be interpreted to

mean ‘‘for the entire year’’, which

would support an argument in favor of

retroactive application of the financial

benefits, it does not make sense to

intepret the statute one way with

respect to regulatory authority and

another with respect to the financial

incentive. Furthermore, the

establishment of a January 1st effective

date is consistent with Commission

regulations and does not create an

undue financial burden on tribes. For

example, if a tribe applies in 1999 and

a certificate is issued and made effective

January 1, 2000, fee payments made by

the tribe in 1999 would have been based

on 1998 revenues pursuant to

Commission regulations. Current fee

regulations provide that fees are

calculated based on the previous year’s

revenues. See 25 CFR 514.1(c)(5)(ii).

Furthermore, the establishment of a

January 1st effective date is the most

practical approach for the Commission

to take. Fees are paid to the Commission

quarterly based on the prior year’s

revenues. It would be impractical for the

Commission to determine, on a case by

case basis, what each self regulating

tribe owes for the part of the year in

which it was not self regulating, and

how much it owes for the part of the

year that it is self regulating. In

addition, the Commission’s budget is

determined each year based on the

amount of fees collected. If fees already

paid were rebated based on a retroactive

application of the statute, the budgetary

process would be in a constant state of

flux. This would make it difficult for the

Commission to determine the amount of

money available at any point in time to

carry out its statutory duties.

The Commission has established a

schedule for the submission of petitions

that should ease the process and

provide guidance to tribes. The process

is as follows: To be considered for

issuance of a certificate the following

January, complete petitions are due no

later than June 30 (Pursuant to

§ 518.5(b), the Commission shall notify

a tribe, by letter, when it considers a

petition to be complete.); petitions will

be reviewed and investigated in

chronological order based on the date of

receipt of a complete petition; and the

Commission will announce its

determinations on December 1 for all

those reviews and investigations it

completes. This process encourages

submission of petitions early in the

calendar year to afford the Commission

enough time to review and investigate

the petition and to make a

determination by December 1.

The Commission recognizes that

under this schedule, the earliest a

certificate will be effective is January 1,

2000. However, the Commission will

accept petitions for the June 30, 1999

deadline starting immediately, and once

these regulations become effective, the

Commission will begin the process of

reviewing and investigating petitions.

Furthermore, it is unlikely, based on the

extent and nature of these regulations,

that the Commission would complete its

review and investigation of a petition in

time for a January 1, 1999, effective

date. In addition, this schedule does not

require tribes to wait an extra year for

the financial benefit of self regulation

because fees are calculated each year

based on the prior year’s revenues. Even

though tribes must wait until January 1,

2000, for the first opportunity to obtain

a certificate, any fees paid in 1999 will

be based on 1998 revenues.

Section 518.7 If a tribe holds a

certificate of self-regulation, is it

required to report information to the

Commission to maintain its selfregulatory status?

One commenter stated that IGRA does

not require certified Tribes to repeatedly

demonstrate that they are selfregulating. This commenter believes

that such a requirement would be so

onerous as to make a certificate not

worthwhile. Another commenter stated

that the report is as complex as the
41968 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

original petition, and suggested the

requirement of an annual report that

only documents a change in status.

The Commission agrees that IGRA

does not affirmatively require certified

tribes to repeatedly demonstrate that

they are self-regulating. However, IGRA

vests the Commission with the power to

remove a certificate. 25 U.S.C.

2710(c)(6). This power would be

rendered meaningless unless the

Commission is routinely informed that

the tribe is continuing to meet the

criteria for self regulation, particularly

in light of the several powers of the

Commission which are abrogated by the

issuance of a certificate. (See 25 U.S.C.

2710(c)(5)(A)). The Commission does,

however, share the concerns of the

commenters that the reporting

requirement may be unduly onerous

and has therefore removed the language,

‘‘with supporting documentation’’ after

‘‘such report shall set forth

information’’. By removing the

requirement that the tribe submit

supporting documentation with its

annual report, the Commission intends

to make the process of completing and

submitting the report less onerous.

While not requiring that the tribe

supplement its annual report with

documentation supporting each self

regulation criteria, the Commission may

require the tribe to supply supporting

documentation if necessary. The

Commission plans to provide guidance

on how to prepare the report. In

addition, the Commission has added

‘‘and shall include an annual report,

with supporting documentation, signed

by an authorized tribal official, which

shows that tribal net gaming revenues

were used in accordance with the

requirements of 25 U.S.C. 2710(b)(2)(B)’’

after ‘‘approval requirements of

§ 518.4’’. This is the same type of report

the Tribe must submit with its petition

under § 518.3(a)(1)(vii).

Section 518.8. Does a tribe that holds a

certificate of self regulation have a

continuous duty to advise the

Commission of any information?

One commenter stated that the

requirement that a tribe advise the

Commission of circumstances that may

negatively impact on the tribe’s ability

to self regulate could be subject to wideranging interpretation as to what may be

a negative impact. This commenter

suggested that this section require a

tribe to advise the Commission of any

circumstances that may reasonably

impact the tribe’s ability to continue to

self regulate.

The Commission generally agrees

with this commenter. Therefore,to

clarify that the tribe has a continuing

duty to advise the Commission of

circumstances that may cause the

Commission to review the tribe’s

certification, and to clean up

unnecessary language, the text of

§ 518.8. has been modified slightly. The

following changes were made: delete ‘‘at

all times after the receipt of a certificate

of self-regulation’’; delete ‘‘negatively

impact on the tribe’s ability to continue

to self-regulate’’ after ‘‘may’’ and add,

‘‘reasonably cause the Commission to

review the tribe’s certificate of self

regulation’; and delete ‘‘may undermine

a tribe’s ability to effectively regulate’’

after ‘‘factors that’’ and add ‘‘are

material to the decision to grant a

certificate of self regulation.’’ This

change clarifies that the Commission

expects to be notified of any significant

circumstances that may affect a tribes

certificate of self regulation.

Section 518.9 Are any of the

investigative or enforcement powers of

the Commission limited by the issuance

of a certificate of self-regulation?

One commenter suggested that the

language of § 518.9 is misleading

because it does not take into account the

language of IGRA at 2710(c)(5)(a) which

states that certain provision of IGRA do

not apply to self-regulated tribes.

The Commission agrees, and therefore

adds the following language to the

beginning of § 518.9, ‘‘ Subject to the

provisions of 25 U.S.C. 2710(c)(5)(A),’’

Section 518.10 Under what

circumstances may the Commission

remove a certificate of self-regulation?

One commenter stated that this

paragraph should indicate that a

decision to remove a certificate is

appealable to Federal District Court.

The Commission agrees and adds to

§ 518.10 the following: ‘‘The decision to

remove a certificate is appealable to

Federal District Court pursuant to 25

U.S.C. 2714.’’

Section 518.12 May a tribe request

reconsideration by the Commission of a

denial of a petition or a removal of a

certificate of self-regulation?

One commenter suggested that

§ 518.12 should state that a request for

reconsideration reopens the matter

before the Commission, and that until

action on the request is complete, the

prior decision of the Commission is not

a final agency action.

The Commission has clarified this

paragraph by adding § 518.5 (j) which

provides that if a request for

reconsideration has been filed within 30

days of the denial or removal, the

Commission’s original decision is not

final agency action.

The Commission has further clarified

§ 518.12 because it was not clear

whether the Commission would decide

within 30 days whether to grant the

request for reconsideration, or whether

the Commission would decide the

request on its merits. Therefore, the

Commission has added the word,

‘‘final’’ before the word, ‘‘decision and

has removed the language, ‘‘with regard

to any request for reconsideration’’ from

the second to last sentence. The

Commission will make its final decision

within 30 days.

One commenter stated that the failure

of the Commission to issue a decision

on reconsideration within 30 days

should result in the automatic approval,

not disapproval, of the request. This

commenter suggests that the automatic

disapproval provision discourages the

timely resolution of requests for

reconsideration.

The Commission disagrees. By

allowing for reconsideration of a

decision to deny a petition or remove a

certificate, the Commission is affording

a Tribe a second opportunity to make its

case. There is no statutory right to

reconsideration, and therefore no

prescribed deadline for such decision.

The Commission has, however,

provided for a 30 day deadline. If no

decision issues within 30 days, the

Tribe will know by the 31st day that the

request was not approved. There is,

therefore, no real threat of continued

inaction by the Commission.

Several grammatical changes were

made to the proposed regulations. These

changes have no substantive effect.

Regulatory Matters

Paperwork Reduction Act

On May 2, 1998, the Commission

received notice that the Office of

Management and Budget approved its

information collection system, and

assigned it number 3141–0008. This

approval expires on May 31, 2001.

Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act, 5 U.S.C. 601 et seq., the

Commission has determined that this

rule will not have a significant

economic impact on a substantial

number of small entities. Because this

rule is procedural in nature, it will not

impose substantive requirements that

could be deemed impacts within the

scope of the Act.

National Environmental Policy Act

The Commission has determined that

this rule does not constitute a major

Federal action significantly affecting the

quality of the human environment and
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41969

that no detailed statement is required

pursuant to the National Environmental

Policy Act of 1969.

List of Subjects in 25 CFR Part 518

Administrative practice and

procedure, Gambling, Indians—lands,

Indians—tribal government, Reporting

and recordkeeping requirements.

For the reasons stated in the

preamble, the Commission amends 25

CFR chapter III by adding part 518 to

read as follows:

PART 518—SELF REGULATION OF

CLASS II GAMING

Sec.

518.1 What does this part cover?

518.2 Who may petition for a certificate

of self-regulation?

518.3 What must a tribe submit to the

Commission as part of its petition?

518.4 What criteria must a tribe meet to

receive a certificate of self-regulation?

518.5 What process will the Commission

use to review petitions?

518.6 When will a certificate of selfregulation become effective?

518.7 If a tribe holds a certificate of selfregulation, is it required to report

information to the Commission to

maintain its self-regulatory status?

518.8 Does a tribe that holds a certificate

of self-regulation have a continuous duty

to advise the Commission of any

information?

518.9 Are any of the investigative or

enforcement powers of the Commission

limited by the issuance of a certificate of

self-regulation?

518.10 Under what circumstances may

the Commission remove a certificate of

self-regulation?

518.11 May a tribe request a hearing on

the Commission’s proposal to remove its

certificate?

518.12 May a tribe request

reconsideration by the Commission of a

denial of a petition or a removal of a

certificate of self-regulation?

Authority: 25 U.S.C. 2706(b)(10),

2710(c)(3)–(6).

§ 518.1 What does this part cover?

This part sets forth requirements for

obtaining, and procedures governing,

the Commission’s issuance of

certificates of self-regulation of class II

gaming operations under 25 U.S.C.

2710(c). When the Commission issues a

certificate of self-regulation, the

certificate is issued to the tribe, not to

a particular gaming operation; the

certificate will apply to all class II

gaming operations operated by the tribe

that holds the certificate.

§ 518.2 Who may petition for a certificate

of self-regulation?

A tribe may submit to the

Commission a petition for selfregulation of class II gaming if, for the

three (3) year period immediately

preceding the date of its petition:

(a) The tribe has continuously

conducted the gaming activity for which

it seeks self-regulation;

(b) All gaming that the tribe has

engaged in, or licensed and regulated,

on Indian lands within the tribe’s

jurisdiction, 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), in accordance with 25

U.S.C. 2710(b)(1)(A);

(c) The governing body of the tribe

has adopted an ordinance or resolution

that the Chairman has approved, in

accordance with 25 U.S.C. 2710(b)(1)(B);

(d) The tribe has otherwise complied

with the provisions of 25 U.S.C. 2710;

and

(e) The gaming operation and the

tribal regulatory body have, for the three

years immediately preceding the date of

the petition, maintained all records

required to support the petition for selfregulation.

§ 518.3 What must a tribe submit to the

Commission as part of its petition?

(a) A petition for a certificate of selfregulation under this part shall contain:

(1) Two copies on 8–1/2’’ X 11’’ paper

of a petition for self-regulation approved

by the governing body of the tribe and

certified as authentic by an authorized

tribal official, which includes:

(i) A brief history of each gaming

operation(s), including the opening

dates and periods of voluntary or

involuntary closure;

(ii) An organizational chart of the

independent tribal regulatory body;

(iii) A description of the process by

which all employee and regulator

positions at the independent tribal

regulatory body are filled, including

qualifying and disqualifying criteria;

(iv) A description of the process by

which the independent tribal regulatory

body is funded and the funding level for

the three years immediately preceding

the date of the petition;

(v) A list of the current regulators and

employees of the independent tribal

regulatory body, their titles, the dates

they began employment, and, if serving

limited terms, the expiration date of

such terms;

(vi) A list of the current gaming

operation division heads; and

(vii) A report, with supporting

documentation, including a sworn

statement signed by an authorized tribal

official, which explains how tribal net

gaming revenues were used in

accordance with the requirements of 25

U.S.C. 2710(b)(2)(B);

(2) A descriptive list of the documents

maintained by the tribe, together with

an assurance that the listed documents

or records are available for the

Commission’s review for use in

determining whether the tribe meets the

eligibility criteria of § 518.2 and the

approval criteria of § 518.4, which shall

include but is not limited to:

(i) The tribe’s constitution or other

governing documents;

(ii) If applicable, the tribe’s revenue

allocation plan pursuant to 25 U.S.C.

2710(b)(3);

(iii) A description of the accounting

system(s) at both the gaming operation

and the tribe that account for the flow

of the gaming revenues from receipt to

their ultimate use, consistent with

IGRA;

(iv) Manual(s) of the internal control

systems of the gaming operation(s);

(v) A description of the record

keeping system for all allegations of

criminal or dishonest activity for the

three (3)-year period immediately

preceding the date of the petition, and

measures taken to resolve the

allegations;

(vi) A description of the record

keeping system for all investigations,

enforcement actions, and prosecutions

of violations of the tribal gaming

ordinance or regulations, for the three

(3)-year period immediately preceding

the date of the petition, including

dispositions thereof;

(vii) A description of the personnel

record keeping system of all current

employees of the gaming operation(s);

(viii) The dates of issuance, and

criteria for the issuance of tribal gaming

licenses issued for each place, facility or

location at which gaming is conducted;

and

(ix) The tribe’s current set of gaming

regulations; and

(3) A copy of the public notice

required under 25 CFR 518.5(d) and a

certification, signed by a tribal official,

that it has been posted. Upon

publication of the notice in a local

newspaper, the tribe shall forward an

affidavit of publication to the

Commission.

§ 518.4 What criteria must a tribe meet to

receive a certificate of self-regulation?

(a) The Commission shall issue a

certificate of self-regulation if it

determines that the tribe has, for the

three years immediately preceding the

petition:

(1) Conducted its gaming activity in a

manner that:

(i) Has resulted in an effective and

honest accounting of all revenues;

(ii) Has resulted in a reputation for

safe, fair, and honest operation of the

activity; and
41970 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

(iii) Has been generally free of

evidence of criminal or dishonest

activity;

(2) Adopted and is implementing

adequate systems for:

(i) Accounting of all revenues from

the activity;

(ii) Investigation, licensing and

monitoring of all employees of the

gaming activity; and

(iii) Investigation, enforcement and

prosecution of violations of its gaming

ordinance and regulations;

(3) Conducted the operation on a

fiscally and economically sound basis;

and

(4) The gaming activity has been

conducted in compliance with the

IGRA, NIGC regulations in this chapter,

and the tribe’s gaming ordinance and

gaming regulations.

(b) Indicators that a tribe has met the

criteria set forth in paragraph (a) of this

section may include, but are not limited

to:

(1) Adoption and implementation of

minimum internal control standards

which are at least as stringent as those

promulgated by the Commission, or

until such standards are promulgated by

the Commission, minimum internal

control standards at least as stringent as

those required by the State of Nevada or

the State of New Jersey;

(2) Evidence that suitability

determinations are made with respect to

tribal gaming regulators which are at

least as stringent as those required for

key employees and primary

management officials of the gaming

operation(s);

(3) Evidence of an established

independent regulatory body within the

tribal government which:

(i) Monitors gaming activities to

ensure compliance with federal and

tribal laws and regulations;

(ii) Promulgates tribal gaming

regulations pursuant to tribal law;

(iii) Ensures that there is an adequate

system for accounting of all revenues

from the activity and monitors such

system for continued effectiveness;

(iv) Performs routine operational or

other audits of the gaming operation(s);

(v) Routinely receives and reviews

accounting information from the gaming

operation(s);

(vi) Has access to and may inspect,

examine, photocopy and audit all

papers, books, and records of the

gaming operation(s);

(vii) Provides ongoing information to

the tribe on the status of the tribe’s

gaming operation(s);

(viii) Monitors compliance with

minimum internal control standards for

the gaming operation;

(ix) Adopts and implements an

adequate system for investigation,

licensing, and monitoring of all

employees of the gaming activity;

(x) Maintains records on licensees and

on persons denied licenses including

persons otherwise prohibited from

engaging in gaming activities within the

tribe’s jurisdiction;

(xi) Inspects and examines all

premises where gaming is conducted;

(xii) Establishes standards for and

issues vendor licenses or permits to

persons or entities who deal with the

gaming operation, such as

manufacturers and suppliers of services,

equipment and supplies;

(xiii) Establishes or approves, and

requires the posting of, rules of games;

(xiv) Inspects games, tables,

equipment, cards, and chips or tokens

used in the gaming operation(s);

(xv) Establishes standards for

technological aids and tests such for

compliance with standards;

(xvi) Establishes or approves video

surveillance standards;

(xvii) Adopts and implements an

adequate system for the investigation of

possible violations of the tribal gaming

ordinance and regulations and takes

appropriate enforcement actions;

(xviii) Determines that there are

adequate dispute resolution procedures

for gaming operation employees and

customers, and ensures that such system

is adequately implemented; and

(xix) Takes testimony and conducts

hearings on regulatory matters,

including matters related to the

revocation of primary management

officials and key employee licenses;

(4) Documentation of a sufficient

source of permanent and stable funding

for the independent tribal regulatory

body which is allocated and

appropriated by the tribal governing

body;

(5) Adoption of a conflict of interest

policy for the regulators/regulatory body

and their staff;

(6) Evidence that the operation is

financially stable;

(7) Adoption and implementation of a

system for adequate prosecution of

violations of the tribal gaming ordinance

and regulations, which may include the

existence of a tribal court system

authorized to hear and decide gaming

related cases;

(8) Evidence that the operation is

being conducted in a safe manner,

which may include, but not be limited

to:

(i) The availability of medical, fire,

and emergency services;

(ii) The existence of an evacuation

plan; and

(iii) Proof of compliance with

applicable building, health, and safety

codes; and

(9) Evidence that reports are produced

or received by the tribe, the tribal

regulatory body, or the gaming

operation based on an evaluation of the

internal controls of the gaming

operation during the three (3) year

period immediately preceding the date

of the petition.

(c) The burden of establishing selfregulation is upon the tribe filing the

petition.

(d) During the review of the

petition,—the Commission shall have

complete access to all areas of and all

papers, books, and records of the tribal

regulatory body, the gaming operation,

and any other entity involved in the

regulation or oversight of the gaming

operation. The Commission shall be

allowed to inspect and photocopy any

relevant materials. The tribe shall take

no action to prohibit the Commission

from soliciting information from any

current or former employees of the tribe,

the tribal regulatory body, or the gaming

operation. Failure to adhere to this

paragraph may be grounds for denial of

a petition for self-regulation.

§ 518.5 What process will the Commission

use to review petitions?

(a) The Chairman shall appoint one

Commissioner to administer the Office

of Self Regulation. The Office of Self

Regulation shall undertake an initial

review of the petition to determine

whether the tribe meets all of the

eligibility criteria of § 518.2. If the tribe

fails to meet any of the eligibility

criteria, the Office of Self Regulation

shall deny the petition and so notify the

tribe. If the tribe meets all of the

eligibility criteria, the Office of Self

Regulation shall review the petition and

accompanying documents for

completeness. If the Office of Self

Regulation finds the petition

incomplete, it shall immediately notify

the tribe by letter, certified mail, return

receipt requested, of any obvious

deficiencies or significant omissions

apparent in the petition and provide the

tribe with an opportunity to submit

additional information and/or

clarification.

(b) The Office of Self Regulation shall

notify a tribe, by letter, when it

considers a petition to be complete.

(c) Upon receipt of a complete

petition, the Office of Self Regulation

shall conduct a review and investigation

to determine whether the tribe meets the

approval criteria under § 518.4. During

the course of this review, the Office of

Self Regulation may request from the

tribe any additional material it deems

necessary to assess whether the tribe has

met the requirements for self-regulation.

The tribe shall provide all information
Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations 41971

requested by the Office of Self

Regulation in a timely manner. The

Office of Self Regulation may consider

any evidence which may be submitted

by interested or informed parties. The

Office of Self Regulation shall make all

such information on which it relies in

making its determination available to

the Tribe and shall afford the Tribe an

opportunity to respond.

(d) The tribe shall post a notice,

contemporaneous with the filing of the

petition, advising the public that it has

petitioned the Commission for a

certificate of self regulation. Such notice

shall be posted in conspicuous places in

the gaming operation and the tribal

government offices. Such notice shall

remain posted until the Commission

either issues a certificate or declines to

do so. The tribe shall also publish such

notice, once a week for four weeks, in

a local newspaper with a broad based

circulation. Both notices shall state that

one of the criteria for the issuance of a

certificate is that the tribe has a

reputation for safe, fair, and honest

operation of the gaming activity, and

shall solicit comments in this regard.

The notices shall instruct commentors

to submit their comments directly to the

Office of Self Regulation, shall provide

the mailing address of the Commission

and shall request that commentors

include their name, address and day

time telephone number.

(e) After making an initial

determination on the petition, the Office

of Self Regulation shall issue a report of

its findings to the tribe.

(1) If the Office of Self Regulation

determines that the tribe has satisfied

the criteria for a certificate of self

regulation, it shall so indicate in its

report and shall issue a certificate in

accordance with 25 CFR 518.6.

(2) If the Office of Self Regulation’s

initial determination is that a tribe has

not met the criteria for a certificate of

self regulation, it shall so advise the

tribe in its report and the tribe shall

have 60 days from the date of service of

the report to submit to the Office of Self

Regulation a written response to the

report. This response may include

additional materials which:

(i) The tribe deems necessary to

adequately respond to the findings; and

(ii) The tribe believes supports its

petition.

(f) At the time of the submission of its

response the tribe may request a hearing

before the Office of Self Regulation. This

request shall specify the issues to be

addressed by the tribe at such hearing,

and any proposed oral or written

testimony the tribe wishes to present.

The Office of Self Regulation may limit

testimony.

(g) The Office of Self Regulation shall

notify the tribe, within 10 days of

receipt of such request, of the date and

place of the hearing. The Office of Self

Regulation shall also set forth the

schedule for the conduct of the hearing,

including the specification of all issues

to be addressed at the hearing, the

identification of any witnesses, the time

allotted for testimony and oral

argument, and the order of the

presentation.

(h) Following review of the tribe’s

response and the conduct of the hearing,

the Office of Self Regulation shall issue

a decision on the petition. The decision

shall set forth with particularity the

findings with respect to the tribe’s

compliance with standards for selfregulation set forth in this part. If the

Office of Self Regulation determines that

a certificate will issue, it will do so in

accordance with 25 CFR 518.6.

(i) The decision to deny a petition

shall be appealable to the full

Commission. Such appeal shall be

received by the Commission within

thirty (30) days of service of the

decision and shall include a

supplemental statement that states with

particularity the relief desired and the

grounds therefor. The full Commission

shall decide the appeal based only on a

review of the record before it. The

decision on appeal shall require a

majority vote of the Commissioners.

(j) The decision of the Commission to

approve or deny a petition shall be a

final agency action. A denial shall be

appealable under 25 U.S.C. 2714,

subject to the provisions of § 518.12.

The Commission decision shall be

effective when the time for the filing of

a request for reconsideration pursuant to

§ 518.12 has expired and no request has

been filed.

§ 518.6 When will a certificate of selfregulation become effective?

A certificate of self-regulation shall

become effective on January 1 of the

year following the year in which the

Commission determines that a

certificate will issue. Complete petitions

are due no later than June 30. No

petitions will be considered for the

following January 1 effective date that

have not been received by June 30 of the

previous year. Petitions will be

reviewed and investigated in

chronological order based on the date of

receipt of a complete petition. The

Commission will announce its

determinations on December 1 for all

those reviews and investigations it

completes.

§ 518.7 If a tribe holds a certificate of selfregulation, is it required to report

information to the Commission to maintain

its self-regulatory status?

Yes. Each tribe that holds a certificate

of self-regulation shall be required to

submit a self-regulation report annually

to the Commission in order to maintain

its self-regulatory status. Such report

shall set forth information to establish

that the tribe has continuously met the

eligibility requirements of § 518.2 and

the approval requirements of § 518.4

and shall include a report, with

supporting documentation, including a

sworn statement signed by an

authorized tribal official, which

explains how tribal net gaming revenues

were used in accordance with the

requirements of 25 U.S.C.

2710(b)(2)(B)’’. The annual report shall

be filed with the Commission on April

15th of each year following the first year

of self-regulation. Failure to file such

report shall be grounds for the removal

of a certificate under § 518.8.

§ 518.8 Does a tribe that holds a certificate

of self-regulation have a continuing duty to

advise the Commission of any information?

Yes. A tribe that holds a certificate of

self-regulation has a continuing duty to

advise immediately the Commission of

any circumstances that may reasonably

cause the Commission to review the

tribe’s certificate of self-regulation.

Failure to do so is grounds for removal

of a certificate of self-regulation. Such

circumstances may include, but are not

limited to: a change in management

contractor; financial instability; or any

other factors that are material to the

decision to grant a certificate of self

regulation.

§ 518.9 Are any of the investigative or

enforcement powers of the Commission

limited by the issuance of a certificate of

self-regulation?

No. Subject to the provisions of 25

U.S.C. 2710(c)(5)(A) the Commission

retains its investigative and enforcement

powers over all class II gaming tribes

notwithstanding the issuance of a

certificate of self-regulation. The

Commission shall retain its powers to

investigate and bring enforcement

actions for violations of the Indian

Gaming Regulatory Act, accompanying

regulations, and violations of tribal

gaming ordinances.

§ 518.10 Under what circumstances may

the Commission remove a certificate of selfregulation?

The Commission may, after an

opportunity for a hearing, remove a

certificate of self-regulation by a

majority vote of its members if it

determines that the tribe no longer
41972 Federal Register / Vol. 63, No. 151 /Thursday, August 6, 1998 /Rules and Regulations

meets the eligiblity criteria of § 518.2,

the approval criteria of § 518.4, the

requirements of § 518.7 or the

requirements of § 518.8. The

Commission shall provide the tribe with

prompt notice of the Commission’s

intent to remove a certificate of selfregulation under this Part. Such notice

shall state the reasons for the

Commission’s action and shall advise

the tribe of its right to a hearing under

§ 518. 11. The decision to remove a

certificate is appealable to Federal

District Court pursuant to 25 U.S.C.

2714.

§ 518.11 May a tribe request a hearing on

the Commission’s proposal to remove its

certificate?

Yes. A tribe may request a hearing

regarding the Commission’s proposal to

remove a certificate of self regulation

under § 518.10. Such a request shall be

filed with the Commission within thirty

(30) days after the tribe receives notice

of the Commission’s action. Failure to

request a hearing within the time

provided by this section shall constitute

a waiver of the right to a hearing.

§ 518.12 May a tribe request

reconsideration by the Commission of a

denial of a petition or a removal of a

certificate of self-regulation?

Yes. A tribe may file a request for

reconsideration of a denial of a petition

or a removal of a certificate of selfregulation within 30 days of receipt of

the denial or removal. Such request

shall set forth the basis for the request,

specifically identifying those

Commission findings which the tribe

believes to be erroneous. The

Commission shall issue a final decision

within 30 days of receipt of the request.

If the Commission fails to issue a

decision within 30 days, the request

shall be considered to be disapproved.

Authority and Signature

This Final Rule was prepared under

the direction of Tadd Johnson,

Chairman, National Indian Gaming

Commission, 1441 L. St. N.W., Suite

9100, Washington, D.C. 20005.

Signed at Washington, D.C. this 29th day

of July, 1998.

Tadd Johnson,

Chairman.

[FR Doc. 98–20723 Filed 8–5–98; 8:45 am]

BILLING CODE 7565–01–P

DEPARTMENT OF DEFENSE

48 CFR Parts 205, 206, 217, 219, 225,

226, 236, 252, and 253

[DFARS Case 98–D007]

Defense Federal Acquisition

Regulation Supplement; Reform of

Affirmative Action in Federal

Procurement

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for

comments.

SUMMARY: The Director of Defense

Procurement has issued an interim rule

amending the Defense Federal

Acquisition Regulation Supplement

(DFARS) guidance concerning programs

for small disadvantaged business (SDB)

concerns. These amendments conform

to a Department of Justice (DoJ) proposal

to reform affirmative action in Federal

procurement, and are consistent with

the changes made to the Federal

Acquisition Regulation (FAR) in Federal

Acquisition Circular (FAC) 97–06. DoJ’s

proposal is designed to ensure

compliance with the constitutional

standards established by the Supreme

Court in Adarand Constructors, Inc. v.

Pena, 115 S. Ct. 2097 (1995).

DATES: Effective Date: October 1, 1998.

Applicability Date: The policies,

provisions, and clauses of this interim

rule are effective for all solicitations

issued on or after October 1, 1998.

Comment Date: Comments on the

interim rule should be submitted in

writing to the address shown below on

or before October 5, 1998, to be

considered in the formulation of the

final rule.

ADDRESSES: Interested parties should

submit written comments to: Defense

Acquisition Regulations Council, Attn:

Ms. Susan Schneider, PDUSD (A&T) DP

(DAR), IMD 3D139, 3062 Defense

Pentagon, Washington, DC 20301–3062,

telefax (703) 602–0350.

E-mail comments submitted over the

Internet should be addressed to:

dfarsacq.osd.mil

Please cite DFARS Case 98–D007 in

all correspondence related to this issue.

E-mail comments should cite DFARS

Case 98–D007 in the subject line.

FOR FURTHER INFORMATION CONTACT: Ms.

Susan Schneider, PDUSD (A&T) DP

(DAR), (703) 602–0131, or Mr. Mike

Sipple, PDUSD (A&T) DP (CPA), (703)

695–8567. Please cite DFARS Case 98–

D007.

SUPPLEMENTARY INFORMATION:

A. Background

In Adarand, the Supreme Court

extended strict judicial scrutiny to

Federal affirmative action programs that

use racial or ethnic criteria as a basis for

decisionmaking. In procurement, this

means that any use of race in the

decision to award a contract is subject

to strict scrutiny. Under strict scrutiny,

any Federal programs that make race a

basis for contract decisionmaking must

be narrowly tailored to serve a

compelling Government interest.

DoJ developed a proposed structure to

reform affirmative action in Federal

procurement designed to ensure

compliance with the constitutional

standards established by the Supreme

Court in Adarand. The DoJ proposal

was published for public notice and

comment (61 FR 26042, May 23, 1996).

DoJ issued a notice that provided a

response to the public comments (62 FR

25648, May 9, 1997). To implement the

DoJ concept, two interim FAR rules

were issued: FAC 97–06, effective

October 1, 1998, implements a price

evaluation adjustment for SDB concerns

(63 FR 35719, June 30, 1998); and FAC

97–07, effective January 1, 1999,

implements an SDB participation

program (63 FR 36120, July 1, 1998).

This interim rule contains the revisions

necessary to conform the DFARS to the

interim FAR rule in FAC 97–06, and to

the DoJ proposal implemented by the

FAR rule. Subsequent revisions will be

issued to conform the DFARS to the

interim FAR rule in FAC 97–07.

B. Regulatory Flexibility Act

This interim rule is not excepted to

have a significant economic impact on

a substantial number of small entities

within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq.,

because most of the changes merely

conform the DFARS to the FAR rule in

FAC 97–06. Two source selection

considerations for SDB concerns

currently in the DFARS, but not in the

FAR, are amended by this rule to

conform to the DoJ model: Leader

company contracting (DFARS 217.401);

and architect-engineer (A–E) services

(DFARS 236.602). These two changes

are not expected to have a significant

economic impact on a substantial

number of small entities since (1) leader

company contracting is infrequently

used by DoD; and (2) the primary factor

in A–E selection is the determination of

the most highly qualified firm; the SDB

consideration is one of several

secondary source selection factors.

Therefore, an initial regulatory

flexibility analysis has not been

performed. Comments are invited from

small businesses and other interested

parties. Comments from small entities

concerning the affected DFARS subparts

also will be considered in accordance