Letter to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque
August 30, 2017 :

° See, Master Equipment Lease Agreement, article 4, § 4.02.
* See, Loan Agreement, article 2, § 2.5(a), Interest.
> See, Master Equipment Lease Agreement, article 8, § 8.03.

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Letter to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque

August 30, 2017

Sole Proprietary Interest

IGRA also requires a tribe to 0 possess “the sole proprietary interest and responsibility for
the conduct of any gaming activity.”’° Proprietary interest is not defined in IGRA, or the NIGC’s
implementing regulations. Black’s Law Dictionary, 10" Edition (2014), defines proprietary
interest as “interest held by a property owner together with all appurtenant, Tights... .” Owner is
defined as “one who has the right to possess, use and convey something.”! 7 Appurtenant i is
defined as “belonging to; accessory or incident to....”'* Case law defines “proprietary interest”
as “one who has an interest in, control of, or present use of certain property.

Sole Proprietary Interest Analysis

In order to determine whether an agreement violates the sole proprietary interest
requirement, the NIGC analyzes three elements: 1) the term of the relationship; 2) the amount of
revenue paid to the third party; and 3) a third party’s right to exercise control over all or any part
of the gaming activity.” Accordingly, if a party, other than the tribe receives a high level of
compensation, for a long period of time, and possesses some aspect of control, an improper
proprietary interest may exist.

'S See, 25 U.S.C. § 2710(b)(2)(10); see also, 25 C.F.R. § 522.4(b)(1).
. Blacks’ Law Dictionary, 10" Edition (2014).

Id.
'° See, Evans v. United States, 349 F.2d 653 (5" Cir. 1965).
9 See, NIGC NOV-11-02 (July 12, 2011); See also City of Duluth v, Fond du Lac Band of Lake Superior Chippewa,
830 F, Supp. 2d 712, 723 (D. Minn. 2011), aff'd in pertinent part, 702 F.3d 1147 (8th Cir. 2013) (discussing NIGC
adjudication of proprietary interest provision).

See, Master Equipment Lease Agreement, article 3, § 3.04.

2 See, Master Equipment Lease Agreement, article 12, § 12.02.

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Letter.to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque
August 30, 2017

Conclusion

The Loan Documents prohibit anyone but the Pueblo from managing the gaming
operation and does not provide Oo ty Uh eh yith the right or responsibility for
making management decisions at the Pueblo’s proposed gaming facility. It is, therefore, my

opinion that the Loan Documents are not management agreements requiring the approval of the
Chair. Additionally, the Loan Documents, on their face, do not violate the IGRA requirement
that the Tribe maintain the sole proprietary interest in its gaming operation.

It is my understanding that the Agreement is represented to be in substantially final form
with respect to terms affecting this opinion. If such terms change in any material way prior to
closing, or are inconsistent with assumptions made herein, this opinion shall not apply. Further,
this opinion is limited to the Loan Documents listed above. This opinion does not include or
extend to any other agreements or documents not submitted for review.

Please note that it is my intent that this letter be released to the public through the
NIGC’s website. If you have any objection to this disclosure, please provide a written statement
explaining the grounds for the objection and highlighting the information that you believe should
be withheld.”* If you object on the grounds that the information qualifies as confidential
commercial information subject to withholding under Exemption Four of the Freedom of
Information Act (FOIA),”” please be advised that the information was voluntarily submitted and,
as such, that any withholding should be analyzed in accordance with the standard set forth in
Critical Mass Energy Project v. NRC.*° Any claim of confidentiality should also be supported

?° See, Master Gaming Lease Agreement, Recitals.
2? See Loan Agreement, article 2, § 2.6(c)(v).

825 C.F.R. §517.7(c).

5 U.S.C. § 552(b)(4).

°° 975 F.2d 871 (D.C, Cir. 1992).


August 30, 2017
VIA FIRST CLASS MAIL

Teresa Leger de Fernandez
Leger Law & Strategy, LLC
414 Old Taos Highway
Santa Fe, NM 87501

Re: Review of Loan Agreement, Master Equipment Lease Agreement, and
related documents

Dear Ms. Leger de Fernandez:

This letter responds to your request of May 1, 2017, on bealf of the Tesuque Gaming
Enterprise, LLC, for the National Indian Gaming Commission’s Office of the General Counsel

to review financing documents and a related Master Equipment Lease Agreement between the
Tesuque Gaming Enterprise, LLC dS other lenders.
Specifically, you have requested my opinion whether the financing documents and Master

Equipment Lease Agreement submitted constitute a management contract requiring the NIGC
Chair’s approval under the Indian Gaming Regulatory Act. Additionally, you have requested my
opinion whether this agreement violates IGRA’s requirement that a Tribe possess and maintain
the sole proprietary interest in its gaming operation. After careful review, it is my opinion that
the Agreement is not a management contract and does not require the approval of the Chairman.
It is also my opinion that it does not violate IGRA’s sole proprietary interest requirement.

In my review, I considered the following submissions (collectively, the “Loan Documents”):

Depagi uque Gaming Enterprise,
LLC.

Disbursement Agreement among Tesuque Gaming Enterprise, LLC

NEW MAILING ADDRESS: NIGC/DEPARTMENT OF THE INTERIOR 1849 C Street NW, Mail Stop # 1621 Washington, DC 20240 Tel: 202.632.7003 Fax: 202.632.7066

REGIONAL OFFICES Porlland, OR; Sacramento, CA; Phoenix, AZ; St. Poul, MN; Tulsa OK; Oklahome City, OK
WWW.NIGC.GOV


Letter to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque
August 30, 2017

with “a statement or certification by an officer or authorized representative of the submitter.”?!

Please submit any written objection to FO[ASubmitterReply@nige.gov within thirty (30) days
of the date of this letter, After this time elapses, the letter will be made public and objections
will no longer be considered.” If you need any additional guidance regarding potential grounds
for withholding, please see the United States Department of Justice’s Guide to the Freedom of
Information Act at http://www.justice.gov/oip/doj-guide-freedom-information-act-0,

If you have any questions, please contact NIGC Staff Attorney Rea L. Cisneros at
(202) 632-7024,

Sincerely,

MichoO Loe ~—

Michael Hoenig
General Counsel

ce: Tim Brown, CEO, Pueblo of Tesuque Development Corporation
Frank Reddick, Akin Gump Strauss Hauer & Feld, LLP

*°25 CFR. § 517.7(c).
° Id.


Letter to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque
August 30, 2017

° Fee Letter addressed to Pueblo of Tesuque Development Corporation,

° —— i: Pueblo of * Tosuque Development Corporation, a federally chartered tribal
d by the Pueblo of Tesuque, (the “Guarantor” i

e Master : TM Lease _ between [@] as ~ and. TM~ TM
* planners erent ssn pores

Management Contracts

The NIGC has defined management contract to mean “any contract, subcontract, or
collateral agreement between an Indian tribe and a contractor or between a contractor and a
subcontractor if such contract or agreement provides for the management of all or part of a
gaming operation.”! Collateral agreement is defined as “any contract, whether or not in writing,
that is related, either directly or indirectly, to a management contract, or any rights, duties, or
obligations created between a tribe (or any of its members, entities, or organizations) and a
management contractor or subcontractor (or any person or entity related to a management
contractor or subcontractor). -

While the NIGC regulations do not define management, the Agency has clarified that
the term encompasses activities such as planning, organizing, directing, coordinating, and
controlling.’ The definition of Primary management official includes “any person who has the
authority to set up working policy for the gaming operation.” Further, management employees
are “those who formulate and effectuate management policies by expressing and making
operative the decision of their employer.”* Whether a particular employee is “managerial” is
not controlled by an employee’s job title,® rather the question must be answered in terms of the
employee’s actual job responsibilities, authority and relationship to management. 7 Bssentially,

' See, 25 C.F.R. § 502.15.
° See, 25 C.F.R. § 502.5.
* See, NIGC Bulletin No. 94-5: “Approved Management Contracts v. Consulting Agreements (Unapproved
Management Contracts are Void).”
* See, 25 C.F.R. § 502.19(b)(3).
* See, N.L.R.B. V. Bell Aerospace Co., 416 U.S, 267, 288 (1974).
° See, Waldo v. M.S.P.B. 19 F. 3d 1395 (Fed. Cir, 1994).
"Id. at 1399.


Letter to Teresa Leger
Re: Review of loan documents for the Pueblo of Tesuque
August 30, 2017

and employee may qualify as management if the employee possesses the actual authority to take
discretionary actions — a de jure manager — or recommends discretionary actions that are
implemented by others possessing actual authority to control employer policy — a de facto
manager.*

If a contract requires the performance of any management activity with respect to all or
part of the gaming operation, the contract is a management contract within the meaning of 25
USS.C. § 2711 and requires the NIGC Chairman’s approval. Management contracts that have not
been approved by the Chairman are void.

Management Analysis
«(OAD |

Collectively, the Loan Documents prohibit rom
making any management decisions at the Pueblo’s proposed gaming facility.'” In particular, the
Lease Agreement clearly states that only Tesuque Gaming Enterprise may manage and operate
Camel Rock Casino, and the New Casino.'! Furthermore, with regard to the use of the Leased
Machines, the Lease Agreement provides that only Tesuque Gaming Enterprise may (i) select
vendors from which Leased Machines will be acquired, (ii) select the Leased machines; (iii)
negotiate pricing, and; (iv) determine where to place the Leased Machines on the casino floor.'”
The Lease Agreement further provides that only Tesuque Gaming Enterprise may decide to
acquire a replacement machine, and only Tesuque Gaming Enterprise may dictate the timing of
such acquisition,’ > Additionally, the Lease Agreement provides that only Tesuque Gaming
Enterprise may determine the delivery schedule of any newly purchased gaming machines and
any Software Licenses, support or maintenance agreements, and manufacturer warranties.'*
Finally, with regard to software, the ‘'esuque Gaming Enterprise will possess the sole authority
and discretion to request all documentation, later versions, updates, and modifications.'* Because
the Loan Documents do not grant the lenders any direct control over management decisions it is
my opinion that the Loan Documents are not management agreements requiring approval of the
NIGC Chair.

* Id. at 1399, citing N.L.R.B. v. Yeshiva, 444 U.S, 672, 683 (1980).

° See, 25 C.F.R. § 522.7.

'° See, Master Equipment Lease Agreement, article 14, § 14.10 (“THIS MASTER LEASE AGREEMENT DOES
NOT PROVIDE FOR THE MANAGEMENT OF ALL OR ANY PART OF THE LESSEE’S OR GAMING
ENTERPRISE BY ANY PERSON OTHER THAN LESSEE OR DEPRIVE LESSEE OF THE SOLE
PROPRIETARY INTEREST AND RESPONSIBILITY FOR THE CONDUCT OF THE GAMING
OPERATIONS...”); Loan Agreement, article 10, § 10.23.

3 See, Master Gaming Lease Agreement, Recitals.

id

'* See, Master Equipment Lease Agreement, article 2, § 2.02(b).

'S See, Master Equipment Lease Agreement, article 6, § 6.01(e).

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