BationaI 3nbian Qaming &ommiseton 

IN THE MATTER OF 

NOVICFA 01-01 

COLORADO RIVER INDIAN TRIBES ) 

July 17,2003 

1 

FINAL DECISION AND ORDER 

Appeal to the National Indian Gaming Commission (NIGC or Commission) from 

a Notice of Violation and Proposed Civil Final Assessment issued to the Colorado River 

Indian Tribes (Respondent or Tribe). 

Appearances 

Gwenellen P. Janov for the Respondent, Colorado River Indian Tribes 

Maria Getoff for the Chairman, National Indian Gaming Commission 

Presiding 0flckal 

Candida S. Steel, Ofice of Hearing and Appeals, U.S. Department of the Interior 

1. Statement of the Case 

On January 23, 2001, the NIGC Chairman issued a Notice of Violation (NOV) to 

the Tribe alleging that NIGC representatives had been denied access to the Tribe's Class 

III gaming records and to areas of the Tribe's gaming facility where Class lII gaming was 

being conducted. The Chairman cited the Indian Gaming Regulatory Act (IGRA) and 

NIGC regulations permitting Commission representatives to enter Indian Gaming 

premises and to have access to records concerning any matters necessary for the 
Commission to cany out its duties. 25 U.S.C. $ 2706(b)(4); 25 C.F.R. $$ 571.5 and 6.' 

The NOV also stated that the NIGC must have access to all gaming facilities and records 

to fulfill its responsibilities under IGRA. The alleged denial of access occurred during an 

attempted audit of the Tribe's records and the internal controls in existence at the Tribe's 

Blue Water Casino near Parker, Arizona, scheduled to begin on January 9,2001. Indian 

gaming operations are to have in place internal control standards that are at least as strict 

as those set forth in the Minimum Internal Control Standards (MICS) adopted by 

Commission. 25 C.F.R. Part 42. 

In an effort to settle the matter, Respondent and NIGC staff held discussions and 

exchanged letters in which the parties set forth their respective positions regarding the 

NOV. When the matter was not resolved, the Chairman issued, on May 11, 2001, a 

Proposed Civil Fine Assessment (CFA) in the amount of $20,000. Respondent appealed 

both the NOV and the CFA. The appeals were consolidated at the request of the parties. 

1 In pertinent part, IGRA and NIGC regulations provide: 

The Commission+4) may demand access to and inspect, examine, photocopy, and audit 

all papers, books, and records respecting gross revenues of class I1 gaming conducted on 

Indian lands and any other matters necessary to cany out the duties of the Commission 

under this chapter[.] 

25 U.S.C. 5 2706(b)(4); 

(a) The Commission's authorized representative may enter the premises of an Indian gaming 

operation to inspect, examine, photocopy, and audit all papers, books, and records (including 

computer records) concerning: 

(1) Gross revenues of class Il gaming conducted on Indian lands; and 

(2) Any other matters necessary to carry out the duties of the Commission under the Act and this 

chapter. 

25 C.F.R 5 571.5; and 

(a) Once the Commission's authorized representative presents proper identification, a gaping 

operation shall provide the authorized representative with access to all papers, books, and records 

(including computer records) concerning class I1 gaming and any other matters for which the 

Commission requires such access to carry out its duties under the Act. 

25 C.F.R. § 571.6. 
A preliminary issue identified in Respondent's appeal was the Commission's 

authority to issue the regulation establishing the MICS for Class 111 gaming operations.* 

Respondent maintained that the NOV should be vacated because the Commission lacked 

authority under IGRA to issue and enforce the MICS regulation as to Class I11 gaming. 

Respondent argued that, given this lack of authority, the NIGC could not conduct an audit 

of Respondent's class III gaming activities and could not demand access to books and 

records that relate solely to Class III gaming.' By agreement of the parties, the 

Commission was to be presented first with a legal question as to whether the Commission 

had authority to issue the regulation establishing the MICS. If the Commission 

determined that it possessed the requisite authority, the matter was to be remanded to the 

Presiding Official for an evidentiary hearing and recommended decision on factual issues 

including whether NIGC or Respondent terminated the MICS compliance audit. 

In its Memorandum Decision and Order dated May 30, 2002, the Commission 

reaffirmed its authority to promulgate MICS relating to Class 111 gaming, thereby 

resolving the preliminary legal question. We incorporate the Memorandum Decision and 

Order of May 30,2002, into this Final Decision as part of the final agency action. 

The evidentiary hearing on factual issues was held on October 24, 2002. The 

Presiding Official submitted a Recommended Decision to the Commission on May 12, 

2 "Class I1 gaming" and "Class I11 gaming" are terms defined in IGRA. "Class 11" gaming includes bingo, 

games similar to bingo, and card games that are not prohibited by the laws of the state in which a tribe 

conducts gaming. The term does not include banking card games such as blackjack or "electronic or 

electromechanical facsimiles of any game of chance or slot machines of any kind." "Class Ill gaming" 

means all forms of gaming that are not class I or class 11. "Class I gaming" involves traditional and social 

games played by tribes and is not the subject of MICS. See 25 U.S.C. $2703(6)-(8). 

Respondent does not challenge the Commission's authority to issue MICS that pertain to class I1 gaming. 
2003. Both parties submitted Objections to the Recommended Decision that were duly 

considered. 25 C.F.R. tj 577.14. 

In our review of the Recommended Decision and the record in the case, it 

appeared that while a fbndamental disagreement continued to exist about the 

Commission's authority, the parties did not disagree on other important aspects of the 

case. The Commission directed its appellate counsel to discuss a resolution of some or 

all of the issues with Respondent's counsel. The Respondent agreed to allow the 

Commission additional time to render a decision so that the discussions might ~ontinue.~ 

The Commission and Respondent ultimately reached agreement on several issues which 

are set forth in a Procedural Stipulation that is now part of the record in the case. This 

decision incorporates all relevant provisions of the Procedural Stipulation. We appreciate 

the Tribes' willingness to reach a satisfactory resolution of the issues. 

2. Recommended Decision 

The Recommended Decision included findings of fact indicating that 

representatives of the Tribe told the NIGC audit team they would not have access to all 

requested Class Ill records and to all requested Class areas of the gaming facility. 

Recommended Decision, p. 6-8 (#s 22, 23, 29, and 30). The Presiding Official 

concludes that evidence of record establishes "the audit work was interrupted by the 

Tribes on the second day of the audit[,]" that "the Chairman has shown by a 

preponderance of the evidence that the audit was halted by the Tribes for at least some 

period of time[,]" and that "notwithstanding the Tribes' admitted 'good faith' concern 

4 Commission regulations contemplate a fmal decision within 30 days of a presiding official's 

recommended decision. 25 C.F.R. 5 577.15. Letters fiom Respondent's counsel indicating agreement to 

an extension of time for a Commission decision will be included in the record. 
about the NIGC's authority [to conduct an audit of class IIJ records], interference with 

the authorized audit is technically a violation." Recommended Decision, pp. 14-1 5. The 

interference with the audit was the result of the Tribe denying access to the Class 111 

records and to all areas of the gaming facility. Recommended Decision, p. 14. 

3. The Notice of Violation 

NOV 01-01 alleges a violation of 25 U.S.C. § 2706(b)(4) and 25 C.F.R. $§ 571.5 

and 571.6 in that, on January 10, 2001, Respondent's Acting Attorney General, Lola 

Rainey, denied the audit team further access to Class I11 gaming records and Class III 

areas of the gaming operation. Evidence of records established that the audit was 

announced to Respondent well in advance of the scheduled date and that the audit team 

arrived on January 9, 2001, to find documents ready for their review as requested in the 

audit notification letter. On the morning of January 10, 2001, the Executive Director of 

the Tribal Gaming Authority, Armando Barley, notified the auditor leading the audit team 

that he was denying further access to Class 111 gaming records and to areas of the gaming 

facility for observation of Class UI gaming activity. Hearing transcript, pp. 39-40, 104, 

and 155. Mr. Barley did so following consultation with Acting Attorney General Rainey. 

Hearing transcript, p. 113. We conclude that Executive Director Barley introduced the 

issue after his discussion with Acting Attorney General Rainey when he consciously 

informed the audit team that full access was being withheld. ' 

Ms. Rainey testified that she wanted to obtain a statement of the NIGC's 

authority to audit Class III gaming records and activities and that she intended to report 

on that authority to the then-sitting Tribal Council which would make a decision about 

5 The Recommended Decision indicates that which individual, Mr. Barley or Ms. Rainey, actually denied 

access can be considered a distinction without a difference. 
granting access. Ms. Rainey did not indicate a timeframe for Tribal Council decision on 

when access might be given. She was discussing the authority issue with some of the 

audit team members when Region Director Ken Billingsley entered the conversation and 

asked whether the audit team was going to have access, "yes or no." Ms. Rainey testified 

that she could not give a "yes" or "no" answer because she did not have authority to do so 

and that only the Tribal Council could grant access. We interpret and find Ms. Rainey's 

statement to mean that "no, you cannot have access now, but we'll see if the Tribal 

Council wants to grant you that access after they consider your authority and how I 

analyze that authority." When she did not reply with a "yes," Region Director Billingsley 

announced that the team was leaving because access was being denied, and the audit was 

terminated.6 

We find the Tribe to have committed a violation of NIGC regulations by 

halting a MICS compliance audit then in progress at Respondent's gaming facility based 

on its good faith concern that the NIGC lacks the statutory authority to conduct a Class 

111 audit. We conclude that the audit team in good faith believed that Respondent's: 

interruption of the audit on January 10, 2001, made completion of the audit impossible 

and, accordingly, departed the reservation.' 

6 We do not agree with conclusions that "both parties were responsible for the impasse that resulted in 

premature termination of the audit" and "the audit team could have continued with the audit of the Tribes' 

Class I1 operations." Recommended Decision, p. 15. The audit could not be effectively and credibly 

conducted without access to Class 111 records and areas of operation. The Class I1 and Class 111 functions 

of the gaming facility are typically not separate and distinct. 

' Respondent agrees to entry of the fhdings set out in this paragraph. See Procedural Stipulation, pp. 2 and 

4. 
4. The Civil Fine Assessment 

Proposed CFA 01-01 contains a discussion of the five factors the Chairman must 

apply in issuing a civil fine assessment. 25 C.F.R. $ 575.4. Seriousness of the violation, 

whether the conduct was willhl or negligent, and the degree of good faith shown by 

Respondent in attempting to achieve rapid compliance after notification of the violation 

are significant factors in this case. Respondent does not have a history of prior violations 

and did not receive any economic benefit as a result of non-compliance.' 

The Commission views denial of access to gaming records and to all areas of a 

tribal gaming facility to be a serious matter that goes to the heart of its ability to regulate 

Indian ga~ning.~ Commission regulations include denial of access to a gaming facility to 

inspect records among those matters it considers to be a "substantial violation." See 25 

C.F.R. 9 573.6(a)(9).1° As the proposed CFA recites, and as the Presiding Official 

concludes, "[s]uch access is necessary for the Commission to meet its responsibilities 

under IGRA. As a practical matter, Respondent's denial of access prevents the 

Commission from discharging the responsibilities entrusted to it by Congress.. .and poses 

% aspect of an "economic benefit of non-compliance" is whether the violation is a continuing one 

permitting the Chairman to treat each day of non-compliance as a separate violation. 25 C.F.R. 5 

575.4(a)(2). The proposed civil fine assessment refers to a date by which the violation is considered to 

have been tolled, but does not state that the Chairman intends to treat each day of the twenty day period 

(January 10-30,2001) as a separate violation. We do not agree with the Presiding Official's proposal that, 

because the CFA alludes to a period of violation of twenty days, the CFA intended a per day assessment of 

$1,000 per day for twenty days. We treat the violation as a single violation occurring on January 10,2001. 

9 As recommended by the Presiding Official, we do not include the value of employee salary and other 

indirect expenses associated with the unsuccessful audit in our consideration of the "Seriousness of the 

Violation" factor. Taking this a step fiuther, under the particular facts and circumstances of this case, we 

also do not base the civil fine assessment on the direct costs incurred in travel and lodging by the audit 

team. 

10 "...The Chairman may issue an order of temporary closure ... if one or more of the following substantial 

violations are present: 

(9) A gaming operation rehses to allow an authorized representative of the 

Commission.. .to enter or inspect a gaming operation, in violation of S. 57 1.5 or 57 1.6 of 

this chapter.. ." 
a serious threat to the integrity of tribal gaming." Recommended Decision, p. 16. This 

conclusion, standing alone, can and does justify a substantial civil fine. 

As a demonstration of its good faith to achieve compliance, Respondent has 

agreed in the recently executed Procedural Stipulation to allow a Commission audit team 

to begin a new MICS compliance audit of its gaming operation with full access to records 

relating to Class III gaming. Based on this recent development, the Commission believes 

that a significant reduction to the proposed civil fine assessment is appropriate. The 

Commission and Respondent have agreed in the Procedural Stipulation to a Civil Fine 

Assessment in the amount of $2,000. Respondent retains the right to seek judicial review 

of the Commission's decision and, specifically, the Commission's Memorandum 

Decision and Order of May 30,2002, reaffirming the Commission's authority to establish 

MICS for Class I11 gaming and conduct a compliance audit. 

ORDER 

We find the Respondent Colorado River Indian Tribes to have been in violation of 

25 U.S.C. 5 2706@)(4) and 25 C.F.R. $5 571.5 and 571.6. We incorporate the 

of May 30, 2002, into this Final 

on all the facts and circumstances of this case, we assess a 

DIAN GAMING COMMISSION: 

Chairman 

Date