| Brownstein Hyatt
Farber Schreck

Andrew D. Moore

November 6, 2014 Attorney at Law
702.464.7093 tel
702.382.8135 fax
amoore@pbhfs.com
VIA FIRST CLASS MAIL

National Indian Gaming Commission

Attn: Jonodev Osceola Chaudhuri, Acting Chairman
90 K Street NE, Suite 200

Washington, DC 20002

Dear Acting Chairman Chaudhuri:

Earlier this year, the National Indian Gaming Commission (“NIGC”) conducted four consultation
sessions with tribal leaders to discuss what level of environmental review under the National Environmental
Policy Act ("NEPA") is required before the NIGC may approve a management agreement. As you likely
know, in 2013, San Diego Gaming Ventures, LLC ("“SDGV"), which is a subsidiary of Penn National
Gaming, Inc. ("Penn National”), submitted the management agreement it entered into with The Jamul
Indian Village of California (the “Jamul Tribe”) to the NIGC for approval. We are counsel! to SDGV and
Penn National. SDGV and the Jamul Tribe are in the process of constructing a gaming and entertainment
facility east of San Diego, California that is scheduled to open in late 2015 (the “Casino”). Currently, the
NIGC requires Indian tribes that have entered into management agreements with casino operators to
comply with NEPA requirements when construction is involved. Penn National supports the adoption of a
categorical exclusion for approval of management agreements by the NIGC under NEPA.

Basis for Categorical Exclusion

The NEPA regulations define a categorical exclusion as “a category of actions which do not
individually or cumulatively have a significant effect on the human environment and which have been found
to have no such effect in procedures adopted by a federal agency in implementation of these regulations
and for which, therefore, neither an environmental assessment nor an environmental impact statement is
required.”' In its Protocol for Categorical Exclusions from NEPA effective May 22, 2012, the NIGC
identified a category pertaining to the regulation, monitoring, and oversight of Indian gaming activities as
being the type of action categorically excluded from NEPA. The management agreement between SDGV
and the Jamul Tribe sets forth the parameters of how SDGV will regulate, monitor, and oversee the gaming
activities at the Casino when it opens in late 2015. Approval of a management agreement should be
included in the categorical exclusion related to the regulation and oversight of Indian gaming activities.

NEPA was enacted in 1970 with two aims: (1) requiring a federal agency “to consider every
significant aspect of the environmental impact of a proposed action” and (2) ensuring “that the agency will
inform the public that it has indeed considered environmental concerns in its decision-making process.””
An Environmental Impact Statement (“EIS”) under NEPA is created when a federal agency is “undertaking
an activity that rises to the level of a major federal action which significantly affects the quality of the human

140 C.F.R. § 1508.4. ft, .
? Baltimore Gas & Electric Co. v. Natural Resources Defensé Council, Inic., 462 U.S. 87, 97 (1983).

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NH QS I-13


Jonodev Chaudhuri
November 6, 2014
Page 2

environment.”* NIGC review and approval of a management contract is not a major federal action that
significantly affects the quality of the human environment. For a casino that involves construction, the
NIGC, in its review of a management agreement, does not have the ability to regulate the scope, design or
size of the casino project. When reviewing management agreements, the scope of the NIGC’s review is
narrow. Congress specifically instructed the NIGC to review the background of each person with a financial
interest or management responsibility in the casino, to ensure that certain accounting provisions and time
limits are contained in the agreement, and to review the reasonableness of the management fee
provisions.‘ Given the limited nature of the NIGC management agreement review and the fact that such
review is not a major federal action that significantly affects the quality of the human environment, the
NEPA review requirement is burdensome, unnecessary, and likely discourages investment in Indian

country.

The Time Periods in IGRA Preclude Preparation of NEPA Documents

The completion of an EIS takes a considerable amount of time. The process involves multiple
drafts of the ElS being circulated and discussed by attorneys and the federal government. A federal
agency cannot make a decision based on a draft EIS until ninety days after publication of a Notice of
Availability of the draft EIS or thirty days after publication of a Notice of Availability of a final EIS, whichever
is later.° The minimum public comment period for an EIS is forty-five days and if the federal agency holds
a public hearing to allow concerned individuals to provide comments to the draft EIS, the agency must give
fifteen day prior notice of such ahearing. Following such a hearing, the public agency must respond to the
comments in the final EIS.° Given these required time periods under NEPA, by the time a final Record of
Decision is published, the average time period to prepare the EIS is 3.4 years. This length of time makes
it highly unlikely that the NIGC will be able to approve or disapprove a management agreement within the
maximum period of 270 days before a tribe is authorized to sue to compel action under 25 U.S.C. §
2711(d).

Consequences of NEPA Review Requirement

By requiring a NEPA environmental review in connection with the approval of a management
agreement, the NIGC increases the cost of developing a casino project and adds time to the development
schedule of the project. Both of these results are detrimental to the tribe developing the casino. The tribe
ultimately pays the increased cost of the casino project. Additionally, the casino opening, which will likely
result in the economic self-sufficiency of the tribe, is delayed.

In addition to the cost and delay attributable to a NEPA environmental review, the requirement for
such a review generally results in additional claims being asserted in litigation related to the planned casino
project. As noted above, NEPA was enacted in 1970 with two aims: (1) requiring a federal agency “to
consider every significant aspect of the environmental impact of a proposed action” and (2) ensuring “that
the agency will inform the public that it has indeed considered environmental concerns in its decision-
making process.” ® When analyzing a federal agency’s efforts to comply with NEPA, the “role of the courts

3 Department of Transportation v. Public Citizen, 541 U.S. 752, 763 (2004).

{See 25 U.S.C. § 2711(a)-(c).

5 42 C.F.R. § 1508.10(b).
& § Id. at §§ 1508.10(c) and 1506.6(c)(2).

” See "How Long Does It Take to Prepare an Environmental Impact Statement?”, Piet and Carole deWitt,
Environmental Practice, Vol. 10, Issue 4, December 2008.
° Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc., 462 U.S. 87, 97 (1983).


Jonodev Chaudhuri
November 6, 2014
Page 3

is simply to ensure that the agency has adequately considered and disclosed the environmental impact of
its actions and that its decision is not arbitrary or capricious.”®

The Class III gaming compact that the Jamul Tribe entered into with the State of California required
that the Jamul Tribe adopt an ordinance which incorporated the policies and purposes of NEPA and the
California Environmental Quality Act (“CEQA”) and that provided for the preparation, circulation, and
consideration by the Jamul Tribe of environmental impact reports concerning off-reservation environmental
impacts associated with the development of a casino and related projects. Pursuant to its ordinance, the
Jamul Tribe has studied the possible environmental impacts of a casino project and prepared an
environmental evaluation (“EE”) that addresses all of the substantive requirements of both NEPA and
CEQA. The EE was submitted for public review and comment in a manner substantially similar to the
requirements for related environmental documents under NEPA and CEQA. Therefore, the NEPA review
requirement related to NIGC review of the management agreement is a superfluous requirement in that the
Jamul Tribe has procedures in place to ensure that the environmental impacts of a planned casino
development are assessed and addressed consistent with a NEPA review.

The requirement of a NEPA review when the NIGC reviews the management agreement simply
opens the door for additional claims to be asserted in litigation against a planned casino development. With
the NEPA requirement in place, litigants are able to assert claims alleging that the NIGC failed to
adequately consider the environmental impact of its actions in its decision-making process in approving a
management agreement. The ability to assert such claims, in connection with an action under NEPA,
increases the risk related to a casino development project, which inevitably results in higher project-related
costs that are passed onto and borne by the tribe.

Conclusion

The requirement that the NIGC conduct an environmental review in conjunction with its review of a
management agreement discourages investment in gaming development in Indian country. Developers
and casino companies are dissuaded from investing in tribal gaming projects given the increased cost and
inevitable delay to a project attributable to a NEPA review. As one of the stated purposes of IGRA is to
encourage business investment in Indian country, Penn National believes that the NIGC should adopt a
categorical exclusion to the NEPA requirement for the approval of management agreements.

Thank you for considering our comments. Please feel free to reach out to us if you have any
questions.

hy
Andr; Py

cc: John Hay, Senior Attorney, National Indian Gaming Commission (via mail)
Carl Sottosanti, Senior Vice President & General Counsel, Penn National Gaming, Inc.
(via email)
Kerry Patterson, Partner, Lewis Roca Rothgerber (via email)
Anna Shimko, Partner, Burke, Williams Sorenson, LLP (via email)
Jennifer Carleton, Shareholder, Brownstein Hyatt Farber Schreck, LLP (via email)

013191\0019\11676603.1

° id, at 98.