~KLAHOMA 

EXECUTIVE BRANCH 

JANICE PRAIRIE CHIEF-BC)SWELL 

GOWRNOR 

OFFICE OF THE GOVERNOfi' 

Execu,tive Branch 

P.0. Box 38 

Can,ch.o, OK 73022 

Tetep hone: (405) 422- 7743 

Fax: (405) 422-8227 

VIA HAND DELIVERY AT NORMAN OKLAHOMA CONSULTATION 

January 18,20 1 1 

Lael Echo-Hawk, 

Counselor to the Chair 

National Indian Gaming Commission 

14-41 L Street W, Suite 9100 

Washington, DC 20005 

RE: National Indian Gaming Cornmi ssion Regulations 

Dear Ms. Echo-Hawk: 

Thank you for undertaking a long-overdue review of the National Indian Gaming 

Commission ("NIGC") regIations, and for consulting with the tribes in accorda~nce with 

Executive Order 13 175 and the agency's consultation policy before determining the changes that 

should be made. In response, the Cheyenne and Arapaho Tribes CbTribes") present the f'ollowing 

comments and suggestions and look forward to working with the NIGC as it updates its 

regulations. 

Changes to the regulatory definitions and provisions may have more impact than appears 

at first glance, including the possibility that a violation of a new term or requirement could result 

in an NIGC enforcement action. A Notice of Violation rNOV") from the NTGC could not only 

result in a civil fine assessment from the agency, but could also affect the terms on which lenders 

and businesses extend credit or enter into contracts with a tribe as well as frighten away potential 

customers through had press. Therefore, all changes for which the NIGC intends to move 

forward should be carefully assessed through negotiated rulemaking. This would allow all tribes 

the opportunity for meaningfuI participation. The current Tribal Advisory Committee system is 

not preferable because it severely limits the extent and quality of input that may be received from 

the vast majority of tribes. 

1. Definitions 

(a) Net Revenues 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 2 

The NIGC is considering changing the definition of "'Net Revenues" in its replations 

into two (2) definitions. one (1) for the calculation of the management fee for management 

contractors and another for the definition of allowable uses of the revenues. Because NPGC is 

constrained by the definition of Net Revenues in its authorizing statute, it would be unli~wful for 

the agency to make either of these changes. 

The Indian Gaming Regulatory Act C'IGRA) defines Net Revenues as "gross revenues 

of an Indian gaming activity less amounts paid out as, or paid for, prizes and total operating 

expenses, excluding management fees."' In accordance with IGRA, the current regulation 

provides that Net Revenues "'means gross gaming revenues of an Indian gaming operation less 

(a) Amounts paid out as, or paid for, prizes; and (b) Total gaming-related operating expenses, 

including a11 those expenses of the gaming operation commonly known as operating expenses 

and non-operating expenses consistent with professional accounting pronouncements, excluding 

management fees."2 

Most companies caIculate net revenues in accordance with Generally Accepted 

Accounting Principles ("GAAP"). which allow additional deductions of complimente~ry sales, 

interest, and depreciation from gross sales when calculating net revenues. While it would ease 

accounting to use the general GAAP standard for calculating net revenues, Congress provided a 

set definition in IGRA and, pursuant to federal law; an agency's regulations are limited to 

interpreting and implementing an act in accordance with the terms of that act and other 

applicable law. The NFGC should not, and cannot, change this regulation unless Congess 

amends the IGRA. 

As to the second proposed definition of Net Revenues, which would include a calculation 

of cash flow before allowing the Tribes to allocate monies left over after considaatioi~ of Ioan 

payments, reserves, and depreciation, this suggestion constitutes a violation of tribal sovereignty. 

Indian tribes have a right to rely on their own accountants and decisions of acceptable (:ash flow 

methods rather than have a single standard handed down to them from the federal government. 

The differing circumstances of each tribe necessitate that each come up with its own acceptable 

method of apportioning monies to urgent needs. In addition, pursuant to IGRA, tribes who wish 

to provide per capita payments to their members, are required to submit revenue allocation plans 

to the Department of Interior for approval. Thus, any approval for the use of cash flow for the 

purpose of providing per capita payments is not within the jurisdiction of the NIGC. 

We wetcome an advisory bulletin on suggested factors for tribes to consirlet when 

determining what portion of net revenues should remain with the gaming operation as reserves or 

be applied to its expenses and financing needs before allocating monies in accordance with 

IGRA. A regulation on this matter, however, would expose tribal governments to enfixcement 

action by the NIGC for violation of federal law. Budgeting matters are an inherent sovereign 

function and should not be subject to review and policing by the great white father. 

"2 U.S.C. C; 2703(9). ' 25 C.F.R. 5 502.16. 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 3 

Moreover, it is likely a Notice of Violation brought to enforce the regulation would result 

in a Hearing Officer or federal court determining that the regulation is ultra vires. Therefore, the 

imposition of these new regalations would constitute a waste of agency resources. The NIGC is 

funded exclusively from tribal gaming revenues and the government should use these funds 

cautiously and in accordance with its Congressional mandate. 

(b) Management Contracts 

The proposed definition of Management Contract seeks to address a troubling situation 

wherein, through a series of agreements, tribes receive less income from a gaming establishment 

than the manager. The TGRA does not specifically define "management contract," but 25 U.S.C. 

5 271 1 (a) clarifies that the NIGC Chairman may approve management contracts "for the 

operation and management" of the gaming facility. A definition setting out the maximum 

acceptable compensation to a management contractor from all revenue sources related to the 

Tribe might be appropriate. Any violations of such a regulation should be enforced solely 

against the company rather than a victim tribe. 

In addition. the NIGC should not attempt to broaden the definition of "management contracts" to 

include those contracts which are cIearIy not management contracts such as slot leases, loan and 

development contracts and non-gaming contracts. However, the NIGC should rev~ew nmmanagement contracts to ensure that they do not contain "default" provisions whereby the 

contractor would, hy "default". become the manager of the gaming facility or alternatively place 

the gaming facility into receivership. 

II. Fees 

The NIGC reguIations currently require submission of fees twice yearly based on a 

calendar year. It wouId be more convenient for tribes to submit payments based on their fiscal 

year as this would eliminate the need to conduct a separate audit or an audit adjust men^: in order 

to calculate NIGC fees. If the agency moves to such a method of collecting fees, it might be best 

to require an initial notification from each tribe of its fiscal year start date and continuing 

notification within 60 days of any changes to the fiscal year. 

The Tribes are concerned the NIGC's suggested alteration of the method by which the 

agency's fees are calculated could contravene the IGRA. The Act specifies at 25 U.S.C. 3 

27 16(6) that gross gaming revenues. for purposes of fee calculation. "shall constitute the annual 

total amount of money wagered, less any amounts paid out as prizes or paid for prizes awarded 

and less allowance for amortization of capital expenditures for structures." While the change in 

calculation might make the fee easier to calculate, it certainly runs afoul of the NIGC's statutory 

mandate. 

As for fingerprint processing fees, these should be included in the calcuIation of net 

revenues because they are statutorily-required operating expenses. These fees should be adjusted 

on an as-needed-basis only if the FederaI Bureau of Investigation raises the rates charged to the 

NIGC, and therefore the Tribes, for utilizing the service. 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 4 

Altering the NIGC's current approach to late payment of fees would be commendabte, as 

the current use of NOVs ovesIy penalizes tribes for minor fmctionarys' faiIure to submit a 

payment on time. This can occur innocently after a change in government leadrmhip or 

employee turnover. Treating an easily-fixable oversight with the same level of severity as 

operating gaming without a facility license, defrauding a customer, or allowing in~lividuaIs 

without approved management contracts to manage the gaming3 is overly punitive. An IrJOV can 

degrade a tribal facility's bond ratings. loan percentage rates, and business reputation. New 

regulations should allow a warning notice to the Tribe, followed by assessment of a minima1 late 

fee. Only in cases where two (2) or three (3) fee payments have gone completely unpa~d, or the 

tribal governing body has officially resolved or publicly stated its intention not to pay NIGC any 

fees for an TGRA facility, should a NOV be considered, and then only after negotiations with the 

Tribe, on a leader-to-leader government consultation basis, have failed. 

111. Self-Regulation 

The Commission's regulations setting out the process for sdf-regulation do require 

updating. The information requested from the Tribes at 25 C.F.R. 5 51 8.3 violates the 

Paperwork Reduction Act, 44 U.S.C. 5 3501 ef seq., by requiring the Tribes b, submit 

information already collected or generated by the federal government. Other requested 

information, such as a list of current employees and division heads, funding for the tribal 

regulatory body. and organization charts, are not clearly related to the NTGC's review. Now that 

the Tribes are required to obtain an annual mandatory Minimum Internal Control Standards 

("MICS") audit4 of their class I1 gaming as well as an annual financial audit,' the NIGlC should 

be able to rely soIeIy upon these and a review of NOVs issued by the agency over the last three 

years. Such a system would allow a tribe to submit solely a tribal resolution requesl.ing selfregulation to trigger the NIGC to review the request. 

The NIGC may wish to alter 25 C.F.R. 518.9, which effectively nuIlifiles lesser 

ovasight theoretically provided by a certificate of self-regulation. The agency's intergrctation of 

its enforcement powers in Q 5 18.9 resulted in a regulation removing the statutory protections 

from unwanted government interference in the affairs of a self-regdated tribe and amendment 

should be considered to best honor the intent of IGRA. 

At the same time, updating this set of regulations should be a lesser priority for the 

agency than the other considered changes. Almost every gaming operation now ofkrs both 

Class I1 and Class 111 gaming, making the potential impact quite minimal. In fact, only two (2) 

out of approximately 250 gaming tribes have obtained certificates of self-regulation. This is 

because the financial effects resulting from waiver of fee requirements are minimal and because 

the amount of NIGC oversight removed is almost nil due to continuing TGRA requirements 

regarding licensing and enforcement that the NIGC cannot alter without a statutory change. The 

Tribes would support the NIGC if it chose to request that Congress allow self-regulation of Class 

25 C.E.R. 4 573.6. 

25 C.F.R. 3 542.3(f) (also known as "agreed-upon procedures"). 5 25 U.S.C. 8 27 1: O(bW2)(C). 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 5 

111 gaming, as well and amended the IGRA to allow lesser federal oversight nf self-regulated 

operations. 

IV. Review and Approval of Ordinances and Regulations 

The Tribes have no objections to removal of Part 523, Review and Approval of Existing 

Ordinances and Regulations. For newly submitted ordinances reviewed under Part 522, the 

NIGC should remove regulatory provisions which it no longer utilizes, including the submission 

requirements of 25 C.F.R. 8 522.2(d) requesting copies of all tribal gaming regulations. 

V. Mana~ement Contracts 

The NIGC should expand its authority over collateral agreements to management 

contracts. As the Tribes' trustee, the agency should review all documents related to a 

management contracts under consideration by the NIGC to ensure that the Tribes are getting at 

least the percentages of net revenues required by Congress in the IGRA, that they do not contain 

default provisions giving more rnanagement control to the manager, and that such contracts do 

not violate the "sole proprietary interest" requirements of the IGRA. The updated re;glations 

should specify that failure to turn in all coEEatesal agreements between the parties, including the 

principals of the management contracts. will automatically nullify the NIGC Chairman's 

approval of the management contracts. Further, updating the regulations to include disapproval 

for the two (2) reasons proposed in the Notice of Inquiry (failure to meet submission 

requirements and or failure to contain repIatory requirements necessary for approval:^ may be 

unnecessary as management contracts with these failings have never been approved by t'he NIGC 

Chairman. 

VI. Proceedings Before the Commission 

The current re~lations for service, at 25 C.F.R. $ 5 1 9.3, do not contain standard methods 

for ensuring that the document sent by the NIGC arrived, and was received by the oth~er party. 

The NIGC regulations shouId require that service by mail be made by certified mail, return 

receipt signed by the exact individual requested. In addition, however, if the mailing is to any 

party other than the individual specified as an agent for service of process in the tribal gaming 

ordinance, the designated tribal agent for service of process must also receive a copy of the 

document for service to be effected. All service by mailing should be considered complete not 

upon mailing, but upon the NIGC's receipt of the post ofice's rehzrn receipt slip. Service by 

facsimile should not suffice, nor should place a copy in a conspicuous place. The whole point of 

the service requirement is to ensure that the other party has notice of the proceedings. 

Due to the multipIe layers of tribal governments, similar to the tripartite system1 utilized 

by the federal government, there may he confusion or dissension amongst the different branches 

as to the submission of gaming ordinances or management contracts. Topics on which appeal to 

the Commission are available shouId therefore include approval of gaming ordinances and 

management contracts and their amendments. The sole point of appeal of these sllould be 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 6 

whether or not the ordinances or contracts were validly enacted and submitted pursuant to tribal 

law, or whether or not subsequent tribal actions have resulted in the document being superseded 

or repealed. 

VII. MICS 

The Tribes have a gaming compact with the State of Oklahoma that incorporates the 

NIGC MICS. Therefore, whatever action the NIGC takes, it must not endanger the rel:rtionship 

between the Tribes and the State nor alter the obligations agreed to by both in the gaming 

compact. Any and a11 changes to the MICS, including a consideration of whether they shouId 

become optional recommendations, should be undertaken through the negotiated rulemaking 

process to ensure that tribal suggestions are treated with the utmost respect ;md due 

consideration. The negotiated rulemaking process should be between Indian tribes and the 

federal government in accordance with the Federal Advisory Committee Act, with possible 

industry advisor input aFIowed if needed. The general public should not be allowed to pslrticipate 

untiI public meetings are held, latex in the process. 

A guiding principle to be followed during this process is that tribal sovereignty to make 

regulations and requirements and he ruled by them should always be preferred to imposition of 

new rules by the federal government. The differences in size, location, and individual laws of 

each tribe may make the single MICS standard result in gaming being economically and 

logistically unviable. This should not be taken lightly. 

The NIGC should not begin consultations with a prepared draft as this curtails the 

feedback which will be received and limits discussion. No new regulations should be considered 

without tribal consultations, and, if there is a consensus that a regulatory solution to the problem 

is needed, the NIGC should solicit comments and drafts. Consultation must be meimingful, 

however, not just part of a list of NIGC action items and tribal concerns that might be discussed 

during a haIf hour meeting of the NIGC Commissioners and Tribal leaders. The NIGI? should 

create a website forum for tribal comments to inspire other suggestions from the tribes and 

agency employees. Only after consultation meetings dedicated to only one topic, such as MICS 

revisions, based on website suggestions, should any drafting be undertaken. ARer that, the 

negotiated rulemaking process should continue pursuant to the Negotiated Rulemaking Act, 5 

U.S.C. 6 561 et seq. 

VIII. Backanund Investigations and Licensing 

As almost all tribes now use the background investigation pilot program, which reduces 

the paperwork and manpower needed to conduct licensing investigations, the "pilot" program 

should be formalized. The default method for submitting licensing information to the NIGC 

should be submission of only the suitability report, with the licensure decision noted thereon, and 

more documentation should be required only if a tribe has saious deficiencies with its licensure 

process such that an NOV has been issued and a set term of additional supervision and document 

submission has been agreed to in a settlement or imposed as a civil enforcement mechanism. 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 7 

It would be very helphl if the Commission could renegotiate its Memorandum of 

Understanding with the Federal Bureau of Investigation ("FBI") to allow fingerprint checks of 

potential and current employees and vendors that do not fall in the categories of primary 

management officials, key employees, or management contractors. This would great1 y enhance 

the Tribes' ability to ensure that no bad elements have any possible access to the gaming 

operation or funds. If the NIGC does reach agreement with the FBI and implement such a 

program, any related regulations shouId not mandate that such checks be made, but rather allow 

the tribes to use the system or not at their discretion. The fingerprint fees charged for these 

individuals should be the same as the fee charged for statutorily-required checks. We appreciate 

the NIGC's willingness to proactiveIy assist th etribes in checking backgrounds of all employees 

and vendors as thoroughly as possible. 

IX. Facility License Notifications, Renewals, and Submissions 

The Tribes do not bdieve any modifications to this regulation are needed. 

X. Inspection and Access 

The Tribes do not believe the NIGC needs to revise these regulations. Recorlds in the 

hands of third parties may be obtained through already extant litigation methods if truly 

necessary. In addition. NIGC regulations already allow the agency to take enforcement action if 

the records it seeks are truly within its purview. See 25 C.F.R. fi 573.6(9). The NlGC has hrn 

time to time overreached in its requests for records, such as in the Colnrudo River Indim Tribes 

matter, and the tribes should be able to protect governmental documents and people's personal 

in formation from unauthorized and ultra 17ir.m federal government review. 

XI. Enforcement 

It wouId be helpful for the tribes if a NOV were expunged automatically after a number 

of years. The only effect closed NOV files have for tribes is that theNIGC utilizes past NOVs to 

calculate civil fines for new violations, examines the NOVs issued against that tribe in the last 

five years. 25 C.F.R. 5 575.31~). Therefore, if the NlGC opts to expunge NOV files, five (5) 

years would be an appropriate period for removal. 

There is an issue of utility for other tribes and the industry in knowing how strenuously 

the NIGC enforces various violations, as demonstrated by its focus on past errors. Other tribes 

would like to learn from past mistakes and also be able to calculate potential civil fine 

impositions and negotiated settlements assessed in past actions. Perhaps past NOVs could be 

posted on the website for violations more than five years old with the tribal identifyrng 

information removed. 

XIl. Potential New Re~wEations: Tribal Advisory Committee 

There is no need for Tribal Advisory Committee ("TAC") regulations. The TAC process. 

as discussed above, reduces the ability of all tribes to provide meaningful input and be hIty 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 8 

involved in a regulatory process that could result in millions of dollars of implementation .costs. 

In odes to avoid unfunded mandates and allow for a truly free and open discussion of regulatory 

initiatives, the NIGC should only prornuIgate new regulations through the negotiated rulemaking 

process. 

XIII. Potential New Regulations: Sole Proprietary Interest 

The NIGC appears to have claimed potential violations of the sole proprietar,~ interest 

requirement when it sees agreements, or series of agreements, indicating that the tribes have 

unwittingly entered into bad deals, especially when the other parties would end up receiving the 

majority of profits from the operation. Rather than pursue this tactic, which is based on flimsy 

legal citations to what constitutes a sole proprietary interest based on tax law, the NIGC should 

rather speak up as a trustee. Tribal governments, like any others, vary in sophisticatior~ and can 

be targeted by bad elements. The NIGC should allow the tribes freedom to make what it 

considers poor business decisions as their own sovereign right. However, if the deal appears to 

shock the conscience, the NIGC should step in as trustee to inform the tribes of the issue. 

If the NIGC determines the rnzttter is egregious enough that it must step in, the NlGC 

should take some method of final agency action to challenge the agreement as trustee. Final 

agency action, as opposed to a legal advisory opinion, would be subject to court review and 

allow finality. This option might require revision of the statute at 25 U.S.C. 8 2714 to allow for 

APA review of the final agency action or could potentially fall under other Department of the 

Interior regulation such as 25 C.F.R. 2.3, if amended to include NIGC decisions. 

XIV. Potential New Regylations: Communication Policy 

Because the NIGC often communicates with the tnbes at a11 levels of government, from 

agency employees speaking to tribal employees on daily operational matters to formal 

communications between government officials, regulations standardizing communication might 

end up stifling, rather than expanding, communications. Should the NIGC determine that 

regulations are needed, these should clearly specify the types of communications involved and 

clarify that all other types of communication may proceed without regard to the new rules. 

Otherwise. the simple scheduling of a site visit or a tribal query on how to interpret a rule or 

replation could be considered consultation and be subject to inappropriate limitalions and 

procedures. 

The IGRA requires each approved tribal gaming ordinance contain a point of contact for 

federal notices. Tf a tribe requires that further tribal entities be contacted regarding fees or a 

NOV, the federal government should allow the tribes to use this existing mechanism to 

communicate its preferences. New regulations should not be considered unIess necessay. 

XV. Potential New Rewlations: Buy hdian Act 

The Tribes support a new regulation requiring the agency to give preference to Indianowned businesses when obtaining goods or services. 
Letter to Lael Echo-Hawk 

January 18,2011 

Page 9 

XVI. Otha Remlations 

The Tribes agree no revision is necessary and provide no further comment. 

XVII. ConcIusion 

The Tribes Iook forward to an early opporhnity to comment on the decisirln to go 

forward with deveIopment of any new regulations, preferably before they are drafted, in order to 

provide more specific input. 

Sincerely,