management agreements and do not require the issuance of a declination letter. Without such a
bulletin lenders will continue to require nearly all financing documents to be submitted to NIGC
for approval. This process costs tribes additional resources for outside attorney and consulting
fees and leads to lost revenues and opportunities while the letters are requested and processed.
Further, this process overly burdens the NIGC and requires the NIGC to dedicate limited
resources to such reviews and letters, which detracts from the NIGC’s ability to focus on other
important and pressing issues facing tribes. This is an issue of high priority that NIGC should
address quickly.

F. External Audits

The Tribe would also urge that the NIGC look at the class III compacts of Tribes, such as
the Washington State tribes, to determine if duplicative audit requirements can be eliminated. As
it stands now, the State already audits to not only the compact but NIGC standards as well.
However, the State audit currently does not count as the NIGC external audit. If the NIGC could
adopt an audit standard that incorporates what is happening in tribe’s class III compacts,
significant and costly duplication of effort could be reduced. This cost reduction could come at
no significant regulatory risk if the various state gaming agency audits could be utilized in whole
or in part to satisfy NIGC requirements.

The Tribe has no further comments at this time. Once again, the Tribe thanks you for the
opportunity to help the NIGC develop the best possible regulations and polices, and looks
forward to commenting further as this process unfolds.

Leonard Forsman
Chairman
The Suquamish Tribe


(2) “Gross Gaming Revenues”

The Tribe does not have concerns with the current definition of “gross revenues” for
purposes of calculating NIGC fees. Unless other tribes are experiencing difficulty because the
definition is not more consistent with the GAAP, the Tribe does not see a need to revise this
definition. Moreover, the Tribe notes that the term is defined in IGRA at 25 U.S.C. Section 2717

for the same purposes and submits that any revision to the definition of “gross revenues” in the
NIGC regulations would have to be consistent with IGRA. The Tribe places a low priority on
this potential revision.

(3) Fingerprint Fees

The NIGC has put forth for consideration the question of whether it should expressly
include fingerprint processing fees in the fees calculated under Part 514. This would include the
fingerprint fees in the statutory and regulatory cap on the fees gaming tribes must pay the NIGC,
which would presumably have a positive, although not highly significant, financial impact on the
tribes. The Tribe would therefore support such a revision but places a low priority on it in light
of the greater importance it places on other issues discussed herein. The Tribe agrees that the
NIGC should periodically review the fees charged by the FBI for fingerprint processing and
ensure that the fees the NIGC charges tribes are reasonably similar. But the Tribe does not find it
necessary to promulgate such a requirement by regulation. If the NIGC does decide to proceed
with either or both of these potential changes, the Tribe believes a standard notice-and-comment
process should be sufficient.

(4) Late Payment Fees

The Tribe fully supports the idea of the NIGC instituting a late payment system instead of
issuing NOVs or taking other more serious actions. The Tribe believes that a reasonable
monetary penalty is far more appropriate than an NOV in the case of late payments. The Tribe
would support revising Part 514 to clarify that late payments will ordinarily result in a monetary
penalty and to set forth the schedule of monetary penalties. The Tribe would also support
revising Part 514 to clarify that an NOV would issue only under certain limited circumstances.
The Tribe views this as a medium priority, and believes a standard notice-and-comment process
should be sufficient.

c. Self-Regulation

25 C.F.R. Sections 518.3 and 518.4 set forth extensive requirements that a tribe must
meet in order to obtain a certificate of self-regulation for its class II gaming operations. Many
tribes would undoubtedly be able to meet these requirements, but very few have chosen to make
the effort. Presumably, tribes do not attempt to meet these requirements both because the
requirements are so extensive and because the benefits of achieving self-regulation are few. The
Tribe believes that a number of the requirements are either duplicative in that they require a tribe
to produce information that is already available to the NIGC or are not reasonably related to the
limited factors set forth in IGRA. As for the benefits of self-regulation, the fee reduction is clear,


promulgate such regulations, the Tribe would place a relatively low priority on them. As long
as any such regulations do not purport to impose any requirements on tribes, the Tribe believes a
standard notice-and-comment process should be sufficient.

I. Facility Licensing

Of highest priority to the Tribe is the issue of the new facility licensing provisions of 25
C.F.R. Part 559 (together with the specific provisions in Parts 502 and 522 discussed above).
The Tribe would like to see these provisions eliminated. IGRA only requires a license for each
gaming facility and, as discussed above, gives the NIGC the authority to review a tribal
ordinance governing class II gaming to determine if it provides that “the construction and
maintenance of the gaming facility, and the operation of that gaming is conducted in a manner
which adequately protects the environment and the public health and safety.” 25 U.S.C. §
2710(b). If an ordinance does so provide and if it meets the other requirements of Section
2710(b)(2), then the Chairperson of the NIGC does not even have discretion—he or she “shall
approve” the tribal gaming ordinance. The requirements of subsection (b) are incorporated into
the requirements for class III gaming activities as well. 25 U.S.C. § 2710(d). Notably, these
provisions of IGRA only give the NIGC the authority to review a tribal gaming ordinance for
specific content and approve it. The provisions do not give the NIGC any authority to review
other tribal laws or any say over the substance of other tribal laws.

For tribes with class III compacts, those compacts completely address issues of
environmental and public safety in class III facilities and should be given precedence over any
NIGC regulation. This is especially true when tribes combine class II and class III activities in a
single facility, as is the case with the Suquamish Tribe.

Yet the NIGC has seized hold of the above-cited IGRA provisions and claims that they
give the NIGC the authority to require tribes to promulgate laws on specific topics, to require
tribes to provide information going far beyond information related to gaming, to pass judgment
on the substance of tribal laws, to penalize tribes if their laws do not meet the NIGC’s standards,
and more. All of this far exceeds the scope of authority IGRA grants to the NIGC. Moreover, it
constitutes a gross intrusion on tribal sovereignty. Indeed, the Tribe can conceive of few, if any,
incursions on tribal sovereignty greater than dictating to tribes (albeit in a roundabout way) what
laws they must adopt and then judging the adequacy of those laws.

There are also several practical concerns. For one thing, the requirements are
burdensome. Having to identify all laws that apply, for a laundry list of topics, then determine
whether a gaming operation is in compliance with every provision of those laws is extremely
time consuming and expensive. For another thing, the end product provided to the NIGC under
the regulations is essentially meaningless. It is merely a list of laws, the content of which the
NIGC does not know. Also, requiring tribes to submit information on the land for new gaming
operations is duplicative of DOI function and unnecessary. It is the Tribe’s view that the NIGC
likely lacks expertise and depth of staffing in the broad range of topics it seeks to require tribes to
address, and that the NIGC is therefore not qualified to determine whether a tribe’s laws on those
topics are adequate or whether a tribe is in compliance with the laws on those topics. For all of


of Parts 531 and 533 do not apply well to collateral agreements. As a general matter, the Tribe
believes that tribes should have the freedom to contract and to make their own business decisions
whether good or bad. Ifa tribe specifically asks the NIGC to review and approve its collateral
agreements, then the NIGC would be within its authority to do so, provided the collateral
agreements at least relate to gaming. In most instances, however, the Tribe believes that tribes
are perfectly capable of determining for themselves what amounts a contract requires them to pay
and whether such amounts exceed a percentage of the net revenues that is permissible under
IGRA or, more importantly, acceptable to the tribes themselves. Thus, the Tribe does not
perceive a need for revisions regarding collateral agreements and accordingly views this as a low

priority.

(2) Approval of Management Contracts

The Tribe does not believe it is necessary to add specific grounds for disapproving
management contracts under the “trustee standard” of Part 533. For one thing, the specific
grounds the NIGC mentions already constitute grounds for disapproving a management contract
under 25 C.F.R. Section 533.6(a). While it might be somewhat desirable to limit the NIGC’s
ability to disapprove a management contract under the “trustee standard,” the Tribe views this as
alow priority. In the event the NIGC nevertheless decides to pursue such a revision, the Tribe
suggests that a standard notice-and-comment process would be sufficient.

(3) Background Investigations

On its face, 25 C.F.R. Part 537 appears to limit its background investigation requirements
to management contracts for class II gaming. As the Notice of Inquiry points out, the
Chairperson of the NIGC does have the power under IGRA to approve management contracts for
both class II and class Il] gaming. 25 U.S.C. § 2705(a)(4). However, the Tribe notes that this
does not constitute a general grant of authority over class III management contracts. The Tribe
also questions whether it would be appropriate for the NIGC to impose background investigation
requirements on class II] management contracts, when the NIGC’s requirements would in many
cases either duplicate or be inconsistent with background investigation requirements under tribal-
state gaming compacts. If the NIGC does intend to impose the requirements of Part 537 on class
III management contracts, then the Tribe agrees that Part 537 requires revision. But the Tribe
would advise the NIGC to convene a Tribal Advisory Council to determine whether that course
of action is appropriate in the first place and, if so, how to revise Part 537. The Tribe places a
low priority on this issue, primarily because the Tribe does not have any management contracts
for its gaming operation.

F. Proceedings before the Commission

The Tribe is somewhat concerned with the lack of formal processes for appeals. The
Tribe suggests removing the option for initial service by facsimile and requiring prior consent of
the party to be served for subsequent service by facsimile. The Tribe views extensive revisions
to these Parts as a moderate priority. If the NIGC does decide to proceed with such revisions,
the Tribe suggests that the NIGC convene a Tribal Advisory Committee for that purpose.


but the other benefits are limited and rather vague. Finally, there is not much benefit in
achieving self-regulating status for class II gaming for tribes who also offer class III gaming. The
Tribe would support the NIGC in streamlining the requirements and process for self-regulation.
However, unless there is a corresponding increase in the benefits of self-regulation (such as
clearly reduced NIGC oversight, self-regulation for class III as well, and other clear benefits), the
Tribe suspects that streamlining Part 518 would have little impact. Therefore, the Tribe
recommends that the NIGC explore the possibility of increasing the benefits of self-regulation
first. The Tribe views this as a matter of medium priority. In the event the NIGC does decide
to pursue revisions to Part 518 (or relevant amendments to IGRA), the Tribe believes a Tribal
Advisory Committee and a subsequent opportunity for comment would be appropriate.

D. Review and Approval of Ordinances

(1) Part 522

The Notice of Inquiry does not specifically request comment on 25 C.F.R. Part 522, but
the Tribe believes the NIGC should consider eliminating 25 C.F.R. Section 522.2(i), which was
recently added as part of the facility licensing standards. The subsection requires tribes to
provide “Indian lands or environmental and public health and safety documentation that the
Chairman may in his or her discretion request as needed.” For the reasons discussed above with
regard to Section 502.22, the Tribe believes that this subsection exceeds the NIGC’s authority
and encroaches on tribal sovereignty. The NIGC should work with a Tribal Advisory Committee
to address this issue in conjunction with the facility licensing provisions discussed below, which
the Tribe views as a high priority.

(2) Part 523

The Tribe has no objection to removing 25 C.F.R. Part 523.

E. Management Contracts

(1) Collateral Agreements

IGRA specifies that references to the term “management contract” include “collateral
agreements to such contract that relate to the gaming activity.” 25 U.S.C. § 2711(a)(3). The
NIGC regulations likewise define “management contract” to include a “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 the gaming operation.” 25
C.F.R. § 502.15. Thus, in order for the NIGC to have the authority to approve a collateral
agreement under 25 U.S.C. Section 2711, the contract must relate to the gaming activity. And in
order for the NIGC to have the authority to approve a collateral agreement under 25 C.F.R. Part
533, the collateral agreement would have to provide for the management of all or part of the
gaming operation. The Tribe believes this structure is appropriate as it is. The NIGC should not
have authority over all collateral agreements. And, if the NIGC chooses not to exercise the full
extent of its authority over collateral agreements, that is fine. Indeed, many of the requirements


to keep the Class II MICS current with changing technology and other circumstances in a timely
fashion remains questionable. And as a general matter, the Tribe firmly believes that it is far
better for tribes to determine the rules and regulations they will abide by, rather than have rules
and regulations unilaterally imposed on them by the federal government. Just as in class III
gaming, tribes currently have or are perfectly capable of adopting their own internal controls that
meet or exceed the NIGC’s Class II MICS. The Tribe would therefore encourage the NIGC to
consider rescinding the Class II MICS. In the alternative, the NIGC could convert them to
guidelines or to model Class II MICS.

If the NIGC does not rescind the Class II MICS, the Tribe believes the Class II MICS will
need substantial revisions in order to constitute a useful system of internal controls. The Tribe
understands that the NIGC has already drafted some revisions, and it would not want to see the
time and resources invested in that go to waste. However, the Tribe believes that the NIGC
should generally seek tribal input before preparing a draft of any new regulations or substantial
revisions to regulations. The Tribe would accordingly recommend convening a Tribal Advisory
Committee and starting the revision process essentially from scratch, using the already-prepared
draft merely as a point to begin conversation. The tribes and the NIGC should work together to
prepare a revised draft before opening the draft up to comment by the general public. Finally,
any Class II MICS should be as minimal and general as possible, in order to best allow for the
diversity amongst tribal gaming operations and the inevitable changes in technology and
circumstances. The Tribe views the issue of the Class II MICS as a high priority.

(3) Class II Technical Standards

The Tribe’s comments regarding the Class II Technical Standards are the same as its
comments regarding the Class II MICS, above.

H. Backgrounds and Licensing

qd) Background Investigations

Most tribes currently participate in what was originally a pilot program regarding the
background investigation of employees. The Tribe would not object to the NIGC promulgating
regulations formalizing the program. But because most tribes already participate in the program
and it seems to work well as it is, the Tribe views this as a relatively low priority. If the NIGC
decides to pursue this, the Tribe believes a standard notice-and-comment process should be
sufficient, as long as the proposed regulations adhere closely to the existing program.

(2) Fingerprinting

The NIGC should give tribes the option of submitting to the NIGC the fingerprints of
vendors, consultants, and other non-employees that have access to the gaming operations. The
key point is that this should be an option, not a requirement, for tribes. Tribes who choose to
avail themselves of this option should pay standard fingerprint processing fees. The Tribe is not
sure that regulations regarding this issue are necessary, but in the event the NIGC does decide to


THE SUQUAMISH TRIBE
OFFICE OF TRIBAL COUNCIL
LEONARD FORSMAN, CHAIRMAN

Post Office Box 498

Suquamish, WA 98392-0498

Phone (360) 598-3311
Fax (360) 598-6295

February 11, 2011

Tracie Stevens, Chairwoman

National Indian Gaming Commission

1441 L Street N.W., Suite 9100 Via Electronic Mail
Washington, D.C. 20005 reg.review@nige.gov

Re: — Notice of Inquiry and Request for Information; Notice of Consultation
Dear Chairwoman Stevens:

The Suquamish Tribe (“Tribe’) thanks you for the opportunity to comment on the regulations
promulgated by the National Indian Gaming Commission (NIGC) pursuant to the Indian Gaming
Regulatory Act (GRA). Our comments are made in the order the regulations appear, and we have
noted in bold the priority we attach to each section. Before commenting specifically on the
regulations, the Tribe offers some general thoughts.

First, gaming works. The operation of gaming by Indian tribes has enabled unprecedented
economic development in Indian country, which has in turn allowed many tribes to diversify their
economies, strengthen their tribal governments, and become more self-sufficient. The Suquamish
Tribe is a model of this. The Tribe has invested all of its gaming revenues in its government, its
community, and its economic development efforts. It has grown and diversified its business
enterprises continuously but cautiously, being careful not to overextend itself as some other tribes
have done. It has used gaming revenues to repurchase land on its Port Madison Indian Reservation
and to build a new Tribal government center, police station, courthouse, community house,
community dock, early learning center, sports facilities, and veterans memorial, among other things.
The Tribe is in the process of creating a new memorial at Chief Seattle’s gravesite, and constructing a
new Suquamish museum. Moreover, the Tribe has made substantial contributions to the surrounding
communities, due in no small part to gaming revenues. But much work remains to be done. Tribal
economic development is an ongoing process, and tribes’ ability to continue on their paths of
economic development and self-sufficiency must not be impeded.

Second, the industry is well regulated. The concerns used to justify passage of IGRA, such as
the possible infiltration of organized crime and other corrupting influences, have not been realized.
Many tribes now have several decades of successful experience under their belts as the primary
regulators of their gaming operations. Notably, the experience of many tribes (including the
Suquamish Tribe) predates the NIGC’s more intrusive efforts to regulate Indian gaming, such as its
promulgation of minimum internal control standards, technical standards, and facilities licensing


serious penalties for relatively minor issues. In addition, if the NIGC does decide to institute a
late payment system as discussed above, the NIGC will likely want to amend Section 573.6(a)(2)
to reflect that late payments would only result in orders of closure under certain very limited
circumstances.

The Notice of Inquiry asks whether the NIGC should promulgate a regulation permitting
the withdrawal of an NOV after it has been issued. The Tribe notes that nothing in Part 573
would prevent the withdrawal of an NOV after it has been issued. Because Section 573.3
specifies that it is the Chairperson who may issue an NOV, the Tribe believes that the
Chairperson also has the implicit authority to withdraw an NOV. The Tribe would not object to
revising Part 573 to make that authority explicit and to address under what circumstances an
NOV should be withdrawn, and by whom.

The Tribe would also like the NIGC to expunge NOVs after a certain amount of time has
passed. This may be another appropriate revision to Part 573.

The Tribe views these as medium priority issues and believes the NIGC should work
first with a Tribal Advisory Committee to accomplish any revisions to Part 573.

IL. Potential New Regulations

A. Tribal Advisory Committee

The Tribe believes that a thoughtfully organized Tribal Advisory Committee can be an
effective way to begin drafting or revising NIGC regulations. It therefore encourages the NIGC
to use Tribal Advisory Committees in appropriate circumstances. The Tribe believes that Tribal
Advisory Committees should consist of duly authorized tribal government representatives with
specific experience in the particular area that the contemplated regulation will address. The
members of Tribal Advisory Committees should represent a cross section of tribes, taking into
account geographic area, size of gaming operation, etc. Tribal Advisory Committees should be
large enough to represent a relatively broad range of tribal views, yet not so large as to be
unwieldy. The NIGC should involve Tribal Advisory Committees early in the process,
preferably before the NIGC has prepared a draft of a proposed regulation. Once the Tribal
Advisory Committee and the NIGC have worked together to prepare a draft, the NIGC should
circulate the draft to other tribes for comment, before opening the draft up to public comment.
Having said all that, the Tribe does not believe that a regulation regarding Tribal Advisory
Committees is necessary. Perhaps an NIGC policy, drafted with tribal input, would be more
appropriate. While the Tribe views the use of appropriate Tribal Advisory Committees as a
continuing high priority, it gives a relatively low priority to the drafting of a regulation or
policy regarding Tribal Advisory Committees.

B. Sole Proprietary Interest

The Tribe does not believe a “sole proprietary interest” regulation is necessary. In the
event the NIGC does pursue a “sole proprietary interest” regulation, the Tribe stresses the


these reasons and many more, the Tribe strongly urges the NIGC to promptly retract Part 559 and
the related provisions of Parts 502 and 522. Again, this issue is of the highest priority to the
Tribe.

In the event the NIGC does not eliminate these provisions, the Tribe strongly urges the
NIGC to at least revise the more troublesome aspects of them. The Tribe would recommend that
the NIGC work closely with a Tribal Advisory Committee to determine what provisions should
be revised and what the appropriate revisions might be. Among other things, if the NIGC retains
Section 559.5, the Tribe would recommend revising it so that the standard under subsection
(a)(1) is substantial enforcement and the standard under subsection (a)(2) is substantial
compliance. The Tribe believes that 100% enforcement or compliance, 100% of the time, is an
unrealistic standard. An employee could leave a food item out a little too long and violate a food
code, or someone could temporarily prop a fire door open and violate a fire code, just to give two
examples. Tribes are in the best position to deal with these kinds of incidents and routinely do.
Surely the NIGC would not want a written plan regarding how a tribe will come into compliance
for minor issues such as these! Yet as the regulations of Part 559 are currently written, there is
no room for minor lapses in enforcement or compliance. This is but one minor revision that the
Tribe would recommend in the event the NIGC decides to retain Part 559. The Tribe strongly
advises the NIGC to accept extensive tribal input into more significant revisions to Part 559, if
the NIGC does not rescind Part 559 outright, as the Tribe would recommend.

J. Inspection and Access

The NIGC should not revise 25 C.F.R. Part 571 to “clarify” the NIGC’s access to records
at off-site locations, including at sites maintained or owned by third parties. The Tribe views
Section 571.6(b) as already adequately addressing the availability of off-site records. And to the
extent a gaming operation refuses to make available off-site records that are properly within the
NIGC’s purview, the NIGC can compel non-tribal third parties to produce the information using
standard avenues. Tribes must be able to protect their information and records. Third parties
already have less of an incentive to protect tribes’ information and revising Part 571 as the NIGC
proposes could increase the pressure on third parties to provide information, whether or not that
is proper. While this might benefit the NIGC in limited instances, it is not right to impair tribes’
ability to protect their information in appropriate circumstances. Because the Tribe does not
believe the NIGC should revise Part 571, it places a low priority on this issue. If the NIGC does
revise Part 571, the Tribe would recommend at least a standard notice-and-comment process and
perhaps a Tribal Advisory Committee depending on the nature of the contemplated revisions.

K. Enforcement

As a general matter, the Tribe believes that the NIGC should issue Notices of Violation
(NOVs) only as a last resort, after the NIGC has notified a tribe of a problem, tried in good faith
to work with the tribe to resolve the problem, and failed to resolve the problem through those
efforts. The Tribe would support amendments to 25 C.F.R. Part 573 that clarify the steps the
NIGC must take before issuing an NOV. It might also be helpful to include a heightened
standard for when the NIGC may issue NOVs and orders of closure, so that tribes do not receive


G. MICS and Technical Standards

dd) Class Ill MICS

Given the Colorado River Indian Tribes v. NIGC decision, it is clear that the NIGC does
not have the authority to regulate class III gaming and accordingly lacks the authority to require
tribes to comply with the class III Minimum Internal Control Standards set forth in 25 C.F.R.
Part 542 (“Class III MICS”). Therefore, the NIGC should strike the Class III MICS from the
Code of Federal Regulations. The Tribe views this as a high priority and suggests that the
NIGC undertake this task as soon as possible.

The Tribe recognizes that some tribes may have agreed to incorporate the Class III MICS
in their gaming compacts with the states and that eliminating the Class III MICS could impact
their gaming compacts. As the Tribe suggested at the Squaxin Island hearing, the NIGC could
move these regulations to the “Reading Room” page of its website and relabel them as “model”
regulations for use by any Tribe in its own ordinances. It would be acceptable for the NIGC to
convert the current Class III MICS into guidelines or model Class III MICS.

But that still leaves the issue of whether the NIGC should periodically revise the no-
longer-effective Class III MICS, in order to keep up with changes in technology and other
circumstances. The Tribe does not believe that continuing to revise the Class III MICS is an
efficient use of NIGC resources. The Tribe views the Class III MICS as unnecessary in the first
place. The Suquamish Tribe, like other tribes, has negotiated internal controls in its Gaming
Compact, and has also implemented additional internal controls, all of which meet or exceed the
NIGC’s Class III MICS. Even without the Class III MICS, tribes will conduct their gaming in a
manner that meets or exceeds industry standards because they have a strong incentive to protect
their gaming operations. Moreover, the Suquamish Tribe and other tribes are able to revise their
internal controls in order to keep up with rapid changes in technology and other circumstances
(including the type of tribe-specific circumstances that the Class III MICS are not well adapted
to) better and more quickly than the federal government can. Finally, many tribes will not use
the Class III MICS, yet the cost to continue to revise them will be substantial. The NIGC’s
resources can be spent in better ways that benefit a broader spectrum of tribes.

(2) Class II MICS

The Tribe acknowledges that IGRA gives the NIGC the authority to monitor and inspect
class II gaming on Indian lands. It is not convinced, however, that the NIGC therefore has the
broad authority to promulgate and require tribes to comply with the class II Minimum Internal
Control Standards set forth in 25 C.F.R. Part 543 but not yet effective (“Class II MICS”). The
Tribe urges the NIGC to remember the fundamental purposes behind IGRA and to remember that
class II gaming is a safe harbor for all tribes, because the consent of the states is not required.
The Class II MICS should reflect that reality. In addition, a one-size-fits-all set of Class II MICS
is not well suited to the realities of the tribal gaming industry, which is very diverse in terms of
geography, the size of gaming operations, the applicable laws, etc. Moreover, the NIGC’s ability


(3) § 502.22

25 C.F.R. Section 502.22 defines the phrase “construction and maintenance of the gaming
facility, and the operation of that gaming is conducted in a manner which adequately protects the
environment and the public health and safety,” which is a phrase used in IGRA at 25 U.S.C.
Section 2710. The Notice of Inquiry did not specifically request comment on Section 502.22, but
the Suquamish Tribe believes the NIGC should consider revising it. The relevant portion of
IGRA states only that “The Chairman shall approve any tribal ordinance or resolution concerning
the conduct, or regulation of class II gaming on the Indian lands within the tribe’s jurisdiction if
such ordinance or resolution provides that...the construction and maintenance of the gaming
facility, and the operation of that gaming is conducted in a manner which adequately protects the
environment and the public health and safety...” 25 U.S.C. § 2710(b)(2)(E). IGRA does not
otherwise dictate what laws a tribe must have in place or require tribes to identify and enforce
any specific laws. Therefore, as a general matter, the Tribe believes that 25 C.F.R. Section
502.22 far exceeds the scope of IGRA by requiring tribes to identify, adopt, and enforce laws on
specific topics. The Tribe also views this as a blatant and severe encroachment on tribal
sovereignty. Moreover, the second sentence of Section 502.22 is a substantive provision, which
does not belong in a definition. For these reasons, the Tribe suggests that the NIGC remove or
substantially revise this definition. The Tribe places a high priority on this revision and believes
the NIGC should work with a Tribal Advisory Committee to address it in conjunction with the
facility licensing provisions discussed below.

B. Fees
(1) Calculation of NIGC Fees

Under the current NIGC regulations, tribes must calculate the fees they pay to the NIGC
ona calendar year basis. The fees are based on a percentage of each gaming operation’s gross
revenues. However, IGRA does not specify that either the gross revenues or the fees must be
calculated on a calendar year basis. Moreover, 25 C.F.R. Section 571.12 requires audits “for
each fiscal year.” These audits must further be reconciled with the NIGC fee assessment reports
under 25 C.F.R. Section 571.14. Thus, calculating the NIGC fees on a calendar year basis and
reconciling them with the annual audits could be problematic and unnecessarily burdensome for
tribes that operate on a fiscal year other than the calendar year. The Suquamish Tribe’s fiscal
year is the calendar year, so it does not have a problem with this itself. However, many other
tribes follow the federal fiscal year, and the Tribe believes that tribes should be free to choose
what their fiscal year will be and should not be negatively impacted as a result of that choice.
Therefore, the Tribe believes the NIGC should revise Part 514 to provide for the calculation of
fees on the basis of a tribe’s fiscal year, whatever that may be. The Tribe places a medium
priority on this but believes that the contemplated revision is straightforward enough that the
NIGC should be able to accomplish it relatively quickly. For the same reason, the Tribe believes
that a standard notice-and-comment process should be sufficient to accomplish this revision.


that any definition of the term in the NIGC regulations must be consistent with IGRA definition.
Accordingly, the Tribe views this potential revision as a low priority.

(b) Allowable Uses

Second, the NIGC asks whether it would be appropriate to have a separate definition for
purposes of calculating the “net revenues” that are available for the allowable uses specified
under IGRA. More specifically, a revised definition might take the actual cash flow and financial
integrity of the gaming operation into account before allocating funds to allowable uses under
IGRA. The Tribe agrees that tribes should consider the cash flow and costs of doing business
(e.g., making loan payments, accounting for depreciation) and the financial integrity of their
gaming operations before allocating funds for other purposes. However, the Tribe does not
believe that the NIGC should dictate such a requirement to tribes. Tribes must be able to make
their own business and budgeting decisions, even if their decisions occasionally might not be
optimal. Therefore, the Tribe considers this potential revision a low priority.

(2) Management Contract

The Tribe does not believe that the NIGC should expand the definition of “management
contract” to include any contract that requires the payment of a fee based on a percentage of
gaming revenues, such as slot lease agreements. While a vendor might receive payment based on
a percentage of gaming revenues under these contracts, the vendor typically does not receive
control over the “operation and management” of the gaming operation, as contemplated by 25
U.S.C. Section 2711 of IGRA. To the extent a vendor does receive control over the operation
and management of the gaming operation, NIGC review of that contract would be appropriate
under IGRA and the existing regulations. For the NIGC to review contracts that do not give a
vendor control over the operation and management of the gaming operation would constitute
overreaching by the NIGC and would interfere with the tribes’ sovereign authority to contract
and to make their own business decisions. Moreover, broadening the definition of “management
contractor” in this manner could require tribes to seek review of even small contracts, which
could easily impede tribes’ ability to contract efficiently and would hardly be the best use of
NIGC resources.

The Tribe is aware, however, of the possibility that a management contractor might
receive an impermissibly high percentage of gaming revenues by executing a series of
agreements, some of which do not require NIGC review under the current regulations. The Tribe
understands the desire to prevent such circumstances. Accordingly, the Tribe probably would not
oppose (although it would not actively support) placing a cap on the total compensation that a
management contractor can receive from all revenue sources relating to a tribe. But as a matter
of principle, the Tribe believes that each tribe’s circumstances are unique, and as sovereigns, all
tribes should be free to contract as they see fit. Therefore additional contracting restrictions are
neither necessary nor appropriate. The Tribe therefore places a low priority on any such
revision.


standards. The Tribe is concerned that these regulatory activities by the NIGC are not only
unnecessary but constitute overreaching and encroach on tribal sovereignty.

The Tribe shares the NIGC’s commitment to the effective regulation of tribal gaming and
believes that other tribes do as well. In fact, tribes are the ones with the most incentive to protect
their gaming operations, both in terms of the fairness of play and in terms of public health and
safety. The Tribe accordingly believes that tribes must remain the primary regulators of their
gaming operations. For this reason, the making and enforcement of laws and regulations
applicable to Indian gaming should be left to tribes as much as possible, and tribes should be free
to make their own business decisions, even if those decisions might occasionally fall short of
optimal. In contrast, NIGC regulations should be revised to be as respectful of tribes as possible,
and new NIGC regulations pertaining to tribes should be considered only when truly necessary.
Both of these things should be accomplished using as much tribal input as possible, beginning as
early in the process as possible.

From that frame of reference, the Tribe provides the following additional comments in
response to your November 12, 2010, Notice of Inquiry and Request for Information; Notice of
Consultation (“Notice of Inquiry”):

I. Current Regulations
A. Definitions
dd) Net Revenues

The Notice of Inquiry requests comments regarding whether there should be two separate
definitions of the term “net revenues” (which the NIGC currently defines in 25 C.F.R. § 502.16).

(a) Management Fee

First, the NIGC asks whether it would be appropriate, for purposes of calculating
allowable management fees, to have a definition of “net revenues” that more closely resembles
Generally Accepted Accounting Principles (GAAP). Such a definition might permit the
deduction of additional expenses in calculating the net revenues. The Suquamish Tribe does not
have a management contract for its Casino. Therefore, it has no strong interest in the method of
calculating management fees. Nor does the Tribe otherwise have any concerns with the current
definition of “net revenues.” The Tribe can, however, see that it might be more convenient for
accounting professionals if the definition of net revenues more closely resembled the
corresponding definition in the GAAP. The Tribe can also see that providing for the deduction
of additional expenses in calculating net revenues might protect some tribes with management
contracts, by effectively reducing the maximum amount that the tribes can pay under the
management contracts. But the Tribe questions whether there is actually a need to protect tribes
in this manner, when tribes are sovereigns which are free to negotiate the terms of their contracts.

If they wish to pay lower fees on their management contracts, then they can negotiate lower fees.
The Tribe also notes that the term “net revenues” is defined in IGRA at 25 U.S.C. § 2703(9) and


paramount importance of preserving tribes’ sovereign authority to make their own business
decisions. Also in that event, the Tribe recommends that the NIGC work with a Tribal Advisory
Committee to draft appropriate regulations, which should then be submitted for comment.

Cc. Communication with Tribes

The Tribe does not believe a regulation regarding the NIGC’s communications with tribes
is necessary. All tribes are different, and a one-size-fits-all regulation therefore would not be
appropriate. The Tribe believes that the NIGC’s current policy of sending communications to
both tribal leaders and tribal gaming commissions/agencies, in addition to issuing press releases
and publishing notices, will generally be sufficient to reach all necessary parties. The NIGC
should use these as the default means of communication with tribes, although tribes should also
be able to designate different or additional parties to receive communications if they wish. When
the NIGC sends communications to tribal leaders and gaming commissions/agencies, the Tribe
recommends sending the communications by both U.S. Mail and electronic mail. With that said,
a flexible NIGC policy on this subject would probably be more appropriate than a regulation. In
the event the NIGC does pursue a regulation on this subject, the Tribe would urge the NIGC not
to unduly complicate the communications process. There are different types of communications,
and not all communications need to be subject to formal processes.

D. Buy Indian

The Tribe fully supports the NIGC’s desire to “Buy Indian.” The Tribe believes it is
eminently appropriate for the NIGC to give preference to qualified Indian-owned businesses
when purchasing goods and services. However, the Tribe believes this subject is better suited to
an internal NIGC policy than to a regulation. The Tribe views this as a relatively low priority.

E. Financing Issues

In accordance with NIGC Bulletins 93-3 and 94-5 and in the context of the recent court
decision, Wells Fargo, N.A. v. Lake of the Torches Economic Development Corp., 677 F.
Supp.2d 1056 (W.D. Wis. 2010), lenders are now requiring loan documents involving gaming
revenues to be submitted to NIGC for a declination letter opining that the loan documents,
individually or collectively, do not constitute a management contract requiring the approval of
the NIGC Chairwoman or grant to any person a proprietary interest in any gaming operation of
the tribe within the meaning of the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701 et seq.
(IGRA”) and regulations promulgated thereunder at 25 C.F.R. Parts 500-599.

NIGC should address this issue by issuing a new bulletin that clearly spells out the
requirements necessary to ensure that traditional financing documents (credit agreements and
bond indentures) from commercial financial institutions are not viewed as management contracts
under IGRA. Such a bulletin could be drafted to apply proactively to new documentation and in
it the NIGC could specifically express that the bulletin is not intended to be applied to any
existing financings not previously reviewed by the NIGC. By doing so both lenders and tribes
can use that new bulletin as a resource to drafting financing documents that are clearly not