45228 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

participating State’s performance in 

implementing the requirements of the 

Program at least once every 5 years. 

(1) The Operating Administration 

must provide notice and an opportunity 

for public comment during the review. 

(2) At the conclusion of its last review 

prior to the expiration of the term, the 

Operating Administration may extend a 

State’s participation in the Program for 

an additional term of not more than 5 

years (as long as such term does not 

extend beyond the termination date of 

the Program) or terminate the State’s 

participation in the Program. 

(c) Early Termination. (1) If the 

Operating Administration, in 

consultation with the Office of the 

Secretary and the Chair of CEQ, 

determines that a State is not 

administering the Program consistent 

with the terms of its written agreement, 

or the requirements of this part or 23 

U.S.C. 330, the Operating 

Administration must provide the State 

notification of that determination. 

(2) After notifying the State of its 

determination under paragraph (c)(1), 

the Operating Administration must 

provide the State a maximum of 90 days 

to take the appropriate corrective action. 

If the State fails to take such corrective 

action, the Operating Administration 

may terminate the State’s participation 

in the Program. 

Title 49—Transportation 

PART 264—PROGRAM FOR 

ELIMINATING DUPLICATION OF 

ENVIRONMENTAL REVIEWS AND THE 

SURFACE TRANSPORTATION 

PROJECT DELIVERY PROGRAM 

■ 4. The authority citation for part 264 

is revised to read as follows: 

Authority: 23 U.S.C. 327; 49 CFR 1.81; 23 

U.S.C. 330. 

■ 5. Revise the heading for part 264 to 

read as set forth above. 

■ 6. Revise § 264.101 to read as follows: 

§ 264.101 Procedures for complying with 

the surface transportation project delivery 

program application requirements and 

termination and the procedures for 

participating in and complying with the 

program for eliminating duplication of 

environmental reviews. 

The procedures for complying with 

the surface transportation project 

delivery program application 

requirements and termination are set 

forth in part 773 of title 23 of the Code 

of Federal Regulations. The procedures 

for participating in and complying with 

the program for eliminating duplication 

of environmental reviews are set forth in 

part 778 of title 23 of the Code of 

Federal Regulations. 

PART 622—ENVIRONMENTAL IMPACT 

AND RELATED PROCEDURES 

■ 7. The authority citation for part 622 

is revised to read as follows: 

Authority: 42 U.S.C. 4321 et seq.; 49 

U.S.C. 303 and 5323(q); 23 U.S.C. 139, 326, 

327, and 330; Pub. L. 109–59, 119 Stat. 1144, 

sections 6002 and 6010; 40 CFR parts 1500– 

1508; 49 CFR 1.81; Pub. L. 112–141, 126 Stat. 

405, sections 1315, 1316, 1317, and 1318; 

and Pub. L. 114–94, section 1309. 

■ 8. Revise § 622.101 to read as follows: 

§ 622.101 Cross-reference to procedures. 

The procedures for complying with 

the National Environmental Policy Act 

of 1969, as amended (42 U.S.C. 4321 et 

seq.), and related statutes, regulations, 

and orders are set forth in part 771 of 

title 23 of the Code of Federal 

Regulations. The procedures for 

complying with 49 U.S.C. 303, 

commonly known as ‘‘Section 4(f),’’ are 

set forth in part 774 of title 23 of the 

Code of Federal Regulations. The 

procedures for complying with the 

surface transportation project delivery 

program application requirements and 

termination are set forth in part 773 of 

title 23 of the Code of Federal 

Regulations. The procedures for 

participating and complying with the 

program for eliminating duplication of 

environmental reviews are set forth in 

part 778 of title 23 of the Code of 

Federal Regulations. 

[FR Doc. 2017–20561 Filed 9–27–17; 8:45 am] 

BILLING CODE 4910–22–P 

NATIONAL INDIAN GAMING 

COMMISSION 

25 CFR Part 547 

RIN 3141–AA64 

Technical Standards 

AGENCY: National Indian Gaming 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The National Indian Gaming 

Commission proposes to amend the 

minimum technical standards for Class 

II gaming systems and equipment. The 

proposed rule would amend regulations 

that describe how tribal governments, 

tribal gaming regulatory authorities, and 

tribal gaming operations comply with 

the technical standards. In particular, 

the proposed rule amends the 

requirement that gaming systems 

manufactured before November 10, 

2008, be modified to meet standards 

applicable to gaming systems 

manufactured on or after November 10, 

2008, or be removed from the gaming 

floor by November 10, 2018. The 

Commission proposes this action to 

assist tribal governments, tribal gaming 

regulatory authorities, and operations in 

ensuring the integrity and security of 

Class II games and gaming revenue 

through minimum technical standards 

for Class II gaming systems and 

equipment. 

DATES: The agency must receive 

comments on or before November 13, 

2017. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: 547.5_Comments@nigc.gov. 

• Fax: 202–632–7066. 

• Mail: National Indian Gaming 

Commission, 1849 C Street NW., MS 

1621, Washington, DC 20240. 

• Hand Delivery: National Indian 

Gaming Commission, 90 K Street NE., 

Suite 200, Washington, DC 20002, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: 

Austin Badger, National Indian Gaming 

Commission; Telephone: 202–632–7003. 

SUPPLEMENTARY INFORMATION: 

I. Comments Invited 

Interested parties are invited to 

participate in this proposed rulemaking 

by submitting such written data, views, 

or arguments as they may desire. 

Comments that provide the factual basis 

supporting the views and suggestions 

presented are particularly helpful in 

developing reasoned regulatory 

decisions on the proposal. 

II. Background 

The Indian Gaming Regulatory Act 

(IGRA or Act), Public Law 100–497, 25 

U.S.C. 2701 et seq., was signed into law 

on October 17, 1988. The Act 

establishes the National Indian Gaming 

Commission (NIGC or Commission) and 

sets out a comprehensive framework for 

the regulation of gaming on Indian 

lands. On October 8, 2008, the NIGC 

published a final rule in the Federal 

Register called Technical Standards for 

Electronic, Computer, or Other 

Technologic Aids Used in the Play of 

Class II Games. 73 FR 60508. The rule 

added a new part to the NIGC’s 

regulations establishing a process for 

ensuring the integrity of electronic Class 

II games and aids. The standards were 

designed to assist tribal gaming 

regulatory authorities and operators 

with ensuring the integrity and security 

of Class II gaming, the accountability of 

Class II gaming revenue, and provide 

guidance to equipment manufacturers 


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and distributors of Class II gaming 

systems. The standards do not classify 

which games are class II and which 

games are class III. 

When implemented in 2008, the part 

547 technical standards introduced 

several new requirements for Class II 

gaming systems designed to protect the 

security and integrity of Class II gaming 

systems and tribal operations. The 

Commission understood, however, that 

some existing Class II gaming systems 

might not meet all of the requirements 

of the technical standards. Therefore, to 

avoid any potentially significant 

economic and practical consequences of 

requiring immediate compliance, the 

Commission implemented a five year 

sunset provision which allowed eligible 

gaming systems manufactured before 

November 10, 2008 (2008 Systems) to 

remain on the gaming floor. The 

Commission believed that a five year 

period was sufficient for market forces 

to move equipment toward compliance 

with the standards applicable to gaming 

systems manufactured on or after 

November 10, 2008. 

On September 21, 2012, the NIGC 

published a final rule in the Federal 

Register which included an amendment 

delaying the sunset provision by an 

additional five years. 77 FR 58473. The 

Commission recognized that its prior 

analysis regarding the continued 

economic viability of the 2008 Systems 

had proven to be mistaken. The NIGC 

established the initial five year period in 

the midst of a much stronger economy. 

In the time that followed the economic 

downturn, many tribal gaming 

operations set new priorities that 

required keeping a 2008 System on the 

gaming floor for a longer period of time. 

Balancing the economic needs against a 

risk that potentially increases as 

technology advances and 2008 Systems 

remain static, the Commission 

determined that 2008 Systems could 

continue to be offered for play until 

November 10, 2018. 

Now, with the November 10, 2018, 

sunset approaching, the Commission 

believed it appropriate to include the 

2008 Systems and associated sunset 

provision of the part 547 technical 

standards as a topic for consultation. 

The topic was therefore included in a 

November 22, 2016, letter to tribal 

leaders introducing the Commission’s 

2017 consultation series. 

III. Development of the Proposed Rule 

On March 23, 2017, in Tulsa, OK, and 

April 12, 2017, in San Diego, CA, the 

NIGC consulted on the 2008 Systems 

and associated sunset provision of part 

547. The Commission also solicited 

written comments through May 31, 

2017. In addition, NIGC staff attended 

several National Indian Gaming 

Association Class II Subcommittee 

meetings. The consultations and 

meetings, combined with the written 

comments, proved invaluable in the 

development of a discussion draft. On 

June 14, 2017, the Commission issued a 

discussion draft which, among other 

proposed amendments, proposed 

removing the November 10, 2018, 

sunset for 2008 Systems. Additional 

written comments responsive to the 

discussion draft were solicited through 

July 15, 2017. 

Written comments received after the 

issuance of the discussion draft were 

generally supportive of the proposed 

removal of the November 10, 2018, 

sunset for 2008 Systems. Comments also 

indicated, however, several specific 

remaining areas of concern. The 

Commission developed the proposed 

rule after considering the comments 

received. 

A. General Comments 

Some commenters questioned the 

Commission’s authority to implement 

technical standards and its authority to 

enforce the standards. IGRA gives the 

Commission the authority to adopt these 

technical standards. Congress was 

expressly concerned that gaming under 

IGRA be ‘‘conducted fairly and honestly 

by both the operator and players’’ and 

‘‘to ensure that the Indian tribe is the 

primary beneficiary of the gaming 

operation.’’ 25 U.S.C. 2702(2). The 

technical standards are designed to 

ensure that these concerns are 

addressed. These standards implement 

the authority granted the NIGC to 

monitor, inspect, and examine Class II 

gaming, 25 U.S.C. 2706(b)(1)–(4), and to 

promulgate such regulations as it deems 

appropriate to implement the provisions 

of IGRA. 25 U.S.C. 2706(b)(10). The 

Commission further reiterates that this 

rule does not classify games for 

purposes of IGRA. The rule assumes 

that the games played are Class II games. 

This rule establishes a process for 

ensuring the integrity and security of 

Class II games and an accounting of 

Class II revenue. 

B. 2008 Systems, Pre-Discussion Draft 

Many commenters requested that the 

November 10, 2018, sunset for 2008 

Systems be removed. Commenters 

suggested that the existing sunset 

provision could not be justified because 

there has been no evidence that 2008 

Systems represent a risk to the integrity 

and security of Class II gaming. 

Commenters noted that 2008 Systems 

appear to be protected by 26 out of 28 

technical standards identified by 

commenters as ‘‘high risk.’’ In addition, 

commenters suggested that, even 

assuming additional risks are associated 

with 2008 Systems, such risks are 

mitigated by tribal gaming regulatory 

authorities (TGRAs) through internal 

control standards. 

The Commission agrees that the 2008 

sunset can be removed. The 

Commission disagrees, however, that 

evidence of risk forms the sole legal 

justification for the technical standards. 

The technical standards are intended to 

ensure the integrity and security of 

Class II gaming and the accountability of 

Class II gaming revenue. The technical 

standards include minimum 

requirements that the Commission 

believes, in its judgment, are 

appropriate and consistent with its 

Federal regulatory oversight mission. 

The Commission has, however, 

determined that removal of the sunset 

provision is justified provided that 2008 

Systems are subject to additional annual 

review by TGRAs. 

Commenters also suggested that the 

sunset provision threatens significant 

economic harm and the continued 

success and viability of the Class II 

gaming industry. Commenters suggested 

that the sunset provision is an 

unnecessary cost burden on 

manufacturers and tribes. Commenters 

further suggested that the sunset 

provision will cause tribes to lose 

leverage in compact negotiations with 

states. 

The Commission understands the 

commenters’ concerns over the 

economic impact of removing noncompliant Class II gaming systems from 

the gaming floor. The Commission 

notes, however, that part 547 as 

originally enacted and as amended only 

requires removal if the games are not 

made compliant with the testing 

standards for newer systems set forth in 

the regulation. The regulation initially 

provided the industry with five years to 

modify or replace 2008 Systems. The 

Commission subsequently granted an 

additional five years to bring the 

systems into compliance with the 

standards for newer systems. The 

Commission has now determined that 

removal of the sunset provision is 

justified provided that 2008 Systems are 

subject to additional annual review by 

the TGRA. 

Commenters suggested that the sunset 

provision is retroactive and that IGRA 

does not authorize the NIGC to 

promulgate regulations that have 

retroactive effect. The Commission 

disagrees that the proposed 

amendments are retroactive. The 

proposed amendments do not alter the 


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45230 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

legal consequences of actions completed 

before their effective date. 

A commenter suggested extending the 

sunset provision indefinitely, subject to 

the authority of TGRAs. A commenter 

submitted proposed language 

implementing an annual audit 

requirement for 2008 Systems. The 

Commission’s subsequent discussion 

draft partially incorporated this 

recommendation. 

C. 2008 Systems, Post-Discussion Draft 

The discussion draft required TGRAs 

to: ‘‘Annually review the Class II gaming 

system, its current components, and the 

associated testing laboratory reports to 

determine whether the Class II gaming 

system may be approved pursuant to 

paragraph (b) of this section. The TGRA 

shall make a finding identifying the 

Class II gaming systems reviewed, the 

Class II gaming systems subsequently 

approved pursuant to paragraph (b), 

and, for Class II gaming systems that 

cannot be approved pursuant to 

paragraph (b), the modifications 

necessary for such approval. The TGRA 

shall transmit its findings to the 

Commission within 120 days of the 

gaming operation’s fiscal year end.’’ 

Commenters suggested that the NIGC 

has provided no compelling reason to 

change the existing reporting 

requirements. Commenters further 

suggested that the annual reporting 

requirement appears to be 

unintentionally applicable to all Class II 

gaming systems. 

Although the requirement does 

impose an additional requirement on 

TGRAs, the Commission believes that 

removal of the sunset provision 

warrants annual review specific to 2008 

Systems. In addition, the annual 

reporting requirement is contained 

within § 547.5(a) and is therefore 

applicable only to 2008 Systems. The 

Commission has, however, revised and 

clarified the annual review and 

reporting procedures in the proposed 

rule to reduce the perceived burden on 

TGRAs. Pursuant to this proposed rule, 

TGRAs are not required to transmit its 

findings, but rather must maintain 

records and make them available to 

NIGC staff upon request. 

The discussion draft further provided 

that ‘‘A TGRA may not permit the use 

of any Class II gaming system 

manufactured before November 10, 2008 

in a tribal gaming operation unless:’’ it 

meets requirements applicable to 2008 

Systems. Discussion Draft § 547.5(a)(3) 

provides that ‘‘If the Class II gaming 

system is subsequently approved 

pursuant to paragraph (b) of this section, 

this paragraph (a) [2008 Systems] no 

longer applies.’’ Commenters suggested 

that the Discussion Draft could be 

misinterpreted to provide that all Class 

II gaming systems manufactured prior to 

November 10, 2008, including those that 

are now compliant with § 547.5(b), 

would be subject to the 2008 System 

provisions in § 547.5(a). Commenters 

further suggested that approving a 2008 

System pursuant to § 547.5(b) requires a 

2008 System to be resubmitted to a 

testing lab for full re-certification and/ 

or requires TGRAs to make technical 

determinations. 

The Commission believes that 

discussion draft § 547.5(a)(3) is clear 

that Class II gaming systems approved 

pursuant to § 547.5(b) are no longer 

2008 Systems. The Commission has, 

however, clarified in the proposed rule 

that the use of the term ‘‘approved’’ is 

intended to reference TGRA approval 

based on review of existing testing lab 

reports for all current components of the 

Class II gaming system. 

Finally, the discussion draft 

Discussion Draft § 547.5(a)(1)(viii) 

provides that ‘‘All player interfaces of 

the Class II gaming system have a date 

of manufacture before November 10, 

2008.’’ Commenters suggested that the 

requirement that all player interfaces of 

2008 Systems have a date of 

manufacture before November 10, 2008, 

was a new requirement. Commenters 

further suggested that this requirement 

was unnecessary and would prevent use 

of newer player interfaces with 2008 

Systems, contrary to provisions 

encouraging 2008 Systems to be 

modified to move towards compliance 

with standards for newer systems. 

Although not included in the 2012 

amendment to part 547, the date of 

manufacture requirement is not entirely 

new. The 2008 System provisions were 

originally intended to apply only to 

systems in play or manufactured by 

November 10, 2008. 73 FR 60508, 

60510. Pursuant to the 2008 regulations, 

§ 547.4(a)(7) required ‘‘the supplier of 

any player interface to designate with a 

permanently affixed label each player 

interface with an identifying number 

and the date of manufacture or a 

statement that the date of manufacture 

was on or before the effective date of 

this part. The tribal gaming regulatory 

authority shall also require the supplier 

to provide a written declaration or 

affidavit affirming that the date of 

manufacture was on or before November 

10, 2008.’’ 73 FR 60508, 60527 (October 

10, 2008). The Commission agrees, 

however, that the date of manufacture 

requirement included in the discussion 

draft could be interpreted as preventing 

the use of newer player interfaces and 

has therefore removed the requirement 

from the proposed rule. 

D. Class II Gaming System Component 

Repair, Replacement, or Modification 

Discussion draft § 547.5(c)(2)(ii) 

provided that ‘‘The testing laboratory 

tests the submission to the standards 

established by: (A) This part; (B) Any 

applicable provisions of part 543 of this 

chapter that are testable by the testing 

laboratory; and (C) The TGRA.’’ 

Commenters suggested that the new 

requirement that modifications to 2008 

Systems be tested to the standards 

applicable to newer systems is 

unnecessary and will only result in 

additional costs with no practical 

benefit. Commenters noted that 

laboratory reports are currently not 

required for all modifications to 2008 

Systems, thereby providing TGRAs with 

greater flexibility and control over such 

modifications. Commenters suggested 

that this provision will force TGRAs to 

use the emergency modification 

procedures to avoid testing delays. 

The Commission disagrees that the 

requirement that all modifications be 

tested to the standards applicable to 

newer systems is unnecessary. The 

current and proposed regulations 

require the TGRA to determine, among 

other requirements, whether a 

modification will maintain or advance 

the Class II gaming system’s compliance 

with the technical standards. The new 

requirement ensures that TGRAs are 

provided with the information needed 

for the TGRA to make such a 

determination. In addition, the 

Commission believes that TGRAs will 

continue to utilize the emergency 

modification provisions for their 

intended purpose. 

E. Records 

Discussion draft § 547.5(g) provided 

that ‘‘The Commission may use the 

information derived therefrom for any 

lawful purpose including, without 

limitation, to monitor the use of Class II 

gaming systems, to assess the 

effectiveness of the standards required 

by this Part, and to inform future 

amendments to this Part. The 

Commission will only make available 

for public review records or portions of 

records subject to release under the 

Freedom of Information Act, 5 U.S.C. 

552; the Privacy Act of 1974, 5 U.S.C. 

552a; or the Indian Gaming Regulatory 

Act, 25 U.S.C. 2716(a).’’ Commenters 

expressed reluctance to expose sensitive 

testing and compliance records to 

possible public disclosure. Commenters 

suggested that records only be available 

for review on site by NIGC staff. 

The Commission agrees that sensitive 

testing and compliance records should 

not be disclosed. As cited in the 


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Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45231 

discussion draft, 25 U.S.C. 2716(a) states 

that ‘‘the Commission shall preserve any 

and all information received pursuant to 

this chapter as confidential pursuant to’’ 

the confidential commercial or financial 

information and law enforcement 

information exceptions of the Freedom 

of Information Act. The Commission is 

therefore precluded from releasing such 

information. 

Regulatory Matters 

Regulatory Flexibility Act 

The proposed rule will not have a 

significant impact on a substantial 

number of small entities as defined 

under the Regulatory Flexibility Act, 5 

U.S.C. 601, et seq. Moreover, Indian 

Tribes are not considered to be small 

entities for the purposes of the 

Regulatory Flexibility Act. 

Small Business Regulatory Enforcement 

Fairness Act 

The proposed rule is not a major rule 

under 5 U.S.C. 804(2), the Small 

Business Regulatory Enforcement 

Fairness Act. The rule does not have an 

effect on the economy of $100 million 

or more. The rule will not cause a major 

increase in costs or prices for 

consumers, individual industries, 

Federal, State, local government 

agencies or geographic regions. Nor will 

the proposed rule have a significant 

adverse effect on competition, 

employment, investment, productivity, 

innovation, or the ability of the 

enterprises, to compete with foreign 

based enterprises. 

Unfunded Mandate Reform Act 

The Commission, as an independent 

regulatory agency, is exempt from 

compliance with the Unfunded 

Mandates Reform Act, 2 U.S.C. 1502(1); 

2 U.S.C. 658(1). 

Takings 

In accordance with Executive Order 

12630, the Commission has determined 

that the proposed rule does not have 

significant takings implications. A 

takings implication assessment is not 

required. 

Civil Justice Reform 

In accordance with Executive Order 

12988, the Commission has determined 

that the proposed rule does not unduly 

burden the judicial system and meets 

the requirements of section 3(a) and 

3(b)(2) of the Order. 

National Environmental Policy Act 

The Commission has determined that 

the proposed rule does not constitute a 

major federal action significantly 

affecting the quality of the human 

environment and that no detailed 

statement is required pursuant to the 

National Environmental Policy Act of 

1969, 42 U.S.C. 4321, et seq. 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule 

were previously approved by the Office 

of Management and Budget (OMB) as 

required by 44 U.S.C. 3501 et seq. and 

assigned OMB Control Number 3141– 

0007, which expired in August of 2011. 

The NIGC is in the process of reinstating 

that Control Number. 

List of Subjects in 25 CFR Part 547 

Gambling, Indian—lands, Indian— 

tribal government, Reporting and 

recordkeeping requirements. 

Therefore, for reasons stated in the 

preamble, 25 CFR part 547 is proposed 

to be amended as follows: 

PART 547—MINIMUM TECHNICAL 

STANDARDS FOR CLASS II GAMING 

SYSTEMS AND EQUIPMENT 

■ 1. The authority citation for part 547 

continues to read as follows: 

Authority: 25 U.S.C. 2706(b). 

■ 2. Revise § 547.5 to read as follows: 

§ 547.5 How does a tribal government, 

TGRA, or tribal gaming operation comply 

with this part? 

(a) Gaming systems manufactured 

before November 10, 2008. (1) Any Class 

II gaming system manufactured before 

November 10, 2008, that is not 

compliant with paragraph (b) of this 

section may be made available for use 

at any tribal gaming operation if: 

(i) The Class II gaming system 

software that affects the play of the 

Class II game, together with the 

signature verification required by 

§ 547.8(f) was submitted to a testing 

laboratory within 120 days after 

November 10, 2008, or October 22, 

2012; 

(ii) The testing laboratory tested the 

submission to the standards established 

by § 547.8(b), § 547.8(f), and § 547.14; 

(iii) The testing laboratory provided 

the TGRA with a formal written report 

setting forth and certifying to the 

findings and conclusions of the test; 

(iv) The TGRA made a finding, in the 

form of a certificate provided to the 

supplier or manufacturer of the Class II 

gaming system, that the Class II gaming 

system is compliant with § 547.8(b), 

§ 547.8(f), and § 547.14; 

(v) The Class II gaming system is only 

used as approved by the TGRA and the 

TGRA transmitted its notice of that 

approval, identifying the Class II gaming 

system and its components, to the 

Commission; 

(vi) Remote communications with the 

Class II gaming system are only allowed 

if authorized by the TGRA; and 

(vii) Player interfaces of the Class II 

gaming system exhibit information 

consistent with § 547.7(d) and any other 

information required by the TGRA. 

(2) For so long as a Class II gaming 

system is made available for use at any 

tribal gaming operation pursuant to this 

paragraph (a) the TGRA shall: 

(i) Retain copies of the testing 

laboratory’s report, the TGRA’s 

compliance certificate, and the TGRA’s 

approval of the use of the Class II 

gaming system; 

(ii) Maintain records identifying the 

Class II gaming system and its current 

components; and 

(iii) Annually review the testing 

laboratory reports associated with the 

Class II gaming system and its current 

components to determine whether the 

Class II gaming system may be approved 

pursuant to paragraph (b)(1)(v) of this 

section. The TGRA shall make a finding 

identifying the Class II gaming systems 

reviewed, the Class II gaming systems 

subsequently approved pursuant to 

paragraph (b)(1)(v), and, for Class II 

gaming systems that cannot be approved 

pursuant to paragraph (b)(1)(v), the 

components of the Class II gaming 

system preventing such approval. 

(3) If the Class II gaming system is 

subsequently approved by the TGRA 

pursuant to paragraph (b)(1)(v) as 

compliant with paragraph (b) of this 

section, this paragraph (a) no longer 

applies. 

(b) Gaming system submission, 

testing, and approval—generally. (1) 

Except as provided in paragraph (a) of 

this section, a TGRA may not permit the 

use of any Class II gaming system in a 

tribal gaming operation unless: 

(i) The Class II gaming system has 

been submitted to a testing laboratory; 

(ii) The testing laboratory tests the 

submission to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA; 

(iii) The testing laboratory provides a 

formal written report to the party 

making the submission, setting forth 

and certifying its findings and 

conclusions, and noting compliance 

with any standard established by the 

TGRA pursuant to paragraph (b)(1)(ii)(C) 

of this section; 

(iv) The testing laboratory’s written 

report confirms that the operation of a 

player interface prototype has been 


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45232 Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 

certified that it will not be compromised 

or affected by electrostatic discharge, 

liquid spills, electromagnetic 

interference, or any other tests required 

by the TGRA; 

(v) Following receipt of the testing 

laboratory’s report, the TGRA makes a 

finding that the Class II gaming system 

conforms to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA. 

(2) For so long as a Class II gaming 

system is made available for use at any 

tribal gaming operation pursuant to this 

paragraph (b) the TGRA shall: 

(i) Retain a copy of the testing 

laboratory’s report; and 

(ii) Maintain records identifying the 

Class II gaming system and its current 

components. 

(c) Class II gaming system component 

repair, replacement, or modification. (1) 

As permitted by the TGRA, individual 

hardware or software components of a 

Class II gaming system may be repaired 

or replaced to ensure proper 

functioning, security, or integrity of the 

Class II gaming system. 

(2) A TGRA may not permit the 

modification of any Class II gaming 

system in a tribal gaming operation 

unless: 

(i) The Class II gaming system 

modification has been submitted to a 

testing laboratory; 

(ii) The testing laboratory tests the 

submission to the standards established 

by: 

(A) This part; 

(B) Any applicable provisions of part 

543 of this chapter that are testable by 

the testing laboratory; and 

(C) The TGRA; 

(iii) The testing laboratory provides a 

formal written report to the party 

making the submission, setting forth 

and certifying its findings and 

conclusions, and noting compliance 

with any standard established by the 

TGRA pursuant to paragraph (c)(2)(ii)(C) 

of this section; 

(iv) Following receipt of the testing 

laboratory’s report, the TGRA makes a 

finding that the: 

(A) The modification will maintain or 

advance the Class II gaming system’s 

compliance with this part and any 

applicable provisions of part 543 of this 

chapter; and 

(B) The modification will not detract 

from, compromise or prejudice the 

proper functioning, security, or integrity 

of the Class II gaming system; 

(3) If a TGRA authorizes a component 

modification under this paragraph, it 

must maintain a record of the 

modification and a copy of the testing 

laboratory report so long as the Class II 

gaming system that is the subject of the 

modification remains available to the 

public for play. 

(d) Emergency Class II gaming system 

component modifications. (1) A TGRA, 

in its discretion, may permit the 

modification of previously approved 

components to be made available for 

play without prior laboratory testing or 

review if the modified hardware or 

software is: 

(i) Necessary to correct a problem 

affecting the fairness, security, or 

integrity of a game or accounting system 

or any cashless system, or voucher 

system; or 

(ii) Unrelated to game play, an 

accounting system, a cashless system, or 

a voucher system. 

(2) If a TGRA authorizes modified 

components to be made available for 

play or use without prior testing 

laboratory review, the TGRA must 

thereafter require the hardware or 

software manufacturer to: 

(i) Immediately advise other users of 

the same components of the importance 

and availability of the update; 

(ii) Immediately submit the new or 

modified components to a testing 

laboratory for testing and verification of 

compliance with this part and any 

applicable provisions of part 543 of this 

chapter that are testable by the testing 

laboratory; and 

(iii) Immediately provide the TGRA 

with a software signature verification 

tool meeting the requirements of 

§ 547.8(f) for any new or modified 

software component. 

(3) If a TGRA authorizes a component 

modification under this paragraph, it 

must maintain a record of the 

modification and a copy of the testing 

laboratory report so long as the Class II 

gaming system that is the subject of the 

modification remains available to the 

public for play. 

(e) Compliance by charitable gaming 

operations. This part does not apply to 

charitable gaming operations, provided 

that: 

(1) The tribal government determines 

that the organization sponsoring the 

gaming operation is a charitable 

organization; 

(2) All proceeds of the charitable 

gaming operation are for the benefit of 

the charitable organization; 

(3) The TGRA permits the charitable 

organization to be exempt from this 

part; 

(4) The charitable gaming operation is 

operated wholly by the charitable 

organization’s employees or volunteers; 

and 

(5) The annual gross gaming revenue 

of the charitable gaming operation does 

not exceed $3,000,000. 

(f) Testing laboratories. (1) A testing 

laboratory may provide the 

examination, testing, evaluating and 

reporting functions required by this 

section provided that: 

(i) It demonstrates its integrity, 

independence and financial stability to 

the TGRA. 

(ii) It demonstrates its technical skill 

and capability to the TGRA. 

(iii) If the testing laboratory is owned 

or operated by, or affiliated with, a tribe, 

it must be independent from the 

manufacturer and gaming operator for 

whom it is providing the testing, 

evaluating, and reporting functions 

required by this section. 

(iv) The TGRA: 

(A) Makes a suitability determination 

of the testing laboratory based upon 

standards no less stringent than those 

set out in § 533.6(b)(1)(ii) through (v) of 

this chapter and based upon no less 

information than that required by 

§ 537.1 of this chapter, or 

(B) Accepts, in its discretion, a 

determination of suitability for the 

testing laboratory made by any other 

gaming regulatory authority in the 

United States. 

(v) After reviewing the suitability 

determination and the information 

provided by the testing laboratory, the 

TGRA determines that the testing 

laboratory is qualified to test and 

evaluate Class II gaming systems. 

(2) The TGRA must: 

(i) Maintain a record of all 

determinations made pursuant to 

paragraphs (f)(1)(iii) and (f)(1)(iv) of this 

section for a minimum of three years. 

(ii) Place the testing laboratory under 

a continuing obligation to notify it of 

any adverse regulatory action in any 

jurisdiction where the testing laboratory 

conducts business. 

(iii) Require the testing laboratory to 

provide notice of any material changes 

to the information provided to the 

TGRA. 

(g) Records. Records required to be 

maintained under this section must be 

made available to the Commission upon 

request. The Commission may use the 

information derived therefrom for any 

lawful purpose including, without 

limitation, to monitor the use of Class II 

gaming systems, to assess the 

effectiveness of the standards required 

by this part, and to inform future 

amendments to this part. The 

Commission will only make available 

for public review records or portions of 

records subject to release under the 

Freedom of Information Act, 5 U.S.C. 

552; the Privacy Act of 1974, 5 U.S.C. 


jstallworth on DSKBBY8HB2PROD with PROPOSALS
Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 / Proposed Rules 45233 

552a; or the Indian Gaming Regulatory 

Act, 25 U.S.C. 2716(a). 

Dated: September 19, 2017. 

Jonodev O. Chaudhuri, 

Chairman. 

Kathryn Isom-Clause, 

Vice Chair. 

E. Sequoyah Simermeyer, 

Associate Commissioner. 

[FR Doc. 2017–20635 Filed 9–27–17; 8:45 am] 

BILLING CODE 7565–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Parts 1 and 5f 

[REG–128841–07] 

RIN 1545–BG91 

Public Approval of Tax-Exempt Private 

Activity Bonds 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Withdrawal of notice of 

proposed rulemaking and notice of 

proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations to update and 

streamline the public approval 

requirement provided in section 147(f) 

of the Internal Revenue Code applicable 

to tax-exempt private activity bonds 

issued by State and local governments. 

The proposed regulations would update 

the existing regulations on the public 

approval requirement to reflect statutory 

changes, to streamline the public 

approval process, and to reduce burden 

on State and local governments that 

issue tax-exempt private activity bonds. 

This document also withdraws two 

previous notices of proposed 

rulemaking on this topic. The proposed 

regulations affect State and local 

governments that issue tax-exempt 

private activity bonds. 

DATES: Comments and requests for a 

public hearing must be received by 

December 27, 2017. 

ADDRESSES: Send submissions to 

CC:PA:LPD:PR (REG–128841–07), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–128841– 

07), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC 20224, or sent 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–128841– 

07). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Spence Hanemann at (202) 317–6980; 

concerning submissions of comments 

and requesting a hearing, Regina 

Johnson at (202) 317–6901 (not toll-free 

numbers). 

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act 

The collection of information 

contained in this notice of proposed 

rulemaking has been submitted to the 

Office of Management and Budget for 

review under OMB Control Number 

1545–2185 in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507(d)). The collection of 

information in this proposed regulation 

is the requirement in § 1.147(f)–1 that 

certain information be contained in a 

public notice or public approval and, 

consequently, disclosed to the public. 

This information is required to meet the 

statutory public approval requirement 

provided in section 147(f). The likely 

respondents are the governmental units 

required to approve an issue of private 

activity bonds under section 147(f). 

Estimated total annual burden: 2,600 

hours. 

Estimated average annual burden per 

respondent: 1.3 Hours. 

Estimated number of respondents: 

2,000. 

Estimated frequency of responses: 

Annual. 

Comments on the collection of 

information should be sent to the Office 

of Management and Budget, Attn: Desk 

Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, with copies to the Internal 

Revenue Service, Attn: IRS Reports 

Clearance Officer, SE:CAR:MP:T:T:SP, 

Washington, DC 20224. Comments on 

the collection of information should be 

received by November 27, 2017. 

Comments are specifically requested 

concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the IRS, 

including whether the information will 

have practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information; 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collection of information 

may be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology; and 

Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

Background 

This document contains proposed 

amendments to 26 CFR part 1 under 

section 147(f) of the Internal Revenue 

Code of 1986 (the Code) and 26 CFR 

part 5f under section 103(k) of the 

Internal Revenue Code of 1954 (the 1954 

Code). In the Tax Equity and Fiscal 

Responsibility Act of 1982 (TEFRA), 

Public Law 97–248, 96 Stat. 324, 

Congress added section 103(k) to the 

1954 Code to impose a public approval 

requirement on tax-exempt industrial 

development bonds. On May 11, 1983, 

the Department of the Treasury 

(Treasury Department) and the IRS 

published in the Federal Register (48 

FR 21117) temporary regulations under 

section 103(k) of the 1954 Code (TD 

7892) (the Existing Regulations). See 

§ 5f.103–2. A notice of proposed 

rulemaking (LR–221–82) by crossreference to the temporary regulations 

was published in the Federal Register 

(48 FR 21166) on the same day. 

In the Tax Reform Act of 1986 (1986 

Tax Act), Public Law 99–514, 100 Stat. 

2085, Congress reorganized the taxexempt bond provisions and carried 

forward the public approval 

requirement of section 103(k) of the 

1954 Code in expanded form in section 

147(f) of the Code. In section 147(f), 

Congress extended the public approval 

requirement to apply to all types of taxexempt private activity bonds, as 

provided in section 141(e). The 

legislative history of the 1986 Tax Act 

indicates that ‘‘[t]he conferees intend 

that, to the extent not amended, all 

principles of present law continue to 

apply under the reorganized 

provisions.’’ H.R. Rep. No. 99–841, at II– 

686 (1986) (Conf. Rep.). Thus, the 

Existing Regulations in § 5f.103–2 

remain in effect. 

On September 9, 2008, the Treasury 

Department and the IRS published a 


jstallworth on DSKBBY8HB2PROD with PROPOSALS