Source: http://thefederalregister.com/2011/10/11/2011-25955.html
Timestamp: 2018-05-23 12:59:17
Document Index: 551199369

Matched Legal Cases: ['art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'art 514', 'ART 514', 'art? 514', '§ 514', '§ 514', '§ 514', '§ 514']

RIN 3141-AA40
SUMMARY: The National Indian Gaming Commission (NIGC) proposes to amend its fee regulations by requiring tribes to submit their fees and fee statements on a quarterly basis, basing the fee calculation on the gaming operation's fiscal year, establishing an assessment for fees submitted one to 90 days late, and establishing a fingerprinting fee payment process.
DATES: The agency must receive comments on or before December 12, 2011.
*Mail comments to:National Indian Gaming Commission, 1441 L Street, NW., Suite 9100, Washington, DC 20005.
*Fax comments to:National Indian Gaming Commission at 202-632-0045.
FOR FURTHER INFORMATION CONTACT: National Indian Gaming Commission, 1441 L Street, NW., Suite 9100 Washington, DC 20005. Telephone: 202-632-7009; e-mail:reg.review@nigc.gov.
SUPPLEMENTARY INFORMATION: I. Comments Invited
The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497, 25 U.S.C. 2701et seq.,was signed into law on October 17, 1988. The Act establishes the National Indian Gaming Commission (“Commission”) and sets out a comprehensive framework for the regulation of gaming on Indian lands. The purposes of IGRA include providing a statutory basis for the operation of gaming by Indian Tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments; ensuring that the Indian tribe is the primary beneficiary of the gaming operation; and declaring that the establishment of independent federal regulatory authority for gaming on Indian lands, the establishment of federal standards for gaming on Indian lands, and the establishment of a National Indian Gaming Commission are necessary to meet congressional concerns regarding gaming and to protect such gaming as a means of generating tribal revenue. 25 U.S.C. 2702.
The IGRA established an agency funding framework whereby gaming operations licensed by tribes pay a fee to the Commission for each gaming operation that conducts Class II or Class III gaming activity that is regulated by IGRA. 25 U.S.C. 2717(a)(1). These fees are used to fund the Commission in carrying out its regulatory authority. Fees are based on the gaming operation's gross revenues which are defined as 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. 25 U.S.C. 2717(a)(6). The rate of fees is established annually by the Commission and shall be payable on a quarterly basis. 25 U.S.C. 2717(a)(3). IGRA limits the total amount of fees imposed during any fiscal year to .08 percent of the gross gaming revenues of all gaming operations subject to regulation under IGRA. Failure of a gaming operation to pay the fees imposed by the Commission's fee schedule can be grounds for a civil enforcement action. 25 U.S.C. 2713(a)(1). The purpose of Part 514 is to establish how the NIGC sets and collects those fees, to establish a basic formula for tribes to utilize in calculating the amount of fees to pay, and to advise of the consequences for failure to pay the fees.
The Commission conducted a total of 11 tribal consultations as part of its review of Part 514. Tribal consultations were held in every region of the countryand were attended by over 189 tribes and 535 tribal leaders or their representatives. In addition to tribal consultations, on May 10, 2011, the Commission requested public comment on a Preliminary Draft of amendments to Part 514. 76 FR 26967. After considering the comments received from the public and through tribal consultations, the Commission proposes five amendments to Part 514: changing the fee calculation from a calendar year to a fiscal year basis; changing the payment schedule to a quarterly payment system; ensuring language is consistent with industry standards; creating a ticketing system for payments submitted late; and formalizing the fingerprinting fee system. The Commission does not propose any amendments to the definition of gross gaming revenue.
A. Change the Fee Calculation to a Calculation Based on a Gaming Operation's Fiscal Year
Currently, each gaming operation regulated by IGRA must submit fee statements showing the calculation of assessable gross revenues for the previous calendar year. The Preliminary Draft of amendments to Part 514 proposed changing the timeframe of the fee calculation from the calendar year to the gaming operation's fiscal year. It is important to note that fees set by the Commission continue to be based on the gross gaming revenues of tribes, subject to the .08 percent limit established by 25 U.S.C. 2717. Comments received on the Preliminary Draft of Part 514 generally supported basing annual fees on a gaming operation's fiscal year rather than a calendar year. One commenter objected to the use of a fiscal year for calculating annual fees. The commenter expressed concern created by a conversion from a calendar year to a fiscal year and the inevitable overlap period that conversion would create.
In this proposed rule, Section 514.7 addresses the overlap period by requiring the tribe to notify the Commission of the “stub period” and submit the financial statements and fees for that period within 90 days of the tribe's request. Further, this proposed rule does not mandate a tribe change their fiscal year. While many tribes utilize a fiscal year that is not based on the calendar year, other tribes do utilize a fiscal year based on a calendar year. The Commission believes that the use of a fiscal year for calculating annual fees and completing fee statements will result in fewer inaccuracies in the calculation. The Commission notes that errors in calculating the fees have occurred as a result of a gaming operation's fiscal year being different than the calendar year. This proposed amendment changes the annual timeframe for calculating the fees; the formula contained in the regulation for calculating the assessable gross gaming revenue remains the same. The Commission believes that this proposed amendment will result in greater efficiencies for both NIGC and tribes by reducing the likelihood of errors in the fee calculation.
B. Require Submission of Quarterly Fee Statements and Payments
Part 514 currently requires each gaming operation regulated by IGRA to submit bi-annual fee statements showing its assessable gross revenues and to submit fee payment with those statements. The statements must show the amounts derived from each class of game, the amounts deducted for prizes, and amounts deducted for amortization of structures. The statements must also include the computation of the fees payable, showing all the amounts used in the calculation. The statements are due on or before June 30th and December 31st of each year.
The Preliminary Draft of Part 514 proposed changing from a bi-annual submission requirement to a quarterly submission requirement. Comments support this proposed amendment, noting however, that there should be no prohibition on pre-paying the fees for an entire year. The Commission is not proposing a revision that would prohibit pre-payment. However, quarterly fee statements are still required, even if the fee has been prepaid. Based on a review of the comments received, the Commission proposes to amend Part 514 to require the submission of quarterly fee statements and payments.
C. Ensure Regulation Language is Consistent With Industry Standards
The discussion draft Part 514 proposed amendments which would utilize standard industry language. The discussion draft proposed changing “admission fees” to “entry fees”. “Entry fee” is a term commonly used in the gaming industry and the Commission believes the clarification will eliminate concern that an “admission fee” includes admission to concerts or other non-gaming activity. The Commission did not receive any comments on the Preliminary Draft that opposed the changes. Accordingly, the Commission proposes amending Part 514 to incorporate these revisions.
D. Revise the Late Payment Fee System
IGRA and NIGC regulations provide that a failure to pay fees may result in closure or revocation of approval of any license, ordinance, or resolution required under IGRA. The NIGC has issued Notices of Violation (NOV) and civil fine assessments to tribes submitting their fees late. The Commission notes that because the NIGC does not receive federal appropriations to fund its operations, it is vital that fees are submitted in a timely manner to ensure the continued funding of NIGC operations. Tribes have commented that a NOV for the late payment of fees can be an unnecessarily punitive response. In response to this concern, the Commission circulated in the Preliminary Draft a fine system that would address fees paid less than and upto 90 days after they are due.
Comments received on the Preliminary Draft supported the development of a system that addresses a late payment in a tiered approach. Comments acknowledged the need for submission of fees in a timely manner, but also noted that the circumstances of minor delays should be considered before issuance of a NOV and civil fine assessment.
The Commission proposes amending Part 514 to add a “ticket” system which assesses a fine for a late fee payment. The proposed Rule distinguishes between “late payments” and “failure to pay annual fees.” A payment received between 1 and 90 days late is a “late payment” and would be subject to an increasing percentage based late payment fine. A payment received after 90 days constitutes a “failure to pay annual fees” and subjects the tribe to a potential NOV and civil fine assessment. The proposed rule also includes a mechanism whereby the Chair may consider any mitigating circumstances surrounding the late payments and reduce the fine due. Per federal law, any fines are payable to U.S. Treasury, not the NIGC.
E. Formalize the Fingerprinting Fee Process
The NOI asked whether the Part should include a section on fingerprint processing fees. Comments received in response to the NOI supported this revision.
The Commission included in the Preliminary Draft provisions for the collection of fees for processing fingerprints. The section requires the Commission to adopt preliminary rates for processing fingerprints at the same time as the annual fee schedule is set and modified (March 1 and June 1 of each year). If a tribe fails to pay its bill for fingerprint fees, the Chair may suspend further fingerprint card processing for that tribe.
Comments received supported this revision. Some comments expressed concern about fluctuating costs and the need to adjust costs as needed. In order to address this issue, the proposed rule provides for the Commission to review the fee rate annually and establish a preliminary rate in March and adopt a final rate in July of each year. Another comment recommended the fingerprinting fees being included in the calculation of net revenues as a statutorily required operating expense. The proposed draft does not include this language asnet revenuesis a statutorily defined term.
The proposed amendment includes the provisions circulated in the Preliminary Draft. The Commission believes formalizing the procedures for assessing fingerprint card processing fees in a regulation provides transparency and clarity.
F. Definition of Gross Gaming Revenue
In the Notice of Inquiry, the Commission asked whether the definition ofgross gaming revenueshould be revised to include the GAAP definition. The discussion draft however, did not include this revision. Comments noted that the GAAP definition, while providing a standard definition, may be inconsistent with the definition contained in the Act. The Commission agrees and therefore does not propose any change to the definition ofgross gaming revenue.
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.
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. 3501et 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.
Dated: October 3, 2011, Washington, DC. Text of the Proposed Rules
For the reasons discussed in the Preamble, the Commission proposes to revise 25 CFR part 514 to read as follows:
PART 514—FEES Sec. 514.1 What is the purpose of this part? 514.2 When will the annual rates be published? 514.3 What is the maximum fee rate? 514.4 What are “assessable gross revenues” and how does a tribe calculate the amount of the annual fees it owes? 514.5 When must a tribe pay its annual fees? 514.6 What are the quarterly statements that must be submitted with the fee payments? 514.7 What should a tribe do if it changes its fiscal year? 514.8 Where should fees, quarterly statements, and other communications about fees be sent? 514.9 What happens if a tribe submits its fee payment or quarterly statement late? 514.10 When does a late payment or quarterly statement submission become a failure to pay? 514.11 Can a tribe or gaming operation appeal a proposed late fee? 514.12 When does a notice of late submission and/or a proposed late fee become a final order of the Commission and final agency action? 514.13 How are late submission fees paid, and can interest be assessed? 514.14 What happens if a tribe overpays its fees or if the Commission does not expend the full amount of fees collected in a fiscal year? 514.15 May tribes submit fingerprint cards to the NIGC for processing? 514.16 How does the Commission adopt the fingerprint processing fee? 514.17 How are fingerprint processing fees collected by the Commission? Authority:
25 U.S.C. 2706, 2710, 2710, 2717, 2717a
(b) The Commission shall publish the rates of fees in a notice in theFederal Register.
(1) No more than 2.5 percent of the first $1,500,000 (1st tier), and
(2) No more than 5 percent of amounts in excess of the first $1,500,000 (2nd tier) of the assessable gross revenues from each gaming operation subject to the jurisdiction of the Commission.
(b) If a tribe has a certificate of self-regulation, the rate of fees imposed shall be no more than .25 percent of assessable gross revenues from self-regulated class II gaming operations.
(1) An amount not to exceed 5% of the cost of structures in use throughout the year and 2.5% (two and one-half percent) of the cost of structures in use during only a part of the year; or
(e) Examples of computations follow:
(1) For paragraph (d)(1) of this section:
Gross gaming revenues: Money wagered $1,000,000 Entry fees 5,000 $1,005,000 Less: Prizes paid in cash 500,000 Cost of other prizes awarded 10,000 510,000 Gross gaming profit 495,000 Less allowance for amortization of capital expenditures for structures: Capital expenditures for structures made in— Prior years 750,000 Current year 50,000 Maximum allowance: $750,000 × .05 = 37,500 50,000 × .025 = 1,250 38,750 Assessable gross revenues 456,250
(2) For paragraph (d)(2) of this section:
Gross gaming revenues: Money wagered $1,000,000 Entry fees $5,000 1,005,000 Less: Prizes paid in cash 500,000 Cost of other prizes awarded 10,000 510,000 Gross gaming profit 495,000 Less allowance for amortization of capital expenditures for structures: Total amount of depreciation per books 400,000 Maximum allowance: $400,000 × .10 = 40,000 Gross gaming revenues 455,000 Assessable gross revenues 455,000
(f) All class II and III revenues from gaming operations are to be included.
(a) The most recent rates of fees adopted by the Commission pursuant to paragraph (a) of § 514.1,
1st tier revenues—$1,500,000 × 0.0% = 0 2nd tier revenues—500,000 × .08% = $400 Annual fees 400 Multiply for fraction of year—1/4or .25 Fees for first payment 100 Amount to be remitted 100
The statements, remittances and communications about fees shall be transmitted to the Commission at the following address: Comptroller, National Indian Gaming Commission, 1441 L Street, NW., Suite 9100, Washington, DC 20005. Checks should be made payable to the National Indian Gaming Commission (do not remit cash).
(1) For statements and/or fee payments one (1) to thirty (30) calendar days late, the Chair may propose a late fee of up to, but not more than ten percent (10%) of the fee amount for that quarter, as calculated in § 514.6(e);
(2) For statements and/or fee payments thirty-one (31) to sixty (60) calendar days late, the Chair may propose a late fee of up to, but not more than fifteen percent (15%) of the fee amount for that quarter, as calculated in § 514.6(e);
(3) For statements and/or fee payments sixty-one (61) to ninety (90) calendar days late, the Chair may propose a late fee of up to, but not more than twenty percent (20%) of the fee amount for that quarter, as calculated in § 514.6(e).
(b) To the extent that revenue derived from fees imposed under the scheduleestablished under this paragraph are not expended or committed at the close of any fiscal year, such funds shall remain available until expended to defray the costs of operations of the Commission.
(c) Fingerprint fees shall be sent to the following address: Comptroller, National Indian Gaming Commission, 1441 L Street, NW., Suite 9100, Washington, DC 20005. Checks should be made payable to the National Indian Gaming Commission (do not remit cash).
Dated: October 3, 2011, Washington, DC. Tracie L. Stevens, Chairwoman. Steffani A. Cochran, Vice-Chairwoman. Daniel J. Little, Associate Commissioner.