2011-25932. National Indian Gaming Commission

AGENCY:

National Indian Gaming Commission.

ACTION:

Notice of no action.

SUMMARY:

On November 18, 2010, the National Indian Gaming Commission (NIGC) issued a Notice of Inquiry and Notice of Consultation advising the public that the NIGC was conducting a comprehensive review of its regulations and requesting public comment on the process for conducting the regulatory review. On April 4, 2011, after holding eight consultations and reviewing all comments, NIGC published a Notice of Regulatory Review Schedule setting out a consultation schedule and process for review. Based on the above review, the Commission notifies the public that it does not intend to take action at this time on certain other regulations identified in the Notice of Regulatory Review Schedule.

FOR FURTHER INFORMATION CONTACT:

National Indian Gaming Commission, 1441 L Street NW., Suite 9100 Washington, DC 20005. Telephone: [phone]; e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497, 25 U.S.C. 2701 et seq., authorizes the NIGC to promulgate such regulations and guidelines as it deems appropriate to implement certain provisions of the Act. 25 U.S.C. 2706(b)(10). On November 12, 2010, the Commission issued a Notice of Inquiry (NOI) requesting comment on which of its regulations were most in need of revision, in what order the Commission should review its regulations, and the process NIGC should utilize to make revisions. The NOI was published in the Federal Register on November 18, 2010. 75 FR 70680. The Commission's regulatory review process established a tribal consultation schedule of 33 meetings over 11 months with a description of the regulation groups to be covered at each consultation.

I. Management Contracts—Collateral Agreements

The NOI asked whether the Commission should consider promulgating a regulation requiring the review and approval of collateral agreements to a management contract. A majority of the comments submitted in response to the NOI stated that IGRA already allows for the review of collateral agreements to a management contract. After reviewing the comments received in response to the NOI, the Commission announced its intent to narrow its inquiry and only review the issue of approval of collateral agreements to a management contract.

Public comments received during both the NOI and NRRA consultation and comment period have varied widely. Those comments supporting both the NIGC's review and approval of collateral agreements stated that the review and approval of collateral agreements would greatly reduce the risks to both Tribes and would-be management contractors, thus reducing overreaching by third parties; and that it is the NIGC's trust responsibility to the review and approval of collateral agreements in order to ensure that collateral agreements do not violate the sole proprietary interest provisions of IGRA.

Public comments opposed to the required approval of collateral agreements state that collateral agreements are outside the scope of NIGC authority and requiring their submission and approval would allow the NIGC to second-guess tribal business decisions. Similar comments opposed NIGC review of non-management business relationships of the Tribe; and that requiring the submission and approval of collateral agreements would expand NIGC authority beyond what is authorized by the IGRA. Public commentators also stated that requiring the approval of collateral agreements could affect the development of business relationships and discourage private investment in Indian country. These commentators recommended the NIGC only review and approve those collateral agreements that contain management provisions separate from those in the related management contract. Public commentators also expressed their concern over the length of time it currently takes for the NIGC to review and approve a management contract and that the required approval of collateral agreements would further increase that time. Finally, one commenter noted the sensitive, proprietary information contained in collateral agreements and suggested the NIGC review collateral agreements only at the gaming facility.

The Commission reviewed the comments received and has decided to not promulgate a regulation requiring NIGC approval of collateral agreements to management contracts at this time. IGRA provides for approval of management agreements. 25 U.S.C. 2705(a)(4). IGRA does not require approval of agreements collateral to management contracts unless those agreements also provide for management. The Commission's decision today does not prevent tribes from submitting any agreement, collateral or not, for NIGC review to determine whether the agreement provides for management. As a matter of practice, the NIGC regularly reviews a variety of agreements to determine if the agreements in fact provide for management. To be clear, the Commission's decision today does not alter in any way, the NIGC's continued practice of reviewing agreements for management. The Commission notes that any contract that provides for management that has not been approved by the Chairwoman is void. 25 CFR 533.7. Further, managing without an approved contract is a substantial violation of IGRA that can result in an enforcement action and closure order. 25 CFR 573.6(a)(7).

II. Definitions—Net Revenues—management fee

The NOI asked whether the Commission should consider whether the definition of net revenues for the purposes of calculating the management fees should be defined to be consistent with the General Accepted Accounting Principles (GAAP). Many comments stated that if this definition was amended, it would still need to remain consistent with the statutory definition of net revenues contained in IGRA, 25 U.S.C. 2703(9). Other comments stated that it should be defined consistent with industry standards such as GAAP. One comment noted that a clearer definition would have resolved a dispute with their state over the definition of net win and net revenue. Another comment stated that the 2008 regulatory change to the definition of net revenue does not comply with IGRA and needs to be revised to ensure it is consistent with the statutory definition.

The Commission has reviewed the comments received during both the NOI and NRRA comment and consultation periods and has decided not to issue a rule at this time amending the definition of net revenues set forth at 25 CFR 502.16. The Commission agrees that changing the definition to be consistent with GAAP could result in a definition that is inconsistent with the statutory definition contained in 25 U.S.C. 2703(9).

Dated: October 3, 2011, Washington, DC.

Tracie L. Stevens,

Chairwoman.

Steffani A. Cochran,

Vice-Chairwoman.

Daniel J. Little,

Associate Commissioner.