July 27, 2009

Amendments to Various National Indian Gaming Commission Regulations

SUMMARY: The final rule modifies various Commission regulations to reduce by half the fee reporting burdens on tribes, remove obsolete provisions, clarify existing appellate procedures, update and clarify management contract procedures and costs for background investigations, clarify various definitions and licensing notices, update audit requirements to allow for simplified and consolidated reporting in certain circumstances, and add gaming on ineligible lands to the class of substantial violations warranting immediate closure.
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[Federal Register: July 27, 2009 (Volume 74, Number 142)]
[Rules and Regulations]               
[Page 36926-36940]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jy09-3]                         

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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Parts 502, 514, 531, 533, 535, 537, 539, 556, 558, 571, 573

RIN 3141-0001

 
Amendments to Various National Indian Gaming Commission 
Regulations

AGENCY: National Indian Gaming Commission.

ACTION: Final Rule.

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SUMMARY: The final rule modifies various Commission regulations to 
reduce by half the fee reporting burdens on tribes, remove obsolete 
provisions, clarify existing appellate procedures, update and clarify 
management contract procedures and costs for background investigations, 
clarify various definitions and licensing notices, update audit 
requirements to allow for simplified and consolidated reporting in 
certain circumstances, and add gaming on ineligible lands to the class 
of substantial violations warranting immediate closure.

DATES: Effective Date: This rule is effective on August 26, 2009.
    Compliance Date: Submitting fee statements and payments twice per 
year under sections 514.1(c)(2) and 514.1(d) is not required until 
January 1, 2010.

FOR FURTHER INFORMATION CONTACT: Rebecca Chapman, Staff Attorney, 
Office of General Counsel, at (202) 632-7003; fax (202) 632-7066 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

I. Background

    On October 17, 1988, Congress enacted the Indian Gaming Regulatory 
Act (IGRA or Act), 25 U.S.C. 2701-21, creating the National Indian 
Gaming Commission (NIGC or Commission) and developing a comprehensive 
framework for the regulation of gaming on Indian lands. 25 U.S.C. 2702. 
IGRA granted the NIGC, among other things, regulatory oversight and 
enforcement authority over tribal gaming. This authority

[[Page 36927]]

includes the authority to monitor tribal compliance with IGRA, NIGC 
regulations, and tribal gaming ordinances.
    In 1992, the Commission adopted its initial regulations, and it has 
worked under IGRA for almost 20 years. 25 U.S.C. 2706(b)(10). The 
Commission undertakes this collection of regulation changes to better 
carry out its statutory duties. The final rule modifies various 
Commission regulations to (1) reduce by half the fee reporting burdens 
on tribes, (2) remove obsolete provisions, (3) clarify existing 
appellate procedures, (4) update and clarify management contract 
procedures and costs for background investigations, (5) clarify various 
definitions and licensing notices, (6) update audit requirements to 
allow for simplified and consolidated reporting in certain 
circumstances, and (7) add gaming on ineligible lands to the class of 
substantial violations warranting immediate closure.

Development of the Proposed Rules Through Tribal Consultation

    The Commission identified a need for minor changes to various parts 
of its regulations, and in accordance with its government-to-government 
consultation policy (69 FR 16973 (Mar. 31, 2004)), requested input from 
Indian tribes. On March 26, 2007, the Commission prepared amendments to 
the regulations and sent a copy to the leaders of all gaming tribes for 
comment. Fifty-seven tribes provided written comments. The NIGC 
carefully reviewed all comments and often incorporated suggested 
changes that corrected grammar, clarified meaning, and better expressed 
or implemented the Commission's regulatory intent.
    In addition, the NIGC consulted with tribes and their gaming 
commissions at regional gaming meetings around the country and at the 
Washington, DC, headquarters. Since March 26, 2007, the NIGC held 
consultations at 15 regional gaming conferences and consulted with more 
than 110 tribes with the proposed rule as a possible topic for 
discussion. Other than the previous 57 submissions, tribes gave no 
further suggestions for improvement on the proposed rule.
    The Commission published the regulations--updated and improved by 
incorporation of tribal comments--as a proposed rule in the Federal 
Register on December 22, 2008, 73 FR 78242, Dec. 22, 2008. The 
Commission set a 45-day comment period, which would close on February 
5, 2009. Nineteen tribal leaders requested more time to review the 
proposed rule, and the Commission extended the comment period to March 
9, 2009. See 74 FR 4363, Jan. 26, 2009.
    The Commission received a total of 54 written comments on the 
proposed rule. In addition, the Commission met with 56 tribes at six 
regional conferences around the country after the proposed rule's 
publication. The Commission invited all attending leaders to discuss 
the proposed rule, and two leaders provided additional comments. These 
comments were considered with the written comments received.

III. Purpose and Scope

    The final rule modifies various Commission regulations to (1) 
reduce by half the fee reporting burdens on tribes, (2) remove obsolete 
provisions, (3) clarify existing appellate procedures, (4) update and 
clarify management contract procedures and costs for background 
investigations, (5) clarify various definitions and licensing notices, 
(6) update audit requirements to allow for simplified and consolidated 
reporting in certain circumstances, and (7) add gaming on ineligible 
lands to the class of substantial violations warranting immediate 
closure. The final rule is discussed below.

A. Definitions

    NIGC regulations define ``key employee'' at 25 CFR 502.14. 
Applicants for positions defined as key employees are, among other 
things, subject to a background investigation as a condition of 
licensure. Under present regulations, this list of key employees is 
limited. With the addition of ``any other person designated by the 
tribe as a key employee,'' this section will allow tribes to expand the 
list and access the criminal history records held by the federal 
government for the purpose of conducting background investigations on 
these additional key employees.
    IGRA and NIGC regulations define ``net revenue'' as ``gross gaming 
revenues of an Indian gaming operation less amounts paid out as, or 
paid for, prizes; and total gaming-related operating expenses, 
excluding management fees.'' 25 U.S.C. 2703(9); 25 CFR 502.16. The 
final rule amends 25 CFR 502.16 to define net revenues as previously 
seen in the regulations but clarifying what constitutes operating 
expenses and what does not.
    The final rule incorporates the industry understanding of what 
constitutes an operating expense in order to clarify what constitutes 
net revenues for a gaming operation.
    The NIGC's regulations define a ``person having a direct or 
indirect financial interest in a management contract'' to include 
holders of at least 10% of the issued and outstanding stock alone. The 
final rule reduces the requisite financial interest to five percent for 
publicly traded companies so as to be consistent with the Securities 
and Exchange Commission's understanding of a ``significant 
shareholder.'' This change is also consistent with similar requirements 
in other gaming jurisdictions.
    NIGC regulations define ``primary management official'' at 25 CFR 
502.19. Applicants for positions defined as primary management 
officials are, among other things, subject to a background 
investigation as a condition of licensure. Under present regulations, 
this list of primary management officials is limited. With the addition 
of ``any other person designated by the tribe as a primary management 
official,'' this section will allow tribes to expand the list and 
access the criminal history records held by the federal government for 
the purpose of conducting background investigations on these additional 
primary management officials.

B. Annual Fees Required

    IGRA requires the NIGC to set an annual funding rate. 25 U.S.C. 
2717. NIGC implements this requirement under 25 CFR part 514, which 
requires tribal submissions of fees four times per year. The final rule 
reduces the number of fee submissions by half. That said, submitting 
fee statements and payments twice per year under sections 514.1(c)(2) 
and 514.1(d) is not required until January 1, 2010.
    In addition, the final rule requires that fees be sent on or before 
their due dates. This is a change from the previous requirement that 
NIGC actually receive fees on or before their due dates. Fees and 
statements must now be postmarked by their due dates. If using a 
private delivery service, such as FedEx or UPS, then the shipping 
receipt must be dated on or before the due date.

C. Content of Management Contracts

    IGRA and NIGC regulations require specific provisions in a 
management contract, and its accompanying submission package, before 
the Chairman can approve it. 25 U.S.C. 2711; 25 CFR 531.1, 533.3. The 
Chairman must also approve any amendment to a management contract. 25 
CFR 535.1, 535.3. In applying for approval, all persons having a 
financial interest in, or management responsibility for, a management 
contract must be disclosed to the Commission and must undergo a 
background investigation. 25 CFR 537.1. Management contractors must pay 
for this investigation. 25 CFR 537.3. If the Chairman disapproves a 
management

[[Page 36928]]

contract or amendment, the tribe or contractor may appeal. 25 CFR 
539.1, 539.2.
    The final rule updates 25 CFR 531.1, 533.1, 533.3, and 533.7 by 
removing language regarding the Secretary of the Interior's approval of 
management contracts. Because the Secretary no longer fulfills that 
role, the NIGC is eliminating unnecessary references in sections 531.1, 
533.1, 533.3, and 533.7 to the Secretary's former authority. Further, 
section 533.5 permits the Chairman to take action on noncompliant 
management contracts previously approved by the Secretary. Because no 
management contracts approved by the Secretary remain active, section 
533.5 is obsolete, and the final rule removes it.
    Additionally, the final rule updates section 533.3 to reflect the 
existing practice of providing a legal description for the land upon 
which the gaming facility operates or will operate. This allows the 
Commission to determine whether a management contract references a site 
that is ``Indian lands'' eligible for gaming as required under IGRA.
    The final rule changes Sec.  537.3 to increase the fee for 
background investigations. This updates the fee and more accurately 
reflects the Commission's actual costs.
    Finally, the final rule replaces the words ``modification'' and 
``modify'' with ``amendment'' and ``amend'' in Sec. Sec.  535.1, 535.3, 
539.1, and 539.2 for purposes of internal consistency.

D. Background and Licensing for Primary Management Officials and Key 
Employees

    IGRA requires that tribes, through their gaming ordinances, 
maintain an adequate system of background investigations. 25 U.S.C. 
2710(b)(2)(F). NIGC regulations, 25 CFR parts 556 and 558, implement 
this requirement. The final rule removes language in 25 CFR 556.2, 
556.3 and 558.2 referring to the employment of individuals as key 
employees and primary management officials and replaces it with 
language referring to their licensure instead. The reason for this is 
that a decision to license an applicant and a decision about an 
applicant's suitability (or eligibility) for licensure is separate and 
distinct from a decision to hire the applicant. The Commission believes 
that these sections should be concerned with licensure and suitability 
determinations, not employment decisions.
    The granting of a license is a privilege and the burden of proving 
suitability is on the applicant. In doing so, the applicant typically 
provides much more comprehensive personal information on a license 
application than is normally required on an employment application. 
Thus, these changes redraw the distinction between employment and 
licensure, making it clear when an applicant must provide more detailed 
information and when this Commission may share applicant information.
    As stated in the notice required by the proposed 25 CFR 556.2, 
application information may be ``disclosed * * * in connection with the 
issuance, denial, or revocation of a gaming license. * * *'' As such, 
the information could not, without otherwise complying with the 
requirements of the Privacy Act, 5 U.S.C. 552a, be provided to support 
employment decisions by prospective or current employers of the license 
applicant. This is a change from prior practice. Under the NIGC's 
existing regulations, application information can be disclosed in 
connection with the hiring and firing of an employee.
    Finally, the amendments to 25 CFR 556.2, 556.3 and 558.2 will have 
implications for tribal gaming ordinances, but not immediately. Upon 
the effective date, tribes do not have to immediately amend their 
gaming ordinances. However, following the effective date, whenever 
tribes amend their gaming ordinances, they must also make amendments 
conforming to the language in these sections.

E. Monitoring and Investigating

    IGRA requires ordinances submitted for the Chairman's review to 
contain a provision requiring an annual audit. 25 U.S.C. 2710(b)(2). 
The NIGC's regulation, 25 CFR 571.12, creates standard procedures for 
the submission of the annual audit to the Commission, and Sec.  571.13 
deals with how and when a tribe submits an audit statement. The final 
rule still requires tribes to contract with independent certified 
public accountants that use Generally Accepted Accounting Principles 
and Generally Accepted Accounting Standards to complete their audits. 
However, the final rule allows tribes with multiple facilities to 
consolidate their audit statements into one. Further, the final rule 
allows operations earning less than $2 million in gross gaming revenue 
to file an abbreviated statement. The final rule also allows a tribe to 
submit an electronic version of an audit for so called ``stub periods'' 
of less than one year.
    Finally, the final rule requires that audits and financial 
statements be sent on or before their due dates. This is a change from 
the previous requirement that NIGC actually receive the audits and 
statements on or before their due dates. Audits and statements must now 
be postmarked by their due dates. If using a private delivery service, 
such as FedEx or UPS, then the shipping receipt must be dated on or 
before the due date. The final rule reflects common sense practice and 
reduces tribal costs and burden hours.
    NIGC regulation 25 CFR 573.6 discusses the Chairman's ability to 
close a gaming operation for any listed substantial IGRA violation. The 
final rule adds one substantial violation to the list. The Chairman may 
now issue a temporary closure order for a gaming operation that 
operates on Indian land not eligible for gaming under IGRA. Indian 
gaming under IGRA must occur on ``Indian lands,'' 25 U.S.C. 2710(a), 
(b) and (d), as IGRA defines that term. 25 U.S.C. 2703(4). If Indian 
land is trust land acquired after October 17, 1988 (``after-acquired 
land''), then the land is eligible for gaming only if it meets one of 
the exceptions provided in 25 U.S.C. 2719. A gaming operation that 
operates on after-acquired trust land that does not meet one of the 
exceptions in section 2719 is in violation of IGRA. Operating illegally 
in this way is a substantial violation of IGRA that warrants immediate 
closure.

Regulatory Matters

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires that 
an agency prepare a regulatory flexibility analysis of any rule subject 
to notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute, unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities.
    For purposes of assessing the impact of the final rule, ``small 
entity'' is defined as: (1) A small business that meets the definition 
of a small business found in the Small Business Act and codified at 13 
CFR 121.201; (2) a small governmental jurisdiction that is a government 
of a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise that is independently owned and operated 
and is not dominant in its field.
    Indian tribes and tribal casinos do not meet this definition. 
Tribes are excluded from the governmental jurisdictions listed under 
(2), and tribally owned casinos are not ordinary commercial activities 
but are tribal governmental operations.

[[Page 36929]]

    As a practical matter here, the cost increases of the final rule 
take the form of increased fees for management contractors' background 
investigations. The economic impact of these is not significant as the 
fees, currently below industry norms, are raised to meet them, and the 
effect is limited to only management contracting entities. These are by 
no means substantial in number, and, generally, do not fall within the 
definition of ``small entity'' as defined by the Small Business Act. 
Accordingly, the Commission certifies that this action will not have a 
significant economic impact on a substantial number of small entities.

Small Business Regulatory Enforcement Fairness Act

    The final 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 
annual 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 final 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 Mandates Reform Act

    The Commission, as an independent regulatory agency within the 
Department of the Interior, is exempt from compliance with the Unfunded 
Mandates Reform Act. 2 U.S.C. 1502(1); 2 U.S.C. 658(1). Regardless, the 
final rule does not impose an unfunded mandate on state, local, tribal 
governments, or on the private sector of more than $100 million per 
year. Thus, it is not a ``significant regulatory action'' under the 
Unfunded Mandates Reform Act.

Civil Justice Reform

    In accordance with Executive Order 12988, the Office of General 
Counsel has determined that the final rule does not unduly burden the 
judicial system, and it meets the requirements of section 3(a) and 
3(b)(2) of that order.

National Environmental Policy Act

    The Commission has determined that the final rule does not 
constitute a major federal action significantly affecting the quality 
of the human environment and 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 final rule does not require any significant changes in 
information collection under the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501 et seq. The information collections in the affected 
regulations are included within OMB control numbers 3141-0001 for part 
571; 3141-0003 for parts 556 and 558; 3141-0004 for parts 531, 533, 
535, 537, 539; and 3141-0007 for part 514.

Review of Public Comments

    A number of commenters made editorial suggestions that improved 
consistency within the final rule. These changes were accepted and did 
not change the substance of the final rule. Substantive changes and 
suggestions are addressed below.

General Comments

    Comment: Eight commenters objected generally to any promulgation of 
regulations by the NIGC, stating that such action violated tribal 
sovereignty. Further, the commenters also stated that the NIGC had 
failed to consult tribes in crafting these changes. The commenters 
requested complete withdrawal of these regulations, including 
regulations passed in 1993 that the NIGC has not proposed to amend.
    Response: The Commission does not agree that making these slight 
modifications to its existing regulations violates tribal sovereignty. 
Under IGRA, tribes and the NIGC share dual regulatory roles, and the 
NIGC is statutorily authorized to issue regulations. Thus, the 
Commission does not feel that it is appropriate to withdraw the final 
rule. Further, as to those regulations passed in 1993 that were not 
addressed in the proposed rule, they have served Indian gaming well for 
16 years, and the Commission sees no reason to withdraw them now.
    As to a failure of consultation, the Commission strongly disagrees. 
The NIGC has spent the last two years consulting with tribes on the 
updates. The Commission alerted tribes to the changes in March 2007, 
has asked them for review and comment, and has incorporated tribal 
suggestions into each successive draft. Further, the Commission has met 
with tribes all over the country to discuss the regulations, or 
anything else that tribal leaders desired to discuss. Comments from 
those discussions were incorporated into the final rule.
    Comment: The NIGC has received comments that are generally 
supportive of these updated rules.
    Response: The Commission appreciates the support and is grateful to 
everyone who commented, both on the proposed rule and in response to 
the earlier draft sent to tribal leaders.
    Comment: Nine commenters cited to a White House memorandum signed 
by Chief of Staff Rahm Emanuel on January 20, 2009, stating that it 
advocated for the immediate withdrawal of all pending regulations. 
Thus, the commenters insisted that the proposed rule could not go 
forward.
    Response: The Commission disagrees. The commenters incorrectly 
refer to this memorandum as an executive order, which it is not. 
Further, the memorandum does not ask agencies to withdraw all pending 
regulations. Rather, it says something far narrower, asking for the 
withdrawal of proposed regulations that had not already been published 
in the Federal Register by January 20, 2009. This proposed rule was 
published in the Federal Register on December 22, 2008, almost one 
month prior to the memorandum.
    Additionally, the memorandum asks agencies to extend the comment 
periods for any proposed rules pending. The Commission had done just 
that and extended the comment period for the proposed rule as published 
in the Federal Register. See 74 FR 4363 (January 26, 2009). Finally, 
the Commission continues to comply with the memorandum and keep the 
Administration informed as to the final rule.

Specific Comments

    Comment: Some commenters requested that the definition for ``net 
revenues'' in 25 CFR 502.16 include the words ``gaming-related'' in 
order to make clear that the Commission's jurisdiction extends only to 
gaming revenues.
    Response: The Commission agrees and incorporated this change into 
the final rule.
    Comment: Ten commenters claimed that the NIGC has no authority to 
change the definition of ``net revenues'' in 25 CFR 502.16 because 
Congress has already defined the term.
    Response: The Commission is not changing the definition of net 
revenue. It is, rather, preserving the original meaning of the term in 
IGRA in light of changes in professional accounting pronouncements that 
make the term ambiguous. What is more, that ambiguity has the potential 
to improperly increase management contract fees.
    When IGRA was enacted, the definition of net revenue reflected the 
accounting profession's understanding of ``operating expenses'' as 
including all expenses incurred by a business.

[[Page 36930]]

Subsequently, however, the accounting profession changed its 
understanding of the term.
    The American Institute of Certified Professional Accountants 
(AICPA) reasoned that not all expenses are alike. Some expenses are 
directly tied to increases and decreases in the economic activity of a 
business, and hence its ability to produce revenue. Examples of these 
include salaries, utilities, and advertising. Presumably, an increase 
in these expenses--say, in a period of expansion for the business--
should ultimately result in the business producing more revenue. AICPA 
called these expenses ``operating expenses,'' and thus the term has 
come to refer to a smaller class of expenses than it did when IGRA was 
adopted.
    Other expenses are not so closely tied to a business's economic 
activity and revenue production. For example, a business's interest 
obligation on a loan may increase with a change in the prime rate, and 
this does not represent an expansion of business activity at all. These 
latter expenses AICPA now calls ``non-operating expenses.''
    Under IGRA, ``net revenue'' is calculated by deducting prizes and 
``operating expenses'' from gross revenue. ``Operating expenses,'' 
however, has become ambiguous because of the change in AICPA's 
understanding of the term. Thus, the question arises whether to 
calculate net revenues by deducting ``operating expenses'' as the term 
was understood at the time IGRA was adopted or as the term is 
understood now.
    If you apply the current understanding and remove interest and the 
like--the ``non-operating'' expenses--from the calculation of net 
revenue, the result is improperly high management contract fees. The 
expenses deducted from gross revenues become smaller, and net revenues, 
which form the basis for calculating management fees, are overstated.
    This is the result the Commission intends to prevent. The amendment 
to 502.16 is intended to ensure that net revenues are calculated by 
using AICPA's original understanding and deducting as ``operating 
expenses'' all of the expenses incurred by a business--by deducting, in 
other words, what AICPA now calls ``operating expenses'' and ``non-
operating expenses.''
    Comment: Fifteen commenters objected to the definition of ``Person 
having a direct or indirect financial interest in a management 
contract,'' 25 CFR 502.17 as unduly burdensome to tribes. Tribal 
commenters argued that the definition could make it impossible for 
tribal entities to manage a gaming operation because the definition can 
be read to include all tribal members. Thus, they argue, when a tribal 
entity is the manager, all tribal members would be subject to 
background investigations and suitability determinations.
    Response: The Commission does not agree. The language in 502.17(e) 
to which the commenters refer is the same language adopted in 1993. The 
Commission has not proposed any changes to it, and it sees no reason to 
change the language now. The Commission has never interpreted this 
section to include the entire membership of a tribe for purposes of 
determining who ``has an interest'' in a management contract and thus 
who needs to undergo a background investigation.
    The Commission proposed only two changes here. One was to lower the 
threshold for corporate stockholders included in the definition of 
``persons with a direct or indirect financial interest'' from persons 
owning 10% of stocks to 5% of stocks. The other was to add persons 
receiving gifts.
    Comment: These same commenters objected to the change in section 
502.17 that allows the agency to conduct background investigations on 
persons with 5% or more interest in the management contract, a change 
from the previous 10% interest. The commenters argued that this change 
appeared arbitrary and would increase the time needed to complete the 
approval process by increasing the number and costs of required 
background investigations.
    Response: The Commission disagrees. It feels that the changes do 
not create significant cost increases for tribes because the management 
contractor pays for the background investigations conducted on their 
principals. While the change may require a greater number of background 
investigations, the increased workload falls on the Commission staff 
conducting the background investigations. The Commission feels that the 
increase in workload is offset by the benefit of protecting the 
integrity of Indian gaming. Finally, eight commenters expressly agreed 
with the changes presented in this section.
    Comment: Nine commenters objected to the changes in filing fee 
statements under 25 CFR 514.1 and cited to Colorado River Indian Tribe 
v. National Indian Gaming Commission (CRIT), 383 F. Supp 2d 123 (D.D.C. 
2005), aff'd 466 F. 3d 134 (D.C. Cir. 2006), for the proposition that 
the NIGC does not possess authority to apply these changes to Class III 
gaming operations.
    Response: The Commission disagrees. The commenters incorrectly 
understand CRIT to hold that NIGC has no authority over Class III 
gaming. CRIT, however, only holds that NIGC lacks the authority to 
promulgate and enforce minimum internal control standards for most 
Class III gaming operations. 383 F. Supp 2d 123, 132 (D.D.C. 2005). 
CRIT did not strip the NIGC of the power to regulate Class III gaming 
generally. Rather, it stands for the proposition that NIGC, like every 
other administrative agency, has only those authorities Congress has 
granted to it. The NIGC has continued to regulate the industry 
consistent with IGRA's provisions, and IGRA specifically gives the 
Commission the authority to assess fees on Class III gaming. 25 U.S.C 
2717(a)(1). Finally, six commenters agreed with the changes to 514.1.
    Comment: Nine commenters objected to the requirement in 25 CFR 
514.1 that fees and fee statements actually be received by NIGC on or 
before the due dates, preferring instead to apply the mailbox rule. 
This would mean that fee payments and statements are timely so long as 
they are mailed by their due dates, no matter how long those documents 
take to arrive.
    Response: The Commission agrees. The final rule now requires that 
fees and fee statements be sent on or before their due dates. Fees and 
fee statements must now be postmarked by their due dates. If using a 
private delivery service, such as FedEx or UPS, then the shipping 
receipt must be dated on or before the due date.
    Comment: Six commenters objected to the requirements that 
management contracts set operating days and hours as well as the 
advertising and placing budgets under 25 CFR 531.1(b)(3) and (10). 
Specifically, commenters asserted that these requirements were 
indicative of NIGC overreaching its authority and asked too much of 
tribes and potential contractors.
    Response: The Commission disagrees. None of the language in 
531.1(b) was changed from the original language adopted in 1993. The 
requirements that management contracts must contain provisions 
regarding days and hours of operation, as well as provisions on 
advertising and placing budgets, has always existed in the Commission's 
regulations. The Commission sees no reason to change that language now. 
Finally, two commenters specifically agreed with the changes presented 
in 531.1.
    Comment: Five commenters noted that 25 CFR 533.2 gave tribes only 
30 days to submit contracts for

[[Page 36931]]

management approval and felt that the timeline was too stringent.
    Response: The Commission understands that the parties to a 
management contract may desire more time and thinks that it is fair to 
allow a longer time for submission. Thus, the Commission has changed 
this section to allow for the submission of management contracts within 
60 days of their execution.
    Comment: Twelve commenters objected to the requirement in 25 CFR 
533.3(h) that the parties to a management contract submit a legal 
description of the land on which the gaming is to take place. The 
requirement, they felt, was burdensome and unnecessary. Commenters 
instead preferred the idea of having the Chairman approve management 
contracts without a legal description in case the parties chose a 
different site for construction or needed more time to finalize the 
land-into-trust process.
    Response: The Commission disagrees. The NIGC routinely requests 
land descriptions for all management contracts. Since all management 
contracts are site-specific, the Chairman needs to have this legal 
description to determine whether the gaming operation will reside on 
Indian lands as IGRA requires. The Chairman does not normally approve 
management contracts prior to land being taken into trust. 
Consequently, this change simply clarifies agency practice.
    Comment: Seven commenters objected to the 90-day extension 
permitted to the Chairman for his decision on a management contract 
under 25 CFR 533.4 because it allows the Chairman too much time. The 
commenters insisted that the standard 180 days for approval was long 
enough.
    Response: The Commission disagrees. The 90-day extension that the 
commenters object to is the original language of the regulations 
adopted in 1993. The changes to this section do not involve this 
timeline, and the Commission feels no need to revisit the question now.
    Comment: One commenter objected to 25 CFR 535.3 and 537.1 on 
grounds that they violated tribal sovereignty and were too burdensome.
    Response: The Commission disagrees. The commenter failed to explain 
what changes were problematic or why these changes violate sovereignty 
or burden the tribes. Further, the changes made to these two sections 
do not impede tribal sovereignty. The changes to section 535.3 indicate 
that the Chairman can void management contract amendments as well as 
approve them, a power given to him by IGRA. 25 U.S.C. 2711. Thus, this 
change merely clarifies the Chairman's existing authority.
    Furthermore, the changes to section 537.1 merely require a 
management contractor to disclose its ten largest stock holders, their 
relations, and managers, regardless of corporate form. This is a 
clarification of an existing obligation. In fact, much of the text of 
these two sections remains unchanged from the original language adopted 
in 1993. Finally, two commenters agreed with the changes.
    Comment: Six commenters objected to the language in 25 CFR 535.1 
that states: ``If the Chairman does not approve or disapprove an 
amendment within the timelines of paragraph (d)(1) or (d)(2) of this 
section, the amendment shall be deemed disapproved.'' The commenters 
asserted that the Chairman's failure to act on these contracts should 
make them ``deemed approved'' by operation of law instead of ``deemed 
disapproved.'' They requested that the NIGC make this change to this 
section.
    Response: The Commission disagrees. This language has not changed 
from the language adopted in 1993 and has always read that the Chairman 
can ``approve or disapprove'' the amendment at issue and that the 
amendment will be ``deemed disapproved'' if he fails to act. The 
Commission sees no reason to change this now.
    Comment: Twelve commenters objected to the increase in fees for 
background investigations from $10,000 to $25,000 under 25 CFR 537.3. 
The commenters suggested that the fee was too high and caused too great 
a burden on tribes. They advised that the fee should remain the same.
    Response: The Commission disagrees. The change represents the 
amount of the deposit made for the background investigations rather 
than an increase in fees. Furthermore, typically, contractors pay for 
their background investigations, and not the tribes. Furthermore, even 
if a tribe chooses to reimburse a contractor for the costs, the deposit 
presented in the final rule has been changed to reflect the actual 
costs of performing this service.
    Comment: One commenter objected to the ability of a party to appeal 
the Chairman's approval of a management contract or amendment under 25 
CFR 539.2. Originally, this section only permitted appeals for 
disapprovals of management contracts and amendments. The commenter 
requested that this language be removed for fear that state and local 
governments might be considered a party for purposes of appealing under 
this section and challenging an approved management contract or 
amendment.
    Response: The Commission disagrees. While the Commission 
anticipates that this addition will be used infrequently, the amendment 
was made to acknowledge the possibility that parties may question the 
propriety of a contract approval. This section does not give standing 
to an entity that was not a party to the management contract or 
amendment. The amended section merely recognizes a practical necessity 
and reflects existing practices.
    Comment: Two commenters stated that 25 CFR 558.2 needed 
clarification because the language appeared to indicate that someone 
other than a gaming commission could license gaming employees.
    Response: The Commission agrees and has altered the language in the 
final rule accordingly.
    Comment: Twenty-three commenters objected to the changes presented 
in 25 CFR 556.2, 556.3, and 558.2. The commenters insisted that the 
NIGC lacks the authority to change these sections because the changes 
would require tribes to specifically amend their ordinances in 
contravention of their status as a sovereign.
    The commenters also asserted that in replacing the word 
``employment'' with the word ``licensing'' throughout these sections, 
the Commission was making a mistake. They argued that changing these 
words incorrectly indicated that the Privacy Act and False Statement 
Act now apply to tribes. Finally, the commenters argued that using 
these sections for employment purposes was convenient for their needs.
    Response: The Commission does not agree. The final rule is not 
retroactive and does not require any tribe to immediately amend its 
gaming ordinance. Rather, the amendments need only be made when a tribe 
otherwise chooses to amend its gaming ordinance. Thus, the final rule 
states that tribal gaming ordinances and ordinance amendments that have 
been approved by the Chairman * * * and that reference this rulemaking 
will not need to be amended to comply with this section. All future 
ordinance submissions, however, must comply.
    Furthermore, the Privacy Act notice and False Statement Act notice 
have been required as part of NIGC regulations since they were adopted 
in 1993. The Commission is only changing the word ``employment'' to 
``licensing.'' None of the changes alter the application of these Acts. 
Because tribes access personally identifiable information through the 
NIGC, they

[[Page 36932]]

have agreed to the Privacy Act and False Statement Act restrictions.
    Finally, the emphasis here is on licensing and not employment. A 
decision to license an applicant and a decision about an applicant's 
suitability (or eligibility) for licensure are separate and distinct 
from a decision to hire the applicant. We have concluded that these 
sections should be concerned with licensure and suitability 
determinations, not employment decisions.
    Comment: Ten commenters objected to the changes for filing audits 
under 25 CFR 571.12 and cited the Colorado River Indian Tribe v. 
National Indian Gaming Commission (CRIT), 383 F. Supp 2d 123 (D.D.C. 
2005), aff'd 466 F. 3d 134 (D.C. Cir 2006), for the proposition that 
the NIGC does not possess authority to apply these changes to Class III 
gaming operations.
    Response: The Commission disagrees. The commenters incorrectly 
understand CRIT to hold that NIGC has no authority over Class III 
gaming. CRIT, however, only holds that NIGC lacks the authority to 
promulgate and enforce minimum internal control standards for Class III 
gaming operations. 383 F. Supp 2d 123, 132 (D.D.C. 2005). CRIT did not 
strip the NIGC of the power to regulate Class III gaming generally. 
Rather, it stands for the proposition that NIGC, like every other 
administrative agency, has only those authorities Congress has granted 
to it. The NIGC has continued to regulate the industry consistent with 
IGRA's provisions, and IGRA requires Class II and Class III operations 
to file annual audits. 25 U.S.C. 2710(b)(2)(C); 2710(d)(1)(A)(ii). 
Finally, five commenters agreed with the changes to 571.12.
    Comment: Ten commenters objected to the requirement in 25 CFR 
571.12 that audit statements actually be received by NIGC on or before 
the due dates, preferring instead to apply the mailbox rule. This would 
mean that audit statements are timely so long as they are mailed by the 
due dates, no matter how long those documents take to arrive.
    Response: The Commission agrees. The final rule now requires that 
audits and financial statements be sent on or before their due dates. 
Audit statements must now be postmarked by their due dates. If using a 
private delivery service, such as FedEx or UPS, then the shipping 
receipt must be dated on or before the due date.
    Comment: Three commenters objected to the new requirement for a 
written statement as requested under 25 CFR 571.12(c)(3), (d)(5), and 
(e)(5). They insisted that the requirement was unnecessary and that the 
requirement was vaguely worded. Without further explanation, the 
requirement could cause further non-compliance as tribes attempt to 
understand the scope of what is required in the statement.
    Response: The Commission agrees. The Commission is convinced by the 
arguments presented and has altered the final rule to delete these 
section requirements.
    Comment: One commenter noted that the word ``reports'' appeared in 
the 1993 version of this section but no longer appears in the proposed 
rule published in December 2008. The commenter suggested that 25 CFR 
571.13 include the word ``reports'' again because it captures more 
broadly the documents compiled by the certified public accountant when 
conducting an audit.
    Response: The Commission agrees. The Commission has altered the 
final rule to put the word ``reports'' back in the relevant section.
    Comment: Ten commenters objected to the addition of gaming on 
ineligible lands as a substantial violation under 25 CFR 573.6. 
Commenters argued that the Commission could not claim that gaming on 
ineligible lands is a substantial IGRA violation when it routinely 
permits operations to continue running after it is discovered that they 
exist on ineligible lands. The commenters asserted that the regulation 
was also duplicative because gaming occurring on ineligible lands is an 
issue that could be handled by parties other than the NIGC. Further, 
they suggested that the additional enforcement power for the Chairman 
creates confusion as to authority between the NIGC and the Department 
of the Interior (DOI) on this issue. A split decision between the 
departments could cause problems for tribes.
    Response: The Commission disagrees. First, the Chairman does not 
routinely permit the operation of gaming on ineligible lands under 
IGRA. Next, the addition is not duplicative, and there is no additional 
power given to the Chairman. The Chairman already has the authority to 
close an operation running on ineligible lands. Under existing 
regulations, closure is a two-step process. The Chairman first has to 
issue a notice of violation. He may subsequently order closure if the 
operation on ineligible lands continues. Under the change here, the 
Chairman may issue a notice of violation and closure order 
simultaneously. The change thus merely adds operating on ineligible 
lands to the list of serious violations that justify immediate closure. 
Finally, there is no confusion between DOI and NIGC. Regardless of 
which agency makes the decision as to whether lands qualify for gaming, 
only the NIGC has the authority to close a gaming operation.

List of Subjects in 25 CFR Parts 502, 514, 531, 533, 535, 537, 539, 
556, 558, 571

    Gambling, Indians--lands, Indians--tribal government, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, the Commission amends its 
regulations at 25 CFR Chapter III as follows:

PART 502--DEFINITIONS OF THIS CHAPTER

0
1. The authority citation for part 502 continues to read as follows:

    Authority:  25 U.S.C. 2701 et seq.


0
2. Add new paragraph (d) to Sec.  502.14 to read as follows:


Sec.  502.14   Key employee.

* * * * *
    (d) Any other person designated by the tribe as a key employee.

0
3. Revise Sec.  502.16 to read as follows:


Sec.  502.16   Net revenues.

    Net revenues means gross gaming revenues of an Indian gaming 
operation less--
    (a) Amounts paid out as, or paid for, prizes; and
    (b) Total gaming-related operating expenses, including all those 
expenses of the gaming operation commonly known as operating expenses 
and non-operating expenses consistent with professional accounting 
pronouncements, excluding management fees.

0
4. Revise Sec.  502.17 to read as follows:


Sec.  502.17   Person having a direct or indirect financial interest in 
a management contract.

    Person having a direct or indirect financial interest in a 
management contract means:
    (a) When a person is a party to a management contract, any person 
having a direct financial interest in such management contract;
    (b) When a trust is a party to a management contract, any 
beneficiary or trustee;
    (c) When a partnership is a party to a management contract, any 
partner;
    (d) When a corporation is a party to a management contract, any 
person who is a director or who holds at least 5% of the issued and 
outstanding stock alone or in combination with another stockholder who 
is a spouse, parent, child or sibling when the corporation is publicly 
traded or the top ten (10)

[[Page 36933]]

shareholders for a privately held corporation;
    (e) When an entity other than a natural person has an interest in a 
trust, partnership or corporation that has an interest in a management 
contract, all parties of that entity are deemed to be persons having a 
direct financial interest in a management contract; or
    (f) Any person or entity who will receive a portion of the direct 
or indirect interest of any person or entity listed above through 
attribution, grant, pledge, or gift.

0
5. Add new paragraph (d) to Sec.  502.19 to read as follows:


Sec.  502.19   Primary management official.

* * * * *
    (d) Any other person designated by the tribe as a primary 
management official.

PART 514--FEES

0
6. The authority citation for part 514 continues to read as follows:

    Authority:  25 U.S.C. 2706, 2708, 2710, 2717, 2717a.


0
7. Revise Sec.  514.1 to read as follows:


Sec.  514.1   Annual fees.

    (a) Each gaming operation under the jurisdiction of the Commission 
shall pay to the Commission annual fees as established by the 
Commission. The Commission, by a vote of not less than two of its 
members, shall adopt the rates of fees to be paid.
    (1) The Commission shall adopt preliminary rates for each calendar 
year no later than February 1st of that year, and, if considered 
necessary, shall modify those rates no later than July 1st of that 
year.
    (2) The Commission shall publish the rates of fees in a notice in 
the Federal Register.
    (3) The rates of fees imposed shall be--
    (i) No more than 2.5 percent of the first $ 1,500,000 (1st tier), 
and
    (ii) 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.
    (4) 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.
    (b) For purposes of computing fees, assessable gross revenues for 
each gaming operation are the annual total amount of money wagered on 
class II and III games, admission fees (including table or card fees), 
less any amounts paid out as prizes or paid for prizes awarded, and 
less an allowance for amortization of capital expenditures for 
structures.
    (1) Unless otherwise provided by the regulations, generally 
accepted accounting principles shall be used.
    (2) The allowance for amortization of capital expenditures for 
structures shall be either:
    (i) 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
    (ii) An amount not to exceed 10% of the cost of the total amount of 
amortization/depreciation expenses for the year.
    (3) Examples of computations follow:
    (i) For paragraph (2)(i) of this section:




Gross gaming revenues:
    Money wagered.......................  ..............      $1,000,000
    Admission 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 x .05 =................          37,500  ..............
        50,000 x .025 =.................           1,250          38,750
    Assessable gross revenues...........  ..............         456,250


     (ii) For paragraph (2)(ii) of this section:




Gross gaming revenues:
    Money wagered.......................  ..............      $1,000,000
    Admission 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 amortization/                400,000  ..............
     depreciation per books
    Maximum allowance:
        $400,000 x .10 =................  ..............          40,000
    Gross gaming revenues...............  ..............         455,000
    Assessable gross revenues...........  ..............         455,000


     (4) All class II and III revenues from gaming operations are to be 
included.
    (c) Each gaming operation subject to the jurisdiction of the 
Commission and not exempt from paying fees pursuant to the self-
regulation provisions shall file with the Commission a statement

[[Page 36934]]

showing its assessable gross revenues for the previous calendar year.
    (1) These statements shall show the amounts derived from each type 
of game, the amounts deducted for prizes, and the amounts deducted for 
the amortization of structures;
    (2) These statements shall be sent to the Commission on or before 
March 1st and August 1st of each calendar year.
    (3) The statements shall identify an individual or individuals to 
be contacted should the Commission need to communicate further with the 
gaming operation. The telephone numbers of the individual(s) shall be 
included.
    (4) Each gaming operation shall determine the amount of fees to be 
paid and remit them with the statement required in paragraph (c) of 
this section. The fees payable shall be computed using--
    (i) The most recent rates of fees adopted by the Commission 
pursuant to paragraph (a)(1) of this section,
    (ii) The assessable gross revenues for the previous calendar year 
as reported pursuant to this paragraph, and
    (iii) The amounts paid and credits received during the year.
    (5) Each statement shall include the computation of the fees 
payable, showing all amounts used in the calculations. The required 
calculations are as follows:
    (i) Multiply the previous calendar year's 1st tier assessable gross 
revenues by the rate for those revenues adopted by the Commission.
    (ii) Multiply the previous calendar year's 2nd tier assessable 
gross revenues by the rate for those revenues adopted by the 
Commission.
    (iii) Add (total) the results (products) obtained in paragraphs 
(c)(5)(i) and (ii) of this section.
    (iv) Multiply the total obtained in paragraph (c)(5)(iii) of this 
section by \1/2\.
    (v) The amount computed in paragraph (c)(5)(iv) of this section is 
the amount to be remitted.
    (6) Examples of fee computations follow:
    (i) Where a filing is made for March 1st of the calendar year, the 
previous year's assessable gross revenues are $2,000,000, the fee rates 
adopted by the Commission are 0.0% on the first $1,500,000 and .08% on 
the remainder, the amounts to be used and the computations to be made 
are as follows:




1st tier revenues--$1,500,000 x 0.0% =                            ......
2nd tier revenues--500,000 x                                        $400
.08% =
  Annual fees...................................................     400
Multiply for fraction of year--\1/2\ or.........................     .50
  Fees for first payment........................................     200
    Amount to be remitted.......................................     200


    (7) The statements, remittances and communications about fees shall 
be transmitted to the Commission at the following address: Office of 
Finance, 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).
    (8) The Commission may assess a penalty for failure to file timely 
a statement.
    (9) Interest shall be assessed at rates established from time to 
time by the Secretary of the Treasury on amounts remaining unpaid after 
their due date.
    (d) The total amount of all fees imposed during any fiscal year 
shall not exceed the statutory maximum imposed by Congress. The 
Commission shall credit pro-rata any fees collected in excess of this 
amount against amounts otherwise due by March 1st and August 1st of 
each calendar year.
    (e) Failure to pay fees, any applicable penalties, and interest 
related thereto may be grounds for:
    (1) Closure, or
    (2) Disapproving or revoking the approval of the Chairman of any 
license, ordinance, or resolution required under this Act for the 
operation of gaming.
    (f) To the extent that revenue derived from fees imposed under the 
schedule established 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.

PART 531--CONTENT OF MANAGEMENT CONTRACTS

0
8. The authority citation for part 531 continues to read as follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

0
9. Revise Sec.  531.1 to read as follows:


Sec.  531.1  Required provisions.

    Management contracts shall conform to all of the requirements 
contained in this section in the manner indicated.
    (a) Governmental authority. Provide that all gaming covered by the 
contract will be conducted in accordance with the Indian Gaming 
Regulatory Act (IGRA, or the Act) and governing tribal ordinance(s).
    (b) Assignment of responsibilities. Enumerate the responsibilities 
of each of the parties for each identifiable function, including:
    (1) Maintaining and improving the gaming facility;
    (2) Providing operating capital;
    (3) Establishing operating days and hours;
    (4) Hiring, firing, training and promoting employees;
    (5) Maintaining the gaming operation's books and records;
    (6) Preparing the operation's financial statements and reports;
    (7) Paying for the services of the independent auditor engaged 
pursuant to Sec.  571.12 of this chapter;
    (8) Hiring and supervising security personnel;
    (9) Providing fire protection services;
    (10) Setting advertising budget and placing advertising;
    (11) Paying bills and expenses;
    (12) Establishing and administering employment practices;
    (13) Obtaining and maintaining insurance coverage, including 
coverage of public liability and property loss or damage;
    (14) Complying with all applicable provisions of the Internal 
Revenue Code;
    (15) Paying the cost of any increased public safety services; and
    (16) If applicable, supplying the National Indian Gaming Commission 
(NIGC, or the Commission) with all information necessary for the 
Commission to comply with the regulations of the Commission issued 
pursuant to the National Environmental Policy Act (NEPA).
    (c) Accounting. Provide for the establishment and maintenance of 
satisfactory accounting systems and procedures that shall, at a 
minimum:
    (1) Include an adequate system of internal accounting controls;
    (2) Permit the preparation of financial statements in accordance 
with generally accepted accounting principles;
    (3) Be susceptible to audit;
    (4) Allow a gaming operation, the tribe, and the Commission to 
calculate the annual fee under Sec.  514.1 of this chapter;
    (5) Permit the calculation and payment of the manager's fee; and
    (6) Provide for the allocation of operating expenses or overhead 
expenses among the tribe, the tribal gaming operation, the contractor, 
and any other user of shared facilities and services.
    (d) Reporting. Require the management contractor to provide the 
tribal governing body not less frequently than monthly with verifiable 
financial reports or all information necessary to prepare such reports.
    (e) Access. Require the management contractor to provide immediate 
access to the gaming operation, including its books and records, by 
appropriate tribal officials, who shall have:

[[Page 36935]]

    (1) The right to verify the daily gross revenues and income from 
the gaming operation; and
    (2) Access to any other gaming-related information the tribe deems 
appropriate.
    (f) Guaranteed payment to tribe. Provide for a minimum guaranteed 
monthly payment to the tribe in a sum certain that has preference over 
the retirement of development and construction costs.
    (g) Development and construction costs. Provide an agreed upon 
maximum dollar amount for the recoupment of development and 
construction costs.
    (h) Term limits. Be for a term not to exceed five (5) years, except 
that upon the request of a tribe, the Chairman may authorize a contract 
term that does not exceed seven (7) years if the Chairman is satisfied 
that the capital investment required, and the income projections, for 
the particular gaming operation require the additional time. The time 
period shall begin running no later than the date when the gaming 
activities authorized by an approved management contract begin.
    (i) Compensation. Detail the method of compensating and reimbursing 
the management contractor. If a management contract provides for a 
percentage fee, such fee shall be either:
    (1) Not more than thirty (30) percent of the net revenues of the 
gaming operation if the Chairman determines that such percentage is 
reasonable considering the circumstances; or
    (2) Not more than forty (40) percent of the net revenues if the 
Chairman is satisfied that the capital investment required and income 
projections for the gaming operation require the additional fee.
    (j) Termination provisions. Provide the grounds and mechanisms for 
amending or terminating the contract (termination of the contract shall 
not require the approval of the Chairman).
    (k) Dispute provisions. Contain a mechanism to resolve disputes 
between:
    (1) The management contractor and customers, consistent with the 
procedures in a tribal ordinance;
    (2) The management contractor and the tribe; and
    (3) The management contractor and the gaming operation employees.
    (l) Assignments and subcontracting. Indicate whether and to what 
extent contract assignments and subcontracting are permissible.
    (m) Ownership interests. Indicate whether and to what extent 
changes in the ownership interest in the management contract require 
advance approval by the tribe.
    (n) Effective date. State that the contract shall not be effective 
unless and until it is approved by the Chairman, date of signature of 
the parties notwithstanding.

PART 533--APPROVAL OF MANAGEMENT CONTRACTS

0
10. The authority citation for part 533 continues to read as follows:

    Authority:  25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

0
11. In Sec.  533.1, remove paragraph (c).

0
12. Revise Sec.  533.2 to read as follows:


Sec.  533.2  Time for submitting management contracts and amendments.

    A tribe or a management contractor shall submit a management 
contract to the Chairman for review within sixty (60) days of execution 
by the parties. The Chairman shall notify the parties of their right to 
appeal the approval or disapproval of the management contract under 
part 539 of this chapter.

0
13. Revise Sec.  533.3 to read as follows:


Sec.  533.3  Submission of management contract for approval.

    A tribe shall include in any request for approval of a management 
contract under this part:
    (a) A contract containing:
    (1) Original signatures of an authorized official of the tribe and 
the management contractor;
    (2) A representation that the contract as submitted to the Chairman 
is the entirety of the agreement among the parties; and
    (b) A letter, signed by the tribal chairman, setting out the 
authority of an authorized tribal official to act for the tribe 
concerning the management contract.
    (c) Copies of documents evidencing the authority under paragraph 
(b) of this section.
    (d) A list of all persons and entities identified in Sec. Sec.  
537.1(a) and 537.1(c)(1) of this chapter, and either:
    (1) The information required under Sec.  537.1(b)(1) of this 
chapter for class II gaming contracts and Sec.  537.1(b)(1)(i) of this 
chapter for class III gaming contracts; or
    (2) The dates on which the information was previously submitted.
    (e)(1) For new contracts and new operations, a three (3)-year 
business plan which sets forth the parties' goals, objectives, budgets, 
financial plans, and related matters; or
    (2) For new contracts for existing operations, a three (3)-year 
business plan which sets forth the parties' goals, objectives, budgets, 
financial plans, and related matters, and income statements and sources 
and uses of funds statements for the previous three (3) years.
    (f) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(h) of this chapter, for a term limit in excess of five 
(5) years, but not exceeding seven (7) years.
    (g) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(i) of this chapter, for a fee in excess of thirty (30) 
percent, but not exceeding forty (40) percent.
    (h) A legal description for the site on which the gaming operation 
to be managed is, or will be, located.
0
14. Revise Sec.  533.4 to read as follows:


Sec.  533.4  Action by the Chairman.

    (a) The Chairman shall approve or disapprove a management contract, 
applying the standards contained in Sec.  533.6 of this part, within 
180 days of the date on which the Chairman receives a complete 
submission under Sec.  533.3 of this part, unless the Chairman notifies 
the tribe and management contractor in writing of the need for an 
extension of up to ninety (90) days.
    (b) A tribe may bring an action in a U.S. district court to compel 
action by the Chairman:
    (1) After 180 days following the date on which the Chairman 
receives a complete submission if the Chairman does not approve or 
disapprove the contract under this part; or
    (2) After 270 days following the Chairman's receipt of a complete 
submission if the Chairman has told the tribe and management contractor 
in writing of the need for an extension and has not approved or 
disapproved the contract under this part.


Sec.  533.5  [Removed and Reserved]

0
15. Remove and reserve Sec.  533.5.

0
16. Revise Sec.  533.6 to read as follows:


Sec.  533.6  Approval and disapproval.

    (a) The Chairman may approve a management contract if it meets the 
standards of part 531 of this chapter and Sec.  533.3 of this part. 
Failure to comply with the standards of part 531 of this chapter or 
Sec.  533.3 may result in the Chairman's disapproval of the management 
contract.
    (b) The Chairman shall disapprove a management contract for class 
II gaming if he or she determines that--
    (1) Any person with a direct or indirect financial interest in, or 
having management responsibility for, a management contract:
    (i) Is an elected member of the governing body of the tribe that is 
party to the management contract;
    (ii) Has been convicted of any felony or any misdemeanor gaming 
offense;
    (iii) Has knowingly and willfully provided materially false 
statements or

[[Page 36936]]

information to the Commission or to a tribe;
    (iv) Has refused to respond to questions asked by the Chairman in 
accordance with his or her responsibilities under this part; or
    (v) Is determined by the Chairman to be a person whose prior 
activities, criminal record, if any, or reputation, habits, and 
associations pose a threat to the public interest or to the effective 
regulation and control of gaming, or create or enhance the dangers of 
unsuitable, unfair, or illegal practices, methods, and activities in 
the conduct of gaming or the carrying on of related business and 
financial arrangements;
    (2) The management contractor or its agents have unduly interfered 
with or influenced for advantage, or have tried to unduly interfere 
with or influence for advantage, any decision or process of tribal 
government relating to the gaming operation;
    (3) The management contractor or its agents has deliberately or 
substantially failed to follow the terms of the management contract or 
the tribal gaming ordinance or resolution adopted and approved pursuant 
to this Act; or
    (4) A trustee, exercising the skill and diligence to which a 
trustee is commonly held, would not approve the contract.
    (c) The Chairman may disapprove a management contract for class III 
gaming if he or she determines that a person with a financial interest 
in, or management responsibility for, a management contract is a person 
whose prior activities, criminal record, if any, or reputation, habits, 
and associations pose a threat to the public interest or to the 
effective regulation and control of gaming, or create or enhance the 
dangers of unsuitable, unfair, or illegal practices, methods, and 
activities in the conduct of gaming or the carrying on of related 
business and financial arrangements.

0
17. Revise Sec.  533.7 to read as follows:


Sec.  533.7  Void agreements.

    Management contracts and changes in persons with a financial 
interest in or management responsibility for a management contract, 
that have not been approved by the Chairman in accordance with the 
requirements of part 531 of this chapter and this part, are void.

PART 535--POST-APPROVAL PROCEDURES

0
18. The authority citation for part 535 continues to read as follows:

    Authority:  25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.


0
19. Revise Sec.  535.1 to read as follows:


Sec.  535.1  Amendments.

    (a) Subject to the Chairman's approval, a tribe may enter into an 
amendment of a management contract for the operation of a class II or 
class III gaming activity.
    (b) A tribe shall submit an amendment to the Chairman within thirty 
(30) days of its execution.
    (c) A tribe shall include in any request for approval of an 
amendment under this part:
    (1) An amendment containing original signatures of an authorized 
official of the tribe and the management contractor and terms that meet 
the applicable requirements of part 531 of this chapter;
    (2) A letter, signed by the tribal chairman, setting out the 
authority of an authorized tribal official to act for the tribe 
concerning the amendment;
    (3) Copies of documents evidencing the authority under paragraph 
(c)(2) of this section;
    (4) A list of all persons and entities identified in Sec.  537.1(a) 
and Sec.  537.1(c)(1) of this chapter:
    (i) If the amendment involves a change in person(s) having a direct 
or indirect financial interest in the management contract or having 
management responsibility for the management contract, a list of such 
person(s) and either:
    (A) The information required under Sec.  537.1(b)(1) of this 
chapter for class II gaming contracts or Sec.  537.1(b)(1)(i) of this 
chapter for class III gaming contracts; or
    (B) The dates on which the information was previously submitted;
    (ii) [Reserved]
    (5) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(h) of this chapter, for a term limit in excess of five 
(5) years, but not exceeding seven (7) years; and
    (6) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(i) of this chapter, for a management fee in excess of 
thirty (30) percent, but not exceeding forty (40) percent.
    (d)(1) The Chairman shall approve or disapprove an amendment within 
thirty (30) days from receipt of a complete submission if the amendment 
does not require a background investigation under part 537 of this 
chapter, unless the Chairman notifies the parties in writing of the 
need for an extension of up to thirty (30) days.
    (2) The Chairman shall approve or disapprove an amendment as soon 
as practicable but no later than 180 days from receipt of a complete 
submission if the amendment requires a background investigation under 
part 537 of this chapter;
    (3) A party may appeal the Chairman's approval or disapproval of an 
amendment under part 539 of this chapter. If the Chairman does not 
approve or disapprove an amendment within the timelines of paragraph 
(d)(1) or (d)(2) of this section, the amendment shall be deemed 
disapproved and a party shall have thirty (30) days to appeal the 
decision under part 539 of this chapter.
    (e)(1) The Chairman may approve an amendment to a management 
contract if the amendment meets the submission requirements of 
paragraph (c) of this section. Failure to comply with the submission 
requirements of paragraph (c) of this section may result in the 
Chairman's disapproval of an amendment.
    (2) The Chairman shall disapprove an amendment of a management 
contract for class II gaming if he or she determines that the 
conditions contained in Sec.  533.6(b) of this chapter apply.
    (3) The Chairman may disapprove an amendment of a management 
contract for class III gaming if he or she determines that the 
conditions contained in Sec.  533.6(c) of this chapter apply.
    (f) Amendments that have not been approved by the Chairman in 
accordance with the requirements of this part are void.

0
20. Revise Sec.  535.3 to read as follows:


Sec.  535.3  Post-approval noncompliance.

    If the Chairman learns of any action or condition that violates the 
standards contained in parts 531, 533, 535, or 537 of this chapter, the 
Chairman may require modifications of, or may void, a management 
contract or amendment approved by the Chairman under such sections, 
after providing the parties an opportunity for a hearing before the 
Chairman and a subsequent appeal to the Commission as set forth in part 
577 of this chapter. The Chairman will initiate modification or void 
proceedings by serving the parties, specifying the grounds for the 
modification or void. The parties will have thirty (30) days to request 
a hearing or respond with objections. Within thirty (30) days of 
receiving a request for a hearing, the Chairman will hold a hearing and 
receive oral presentations and written submissions. The Chairman will 
make a decision on the basis of the developed record and notify the 
parties of the decision and of their right to appeal.

[[Page 36937]]

PART 537--BACKGROUND INVESTIGATIONS FOR PERSONS OR ENTITIES WITH A 
FINANCIAL INTEREST IN, OR HAVING MANAGEMENT RESPONSIBILITY FOR, A 
MANAGEMENT CONTRACT

0
21. The authority citation to part 537 continues to read as follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.


0
22. Revise Sec.  537.1 to read as follows:


Sec.  537.1  Applications for approval.

    (a) For each management contract for class II gaming, the Chairman 
shall conduct or cause to be conducted a background investigation of:
    (1) Each person with management responsibility for a management 
contract;
    (2) Each person who is a director of a corporation that is a party 
to a management contract;
    (3) The ten (10) persons who have the greatest direct or indirect 
financial interest in a management contract;
    (4) Any entity with a financial interest in a management contract 
(in the case of institutional investors, the Chairman may exercise 
discretion and reduce the scope of the information to be furnished and 
the background investigation to be conducted); and
    (5) Any other person with a direct or indirect financial interest 
in a management contract otherwise designated by the Commission.
    (b) For each natural person identified in paragraph (a) of this 
section, the management contractor shall provide to the Commission the 
following information:
    (1) Required information. (i) Full name, other names used (oral or 
written), social security number(s), birth date, place of birth, 
citizenship, and gender;
    (ii) A current photograph, driver's license number, and a list of 
all languages spoken or written;
    (iii) Business and employment positions held, and business and 
residence addresses currently and for the previous ten (10) years; the 
city, state and country of residence from age eighteen (18) to the 
present;
    (iv) The names and current addresses of at least three (3) personal 
references, including one personal reference who was acquainted with 
the person at each different residence location for the past five (5) 
years;
    (v) Current business and residence telephone numbers;
    (vi) A description of any existing and previous business 
relationships with Indian tribes, including ownership interests in 
those businesses;
    (vii) A description of any existing and previous business 
relationships with the gaming industry generally, including ownership 
interests in those businesses;
    (viii) The name and address of any licensing or regulatory agency 
with which the person has filed an application for a license or permit 
relating to gaming, whether or not such license or permit was granted;
    (ix) For each gaming offense and for each felony for which there is 
an ongoing prosecution or a conviction, the name and address of the 
court involved, the charge, and the dates of the charge and of the 
disposition;
    (x) For each misdemeanor conviction or ongoing misdemeanor 
prosecution (excluding minor traffic violations) within ten (10) years 
of the date of the application, the name and address of the court 
involved, and the dates of the prosecution and the disposition;
    (xi) A complete financial statement showing all sources of income 
for the previous three (3) years, and assets, liabilities, and net 
worth as of the date of the submission; and
    (xii) For each criminal charge (excluding minor traffic charges) 
regardless of whether or not it resulted in a conviction, if such 
criminal charge is within 10 years of the date of the application and 
is not otherwise listed pursuant to paragraphs (b)(1)(ix) or (b)(1)(x) 
of this section, the name and address of the court involved, the 
criminal charge, and the dates of the charge and the disposition.
    (2) Fingerprints. The management contractor shall arrange with an 
appropriate federal, state, or tribal law enforcement authority to 
supply the Commission with a completed form FD-258, Applicant 
Fingerprint Card, (provided by the Commission), for each person for 
whom background information is provided under this section.
    (3) Responses to Questions. Each person with a direct or indirect 
financial interest in a management contract or management 
responsibility for a management contract shall respond within thirty 
(30) days to written or oral questions propounded by the Chairman.
    (4) Privacy notice. In compliance with the Privacy Act of 1974, 
each person required to submit information under this section shall 
sign and submit the following statement:

    Solicitation of the information in this section is authorized by 
25 U.S.C. 2701 et seq. The purpose of the requested information is 
to determine the suitability of individuals with a financial 
interest in, or having management responsibility for, a management 
contract. The information will be used by the National Indian Gaming 
Commission members and staff and Indian tribal officials who have 
need for the information in the performance of their official 
duties. The information may be disclosed to appropriate federal, 
tribal, state, or foreign law enforcement and regulatory agencies in 
connection with a background investigation or when relevant to 
civil, criminal or regulatory investigations or prosecutions or 
investigations of activities while associated with a gaming 
operation. Failure to consent to the disclosures indicated in this 
statement will mean that the Chairman of the National Indian Gaming 
Commission will be unable to approve the contract in which the 
person has a financial interest or management responsibility.
    The disclosure of a person's Social Security Number (SSN) is 
voluntary. However, failure to supply a SSN may result in errors in 
processing the information provided.

    (5) Notice regarding false statements. Each person required to 
submit information under this section shall sign and submit the 
following statement:

    A false statement knowingly and willfully provided in any of the 
information pursuant to this section may be grounds for not 
approving the contract in which I have a financial interest or 
management responsibility, or for disapproving or voiding such 
contract after it is approved by the Chairman of the National Indian 
Gaming Commission. Also, I may be punished by fine or imprisonment 
(U.S. Code, title 18, section 1001).

    (c) For each entity identified in paragraph (a)(4) of this section, 
the management contractor shall provide to the Commission the following 
information:
    (1) List of individuals. (i) Each of the ten (10) largest 
beneficiaries and the trustees when the entity is a trust;
    (ii) Each of the ten (10) largest partners when the entity is a 
partnership;
    (iii) Each person who is a director or who is one of the ten (10) 
largest holders of the issued and outstanding stock alone or in 
combination with another stockholder who is a spouse, parent, child or 
sibling when the entity is a corporation; and
    (iv) For any other type of entity, the ten (10) largest owners of 
that entity alone or in combination with any other owner who is a 
spouse, parent, child or sibling and any person with management 
responsibility for that entity.
    (2) Required information. (i) The information required in paragraph 
(b)(1)(i) of this section for each individual identified in paragraph 
(c)(1) of this section;
    (ii) Copies of documents establishing the existence of the entity, 
such as the partnership agreement, the trust

[[Page 36938]]

agreement, or the articles of incorporation;
    (iii) Copies of documents designating the person who is charged 
with acting on behalf of the entity;
    (iv) Copies of bylaws or other documents that provide the day-to-
day operating rules for the organization;
    (v) A description of any existing and previous business 
relationships with Indian tribes, including ownership interests in 
those businesses;
    (vi) A description of any existing and previous business 
relationships with the gaming industry generally, including ownership 
interest in those businesses;
    (vii) The name and address of any licensing or regulatory agency 
with which the entity has filed an application for a license or permit 
relating to gaming, whether or not such license or permit was granted;
    (viii) For each gaming offense and for each felony for which there 
is an ongoing prosecution or a conviction, the name and address of the 
court involved, the charge, and the dates of the charge and 
disposition;
    (ix) For each misdemeanor conviction or ongoing misdemeanor 
prosecution within ten (10) years of the date of the application, the 
name and address of the court involved, and the dates of the 
prosecution and disposition;
    (x) Complete financial statements for the previous three (3) fiscal 
years; and
    (xi) For each criminal charge (excluding minor traffic charges) 
whether or not there is a conviction, if such criminal charge is within 
10 years of the date of the application and is not otherwise listed 
pursuant to paragraph (c)(1)(viii) or (c)(1)(ix) of this section, the 
criminal charge, the name and address of the court involved and the 
dates of the charge and disposition.
    (3) Responses to questions. Each entity with a direct or indirect 
financial interest in a management contract shall respond within thirty 
(30) days to written or oral questions propounded by the Chairman.
    (4) Notice regarding false statements. Each entity required to 
submit information under this section shall sign and submit the 
following statement:

    A false statement knowingly and willfully provided in any of the 
information pursuant to this section may be grounds for not 
approving the contract in which we have a financial interest, or for 
disapproving or voiding such contract after it is approved by the 
Chairman of the National Indian Gaming Commission. Also, we may be 
punished by fine or imprisonment (U.S. Code, title 18, section 
1001).


0
23. Revise Sec.  537.3 to read as follows:


Sec.  537.3   Fees for background investigations.

    (a) A management contractor shall pay to the Commission or the 
contractor(s) designated by the Commission the cost of all background 
investigations conducted under this part.
    (b) The management contractor shall post a bond, letter of credit, 
or deposit with the Commission to cover the cost of the background 
investigations as follows:
    (1) Management contractor (party to the contract)--$25,000
    (2) Each individual and entity with a financial interest in the 
contract--$10,000
    (c) The management contractor shall be billed for the costs of the 
investigation as it proceeds; the investigation shall be suspended if 
the unpaid costs exceed the amount of the bond, letter of credit, or 
deposit available.
    (1) An investigation will be terminated if any bills remain unpaid 
for more than thirty (30) days.
    (2) A terminated investigation will preclude the Chairman from 
making the necessary determinations and result in a disapproval of a 
management contract.
    (d) The bond, letter of credit or deposit will be returned to the 
management contractor when all bills have been paid and the 
investigations have been completed or terminated.

PART 539--APPEALS

0
24. The authority citation for part 539 continues to read as follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

0
25. Revise Sec.  539.1 to read as follows:

Sec.  539.1   Scope of this part.

    This part applies to appeals from the Chairman's decision to 
approve or disapprove a management contract or amendment under this 
subchapter, except that appeals from the Chairman's decision to require 
modifications of or to void a management contract or amendment 
subsequent to his or her initial approval are addressed in Sec.  535.3 
and part 577 of this chapter.

0
26. Revise Sec.  539.2 to read as follows:


Sec.  539.2  Appeals.

    A party may appeal the Chairman's approval or disapproval of a 
management contract or amendment under parts 533 or 535 of this chapter 
to the Commission. Such an appeal shall be filed with the Commission 
within thirty (30) days after the Chairman serves his or her 
determination pursuant to part 519 of this chapter. Failure to file an 
appeal within the time provided by this section shall result in a 
waiver of the opportunity for an appeal. At the time of filing, an 
appeal under this section shall specify the reasons why the party 
believes the Chairman's determination to be erroneous, and shall 
include supporting documentation, if any. Within thirty (30) days after 
receipt of the appeal, the Commission shall render a decision unless 
the appellant elects to provide the Commission additional time, not to 
exceed an additional thirty (30) days, to render a decision. In the 
absence of a decision within the time provided, the Chairman's decision 
shall constitute a final decision of the Commission.

PART 556--BACKGROUND INVESTIGATIONS FOR PRIMARY MANAGEMENT 
OFFICIALS AND KEY EMPLOYEES

0
27. The authority citation for part 556 continues to read as follows:

    Authority:  25 U.S.C. 2706, 2710, 2712.


0
28. Revise Sec.  556.2 to read as follows:


Sec.  556.2   Privacy notice.

    (a) A tribe shall place the following notice on the application 
form for a key employee or a primary management official before that 
form is filled out by an applicant:

    In compliance with the Privacy Act of 1974, the following 
information is provided: Solicitation of the information on this 
form is authorized by 25 U.S.C. 2701 et seq. The purpose of the 
requested information is to determine the eligibility of individuals 
to be granted a gaming license. The information will be used by the 
Tribal gaming regulatory authorities and by the National Indian 
Gaming Commission members and staff who have need for the 
information in the performance of their official duties. The 
information may be disclosed to appropriate Federal, Tribal, State, 
local, or foreign law enforcement and regulatory agencies when 
relevant to civil, criminal or regulatory investigations or 
prosecutions or when pursuant to a requirement by a tribe or the 
National Indian Gaming Commission in connection with the issuance, 
denial, or revocation of a gaming license, or investigations of 
activities while associated with a tribe or a gaming operation. 
Failure to consent to the disclosures indicated in this notice will 
result in a tribe's being unable to license you for a primary 
management official or key employee position.

    The disclosure of your Social Security Number (SSN) is voluntary. 
However, failure to supply a SSN may result in errors in processing 
your application.
    (b) A tribe shall notify in writing existing key employees and 
primary

[[Page 36939]]

management officials that they shall either:
    (1) Complete a new application form that contains a Privacy Act 
notice; or
    (2) Sign a statement that contains the Privacy Act notice and 
consent to the routine uses described in that notice.
    (c) All tribal gaming ordinances and ordinance amendments that have 
been approved by the Chairman prior to the effective date of this 
section and that reference this notice do not need to be amended to 
comply with this section. All future ordinance submissions, however, 
must comply.
    (d) All license application forms used 180 days after the effective 
date of this section shall contain notices in compliance with this 
section.

0
29. Revise Sec.  556.3 to read as follows:


Sec.  556.3   Notice regarding false statements.

    (a) A tribe shall place the following notice on the application 
form for a key employee or a primary management official before that 
form is filled out by an applicant:
    A false statement on any part of your license application may be 
grounds for denying a license or the suspension or revocation of a 
license. Also, you may be punished by fine or imprisonment (U.S. 
Code, title 18, section 1001).
    (b) A tribe shall notify in writing existing key employees and 
primary management officials that they shall either:
    (1) Complete a new application form that contains a notice 
regarding false statements; or
    (2) Sign a statement that contains the notice regarding false 
statements.
    (c) All tribal gaming ordinances and ordinance amendments that have 
been approved by the Chairman prior to the effective date of this 
section and that reference this notice do not need to be amended to 
comply with this section. All future ordinance submissions, however, 
must comply.
    (d) All license application forms used 180 days after the effective 
date of this section shall contain notices in compliance with this 
section.

PART 558--GAMING LICENSES FOR KEY EMPLOYEES AND PRIMARY MANAGEMENT 
OFFICIALS

0
30. The authority citation for part 558 continues to read as follows:

    Authority:  25 U.S.C. 2706, 2710, 2712.


0
31. Revise Sec.  558.2 to read as follows:


Sec.  558.2   Eligibility determination for granting a gaming license.

    (a) An authorized tribal official shall review a person's prior 
activities, criminal record, if any, and reputation, habits and 
associations to make a finding concerning the eligibility of a key 
employee or a primary management official for granting of a gaming 
license. If the authorized tribal official, in applying the standards 
adopted in a tribal ordinance, determines that licensing of the person 
poses a threat to the public interest or to the effective regulation of 
gaming, or creates or enhances the dangers of unsuitable, unfair, or 
illegal practices and methods and activities in the conduct of gaming, 
an authorizing tribal official shall not license that person in a key 
employee or primary management official position.
    (b) All tribal gaming ordinances and ordinance amendments that have 
been approved by the Chairman prior to the effective date of this 
section and that reference this section do not need to be amended to 
comply with this section. All future ordinance submissions, however, 
must comply.

PART 571--MONITORING AND INVESTIGATIONS

0
32. The authority citation for part 571 continues to read as follows:

    Authority: 25 U.S.C. 2706(b), 2710(b)(2)(C), 2715, 2716.


0
33. Revise Sec.  571.12 to read as follows:


Sec.  571.12   Audit standards.

    (a) Each tribe shall prepare comparative financial statements 
covering all financial activities of each class II and class III gaming 
operation on the tribe's Indian lands for each fiscal year.
    (b) A tribe shall engage an independent certified public accountant 
to provide an annual audit of the financial statements of each class II 
and class III gaming operation on the tribe's Indian lands for each 
fiscal year. The independent certified public accountant must be 
licensed by a state board of accountancy. Financial statements prepared 
by the certified public accountant shall conform to generally accepted 
accounting principles and the annual audit shall conform to generally 
accepted auditing standards.
    (c) If a gaming operation has gross gaming revenues of less than 
$2,000,000 during the prior fiscal year, the annual audit requirement 
of paragraph (b) of this section is satisfied if:
    (1) The independent certified public accountant completes a review 
of the financial statements conforming to the statements on standards 
for accounting and review services of the gaming operation; and
    (2) Unless waived in writing by the Commission, the gaming 
operation's financial statements for the three previous years were sent 
to the Commission in accordance with Sec.  571.13.
    (d) If a gaming operation has multiple gaming places, facilities or 
locations on the tribe's Indian lands, the annual audit requirement of 
paragraph (b) of this section is satisfied if:
    (1) The tribe chooses to consolidate the financial statements of 
the gaming places, facilities or locations;
    (2) The independent certified public accountant completes an audit 
conforming to generally accepted auditing standards of the consolidated 
financial statements;
    (3) The consolidated financial statements include consolidating 
schedules for each gaming place, facility, or location;
    (4) Unless waived in writing by the Commission, the gaming 
operation's financial statements for the three previous years, whether 
or not consolidated, were sent to the Commission in accordance with 
Sec.  571.13; and
    (5) The independent certified public accountant expresses an 
opinion on the consolidated financial statement as a whole and subjects 
the accompanying financial information to the auditing procedures 
applicable to the audit of consolidated financial statements.
    (e) If there are multiple gaming operations on a tribe's Indian 
lands and each operation has gross gaming revenues of less than 
$2,000,000 during the prior fiscal year, the annual audit requirement 
of paragraph (b) of this section is satisfied if:
    (1) The tribe chooses to consolidate the financial statements of 
the gaming operations;
    (2) The consolidated financial statements include consolidating 
schedules for each operation;
    (3) The independent certified public accountant completes a review 
of the consolidated schedules conforming to the statements on standards 
for accounting and review services for each gaming facility or 
location;
    (4) Unless waived in writing by the Commission, the gaming 
operations' financial statements for the three previous years, whether 
or not consolidated, were sent to the Commission in accordance with 
Sec.  571.13; and
    (5) The independent certified public accountant expresses an 
opinion on the consolidated financial statements as a whole and 
subjects the accompanying financial information to the auditing 
procedures applicable to the audit of consolidated financial 
statements.

0
34. Revise Sec.  571.13 to read as follows:

[[Page 36940]]

Sec.  571.13  Copies of audit reports.

    (a) Each tribe shall prepare and submit to the Commission two paper 
copies or one electronic copy of the financial statements and audits 
required by Sec.  571.12, together with management letter(s), and other 
documented auditor communications and/or reports as a result of the 
audit setting forth the results of each fiscal year. The submission 
must be sent to the Commission within 120 days after the end of each 
fiscal year of the gaming operation.
    (b) If a gaming operation changes its fiscal year, the tribe shall 
prepare and submit to the Commission two paper copies or one electronic 
copy of the financial statements, reports, and audits required by Sec.  
571.12, together with management letter(s), setting forth the results 
of the stub period from the end of the previous fiscal year to the 
beginning of the new fiscal year. The submission must be sent to the 
Commission within 120 days after the end of the stub period, or a tribe 
may incorporate the financial results of the stub period in the 
financial statements for the new business year.
    (c) When gaming ceases to operate and the tribal gaming regulatory 
authority has terminated the facility license required by Sec.  559.6, 
the tribe shall prepare and submit to the Commission two paper copies 
or one electronic copy of the financial statements, reports, and audits 
required by Sec.  571.12, together with management letter(s), setting 
forth the results covering the period since the period covered by the 
previous financial statements. The submission must be sent to the 
Commission within 120 days after the cessation of gaming activity or 
upon completion of the tribe's fiscal year.


0
35. Revise Sec.  571.14 to read as follows:


Sec.  571.14   Relationship of financial statements to fee assessment 
reports.

    A tribe shall reconcile its Commission fee assessment reports, 
submitted under 25 CFR part 514, with its audited or reviewed financial 
statements for each location and make available such reconciliation 
upon request by the Commission's authorized representative.

PART 573--ENFORCEMENT

0
36. The authority citation for part 573 continues to read as follows:

    Authority: 25 U.S.C. 2703 (4), 2705(a)(1), 2706, 2713, 2715, 
2719.


0
37. Add new paragraph (a)(13) to Sec.  573.6 to read as follows:


Sec.  573.6   Order of temporary closure.

    (a) * * *
    (13) A gaming facility operates on Indian lands not eligible for 
gaming under the Indian Gaming Regulatory Act.
* * * * *

Philip N. Hogen,
Chairman.
Norman H. DesRosiers,
Vice Chairman.
[FR Doc. E9-17121 Filed 7-24-09; 8:45 am]

BILLING CODE 7565-01-P

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