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October 20, 2006

Court: NIGC lacks authority over Class III gaming

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A major decision from the D.C. Circuit Court of Appeals confirms that the National Indian Gaming Commission lacks the authority to issue regulations for Class III gaming.

In a unanimous ruling, a three-judge panel of the court said Class III gaming is regulated by tribal laws and tribal-state compacts. The court couldn't find a single provision of the Indian Gaming Regulatory Act that grants such power to the NIGC.

"Even now the commission concedes that no provision of the act explicitly grants it the power to impose operational standards on class III gaming," Judge A. Raymond Randolph wrote.

The ruling is a huge victory for the Colorado River Indian Tribes of Arizona. The tribe questioned the NIGC's authority over Class III gaming, specifically a set of complex and comprehensive rules known as Minimum Internal Control Standards (MICS).

The court noted that tribal laws and Arizona tribal-state compact speak to the issue at hand. "Both the ordinance and the compact contain their own internal control standards," Randolph wrote.

"The state of Arizona monitors the tribe’s compliance with the standards, for which the Tribe reimburses the state about $250,000 per year," he continued. "The tribe’s gaming agency employs twenty-nine employees and has an annual budget of $1.2 million."

The MICS were first issued in 1999. The NIGC sought to audit the Blue Water Casino in order to determine whether the facility complied with the regulations.

The tribe challenged the audit, first before the Interior Department's Office of Hearings and Appeals. An administrative law judge ruled that the NIGC's attempt to enforce the MICS infringed on tribal and state sovereignty.

Officials at the NIGC refused to accept the decision, so they fined the tribe. Under a settlement, the tribe agreed to pay the fine but reserved a court challenge to IGRA.

At the district court level, the tribe prevailed again. The victory prompted Sen. John McCain (R-Arizona), the chairman of the Senate Indian Affairs Committee and one of the authors of IGRA, to introduce a bill that would overturn the decision by granting the NIGC the authority it lacks.

"I don't understand the logic of the suit," said McCain. "The purpose of IGRA was to regulate Class III gaming."

But the D.C. Circuit's decision quoted language from the Senate committee's report on IGRA that contradicted McCain. The report stated "there is no adequate federal regulatory system in place for class III gaming, nor do tribes have such systems for the regulation of class III gaming currently in place. Thus a logical choice is to make use of existing state regulatory systems,although the adoption of State law is not tantamount to an accession to state jurisdiction."

The NIGC recently issued a new version of the MICS over tribal objections. NIGC Chairman Phil Hogen has asserted that the litigation only applies to CRIT and that all other tribes must still comply with the rules.

McCain's bill, meanwhile, remains tied up in the Senate. A dozen holds have been placed on S.2078, making it unlikely that the bill will pass as a single package.

Get the Decision:
Colorado River Indian Tribes v. NIGC (October 20, 2006)

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