<DOC>
[108 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:87197.wais]
S. Hrg. 108-67, Pt. 1
INDIAN GAMING REGULATORY ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
ON
OVERSIGHT HEARING ON INDIAN GAMING REGULATORY ACT: ROLE AND FUNDING OF
THE NATIONAL INDIAN GAMING COMMISSION
__________
MAY 14, 2003
WASHINGTON, DC
__________
PART 1
__________
87-197 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
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COMMITTEE ON INDIAN AFFAIRS
BEN NIGHTHORSE CAMPBELL, Colorado, Chairman
DANIEL K. INOUYE, Hawaii, Vice Chairman
JOHN McCAIN, Arizona, KENT CONRAD, North Dakota
PETE V. DOMENICI, New Mexico HARRY REID, Nevada
CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii
ORRIN G. HATCH, Utah BYRON L. DORGAN, North Dakota
JAMES M. INHOFE, Oklahoma TIM JOHNSON, South Dakota
GORDON SMITH, Oregon MARIA CANTWELL, Washington
LISA MURKOWSKI, Alaska
Paul Moorehead, Majority Staff Director/Chief Counsel
Patricia M. Zell, Minority Staff Director/Chief Counsel
(ii)
C O N T E N T S
----------
Page
Statements:
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
chairman, Committee on Indian Affairs...................... 1
Choney, Cloyce, commissioner, National Indian Gaming
Commission, Washington, DC................................. 1
DeRosier, Norm, Viejas Gaming Commission..................... 13
Hogen, Phil, chairman, National Indian Gaming Commission,
Washington, DC............................................. 1
Stevens, Jr., Ernest L., chairman, National Gaming
Association, Washington, DC................................ 13
Van Norman, Mark, executive director, National Indian Gaming
Association................................................ 13
Westrin, Nelson, vice chairman, National Indian Gaming
Commission, Washington, DC................................. 1
Appendix
Prepared statements:
Hogen, Phil (with attachments)............................... 27
McCain, Hon. John, U.S. Senator from Arizona................. 25
Stevens, Jr., Ernest L. (with attachments)................... 39
INDIAN GAMING REGULATORY ACT
----------
WEDNESDAY, MAY 14, 2003
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to other business, at 9:55 a.m.
in room 216, Hart Senate Building, the Hon. Ben Nighthorse
Campbell, (chairman of the committee) presiding.
Present: Senators Campbell, Inouye, and Akaka.
STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM
COLORADO, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. The Committee on Indian Affairs will be in
session.
We will now proceed to the oversight hearing on the Indian
Gaming Regulatory Act: The Role and the Funding of the National
Indian Gaming Commission. We have just one panel, and that will
be Phil Hogen, chairman, National Indian Gaming Commission,
Washington, DC, accompanied by Nelson Westrin and Chuck Choney.
Next we will have Ernest Stevens, chairman, National Indian
Gaming Association, Washington, DC. He will be accompanied by
Mark Van Norman.
Mr. Hogen, please come up and have a seat.
Your complete written testimony will be included in the
record. If you would like to abbreviate your remarks, please
feel free to do that. Welcome to the committee.
STATEMENT OF PHIL HOGEN, CHAIRMAN, NATIONAL INDIAN GAMING
COMMISSION, WASHINGTON, DC, ACCOMPANIED BY NELSON WESTRIN, VICE
CHAIRMAN, NATIONAL INDIAN GAMING COMMISSION; AND CLOYCE
``CHUCK'' CHONEY, COMMISSIONER, NATIONAL INDIAN GAMING
COMMISSION
Mr. Hogen. Good morning. Thank you, Mr. Chairman. We much
appreciate the opportunity to come tell the story of the
National Indian Gaming Commission this morning. We have a lot
to say, and we know we do not have a lot of time to do it, so I
will try to get right to it.
But first I would like to introduce the other members of
the National Indian Gaming Commission who are with me here
today. Our vice chairman is Nelson Westrin. Nelson is the
former executive director of the Michigan Gaming Control Board.
He was there when that gaming regulatory body started. He put
it together and he brings a great deal of expertise to our
body. We really appreciate having him on board.
Cloyce ``Chuck'' Choney is the other member of the
Commission. Chuck is a Comanche from Oklahoma. He spent 26
years with the Federal Bureau of Investigation. He knows his
way around Indian country and investigations. We are just
delighted to have him part of our team. That has really
strengthened our relationship with members of the Federal law
enforcement family.
We want to talk about basically three areas today. We are
bureaucrats so we are going to talk about our funding and our
budget. We want to talk about the mission that we have and how
we attempt to perform that mission. Finally, we want to talk
about what we view are some shortcomings in the Indian Gaming
Regulatory Act that tend to complicate our performance of that
mission.
Before I launch into that, I want to say that we think we
know our place within the Indian gaming scheme of things. We
would not be here if it were just for the Federal Government.
Indian gaming was created by Indians, by leaders that brought
economic development to their reservations where that was
desperately needed. Without their vision and without their
leadership, there would not be an industry. We would not be
here.
With respect to the gaming that is occurring out there,
there are several key players that perform the regulatory
functions. The front line, all day, every day regulation is
performed by tribal regulators. We think they do that job very
well.
Our role is rather a secondary role. We support and provide
oversight of that regulation, that tribal gaming commissions
perform for their tribes. Of course, under the tribal-State
compacts for class III gaming, States, too, can and do play
supporting roles. But most of the manpower, and all of the
money that is spent to regulate Indian gaming, is provided by
the tribes. They are doing a commendable job. Our oversight, we
hope--and we think it does--tends to lend credibility to that
first line regulation that tribes do.
There is a dynamic tension that exists between these levels
of regulators, but we think that is to be expected in that kind
of a relationship. But we think we have a good and positive
relationship with tribes and their tribal regulators.
Now, getting to the funding part of the presentation, since
1997, the National Indian Gaming Commission's operations have
been funded solely by tribes--fees that are collected on class
II and class III gaming, as well as some lesser amounts that
are collected for services, particularly the fingerprint
processing that we do for tribes in cooperation with their
background investigations. We also charge some fees in
connection with the background investigations we conduct when
we are doing management contract reviews.
The fees that we collect, of course, are capped by the
statute, capped currently at $8 million. Exhibit number 2 of
our written statement is a pie chart that shows that about 85
percent of the dollars that we current spend are basically
fixed costs--salaries and money we spend to keep the doors open
at our office here in Washington and our five field offices.
The Chairman. Is that the red portion of your chart?
Mr. Hogen. Yes; the lion's share is basically
uncontrollable, so to speak. We have to pay that whether or not
we are working hard.
The Chairman. You had better be working hard.
Mr. Hogen. We absolutely try to do that.
That is the picture. Right now we are spending the full $8
million basically to do that. Of course, the industry itself,
as this chart demonstrates, is on an upward trend. We do not
know that it will always go at that level or at that rate, but
recently that is the way it has been going. That is good. That
means that puts dollars on reservations where they are supposed
to go.
But it also means that we have more to do. With the same
amount to do more, we have to be creative. But during this
period of time, there have been more tribal gaming operations
and there have been larger tribal gaming operations. We have
come up with some more requirements that we have to get out
there and verify, such as our minimal internal controls
standards and the environment, health, and public safety
provisions that we are responsible for overseeing.
The gaming itself is becoming more complex. It is a more
technical industry. We have to be better at what we do. In
2001, NIGC spending to hit the ceiling. We collected all the $8
million. We could not hire any more people or do anything more.
So we had to put in place a hiring freeze. We had to restrict
the travel of the investigators and the auditors. We had to
suspend a consultation circuit riding program where they would
go out around Indian country. We have been able to only
minimally upgrade equipment, training, and the technology that
we utilize. We are in a bind over there.
Also appended to our testimony is a copy of our
organizational chart. It shows who works for us and what they
do. It also shows the vacancies. We have 19 field investigators
in our five field offices and here in our Washington office.
Right now, three of those positions are vacant. We have seven
auditor positions; three of those positions are vacant.
The Chairman. Those are positions all in the Washington
office?
Mr. Hogen. No; these are the whole team; five field offices
and the Washington office.
The Chairman. The positions that are vacant. Are they out
in the field are they mostly here in Washington?
Mr. Hogen. They are both. It is probably weighted a little
more to the field because that is where the people are. But if
and when we get dollars to fill positions, the field positions
will be the first ones that we will backfill.
We also have had some senior positions open. We currently
do not have a general counsel. We do not have a director of
Congressional affairs. We have folks acting in that capacity.
That means that those acting folks cannot do the jobs that they
were doing before.
The good news in connection with that, and the fact that
there were vacancies in our positions in the Commission
membership means that we saved some dollars. We were not paying
those big salaries. With those savings, we were able to hire
some of the people and fill some of the slots that we had not
filled before.
But notwithstanding the shortage of folks that we have, we
are still doing a lot of work. We made 329 ``routine'' site
visits to field offices during 2002. We conducted 75 training
sessions out at reservations or in tribal facilities. We made
226 visits that were made to address specific problems. That is
not across the board because 148 of those occurred at our Tulsa
office where we have struggled with where you draw the line
between class II and class III gaming.
Indian gaming is extremely diverse. In some cases it is far
flung and remote. Geography and special circumstances tends to
influence how we distribute those field visits and so forth. If
you are in Tulsa and you need to go to the Muskogee Creek
facility, you are ten minutes away. If you are in the St. Paul
office and you need to go to Pine Ridge, you have to spend
$1,000 and a lot of time on the airplane and behind a steering
wheel. So it is not all divided up the same way, so to speak.
We have a strong audit team. The audit function is probably
the newest group that has been developed at the National Indian
Gaming Commission. First of all, they review the audits that
all tribes have to have performed and send to NIGC. Those
audits are helpful, but of course, they basically show the
financial position of the facility. They do not say that they
have looked under every rock to see if anything was wrong. But
occasionally we do that kind of an audit as well, a fraud or an
investigative audit.
Most recently we have been doing minimal internal control
audits which have been extremely productive. We came out with
these minimum internal control standards that say things like:
When you take the money out of the slot machine you have to
have somebody from security there. You have to have somebody
who is going to account for the money. You have to have a
witness. They all have to sign the paper.
There are things like that. You have a track record on
these undocumented cash transactions. When we do a MIC audit,
we go out and look at the paper trail for those things and try
to see how the operation is running. This provides great
oversight from our perspective. I think the tribes are
extremely well served when we look at them and tell them where
there are some shortcomings.
Ideally, our auditors tell us we would do one of those MICS
audits at each facility about every 5 years. Last year, 2002,
we were only able to do five of those. That is 5 out of 300
operations. At that rate it would be a long time to make the
full circuit. We cannot do that with the staff that we
currently have.
In terms of the background investigation process that the
tribes initially perform and do well, we help process those
fingerprints. In 2002, we processed 30,000 fingerprints,
sending them on to the FBI and sending the results back to the
tribes. We looked at over 24,000 employee background
investigations. We are part of that team, and that keeps us
busy.
We also, of course, review and approve the tribal gaming
ordinances. You might think that would be something that would
just be a one-time deal from each tribe, but there are changes.
For example, Arizona not long ago, expanded gaming to include
black jack. Each of the tribes had to revise its ordinance,
send it in to us, and we reviewed it. Of course, there are new
operations where they send in new ordinances. We also review
and approve management contracts. That is a slow but a very
thorough process. That keeps us busy. Like other agencies, we
get a lot of Freedom of Information Act requests. We spend a
lot of time and resources responding to the FOIA requests.
To do all of the things we are supposed to do, frankly with
the growing industry, we need more resources and we need more
money. The way we are funded now is exclusively by the fees
that we get from class II and class III gaming. The good news
for the tribes, of course, is as those total dollars expand,
the rate that they have to pay us to fund that $8 million goes
down.
The first thing the three new Commissioners did when we
came on board was to set the rate for calendar year 2002. You
cannot do that until the end of the year because you do not
know exactly how much money has been generated out there. We
set the rate. We lowered the rate. It was set at 65 cents per
thousand dollars. For every thousand dollars of tribal revenue
out there, they sent us 65 cents.
When we set the rate for this year, 2003, because we could
see the expanding industry, we were able to reduce that to 59
cents per thousand dollars. In the 2003 budget, the President
had requested $2 million in appropriated taxpayer dollars to
supplement our $8 million for the operation. Of course, when
Congress put the budget to bed here with the Omnibus Funding
Bill earlier this year, there was a deficit looming and they
did not appropriate that money. We are still at the status quo,
or the $8 million fee cap level.
However, the Omnibus Funding Bill did raise the cap for
2004, raising it from $8 million to $12 million. That was the
appropriators' vision or view of how to address this situation.
We further understand that that was a message to you, to this
committee, saying, ``If you want to change or fix the way NIGC
is funded, you have a window of opportunity to do this.''
We understand that you folks can wave the wand. Maybe when
we get to 2004, that $12 fee cap will not be there or maybe you
will change the structure. As we understand the $12 million fee
cap, it is a one-time deal. It is not changed forever; it is
changed for 2004. You might make that permanent, or you might
entirely change the formula.
That puts us in a little bit of a bind in terms of what to
do when. If we go out and hire more people who we would expect
to pay over the years and we spend part of $12 million, if it
is not going to be there in the out years, we are in trouble.
We will have to RIF those people and that would not be good.
We can buy some new equipment and get some needed training
and so forth, but we are hesitant to open more doors or hire a
lot more people. We want to know what the stability of that
funding will be.
In terms of what we would do if we had more money, this is
how we would spend the money if we had $10 million instead of
$8 million. We would hire more auditors. We would hire more
investigators.
The Chairman. My old eyes can barely see that chart let
alone the printing on that chart. Do you have those printed up
for the committee?
Mr. Hogen. Yes; I believe it is attached to the statement.
The Chairman. We do not have any of those charts you have
shown so far.
Mr. Hogen. I apologize for that.
The Chairman. Provide those for the committee, if you
would.
Mr. Hogen. We certainly will.
In addition to that, we have a copy of our budget showing
how we spend it by the month and by the item. We will provide
it to the committee and, of course, we have provided it to the
tribes.
How can we maybe better set the rate of the fees? Here is
what I think you should do. I think rather than setting a
finite number there--$8 million, $10 million, $12 million--set
it at a percentage rate. If the industry grew, so, too, would
the fees to regulate that industry. If it contracts, we need
less money and it would go down.
Right now the maximum for the fees is 5 percent. Well, of
course, given the experience we have had since 1988, that is an
outrageously high fee. We would never need that much money. If
we had one-fiftieth of that; if we had one-tenth of a percent
as the fee cap--that is not the budget; that is just the
maximum--then if you had a $12-billion industry, then we would
get $12 million. If you had a $13-million industry, we could
get $13 billion.
We think that would be an approach that you might want to
consider in terms of giving us some stability so that as the
industry grows we could grow and we could make some long-term
plans.
The last thing I want to say about that is that fee cap is
just that. That is not the budget. In 2004, we have a fee cap
of $12 million. I do not think we could intelligently spend
that much money if we wanted to; $10 million, yes. We have a
plan for that. But just because the fee cap is there, that does
not mean that we would seek all of that money.
So that is our story with respect to our budget and our
funding. At the conclusion of my statement, I will try to
respond to any questions you might have.
Before we conclude, I want to talk about things that we
think might be changed in the Indian Gaming Regulatory Act that
would assist us. There are probably a couple of things that
everybody who is in Indian gaming agree on with respect to
IGRA. No. 1, is that it is not perfect. No. 2, everybody is
afraid that if it is ever amended, it will be amended in a way
they will not like. There is not much impetus to change it.
In years past, ordinarily there has been a bill introduced
to amend the Indian Gaming Regulatory Act. The National Indian
Gaming Commission has most often been in the reactive posture.
They were asked after it was introduced, ``what did we think''.
Typically, NIGC said, ``Well, we do not like it exactly that
way.''
We are here to offer some suggestions that we think might
be considered before a bill like that gets introduced.
First of all, with respect to the authority of the National
Indian Gaming Commission with respect to class III gaming, the
lion's share of Indian gaming revenue is in class III. The
scenario is that there is a tribal State compact that will be
negotiated which will, in part, address the structure of the
regulation.
Yet, the Chairman of the National Indian Gaming Commission
has the authority and the responsibility to close or to fine a
facility if it is not operating correctly or in compliance with
the Indian Gaming Regulatory Act, or the NIGC regulations, or
the ordinance that the tribe passes.
I construe that to be authority over all the gaming--class
II and class III. But if you comb through the act, it does not
clearly say that we have authority over class III activities.
Sometimes when we knock on a tribe's door, doing our oversight,
and we say, ``We would like to look at those records,'' they
say, ``Wait 1 minute. Those are class III gaming records. You
do not have the authority to look at those.'' Then we end up in
the court hassling about that.
Someday if there is no change in the law, the court will
clarify that. I think they will find that we have that
authority. But with the stroke of a pen, I think Congress could
clarify that and that would be of assistance to all.
I would like to move on to folks that do consulting,
vending, development agreements, and so forth, for tribes.
Under the current structure, we have authority to oversee
management contracts. If a tribe and a developer want to set up
an arrangement whereby the group manages the facility for the
tribe, they send us that contract. We look at it in the role of
the Federal trustee to make sure that the tribe is not being
taken advantage of. We put our stamp of approval on it if it
passes that review.
If, in fact, management contractors are out there and they
run afoul of what they have agreed to or any of the acts we are
responsible for enforcing, we can penalize them. We can suspend
the contract. We can impose a fine. We think that is helpful to
tribes.
There are not very many management contracts out there.
There are over 300 operations but there are only 15 of those
that are run pursuant to a management agreement. In the history
of the National Indian Gaming Commission, only 40 management
contracts have been approved. There are 21 currently in our
pipeline or under consideration or review. It is easy to see
that is the exception and not the rule.
I am not here to say that is a bad deal. In many cases the
tribes are doing the right thing managing operations by
themselves.
The Chairman. 300 are managing their own operations?
Mr. Hogen. There are 300 total, and only 15 of those are
under a management contract. There are 285 without a management
contract. But of that 285, there are a large number where
somebody else is really doing part of the operation--a third
party consultant, a third party vendor, a third party
developer. They have not entered into a classic ``management
contract'' that we have reviewed and approved.
There are a couple of things that concern us about that.
First of all, when it is not a management contract, we have no
role in looking at their background. They may be perfectly
suitable people, but we, at this level, have never had an
opportunity to check into that like we could do if it were a
management contract.
The Chairman. That means some tribes are hiring groups
under a consultant capacity or some other name rather than a
management group?
Mr. Hogen. Right. I am sure one of the reasons that tribes
and developers do that is that it is such an onerous process to
go through our management contract review process. I am hoping
we can streamline that.
There are people out there that are determining who wins
and loses the bets, that handle the money, that are not under
our review, and in some cases, are not even subject to even
tribal background reviews.
If, in fact, those folks run afoul of the rules and run off
with the tribe's money, we have no authority over them. What I
would like to see is an amendment that would give us a role to
do that, whether it be licensing or oversight. And, also to say
that if, in fact, they do make off with the tribe's money,
there would be an arrangement for them to disgorge or refund
what they defrauded the tribe. We think we could clean up the
industry.
We do background investigations for management contracts,
but in many cases that is the cream of the crop. These people
can pass muster. The people who want to sneak in under the
cover of darkness would want to avoid a management contract.
Moving on to the Supreme Court's 1996 Seminole decision
which said tribes cannot sue States if States refuse to
negotiate in good faith, I think everybody from the tribal side
would agree that has been problematic. Of course, the Secretary
of the Interior is now working through procedures in a couple
of situations to try to come up with rules for a compact that
can occur where the States have not agreed. There are
challenges and there will be continued challenges to that
process.
Our concerns are twofold: First of all, we think that the
playing field should be leveled again so that the States and
the tribes are on the same footing. Right now the States cannot
get sued, so they have an advantage.
Second, in those environments where there is obviously a
question about the fairness of the State refusing to negotiate,
you have gaming activities by tribes that probably enters into
the class III territory. If we go out there and try to enforce
against that, shut it down or whatever, if and when we get to
court, the court says, ``Well, it looks like these folks should
be able to get a class III compact. They have not.'' Then this
litigation comes to a standstill.
That means that you get less clarity in the regulation and
the operation of gaming. If we could restore that balance, if
you could perhaps give the Secretary clear authority to impose
Secretarial procedures where tribes cannot negotiate a compact,
that would put us back where I think Congress intended to go in
the first place.
When I had the privilege of appearing before the Committee
during my confirmation, I was asked, ``Do I intend to consult
with tribes.'' I do intend to do that. I think we have been
doing that. We certainly intend to continue to consult with
tribes as we spend their money and partner with them in the
regulation of their industry.
One of the things we are working on at the present time is
setting up a more formal statement of how that consultation
will be conducted. I came to this job from the Department of
the Interior. The Bureau of Indian Affairs, of course, has a
lengthy formal consultation process. In my view, we cannot
afford to do anything quite that complex. I think that is too
cumbersome when commissioners only have a 3-year term to do
their job. By the time you get acquainted and then go out and
start a long process like that, your term is up.
We want to come up with a more flexible, more nimble
approach, but we want it to be meaningful. We are resuming this
circuit riding of consultation sessions that we started when I
served on the Commission as an Associate Commissioner. We are
going to be heading out to Minneapolis next week, the Great
Plains and Midwest Indian Gaming Trade Show will occur there.
We will follow that with a consultation session whereby we
will invite all of the tribes to come to hear what we have to
say and hear what they have to say. Then we will sit down with
individual tribes with all the tribes that want to sign up or
visit with us and hear not only about local concerns, but about
their views on these big picture issues we are talking about
right now.
As we do this, of course, a couple of the key subjects we
want to talk about are the changes that the past Commission
made in the definitions regulations relating to aids for class
II gaming, as well as facsimiles that constitute class III
gaming, as well as our budget and our funding.
In July we will be going out to the Northwest. The
Northwest Gaming Association will be holding its meeting in
Tacoma. We are going to piggyback on that, as we are doing in
Minneapolis. A couple of weeks ago Commissioner Choney and I
went to Oklahoma. It was short notice, but 150 tribal leaders
and representatives of Indian gaming in Oklahoma showed up. We
had a long, very productive discussion. We probably spent more
time there talking about where you draw the line between class
II and class III, and how you classify games, than we will in
some of the other venues. That was a very productive session.
We are on the consultation trail. We have had meetings. We
have provided budget information. We want to continue to do
that.
Finally, before I conclude here, I want to acknowledge the
dedication and hard work of the current team that we have at
the National Indian Gaming Commission. In the face of these
changes in leadership and shortfalls, and the rapid growth that
the industry has experienced, our staff has been extremely
professional and has worked extremely hard. They have bent over
backward to try to be user friendly rather than use a traffic-
cop approach when they run into a problem in Indian country.
I am proud to be leading that team right now. I am also
proud to say that we three new Commissioners are getting along
great. We think that we each bring an unique prospective that
is considered by one another as we do our job. We hope to move
onward and upward.
With that, I would be happy to respond to any questions you
might have. I know that Vice Chairman Westrin and Commissioner
Choney would also be happy to respond to any questions. I would
ask that my statement be included in the record in its
entirety.
Thank you.
The Chairman. Without objection, so ordered.
[Prepared statement of Mr. Hogen appears in appendix.]
The Chairman. Thank you. I am glad you are improving the
relationship with tribes through consultation. As you know, we
had some feedback early on from tribes that felt the Gaming
Commission was somewhat punitive. When you say you are hearing
what they have to say, that is great, because if you do not, we
are going to hear what they have to say. I appreciate your
doing that.
Let me ask you a few questions particularly about
California. I keep hearing about the explosive growth in
California of gaming tribes. How many California tribes now are
into gaming presently? What is the projection of the number of
tribes that will be starting? Do you have a number?
Mr. Hogen. In our office we know, and our field office in
Sacramento could tell me in a heartbeat. There are about 60
tribes that are actively engaged in gaming right now. There are
a number of them that are negotiating compacts. It is in that
ballpark, I believe.
The Chairman. Some of the California tribes use the so-
called ``model compact'' that Governor Davis negotiated. Are
there variations of that in the duties that the Commission has
to perform?
Mr. Hogen. It is pretty much a standard cookie cutter
compact, so to speak, for all the California operations. One
tribe, Coyote Valley, is holding out and in litigation with
respect to whether they have to play by those same rules. I
think all of the tribes that currently are operational pretty
much have the same identical compact.
The Chairman. I see. You mentioned the fee assessments are
about 59 cents per thousand dollars. Do you have any evidence
that that fee level, that assessment level, has caused any
hardship to tribal operations?
Mr. Hogen. As far as I know, there are a number of tribes
that are late in paying their fees, or have not paid their
fees. But ordinarily that is an oversight. It is not because
they did not have the money to do that.
The first $1.5 million generated by every operation is not
subject to the fee. If you have a really small operation, they
get our service but they do not have to pay any fee. In the
scheme of things, I do not think that is overly burdensome.
But in the same breath I want to say that Indian gaming's
regulation is probably less efficient than some other gaming
regulation in that we necessarily have these three levels. You
have the tribes that do basically all the work on the floor, on
the ground. The States partner in that. Then we provide
oversight.
A reason for that is, there is a perception by some, that
if the tribe regulates its own gaming, it is the fox watching
the hen house. I think tribes should be trusted to do that. But
to give them credibility, we can come up here and say, ``We
have been out there. We looked at it. We know it is squeaky
clean.'' We think that strengthens what they do.
But they also have the luxury of looking just at one or two
operations very intensely. They are not looking at the number
of facilities that the Nevada Gaming Commission would have. It
is going to be a little expensive, but we think it has been
worth that investment so far.
The Chairman. You also get $2 million in reimbursement
costs. You mentioned the fingerprinting and background checks.
First of all, could those activities be outsourced?
Mr. Hogen. Well, with respect to the fingerprint activity,
that is probably a critical role for us to play in that the FBI
is quite selective with whom they do business.
The Chairman. How about doing background checks and things
of that nature?
Mr. Hogen. Well, we get reimbursed. If Bally's Gaming comes
to us and says, ``We want to do a management contract----''
The Chairman. If you are reimbursed for that, does that
need to be part of your budget needs?
Mr. Hogen. We put that in a separate category. It pays for
itself. You are right about that. We do not need to get more
money to do that because it is pay-as-you-go. It is the other
stuff that we need the money for.
The Chairman. For a number of years, the tribes and the
Committee have not received information that we think needs to
be provided to the Committee and the tribes. We have mentioned
this a couple of times in the past when you have been in here.
You did mention your trying to improve your consultation
with tribes. Do you have a policy of consultation?
Mr. Hogen. We have been doing it tribe-by-tribe, but Vice
Chairman Westrin has taken upon himself the task to propose for
us a consultation process. I learned when I was at the
Department of the Interior the lesson of BITAM. Secretary
Norton came out with the plan. The tribes said, ``We are not
talking about that. You did not talk with us first.''
This is one of the things that we are going to talk with
the tribes about when we go to Minneapolis and when we go to
Tacoma to get their input before we put it in bold type and
say, ``Here it is.''
The Chairman. The Departments should all learn from BITAM.
In some parts of the country, particularly Oklahoma, I
think you mentioned there is a lot of litigation regarding the
use of technological aids for class II gaming and the
application of the Johnson Act. In your opinion, are the class
II definitions in need of change or modernizing? Did the action
taken by your predecessors sufficiently clarify the definition?
Mr. Hogen. I think it did bring considerable clarity to
that. In two recent Court of Appeals decisions--Santee Sioux v.
National Indian Gaming Commission decision of the Eighth
Circuit on New Year's Eve of last year, and the recent decision
of the Seneca Cayuga case--found that devices that used spools
of pull tabs, although they had electronic card readers and
video displays, were class II.
In those decisions, they addressed the new regulations of
the Commission. In other words, they said:
This brings some clarity to this. The Commission is in the
business of regulating gaming. They are entitled to some
deference.
This gives us a brighter line.
Yes; I think the regulation has considerably helped clarify
the picture. What we need to continue to remind ourselves is
that given the advance of technology, this is a dynamic area. I
do not think we can ever sit back and say that we do not ever
have to change that again.
The Chairman. Thank you. We are still dealing with the
Seminole decision. Basically it stripped the tribes of any
leverage they had in getting the States to negotiate. Without
amending IGRA, are there any other ways that you think we could
resolve the impasses that we have between tribes and States?
Obviously, if we tried to amend IGRA, the States may oppose any
changes that would take away their ability to do what they have
already won in Court.
Mr. Hogen. Secretary Norton has been working with the
Santee Sioux Tribe in Nebraska and with the Seminole Tribe in
Florida with respect to trying to come up with a compact. That
is a long tedious process, but progress is being made. I know
that based on the conversations we have recently had. I was
over there when that process was ongoing.
If and when that process gets finished and we have a model
to work from, then I think that will be addressed in large
part. But it will perhaps take longer than an amendment to IGRA
might take.
The Chairman. We probably will not be able to amend IGRA if
it looks like a threat to the States. We just would not get the
thing through.
I understand that some of the new regulations that you are
developing have to do with environmental health and safety
regulations. I think I can understand safety, but what kind of
regulations are you developing that have to do with
environmental health in a casino?
Mr. Hogen. If a casino were proposed to be built on a
fragile river bank and it would crash into the river or pollute
the river, we would probably say, ``Hey, take another look at
this.''
The Chairman. I see.
Mr. Hogen. We have issued some regulations that are
basically advisory. There is some term of art that I cannot
think of right now that we call that. But basically what we say
is:
We are not setting the rules of what you have to do for
environment. But you do have to look at this. You have to make
your own plan. Go by your own tribal code, or whatever.
If and when we find a situation where there is imminent
danger, we can take action. We have never had to do this.
The Chairman. Do you not have the legal authority or
experts on your staff to deal with safety regulations, like
OSHA does, or like EPA does with environmental health; do you?
Mr. Hogen. We do not have safety experts, so to speak. With
respect to environmental issues, when we review and approve
management contracts, that is a major Federal action that
triggers NEPA. An environmental assessment may have to be made.
We have to look intelligently at that.
The Chairman. You work with these other agencies when you
have to make that assessment or decision?
Mr. Hogen. We do that. We work with the folks in Bureau of
Indian Affairs and the Department of the Interior. Of course,
we also want to be sure we understand what they are telling us.
We have some of that experience in-house.
The Chairman. Thank you. I have no further questions.
Senator Inouye or other members may have questions. If they
do, they will probably submit them in writing. I would
appreciate it if you could get answers back to the committee.
Mr. Hogen. I would be very happy to do that. Thank you for
this opportunity.
The Chairman. While our panel is coming to the table, we
will stand in recess for just a couple of minutes.
[Recess.]
The Chairman. The committee will come back to order.
Our next panel will be Ernest L. Stevens, Jr., chairman,
National Indian Gaming Association, Washington, DC. He is
accompanied by Mark Van Norman, executive director, National
Indian Gaming Association, Washington, DC, and Norm DeRosier,
Viejas Gaming Commission.
If your colleagues are going to speak, please have them
identify their names for the record. As with the other witness,
if you would like to turn your complete written testimony in,
that will be fine. You can abbreviate it, if you would like to.
STATEMENT OF ERNEST L. STEVENS, Jr., CHAIRMAN, NATIONAL INDIAN
GAMING ASSOCIATION, WASHINGTON, DC, ACCOMPANIED BY MARK VAN
NORMAN, EXECUTIVE DIRECTOR, NATIONAL INDIAN GAMING ASSOCIATION,
WASHINGTON, DC; AND NORM DeROSIER, VIEJAS GAMING COMMISSION
Mr. Stevens. Thank you, Mr. Chairman.
Good morning, Senator. Thank you for allowing me to be here
today. I will summarize my statement. I would ask that my
statement be included in the record in its entirety.
The Chairman. Without objection, so ordered.
[Prepared statement of Mr. Stevens appears in appendix.]
Mr. Stevens. With me today are Mark Van Norman. He is a
member of the Cheyenne River Sioux Indian Tribe. He is NIGA's
executive director. Also here is Norm DeRosier, a gaming
commissioner from the Viejas band of Kumeyaay Indians.
I am an Oneida from Wisconsin. I serve as the chairman of
the National Indian Gaming Association. I want to say, Senator,
that I am honored to be here to share this information with you
on the regulation of Indian gaming, and to discuss the role of
funding at NIGC.
As you know, Senator, tribes have survived a history of
genocide, oppression, and dispossession. In the early 1970's we
were number one in everything that was bad--unemployment,
poverty, dropout rates, and substandard health care. At that
time, a number of tribes began to turn to gaming as a way out.
Tribal governments use gaming like States use lotteries, to
build infrastructure and provide essential services for their
citizens. We believe that is working.
In just 30 years, Indian gaming has helped tribes to begin
to rebuild communities that were all but forgotten. Where once
there was poverty and unemployment, Indian gaming provides more
than 300,000 American jobs. Where once tribes suffered disease
and lack of health care, Indian gaming helps to build clinics,
and provides health care to the sick and to the elderly.
Where once tribes faced epidemic suicide and dropout rates,
Indian gaming builds schools, funds scholarship programs, and
provides hope for the entire generation of our Indian youth.
Indian gaming is all of this and a lot more. Our tribal
governments are stronger and our people are stronger.
Indian country still has a long way to go. Too many of our
people continue to live in disease and poverty, but Indian
gaming offers hope for a better future for our tribal
communities.
The great irony now is that Indian tribes are helping non-
Indian communities as well. We are very proud of that, sir. We
provide jobs for non-Indians nationwide. In fact, you may not
know this, but over 75 percent of the 300,000 Indian gaming
jobs go to non-Indians.
The Chairman. 75 percent?
Mr. Stevens. 75 percent of over 300,000 jobs go to non-
Indians. We have to work together. In spite of our history, we
move forward without any issues. We have tremendous working
arrangements with the municipalities. We have a common bridge
because most of the people that live and work in the
communities around us are working and are interacting in our
facilities.
So we walk together hand-in-hand. Again, I will not go into
long detail about how these initiatives in Indian Country have
assisted the welfare-to-work initiatives that have been so
common nationwide, but assisting them with well-paid jobs with
good benefits such as health care and a lot of times even child
care.
We are real proud of how we walk together with our
neighbors in our surrounding municipalities. We get a lot of
isolated stories out there in different regions because there
is so much going on. But the majority of us have great stories
to tell in Indian country.
Tribes also add to the Federal, State, and local revenues.
Let me also add the ``T'' word up front. Indians pay taxes.
People who work at Indian casinos and those who do business
with Indian casinos, and those who get paid by and win in any
casinos, pay Federal income taxes. They pay taxes just like the
folks who work at the State lotteries.
As employers, tribes pay taxes to fund Social Security and
participate as government's in the Federal unemployment system.
Economists estimate that Indian gaming provides Federal, State,
and local governments with more than $6 billion in increased
income sales and other taxes and revenues. That is $6 billion
in Federal, State, and local revenue.
We realize that the benefits of Indian gaming would not be
possible without good regulation. Successful operations require
solid regulation. Tribal governments understand and abide by
this principle, and gaming has been the best opportunity in 200
years to bring us out of poverty. Without question, tribes are
committed to regulation.
Working in cooperation with tribal, State, and Federal
Governments all play in a role in regulation of Indian gaming.
This system is costly. It is comprehensive. It is working. We
are very proud of it, Senator.
Is our regulatory system different from other gaming
operations? You bet it is. No Federal commission oversees the
State lotteries, horse and dog track wagers, jai alai, or
commercial river boat gaming industries. But Federal oversight
of Indian gaming is extensive. Anyone who commits a crime
against Indian gaming facility has committed a Federal offense.
They have, and they will continue to go to jail.
If you want to visualize the structure of Indian gaming
regulations, it is like a wedding cake. The bottom layer, or
tribal regulation, is the primary and the largest with the most
resources and the most manpower. The second layer is State
regulators which come in through the tribal-State compact
process. They provide help with background checks,
investigation, and oversight. Of course, the top layer is NIGC
and other Federal agencies that work in Indian gaming. In
addition to the NIGC is the FBI, the Department of Justice,
Treasury, the Interior Department, and everybody's favorite,
the IRS.
Any way you slice the cake, you are going to get a
regulator. Sometimes that can be cumbersome, but we would
rather be cumbersome and thorough than have any of these
issues. That is why we get so much back-up out there that says,
``Indian gaming is strongly regulated.'' That is because we
have so many checks and balances in this system. We are very
proud of that.
In total, tribes invest over $212 million annually for the
regulation of Indian gaming. That includes $164 million for
tribal gaming regulation. Over $40 million is for reimbursement
of State regulatory agencies for their support, and $8 million
is to fund the National Indian Gaming Commission.
In addition, the Commission collects another million
dollars for processing fingerprints and background checks for a
$9-million budget. Under IGRA, Congress intended for three
sovereigns to work in cooperation on the regulation of Indian
gaming. Each regulatory body has a distinct and supportive role
for the three different classes of Indian gaming. The idea was
to avoid duplication, but provide comprehensive oversight.
Through IGRA, Congress made it clear that tribal regulatory
agencies are the primary regulators of Indian gaming. Indian
country takes that role very seriously, Senator. As the primary
regulators, tribal regulatory agencies have the largest budget
for Indian gaming regulation. Tribes spend over $164 million
annually on self regulation. Our system includes over 2,800
tribal gaming commissioners and regulatory personnel.
In addition to employing top-notch personnel, tribes use
state-of-the-art regulatory surveillance and security equipment
to support the regulatory operations. We are very excited in
this day and time when we have facial recognition. We have
cameras that can look underground and tell you whether a penny
is heads up or tails. We really have some outstanding
technology out there. We are proud of that. We are upgrading it
every day. Everything that becomes available, Indian tribes are
working together to establish the best.
State regulatory agencies assist tribal agencies with
background checks, licensing inspections, and review of class
III Indian gaming operations. Tribes reimburse States over $40
million annually for those regulatory services.
At the Federal level, the NIGC shares the responsibility
for regulation with other government agencies. The NIGC defers
to State gaming agencies on background checks, licensing
decisions, and compact enforcement for class III gaming
regulation. NIGC works in partnership with tribal gaming
regulatory agencies on class II gaming regulation, and provides
background oversight for class III gaming regulation.
NIGC also acts as a facilitator to help build strong
relationship between the three sovereigns to further strengthen
Indian gaming regulation. In fact, a couple of months ago, NIGC
hosted a meeting to discuss the formation of a national Indian
gaming intelligence network to share information and to provide
technical assistance to tribal regulators nationwide.
Participants included the chairman of Attorney General
Ashcroft's Native American Issues Subcommittee, officials from
the FBI, Treasury's Financial Crimes Enforcement net worth,
North Dakota's attorney general, the NIGC, and tribal gaming
regulators throughout the country.
As I stated above, the systems of checks and balances in a
cooperative regulation has proven effective. Much of the credit
for the success in regulation should go to tribal governments
and the tribal leaders who recognize the need for solid
regulation, and who took the initiative to provide the funding.
Against the backdrop of comprehensive regulation, the FBI
and the U.S. Justice Department have testified repeatedly that
there has been no substantial infiltration of organized crime
on Indian gaming. In fact, the last time the chief of the
Department of Justice's Organized Crime Division testified
before this committee, he stated that, and I quote:
Indian gaming has proven to be a useful economic
development tool for a number of tribes who have utilized
gaming revenues to support a variety of essential services.
While there has been isolated occasions when a crime has
occurred at Indian gaming facilities, the Department of Justice
found that coordination between tribal, State, and Federal
regulators and law enforcement ensure that offenders are
caught, prosecuted, and punished. Indian gaming has a good
track record because tribes hire the most highly qualified
people from tribal, State, and Federal law enforcement
regulatory agencies.
Again, tribes spend $212 million on regulation each year.
That is a lot of money that could go to fund sorely needed
programs. But tribes realize that regulation is the cost of a
successful operation and it is needed to protect our resources.
I would like to take a moment to recognize our tribal
regulator that makes gaming work. Mr. DeRosier has 9 years of
service in State law enforcement prior to his 11 years of
service in tribal regulation. He also serves as the chairman of
the National Tribal Gaming Commission and Regulatory
Association that worked actively throughout Indian country.
Finally, that brings me to the issue of funding for the
NIGC. NIGC and our member tribes hold the NIGC and its
Commissioners in high regard. The current Commissioners have
outstanding credentials and complement each other. I just want
to make it clear, Senator, we do not always agree on
everything, but we know that we have a mutual job to do. It is
just as I stated. The tribal leaders trust us to protect this
operation. All of this country count on us. If you could select
the best three people to do that job, and if I had my choice, I
would select the ones that have been selected to do this job.
We do not always agree, but you have three outstanding
professionals in this capacity. They testified just prior to my
coming up here.
The NIGC serves a sound purpose and for the most part has
provided tribal governments with solid background oversight to
ensure the continued integrity of Indian gaming. For the past
five years, NIGC was funded at a level of $8 million each year
based on fees paid by tribal governments.
Last year President Bush included a $2-million request for
a one-time appropriation for NIGC, with the direction to NIGC
to work with tribes on future increases. NIGC supported this
Federal appropriation for fiscal year 2003. We want to thank
the chairman and the vice chairman of this committee for
supporting the President's request as well.
Regrettably, the President's request was ignored, and
instead Congress authorized an immediate increase in the NIGC
fee cap from $8 million to $12 million in fiscal year 2004--a
$4-million increase that tribal governments will pay for. We
believe that was the wrong way to do business. The action by-
passed this committee. It violated the legislative process, and
ignored the government-to-government consultation process.
While Congress did direct NIGC to consult on the
implementation of their budget increase, it will come after the
fact. We believe consultation should come before any policy
changes. It just makes sense to us. We agree that the NIGC must
receive adequate funding to do its job. However, as a Federal
partner in the system, NIGC must strive to support and
complement, but not duplicate, tribal and State regulatory
activities.
As for the NIGC's direction to consult on the increase to
$12 million for fiscal year 2004, I urge the Commission to take
five steps:
First, formally adopt the policy of government-to-
government consultation in accord with the recent Presidential
Executive Orders;
Second, propose a schedule of consultation meetings with
Indian country immediately. We believe that they are beginning
to adhere to some of these concerns as stated in Chairman
Hogen's presentation, but we are not satisfied up to this
point;
Third, provide a detailed proposed budget to NIGC, our
member tribes, and this committee;
Fourth, use a portion of these funds to increase self
regulation for class III tribes, and;
Fifth, we ask that the Commission resume quarterly
consultation with tribal regulators which will include
providing tribes with training and technical assistance. Use of
this Commission's increased funding in this way will prevent
duplication and will focus on the Commission's resources on its
core mission, which is to provide technical assistance to
tribal gaming commissions.
Finally, before I close, Senator, I would like to comment
on Chairman Hogen's proposed IGRA amendments. First, he has
asked to complete elimination of a fee cap. As I just stated,
the cap has already been raised $4 million. That is an increase
of 50 percent. Do you know of any other Government agency that
get an increase of 50 percent in 1 year?
Nevertheless, we are not asking Congress to roll it back.
This is not the time to start talking about a fee increase. The
Commission got what it wanted last year. It should now consult
with the tribes on what it plans to do with this increase that
it is already getting. It should provide a detailed report to
Congress. Then next year, if the NIGC wants to ask for a
further increase, it should be required to justify it to the
tribes and to Congress. That is what accountability is all
about from our perspective.
Second, the chairman has asked for an amendment to require
any person associated or seeking to become associated with the
tribal gaming operation, to first obtain a license with the
NIGC. This proposal would grind activity in tribal operations
to a halt. Tribes already conduct investigation and background
checks on their employees and contractors. NIGC should not
impose a new barrier to economic activity in Indian country.
NIGC has moved too slow in reviewing management contracts.
Adding this responsibility would prove too burdensome for both
the Commission and tribal gaming operations. Instead, the
Commission should recommend guidelines for tribal regulators
and operation managers to look to when considering new
employees or contractors.
Third, the chairman has asked for an amendment to clarify
the Commission's authority over class III gaming. IGRA
expressly established the tribal State compact process to set
regulatory framework for class III gaming. IGRA requires NIGC
to approve class III ordinances as long as they meet the
minimum statutory requirements. Accordingly, NIGC should
instead clarify through regulation that it will defer to tribal
State compacts to govern class III gaming with a few narrow
exceptions.
Finally, I want to mention a note on the Supreme Court's
decision in Seminole Tribes v. Florida. I applaud the
Commission for its intent to seek an amendment to correct this
decision. Today I want to state for the record that any bill to
amend IGRA should include an amendment to provide a correction
to the Seminole case. The case was decided in 1996 and still
haunts a number of tribes.
The Seminole decision frustrated Congress' intent by
effectively giving States veto power over the compacting
process. The Interior Department promulgated regulations for
alternative procedures for class III compacting. Now may be the
appropriate time for Congress to legislatively affirm those
regulations. I hope that the committee will consider including
such a provision in any IGRA amendment that is introduced this
session.
Senator if I may, I would like to briefly summarize my
three points today:
First, Indian gaming is working. It is rebuilding tribal
economies, benefiting non-Indian communities, and providing
hope for future generations of Indian people.
Second, Indian gaming is fully regulated. We should all
take note of the hard work, tireless hours, and hundreds of
millions of dollars that tribal governments and their employees
spend on regulating Indian gaming operations. The ethocentric
view that Indian gaming is only regulated by 70 employees and
$8 million that fund the NIGC is just plain wrong and should be
put to rest. Indian tribes are responsible, accountable, and
are working in partnership with Federal and State governments.
Finally, I would ask that NIGC also be held accountable. I
urge NIGC to adopt and adhere to a formal policy of government-
to-government consultation and increased communication between
tribes and the NIGC. Such a practice will only serve to further
strengthen the regulation of Indian gaming.
Again, Senator, we feel we have made progress on that, but
I cannot tell you that we are satisfied up to this point. I
think we need to continue to strengthen that intent.
Mr. Chairman, I want to thank you for providing me this
opportunity to testify.
I want to ask Mr. Van Norman if he could just briefly tell
you about the two charts we brought this morning.
Mr. Van Norman. Mr. Chairman, my name is Mark Van Norman. I
am the executive director of NIGA.
The first chart demonstrates the different budget
investments annually in Indian gaming. It shows that tribes are
the primary regulators. We have $164 million each year that
tribes invest for their own regulations. They reimburse States
$40 million, and the NIGC has a budget of $8 million. Clearly
we need coordination and we need to leverage the tribal
resources so that we are not duplicating efforts at the NIGC
level.
I also want to show you an example of our advancing
technology. This comes from the Viejas Tribe where Mr. DeRosier
is the Gaming Commission. They are now employing electronic
fingerprint technology. When folks come in, instead of putting
ink on their fingers, they put it across the computer screen.
It is immediately sent over to the National Indian Gaming
Commission. The FBI can turn this around and give you a
criminal history within 24 hours.
The Chairman. These are for potential employees?
Mr. Van Norman. These are for potential employees.
The Chairman. Is that the same system that the big casinos
in Atlantic City or Las Vegas would use?
Mr. Van Norman. I believe it is. The situation that we are
in is that it speeds the background checks so that they can be
done in 24 hours. Tribes can go ahead and issue a license with
the knowledge of the criminal history. This is new technology.
We may be ahead of some of the casinos in Nevada and New
Jersey.
The Chairman. You heard the NIGC speak about background
checks. Do you think this supplements what they are doing, or
actually is a better system because it is faster?
Mr. Van Norman. This system has worked in coordination with
NIGC. They forward the fingerprints to the FBI for the criminal
background check. We think it would be important for the NIGC
to use part of their new budget increase to invest in this
technology so that it is available at their regional offices.
Mr. Stevens. Just to give you a lighthearted example of the
intensity of gaming commissioners, in my previous capacity as a
gaming consultant, I had to do a background check in some place
in California. Previous to that, I served as a tribal
councilman for the Oneida Nation in Wisconsin. I was also a
member of the Native American Rights Fund Board and the
National Congress of American Indians.
We staged a very respectful and rehearsed demonstration,
hoping to educate the Supreme Court about tribal issues. That
demonstration, I believe, was called Civil Disobedience. We
were incarcerated briefly for being on the Supreme Court's
steps. It was all rehearsed. We got $50 and were bailed out of
jail. It was a lighthearted thing except that the guys that
asked me to do, I thought they were going with me. It was just
Chief Blue and me from Catawba that went.
But the tribal regulators did not want to hear anything
about lightheartedness. They scrutinized me heavily to think
that I was arrested at the Supreme Court steps.
The Chairman. Was there some kind of a record of that kept?
There was nothing put on any police record if it was rehearsed
and planned; was there?
Mr. Stevens. I was convicted of a misdemeanor in the
District of Columbia.
I am not ashamed of that. It just shows the intensity of
our regulators out there in Indian country to bring that
forward and scrutinizing that heavily. They are very thorough
and they are very complete. These checks and balances
complement one another. We are very proud of the Indian
regulators out there.
The Chairman. Let me ask you a few questions about gaming
in general.
I am sure you read the two-part Time Magazine articles?
Mr. Stevens. Yes, sir.
The Chairman. They were very in-depth but probably stilted
to one side of the issue. I think it has driven some concerns
by some of my colleagues about Indian gaming. I have mentioned
that to you before.
I have never heard you say on the record your view of those
articles. Would you like to do that?
Mr. Stevens. I am reluctant to, Senator. I sent you the
letter asking that we could engage in this protection of Indian
gaming. We want to sit before you today to strengthen what we
have out there. We do not want to sit before you or anybody
else in response to this type of publications and to try to
give the benefit of the doubt. We responded to all those
issues.
The Chairman. Did you respond to Time Magazine?
Mr. Stevens. Yes; they gave me about that much [indicating]
to their two articles. We felt we were successful in doing so.
We responded to many magazines. We responded through ads.
The tribal leaders came to Washington, DC and talked about
this. Basically what they said was that even good publications
sometimes have bad reporting. You and I both have had to deal
with publications and news sources that report in an
unfortunate and sometimes an unethical manner. I just think
that what we have been told by tribal leaders is that we
respond. The issues centered around Time Magazine were either
mistruths or half reporting without getting the whole story.
The Chairman. Did anybody when they were writing those
articles, talk to anyone in NIGA before they were written?
Mr. Stevens. No; as a matter of fact, not only did they not
talk with NIGA, they were very selective and almost non-
existent in talking with any tribal leaders throughout all of
Indian country. It was very carefully rehearsed and very
carefully written in a very negative way. They were very
careful about finding any truth in Indian County. As a result,
of course, they did not.
Mr. Van Norman. Mr. Chairman, could I add something?
The Chairman. Yes, sir.
Mr. Van Norman. We have an appendix to Chairman Stevens'
testimony that we would like to have included in the record.
The Chairman. Without objection, so ordered.
Mr. Van Norman. It includes a more recent article from the
Atlanta Journal Constitution from April 27. We felt that was a
little more reflective because that article was based on Census
numbers. The Census is something that you can rely on.
The Census showed that for tribes with gaming, average per
capita income increased by about 50 percent. For tribes without
gaming, average per capita income increased only by about 16
percent.
But even with the 50-percent increase in per capita income
among the gaming tribes, we only went up to $13,500 average per
capita income in 2000. That compares to $21,500 average per
capita income nationally. We are still 60 percent below the
average per capita income looking across Indian country.
The Chairman. Along that line, in California the tribes
contribute to a development fund because some tribes are doing
well and some not doing so well. Do you believe that the
wealthier gaming tribes have any obligation to help or
contribute to those less fortunate tribes?
I have visited a number of tribes that have gaming
operations and it seems to me that the ones that are doing
really well are the ones that are in close proximity to a
metropolitan area, and easy to get to by people who enjoy
gaming. But the ones that are on reservations that are way out,
like Pine Ridge or Lame Deer, there are very few people who
want to go that far for an evening of gaming.
The casino is generally very small and the only people in
them are a few of the tribal members and maybe a truck driver
or two that happens to stop on the way by. Some of them, in
fact, have actually gone to receivership, as you know. It is
not the answer for all tribes. How do you feel about sharing
the wealth, as they do in California? Maybe that is the wrong
word for it, but having a fund to contribute to less wealthy
tribes?
Mr. Stevens. As you know, Senator, being a Native American
yourself, we have a long history of looking out for one
another. I think those examples exist in Indian country. In
South Dakota we really have to be able to get those tribes a
better location, some more games, and support for their
industry out there. There is no question that we need to do
more to support them.
I was just at Four Bears Casino in Fort Berthold Indian
Reservation. They are pretty far out. They are doing some real
good business initiatives out there. They are really doing good
to not just employ their own people, but people from the
surrounding communities.
I talked with a lady there from Canada. She just loves the
place. I think once the people understand that once people
understand this, they will be in a better place and understand
what we have to do in Indian country. These are governments
working to enhance government services and build for their
future versus a few rich investors running the business for
their own personal income.
Another example is down in Milwaukee at the Potawatomi
Bingo Casino. They put millions of dollars into that economy
there. I have personally toured the quadrants of the inner city
where there is a strong need and where the Potawatomi Casino
pumps millions of dollars into there and into other charities.
In addition to all that, every holiday they put in over
$700,000 to 16 programs. It is called ``The Miracle on Canal
Street.'' In addition to that, they send a regular lump sum
payment to the Bad River and Red Cliff Indian communities who
have pretty much a tourism industry in Northern Wisconsin.
I just wanted to highlight that example. Nationwide, our
figure is somewhere between $68 million to $70 million that
Indian tribes give to charities, Indian and non-Indian alike.
That is our latest figure.
The Chairman. I would certainly encourage you to continue
to pull together any statistics like that. I think it gives
Indian tribes a clear defense against some of the accusations
that I think are unfair accusations. I was not very happy with
that Time Magazine article either. It was rather one-sided.
Mr. Stevens. President Tex Hall, Chairman Ron Allen,
Chairman Anthony Pico, and I personally went to the Boston
Globe, sat with them, and tried to provide them with the best
education we could. Business Weekly just wrote a very narrow
article recently. The unfortunate part about that is that Time
avoided us and avoided the truth. These people talked with us
for 1 hour and still wrote a story about isolated incidents and
refused our references to give them the story.
The Chairman. Do you have any kind of a public relations
plan, for lack of a better word, or a contract with anyone to
try to get the truth out or put a better face on Indian gaming?
Mr. Stevens. Absolutely. I was actually trying not to talk
about Time Magazine today. I was just trying mostly to talk
about that initiative. It is a national public relations
initiative. It is cochaired by Mark Brown from Mohegan and
Darren Marques from San Manuel. We have been in operation for 5
months. We currently have a plan that gets out there and tells
the real story, a proactive story. We also do have a public
relations director. When that Time article first hit, we
papered the Hill with about everything we could get to tell
people the true story.
In our legislative summit this winter, legislators like
yourself and others came and were a recipient of that
clarification. Again, the tribal leaders refused to operate
that way. They told us that this is a public relations
initiative that we are going through right now. We raised
somewhere between $400,000 to $500,000 to do ads and different
types of things like that, to tell the proactive true story
about Indian gaming.
They have stepped up to the plate, but they do not want to
step up in response to Time. They want to step up to enhance
and talk about the good things that are happening throughout
Indian country.
The Chairman. Let me shift the questions to your
relationship with NIGC. You mentioned that some of the
consultation comes after the fact rather than before.
Mr. Stevens. It was strictly regarding the budget request.
The Chairman. Did I understand you to say that you think
that the budget request should be disseminated to tribes
before?
Mr. Stevens. Absolutely. That is the strong point we are
trying to make. We want those budget increases to come to the
tribe.
The Chairman. The budget requests are already a matter of
record when they request them through this committee or through
the Appropriations Committee.
Mr. Stevens. The main thing is that they have to pay for
it. That is the reason that I stand on that strong point that
it has to come through the tribes.
Mr. Van Norman. There was an unusual process last year. If
you recall, the President came out with his appropriation
request in January as normal. We relied on the Administration's
request and talked to our member tribes about it. They
supported the $2 million appropriation requested.
Then there was a delay in the passage of that bill from its
normal passage in September up until January. In a 1-month
period between the end of December and January, frankly, the
Appropriations staff changed gears. There was no real public
acknowledgment of that until the bill became available, which
was only a couple of days prior to passage.
The Chairman. I have to tell you that last year was a
really unusual year, as you probably know. It was the first
time in 28 years that we did not finish our appropriations
process. We had to do it the following year with some new
members that were not even here when we framed up things the
year before. You probably know that. We ended up passing a
omnibus package of, I think, 10 of the 13 bills that we did get
passed when we should have the year before.
Everything was a little unusual. Very frankly, when you put
that much paperwork together, no one--no single staff or no
Senator--knows everything that is in there. Some things go
through that should not. It is as simple as that. We dropped
the ball in getting the job done in the Senate, and in the
House, too. Hopefully that will not happen again.
Mr. Van Norman. We want to thank you because we thought we
had a clear statement from the authorizing committee over to
the appropriators. We hope that this year the authorizing
committee dialog will be heated by the appropriators.
Mr. Stevens. We are not asking for a rollback on this
thing. We want to move forward and help get our jobs done. We
respect NIGC's role in this. We are not asking for a rollback.
We are just asking for future increases and consultations with
the tribes.
The Chairman. Senator Inouye and I are on both committees,
as you probably know. I know he will do his best, and I will
certainly will, too.
Let me ask about the consultation. Do you have some kind of
a draft policy that you would like to give to us, or to the
NIGC to start the discussion about consultation before the
fact?
Mr. Stevens. I think that we could provide it. I do not
know that Phil would be excited about that.
The Chairman. Well, you provide it to us and we will try to
excite Phil. [Laughter.]
Mr. Stevens. I think that we would love to do that. Again,
with respect to Chairman Hogen, we would continue to assert
that. If it would be more helpful in black and white, we would
love to do that.
The Chairman. If you would at least provide it to us, I
would appreciate that.
Mr. Stevens. We will make sure we do that.
The Chairman. I think I have no further questions. If we
do, I will send them to you in writing, if you would get back
to us in writing. Other Senators may do the same.
The Chairman. Thank you for appearing today.
With that, this hearing is adjourned.
[Whereupon, at 11:14 a.m., the committee was adjourned, to
reconvene at the call of the Chair.]
=======================================================================
A P P E N D I X
----------
Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Hon. John McCain, U.S. Senator from Arizona
Mr. Chairman and Vice Chairman, thank you for scheduling today's
hearing to evaluate the role and funding of the National Indian Gaming
Commission [NIGC], the Federal agency responsible for oversight of
Indian gaming. It is critically important to check-in and continue
congressional oversight on issues associated with the regulation of
Indian gaming.
Senator Inouye and I, as the original authors of the Indian gaming
law envisioned that Indian gaming would grow exponentially, given the
right political climate and economic opportunities. We instituted the
National Indian Gaming Commission to be the official oversight agency,
responsible for implementing and monitoring different regulatory
aspects of the industry as well as enforcing against criminal
activities.
More than 14 years later, Indian gaming is a $13-billion industry
and growing fast. The largest casino in the world is a tribal casino
and many others are fast becoming world class casinos. By no means am I
critical of that success. Indian gaming has afforded economic
opportunity and success where the Federal Government has failed to meet
its responsibilities to aid tribal communities for such fundamental
services such as education and health care.
Considering the steady growth, we also need to continually evaluate
the Commission's ability to respond to that growth. It's been
acknowledged in prior hearings before this committee that the NIGC has
been limited in fully meeting its responsibilities by the lack of
adequate resources to match the growth of the industry. The limitations
on the agency have also been highlighted by several investigative
reports, including those in recent Time Magazine profiles, which have
characterized the National Indian Gaming Commission as ``the impotent
enforcer'' with bare-bones resources and staff to fulfill its statutory
responsibilities.
Those of us most familiar with Indian gaming and the Indian gaming
law recognize the bias of those reports. However, there is an
underlying message in such reports that should compel our response and
encourage all of us to provide a more informed status of the Indian
gaming industry.
The ability of the NIGC to fulfill its statutory role is very
important, since the industry itself has changed dramatically since
1988. The NIGC is currently responsible for monitoring 300 gaming
facilities with a current budget of $8 million and employing 77 staff.
By way of comparison, the New Jersey Casino Control Commission spends
$59 million and hires a staff of 720 to monitor 12 casinos in Atlantic
City. This is an important point considering that Indian gaming is now
believed to generate more revenue than Las Vegas and Atlantic City
combined.
If we are to defend the integrity of Indian gaming then we must
defend it by ensuring the strongest possible regulation and highest
standards, equal to the regulation of non-Indian gaming. An immediate
point of concern from the NIGC's testimony today is the fact that the
NIGC has only four auditors on hand to deal with what the NIGC
describes as ``the only mechanism'' to determine ``with any certainty
the extent to which specific operations are at risk of theft or loss or
may be engaging in practices that jeopardize the integrity of the games
conducted.'' The NIGC will also report today on its limitations in
preventing any major criminal elements or individuals from unduly
profiting from Indian gaming.
Another point of discussion today is the funding for the Commission
itself, which is 100 percent from fees assessed on gaming facilities.
While the original Indian gaming law did set a limit of fees assessed
on certain tribal facilities to support the operations of the NIGC, the
Act has since been amended twice in recognition of the limitations
facing the NIGC to carryout its responsibilities to match the growth of
the industry. The latest change raises the agency's fee assessment
ceiling to $12 million for fiscal year 2004, which according to the
NIGC will provide significant help, but the agency anticipates that
further resources will still be necessary for future years.
My friends in Indian country know that I am a strong supporter of
Indian gaming, and of tribal self-governance to increase self-
sufficiency for tribal communities. I don't think anyone here would
question the benefit of gaming revenues to support tribal economies and
services. The issue at hand is whether we are sufficiently supporting
the agency or hampering it by imposing restrictive limitations.
The NIGC will testify today about the need to ``modernize IGRA'' to
conform with the industry boom. I think there is merit to this
discussion. I emphasize to the National Indian Gaming Association that
the purpose of such discussion is not to compromise tribal regulation
or sovereignty, but to strengthen it.
I look forward to additional hearings by this committee to consider
other regulatory issues association with Indian gaming.
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