Rule2022-24135
Management Contracts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 14, 2022
Effective
December 14, 2022
Issuing agencies
Interior DepartmentNational Indian Gaming Commission
Abstract
The National Indian Gaming Commission (NIGC or Commission) issued a proposed rule revising its management contract regulations. The Indian Gaming Regulatory Act (IGRA) provides that an Indian tribe may enter into a management contract for the operation of Class II or Class III gaming activity if such contract has been submitted to and approved by the NIGC Chairman. Collateral agreements to a management contract are also subject to the Chairman's approval. This final rule makes background investigations required of all persons who have 10 percent or more direct or indirect financial interest in a management contract, of all entities with 10 percent or more financial interest in a management contract, of any other person or entity with a direct or indirect financial interest in a management contract otherwise designated by the Commission, and authorizes the Chairman, either by request or unilaterally, to exercise discretion to reduce the scope of the information to be furnished and background investigation to be conducted for certain entities.
Full Text
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<title>Federal Register, Volume 87 Issue 218 (Monday, November 14, 2022)</title>
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[Federal Register Volume 87, Number 218 (Monday, November 14, 2022)]
[Rules and Regulations]
[Pages 68046-68048]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-24135]
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DEPARTMENT OF THE INTERIOR
National Indian Gaming Commission
25 CFR Part 537
RIN 3141-AA58
Management Contracts
AGENCY: National Indian Gaming Commission.
ACTION: Final rule.
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SUMMARY: The National Indian Gaming Commission (NIGC or Commission)
issued a proposed rule revising its management contract regulations.
The Indian Gaming Regulatory Act (IGRA) provides that an Indian tribe
may enter into a management contract for the operation of Class II or
Class III gaming activity if such contract has been submitted to and
approved by the NIGC Chairman. Collateral agreements to a management
contract are also subject to the Chairman's approval. This final rule
makes background investigations required of all persons who have 10
percent or more direct or indirect financial interest in a management
contract, of all entities with 10 percent or more financial interest in
a management contract, of any other person or entity with a direct or
indirect financial interest in a management contract otherwise
designated by the Commission, and authorizes the Chairman, either by
request or unilaterally, to exercise discretion to reduce the scope of
the information to be furnished and background investigation to be
conducted for certain entities.
DATES: This rule is effective December 14, 2022.
FOR FURTHER INFORMATION CONTACT: Michael Hoenig, 1849 C Street NW, Mail
Stop #1621, Washington, DC 20240. Telephone: 202-632-7003.
SUPPLEMENTARY INFORMATION:
I. Background
The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497,
25 U.S.C. 2701 et seq., was signed into law on October 17, 1988. The
Act establishes the NIGC and sets out a comprehensive framework for the
regulation of gaming on Indian lands. On January 22, 1993, the NIGC
published a final rule in the Federal Register called Background
Investigations for Person or Entities with a Financial Interest in a
Management Contract (58 FR 5831). The rule added a new part to the
Commission's regulations implementing the mandates of the Indian Gaming
Regulatory Act of 1988 by establishing the requirements and procedures
for the approval of management contracts concerning Indian gaming
operations and the conduct of related background investigations. The
Commission has substantively amended them numerous times, most recently
in 2012 (August 9, 2012; 77 FR 47514). On December 2, 2021, the NIGC
published a notice of proposed rulemaking in the Federal Register
called Background Investigations for Persons or Entities With a
Financial Interest in or Having a Management Responsibility for a
Management Contract (86 FR 68446).
II. Development of the Rule
On June 9, 2021, the Commission issued a Dear Tribal Leader Letter
announcing the beginning of tribal consultations on 25 CFR 537.1(a)(3),
among other regulations. On July 12, 2021, the Commission issued a
second Dear Tribal Leader Letter announcing the dates of virtual
consultations and seeking written comments on the proposed changes to
part 537. On July 27, 2021, and July 28, 2021, the Commission held
virtual consultations and accepted comments from Tribes on those
changes.
Upon reviewing the comments received during the consultation period
from July 12--August 12, 2021, the Commission published a Notice of
Proposed Rulemaking (NPRM) on December 2, 2021 (86 FR 68446). The NPRM
invited interested parties to participate in the rulemaking process by
submitting comments and any supporting data to the NIGC by January 3,
2022. The consultation and the written comments have proven invaluable
to the Commission in making amendments to the Management Contract
regulations.
III. Review of Public Comments
Comment: One commenter suggested that the term ``Chairman'' be
changed to ``Chair'' throughout the regulation.
Response: The Commission agrees with the recommendation and has
made that change.
Comment: One commenter suggested that the term ``indirect financial
interest'' was too vague and possibly too broad and should be deleted
or defined.
Response: Under IGRA, the NIGC has broad authority to ensure
compliance with IGRA. Individuals or entities can have an ``indirect
financial interest'' in innumerable ways. Any effort to define this
term to specific types of relationships would improperly and
unnecessarily limit the Commission's authority to regulate financial
interests in Indian gaming.
Comment: Several commenters suggest that the NIGC include
information as to how and when the Commission will notify a TGRA of a
unilateral decision by the Chair to reduce the scope of required
information or, alternatively, what would need to be included in a
request submitted by TGRAs for the same.
Response: The Commission appreciates the comments and clarifies
that background investigations and suitability determinations discussed
in this part pertain to management companies wishing to enter into an
agreement with a tribe, not the tribe itself. As such, a request for a
reduced scope background investigation would typically be made by, and
granted to, a management company, individual or entity with management
responsibility for the contract, or individual or entity with a direct
or indirect financial interest. If a tribe or wholly owned tribal
entity is proposing to manage another Tribe's gaming operation, they
may request a reduced background investigation or the Chair may elect
to perform one unilaterally. In either case, the NIGC will notify the
requester of a decision. As to how to make a request, the Commission
responds that it will set forth any process in a bulletin. If a
potential management company has questions as to how to request a
reduced scope background investigation prior to the issuance of that
bulletin, the Commission invites them to contact the NIGC for further
information.
Comment: Another commenter supports the change to clarify the
reduced scope background investigation, but suggests the NIGC add
examples of ``approaches the Chair may take to reduce the scope of
information to be furnished. The commenter included suggested language
to include
[[Page 68047]]
in the regulation, including accepting ``substantively current
background information submitted previously to the Commission or other
jurisdictions and providing reciprocity for background investigation
results to reduce the burden of submitting duplicative information and
reduce delay in background investigations.''
Response: The Commission appreciates the commenter's support for
the changes to clarify the reduced scope background investigation, and
agrees that the examples suggested are a reasonable and sensible way to
reduce the scope of the investigation. Ultimately, though, the
Commission declines to include the suggested language. The scope of the
background investigation, though reduced, is still at the discretion of
the Chair, who must ultimately make the suitability determination for
all entities and individuals backgrounded. The Commission does not
intend through this amendment to prescribe what information the Chair
must or may require as part of a reduced scope investigation.
Comment: One commenter suggested that the NIGC consider adding a
standard for when the Chair exercises his or her discretion to approve
a request for a reduced background investigation, e.g. what constitutes
a ``national bank'' and to provide additional detail regarding what
supporting documents tribes would be required to submit as well as
timelines associated with such requests. Response: The Commission
declines to define ``National Bank'' or ``institutional investor'' in
its regulations, as these are terms commonly understood in the Banking
and Finance industries. A National Bank is widely understood to mean a
Commercial Bank formed under the National Bank Act, 12 U.S.C. 38,
chartered by the Comptroller of the Currency, and a member of the
Federal Deposit Insurance Company. The term ``institutional investor''
is defined by and must be registered with, the Securities and Exchange
Commission.
Comment: One commenter objected to the NIGC changing its regulation
to initially require background checks and suitability determination on
entities and individuals that have 10 percent or more direct or
indirect financial interest in a management contract. The Commenter
believes that imposing a 10 percent interest threshold is ``an
arbitrary approach that will encourage `bad actors' to structure their
deals below the 10 percent threshold to avoid NIGC scrutiny. The
Commenter further asserts that the change will improve efficiency at
``the expense of tribes who rely on the NIGC to keep `bad actors' out
of Indian gaming and that the amendment ``conflicts with the
requirements of the IGRA.''
Response: The Commission thanks the Commenter for its input on this
topic. It has determined to finalize the Change, however, and responds
that the change will not negatively impact the agency's ability to
protect the interests of Tribes. At the outset, it is important to note
that the NIGC is not changing the requirement to submit any individual
or entity that has management responsibility for the contract.
Accordingly, the NIGC will still require background investigations and
suitability determinations for all individuals and entities that may
have any decision-making authority or influence over the contract or
the Tribe's gaming operation.
Rather, the purpose of the change is to reduce the time and expense
of background investigations by no longer requiring the initial
submission of those with minor financial interests in, but no control
over, the management contract or the gaming operation. Moreover, the
regulation includes a provision requiring a background investigation
and suitability determination for ``any other person or entity with a
direct or indirect financial interest in a management contract
otherwise designated by the Commission.'' When a management contract is
submitted, the NIGC's background investigators ensure that the list
that was submitted is accurate. As part of that review, they will ask
for a full list of all the entities and individuals involved in, and
with a financial interest in, the contract, even if not all of those
entities and individuals will be subject to a background investigation.
If, however, investigators identify an entity or individual that should
be subject to further review, the Commission may order such pursuant to
Sec. 537.1(a)(3). For these reasons, the Commission does not believe
the amendment creates any additional risk to Tribes, does not permit a
bad actor to structure its management contract in a way that allows
them to escape review from the NIGC, and meets IGRA's purpose of
``shielding tribes from organized crime and other corrupting
influences.''
Regulatory Matters
Regulatory Flexibility Act
The proposed rule will not have a significant impact on a
substantial number of small entities as defined under the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq. Moreover, Indian Tribes are not
considered to be small entities for the purposes of the Regulatory
Flexibility Act.
Small Business Regulatory Enforcement Fairness Act
The proposed 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 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 proposed 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 Mandate Reform Act
The Commission, as an independent regulatory agency, is exempt from
compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2
U.S.C. 658(1).
Takings
In accordance with Executive Order 12630, the Commission has
determined that the proposed rule does not have significant takings
implications. A takings implication assessment is not required.
Civil Justice Reform
In accordance with Executive Order 12988, the Commission has
determined that the rule does not unduly burden the judicial system and
meets the requirements of sections 3(a) and 3(b)(2) of the Order.
National Environmental Policy Act
The Commission has determined that the rule does not constitute a
major federal action significantly affecting the quality of the human
environment and that 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 information collection requirements contained in this rule were
previously approved by the Office of Management and Budget (OMB) as
required by 44 U.S.C. 3501 et seq. and assigned OMB Control Number
3141- 0007.
Tribal Consultation
The National Indian Gaming Commission is committed to fulfilling
its tribal consultation obligations--whether directed by statute or
[[Page 68048]]
administrative action such as Executive Order (E.O.) 13175
(Consultation and Coordination with Indian Tribal Governments)--by
adhering to the consultation framework described in its Consultation
Policy published July 15, 2013. The NIGC's consultation policy
specifies that it will consult with tribes on Commission Action with
Tribal Implications, which is defined as: Any Commission regulation,
rulemaking, policy, guidance, legislative proposal, or operational
activity that may have a substantial direct effect on an Indian tribe
on matters including, but not limited to, the ability of an Indian
tribe to regulate its Indian gaming; an Indian Tribe's formal
relationship with the Commission; or the consideration of the
Commission's trust responsibilities to Indian tribes.
Pursuant to this policy, on June 9, 2021, the National Indian
Gaming Commission sent a Notice of Consultation announcing that the
Agency intended to consult on a number of topics, including proposed
changes to the management contract process. On July 27, 2021, and July
28, 2021, the Commission held two virtual consultations on the proposed
changes to the management contract process.
List of Subjects in 25 CFR Part 537
Gambling, Indian--lands, Indian--tribal government, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Commission amends 25
CFR part 537 as follows:
PART 537--BACKGROUND INVESTIGATIONS FOR PERSONS OR ENTITIES WITH A
FINANCIAL INTEREST IN, OR HAVING MANAGEMENT RESPONSIBILITY FOR, A
MANAGEMENT CONTRACT
0
1. The authority citation for part 537 continues to read:
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
0
2. Amend Sec. 537.1 by revising paragraphs (a)(1) through (3) and
adding paragraph (d) to read as follows:
Sec. 537.1 Applications for approval.
(a) * * *
(1) All persons who have 10 percent or more or indirect financial
interest in a management contract;
(2) All entities with 10 percent or more financial interest in a
management contract; and
(3) Any other person or entity with a direct or indirect financial
interest in a management contract otherwise designated by the
Commission.
* * * * *
(d) For any of the following entities, or individuals associated
with the following entities, the Chair may, upon request or
unilaterally, exercise discretion to reduce the scope of the
information to be furnished and background investigation to be
conducted:
(1) Tribe as defined at 25 CFR 502.13;
(2) Wholly owned Tribal entity;
(3) National bank; or
(4) Institutional investor that is federally regulated or is
required to undergo a background investigation and licensure by a State
or Tribe pursuant to a Tribal-State compact.
Edward Simermeyer,
Chairman.
Jean Hovland,
Vice Chair.
[FR Doc. 2022-24135 Filed 11-10-22; 8:45 am]
BILLING CODE 7565-01-P
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