[Federal Register Volume 73, Number 246 (Monday, December 22, 2008)]
[Proposed Rules]
[Pages 78242-78252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30019]
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DEPARTMENT OF THE INTERIOR
National Indian Gaming Commission
25 CFR Parts 502, 514, 531, 533, 535, 537, 539, 556, 558, 571, 573
RIN 3141-0001
Amendments to Various National Indian Gaming Commission
Regulations
AGENCY: National Indian Gaming Commission (NIGC or Commission).
ACTION: Proposed rules.
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SUMMARY: The proposed rule modifies various Commission regulations to
reduce reporting burdens on tribes, update costs for background
investigations, clarify definitions and regulatory intent, and update
audit requirements to consolidate and reflect industry standards.
DATES: Submit comments on or before February 5, 2009.
ADDRESSES: Comments can be faxed, mailed, or e-mailed. Mail comments to
``Comments on Administrative Regulations,'' National Indian Gaming
Commission, 1441 L St., NW., Washington, DC 20005, Attn: Rebecca
Chapman, Office of General Counsel. Comments may be faxed to 202-632-
7066 (not a toll-free number). Comments may be sent electronically to
[email protected].
FOR FURTHER INFORMATION CONTACT: Rebecca Chapman, Staff Attorney,
Office of General Counsel, at (202) 632-7003; fax (202) 632-7066 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
I. Background
On October 17, 1988, Congress enacted the Indian Gaming Regulatory
Act (IGRA or Act), 25 U.S.C. 2701-21, creating the National Indian
Gaming Commission (NIGC or Commission) and developing a comprehensive
framework for the regulation of gaming on Indian lands. 25 U.S.C. 2702.
The NIGC was granted, among other things, regulatory oversight and
enforcement authority, including the authority to monitor tribal
compliance with IGRA, NIGC regulations, and tribal gaming ordinances.
The Commission has worked under IGRA for almost twenty years, and
in 1992, it adopted regulations. 25 U.S.C. 2706(b)(10). To better carry
out its statutory duties, the Commission undertakes this collection of
minor, miscellaneous regulation changes. The proposed rule will update
regulations, and it will streamline and optimize existing procedures.
II. Development of the Proposed Rules Through Written Tribal
Consultation
The Commission identified a need for minor changes to various parts
of its regulations, and in accordance with its government-to-government
consultation policy (69 FR 16,973 (Mar. 31, 2004)), requested input
from Indian tribes. On March 26, 2007, the Commission prepared
amendments to the regulations and sent a copy to the leaders of all
gaming tribes for comment. Fifty-seven tribes provided written
comments. The NIGC carefully reviewed all comments, often incorporating
suggested changes.
In addition, the NIGC consulted with tribes and their gaming
commissions at regional gaming association meetings around the country
and at the Washington, DC, headquarters. Since March 26, 2007, the NIGC
has held consultations at fifteen regional gaming conferences and
consulted with more than 110 tribes when the proposed rule was on the
agenda. Other than the previous 57 submissions, no tribes chose to
consult or comment further about these miscellaneous regulation
changes.
III. Purpose and Scope
The changes in this proposed rule are minor but provide incremental
improvements to existing regulations. These changes clarify existing
regulations, reduce tribal reporting burdens for fees, update costs for
background investigations, and allow tribes to consolidate audits and/
or file shortened versions to reduce costs. The proposed rule is
discussed below.
A. Definitions
NIGC regulations define ``key employee'' at 25 CFR 502.14. The jobs
listed for key employees are, among other things, subject to a
background investigation as a condition of licensure. The proposed rule
would reflect the common practice of tribes that identify additional
employees as key employees subject to background investigations beyond
those positions identified in IGRA. NIGC has received no comments on
this change.
IGRA and NIGC regulations define ``net revenue'' as ``gross gaming
revenues of an Indian gaming operation
[[Page 78243]]
less amounts paid out as, or paid for, prizes; and total gaming-related
operating expenses, excluding management fees.'' 25 U.S.C. 2703(9); 25
CFR 502.16. The proposed rule would amend 25 CFR 502.16 to read:
Net Revenues means gross gaming revenues of an Indian gaming
operation less--
(a) Amounts paid out as, or paid for, prizes; and
(b) Total gaming-related operating expenses, including all those
expenses of the gaming operation commonly known as operating
expenses and non-operating expenses consistent with professional
accounting pronouncements, excluding management fees.
The proposed rule would reflect the industry understanding of what
constitutes an operating expense in order to clarify what constitutes
net revenues for a gaming operation.
The Commission accepted the suggestion of a number of commenters to
include the words ``gaming-related'' in order to make clear that the
Commission's jurisdiction extended only to gaming revenues. Thus, the
proposed rule reflects this suggestion.
The NIGC's regulations define a ``person having a direct or
indirect financial interest in a management contract'' to include:
(d) When a corporation is a party to a management contract, any
person who is a director or who holds at least 10% of the issued and
outstanding stock alone or in combination with another stockholder
who is a spouse, parent, child or sibling; or * * *
25 CFR 502.17(d). The proposed rule would lower the requisite financial
interest to five percent for publicly traded companies so as to be
consistent with the Securities and Exchange Commission's understanding
of a ``significant shareholder.'' The Commission also notes that this
change would be consistent with similar requirements in other gaming
jurisdictions.
One comment from a tribe stated that this part of the proposed rule
created too onerous a burden on tribes. However, the NIGC disagrees and
feels that lowering the requisite interest would best protect the
integrity of Indian gaming.
NIGC regulations define ``primary management official'' at 25 CFR
502.19. The jobs listed for primary management officials are, among
other things, subject to a background investigation as a condition of
licensure. The proposed rule would reflect the common practice of
tribes that identify additional employees as primary management
officials subject to background investigations beyond those positions
identified in IGRA. NIGC has received no comments on this change.
B. Annual Fees Required
IGRA requires the NIGC to set an annual funding rate. 25 U.S.C.
2717. NIGC implements this requirement under 25 CFR part 514, which
requires tribal submissions of fees four times per year. The proposed
rule would reduce the number of fee submissions by half. The proposed
rule would also incorporate suggested changes by some tribal commenters
that noted inconsistencies in language over when to set fee rates and
when to adjust schedules.
C. Content of Management Contracts
IGRA and NIGC regulations require specific provisions in a
management contract, and its accompanying submission package, before
the Chairman can approve it. 25 U.S.C. 2711; 25 CFR 531.1, 533.3. The
Chairman must also approve any amendment to a management contract. 25
CFR 535.1, 535.3. In applying for approval, all persons having a
financial interest in, or management responsibility for, a management
contract must be disclosed to the Commission and must undergo a
background investigation. 25 CFR 537.1. Management contractors must pay
for this investigation. 25 CFR 537.3. If the Chairman disapproves a
management contract or amendment, the tribe or contractor may appeal.
25 CFR 539.1, 539.2.
The proposed rule would update 25 CFR 531.1, 533.1, 533.3, and
533.7 by removing language regarding the Secretary of the Interior's
approval of management contracts. Because the Secretary no longer
fulfills that role, the NIGC is eliminating unnecessary references in
Sec. Sec. 531.1, 533.1, 533.3, and 533.7 to the Secretary's former
authority. Further, section 533.5 permits the Chairman to take action
on noncompliant management contracts previously approved by the
Secretary. Because no management contracts approved by the Secretary
remain active, section 533.5 is obsolete and would be removed.
Additionally, the proposed rule would update Sec. 533.3 to reflect
the existing practice of providing a legal description for the land
upon which the gaming facility operates or will operate. This practice
allows the Commission to determine whether a management contract
references a site that is ``Indian lands'' eligible for gaming as
required under IGRA.
The proposed rule would change Sec. 537.3 to increase the fee for
background investigations. This would update the fee and make it closer
to actual industry costs.
Finally, the proposed rule would replace the words ``modification''
and ``modify'' with ``amendment'' and ``amend'' in Sec. Sec. 535.1,
535.3, 539.1, and 539.2 for purposes of internal consistency.
The only substantive comment received on proposed changes to these
sections came from a tribe that objected to the addition of a legal
description in the management contract submission package. As the
amendment merely reflects existing practice, the Commission will
propose the change.
D. Background and Licensing for Primary Management Officials and Key
Employees
IGRA requires that tribes, through their gaming ordinances,
maintain an adequate system of background investigations. 25 U.S.C.
2710(b)(2)(F). NIGC regulations, 25 CFR parts 556 and 558, implement
this requirement. The proposed rule would remove language in 25 CFR
556.2, 556.3 and 558.2 referring to the employment of individuals as
key employees and primary management officials and replace it with
language referring to their licensure instead. A decision to license an
applicant and a decision about an applicant's suitability (or
eligibility) for licensure are separate and distinct from a decision to
hire the applicant. These sections are concerned with licensure and
suitability determinations, not employment decisions. The NIGC received
tribal comments that approved of these changes.
These changes have implications for the use and distribution of
gaming application information for key employees and primary management
officials. As stated in the notice required by the proposed 25 CFR
556.2, application information may be ``disclosed * * * in connection
with the issuance, denial, or revocation of a gaming license * * *.''
As such, the information could not, without otherwise complying with
the requirements of the Privacy Act, 5 U.S.C. 552a, be provided to
support employment decisions by prospective or current employers of the
license applicant. This is a change from prior practice. Under the
NIGC's existing regulations, application information can be disclosed
in connection with the hiring and firing of an employee.
Finally, the amendments to 25 CFR 556.2, 556.3 and 558.2 will have
implications for tribal gaming ordinances, but not immediately. Upon
[[Page 78244]]
the effective date, tribes do not have to immediately amend their
gaming ordinances. However, following the effective date, whenever
tribes amend their gaming ordinances, they must also make amendments
conforming to the language in these sections.
E. Monitoring and Investigating
IGRA requires ordinances submitted for the Chairman's review to
contain a provision requiring an annual audit. 25 U.S.C. 2710(b)(2).
The NIGC's regulation, 25 CFR 571.12, creates standard procedures for
the submission of the annual audit to the Commission, and Sec. 571.13
deals with how and when a tribe submits an audit statement. The
proposed rule would still require tribes to contract with independent
certified public accountants that use Generally Accepted Accounting
Principles and Generally Accepted Accounting Standards to complete
their audits. However, the proposed rule would allow tribes with
multiple facilities to consolidate their audit statements into one.
Further, the proposed rule would allow operations earning less than $1
million in gross gaming revenue to file an abbreviated statement.
Finally, the proposed rule would allow a tribe to submit an electronic
version of an audit for so called ``stub periods'' of less than 1 year.
The proposed rule would reflect common sense practice and reduce tribal
costs and burden hours.
Tribal commenters supported the proposed rule's new consolidated
audit statements but noted inconsistencies with accounting language and
a misuse of accounting terms. The Commission agreed and modified the
proposed rule to reflect standard practice and a proper use of
accounting terms.
Tribal commenters also objected to the requirement of stub period
audits under Sec. 571.13 as burdensome. The proposed rule therefore
would permit tribes to incorporate stub period audit information in the
next fiscal year financial statement. This would alleviate any cost and
time concerns.
NIGC regulation 25 CFR 573.6 discusses the Chairman's ability to
close a gaming operation for any listed substantial IGRA violation. The
proposed rule would add one substantial violation to the list and allow
the Chairman to issue a temporary closure order for a gaming operation
that operates on Indian land not eligible for gaming under IGRA. Indian
gaming under IGRA must occur on ``Indian lands,'' 25 U.S.C. 2710(a),
(b) and (d), as IGRA defines that term. 25 U.S.C. 2703(4). If Indian
land is trust land acquired after October 17, 1988 (``after-acquired
land''), then the land is eligible for gaming only if it meets one of
the exceptions provided in 25 U.S.C. 2719. A gaming operation that
operates on after-acquired land and does not meet one of the exceptions
in Sec. 2719 is in violation of IGRA. Operating illegally in this way
is a substantial violation of IGRA that warrants immediate closure. The
NIGC has not received comments on this part of the proposed rule.
Regulatory Matters
Regulatory Flexibility Act
Because the proposed rule would make only minor changes to existing
rules, it 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 annual effect on the economy of $100 million or more. The rule
will not cause a major increase in costs or prices for consumers,
individual industries, Federal, state, local government agencies, or
geographic regions. Nor will the 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 Mandates Reform Act
The Commission, as an independent regulatory agency within the
Department of the Interior, is exempt from compliance with the Unfunded
Mandates Reform Act. 2 U.S.C. 1502(1); 2 U.S.C. 658(1). Regardless, the
proposed rule does not impose an unfunded mandate on state, local,
tribal governments, or on the private sector of more than $100 million
per year. Thus, it is not a ``significant regulatory action'' under the
Unfunded Mandates Reform Act.
Civil Justice Reform
In accordance with Executive Order 12988, the Office of General
Counsel has determined that the proposed rule does not unduly burden
the judicial system, and it meets the requirements of section 3(a) and
3(b)(2) of that order.
National Environmental Policy Act
The Commission has determined that the proposed rule does not
constitute a major federal action significantly affecting the quality
of the human environment and no detailed statement is required pursuant
to the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et
seq.
Paperwork Reduction Act
The proposed rules does not require any significant changes in
information collection under the Paperwork Reduction Act of 1995, 44
U.S.C. 3501 et seq. The information collections in the affected
regulations are included within OMB control numbers 3141-0001 for part
571; 3141-0003 for parts 556 and 558; 3141-0004 for parts 531, 533,
535, 537, 539; and 3141-0007 for part 514.
List of Subjects in 25 CFR Parts 502, 514, 531, 533, 535, 537, 539,
556, 558, 571
Gambling, Indians-lands, Indians--tribal government, Reporting and
recordkeeping requirements.
Text of the Proposed Rules
For the reasons set forth in the preamble, the Commission proposes
to amend its regulations at 25 CFR Chapter III as follows:
1. The authority citation for part 502 continues to read as
follows:
Authority: 25 U.S.C. 2701 et seq.
2. Add new paragraph (d) to Sec. 502.14 to read as follows:
Sec. 502.14 Key employee.
* * * * *
(d) Any other person designated by the tribe as a key employee.
3. Revise Sec. 502.16 to read as follows:
Sec. 502.16. Net revenues.
Net revenues means gross gaming revenues of an Indian gaming
operation less--
(a) Amounts paid out as, or paid for, prizes; and
(b) Total gaming-related operating expenses, including all those
expenses of the gaming operation commonly known as operating expenses
and non-operating expenses consistent with professional accounting
pronouncements, excluding management fees.
4. Revise Sec. 502.17 to read as follows:
Sec. 502.17 Person having a direct or indirect financial interest in
a management contract.
Person having a direct or indirect financial interest in a
management contract means:
(a) When a person is a party to a management contract, any person
having a direct financial interest in such management contract;
[[Page 78245]]
(b) When a trust is a party to a management contract, any
beneficiary or trustee;
(c) When a partnership is a party to a management contract, any
partner;
(d) When a corporation is a party to a management contract, any
person who is a director or who holds at least 5% of the issued and
outstanding stock alone or in combination with another stockholder who
is a spouse, parent, child or sibling when the corporation is publicly
traded or the top ten (10) shareholders for a privately held
corporation;
(e) When an entity other than a natural person has an interest in a
trust, partnership or corporation that has an interest in a management
contract, all parties of that entity are deemed to be persons having a
direct financial interest in a management contract; or
(f) Any person or entity who will receive a portion of the direct
or indirect interest of any person or entity listed above through
attribution, grant, pledge, or gift.
5. Add new paragraph (d) to Sec. 502.19 to read as follows:
Sec. 502.19 Primary management official.
* * * * *
(d) Any other person designated by the tribe as a primary
management official.
6. The authority citation for part 514 continues to read as
follows:
Authority: 25 U.S.C. 2706, 2708, 2710, 2717, 2717a.
7. Revise Sec. 514.1 to read as follows:
Sec. 514.1 Annual fees.
(a) Each gaming operation under the jurisdiction of the Commission
shall pay to the Commission annual fees as established by the
Commission. The Commission, by a vote of not less than two of its
members, shall adopt the rates of fees to be paid.
(1) The Commission shall adopt preliminary rates for each calendar
year no later than February 1st of that year, and, if considered
necessary, shall modify those rates no later than July 1st of that
year.
(2) The Commission shall publish the rates of fees in a notice in
the Federal Register.
(3) The rates of fees imposed shall be--
(i) No more than 2.5 percent of the first $1,500,000 (1st tier),
and
(ii) No more than 5 percent of amounts in excess of the first
$1,500,000 (2nd tier) of the assessable gross revenues from each gaming
operation subject to the jurisdiction of the Commission.
(4) If a tribe has a certificate of self-regulation, the rate of
fees imposed shall be no more than .25 percent of assessable gross
revenues from self-regulated class II gaming operations.
(b) For purposes of computing fees, assessable gross revenues for
each gaming operation are the annual total amount of money wagered on
class II and III games, admission fees (including table or card fees),
less any amounts paid out as prizes or paid for prizes awarded, and
less an allowance for amortization of capital expenditures for
structures.
(1) Unless otherwise provided by the regulations, generally
accepted accounting principles shall be used.
(2) The allowance for amortization of capital expenditures for
structures shall be either the greater of:
(a) An amount not to exceed 5% of the cost of structures in use
throughout the year and 2.5% (two and one-half percent) of the cost of
structures in use during only a part of the year; or
(b) An amount not to exceed 10% of the cost of the total amount of
amortization depreciation expenses for the year.
(3) Examples of computations follow:
(a) For (2)(a):
Gross gaming revenues:
Money wagered............................. ........... $1,000,000
Admission fees............................ $5,000 1,005,000
Less:
Prizes paid in cash....................... 500,000 ...........
Cost of other prizes awarded.............. 10,000 510,000
Gross gaming profit........................... ........... 495,000
Less allowance for amortization of capital
expenditures for structures:
Capital expenditures for structures made
in--
Prior years........................... 750,000 ...........
Current year.......................... 50,000 ...........
Maximum allowance:
$750,000 x .05 =.......................... 37,500 ...........
$50,000 x .025 =.......................... 1,250 38,750
Assessable gross revenues..................... ........... 456,250
(b) For (2)(b):
Gross gaming revenues:
Money wagered............................. ........... $1,000,000
Admission fees............................ $5,000 ...........
1,005,000
Less:
Prizes paid in cash....................... 500,000 ...........
Cost of other prizes awarded.............. 10,000 510,000
Gross gaming profit........................... ........... 495,000
Allowance (depreciation expense for 40,000 ...........
structures) per books........................
Capital expenditures for structures:
Capital expenditures for structures made
in
Prior years........................... 750,000 ...........
Current year.......................... 50,000 ...........
Maximum allowance:
$750,000 x .05 =.......................... 37,500 ...........
$50,000 x .025 =.......................... 1,250 ...........
Total maximum allowance....................... 38,750 ...........
Lesser of depreciation per books or maximum ........... 38,750
allowance....................................
Assessable gross revenues..................... ........... 456,250
[[Page 78246]]
(4) All class II and III revenues from gaming operations are to be
included.
(c) Each gaming operation subject to the jurisdiction of the
Commission and not exempt from paying fees pursuant to the self-
regulation provisions shall file with the Commission a statement
showing its assessable gross revenues for the previous calendar year.
(1) These statements shall show the amounts derived from each type
of game, the amounts deducted for prizes, and the amounts deducted for
the amortization of structures;
(2) These statements shall be transmitted to the Commission to
arrive no later than March 1st and August 1st of each calendar.
(3) The statements shall identify an individual or individuals to
be contacted should the Commission need to communicate further with the
gaming operation. The telephone numbers of the individual(s) shall be
included.
(4) Each gaming operation shall determine the amount of fees to be
paid and remit them with the statement required in paragraph (c) of
this section. The fees payable shall be computed using--
(i) The most recent rates of fees adopted by the Commission
pursuant to paragraph (a)(1) of this section,
(ii) The assessable gross revenues for the previous calendar year
as reported pursuant to this paragraph, and
(iii) The amounts paid and credits received during the year.
(5) Each statement shall include the computation of the fees
payable, showing all amounts used in the calculations. The required
calculations are as follows:
(i) Multiply the previous calendar year's 1st tier assessable gross
revenues by the rate for those revenues adopted by the Commission.
(ii) Multiply the previous calendar year's 2nd tier assessable
gross revenues by the rate for those revenues adopted by the
Commission.
(iii) Add (total) the results (products) obtained in paragraphs
(c)(5) (i) and (ii) of this section.
(iv) Multiply the total obtained in paragraph (c)( 5)(iii) of this
section by \1/2\.
(v) The amount computed in paragraph (c)(5)(iv) of this section is
the amount to be remitted.
(6) Examples of fee computations follows:
(i) Where a filing is made for March 1st of the calendar year, the
previous year's assessable gross revenues are $2,000,000, the fee rates
adopted by the Commission are 0.0% on the first $1,500,000 and .08% on
the remainder, the amounts to be used and the computations to be made
are as follows:
1st tier revenues--$1,500,000 x 0.0%=
2nd tier revenues--$500,000 x .08%=.......................... $400
Annual fees.................................................. 400
Multiply for fraction of year--\1/2\ or...................... .50
Fees for first payment....................................... 200
Amount to be remitted........................................ 200
(7) The statements, remittances and communications about fees shall
be transmitted to the Commission at the following address: Office of
Finance, National Indian Gaming Commission, 1441 L Street, NW., Suite
9100, Washington, DC 20005. Checks should be made payable to the
National Indian Gaming Commission (do not remit cash).
(8) The Commission may assess a penalty for failure to file timely
a statement.
(9) Interest shall be assessed at rates established from time to
time by the Secretary of the Treasury on amounts remaining unpaid after
their due date (31 U.S.C. 3717).
(d) The total amount of all fees imposed during any fiscal year
shall not exceed the statutory maximum imposed by Congress. The
Commission shall credit pro-rata any fees collected in excess of this
amount against amounts otherwise due by March 1st and August 1st of
each calendar year.
(e) Failure to pay fees, any applicable penalties, and interest
related thereto may be grounds for:
(1) Closure, or
(2) Disapproving or revoking the approval of the Chairman of any
license, ordinance, or resolution required under this Act for the
operation of gaming.
(f) To the extent that revenue derived from fees imposed under the
schedule established under this paragraph are not expended or committed
at the close of any fiscal year, such funds shall remain available
until expended (Pub. L. 101-121; 103 Stat. 718; 25 U.S.C. 2717a) to
defray the costs of operations of the Commission.
8. The authority citation for part 531 continues to read as
follows:
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
9. Revise Sec. 531.1 to read as follows:
Sec. 531.1 Required provisions.
Management contracts shall conform to all of the requirements
contained in this section in the manner indicated.
(a) Governmental authority. Provide that all gaming covered by the
contract will be conducted in accordance with the Indian Gaming
Regulatory Act (IGRA, or the Act) and governing tribal ordinance(s).
(b) Assignment of responsibilities. Enumerate the responsibilities
of each of the parties for each identifiable function, including:
(1) Maintaining and improving the gaming facility;
(2) Providing operating capital;
(3) Establishing operating days and hours;
(4) Hiring, firing, training and promoting employees;
(5) Maintaining the gaming operation's books and records;
(6) Preparing the operation's financial statements and reports;
(7) Paying for the services of the independent auditor engaged
pursuant to Sec. 571.12 of this chapter;
(8) Hiring and supervising security personnel;
(9) Providing fire protection services;
(10) Setting advertising budget and placing advertising;
(11) Paying bills and expenses;
(12) Establishing and administering employment practices;
(13) Obtaining and maintaining insurance coverage, including
coverage of public liability and property loss or damage;
(14) Complying with all applicable provisions of the Internal
Revenue Code;
(15) Paying the cost of any increased public safety services; and
(16) If applicable, supplying the National Indian Gaming Commission
(NIGC, or the Commission) with all information necessary for the
Commission to comply with the regulations of the Commission issued
pursuant to the National Environmental Policy Act (NEPA).
(c) Accounting. Provide for the establishment and maintenance of
satisfactory accounting systems and procedures that shall, at a
minimum:
(1) Include an adequate system of internal accounting controls;
(2) Permit the preparation of financial statements in accordance
with generally accepted accounting principles;
(3) Be susceptible to audit;
(4) Allow a gaming operation, the tribe, and the Commission to
calculate the annual fee under Sec. 514.1 of this chapter;
(5) Permit the calculation and payment of the manager's fee; and
(6) Provide for the allocation of operating expenses or overhead
expenses among the tribe, the tribal gaming operation, the contractor,
and any other user of shared facilities and services.
(d) Reporting. Require the management contractor to provide the
tribal governing body not less frequently than monthly with verifiable
financial reports or all information necessary to prepare such reports.
[[Page 78247]]
(e) Access. Require the management contractor to provide immediate
access to the gaming operation, including its books and records, by
appropriate tribal officials, who shall have:
(1) The right to verify the daily gross revenues and income from
the gaming operation; and
(2) Access to any other gaming-related information the tribe deems
appropriate.
(f) Guaranteed payment to tribe. Provide for a minimum guaranteed
monthly payment to the tribe in a sum certain that has preference over
the retirement of development and construction costs.
(g) Development and construction costs. Provide an agreed upon
maximum dollar amount for the recoupment of development and
construction costs.
(h) Term limits. Be for a term not to exceed five (5) years, except
that upon the request of a tribe, the Chairman may authorize a contract
term that does not exceed seven (7) years if the Chairman is satisfied
that the capital investment required, and the income projections, for
the particular gaming operation require the additional time. The time
period shall begin running no later than the date when the gaming
activities authorized by an approved management contract begin.
(i) Compensation. Detail the method of compensating and reimbursing
the management contractor. If a management contract provides for a
percentage fee, such fee shall be either:
(1) Not more than thirty (30) percent of the net revenues of the
gaming operation if the Chairman determines that such percentage is
reasonable considering the circumstances; or
(2) Not more than forty (40) percent of the net revenues if the
Chairman is satisfied that the capital investment required and income
projections for the gaming operation require the additional fee.
(j) Termination provisions. Provide the grounds and mechanisms for
amending or terminating the contract (termination of the contract shall
not require the approval of the Chairman).
(k) Dispute provisions. Contain a mechanism to resolve disputes
between:
(1) The management contractor and customers, consistent with the
procedures in a tribal ordinance;
(2) The management contractor and the tribe; and
(3) The management contractor and the gaming operation employees.
(l) Assignments and subcontracting. Indicate whether and to what
extent contract assignments and subcontracting are permissible.
(m) Ownership interests. Indicate whether and to what extent
changes in the ownership interest in the management contract require
advance approval by the tribe.
(n) Effective date. State that the contract shall not be effective
unless and until it is approved by the Chairman, date of signature of
the parties notwithstanding.
10. The authority citation for part 533 continues to read as
follows:
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
Sec. 533.3 [Amended]
11. In Sec. 533.1, remove paragraph (c).
12. Revise Sec. 533.2 to read as follows:
Sec. 533.2 Time for submitting management contracts and amendments.
A tribe or a management contractor shall submit a management
contract to the Chairman for review within thirty (30) days of
execution by the parties. The Chairman shall notify the parties of
their right to appeal the approval or disapproval of the management
contract under part 539 of this chapter.
13. Revise Sec. 533.3 to read as follows:
Sec. 533.3 Submission of management contract for approval.
A tribe shall include in any request for approval of a management
contract under this part:
(a) A contract containing:
(1) Original signatures of an authorized official of the tribe and
the management contractor;
(2) A representation that the contract as submitted to the Chairman
is the entirety of the agreement among the parties; and
(b) A letter, signed by the tribal chairman, setting out the
authority of an authorized tribal official to act for the tribe
concerning the management contract.
(c) Copies of documents evidencing the authority under paragraph
(b) of this section.
(d) A list of all persons and entities identified in Sec. Sec.
537.1(a) and 537.1(c)(1) of this chapter, and either:
(1) The information required under Sec. 537.1(b)(1) of this
chapter for class II gaming contracts and Sec. 537.1(b)(1)(i) of this
chapter for class III gaming contracts; or
(2) The dates on which the information was previously submitted.
(e)(1) For new contracts and new operations, a three (3)-year
business plan which sets forth the parties' goals, objectives, budgets,
financial plans, and related matters; or
(2) For new contracts for existing operations, a three (3) year
business plan which sets forth the parties goals, objectives, budgets,
financial plans, and related matters, and income statements and sources
and uses of funds statements for the previous three (3) years.
(f) If applicable, a justification, consistent with the provisions
of Sec. 531.1(h) of this chapter, for a term limit in excess of five
(5) years, but not exceeding seven (7) years.
(g) If applicable, a justification, consistent with the provisions
of Sec. 531.1(i) of this chapter, for a fee in excess of thirty (30)
percent, but not exceeding forty (40) percent.
(h) A legal description for the site on which the gaming operation
to be managed is, or will be, located.
14. Revise Sec. 533.4 to read as follows:
Sec. 533.4 Action by the Chairman.
(a) The Chairman shall approval or disapprove a management
contract, applying the standards contained in Sec. 533.6 of this part,
within 180 days of the date on which the Chairman receives a complete
submission under Sec. 533.3 of this part, unless the Chairman notifies
the tribe and management contractor in writing of the need for an
extension of up to ninety (90) days.
(b) A tribe may bring an action in a U.S. district court to compel
action by the Chairman:
(1) After 180 days following the date on which the Chairman
receives a complete submission if the Chairman does not approve or
disapprove the contract under this part; or
(2) After 270 days following the Chairman's receipt of a complete
submission if the Chairman has told the tribe and management contractor
in writing of the need for an extension and has not approved or
disapproved the contract under this part.
Sec. 533.5 [Removed and Reserved]
15. Remove and reserve Sec. 533.5.
16. Revise Sec. 533.6 to read as follows:
Sec. 533.6 Approval and disapproval.
(a) The Chairman may approve a management contract if it meets the
standards of part 531 of this chapter and Sec. 533.3 of this part.
Failure to comply with the standards of part 531 of this chapter or
Sec. 533.3 may result in the Chairman's disapproval of the management
contract.
(b) The Chairman shall disapprove a management contract for class
II gaming if he or she determines that--
(1) Any person with a direct or indirect financial interest in, or
having management responsibility for, a management contract:
(i) Is an elected member of the governing body of the tribe that is
party to the management contract;
[[Page 78248]]
(ii) Has been convicted of any felony or any misdemeanor gaming
offense;
(iii) Has knowingly and willfully provided materially false
statements or information to the Commission or to a tribe;
(iv) Has refused to respond to questions asked by the Chairman in
accordance with his or her responsibilities under this part; or
(v) Is determined by the Chairman to be a person whose prior
activities, criminal record, if any, or reputation, habits, and
associations pose a threat to the public interest or to the effective
regulation and control of gaming, or create or enhance the dangers of
unsuitable, unfair, or illegal practices, methods, and activities in
the conduct of gaming or the carrying on of related business and
financial arrangements;
(2) The management contractor or its agents have unduly interfered
with or influenced for advantage, or have tried to unduly interfere
with or influence for advantage, any decision or process of tribal
government relating to the gaming operation;
(3) The management contractor or its agents has deliberately or
substantially failed to follow the terms of the management contract or
the tribal gaming ordinance or resolution adopted and approved pursuant
to this Act; or
(4) A trustee, exercising the skill and diligence to which a
trustee is commonly held, would not approve the contract.
(c) The Chairman may disapprove a management contract for class III
gaming if he or she determines that a person with a financial interest
in, or management responsibility for, a management contract is a person
whose prior activities, criminal record, if any, or reputation, habits,
and associations pose a threat to the public interest or to the
effective regulation and control of gaming, or create or enhance the
dangers of unsuitable, unfair, or illegal practices, methods, and
activities in the conduct of gaming or the carrying on of related
business and financial arrangements.
17. Revise Sec. 533.7 to read as follows:
Sec. 533.7 Void agreements.
Management contracts and changes in persons with a financial
interest in or management responsibility for a management contract,
that have not been approved by the Chairman in accordance with the
requirements of part 531 of this chapter and this part, are void.
18. The authority citation for part 535 continues to read as
follows:
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
19. Revise Sec. 535.1 to read as follows:
Sec. 535.1 Amendments.
(a) Subject to the Chairman's approval, a tribe may enter into an
amendment of a management contract for the operation of a class II or
class III gaming activity.
(b) A tribe shall submit an amendment to the Chairman within thirty
(30) days of its execution.
(c) A tribe shall include in any request for approval of an
amendment under this part:
(1) An amendment containing original signatures of an authorized
official of the tribe and the management contractor and terms that meet
the applicable requirements of part 531 of this chapter;
(2) A letter, signed by the tribal chairman, setting out the
authority of an authorized tribal official to act for the tribe
concerning the amendment;
(3) Copies of documents evidencing the authority under paragraph
(c)(2) of this section;
(4) A list of all persons and entities identified in Sec. 537.1(a)
and Sec. 537.1(c)(1) of this chapter:
(i) If the amendment involves a change in person(s) having a direct
or indirect financial interest in the management contract or having
management responsibility for the management contract, a list of such
person(s) and either:
(A) The information required under Sec. 537.1(b)(1) of this
chapter for class II gaming contracts or Sec. 537.1(b)(1)(i) of this
chapter for class III gaming contracts; or
(B) The dates on which the information was previously submitted;
(ii) [Reserved]
(5) If applicable, a justification, consistent with the provisions
of Sec. 531.1(h) of this chapter, for a term limit in excess of five
(5) years, but not exceeding seven (7) years; and
(6) If applicable, a justification, consistent with the provisions
of Sec. 531.1(i) of this chapter, for a management fee in excess of
thirty (30) percent, but not exceeding forty (40) percent.
(d)(1) The Chairman shall approve or disapprove an amendment within
thirty (30) days from receipt of a complete submission if the amendment
does not require a background investigation under part 537 of this
chapter, unless the Chairman notifies the parties in writing of the
need for an extension of up to thirty (30) days.
(2) The Chairman shall approve or disapprove an amendment as soon
as practicable but no later than 180 days from receipt of a complete
submission if the amendment requires a background investigation under
part 537 of this chapter;
(3) A party may appeal the Chairman's approval or disapproval of an
amendment under part 539 of this chapter. If the Chairman does not
approve or disapprove an amendment within the timelines of paragraph
(d)(1) or (d)(2) of this section, the amendment shall be deemed
disapproved and a party shall have thirty (30) days to appeal the
decision under part 539 of this chapter.
(e)(1) The Chairman may approve an amendment to a management
contract if the amendment meets the submission requirements of
paragraph (c) of this section. Failure to comply with the submission
requirements of paragraph (c) of this section may result in the
Chairman's disapproval of an amendment.
(2) The Chairman shall disapprove an amendment of a management
contract for class II gaming if he or she determines that the
conditions contained in Sec. 533.6(b) of this chapter apply.
(3) The Chairman may disapprove an amendment of a management
contract for class III gaming if he or she determines that the
conditions contained in Sec. 533.6(c) of this chapter apply.
(f) Amendments that have not been approved by the Chairman in
accordance with the requirements of this part are void.
20. Revise Sec. 535.3 to read as follows:
Sec. 535.3 Post-approval noncompliance.
If the Chairman learns of any action or condition that violates the
standards contained in parts 531, 533, 535, or 537 of this chapter, the
Chairman may require modifications of, or may void, a management
contract or amendment approved by the Chairman under such sections,
after providing the parties an opportunity for a hearing before the
Chairman and a subsequent appeal to the Commission as set forth in part
577 of this chapter. The Chairman will initiate modification or void
proceedings by serving the parties, specifying the grounds for the
modification or void. The parties will have thirty (30) days to request
a hearing or respond with objections. Within thirty (30) days of
receiving a request for a hearing, the Chairman will hold a hearing and
receive oral presentations and written submissions. The Chairman will
make a decision on the basis of the developed record and notify the
parties of the decision and of their right to appeal.
21. The authority citation to part 537 continues to read as
follows:
[[Page 78249]]
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
22. Revise Sec. 537.1 to read as follows:
Sec. 537.1 Applications for approval.
(a) For each management contract for class II gaming, the Chairman
shall conduct or cause to be conducted a background investigation of:
(1) Each person with management responsibility for a management
contract;
(2) Each person who is a director of a corporation that is a party
to a management contract;
(3) The ten (10) persons who have the greatest direct or indirect
financial interest in a management contract;
(4) Any entity with a financial interest in a management contract
(in the case of institutional investors, the Chairman may exercise
discretion and reduce the scope of the information to be furnished and
the background investigation to be conducted); and
(5) Any other person with a direct or indirect financial interest
in a management contract otherwise designated by the Commission.
(b) For each natural person identified in paragraph (a) of this
section, the management contractor shall provide to the Commission the
following information:
(1) Required information. (i) Full name, other names used (oral or
written), social security number(s), birth date, place of birth,
citizenship, and gender;
(ii) A current photograph, driver's license number, and a list of
all languages spoken or written;
(iii) Business and employment positions held, and business and
residence addresses currently and for the previous ten (10) years; the
city, state and country of residence from age eighteen (18) to the
present;
(iv) The names and current addresses of at least three (3) personal
references, including one personal reference who was acquainted with
the person at each different residence location for the past five (5)
years;
(v) Current business and residence telephone numbers;
(vi) A description of any existing and previous business
relationships with Indian tribes, including ownership interests in
those businesses;
(vii) A description of any existing and previous business
relationships with the gaming industry generally, including ownership
interests in those businesses;
(viii) The name and address of any licensing or regulatory agency
with which the person has filed an application for a license or permit
relating to gaming, whether or not such license or permit was granted;
(ix) For each gaming offense and for each felony for which there is
an ongoing prosecution or a conviction, the name and address of the
court involved, the charge, and the dates of the charge and of the
disposition;
(x) For each misdemeanor conviction or ongoing misdemeanor
prosecution (excluding minor traffic violations) within ten (10) years
of the date of the application, the name and address of the court
involved, and the dates of the prosecution and the disposition;
(xi) A complete financial statement showing all sources of income
for the previous three (3) years, and assets, liabilities, and net
worth as of the date of the submission; and
(xii) For each criminal charge (excluding minor traffic charges)
regardless of whether or not it resulted in a conviction, if such
criminal charge is within 10 years of the date of the application and
is not otherwise listed pursuant to paragraphs (b)(1)(ix) or (b)(1)(x)
of this section, the name and address of the court involved, the
criminal charge, and the dates of the charge and the disposition.
(2) Fingerprints. The management contractor shall arrange with an
appropriate federal, state, or tribal law enforcement authority to
supply the Commission with a completed form FD-258, Applicant
Fingerprint Card, (provided by the Commission), for each person for
whom background information is provided under this section.
(3) Responses to Questions. Each person with a direct or indirect
financial interest in a management contract or management
responsibility for a management contract shall respond within thirty
(30) days to written or oral questions propounded by the Chairman.
(4) Privacy notice. In compliance with the Privacy Act of 1974,
each person required to submit information under this section shall
sign and submit the following statement:
Solicitation of the information in this section is authorized by
25 U.S.C. 2701 et seq. The purpose of the requested information is
to determine the suitability of individuals with a financial
interest in, or having management responsibility for, a management
contract. The information will be used by the National Indian Gaming
Commission members and staff and Indian tribal officials who have
need for the information in the performance of their official
duties. The information may be disclosed to appropriate federal,
tribal, state, or foreign law enforcement and regulatory agencies in
connection with a background investigation or when relevant to
civil, criminal or regulatory investigations or prosecutions or
investigations of activities while associated with a gaming
operation. Failure to consent to the disclosures indicated in this
statement will mean that the Chairman of the National Indian Gaming
Commission will be unable to approve the contract in which the
person has a financial interest or management responsibility.
The disclosure of a persons' Social Security Number (SSN) is
voluntary. However, failure to supply a SSN may result in errors in
processing the information provided.
(5) Notice regarding false statements. Each person required to
submit information under this section shall sign and submit the
following statement:
A false statement knowingly and willfully provided in any of the
information pursuant to this section may be grounds for not
approving the contract in which I have a financial interest or
management responsibility, or for disapproving or voiding such
contract after it is approved by the Chairman of the National Indian
Gaming Commission. Also, I may be punished by fine or imprisonment
(U.S. Code, title 18, section 1001).
(c) For each entity identified in paragraph (a)(4) of this section,
the management contractor shall provide to the Commission the following
information:
(1) List of individuals. (i) Each of the ten (10) largest
beneficiaries and the trustees when the entity is a trust;
(ii) Each of the ten (10) largest partners when the entity is a
partnership;
(iii) Each person who is a director or who is one of the ten (10)
largest holders of the issued and outstanding stock alone or in
combination with another stockholder who is a spouse, parent, child or
sibling when the entity is a corporation; and
(iv) For any other type of entity, the ten (10) largest owners of
that entity alone or in combination with any other owner who is a
spouse, parent, child or sibling and any person with management
responsibility for that entity.
(2) Required information. (i) The information required in paragraph
(b)(1)(i) of this section for each individual identified in paragraph
(c)(1) of this section;
(ii) Copies of documents establishing the existence of the entity,
such as the partnership agreement, the trust agreement, or the articles
of incorporation;
(iii) Copies of documents designating the person who is charged
with acting on behalf of the entity;
(iv) Copies of bylaws or other documents that provide the day-to-
day operating rules for the organization;
(v) A description of any existing and previous business
relationships with
[[Page 78250]]
Indian tribes, including ownership interests in those businesses;
(vi) A description of any existing and previous business
relationships with the gaming industry generally, including ownership
interest in those businesses;
(vii) The name and address of any licensing or regulatory agency
with which the entity has filed an application for a license or permit
relating to gaming, whether or not such license or permit was granted;
(viii) For each gaming offense and for each felony for which there
is an ongoing prosecution or a conviction, the name and address of the
court involved, the charge, and the dates of the charge and
disposition;
(ix) For each misdemeanor conviction or ongoing misdemeanor
prosecution within ten (10) years of the date of the application, the
name and address of the court involved, and the dates of the
prosecution and disposition;
(x) Complete financial statements for the previous three (3) fiscal
years; and
(xi) For each criminal charge (excluding minor traffic charges)
whether or not there is a conviction, if such criminal charge is within
10 years of the date of the application and is not otherwise listed
pursuant to paragraph (c)(1)(viii) or (c)(1)(ix) of this section, the
criminal charge, the name and address of the court involved and the
dates of the charge and disposition.
(3) Responses to questions. Each entity with a direct or indirect
financial interest in a management contract shall respond within thirty
(30) days to written or oral questions propounded by the Chairman.
(4) Notice regarding false statements. Each entity required to
submit information under this section shall sign and submit the
following statement:
A false statement knowingly and willfully provided in any of the
information pursuant to this section may be grounds for not
approving the contract in which we have a financial interest, or for
disapproving or voiding such contract after it is approved by the
Chairman of the National Indian Gaming Commission. Also, we may be
punished by fine or imprisonment (U.S. Code, title 18, section
1001).
23. Revise Sec. 537.3 to read as follows:
Sec. 537.3 Fees for background investigations.
(a) A management contractor shall pay to the Commission or the
contractor(s) designated by the Commission the cost of all background
investigations conducted under this part.
(b) The management contractor shall post a bond, letter of credit,
or deposit with the Commission to cover the cost of the background
investigations as follows:
(1) Management contractor (party to the contract)--$25,000.
(2) Each individual and entity with a financial interest in the
contract--$10,000.
(c) The management contractor shall be billed for the costs of the
investigation as it proceeds; the investigation shall be suspended if
the unpaid costs exceed the amount of the bond, letter of credit, or
deposit available.
(1) An investigation will be terminated if any bills remain unpaid
for more than thirty (30) days.
(2) A terminated investigation will preclude the Chairman from
making the necessary determinations and result in a disapproval of a
management contract.
(d) The bond, letter of credit or deposit will be returned to the
management contractor when all bills have been paid and the
investigations have been completed or terminated.
24. The authority citation for part 539 continues to read as
follows:
Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.
25. Revise Sec. 539.1 to read as follows:
Sec. 539.1 Scope of this part.
This part applies to appeals from the Chairman's decision to
approve or disapprove a management contract or amendment under this
subchapter, except that appeals from the Chairman's decision to require
modifications of or to void a management contract or amendment
subsequent to his or her initial approval are addressed in Sec. 535.3
and part 577 of this chapter.
26. Revise Sec. 539.2 to read as follows:
Sec. 539.2 Appeals.
A party may appeal the Chairman's approval or disapproval of a
management contract or amendment under parts 533 or 535 of this chapter
to the Commission. Such an appeal shall be filed with the Commission
within thirty (30) days after the Chairman serves his or her
determination pursuant to part 519 of this chapter. Failure to file an
appeal within the time provided by this section shall result in a
waiver of the opportunity for an appeal. At the time of filing, an
appeal under this section shall specify the reasons why the party
believes the Chairman's determination to be erroneous, and shall
include supporting documentation, if any. Within thirty (30) days after
receipt of the appeal, the Commission shall render a decision unless
the appellant elects to provide the Commission additional time, not to
exceed an additional thirty (30) days, to render a decision. In the
absence of a decision within the time provided, the Chairman's decision
shall constitute a final decision of the Commission.
27. The authority citation for part 556 continues to read as
follows:
Authority: 25 U.S.C. 2706, 2710, 2712.
28. Revise Sec. 556.2 to read as follows:
Sec. 556.2 Privacy notice.
(a) A tribe shall place the following notice on the application
form for a key employee or a primary management official before that
form is filled out by an applicant:
In compliance with the Privacy Act of 1974, the following
information is provided: Solicitation of the information on this
form is authorized by 25 U.S.C. 2701 et seq. The purpose of the
requested information is to determine the eligibility of individuals
to be granted a gaming license. The information will be used by the
Tribal gaming regulatory authorities and by the National Indian
Gaming Commission members and staff who have need for the
information in the performance of their official duties. The
information may be disclosed to appropriate Federal, Tribal, State,
local, or foreign law enforcement and regulatory agencies when
relevant to civil, criminal or regulatory investigations or
prosecutions or when pursuant to a requirement by a tribe or the
National Indian Gaming Commission in connection with the issuance,
denial, or revocation of a gaming license, or investigations of
activities while associated with a tribe or a gaming operation.
Failure to consent to the disclosures indicated in this notice will
result in a tribe's being unable to license you for a primary
management official or key employee position.
The disclosure of your Social Security Number (SSN) is
voluntary. However, failure to supply a SSN may result in errors in
processing your application.
(b) A tribe shall notify in writing existing key employees and
primary management officials that they shall either:
(1) Complete a new application form that contains a Privacy Act
notice; or
(2) Sign a statement that contains the Privacy Act notice and
consent to the routine uses described in that notice.
(c) All tribal gaming ordinances and ordinance amendments approved
by the Chairman prior to the effective date of this section will
require no changes to comply with this section. Future submissions,
however, must comply.
(d) All license application forms used 180 days after the effective
date of this section shall contain notices in compliance with this
section.
29. Revise Sec. 556.3 to read as follows:
Sec. 556.3 Notice regarding false statements.
(a) A tribe shall place the following notice on the application
form for a key
[[Page 78251]]
employee or a primary management official before that form is filled
out by an applicant:
A false statement on any part of your license application may be
grounds for denying a license or the suspension or revocation of a
license. Also, you may be punished by fine or imprisonment (U.S.
Code, title 18, section 1001).
(b) A tribe shall notify in writing existing key employees and
primary management officials that they shall either:
(1) Complete a new application form that contains a notice
regarding false statements; or
(2) Sign a statement that contains the notice regarding false
statements.
(c) All tribal gaming ordinances and ordinance amendments approved
by the Chairman prior to the effective date of this section will
require no changes to comply with this section. Future submissions,
however, must comply.
(d) All license application forms used 180 days after the effective
date of this section shall contain notices in compliance with this
section.
30. The authority citation for part 558 continues to read as
follows:
Authority: 25 U.S.C. 2706, 2710, 2712.
31. Revise Sec. 558.2 to read as follows:
Sec. 558.2 Eligibility determination for granting a gaming license.
(a) An authorized tribal official shall review a person's prior
activities, criminal record, if any, and reputation, habits and
associations to make a finding concerning the eligibility of a key
employee or a primary management official for granting of a gaming
license. If the authorized tribal official, in applying the standards
adopted in a tribal ordinance, determines that licensing of the person
poses a threat to the public interest or to the effective regulation of
gaming, or creates or enhances the dangers of unsuitable, unfair, or
illegal practices and methods and activities in the conduct of gaming,
a management contractor or a tribal gaming operation shall not license
that person in a key employee or primary management official position.
(b) All tribal gaming ordinances and ordinance amendments approved
by the Chairman prior to the effective date of this section will
require no changes to comply with this section. Future submissions,
however, must comply.
32. The authority citation for part 571 continues to read as
follows:
Authority: 25 U.S.C. 2706(b), 2710(b)(2)(C), 2715, 2716.
33. Revise Sec. 571.12 to read as follows:
Sec. 571.12 Audit standards.
(a) Each tribe shall prepare comparative financial statements
covering all financial activities of each class II and class III gaming
operation on the tribe's Indian lands for each fiscal year.
(b) A tribe shall engage an independent certified public accountant
to provide an annual audit of the financial statements of each class II
and class III gaming operation on the tribe's Indian lands for each
fiscal year. The independent certified public accountant must be
licensed by a state board of accountancy. Financial statements prepared
by the certified public accountant shall conform to generally accepted
accounting principles and the annual audit shall conform to generally
accepted auditing standards.
(c) If a gaming operation has assessable gross revenues of less
than $1,000,000 during the prior fiscal year, the annual audit
requirement of paragraph (b) is satisfied if:
(1) The independent certified public accountant completes a review
of the financial statements conforming to the statements on standards
for accounting and review services of the gaming operation;
(2) Unless waived in writing by the Commission, the gaming
operation's financial statements for the three previous years were
timely received by the Commission in accordance with Sec. 571.13; and
(3) The tribe must submit a statement to the Commission supporting
the decision to use reviewed financial statements in place of audited
financial statements. The statement is a one-time submission unless the
tribe chooses another permissible filing alternative.
(d) If a gaming operation has multiple gaming places, facilities or
locations on the tribe's Indian lands, the annual audit requirement of
paragraph (b) is satisfied if:
(1) The tribe chooses to consolidate the financial statements of
the gaming places, facilities or locations;
(2) The independent certified public accountant completes an audit
conforming to generally accepted auditing standards of the consolidated
financial statements;
(3) The consolidated financial statements include consolidating
schedules for each gaming place, facility, or location;
(4) Unless waived in writing by the Commission, the gaming
operation's financial statements for the three previous years, whether
or not consolidated, were timely received by the Commission in
accordance with Sec. 571.13;
(5) The tribe must submit a statement supporting the decision for
consolidated financial statements in place of audited financial
statements for each location. The statement is a one-time submission
unless the tribe chooses another permissible filing alternative; and
(6) The independent certified public accountant expresses an
opinion on the consolidated financial statement as a whole and subjects
the accompanying financial information to the auditing procedures
applicable to the audit of consolidated financial statements.
(e) If there are multiple gaming operations on a tribe's Indian
lands and each operation has assessable gross revenues of less than
$1,000,000 during the prior fiscal year, the annual audit requirement
of paragraph (b) of this section is satisfied if:
(1) The tribe chooses to consolidate the financial statements of
the gaming operations;
(2) The consolidated financial statements include consolidating
schedules for each operation;
(3) The independent certified public accountant completes a review
of the consolidated schedules conforming to the statements on standards
for accounting and review services for each gaming facility or
location;
(4) Unless waived in writing by the Commission, the gaming
operations' financial statements for the three previous years, whether
or not consolidated, were timely received by the Commission in
accordance with Sec. 571.13;
(5) The tribe must submit a statement to the Commission supporting
both the decision to use reviewed financial statements in place of
audited financial statements and the decision to use consolidated
financial statements in place of audited financial statements for each
operation. The statement is a one-time submission unless the tribe
chooses another permissible filing alternative; and
(6) The independent certified public accountant expresses an
opinion on the consolidated financial statements as a whole and
subjects the accompanying financial information to the auditing
procedures applicable to the audit of consolidated financial
statements.
34. Revise Sec. 571.13 to read as follows:
Sec. 571.13 Copies of audit reports.
(a) Each tribe shall prepare and submit to the Commission two paper
copies or one electronic copy of the financial statements and audits
required by Sec. 571.12, together with management letter(s), setting
forth the results of each fiscal year. The submission must be received
by the Commission within 120
[[Page 78252]]
days after the end of each fiscal year of the gaming operation.
(b) If a gaming operation changes its fiscal year, the tribe shall
prepare and submit to the Commission two paper copies or one electronic
copy of the financial statements and audits required by Sec. 571.12,
together with management letter(s), setting forth the results of the
stub period from the end of the previous fiscal year to the beginning
of the new fiscal year. The submission must be received by the
Commission within 120 days after the end of the stub period, or a tribe
may incorporate the financial results of the stub period in the
financial statements for the new business year.
(c) When gaming ceases to operate and the tribal gaming regulatory
authority has terminated the facility license required by Sec. 559.6,
the tribe shall prepare and submit to the Commission two paper copies
or one electronic copy of the financial statements and audits required
by Sec. 571.12, together with management letter(s), setting forth the
results covering the period since the period covered by the previous
financial statements. The submission must be received by the Commission
within 120 days after the cessation of gaming activity or upon
completion of the tribe's fiscal year.
35. Revise Sec. 571.14 to read as follows:
Sec. 571.14 Relationship of financial statements to fee assessment
reports.
A tribe shall reconcile its Commission fee assessment reports,
submitted under 25 CFR part 514, with its audited or reviewed financial
statements for each location and make available such reconciliation
upon request by the Commission's authorized representative.
36. The authority citation for part 573 continues to read as
follows:
Authority: 25 U.S.C. 2705(a)(1), 2706, 2713, 2715.
37. Add new paragraph (a)(13) to Sec. 573.6 to read as follows:
Sec. 573.6 Order of temporary closure.
* * * * *
(13) A gaming facility operates on Indian lands not eligible for
gaming under 25 U.S.C. 2703(4); 2710(a), (b)(1), and (d)(1); and 2719.
* * * * *
Philip N. Hogen,
Chairman.
Norman H. DesRosiers,
Vice Chairman.
[FR Doc. E8-30019 Filed 12-19-08; 8:45 am]
BILLING CODE 7565-01-P