IGA Mid-Year September 13 th , 2023 Foxwoods Resort And Casino Mashantucket Pequot Tribal Nation
8:30am
Breakfast
9:00am
Welcome & Blessing Markane Ellis – Oneida Nation Pequot Color Guard
9:30am
Chairman and Executive Director’s Mid-Year Report Ernie Stevens Jr., Chairman – Indian Gaming Association Jason Giles, Executive Director –Indian Gaming Association
10:00am
Treasury Update Chief Lynn Malerba, Treasurer of the United States NIGC Update Sequoyah Simermeryer, Chairman – National Indian Gaming Association
Update from OIG Paula Harte, Director – Office of Indian Gaming, Department of Interior
11:30 am
Adjourn
12:00pm
John Kieffer Award & Lunch Break
2:00pm
IGA-NCAI Taskforce Meeting and Update Moderator: Jason Giles Remarks From:
Chairman Stevens, IGA President Sharp, NCAI Larry Wright, NCAI Message from The White House Office of Tribal Affairs Message from Department of Interior • Supreme Court Report o Impact of Brackeen Decision o Continuing Impact of Castro-Huerta • Sports Betting o James Siva, CNIGA
o Foxwoods Representative (Chairman Butler or CEO) • Presidential Executive Order On Native Sovereign Nations
3:30pm
Closing Remarks
FEDERAL POLICY PRIORITIES Indian Gaming Association: 2023 Mid-Year
118 th Congress: Leadership and Tribal Priorities ……….…..
2-4
Proposed Revisions to Part 293 – IGRA Compacting ………
5
Proposed Revisions to Part 151 – Tribal Land Into Trust ….
6
Indian Gaming and Mobile Sports Betting …………………..
7
The Debt Ceiling and the Fiscal Recovery Act ………………
8
Reintroduction of Tax-Related Gaming Bills …………………
9
NIGC Regulatory Updates …………………………………………
10-12
Federal Court Updates ……………………………………….…..
13-16
1
Outlook for the 118 th Congress: Tribal Priorities
Legislative Outlook Senate Priorities. After two years of work to enact an aggressive agenda that included passage of the American Rescue Plan, bipartisan gun safety, infrastructure, the CHIPS Act, and the highly partisan Inflation Reduction Act, Senate Democrats plan a more moderate agenda for the 118 th Congress. Leader Schumer has focused the 118 th Congress on must-pass bills that include passing debt limit legislation, the annual defense bill (NDAA), the Farm Bill, and the annual appropriations bill. The Senate also continues to prioritize judicial and agency confirmations. House Priorities. House Republicans are taking a more hardline approach. In the first weeks of reclaiming the majority, House Leadership advanced bills to cut funding for the IRS included in the Inflation Reduction Act, address reproductive rights, and increase energy production. House leaders have also focused on investigations of the Biden Administration and President Biden’s family and the origins of the COVID-19 pandemic. The House Oversight Committee Republicans have launched a wide-ranging investigation into the Biden family’s domestic and international business dealings to determine whether these activities compromise U.S. national security. Republicans have also created a Judiciary subcommittee on the “weaponization of the federal government” and are using the forum to review the FBI investigations into former President Trump. These investigations are meant to fire up the Republican base and have thus far not resulted in any substantive legislative activity. FY’24 Appropriations. House Republicans have pledged to cut discretionary spending by $130 billion from the FY’23 levels, aiming to limit federal agency and program funding to FY’22 levels. The House will press appropriators to return to regular order to enact annual funding bills, vowing to reject the massive year-end omnibus bills that have kept government operations and programs open in recent years. Senate Appropriations Chair Patty Murray (D-WA) and Ranking Member Susan Collins (R-ME) released a joint statement promising to “reach sensible solutions” to fund the government for FY’24. They have also resolved a return to regular order – passing each of the 12 individual spending bills through Committee. So far, the House and Senate Subcommittees have endeavored to live up to this commitment and have been moving bills through the various Subcommittees. On July 13, the House Interior Appropriations Subcommittee approved their bill and it will be marked up by the full committee on July 19. The Senate Interior Appropriations Subcommittee has not taken action on their bill. In related news, on June 1, Congress passed the Fiscal Responsibility Act of 2023. The bill was a negotiated compromise between the House Republican leadership and the Biden Administration to raise the debt ceiling while limiting future spending. The law keeps non-defense funding essentially flat for the fiscal year that begins in October 2023 at approximately $637 billion. Defense funding would be capped at President Biden’s budget request of $886 billion, a 3.5 percent increase over FY’23 spending. Non-defense spending would increase by 1 percent in FY’24, followed by years of non-enforceable funding targets. A group of House Republicans have stated opposition to an omnibus spending bill. They have threatened to cut spending across the board by 1 percent – a return to sequestration - if appropriators do not pass all 12 separate spending bills by the end of December 2023. There is some hope that this carrot-and-stick approach will motivate Congress to pass annual, low-drama appropriations bills in calendar year 2023. Indian Country Priorities . Indian Country continues to press Congress to advance many of the longstanding basic reauthorizations and updating of the Native American Housing Assistance and Self-Determination Act and others that have been held up in recent years by a few Senators seeking
2
to advance bills to acknowledge groups as federally recognized Indian tribes. Indian country is also working to protect funding for key programs in the appropriations and farm bill, as discussed in more detail below. Limit Impacts of Castro-Huerta . Tribes nationwide continue to debate how to address the expected fallout from the Supreme Court’s 2022 decision in Castro-Huerta v. Oklahoma , which held that state governments have concurrent jurisdiction to prosecute crimes committed by non-Indians against Native victims on Indian lands. The Court reasoned that under its “precedents, federal law may preempt state jurisdiction in certain circumstances. But otherwise, as a matter of state sovereignty, a State has jurisdiction over all of its territory, including Indian country.” (Citing the Tenth Amendment to the U.S. Constitution for this statement). The longstanding authority in Indian country is that a state only has the power to exercise authority on Indian lands pursuant to an express act of Congress or the consent of the Tribe. The Castro-Huerta Court turns this presumption on its head, imposing a new test: “unless [affirmatively] preempted [by an Act of Congress], States may exercise jurisdiction to prosecute crimes committed by non-Indians against Indians in Indian country.” Indian Country will work through the Senate Committee on Indian Affairs, the House Natural Resources Committee, and the Biden Administration to blunt the impacts of this decision on tribal sovereignty, including potential down-the-road impacts on Tribal Government taxing authority, civil and regulatory jurisdiction over non-Indians, and related impacts on Tribal government economies. ICWA Protection. On July 15, the Supreme Court issued its decision in Brackeen v. Haaland . Several states had argued that ICWA’s placement preferences violate the Constitution’s equal protection clause and unlawfully commandeers state governments. In a significant 7-2 victory for Indian country, the Court upheld ICWA as constitutional. Justice Gorsuch noted the decision “safeguards the ability of tribal members to raise their children free from interference by state authorities and other outside parties. In the process, the Court also goes a long way toward restoring the original balance between federal, state, and tribal powers the Constitution envisioned.” However, the Court did not rule on the merits regarding the equal protection challenge to ICWA. That claim was dismissed for lack of standing and could be subject to a future legal challenge. Tribal Tax Provisions. Indian Country will continue to press Congress to enact key reforms to the U.S. Tax Code to respect the governmental status of Indian Tribes for purposes of issuing tax- exempt bonds and acknowledge direct tribal government access to the Low-Income Housing and New Markets tax credit programs, respect tribal court rulings for the purpose of the federal child adoption tax credit, provide parity to the tax and pension treatment of tribal police officers and other key tribal government officials, among other longstanding needs. Indian Health Service Advanced Appropriations. Indian Country achieved a historic victory in securing advance appropriations for Indian health care services and programs as part of the FY’23 Omnibus Appropriations Act. However, this achievement fell short of permanent advance appropriations funding. As a result, while funding is secure to prevent impacts from delayed funding or a government shutdown for FY’24, tribes nationwide will work to retain at least one-year advance appropriations in the next spending package. 2023 Farm Bill. The House and Senate Agricultural Committees are working through the process of drafting their Farm Bill reauthorization legislation. Generally, the farm bill comes before Congress every five years, with the current (2018) farm bill set to expire on September 30. The Farm Bill process is never easy; however, several factors will make this reauthorization an uphill battle. First, Republicans are looking to cut back funding for most programs in the bill, especially those under the Conservation title. Many USDA programs received significant funding under the COVID relief bill and the IRA. Republican members argue that those plus-ups should count as a sort of forward funding, and the Farm Bill should reflect that. Second, Republicans would like to cut nutrition programs within the bill. Republicans secured some increased work requirements for the SNAP food
3
assistance program and Temporary Assistance for Needy Families (TANF) programs but will be looking to make more cuts and add further requirements using the Farm Bill. Indian country has been actively engaging in these discussions through the Native Farm Bill Coalition and Congressional allies in the House and Senate. Work with the Biden Administration. As noted above, legislative activity has been difficult in the divided Congress. Indian Country has leaned into working with the Biden Administration and the various executive agencies to secure policy achievements, including working to build on the Administration’s initiatives to improve regulations to restore tribal government homelands, protecting sacred places on federal lands, expanding on tribal government co-management and use of traditional indigenous knowledge in managing federal lands, BLM’s proposed Conservation Rule to enhance protections for sacred places, and new initiatives to expand economic opportunities throughout Indian Country – including updating the Part 293 IGRA compacting regulations discussed in detail below.
4
Proposed Rule to Amend 25 C.F.R. Part 293 – IGRA Class III Compact Regulations On Tuesday, December 6, 2022, the Interior Department published a rule that proposes changes to regulations governing the IGRA compacting process at 25 C.F.R. Part 293. The proposed rule stems from draft revisions to Part 293 that the Department released in March 2022. The Department hosted four tribal leader consultation sessions on the draft revisions and accepted written comments. The Department’s current Part 293 regulations were promulgated in 2008. The 2008 Regulations were designed to “address[es] the process for submission by Tribes and States and consideration by the Secretary of Class III Tribal-State Gaming Compacts, and [are] not intended to address substantive issues .” The proposed rule would address these substantive issues by codifying Departmental policy developed since 1988 through decision letters and federal case law. These decisions address the appropriate scope of class III gaming compacts, revenue-sharing provisions, and other factors. In publishing the proposed rule, Interior acknowledged that “the Indian gaming industry remains one of the most significant sources of Tribal economic development in Indian Country. The changes proposed to 25 C.F.R. Part 293 … would provide clarity on the criteria the Department would consider when deciding whether to approve compacts by clarifying boundaries as to allowable topics of negotiation, better defining key terms, and clearly outlining when the Department must review a gaming compact.” The most substantive provisions in the proposed rule are located at Subpart D, which examines the “Scope of Tribal-State Gaming Compacts.” This Subpart clarifies provisions/topics deemed permissible and impermissible for purposes of tribal-state gaming compact negotiations. For example, permissible provisions include those relating to the application of laws or regulations or that address tribal or state jurisdiction “that are directly related to, and necessary for, the licensing and regulation of gaming activity” (Part 293.17-18); provisions “directly related to the operation of gaming activities” (Part 293.23). Proposed Part 293.24 will govern how the Department will determine whether a provision is “directly related to the operation of gaming activities.” Part 293.25 would codify the Department’s policy governing whether “revenue sharing” provisions in tribal-state gaming compacts are lawful under IGRA. The proposal states that compacts may include “revenue sharing in exchange for a State’s meaningful concessions resulting in a substantial economic benefit for the Tribe.” “Meaningful concession” is defined at Part 293.2(h). Proposed Part 293.27 would clarify that “If the State allows any form of class III gaming, then the State is regulating all forms of class III gaming. A State’s refusal to negotiate in a compact over all forms of class III gaming, not prohibited in the State, is considered evidence of a violation of IGRA.” This position is referred to as the “class-based test.” It was adopted by the Second Circuit in Mashantucket Pequot Tribe v. Connecticut and the Tenth Circuit in Northern Arapahoe Tribe v. Wyoming . Proposed Part 293.29 would make clear that compacts may include provisions allocating State and Tribal jurisdiction over remote wagering originating outside Indian lands where state law or the compact deems the gaming to take place on the Tribe’s Indian lands where the server accepting the wager is located. The federal register notice explains that “the overwhelming majority of commenters agreed that the Department should include provisions related to i-gaming,” noting the need for Tribes to be able to compete in the digital industry. However, the notice also acknowledged that “a handful of commenters opposed the Department addressing i-gaming in the draft revisions.” The recently decided West Flagler case regarding the Seminole Tribe’s compact with the state of Florida upheld the “hub-and-spoke” model of i-gaming. See Federal Court Updates for more information below. Text of the federal register notice of the proposed rule, executive summary, and summary of comments received can be found here: https://www.govinfo.gov/content/pkg/FR-2022-12-06/pdf/2022-25741.pdf. The agency accepted comments and feedback through March 1, 2023. The agency is reviewing the feedback, and a final rule should be published in late 2023.
Proposed Rule to Amend 25 C.F.R. Part 151 – Fee to Trust Process
5
On Monday, December 5, 2022, the Interior Department published a proposed rule to amend regulations governing the discretionary acquisition of tribal land into trust applications at 25 C.F.R. Part 151. These regulations implement the land into trust provision included in the Indian Reorganization Act of 1934. Interior indicates that the proposed rule seeks to streamline the tribal land-to-trust process, reduce costs for tribal government applicants, and establish clear decision- making criteria. The proposed rule is part of the Biden Administration’s two-year initiative to help restore tribal government homelands. In October 2021, Interior held Tribal Leader consultation sessions that discussed the need to improve the administrative process to restore tribal homelands. On March 28, 2022, the Department released draft revisions to Part 151 based on comments received from the October 2021 consultation. The Department then held four Tribal Leader consultations, which led to the current proposed rule. The proposed rule makes minor changes throughout the existing land into trust regulations, which were last substantially amended in 1995. Proposed Part 151.3 establishes that it is the Department’s policy to acquire tribal trust land to strengthen self-determination and sovereignty, ensure that every Tribe has protected homelands where its citizens can maintain their Tribal existence and way of life, and consolidate land ownership to strengthen Tribal governance over reservation lands and reduce checkerboarding. To help expedite the process and increase certainty, Proposed Part 151.8 would require the Department to make a final determination on tribal fee-to-trust applications within 120 calendar days of assembling a complete application package. To help reduce costs, Proposed Part 151.15 would limit trust land applications to a single environmental assessment, with a potential update - if necessary - after notice of the decision has been signed. The proposed rule, at Part 151.9 – 12, would establish clear criteria by requiring that great weight be given to establishing a Tribal land base or protecting Tribal homelands, protecting sacred sites or cultural resources and practices, establishing or maintaining conservation or environmental mitigation areas, consolidating land ownership, acquiring land lost through allotment, protecting treaty or subsistence rights, or facilitating Tribal self-determination, economic development, and Indian housing. One significant change, set forth at Proposed Part 151.4, would set criteria for the Department to determine whether a Tribe was “under federal jurisdiction” in 1934. The lack of a regulatory definition for the term “under federal jurisdiction” (“UFJ”) has plagued the land-into-trust process since the Supreme Court’s 2009 Carcieri v. Salazar decision. Codifying this definition in regulation would make this critical determination more durable than the existing M-Opinion that Interior currently employs to determine whether an Indian tribe was “under federal jurisdiction” for purposes of the Indian Reorganization Act. Text of the federal register notice of the proposed rule and Interior’s Executive summary can be found at this link: https://www.govinfo.gov/content/pkg/FR-2022-12-05/pdf/2022-25735.pdf. The agency accepted comments and feedback through March 1, 2023. The agency is currently reviewing the feedback, and there should be a final rule published in late 2023. Indian Gaming and Mobile Sports Betting Sports and mobile wagering have rapidly expanded in the U.S. since the Supreme Court’s May 2018 decision in Murphy v. NCAA , which struck down the federal Professional and Amateur Sports Prohibition Act as unconstitutional. In the five years since Murphy , at least 35 states and the District of Columbia
6
have legalized sports betting, with at least 20 offering some form of online sports wagering. Dozens of Tribes have added brick-and-mortar sports betting to their operations pursuant to IGRA. The issue of whether Tribes can operate online sports betting is a topic of ongoing legal debate. Some Tribes have worked through the compacting process to implement geo-fenced mobile gaming that requires both the bettor and the server to be on Indian lands. Other Tribes have worked with states to participate under state-run mobile licensing and regulatory models outside of IGRA. Tribes are working with Congress, with the Biden Administration, and in federal court to ensure that Indian gaming maintains equal footing as state governments increasingly authorize mobile sports wagers with a goal of securing authority for Tribes to accept wagers from bettors off Indian lands where the server is located on Indian lands to better ensure that Tribal Governments benefit from mobile gaming revenue. No bill has been introduced to date in the 118 th Congress, but there are efforts to reintroduce some version of the “Removing Federal Barriers to Offering Mobile Wagers on Indian Lands Act” that Rep. Lou Correa (D-CA) with co-sponsor and now former Rep. John Katko (R-NY) introduced in the 117 th Congress. The bill sought to clarify that Tribal Governments can operate online sports wagering under IGRA, where the server – that accepts and processes the bet – is located on Indian lands. The bill also qualified that wagers will be considered to occur on Indian lands if the person placing the wager and server are located in the same state and only if the Tribe and the State have entered into a compact pursuant to IGRA. The bill sought to align current law with the original congressional intent of IGRA to enable Tribal Governments to utilize emerging technology and access emerging gaming markets. The Biden Administration is also working to clarify that IGRA provides enough flexibility for Tribes to add mobile sports wagering to their existing operations. In August of 2021, the Interior Department “deemed approved” a compact between the Seminole Tribe of Florida. That compact included a provision referred to as a “hub and spoke” model, where the Tribe’s servers are the hub, and the spokes are the mobile devices and contracted facilities where the wagers originate. The State legislature authorized mobile sports betting exclusively for the Tribe through legislation enacted at the same time it ratified the compact. In its “deemed approved” letter, the Biden Interior Department rightly acknowledged that “other jurisdictions are deeming wagers to occur at a specified location. Multiple states have enacted laws that deem a bet to have occurred at the location of the servers, regardless of where the player is physically located in the state. The compact reflects this modem understanding of how to regulate online gaming.” This legal argument was questioned in the West Flagler Associates v. Haaland case. The U.S. District Court for the District of Columbia narrowly read IGRA to limit this activity and ruled in favor of the Plaintiffs, holding that the Compact “authorizes gaming both on and off Indian lands [and thus] violates IGRA’s ‘Indian lands’ requirement, which means that the Secretary had a legal duty to reject it.” The Secretary appealed this decision. The Court of Appeals for the District of Columbia vacated the lower court decision and directed the District Court to enter judgment for the Secretary. Additional details about this case are posted in the federal court update below. Finally, the Interior Department is also seeking to clarify the ability of Tribes to conduct mobile wagering through the IGRA compact process. As noted above, Interior’s proposed rule to change regulations at Part 293 would acknowledge that Tribes can operate mobile wagering originating outside Indian lands where state law and/or the compact or amendment deem the gaming to take place on the Tribe’s Indian lands where the server accepting the wagers is located. The Debt Ceiling Debate and the Fiscal Responsibility Act After months of deadlocked negations over raising the debt ceiling, House Republican leadership and the Biden Administration came to an agreement with the Fiscal Responsibility Act of 2023 (FRA) (H.R. 3746). President Biden and Speaker McCarthy had to navigate difficult politics on both sides to secure enough votes to pass the FRA. House Republicans had a long list of policy demands,
7
including drastic cuts to social welfare programs and an overhaul of domestic energy extraction. Democrats were pushing for a “clean” debt ceiling bill, much like the previous three passed during the Trump Administration. The legislation suspended the debt ceiling through January 1, 2025, effectively increasing the amount of money the federal government can borrow to fund federal programs. The deal caps non- defense discretionary spending for FY24 at roughly $704 billion, followed by a 1 percent increase in discretionary spending in FY 2025. The FRA rescinded approximately $28 billion in unobligated COVID-19 funding, including funds made available through the American Rescue Plan Act (ARPA), Coronavirus Aid, Relief and Economic Security (CARES) Act, and other pandemic-related spending bills. While certain funds at the Indian Health Service (IHS) and Bureau of Indian Education (BIE) were protected, other programs were not spared from the recissions. The biggest recission for Indian country was at the Department of Housing and Urban Development (HUD). Funds for the Office of Native American Programs for the operation of tribal housing and housing block grants were clawed back. Funds for Native American language preservation, Rural Development distance learning, telemedicine grants for broadband, and pandemic assistance funding for short-term benefits were also clawed back by the FRA. The FRA also included several policy provisions unrelated to raising the debt ceiling that Democrats conceded to secure Republican votes. ● Work Requirements: The deal tightened restrictions for the SNAP food assistance program and emergency cash aid known as Temporary Assistance for Needy Families. New time limits will be phased in for people without children up to age 54 to receive food assistance through SNAP if they do not complete specific work requirements. Under current law, those time limits only apply to people up to 49 years old. Those expanded limits will sunset in 2030. Democrats have long opposed restrictions on assistance programs and fought to secure some exemptions for homeless people and veterans. ● Permitting Reform: The FRA included changes to the current NEPA permitting process, the decades-old law governing federal environmental reviews of projects. ● IRS Funding: A portion of the $80 billion in funding Democrats pushed through for the IRS last year was rescinded.
8
Tax-Related Gaming Legislation The SLOT Act (H.R. 3125) would modernize the Tax Code by increasing the tax reporting threshold for slot jackpots to $5,000 and provide a mechanism for future increases based on inflation. This change will ease operational and paperwork burdens on casinos and their patrons and enable the IRS to focus its limited resources and staff on filers most likely to have net slot winnings and owe taxes at the end of the year. The current threshold for reporting slot winnings was set at $1,200 in 1977 and has not been updated in 45 years. Accordingly, when a casino patron wins a slot machine jackpot of $1,200 or more, the machine immediately shuts down, and a casino employee must issue that patron the tax reporting form known as a W-2G. This threshold has not been updated in the 45 years since, and if indexed for inflation, the threshold would be around $5,000. Due to inflation and this stagnant requirement, the number of jackpots hitting that threshold, triggering a shutdown of the machine and necessitating excessive paperwork for patrons, has increased dramatically. This has also led to a deluge of W-2G forms inundating an under- budgeted and understaffed IRS every year. The bill was endorsed by the Indian Gaming Association (IGA), California Nations Indian Gaming Association (CNIGA), Santa Ynez Band of Chumash Indians, Choctaw Nation, Chickasaw Nation, Kalispel Indian Tribe, and the American Gaming Association (AGA). The bill has been referred to the House Committee on Ways and Means. There has been no hearing on the bill in the 118 th Congress. The Discriminatory Gaming Tax Repeal Act (H.R. 1661) would repeal the outdated gambling excise tax. Congress enacted the wagering excise tax in 1951 to target organized crime and discourage gambling. Over the past 70 years, provisions concerning the wagering excise tax have been amended to exempt parimutuel wagering, effectively exempting bets on horse and dog racing activity and state- sponsored lotteries. The wagering excise tax assesses 0.25 percent of the amount of money wagered on a sporting event and an additional $50 annual tax for every employee engaged in receiving wagers on behalf of any legal sports betting operator. The law has also been found to apply to pull tabs and certain lotteries. In the late 1990s and early 2000s, Tribal Governments fought the application of the wagering excise tax to wagers on pull-tab games conducted by tribal gaming enterprises. Tribal Governments have argued that since state lotteries are expressly exempt from the wagering excise tax and IGRA requires that the wagering excise tax must be applied to Tribal Governments “in the same manner as such provisions apply to States,” Class II pull-tab games should also be exempt from the tax. Nevertheless, in Chickasaw Nation v. United States , the U.S. Supreme Court held that tribal governments are subject to the wagering excise tax. The wagering excise tax imposes the burden of increased operating costs on legal sports betting operations regulated by Tribal and state governments. The bill would eliminate the increased burden of the wagering excise tax on Indian gaming operations that now employ sports betting and effectively overturn the Supreme Court’s misguided 2001 decision in Chickasaw Nation v. United States . The bill has been referred to the House Committee on Ways and Means. There has been no hearing on the bill in the 118 th Congress.
NIGC Regulatory Updates
9
Since the completion of the NIGC’s Series A, B, and C Tribal consultations held between July 12, 2021, and February 11, 2022, several final rules have been published in the Federal Register that amend regulations governing various aspects of tribal gaming. Further, two proposed rules have been published in the Federal Register that, if formally promulgated, would amend additional regulations governing various aspects of tribal gaming. Facility License Notification Submission Requirements On July 25, 2022, the NIGC published a final rule amending 25 C.F.R. § 559.2(b) to eliminate the requirement to include certain information about a gaming facility when submitting a Facility License Notification to the NIGC Chair. Specifically, the final rule changes the requirement so that the name and address of the proposed gaming facility be included only if known when the facility license notification is submitted to the NIGC Chair. This final rule was initially proposed on December 1, 2021, with an initial comment period that ended on January 3, 2022, which was subsequently re-opened until June 23, 2022. This final rule became effective on August 24, 2022. Background Investigations and Gaming Licenses for Primary Management Officials and Key Employees On August 10, 2022, the NIGC published a proposed rule that would amend the NIGC’s regulations governing background investigations and the issuance of gaming licenses to Primary Management Officials (“PMOs”) and Key Employees (“KEs”) in 25 C.F.R. Parts 502, 556, and 558. Comments to this proposed rule were due September 9, 2022. Specifically, this proposed rule, if promulgated, would amend the NIGC’s regulations by: 1) amending the definition of a KE in § 502.14 to include any person authorized by the gaming operation for unescorted access to restricted areas as so designated by the Tribal Gaming Regulatory Authority; 2) updating the definition of a KE so that it no longer automatically includes individuals whose total cash compensation is over $50,000 per year and allow Tribal governments to designate other employees of a gaming enterprise as a KE so long as that designation is included in the Tribe’s gaming ordinance; 3) specifying that the definition of a PMO in § 502.19 applies to those with management authority over some facet of a gaming operation or enterprise, including the gaming operation’s general manager and its chief financial officer; 4) adding definitions for the terms “Gaming Enterprise” and “Tribal Gaming Regulatory Authority”; 5) clarifying in Part 556 that all KEs and PMOs of the gaming enterprise must be subject to a background investigation; and 6) amending Part 558 to require Tribal governments to notify the NIGC if it revokes a gaming license of a KE or PMO, as well as to forward copies of the license revocation decision and a summary of the evidence it used to the NIGC. This proposed rule also clarifies that ordinances already in effect would not need to be amended to be consistent with the changes proposed to Part 556 or Part 558 but that all future ordinance submissions would have to comply. Appeals to the Commission On August 10, 2022, the NIGC published a proposed rule that would amend its regulations governing appeals made to the NIGC. Comments to this proposed rule were due September 9, 2022. This proposed rule would amend the NIGC’s regulations at 25 C.F.R. Part 585 by: 1) amending § 585.5(a) to only allow motions for extension of time, motions to supplement the record, motions to intervene, and motions for reconsideration in the context of appeals to the NIGC; 2) removing the NIGC’s discretion under § 585.5(a) to consider any other types of motions offered by an appealing party; and
10
3) creating a new section at § 585.8 establishing a process for pursuing a settlement in an appeal on written submissions to the NIGC. The settlement process would allow parties to jointly move to stay an appellate proceeding for a reasonable time to enable the negotiation of a settlement or another agreement that would dispose of the whole or any part of the proceeding. The process would require that a settlement include mandatory provisions waiving further proceedings before the NIGC regarding the specific matter that was settled under the agreement and that the settlement would constitute a dismissal of the appeal and a final agency action. NIGC Fee Calculations On September 6, 2022, the NIGC published a final rule amending its regulations in 25 C.F.R. § 515.4 governing the calculation of annual fees owed by a gaming operation to the NIGC. The final rule excludes amounts wagered as promotional credits from the “total amount of money wagered” when calculating the annual fees owed to the NIGC. This rule was initially proposed on December 2, 2021. The NIGC received some comments opposing the initial proposal, which it took into consideration when amending the proposal into the final rule. This final rule went into effect on October 6, 2022. Gaming Ordinance and Amendment Submission Requirements On September 21, 2022, the NIGC published a final rule amending the NIGC’s regulations controlling the submission and approval requirements for Tribal gaming ordinances and resolutions and amendments thereof. This rule was initially proposed on December 9, 2021, with the comment period initially ending on January 10, 2022, and subsequently being re-opened until June 23, 2022. Specifically, this proposed rule amends the NIGC’s regulations at 25 C.F.R. Part 522 in several ways. These amendments include: 1) authorizing the submission of documents in electronic or physical form; 2) clarifying that the submission requirements apply to amendments of ordinances or resolutions; 3) eliminating the requirement that a Tribal government provide copies of all gaming regulations with the submission of a gaming ordinance or resolution and amendments thereof unless the copies are requested; 4) clarifying that the 90-day deadline for the NIGC Chair’s ruling begins upon receipt of a complete submission; and 5) eliminating the regulatory requirement that the Chair publish a Tribe’s entire gaming ordinance or amendment in the Federal Register upon the Chair’s approval and instead establishing that a notice of the approval is sufficient. This final rule went into effect on October 21, 2022. Audit Standards On September 21, 2022, the NIGC published a final rule amending the NIGC’s regulations concerning its audit standards at 25 C.F.R. Part 571. This rule was originally proposed on June 1, 2022, with the comment period initially open until July 1, 2022, before it was extended to August 1, 2022. Specifically, this final rule amends NIGC regulations at 25 C.F.R. Part 571 by: 1) eliminating the Commission’s waiver requirement and allowing all gaming operations grossing less than $2 million the prior fiscal year to submit financial statements for review in lieu of an audit, so long as the gaming operation’s regulatory agency permits such a disclosure; 2) creating a new financial reporting tier for charitable gaming operations with annual gross revenues of $50,000 or less and establishing financial reporting regulations for such operations where, if permitted by a Tribal government, a charitable gaming operation can submit financial information monthly to the Tribal government or TGRA, and the TGRA will provide an annual certification to the NIGC regarding the operation’s compliant with financial reporting requirements; and
11
3) adding a provision clarifying that submitting an adverse opinion does not satisfy the regulation’s reporting requirements. This final rule became effective on October 21, 2022. Self-Regulation of Class II Gaming On October 18, 2022, the NIGC published a final rule amending the NIGC’s regulations concerning Tribal governments’ self-regulation of Class II gaming. This rule was initially proposed on April 7, 2022. The comment period was extended to June 23, 2022. The final rule amends the NIGC’s regulations at 25 C.F.R. Part 518 by: 1) clarifying the NIGC may make a final decision on issuing a certification of self-regulation within thirty (30) days rather than after thirty (30) days; 2) removing the requirement that the director of the Office of Self-Regulation (“OSR”) must be an NIGC Commissioner; 3) specifying that the OSR is the correct party to receive notifications of material changes from self- regulated Tribal governments; 4) extending the deadline for Tribal governments to report material changes to the OSR from three (3) business days to ten (10) business days; 5) designating OSR as the proponent of any case to revoke a certificate of self-regulation before the NIGC; and 6) specifying that the OSR bears the burden to show just cause for a revocation based on the preponderance of the evidence in any certificate revocation hearing before the NIGC. This final rule will go into effect on November 18, 2022. Background Investigations for Persons and Entities with a Financial Interest in or having a Management Responsibility for a Management Contract. On November 14, 2022, the NIGC published a final rule revising its procedures for processing a request for the approval of a management contract under 25 C.F.R. § 537.1. This rule was initially proposed on December 2, 2021, and had an additional comment period ending January 3, 2022, which was then re- opened until June 23, 2022. The final rule requires background investigations of all persons who have 10 percent or more direct or indirect financial interest in a management contract, all entities with 10 percent or more financial interest in a management contract, and all persons or entities with a direct or indirect financial interest in a management contract otherwise designated by the NIGC. This final rule also authorizes the NIGC Chair, upon request or in his or her discretion, to reduce the scope of information to be furnished and background investigation to be conducted for certain entities with a direct or indirect financial interest in a management contract, including Tribal governments, wholly owned Tribal entities, national banks, and certain institutional investors. This rule provides the NIGC Chair with the discretion to reduce the background investigation requirements set forth in § 537.1(a)(3)-(4) for the specified entities. This final rule becomes effective on December 14, 2022. Federal Court Updates Haaland v. Brackeen (June 15, 2023)— The case dates back to 2017, when Texas joined the Brackeen family (petitioners) in suing the United States, claiming that ICWA: (1) exceeded Congress’ power to enact laws relating to Indian affairs; (2) violated the Tenth Amendment’s anti-commandeering doctrine; and (3) violated the Constitution’s equal protection clause. In 2018, the U.S. District Court in Texas sided with the petitioners, holding that ICWA unlawfully discriminated against non-Natives. The U.S. Court of Appeals for the Fifth Circuit Court reviewed the District Court’s decision, reversing in part and upholding in part, causing both sides to seek Supreme Court review. The Supreme Court granted review and heard oral arguments in November 2022.
12
Justice Amy Coney Barrett wrote the majority opinion and was joined by Chief Justice Roberts, and Justices Gorsuch, Sotomayor, Kagen, Kavanaugh, and Jackson in the 7-2 majority decision. Justice Gorsuch wrote a separate concurring opinion that was joined by Justices Sotomayor and Jackson. Justices Thomas and Alito filed separate dissenting opinions. The petitioners first claimed that ICWA exceeds Congress's Article I power to enact laws relating to Tribes and tribal citizens. Petitioners first claimed that while the Indian Commerce Clause may afford Congress the ability to enact laws relating to Tribal Governments, it had no power to enact laws like ICWA - which they claim relates only to individual Indians. The majority rejected this claim, stating that "we held more than a century ago that 'commerce with the Indian tribes, means commerce with the individuals composing those tribes.’ So that argument is a dead end." Petitioners also claimed that ICWA goes beyond Congress’ power to regulate commerce with Indian Tribes, claiming that “children are not commodities”. The majority acknowledged that “[r]hetorically, it is a powerful point—of course children are not commercial products. Legally, though, it is beside the point. As we already explained, our precedent states that Congress’s power under the Indian Commerce Clause encompasses not only trade but also 'Indian affairs.’” The majority went on to analyze a long list of cases relating to Congress' plenary authority over Indian affairs. In holding that ICWA is clearly within Congress’ constitutional authority, the Court reasoned that " Congress’s power to legislate with respect to Indians is well established and broad .” In the final argument relating to Congress’ Indian affairs authority petitioners argue that federal power stops where state power over the family begins. Justice Barrett held that "Petitioners are trying to turn a general observation (that Congress's powers rarely touch state family law) into a constitutional carveout. That argument is a non-starter. As James Madison said to Members of the First Congress, when the Constitution conferred a power on Congress, 'they might exercise it, although it should interfere with the laws, or even the Constitution of the States.' Family law is no exception." Petitioners also claimed that several provisions of ICWA violate the Tenth Amendment’s anti- commandeering doctrine, which bars Congress from "commanding the States' officers, or those of their political subdivisions, to administer or enforce a federal regulatory program." The majority rejected all three categories of petitioners’ Tenth Amendment arguments, holding that "When a federal statute applies on its face to both private and state actors, a commandeering argument is a heavy lift—and petitioners have not pulled it off. Both state and private actors initiate involuntary proceedings. And, if there is a core of involuntary proceedings committed exclusively to the sovereign, Texas neither identifies its contours nor explains what §1912(d) [of ICWA] requires of a State in that context. Petitioners have therefore failed to show that [this provision of ICWA] commands the States to deploy their executive or legislative power to implement federal Indian policy.” Regarding ICWA’s placement preference for Indian children, the Court noted that ICWA places "the burden on the tribe or other objecting party to produce a higher-ranked placement. So, as it stands, petitioners assert an anti-commandeering challenge to a provision that does not command state agencies to do anything.” The Court conceded that “[s]tate courts are a different matter. ICWA indisputably requires them to apply the placement preferences in making custody determinations.” Despite this concession, the Court ruled that ICWA is valid under Congress’ Article I power. “[W]hen Congress enacts a valid statute pursuant to its Article I powers, 'state law is naturally preempted to the extent of any conflict with a federal statute.’ End of story.” The Court finally looked at petitioner’s claims that ICWA's placement preferences violated equal protection and the non-delegation doctrine. The Court did not reach the merits of these claims because they found the petitioners failed to show standing. As a threshold question, Plaintiffs must show that they have suffered an injury that is "fairly traceable to the defendant's alleged unlawful conduct and likely to be redressed by the requested relief." The Court held that neither the individual petitioners nor the State of Texas could pass that test.
13
The decision is a truly remarkable victory for Indian Country and the protection of Native families. As Justice Gorsuch noted in his concurring opinion, "In affirming the constitutionality of ICWA, the Court safeguards the ability of tribal members to raise their children free from interference by state authorities and other outside parties. In the process, the Court also goes a long way toward restoring the original balance between federal, state, and tribal powers the Constitution envisioned.” Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin , 22–227 On June 15, 2023, the Supreme Court held, eight to one, that Native American tribes, like states and the federal government, must comply with the bankruptcy process. The Bankruptcy Code includes a provision that expressly abrogates the sovereign immunity of “governmental units” for specific purposes. The question before the court was whether this abrogation of government immunity also extends to federally recognized Indian tribes. The court found that Congress had conveyed its intent to abrogate tribal sovereign immunity in unequivocal terms, meeting the high bar to abrogate tribal sovereign immunity. The Supreme Court's ruling establishes that Native American tribes, akin to states and the federal government, must adhere to the bankruptcy process. By determining that the Bankruptcy Code's abrogation of sovereign immunity extends to federally recognized Indian tribes, the Court sought to maintain consistency and fairness in the treatment of creditors, while upholding statutory construction principles and the overall purpose of the bankruptcy system. Maverick Gaming LLC v. United States of America, et al. (WA D.Ct. Feb. 21, 2023)— Maverick Gaming LLC, a Washington-based company that owns and operates 19 card rooms within the State of Washington, filed suit against the United States, the Department of Interior, Sec. Haaland, and Asst. Sec. Bryan Newland, and a number of Washington state officials, for allowing tribes to engage in Class III gaming, including sports betting while prohibiting commercial, non-Indian entities from participating in such gaming. To date, the State of Washington has approved gaming compacts with 29 Indian Tribes, with 16 of those compacts being amended and approved to permit sports betting. Commercial entities like Maverick are barred under Washington criminal law from offering sports betting. Declaring the Tribes to have a “monopoly over most forms of casino-style gaming,” Maverick alleges that such monopoly is inconsistent with IGRA and federal criminal statutes, as well as in violation of the Constitution’s guarantee of equal protection by “irrationally and impermissibly discrimination on the basis of race and ancestry.” Maverick is requesting the court to declare the compact amendments and the Secretary’s approval of such compacts to be in violation of federal law and to declare them not in effect and to set aside and vacate the Secretary’s approval of the compact amendments permitting sports betting. The case paused briefly to address a motion to transfer the matter to the Western District Court of Washington. On April 28, 2022, U.S. District Court for the District of Columbia Judge Florence Pan issued an oral order to grant the motion, stating that the case should have been filed in the appropriate Washington district court. Judge Pan also denied the plaintiff’s request to amend its complaint to remove allegations against state officials, citing a D.C. circuit opinion that prevents her from considering the motion to amend once a court determines there is no personal jurisdiction. The case was transferred to the U.S. District Court for the Western District of Washington. On October 3, 2022, the Shoalwater Bay Indian Tribe filed a motion to dismiss for failure to join a required party. The case was transferred to the Western District Court of Washington, where the Shoalwater Bay Indian Reservation (“Shoalwater”) intervened to file a motion to dismiss. On February 21, 2023, the United States District Court Western District of Washington at Takoma granted the motion to dismiss based on Maverick’s failure to join Shoalwater pursuant to Federal Rules of Civil Procedure 12 (b)(7) and 19, which, as relevant, ensure that all parties with an interest in an action are joined in the litigation. The district court found that 1) Shoalwater was a required party with genuine interests in the outcome of the litigation that would not be adequately represented by the United States alone; and 2) Shoalwater did not waive its sovereign immunity by intervening, and therefore, could not be joined to the suit. The court then performed
14
a Rule 19(b) analysis to determine whether “in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” Based on this, the court found that the action should have been dismissed. Finally, the district court also found that no public rights exception to the joinder rules applied. Maverick disagreed with the district court’s findings that Shoalwater’s absence prevented the suit from going forward equitably. Accordingly, it appealed to the Court of Appeals for the 9 th Circuit, filing its opening brief on July 3, 2023. In its appeal, Maverick argued that the district’s court’s interpretation 1) contradicted precedent that the United States could adequately represent a tribal government absent a conflict of interest; and 2) would lead to what they viewed as absurd results—namely that a sovereign government preserving its immunity could “insulate…final agency actions [involving the sovereign] from any judicial review.” Maverick further notes that, since required-party status must be assessed on a claim-by-claim basis and at least one of its claims did not implicate Shoalwater, it was inappropriate for the district court to dismiss the matter as a whole. Overall, Maverick argues that dismissal because a sovereign cannot be joined by reason of their immunity, even when its interests are represented in the litigation by another party, unfairly deprives would be plaintiffs of the chance to seek remedies to which they might otherwise be entitled and is not a result intended by law, which generally favors “judicial review of administrative action.” Following a request for an amended briefing schedule by the appellees, response briefs from Shoalwater et al . are due on September 1, 2023. West Flagler Associates, Ltd., et al. v. Haaland, et al. (D.C. Circuit June 30, 2023)— In 2021, two suits were filed, one by West Flagler plaintiffs and one by Monterra plaintiffs. Both suits claim that the Seminole Tribe of Florida’s gaming compact, which had been amended to allow sports betting and was approved by the Secretary (by no-action), violates IGRA. West Flagler plaintiffs were suing as they felt the compact would limit their business by allowing the Tribe to monopolize sports betting; Monterra plaintiffs argued that any gaming expansion must be left to the Florida voters rather than the expansion through the compact. The U.S. District Court for the District of Columbia found that the compact violated IGRA and granted the West Flagler plaintiffs’ motion for summary judgment while denying the Monterra plaintiffs’ similar motion as moot and denying the Tribe and Secretary’s motions. The District Court found that because the language of the Seminole “Compact authorizes gaming both on and off Indian lands. The Compact accordingly violates IGRA’s ‘Indian lands’ requirement, which means that the Secretary had an affirmative duty to reject it.” The United States appealed to the D.C. Circuit Court of Appeals and oral arguments were held on December 14, 2022. During arguments, West Flagler challenged the Secretary’s approval by inaction on four grounds: (1) the Compact’s authorization of gaming off Indian lands was unlawful under IGRA, (2) the compact violated the Wire Act, (3) the Compact violated UIGEA, and (4) the Compact violated the Fifth Amendment’s guarantee of Equal Protection. In a decision issued on June 30, 2023, the Circuit Court vacated the District Court’s opinion and entered judgment in favor of the Secretary. The Court rejected Plaintiff’s first claim that the Compact unlawfully violates IGRA by authorizing Class III gaming outside of Indian lands. The Secretary agreed that IGRA does not provide an independent source of legal authority for gaming outside of Indian lands.” However, the Secretary argued that “gaming outside of Indian lands … can be addressed in a compact.” The Court examined the language in the Compact discussing wagers on sports betting “made by players physically located within the State using a mobile or other electronic device,” which are “deemed to take place exclusively where received.” The Court reasoned that “the Compact does not say that these wagers are ‘authorized’ by the Compact.” Instead, this language “simply indicates that the parties to the Compact have agreed that they both consider such activity to occur on tribal lands. Because the compact requires all gaming disputes be resolved in accordance with tribal law, this ‘deeming’ provision simply allocates jurisdiction between Florida and the Tribe, as permitted by [IGRA].”
15
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36Made with FlippingBook - Online catalogs