IGA-NCAI Taskforce Wednesday, November 15, 2023 10:30 a.m. – 12:00 p.m. Location: ROOM 243, New Orleans Convention Center
Welcome and Introductions: IGA Chairman Ernie Stevens, Jr . NCAI President Fawn Sharp Presentations & Updates • IGA-NCAI Taskforce Remarks and Format: o Jason Giles , IGA Executive Director o Larry Wright Jr., NCAI Executive Director • Taskforce Policy Updates on:
o Biden Administration’s “Net Zero” Policy and Respect For Tribal Sovereignty o Protecting Tribal Water Rights after Supreme Court’s Arizona v. Navajo Nation o Respect for Tribal Sovereignty In Off-shore Energy Development o H.R. 1661 – Repeal the Wagering Excise Tax o H.R. 3125 – Shifting Limits on Thresholds (SLOT) Act o Cybersecurity in Indian Country: Addressing the Recent Hacking of Commercial and Tribal Casinos o Presidential Executive Order For Indian Country
Tribal Leader Discussion and Introduction of any new issues for the Taskforce
Next Steps Forward and the Presidential Election of 2024
IGA-NCAI Task Force NCAI Annual 2023 Issues Summary
118 th Congress: Outlook and Must-Pass Legislation ….…………
2-3
Proposed Revisions to Part 293 – IGRA Compacting ….…………
4
Proposed Revisions to Part 151 – Tribal Land Into Trust .……….
5
Equal Protection Challenges to Federal Indian Laws .……………
6-7
Tribal Tax Parity …………………………………………………………
8
NIGC Regulatory Updates ……………………………………………..
9-11
Federal Court Updates ……………………………………….………...
12-15
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Outlook for the End of 118 th Congress First Session In the U.S. House of Representatives, the First Session of the 118 th Congress (calendar year 2023) has been marred by a public struggle within the Republican Majority. In October, a faction of far- right conservatives voted to remove then House Speaker Kevin McCarthy (R-CA). The vote came after McCarthy advanced a 45-day continuing resolution (“CR”) on September 29, 2023 to avoid a government shutdown. The Freedom Caucus had already signaled discontent with McCarthy after he reached a bipartisan agreement with President Biden in late May to raise the debt ceiling to avoid a government default. This was the first time in U.S. history that a sitting Speaker was ousted. After removing McCarthy, it took House Republicans more than three weeks to agree on a new Speaker. On October 25, 2023, Rep. Mike Johnson (R-LA) was elected as the new Speaker of the House. Johnson was first sworn in to serve Louisiana’s Fourth Congressional District in January of 2017. Legislative Outlook: Focus on Must-Pass Bills With divided government in Congress, only highly bipartisan, parochial, and must-pass bills will advance in the 118 th Congress. As a result, the Senate has prioritized Judicial and Agency confirmations. House Republicans have taken a more hardline approach, advancing bills to cut funding for the IRS included in the Inflation Reduction Act, hardline immigration legislation, and increases in oil and gas production. These bills have little chance of advancing in the U.S. Senate. This fall, House Republicans will also ramp up an impeachment inquiry of President Biden. On November 8, 2023, the House Oversight Committee issued subpoenas to the President’s brother, James, and his son, Hunter. Despite this lack of legislative focus, the House and Senate must reach compromise on a growing list of must-pass bills. The following is a summary of bills that must pass both chambers and get signed by the President before the end of the 2023 calendar year. Looming Shutdown: FY’24 Appropriations. As noted above, Congress avoided a government shutdown by passing a 45-day CR that is set to expire on November 17, 2023. With few legislative days remaining, newly-elected Speaker Johnson is considering a new path forward. This approach has been referred to as a “laddered CR”, which would extend four relatively non-controversial funding bills to January 19, 2024 and extend the remaining eight funding bills until February 2, 2024. In the Senate, Majority Leader Chuck Schumer (D-NY) announced that the path forward would be for a stopgap bill, another CR that would extend the deadline for mid-December in hopes to add more time for Congress to have a larger appropriations package completed. Though text has not been released, Leader Schumer has committed that a vote on the stopgap will take place prior to the November 17 deadline. The situation will continue to be monitored as details unfold. Regardless of the approach to keep federal government agencies and programs funded in the short- term in FY’24 (which started on October 1, 2023), the House and Senate will have to reach agreement on overall funding levels. House Republicans are proposing funding levels approximately $120 billion below levels initially approved by the Senate appropriators within the 12 appropriations bills that are currently working through both chambers, 7 of which have been passed in the House. Of importance to Indian Country, the FY’24 House Interior, Environment and Related Agencies funding bill is $12.5 billion below the Senate mark. However, both bills currently retain funding levels at or above FY’23 funding for key programs at the Bureau of Indian Affairs (“BIA”), Bureau of Indian Education (“BIE”), and the Indian Health Service (“IHS”). In addition, both bills include provisions to provide advance appropriations for Indian health care programs and services through FY’25. Great thanks go out to House Interior Appropriations leaders Mike Simpson (R-ID) and Chellie Pingree (D- ME) and Senate Interior Appropriations leaders Jeff Merkley (D-OR) and Lisa Murkowski (R-AK).
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2023 Farm Bill. The Farm Bill authorizes funding for most programs administered by the U.S. Department of Agriculture, including nutrition programs for low-income families (also known as “SNAP”), rural development programs, forestry, crop insurance, commodities, and many others. The Farm Bill comes before Congress every five years. However, the current 2018 Farm Bill expired on September 30, 2023. Indian Country has been actively engaging in the 2023 reauthorization through the Native Farm Bill Coalition and Congressional allies in both chambers. It remains unclear whether Congress will pass a short-term extension to continue these programs for FY’24 or try to pass a new Farm Bill before the end of the First Session of the 118 th Congress. 2023 National Defense Authorization Act. Another must-pass bill is the annual defense authorization bill known as the National Defense Authorization Act (“NDAA”). The NDAA authorizes annual funding levels for the U.S. military and set defense policies for the coming year. The House and Senate have passed two widely different bills and are engaging in conference negotiations to reach agreement on a bill that can pass both chambers. In recent years, Congress has included non- defense policy measures on the annual NDAA. In July of 2024, the Senate Armed Services Committee added a provision to reauthorize and update the Native American Housing Assistance and Self-Determination Act (“NAHASDA”). NAHASDA expired in 2013, and all of Indian Country is working to ensure that Senate NAHASDA provision is included in the final FY’24 NDAA package that will pass Congress in December of 2023. Indian Country Priorities . Limit Impacts of Castro-Huerta . Tribes nationwide continue to debate how to address the 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 decision upended long-standing precedent 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. Indian Country is working in Congress and with 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. 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 long-standing needs. IHS and BIA Advanced Appropriations. Indian Country achieved a historic victory in securing advance appropriations for Indian healthcare as part of the FY’23 Omnibus Appropriations Act. Advanced appropriations will limit the impacts of government shutdowns on Tribal health programs. However, this achievement fell short of permanent advance appropriations funding. As a result, Tribes nationwide are working to make permanent advance appropriations for Indian healthcare programs, as well as extended advanced appropriations to critical education, public safety, and social services programs. Companion bills, H.R. 4832 and S. 2424, to accomplish this goal were introduced by Rep. McCollum (D-MN) with Rep. Tom Cole (R-OK) in the House and Senator Ben Ray Lujan (D-NM) with Senator Markwayne Mullin (R-OK) in the Senate.
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Proposed Rule to Amend 25 C.F.R. Part 293 – IGRA Compacting On December 6, 2022, the Interior Department published a proposal to amend the 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 of 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 the process for submission by Tribes and States and consideration by the Secretary of Class III Tribal-State Gaming Compacts, and [were] 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) and 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." The term "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” and has been adopted by the Second Circuit in Mashantucket Pequot Tribe v. Connecticut and the Tenth Circuit in Northern Arapahoe Tribe v. Wyoming . Regarding the emerging market of online gaming, proposed Part 293.29 would make clear that compacts may include provisions allocating State and Tribal jurisdiction that deem remote wagers to take place at the location of the server accepting the wager that is located on the Tribe's Indian lands. 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." Text of the Federal Register notice of the proposed rule, executive summary, and summary of comments received can be found at this link: https://www.govinfo.gov/content/pkg/FR-2022-12- 06/pdf/2022-25741.pdf. The Department hosted an in-person consultation on January 13, 2023, and held two virtual consultations on January 19 and January 30, 2023. The comment deadline was March 1, 2023. The Interior Department is reviewing comments and may issue a final rule in the coming weeks or months.
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Proposed Rule to Amend 25 C.F.R. Part 151 – Fee to Trust Process On December 5, 2022, the Interior Department published a proposed rule to amend regulations governing the discretionary acquisition of Tribal fee to 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 (“IRA”). Interior states 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. 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 make a determination of 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 Department hosted in-person consultations on January 13, 2023, and two virtual consultations on January 19 and January 30, 2023. The comment period ended on March 1, 2023. The Interior Department is reviewing comments and may issue a final rule in the coming weeks or months.
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Equal Protection Challenges to Federal Indian Laws The United States Constitution acknowledges that “Indian Tribes” are separate distinct governments, that “Indians” were citizens of these governments, that Treaties – including those entered between the United States and Tribal Governments – are the “supreme Law of the Land”. Despite this clear expression of Indian Tribes as separate political entities, anti-Tribal sovereignty groups have increased constitutional challenges to federal laws designed to meet the government’s obligations to Indian Country as being race-based in violation of the Constitution’s Equal Protection Clause. These claims ignore the text of the United States Constitution and well-settled case law. The most high-profile of these cases are Haaland v. Brackeen , which involved the Indian Child Welfare Act, and the Maverick Gaming and West Flagler cases challenging the validity of the Indian Gaming Regulatory Act. Similar questions were raised nearly a half century ago in the Supreme Court’s Morton v. Mancari decision. Mancari held that federal laws relating to Indian Tribes are based upon a political or governmental classification – not racial classifications. Thus, such laws are subject to “rational basis” as opposed to “strict” scrutiny. Mancari reasoned that a federal Indian affairs-related law “will not be disturbed” in the face of an equal protection challenge, “As long as the special treatment can be tied rationally to the fulfillment of Congress’ unique obligation toward the Indians.” Over the past five decades, the Supreme Court and dozens of lower federal courts have consistently upheld the model of the Mancari decision when examining challenges to the constitutionality of federal laws designed to impact Indian Tribes. Despite the well-settled precedent, the renewed interest in claiming that federal Indian affairs laws are race-based were emboldened by the Court’s recent trend of ignoring or overruling its own long- standing decisions. The Court’s June 2022 decision Oklahoma v. Castro-Huerta is one example in which it ignored two centuries of precedent, turning the foundational principle that state laws have no effect on Indian lands, unless expressly authorized by an Act of Congress, on its head. The two highest profile legal challenges involve the Indian Child Welfare Act (ICWA) and the Indian Gaming Regulatory Act (IGRA). The anti-Tribal Government challengers urge the courts to ignore the Supreme Court’s Mancari decision and the model that it established regarding statutory review of laws relating to Indian Tribes. On June 15, 2023, the Supreme Court, in Haaland v. Brackeen , rejected most of the dubious legal attacks on ICWA. In a resounding 7-2 decision, the Court upheld the constitutionality of ICWA. The majority opinion, authored by Justice Amy Coney Barrett, rejected arguments that questioned Congress’ Article I power to enact ICWA, as well as a claim that ICWA violated the Anti- Commandeering Doctrine. The Brackeen decision, however, did not decide the question of whether ICWA violated the Constitution’s Equal Protection Clause on the merits. The Court rejected the petitioner’s argument on grounds that they did not have standing to raise the claim. As a result, the equal protection question remains open to a future legal challenge, one which Justice Brett Kavanaugh characterized as a “serious” and “significant question under bedrock equal protection principles.” As a result, the equal protection claim remains a threat. The law firm representing the parents in the Brackeen case are the same legal minds behind the constitutional attacks on IGRA in Maverick Gaming, LLC v. United States, et al . This is no coincidence. This is no ordinary law firm that represents mom and pop shops - they do not specialize in child custody disputes. The firm took the Brackeen case pro bono – not to serve the best interests of a child, but to lay groundwork for their attack in Maverick as part of a long-standing and coordinated attempt to undermine Tribal sovereignty. As the Native American Rights Fund stated, “This was never a case
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about children. The opposition was essentially trying to weaken Tribes by putting their children in the middle, which is a standard tactic for entities that are seeking to destroy Tribes.” Maverick Gaming LLC is a commercial Washington-based corporation that owns and operates 19 card rooms in the State. Maverick filed suit against the United States, the Department of Interior, Secretary Haaland, Assistant Secretary Bryan Newland, and Washington state officials, for negotiating and approving gaming compacts with 29 Indian Tribes to permit sports betting, including “geo-fenced” sports betting that permits online wagers placed and accepted on Indian lands. The State of Washington’s criminal law prohibits commercial gaming operators, like Maverick, from offering sports betting. Maverick claims that the compact provides Tribes with a “monopoly over most forms of casino-style gaming” that is inconsistent with IGRA and federal criminal laws and violates the Constitution’s guarantee of equal protection by “irrationally and impermissibly discriminating on the basis of race and ancestry.” These attacks are decades in the making. One of the attorneys representing Brackeen and Maverick filed a lawsuit to overturn California’s Prop 5 in 1998, when California voters approved a statute initiative to enact Tribal-State gaming compacts. This same attorney served as the Justice Department’s Solicitor General from 2001-2004, during a time when DOJ filed lawsuits and developed draft legislation to amend IGRA to limit the ability of Tribal Governments to utilize class II gaming. For Indian Country, everything is at stake. If either ICWA or IGRA fall to a racially-based constitutional challenge, attacks against federal laws to preserve Tribal Government culture and religion (NAGPRA), Indian water rights, Indian lands (the Indian Reorganization Act and many others), Indian healthcare and education (IHCIA and ISDEAA), Indian housing (NAHASDA), and many more will immediately follow. As Justice Harry Blackmun, a President Nixon nominee, stated in Mancari : “If these laws, derived from historical relationships and explicitly designed to help only Indians, were deemed invidious racial discrimination, an entire Title of the United States Code (25 U. S. C.) would be effectively erased, and the solemn commitment of the Government toward the Indians would be jeopardized.” Opponents of Indian Country pin their hopes on the Court reverting to making federal Indian policy from the bench as it did in Castro-Huerta . They will ask the Court to dismiss the half century of Mancari ’s precedent and reinterpret the Constitution’s clear expression of Indian tribes as self- governing entities. Essentially, they will ask the Court “to say that the Constitution itself is racially discriminatory” as Professor Matthew Fletcher recently wrote. For these reasons, all of Indian Country is uniting to push back against these existential attacks on tribal sovereignty.
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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.
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NIGC Regulatory Updates 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 15, 2023, the NIGC published a final rule that would amends 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. The original proposed rule was published on August 10, 2022 but the NIGC published a revised rule on April 23, 2023 in response to comments received. The final rule became effective September 14, 2023 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. The final rule also clarifies that ordinances already in effect prior to the rule’s effective date of September 14, 2023 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 December 12, 2022, the NIGC published a final rule that amends its regulations governing appeals made to the NIGC. The proposed rule was published on August 10, 2022 and comments to this proposed rule were due September 9, 2022. This final rule amends 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;
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2) removing the NIGC’s discretion under § 585.5(a) to consider any other types of motions offered by an appealing party; and 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
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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 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.
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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. 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
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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. 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, et al (WA D.Ct. Feb. 21, 2023)— Maverick Gaming LLC, a Washington-based company that owns and operates 19 card rooms in the State of Washington, filed suit against the United States, the Department of Interior, Sec. Haaland, and Asst. Sec. Bryan Newland, and 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. 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, including “geo-fenced” sports betting that permits online wagers placed and accepted on Indian lands. The State of Washington’s criminal law prohibits commercial gaming operators, like Maverick, from offering sports betting. Maverick claims that the compact provides Tribes with a “monopoly over most forms of casino-style gaming” that is inconsistent with IGRA and federal criminal laws and violates the Constitution’s guarantee of equal protection by “irrationally and impermissibly discriminating on the basis of race and ancestry.” Maverick asked the court to vacate the Secretary’s approval of the compact amendments permitting sports betting. The case was initially filed in the U.S. District Court for the District of Columbia. However, in May of 2022, the D.C. District Court granted the State of Washington’s change of venue motion to transfer the case to the U.S. District Court for the Western District of Washington. On October 3, 2022, the Shoalwater Bay Indian Tribe (“Shoalwater”) intervened in the case and filed a motion with the Western District of Washington to dismiss for failure to join a required party. On February 21, 2023, the U.S. District Court Western District of Washington granted the motion to dismiss based on Maverick’s failure to join Shoalwater as a necessary party. The district court found that: Shoalwater was
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a required party with genuine interests in the outcome of the litigation that would not be adequately represented by the United States alone; and Shoalwater did not waive its sovereign immunity by intervening, and therefore, could not be joined to the suit. The court then performed 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.” 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 appealed to the U.S. Court of Appeals for the Ninth Circuit, filing its opening brief on July 3, 2023. In its appeal, Maverick argues that the district’s court’s interpretation: contradicted precedent that the United States could adequately represent a tribal government absent a conflict of interest; and 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.” The United States, the State of Washington, and the Shoalwater Indian Tribe filed response briefs on September 1, 2023. Maverick filed its reply brief on October 9, 2023. The Ninth Circuit has not yet scheduled a date for oral arguments. West Flagler Associates, Ltd., et al. v. Haaland, et al. (D.C. Circuit June 30, 2023)— 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].” The Circuit Court then reviewed the merits of the other three arguments brought by West Flagler, which the District Court did not reach in its analysis. In looking at the arguments regarding the Wire Act and the UIGEA, the Court found the Secretary was not required to disapprove the Compact on either basis as both arguments present questions requiring hypothetical outcomes following the implementation of the Compact. Finally, the Court found that the Secretary did not “authorize” or “grant the Tribe a statewide monopoly over online sports betting” and therefore did not violate the Fifth Amendment’s Equal Protection guarantee. However, the Court makes it clear that even if the Secretary did authorize such sports betting, her approval would survive rational basis review under Mancari , stating that the exclusivity provisions are “rationally related to the legitimate legislative purposes laid out in IGRA by ‘ensuring that the Indian tribe is the primary beneficiary of the gaming operation.’”
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