Authority of NIGC placed in doubt

FROM THE ARCHIVE

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FRIDAY, MAY 10, 2002

A decision by a Department of Interior judicial official would severely limit the ability of federal regulators to police the $10 billion and growing Indian gaming industry.

In a 34-page opinion, Candida S. Steel of the Office of Hearings and Appeals last week ruled that the National Indian Gaming Commission (NIGC) was trampling on tribal and state authority by regulating certain casino operations. Under the Indian Gaming Regulatory Act (IGRA), she wrote, the independent agency can only "recommend" but not mandate rules governing Class III games -- a highly lucrative market including slot machines, blackjack and related offerings.

"[T]he NIGC is not achieving the carefully orchestrated purpose of the IGRA because it impinges on the very sovereignty of the tribes and the states," Steel wrote.

Although non-binding in nature, the decision effectively strikes down the force of hundreds of regulations affecting the day-to-day operation of Indian casinos. Known as "minimum internal control standards," or MICS, the rules govern everything from cash management to employee background checks.

As such, the standards are of great concern to tribal and gaming leaders, some of whom feel the NIGC overstepped its bounds by promulgating them during the Clinton administration. In fact, Steel's proceedings were closely watched in Indian Country, drawing amicus briefs from the National Indian Gaming Association, a trade group representing more than 150 tribes, and nearly a dozen tribes nationwide.

The dispute in question arose when the Colorado River Indian Tribes of Arizona challenged a federal audit of their Blue Water Casino. Gaming regulators, under the MICS, sought access to records, documents and other information regarding the casino's Class III operation.

When the casino balked, NIGC Chairman Montie Deer fined the tribes $20,000. Since Steel said the commission "exceeded its authority" by seeking to conduct the audit under the questionable rules, she has recommended the penalty be dismissed.

NIGC legal counsel Kevin Washburn said the agency has 10 days from this past Monday to raise objections for the record. Within a month, the commission must decide, in writing, whether to accept Steel's recommendations.

Otherwise, the ruling would gain the full force of law and limit the weight of its Class III regulations. The commission is currently seeking to expand the rules.

But since commissioner Liz Homer, a Clinton appointee whose term is up this summer, has recused herself -- her husband is a Colorado River tribal member -- the matter falls entirely upon colleague Teresa Poust. Deer would have difficulty overruling Poust if she decides to accept the ruling and limit her own agency's force.

NIGA has argued the best place for regulation is through tribal standards and compacts with states. "At the tribal government level, Indian tribes invest $160 million annually to regulate Indian gaming through tribal gaming commissions and staff," the group wrote in a letter to the Wall Street Journal.

Colorado River tribal officials are aware of the ruling but didn't provide comment to Indianz.Com when asked. A recent internal dispute over handling of casino funds has led to the seizure of records by tribal and Bureau of Indian Affairs police.

Acting tribal Chairman Russell Welsh instigated the probe, The Arizona Republic reported Tuesday. Sources close to the investigation told the paper Welsh received threats from a person suspected of taking money from the casino.

Relevant Links:
National Indian Gaming Association - http://www.indiangaming.org