[Federal Register: July 12, 2002 (Volume 67, Number 134)]
[Proposed Rules]
[Page 46134-46136]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jy02-18]
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NATIONAL INDIAN GAMING COMMISSION
25 CFR Part 504
RIN 3141-AA04
Classification of Games
AGENCY: National Indian Gaming Commission.
ACTION: Proposed rule withdrawal.
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SUMMARY: The National Indian Gaming Commission hereby gives notice that
the proposed regulations establishing a formal process for the
classification of games published in the Federal Register on November
10, 1999, 64 FR 61234, are withdrawn.
DATES: The proposed rule published on November 10, 1999, at 64 FR 61234
is withdrawn as of July 12, 2002.
FOR FURTHER INFORMATION CONTACT: Penny J. Coleman, Deputy General
Counsel, NIGC, Suite 9100, 1441 L St. NW., Washington, DC 20005.
Telephone: 202-632-7003; and fax, 202-632-7066 (these are not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
On October 17, 1988, Congress enacted the Indian Gaming Regulatory
Act, 25 U.S.C. 2701-21 (IGRA or Act), creating the National Indian
Gaming Commission (NIGC or Commission) and developing a comprehensive
framework for the regulation of gaming on Indian lands. The Act
establishes three classes of Indian gaming.
``Class I gaming'' means social games played solely for prizes of
minimal
[[Page 46135]]
value or traditional forms of Indian gaming played in connection with
tribal ceremonies or celebrations, 25 U.S.C. 2703(6). Indian tribes
regulate Class I gaming exclusively.
``Class II gaming'' means the game of chance commonly known as
bingo, whether or not electronic, computer, or other technologic aids
are used in connection therewith, including, if played in the same
location, pull-tabs, lotto, punch boards, tip jars, instant bingo, and
other games similar to bingo, and various card games, 25 U.S.C. 2703
(7)(A). Class II gaming, however, does not include any banking card
games, electronic or electromechanical facsimiles of any game of chance
or slot machines of any kind, 25 U.S.C. 2703 (7)(B). Tribal governments
and the NIGC share regulatory authority over Class II gaming without
the involvement of state government.
Class III gaming, on the other hand, may be conducted lawfully only
if the state in which the tribe is located and the tribe reach an
agreement called a tribal-state compact. For a compact to be effective,
the approval of the Secretary of the Interior of the compact terms must
be obtained. ``Class III gaming'' includes all forms of gaming that do
not constitute Class I or II gaming, 25 U.S.C. 2703 (8). Class III
gaming thus includes all other games of chance, including most forms of
casino-type gaming, such as slot machines, roulette and pari-mutuel
wagering, and banking card games, such as blackjack.
Game classification is the key feature around which the legal and
regulatory framework of tribal gaming is centered. Any doubts or
confusion as to the proper classification of a game, therefore, will
raise serious questions as to the legality of play of a particular game
and may subject a gaming operation to an enforcement action. While
Congress outlined the basic parameters for the classification of games,
the Commission was left the task of defining certain key terms, see, 25
U.S.C. 2703(6)-(8), which was completed on April 9, 1992, with the
publication of a final rule setting forth the operational definitions,
57 FR 12382.
Notwithstanding the Commission's best efforts to produce clear,
comprehensive definitions, issues in relation to the classification of
games continued to emerge throughout the 1990's, resulting in a series
of disputes between federal, state, and tribal government. Further
complicating the situation, these disputes are not readily subject to
judicial resolution because courts have generally recognized immunities
among such sovereigns against suits by others, Seminole Tribe v.
Florida, 517 U.S. 44 (1996); Oklahoma Tax Comm'n v. Citizen Band
Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505 (1991). Additionally,
the United States has occasionally taken positions on the
classification of games that federal courts subsequently deemed
incorrect, causing substantial consternation among tribes and states
and subjecting the government to criticism by the courts. See United
States v. 162 Megamania Gambling Devices, 231 F.3d 713 (10th Cir.
2000); United States v. 103 Electronic Gambling Devices, 223 F.3d 1091
(9th Cir. 2000).
The proposed rule represents the Commission's first attempt to
confront these difficulties through the establishment of a formal
process for the classification of games. In large measure this approach
was in response to increases in the volume of disputes related to the
classification of games. As this rulemaking effort got underway,
decisions in the courts began to make it increasingly clear that some
of the Commission's definitions were out of alignment with judicial
interpretation of the Act. The definitions pertaining to games
featuring the use of technological aids were particularly troublesome.
Advances in technology had produced devices that in the view of the
Commission blurred the distinction between simple technological aids
and electromechanical facsimiles of games of chance, the earlier
permissible without a compact, the latter unlawful without a compact.
The analytical unanimity of the courts with regard to these cases
impressed upon the Commission the need to reexamine its definitional
regulations.
Early in 2001, the Commission undertook a thorough reexamination of
its definitional regulations. Due to the interrelationship between the
definitional rules and the proposed game classification procedural
regulation, action on the proposed procedural rule was stayed pending a
final determination with regard to the definitions. Having now issued a
final rule amending the Commission's definitions for technological
aids, electromechanical facsimile, and games similar to bingo, the
Commission is now in a position to address the issue of procedure. 67
FR 41166, June 17, 2002.
Currently, there are three methods available to the Commission for
addressing the classification of games. One is classification through
formal notice and comment rulemaking. While such method produces
certainty and finality, the process is slow, cumbersome, and
insufficiently nimble to be practical for use on a routine basis.
Another method is through the use of advisory opinions prepared and
issued by the Commission's Office of General Counsel upon request by an
interested party. To date, the Office General Counsel has issued more
than thirty such opinions regarding the classification of individual
games. These opinions, however, are merely advisory in nature and not
the result of formal administrative processes. They are not, thus,
entitled to the level of deference that must be accorded to final
decisions of the Commission, though the courts have accorded them
limited deference in certain circumstances. United States v. 162
Megamania Gambling Devices, 231 F.3d 713, 719, 720, 722-23 (10th Cir.
2000); see also Diamond Game Enterprises, Inc. v. Reno, 230 F.3d 365
(D.C. Cir. 2000) (relying on Commission's advisory opinion on the Tab
Force Validation System).
The third method is through formal administrative enforcement
action. These actions may be brought in instances where the Chairman
determines that the games offered constitute Class III games and no
compact is in place. While such administrative adjudications can
provide reliable results, the process is cumbersome, time-consuming and
resource-intensive for both the Commission and the affected party. A
single enforcement action may be pending for many months or years
before the administrative process produces a final agency
determination, after which, the matter may be subject to another
lengthy proceeding in the federal courts.
The Commission is of the view that none of the three methods
presently available is ideal. As a matter of sound public policy as
well as in the interest of fairness and due process, a regulated
industry ought not to be forced to risk enforcement action in order to
obtain a legally binding and judicially reviewable classification
opinion from the Commission. Absent a fair, carefully thought-out
procedure for classifying games, however, the Commission has no
alternative but to follow the status quo, which has been unsatisfactory
to all concerned.
The Commission's proposed rule establishing a classification
procedure was severely criticized by tribal governments in written
comments as well as in the testimony at the hearing on the proposal
held January 24, 2000 in Tulsa, Oklahoma. The most vehement criticism
was that the rule failed to recognize that the Commission shares
responsibility for the regulation of Class
[[Page 46136]]
II gaming with tribal governments. Tribal governments, as the primary
regulators of Indian gaming, have an important role to play in the
classification of games. Many felt that the procedure would exacerbate
rather than reduce conflict because the process minimizes the role of
tribal gaming commissions in making classification determinations in
the first instance.
A second major criticism was that the rule was far too sweeping in
that no game, even those games unquestionably falling within the Class
II criteria, could be introduced for play without first receiving a
classification decision from the Commission. Critics felt that given
the large number of Class II games, the Commission would not be able to
produce classification decisions in a reasonable or timely fashion.
Many felt that the Commission's capacity to produce decisions under the
rule would be overwhelmed by the sheer volume of the workload. The
Commission itself has concerns in this regard. Grandfathering those
games in common play at the time of issuance was considered, but this
approach also has its faults and the Commission has yet to discern a
way of effecting a workable solution to the myriad of issues involved
in resolving this difficulty.
Commenters raised a number of other significant questions, many of
which possess great merit. The Commission is particularly sensitive to
the concern that its workload capacity could be detrimentally affected.
Indeed, classification decisions often present difficult technical
issues and the process may be highly time intensive. In some cases, the
expense may be substantial. On the other hand, the Commission
recognizes that its lack of a uniform process for making gaming
classification decisions fosters a climate of uncertainty, exacerbating
disputes and increasing the likelihood of long, drawn out litigation.
The Commission recognizes that Congress intended a partnership
between it and tribal gaming regulators. IGRA clearly anticipates that
tribal and federal regulators must work collaboratively to insure the
integrity of Indian gaming. The Commission believes that a middle
ground can be found with regard to a formal mechanism for game
classification; however, the current proposal does not satisfy this
objective.
It is the Commission's view that the proposed rule would have more
likely satisfied the concerns of all if there had been greater
opportunity for tribal input during its development. The Commission has
utilized collaborative processes in rulemaking for a number of years
with favorable result. Given the joint system of tribal and federal
regulation and the on-going relationship between tribal and federal
regulators, the expertise and experience of tribal regulators would
have greatly aided the Commission's effort to develop a proposal in
better alignment with the concerns and needs of tribal governments and
to assist in resolving the problems that remain outstanding. If, at a
future time, the Commission reconsiders promulgation of a rule
establishing a formal procedure for the classification of games, a
tribal advisory committee should be established to advise the
Commission as to the nature and content of such rule.
History of the Rulemaking
A proposed rule establishing a process for classification of games
was published in the Federal Register on November 10, 1999. 64 FR
61234.
Sixty-nine (69) comments were submitted in response to that
publication. Comments were initially due on January 10, 2000. On
December 27, 1999, the Commission issued a Notice of Extension of Time
and Notice of Hearing. Written and oral testimony was submitted to the
Commission at a public hearing on January 24, 2000, in Tulsa, Oklahoma.
Following the extension, comments were due February 24, 2000.
Notice
The National Indian Gaming Commission (Commission) hereby gives
notice that the proposed regulations establishing a formal process for
the classification of games published in the Federal Register on
November 10, 1999, 64 FR 61234, are withdrawn. If, at a future time,
the Commission elects to proceed with the promulgation of a rule
establishing a formal procedure for the classification of games, it
will establish a tribal advisory committee to advise the Commission as
to the nature and content of such rule.
Signed this 3rd day of July, 2002.
Elizabeth L. Homer,
Vice-Chair.
Teresa E. Poust,
Commissioner.
Chairman's Dissent
I respectfully dissent from the Commission's statement that
attempts to bind a future Commission to establish a formal tribal
advisory committee for the creation of a gaming classification rule. I
believe strongly that tribal advisory committees are an effective way
to obtain tribal input for rulemaking initiatives. Though I would
prefer a mechanism that encourages even broader tribal participation in
our rulemaking initiatives, I would encourage future Commissions to use
tribal advisory committees in rulemaking initiatives. However, I
believe that the current Commission simply lacks the power to bind
future Commissions to a particular rulemaking process. Future
Commissions are free to use the rulemaking approach that allows
interested parties to participate in the process and that, ultimately,
will produce the best rule under the circumstances.
Montie R. Deer,
Chairman.
[FR Doc. 02-17152 Filed 7-11-02; 8:45 am]
BILLING CODE 7565-01-P