Amendments to Various National Indian Gaming Commission Regulations, 78242-78252 [E8-30019]

Agencies

• DEPARTMENT OF THE INTERIOR
• National Indian Gaming Commission

[Federal Register Volume 73, Number 246 (Monday, December 22, 2008)]
[Proposed Rules]
[Pages 78242-78252]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30019]


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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Parts 502, 514, 531, 533, 535, 537, 539, 556, 558, 571, 573

RIN 3141-0001


Amendments to Various National Indian Gaming Commission 
Regulations

AGENCY: National Indian Gaming Commission (NIGC or Commission).

ACTION: Proposed rules.

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SUMMARY: The proposed rule modifies various Commission regulations to 
reduce reporting burdens on tribes, update costs for background 
investigations, clarify definitions and regulatory intent, and update 
audit requirements to consolidate and reflect industry standards.

DATES: Submit comments on or before February 5, 2009.

ADDRESSES: Comments can be faxed, mailed, or e-mailed. Mail comments to 
``Comments on Administrative Regulations,'' National Indian Gaming 
Commission, 1441 L St., NW., Washington, DC 20005, Attn: Rebecca 
Chapman, Office of General Counsel. Comments may be faxed to 202-632-
7066 (not a toll-free number). Comments may be sent electronically to 
adminregs@nigc.gov.

FOR FURTHER INFORMATION CONTACT: Rebecca Chapman, Staff Attorney, 
Office of General Counsel, at (202) 632-7003; fax (202) 632-7066 (not 
toll-free numbers).

SUPPLEMENTARY INFORMATION:

I. Background

    On October 17, 1988, Congress enacted the Indian Gaming Regulatory 
Act (IGRA or Act), 25 U.S.C. 2701-21, creating the National Indian 
Gaming Commission (NIGC or Commission) and developing a comprehensive 
framework for the regulation of gaming on Indian lands. 25 U.S.C. 2702. 
The NIGC was granted, among other things, regulatory oversight and 
enforcement authority, including the authority to monitor tribal 
compliance with IGRA, NIGC regulations, and tribal gaming ordinances.
    The Commission has worked under IGRA for almost twenty years, and 
in 1992, it adopted regulations. 25 U.S.C. 2706(b)(10). To better carry 
out its statutory duties, the Commission undertakes this collection of 
minor, miscellaneous regulation changes. The proposed rule will update 
regulations, and it will streamline and optimize existing procedures.

II. Development of the Proposed Rules Through Written Tribal 
Consultation

    The Commission identified a need for minor changes to various parts 
of its regulations, and in accordance with its government-to-government 
consultation policy (69 FR 16,973 (Mar. 31, 2004)), requested input 
from Indian tribes. On March 26, 2007, the Commission prepared 
amendments to the regulations and sent a copy to the leaders of all 
gaming tribes for comment. Fifty-seven tribes provided written 
comments. The NIGC carefully reviewed all comments, often incorporating 
suggested changes.
    In addition, the NIGC consulted with tribes and their gaming 
commissions at regional gaming association meetings around the country 
and at the Washington, DC, headquarters. Since March 26, 2007, the NIGC 
has held consultations at fifteen regional gaming conferences and 
consulted with more than 110 tribes when the proposed rule was on the 
agenda. Other than the previous 57 submissions, no tribes chose to 
consult or comment further about these miscellaneous regulation 
changes.

III. Purpose and Scope

    The changes in this proposed rule are minor but provide incremental 
improvements to existing regulations. These changes clarify existing 
regulations, reduce tribal reporting burdens for fees, update costs for 
background investigations, and allow tribes to consolidate audits and/
or file shortened versions to reduce costs. The proposed rule is 
discussed below.

A. Definitions

    NIGC regulations define ``key employee'' at 25 CFR 502.14. The jobs 
listed for key employees are, among other things, subject to a 
background investigation as a condition of licensure. The proposed rule 
would reflect the common practice of tribes that identify additional 
employees as key employees subject to background investigations beyond 
those positions identified in IGRA. NIGC has received no comments on 
this change.
    IGRA and NIGC regulations define ``net revenue'' as ``gross gaming 
revenues of an Indian gaming operation

[[Page 78243]]

less amounts paid out as, or paid for, prizes; and total gaming-related 
operating expenses, excluding management fees.'' 25 U.S.C. 2703(9); 25 
CFR 502.16. The proposed rule would amend 25 CFR 502.16 to read:

    Net Revenues means gross gaming revenues of an Indian gaming 
operation less--
    (a) Amounts paid out as, or paid for, prizes; and
    (b) Total gaming-related operating expenses, including all those 
expenses of the gaming operation commonly known as operating 
expenses and non-operating expenses consistent with professional 
accounting pronouncements, excluding management fees.

The proposed rule would reflect the industry understanding of what 
constitutes an operating expense in order to clarify what constitutes 
net revenues for a gaming operation.
    The Commission accepted the suggestion of a number of commenters to 
include the words ``gaming-related'' in order to make clear that the 
Commission's jurisdiction extended only to gaming revenues. Thus, the 
proposed rule reflects this suggestion.
    The NIGC's regulations define a ``person having a direct or 
indirect financial interest in a management contract'' to include:

    (d) When a corporation is a party to a management contract, any 
person who is a director or who holds at least 10% of the issued and 
outstanding stock alone or in combination with another stockholder 
who is a spouse, parent, child or sibling; or * * *

25 CFR 502.17(d). The proposed rule would lower the requisite financial 
interest to five percent for publicly traded companies so as to be 
consistent with the Securities and Exchange Commission's understanding 
of a ``significant shareholder.'' The Commission also notes that this 
change would be consistent with similar requirements in other gaming 
jurisdictions.
    One comment from a tribe stated that this part of the proposed rule 
created too onerous a burden on tribes. However, the NIGC disagrees and 
feels that lowering the requisite interest would best protect the 
integrity of Indian gaming.
    NIGC regulations define ``primary management official'' at 25 CFR 
502.19. The jobs listed for primary management officials are, among 
other things, subject to a background investigation as a condition of 
licensure. The proposed rule would reflect the common practice of 
tribes that identify additional employees as primary management 
officials subject to background investigations beyond those positions 
identified in IGRA. NIGC has received no comments on this change.

B. Annual Fees Required

    IGRA requires the NIGC to set an annual funding rate. 25 U.S.C. 
2717. NIGC implements this requirement under 25 CFR part 514, which 
requires tribal submissions of fees four times per year. The proposed 
rule would reduce the number of fee submissions by half. The proposed 
rule would also incorporate suggested changes by some tribal commenters 
that noted inconsistencies in language over when to set fee rates and 
when to adjust schedules.

C. Content of Management Contracts

    IGRA and NIGC regulations require specific provisions in a 
management contract, and its accompanying submission package, before 
the Chairman can approve it. 25 U.S.C. 2711; 25 CFR 531.1, 533.3. The 
Chairman must also approve any amendment to a management contract. 25 
CFR 535.1, 535.3. In applying for approval, all persons having a 
financial interest in, or management responsibility for, a management 
contract must be disclosed to the Commission and must undergo a 
background investigation. 25 CFR 537.1. Management contractors must pay 
for this investigation. 25 CFR 537.3. If the Chairman disapproves a 
management contract or amendment, the tribe or contractor may appeal. 
25 CFR 539.1, 539.2.
    The proposed rule would update 25 CFR 531.1, 533.1, 533.3, and 
533.7 by removing language regarding the Secretary of the Interior's 
approval of management contracts. Because the Secretary no longer 
fulfills that role, the NIGC is eliminating unnecessary references in 
Sec. Sec.  531.1, 533.1, 533.3, and 533.7 to the Secretary's former 
authority. Further, section 533.5 permits the Chairman to take action 
on noncompliant management contracts previously approved by the 
Secretary. Because no management contracts approved by the Secretary 
remain active, section 533.5 is obsolete and would be removed.
    Additionally, the proposed rule would update Sec.  533.3 to reflect 
the existing practice of providing a legal description for the land 
upon which the gaming facility operates or will operate. This practice 
allows the Commission to determine whether a management contract 
references a site that is ``Indian lands'' eligible for gaming as 
required under IGRA.
    The proposed rule would change Sec.  537.3 to increase the fee for 
background investigations. This would update the fee and make it closer 
to actual industry costs.
    Finally, the proposed rule would replace the words ``modification'' 
and ``modify'' with ``amendment'' and ``amend'' in Sec. Sec.  535.1, 
535.3, 539.1, and 539.2 for purposes of internal consistency.
    The only substantive comment received on proposed changes to these 
sections came from a tribe that objected to the addition of a legal 
description in the management contract submission package. As the 
amendment merely reflects existing practice, the Commission will 
propose the change.

D. Background and Licensing for Primary Management Officials and Key 
Employees

    IGRA requires that tribes, through their gaming ordinances, 
maintain an adequate system of background investigations. 25 U.S.C. 
2710(b)(2)(F). NIGC regulations, 25 CFR parts 556 and 558, implement 
this requirement. The proposed rule would remove language in 25 CFR 
556.2, 556.3 and 558.2 referring to the employment of individuals as 
key employees and primary management officials and replace it with 
language referring to their licensure instead. A decision to license an 
applicant and a decision about an applicant's suitability (or 
eligibility) for licensure are separate and distinct from a decision to 
hire the applicant. These sections are concerned with licensure and 
suitability determinations, not employment decisions. The NIGC received 
tribal comments that approved of these changes.
    These changes have implications for the use and distribution of 
gaming application information for key employees and primary management 
officials. As stated in the notice required by the proposed 25 CFR 
556.2, application information may be ``disclosed * * * in connection 
with the issuance, denial, or revocation of a gaming license * * *.'' 
As such, the information could not, without otherwise complying with 
the requirements of the Privacy Act, 5 U.S.C. 552a, be provided to 
support employment decisions by prospective or current employers of the 
license applicant. This is a change from prior practice. Under the 
NIGC's existing regulations, application information can be disclosed 
in connection with the hiring and firing of an employee.
    Finally, the amendments to 25 CFR 556.2, 556.3 and 558.2 will have 
implications for tribal gaming ordinances, but not immediately. Upon

[[Page 78244]]

the effective date, tribes do not have to immediately amend their 
gaming ordinances. However, following the effective date, whenever 
tribes amend their gaming ordinances, they must also make amendments 
conforming to the language in these sections.

E. Monitoring and Investigating

    IGRA requires ordinances submitted for the Chairman's review to 
contain a provision requiring an annual audit. 25 U.S.C. 2710(b)(2). 
The NIGC's regulation, 25 CFR 571.12, creates standard procedures for 
the submission of the annual audit to the Commission, and Sec.  571.13 
deals with how and when a tribe submits an audit statement. The 
proposed rule would still require tribes to contract with independent 
certified public accountants that use Generally Accepted Accounting 
Principles and Generally Accepted Accounting Standards to complete 
their audits. However, the proposed rule would allow tribes with 
multiple facilities to consolidate their audit statements into one. 
Further, the proposed rule would allow operations earning less than $1 
million in gross gaming revenue to file an abbreviated statement. 
Finally, the proposed rule would allow a tribe to submit an electronic 
version of an audit for so called ``stub periods'' of less than 1 year. 
The proposed rule would reflect common sense practice and reduce tribal 
costs and burden hours.
    Tribal commenters supported the proposed rule's new consolidated 
audit statements but noted inconsistencies with accounting language and 
a misuse of accounting terms. The Commission agreed and modified the 
proposed rule to reflect standard practice and a proper use of 
accounting terms.
    Tribal commenters also objected to the requirement of stub period 
audits under Sec.  571.13 as burdensome. The proposed rule therefore 
would permit tribes to incorporate stub period audit information in the 
next fiscal year financial statement. This would alleviate any cost and 
time concerns.
    NIGC regulation 25 CFR 573.6 discusses the Chairman's ability to 
close a gaming operation for any listed substantial IGRA violation. The 
proposed rule would add one substantial violation to the list and allow 
the Chairman to issue a temporary closure order for a gaming operation 
that operates on Indian land not eligible for gaming under IGRA. Indian 
gaming under IGRA must occur on ``Indian lands,'' 25 U.S.C. 2710(a), 
(b) and (d), as IGRA defines that term. 25 U.S.C. 2703(4). If Indian 
land is trust land acquired after October 17, 1988 (``after-acquired 
land''), then the land is eligible for gaming only if it meets one of 
the exceptions provided in 25 U.S.C. 2719. A gaming operation that 
operates on after-acquired land and does not meet one of the exceptions 
in Sec.  2719 is in violation of IGRA. Operating illegally in this way 
is a substantial violation of IGRA that warrants immediate closure. The 
NIGC has not received comments on this part of the proposed rule.

Regulatory Matters

Regulatory Flexibility Act

    Because the proposed rule would make only minor changes to existing 
rules, it will not have a significant impact on a substantial number of 
small entities as defined under the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq. Moreover, Indian tribes are not considered to be 
small entities for the purposes of the Regulatory Flexibility Act.

Small Business Regulatory Enforcement Fairness Act

    The proposed rule is not a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act. The rule does not 
have an annual effect on the economy of $100 million or more. The rule 
will not cause a major increase in costs or prices for consumers, 
individual industries, Federal, state, local government agencies, or 
geographic regions. Nor will the proposed rule have a significant 
adverse effect on competition, employment, investment, productivity, 
innovation, or the ability of the enterprises to compete with foreign-
based enterprises.

Unfunded Mandates Reform Act

    The Commission, as an independent regulatory agency within the 
Department of the Interior, is exempt from compliance with the Unfunded 
Mandates Reform Act. 2 U.S.C. 1502(1); 2 U.S.C. 658(1). Regardless, the 
proposed rule does not impose an unfunded mandate on state, local, 
tribal governments, or on the private sector of more than $100 million 
per year. Thus, it is not a ``significant regulatory action'' under the 
Unfunded Mandates Reform Act.

Civil Justice Reform

    In accordance with Executive Order 12988, the Office of General 
Counsel has determined that the proposed rule does not unduly burden 
the judicial system, and it meets the requirements of section 3(a) and 
3(b)(2) of that order.

National Environmental Policy Act

    The Commission has determined that the proposed rule does not 
constitute a major federal action significantly affecting the quality 
of the human environment and no detailed statement is required pursuant 
to the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et 
seq.

Paperwork Reduction Act

    The proposed rules does not require any significant changes in 
information collection under the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501 et seq. The information collections in the affected 
regulations are included within OMB control numbers 3141-0001 for part 
571; 3141-0003 for parts 556 and 558; 3141-0004 for parts 531, 533, 
535, 537, 539; and 3141-0007 for part 514.

List of Subjects in 25 CFR Parts 502, 514, 531, 533, 535, 537, 539, 
556, 558, 571

    Gambling, Indians-lands, Indians--tribal government, Reporting and 
recordkeeping requirements.

Text of the Proposed Rules

    For the reasons set forth in the preamble, the Commission proposes 
to amend its regulations at 25 CFR Chapter III as follows:
    1. The authority citation for part 502 continues to read as 
follows:

    Authority: 25 U.S.C. 2701 et seq.

    2. Add new paragraph (d) to Sec.  502.14 to read as follows:


Sec.  502.14  Key employee.

* * * * *
    (d) Any other person designated by the tribe as a key employee.
    3. Revise Sec.  502.16 to read as follows:


Sec.  502.16.  Net revenues.

    Net revenues means gross gaming revenues of an Indian gaming 
operation less--
    (a) Amounts paid out as, or paid for, prizes; and
    (b) Total gaming-related operating expenses, including all those 
expenses of the gaming operation commonly known as operating expenses 
and non-operating expenses consistent with professional accounting 
pronouncements, excluding management fees.
    4. Revise Sec.  502.17 to read as follows:


Sec.  502.17  Person having a direct or indirect financial interest in 
a management contract.

    Person having a direct or indirect financial interest in a 
management contract means:
    (a) When a person is a party to a management contract, any person 
having a direct financial interest in such management contract;

[[Page 78245]]

    (b) When a trust is a party to a management contract, any 
beneficiary or trustee;
    (c) When a partnership is a party to a management contract, any 
partner;
    (d) When a corporation is a party to a management contract, any 
person who is a director or who holds at least 5% of the issued and 
outstanding stock alone or in combination with another stockholder who 
is a spouse, parent, child or sibling when the corporation is publicly 
traded or the top ten (10) shareholders for a privately held 
corporation;
    (e) When an entity other than a natural person has an interest in a 
trust, partnership or corporation that has an interest in a management 
contract, all parties of that entity are deemed to be persons having a 
direct financial interest in a management contract; or
    (f) Any person or entity who will receive a portion of the direct 
or indirect interest of any person or entity listed above through 
attribution, grant, pledge, or gift.
    5. Add new paragraph (d) to Sec.  502.19 to read as follows:


Sec.  502.19  Primary management official.

* * * * *
    (d) Any other person designated by the tribe as a primary 
management official.
    6. The authority citation for part 514 continues to read as 
follows:

    Authority: 25 U.S.C. 2706, 2708, 2710, 2717, 2717a.

    7. Revise Sec.  514.1 to read as follows:


Sec.  514.1  Annual fees.

    (a) Each gaming operation under the jurisdiction of the Commission 
shall pay to the Commission annual fees as established by the 
Commission. The Commission, by a vote of not less than two of its 
members, shall adopt the rates of fees to be paid.
    (1) The Commission shall adopt preliminary rates for each calendar 
year no later than February 1st of that year, and, if considered 
necessary, shall modify those rates no later than July 1st of that 
year.
    (2) The Commission shall publish the rates of fees in a notice in 
the Federal Register.
    (3) The rates of fees imposed shall be--
    (i) No more than 2.5 percent of the first $1,500,000 (1st tier), 
and
    (ii) No more than 5 percent of amounts in excess of the first 
$1,500,000 (2nd tier) of the assessable gross revenues from each gaming 
operation subject to the jurisdiction of the Commission.
    (4) If a tribe has a certificate of self-regulation, the rate of 
fees imposed shall be no more than .25 percent of assessable gross 
revenues from self-regulated class II gaming operations.
    (b) For purposes of computing fees, assessable gross revenues for 
each gaming operation are the annual total amount of money wagered on 
class II and III games, admission fees (including table or card fees), 
less any amounts paid out as prizes or paid for prizes awarded, and 
less an allowance for amortization of capital expenditures for 
structures.
    (1) Unless otherwise provided by the regulations, generally 
accepted accounting principles shall be used.
    (2) The allowance for amortization of capital expenditures for 
structures shall be either the greater of:
    (a) An amount not to exceed 5% of the cost of structures in use 
throughout the year and 2.5% (two and one-half percent) of the cost of 
structures in use during only a part of the year; or
    (b) An amount not to exceed 10% of the cost of the total amount of 
amortization depreciation expenses for the year.
    (3) Examples of computations follow:
    (a) For (2)(a):

 
 
 
Gross gaming revenues:
    Money wagered.............................  ...........   $1,000,000
    Admission fees............................       $5,000    1,005,000
Less:
    Prizes paid in cash.......................      500,000  ...........
    Cost of other prizes awarded..............       10,000      510,000
Gross gaming profit...........................  ...........      495,000
Less allowance for amortization of capital
 expenditures for structures:
    Capital expenditures for structures made
     in--
        Prior years...........................      750,000  ...........
        Current year..........................       50,000  ...........
Maximum allowance:
    $750,000 x .05 =..........................       37,500  ...........
    $50,000 x .025 =..........................        1,250       38,750
Assessable gross revenues.....................  ...........      456,250
 

    (b) For (2)(b):

 
 
 
Gross gaming revenues:
    Money wagered.............................  ...........   $1,000,000
    Admission fees............................       $5,000  ...........
                                                               1,005,000
Less:
    Prizes paid in cash.......................      500,000  ...........
    Cost of other prizes awarded..............       10,000      510,000
Gross gaming profit...........................  ...........      495,000
Allowance (depreciation expense for                  40,000  ...........
 structures) per books........................
Capital expenditures for structures:
    Capital expenditures for structures made
     in
        Prior years...........................      750,000  ...........
        Current year..........................       50,000  ...........
Maximum allowance:
    $750,000 x .05 =..........................       37,500  ...........
    $50,000 x .025 =..........................        1,250  ...........
Total maximum allowance.......................       38,750  ...........
Lesser of depreciation per books or maximum     ...........       38,750
 allowance....................................
Assessable gross revenues.....................  ...........      456,250
 


[[Page 78246]]

    (4) All class II and III revenues from gaming operations are to be 
included.
    (c) Each gaming operation subject to the jurisdiction of the 
Commission and not exempt from paying fees pursuant to the self-
regulation provisions shall file with the Commission a statement 
showing its assessable gross revenues for the previous calendar year.
    (1) These statements shall show the amounts derived from each type 
of game, the amounts deducted for prizes, and the amounts deducted for 
the amortization of structures;
    (2) These statements shall be transmitted to the Commission to 
arrive no later than March 1st and August 1st of each calendar.
    (3) The statements shall identify an individual or individuals to 
be contacted should the Commission need to communicate further with the 
gaming operation. The telephone numbers of the individual(s) shall be 
included.
    (4) Each gaming operation shall determine the amount of fees to be 
paid and remit them with the statement required in paragraph (c) of 
this section. The fees payable shall be computed using--
    (i) The most recent rates of fees adopted by the Commission 
pursuant to paragraph (a)(1) of this section,
    (ii) The assessable gross revenues for the previous calendar year 
as reported pursuant to this paragraph, and
    (iii) The amounts paid and credits received during the year.
    (5) Each statement shall include the computation of the fees 
payable, showing all amounts used in the calculations. The required 
calculations are as follows:
    (i) Multiply the previous calendar year's 1st tier assessable gross 
revenues by the rate for those revenues adopted by the Commission.
    (ii) Multiply the previous calendar year's 2nd tier assessable 
gross revenues by the rate for those revenues adopted by the 
Commission.
    (iii) Add (total) the results (products) obtained in paragraphs 
(c)(5) (i) and (ii) of this section.
    (iv) Multiply the total obtained in paragraph (c)( 5)(iii) of this 
section by \1/2\.
    (v) The amount computed in paragraph (c)(5)(iv) of this section is 
the amount to be remitted.
    (6) Examples of fee computations follows:
    (i) Where a filing is made for March 1st of the calendar year, the 
previous year's assessable gross revenues are $2,000,000, the fee rates 
adopted by the Commission are 0.0% on the first $1,500,000 and .08% on 
the remainder, the amounts to be used and the computations to be made 
are as follows:

 
 
 
1st tier revenues--$1,500,000 x 0.0%=
2nd tier revenues--$500,000 x .08%=..........................       $400
Annual fees..................................................        400
Multiply for fraction of year--\1/2\ or......................        .50
Fees for first payment.......................................        200
Amount to be remitted........................................        200
 

    (7) The statements, remittances and communications about fees shall 
be transmitted to the Commission at the following address: Office of 
Finance, National Indian Gaming Commission, 1441 L Street, NW., Suite 
9100, Washington, DC 20005. Checks should be made payable to the 
National Indian Gaming Commission (do not remit cash).
    (8) The Commission may assess a penalty for failure to file timely 
a statement.
    (9) Interest shall be assessed at rates established from time to 
time by the Secretary of the Treasury on amounts remaining unpaid after 
their due date (31 U.S.C. 3717).
    (d) The total amount of all fees imposed during any fiscal year 
shall not exceed the statutory maximum imposed by Congress. The 
Commission shall credit pro-rata any fees collected in excess of this 
amount against amounts otherwise due by March 1st and August 1st of 
each calendar year.
    (e) Failure to pay fees, any applicable penalties, and interest 
related thereto may be grounds for:
    (1) Closure, or
    (2) Disapproving or revoking the approval of the Chairman of any 
license, ordinance, or resolution required under this Act for the 
operation of gaming.
    (f) To the extent that revenue derived from fees imposed under the 
schedule established under this paragraph are not expended or committed 
at the close of any fiscal year, such funds shall remain available 
until expended (Pub. L. 101-121; 103 Stat. 718; 25 U.S.C. 2717a) to 
defray the costs of operations of the Commission.
    8. The authority citation for part 531 continues to read as 
follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

    9. Revise Sec.  531.1 to read as follows:


Sec.  531.1  Required provisions.

    Management contracts shall conform to all of the requirements 
contained in this section in the manner indicated.
    (a) Governmental authority. Provide that all gaming covered by the 
contract will be conducted in accordance with the Indian Gaming 
Regulatory Act (IGRA, or the Act) and governing tribal ordinance(s).
    (b) Assignment of responsibilities. Enumerate the responsibilities 
of each of the parties for each identifiable function, including:
    (1) Maintaining and improving the gaming facility;
    (2) Providing operating capital;
    (3) Establishing operating days and hours;
    (4) Hiring, firing, training and promoting employees;
    (5) Maintaining the gaming operation's books and records;
    (6) Preparing the operation's financial statements and reports;
    (7) Paying for the services of the independent auditor engaged 
pursuant to Sec.  571.12 of this chapter;
    (8) Hiring and supervising security personnel;
    (9) Providing fire protection services;
    (10) Setting advertising budget and placing advertising;
    (11) Paying bills and expenses;
    (12) Establishing and administering employment practices;
    (13) Obtaining and maintaining insurance coverage, including 
coverage of public liability and property loss or damage;
    (14) Complying with all applicable provisions of the Internal 
Revenue Code;
    (15) Paying the cost of any increased public safety services; and
    (16) If applicable, supplying the National Indian Gaming Commission 
(NIGC, or the Commission) with all information necessary for the 
Commission to comply with the regulations of the Commission issued 
pursuant to the National Environmental Policy Act (NEPA).
    (c) Accounting. Provide for the establishment and maintenance of 
satisfactory accounting systems and procedures that shall, at a 
minimum:
    (1) Include an adequate system of internal accounting controls;
    (2) Permit the preparation of financial statements in accordance 
with generally accepted accounting principles;
    (3) Be susceptible to audit;
    (4) Allow a gaming operation, the tribe, and the Commission to 
calculate the annual fee under Sec.  514.1 of this chapter;
    (5) Permit the calculation and payment of the manager's fee; and
    (6) Provide for the allocation of operating expenses or overhead 
expenses among the tribe, the tribal gaming operation, the contractor, 
and any other user of shared facilities and services.
    (d) Reporting. Require the management contractor to provide the 
tribal governing body not less frequently than monthly with verifiable 
financial reports or all information necessary to prepare such reports.

[[Page 78247]]

    (e) Access. Require the management contractor to provide immediate 
access to the gaming operation, including its books and records, by 
appropriate tribal officials, who shall have:
    (1) The right to verify the daily gross revenues and income from 
the gaming operation; and
    (2) Access to any other gaming-related information the tribe deems 
appropriate.
    (f) Guaranteed payment to tribe. Provide for a minimum guaranteed 
monthly payment to the tribe in a sum certain that has preference over 
the retirement of development and construction costs.
    (g) Development and construction costs. Provide an agreed upon 
maximum dollar amount for the recoupment of development and 
construction costs.
    (h) Term limits. Be for a term not to exceed five (5) years, except 
that upon the request of a tribe, the Chairman may authorize a contract 
term that does not exceed seven (7) years if the Chairman is satisfied 
that the capital investment required, and the income projections, for 
the particular gaming operation require the additional time. The time 
period shall begin running no later than the date when the gaming 
activities authorized by an approved management contract begin.
    (i) Compensation. Detail the method of compensating and reimbursing 
the management contractor. If a management contract provides for a 
percentage fee, such fee shall be either:
    (1) Not more than thirty (30) percent of the net revenues of the 
gaming operation if the Chairman determines that such percentage is 
reasonable considering the circumstances; or
    (2) Not more than forty (40) percent of the net revenues if the 
Chairman is satisfied that the capital investment required and income 
projections for the gaming operation require the additional fee.
    (j) Termination provisions. Provide the grounds and mechanisms for 
amending or terminating the contract (termination of the contract shall 
not require the approval of the Chairman).
    (k) Dispute provisions. Contain a mechanism to resolve disputes 
between:
    (1) The management contractor and customers, consistent with the 
procedures in a tribal ordinance;
    (2) The management contractor and the tribe; and
    (3) The management contractor and the gaming operation employees.
    (l) Assignments and subcontracting. Indicate whether and to what 
extent contract assignments and subcontracting are permissible.
    (m) Ownership interests. Indicate whether and to what extent 
changes in the ownership interest in the management contract require 
advance approval by the tribe.
    (n) Effective date. State that the contract shall not be effective 
unless and until it is approved by the Chairman, date of signature of 
the parties notwithstanding.
    10. The authority citation for part 533 continues to read as 
follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.


Sec.  533.3  [Amended]

    11. In Sec.  533.1, remove paragraph (c).
    12. Revise Sec.  533.2 to read as follows:


Sec.  533.2  Time for submitting management contracts and amendments.

    A tribe or a management contractor shall submit a management 
contract to the Chairman for review within thirty (30) days of 
execution by the parties. The Chairman shall notify the parties of 
their right to appeal the approval or disapproval of the management 
contract under part 539 of this chapter.
    13. Revise Sec.  533.3 to read as follows:


Sec.  533.3  Submission of management contract for approval.

    A tribe shall include in any request for approval of a management 
contract under this part:
    (a) A contract containing:
    (1) Original signatures of an authorized official of the tribe and 
the management contractor;
    (2) A representation that the contract as submitted to the Chairman 
is the entirety of the agreement among the parties; and
    (b) A letter, signed by the tribal chairman, setting out the 
authority of an authorized tribal official to act for the tribe 
concerning the management contract.
    (c) Copies of documents evidencing the authority under paragraph 
(b) of this section.
    (d) A list of all persons and entities identified in Sec. Sec.  
537.1(a) and 537.1(c)(1) of this chapter, and either:
    (1) The information required under Sec.  537.1(b)(1) of this 
chapter for class II gaming contracts and Sec.  537.1(b)(1)(i) of this 
chapter for class III gaming contracts; or
    (2) The dates on which the information was previously submitted.
    (e)(1) For new contracts and new operations, a three (3)-year 
business plan which sets forth the parties' goals, objectives, budgets, 
financial plans, and related matters; or
    (2) For new contracts for existing operations, a three (3) year 
business plan which sets forth the parties goals, objectives, budgets, 
financial plans, and related matters, and income statements and sources 
and uses of funds statements for the previous three (3) years.
    (f) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(h) of this chapter, for a term limit in excess of five 
(5) years, but not exceeding seven (7) years.
    (g) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(i) of this chapter, for a fee in excess of thirty (30) 
percent, but not exceeding forty (40) percent.
    (h) A legal description for the site on which the gaming operation 
to be managed is, or will be, located.
    14. Revise Sec.  533.4 to read as follows:


Sec.  533.4  Action by the Chairman.

    (a) The Chairman shall approval or disapprove a management 
contract, applying the standards contained in Sec.  533.6 of this part, 
within 180 days of the date on which the Chairman receives a complete 
submission under Sec.  533.3 of this part, unless the Chairman notifies 
the tribe and management contractor in writing of the need for an 
extension of up to ninety (90) days.
    (b) A tribe may bring an action in a U.S. district court to compel 
action by the Chairman:
    (1) After 180 days following the date on which the Chairman 
receives a complete submission if the Chairman does not approve or 
disapprove the contract under this part; or
    (2) After 270 days following the Chairman's receipt of a complete 
submission if the Chairman has told the tribe and management contractor 
in writing of the need for an extension and has not approved or 
disapproved the contract under this part.


Sec.  533.5  [Removed and Reserved]

    15. Remove and reserve Sec.  533.5.
    16. Revise Sec.  533.6 to read as follows:


Sec.  533.6  Approval and disapproval.

    (a) The Chairman may approve a management contract if it meets the 
standards of part 531 of this chapter and Sec.  533.3 of this part. 
Failure to comply with the standards of part 531 of this chapter or 
Sec.  533.3 may result in the Chairman's disapproval of the management 
contract.
    (b) The Chairman shall disapprove a management contract for class 
II gaming if he or she determines that--
    (1) Any person with a direct or indirect financial interest in, or 
having management responsibility for, a management contract:
    (i) Is an elected member of the governing body of the tribe that is 
party to the management contract;

[[Page 78248]]

    (ii) Has been convicted of any felony or any misdemeanor gaming 
offense;
    (iii) Has knowingly and willfully provided materially false 
statements or information to the Commission or to a tribe;
    (iv) Has refused to respond to questions asked by the Chairman in 
accordance with his or her responsibilities under this part; or
    (v) Is determined by the Chairman to be a person whose prior 
activities, criminal record, if any, or reputation, habits, and 
associations pose a threat to the public interest or to the effective 
regulation and control of gaming, or create or enhance the dangers of 
unsuitable, unfair, or illegal practices, methods, and activities in 
the conduct of gaming or the carrying on of related business and 
financial arrangements;
    (2) The management contractor or its agents have unduly interfered 
with or influenced for advantage, or have tried to unduly interfere 
with or influence for advantage, any decision or process of tribal 
government relating to the gaming operation;
    (3) The management contractor or its agents has deliberately or 
substantially failed to follow the terms of the management contract or 
the tribal gaming ordinance or resolution adopted and approved pursuant 
to this Act; or
    (4) A trustee, exercising the skill and diligence to which a 
trustee is commonly held, would not approve the contract.
    (c) The Chairman may disapprove a management contract for class III 
gaming if he or she determines that a person with a financial interest 
in, or management responsibility for, a management contract is a person 
whose prior activities, criminal record, if any, or reputation, habits, 
and associations pose a threat to the public interest or to the 
effective regulation and control of gaming, or create or enhance the 
dangers of unsuitable, unfair, or illegal practices, methods, and 
activities in the conduct of gaming or the carrying on of related 
business and financial arrangements.
    17. Revise Sec.  533.7 to read as follows:


Sec.  533.7  Void agreements.

    Management contracts and changes in persons with a financial 
interest in or management responsibility for a management contract, 
that have not been approved by the Chairman in accordance with the 
requirements of part 531 of this chapter and this part, are void.
    18. The authority citation for part 535 continues to read as 
follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

    19. Revise Sec.  535.1 to read as follows:


Sec.  535.1  Amendments.

    (a) Subject to the Chairman's approval, a tribe may enter into an 
amendment of a management contract for the operation of a class II or 
class III gaming activity.
    (b) A tribe shall submit an amendment to the Chairman within thirty 
(30) days of its execution.
    (c) A tribe shall include in any request for approval of an 
amendment under this part:
    (1) An amendment containing original signatures of an authorized 
official of the tribe and the management contractor and terms that meet 
the applicable requirements of part 531 of this chapter;
    (2) A letter, signed by the tribal chairman, setting out the 
authority of an authorized tribal official to act for the tribe 
concerning the amendment;
    (3) Copies of documents evidencing the authority under paragraph 
(c)(2) of this section;
    (4) A list of all persons and entities identified in Sec.  537.1(a) 
and Sec.  537.1(c)(1) of this chapter:
    (i) If the amendment involves a change in person(s) having a direct 
or indirect financial interest in the management contract or having 
management responsibility for the management contract, a list of such 
person(s) and either:
    (A) The information required under Sec.  537.1(b)(1) of this 
chapter for class II gaming contracts or Sec.  537.1(b)(1)(i) of this 
chapter for class III gaming contracts; or
    (B) The dates on which the information was previously submitted;
    (ii) [Reserved]
    (5) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(h) of this chapter, for a term limit in excess of five 
(5) years, but not exceeding seven (7) years; and
    (6) If applicable, a justification, consistent with the provisions 
of Sec.  531.1(i) of this chapter, for a management fee in excess of 
thirty (30) percent, but not exceeding forty (40) percent.
    (d)(1) The Chairman shall approve or disapprove an amendment within 
thirty (30) days from receipt of a complete submission if the amendment 
does not require a background investigation under part 537 of this 
chapter, unless the Chairman notifies the parties in writing of the 
need for an extension of up to thirty (30) days.
    (2) The Chairman shall approve or disapprove an amendment as soon 
as practicable but no later than 180 days from receipt of a complete 
submission if the amendment requires a background investigation under 
part 537 of this chapter;
    (3) A party may appeal the Chairman's approval or disapproval of an 
amendment under part 539 of this chapter. If the Chairman does not 
approve or disapprove an amendment within the timelines of paragraph 
(d)(1) or (d)(2) of this section, the amendment shall be deemed 
disapproved and a party shall have thirty (30) days to appeal the 
decision under part 539 of this chapter.
    (e)(1) The Chairman may approve an amendment to a management 
contract if the amendment meets the submission requirements of 
paragraph (c) of this section. Failure to comply with the submission 
requirements of paragraph (c) of this section may result in the 
Chairman's disapproval of an amendment.
    (2) The Chairman shall disapprove an amendment of a management 
contract for class II gaming if he or she determines that the 
conditions contained in Sec.  533.6(b) of this chapter apply.
    (3) The Chairman may disapprove an amendment of a management 
contract for class III gaming if he or she determines that the 
conditions contained in Sec.  533.6(c) of this chapter apply.
    (f) Amendments that have not been approved by the Chairman in 
accordance with the requirements of this part are void.
    20. Revise Sec.  535.3 to read as follows:


Sec.  535.3  Post-approval noncompliance.

    If the Chairman learns of any action or condition that violates the 
standards contained in parts 531, 533, 535, or 537 of this chapter, the 
Chairman may require modifications of, or may void, a management 
contract or amendment approved by the Chairman under such sections, 
after providing the parties an opportunity for a hearing before the 
Chairman and a subsequent appeal to the Commission as set forth in part 
577 of this chapter. The Chairman will initiate modification or void 
proceedings by serving the parties, specifying the grounds for the 
modification or void. The parties will have thirty (30) days to request 
a hearing or respond with objections. Within thirty (30) days of 
receiving a request for a hearing, the Chairman will hold a hearing and 
receive oral presentations and written submissions. The Chairman will 
make a decision on the basis of the developed record and notify the 
parties of the decision and of their right to appeal.
    21. The authority citation to part 537 continues to read as 
follows:


[[Page 78249]]


    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

    22. Revise Sec.  537.1 to read as follows:


Sec.  537.1  Applications for approval.

    (a) For each management contract for class II gaming, the Chairman 
shall conduct or cause to be conducted a background investigation of:
    (1) Each person with management responsibility for a management 
contract;
    (2) Each person who is a director of a corporation that is a party 
to a management contract;
    (3) The ten (10) persons who have the greatest direct or indirect 
financial interest in a management contract;
    (4) Any entity with a financial interest in a management contract 
(in the case of institutional investors, the Chairman may exercise 
discretion and reduce the scope of the information to be furnished and 
the background investigation to be conducted); and
    (5) Any other person with a direct or indirect financial interest 
in a management contract otherwise designated by the Commission.
    (b) For each natural person identified in paragraph (a) of this 
section, the management contractor shall provide to the Commission the 
following information:
    (1) Required information. (i) Full name, other names used (oral or 
written), social security number(s), birth date, place of birth, 
citizenship, and gender;
    (ii) A current photograph, driver's license number, and a list of 
all languages spoken or written;
    (iii) Business and employment positions held, and business and 
residence addresses currently and for the previous ten (10) years; the 
city, state and country of residence from age eighteen (18) to the 
present;
    (iv) The names and current addresses of at least three (3) personal 
references, including one personal reference who was acquainted with 
the person at each different residence location for the past five (5) 
years;
    (v) Current business and residence telephone numbers;
    (vi) A description of any existing and previous business 
relationships with Indian tribes, including ownership interests in 
those businesses;
    (vii) A description of any existing and previous business 
relationships with the gaming industry generally, including ownership 
interests in those businesses;
    (viii) The name and address of any licensing or regulatory agency 
with which the person has filed an application for a license or permit 
relating to gaming, whether or not such license or permit was granted;
    (ix) For each gaming offense and for each felony for which there is 
an ongoing prosecution or a conviction, the name and address of the 
court involved, the charge, and the dates of the charge and of the 
disposition;
    (x) For each misdemeanor conviction or ongoing misdemeanor 
prosecution (excluding minor traffic violations) within ten (10) years 
of the date of the application, the name and address of the court 
involved, and the dates of the prosecution and the disposition;
    (xi) A complete financial statement showing all sources of income 
for the previous three (3) years, and assets, liabilities, and net 
worth as of the date of the submission; and
    (xii) For each criminal charge (excluding minor traffic charges) 
regardless of whether or not it resulted in a conviction, if such 
criminal charge is within 10 years of the date of the application and 
is not otherwise listed pursuant to paragraphs (b)(1)(ix) or (b)(1)(x) 
of this section, the name and address of the court involved, the 
criminal charge, and the dates of the charge and the disposition.
    (2) Fingerprints. The management contractor shall arrange with an 
appropriate federal, state, or tribal law enforcement authority to 
supply the Commission with a completed form FD-258, Applicant 
Fingerprint Card, (provided by the Commission), for each person for 
whom background information is provided under this section.
    (3) Responses to Questions. Each person with a direct or indirect 
financial interest in a management contract or management 
responsibility for a management contract shall respond within thirty 
(30) days to written or oral questions propounded by the Chairman.
    (4) Privacy notice. In compliance with the Privacy Act of 1974, 
each person required to submit information under this section shall 
sign and submit the following statement:

    Solicitation of the information in this section is authorized by 
25 U.S.C. 2701 et seq. The purpose of the requested information is 
to determine the suitability of individuals with a financial 
interest in, or having management responsibility for, a management 
contract. The information will be used by the National Indian Gaming 
Commission members and staff and Indian tribal officials who have 
need for the information in the performance of their official 
duties. The information may be disclosed to appropriate federal, 
tribal, state, or foreign law enforcement and regulatory agencies in 
connection with a background investigation or when relevant to 
civil, criminal or regulatory investigations or prosecutions or 
investigations of activities while associated with a gaming 
operation. Failure to consent to the disclosures indicated in this 
statement will mean that the Chairman of the National Indian Gaming 
Commission will be unable to approve the contract in which the 
person has a financial interest or management responsibility.
    The disclosure of a persons' Social Security Number (SSN) is 
voluntary. However, failure to supply a SSN may result in errors in 
processing the information provided.

    (5) Notice regarding false statements. Each person required to 
submit information under this section shall sign and submit the 
following statement:

    A false statement knowingly and willfully provided in any of the 
information pursuant to this section may be grounds for not 
approving the contract in which I have a financial interest or 
management responsibility, or for disapproving or voiding such 
contract after it is approved by the Chairman of the National Indian 
Gaming Commission. Also, I may be punished by fine or imprisonment 
(U.S. Code, title 18, section 1001).

    (c) For each entity identified in paragraph (a)(4) of this section, 
the management contractor shall provide to the Commission the following 
information:
    (1) List of individuals. (i) Each of the ten (10) largest 
beneficiaries and the trustees when the entity is a trust;
    (ii) Each of the ten (10) largest partners when the entity is a 
partnership;
    (iii) Each person who is a director or who is one of the ten (10) 
largest holders of the issued and outstanding stock alone or in 
combination with another stockholder who is a spouse, parent, child or 
sibling when the entity is a corporation; and
    (iv) For any other type of entity, the ten (10) largest owners of 
that entity alone or in combination with any other owner who is a 
spouse, parent, child or sibling and any person with management 
responsibility for that entity.
    (2) Required information. (i) The information required in paragraph 
(b)(1)(i) of this section for each individual identified in paragraph 
(c)(1) of this section;
    (ii) Copies of documents establishing the existence of the entity, 
such as the partnership agreement, the trust agreement, or the articles 
of incorporation;
    (iii) Copies of documents designating the person who is charged 
with acting on behalf of the entity;
    (iv) Copies of bylaws or other documents that provide the day-to-
day operating rules for the organization;
    (v) A description of any existing and previous business 
relationships with

[[Page 78250]]

Indian tribes, including ownership interests in those businesses;
    (vi) A description of any existing and previous business 
relationships with the gaming industry generally, including ownership 
interest in those businesses;
    (vii) The name and address of any licensing or regulatory agency 
with which the entity has filed an application for a license or permit 
relating to gaming, whether or not such license or permit was granted;
    (viii) For each gaming offense and for each felony for which there 
is an ongoing prosecution or a conviction, the name and address of the 
court involved, the charge, and the dates of the charge and 
disposition;
    (ix) For each misdemeanor conviction or ongoing misdemeanor 
prosecution within ten (10) years of the date of the application, the 
name and address of the court involved, and the dates of the 
prosecution and disposition;
    (x) Complete financial statements for the previous three (3) fiscal 
years; and
    (xi) For each criminal charge (excluding minor traffic charges) 
whether or not there is a conviction, if such criminal charge is within 
10 years of the date of the application and is not otherwise listed 
pursuant to paragraph (c)(1)(viii) or (c)(1)(ix) of this section, the 
criminal charge, the name and address of the court involved and the 
dates of the charge and disposition.
    (3) Responses to questions. Each entity with a direct or indirect 
financial interest in a management contract shall respond within thirty 
(30) days to written or oral questions propounded by the Chairman.
    (4) Notice regarding false statements. Each entity required to 
submit information under this section shall sign and submit the 
following statement:

    A false statement knowingly and willfully provided in any of the 
information pursuant to this section may be grounds for not 
approving the contract in which we have a financial interest, or for 
disapproving or voiding such contract after it is approved by the 
Chairman of the National Indian Gaming Commission. Also, we may be 
punished by fine or imprisonment (U.S. Code, title 18, section 
1001).

    23. Revise Sec.  537.3 to read as follows:


Sec.  537.3  Fees for background investigations.

    (a) A management contractor shall pay to the Commission or the 
contractor(s) designated by the Commission the cost of all background 
investigations conducted under this part.
    (b) The management contractor shall post a bond, letter of credit, 
or deposit with the Commission to cover the cost of the background 
investigations as follows:
    (1) Management contractor (party to the contract)--$25,000.
    (2) Each individual and entity with a financial interest in the 
contract--$10,000.
    (c) The management contractor shall be billed for the costs of the 
investigation as it proceeds; the investigation shall be suspended if 
the unpaid costs exceed the amount of the bond, letter of credit, or 
deposit available.
    (1) An investigation will be terminated if any bills remain unpaid 
for more than thirty (30) days.
    (2) A terminated investigation will preclude the Chairman from 
making the necessary determinations and result in a disapproval of a 
management contract.
    (d) The bond, letter of credit or deposit will be returned to the 
management contractor when all bills have been paid and the 
investigations have been completed or terminated.
    24. The authority citation for part 539 continues to read as 
follows:

    Authority: 25 U.S.C. 81, 2706(b)(10), 2710(d)(9), 2711.

    25. Revise Sec.  539.1 to read as follows:


Sec.  539.1  Scope of this part.

    This part applies to appeals from the Chairman's decision to 
approve or disapprove a management contract or amendment under this 
subchapter, except that appeals from the Chairman's decision to require 
modifications of or to void a management contract or amendment 
subsequent to his or her initial approval are addressed in Sec.  535.3 
and part 577 of this chapter.
    26. Revise Sec.  539.2 to read as follows:


Sec.  539.2  Appeals.

    A party may appeal the Chairman's approval or disapproval of a 
management contract or amendment under parts 533 or 535 of this chapter 
to the Commission. Such an appeal shall be filed with the Commission 
within thirty (30) days after the Chairman serves his or her 
determination pursuant to part 519 of this chapter. Failure to file an 
appeal within the time provided by this section shall result in a 
waiver of the opportunity for an appeal. At the time of filing, an 
appeal under this section shall specify the reasons why the party 
believes the Chairman's determination to be erroneous, and shall 
include supporting documentation, if any. Within thirty (30) days after 
receipt of the appeal, the Commission shall render a decision unless 
the appellant elects to provide the Commission additional time, not to 
exceed an additional thirty (30) days, to render a decision. In the 
absence of a decision within the time provided, the Chairman's decision 
shall constitute a final decision of the Commission.
    27. The authority citation for part 556 continues to read as 
follows:

    Authority: 25 U.S.C. 2706, 2710, 2712.

    28. Revise Sec.  556.2 to read as follows:


Sec.  556.2  Privacy notice.

    (a) A tribe shall place the following notice on the application 
form for a key employee or a primary management official before that 
form is filled out by an applicant:

    In compliance with the Privacy Act of 1974, the following 
information is provided: Solicitation of the information on this 
form is authorized by 25 U.S.C. 2701 et seq. The purpose of the 
requested information is to determine the eligibility of individuals 
to be granted a gaming license. The information will be used by the 
Tribal gaming regulatory authorities and by the National Indian 
Gaming Commission members and staff who have need for the 
information in the performance of their official duties. The 
information may be disclosed to appropriate Federal, Tribal, State, 
local, or foreign law enforcement and regulatory agencies when 
relevant to civil, criminal or regulatory investigations or 
prosecutions or when pursuant to a requirement by a tribe or the 
National Indian Gaming Commission in connection with the issuance, 
denial, or revocation of a gaming license, or investigations of 
activities while associated with a tribe or a gaming operation. 
Failure to consent to the disclosures indicated in this notice will 
result in a tribe's being unable to license you for a primary 
management official or key employee position.
    The disclosure of your Social Security Number (SSN) is 
voluntary. However, failure to supply a SSN may result in errors in 
processing your application.

    (b) A tribe shall notify in writing existing key employees and 
primary management officials that they shall either:
    (1) Complete a new application form that contains a Privacy Act 
notice; or
    (2) Sign a statement that contains the Privacy Act notice and 
consent to the routine uses described in that notice.
    (c) All tribal gaming ordinances and ordinance amendments approved 
by the Chairman prior to the effective date of this section will 
require no changes to comply with this section. Future submissions, 
however, must comply.
    (d) All license application forms used 180 days after the effective 
date of this section shall contain notices in compliance with this 
section.
    29. Revise Sec.  556.3 to read as follows:


Sec.  556.3  Notice regarding false statements.

    (a) A tribe shall place the following notice on the application 
form for a key

[[Page 78251]]

employee or a primary management official before that form is filled 
out by an applicant:

    A false statement on any part of your license application may be 
grounds for denying a license or the suspension or revocation of a 
license. Also, you may be punished by fine or imprisonment (U.S. 
Code, title 18, section 1001).

    (b) A tribe shall notify in writing existing key employees and 
primary management officials that they shall either:
    (1) Complete a new application form that contains a notice 
regarding false statements; or
    (2) Sign a statement that contains the notice regarding false 
statements.
    (c) All tribal gaming ordinances and ordinance amendments approved 
by the Chairman prior to the effective date of this section will 
require no changes to comply with this section. Future submissions, 
however, must comply.
    (d) All license application forms used 180 days after the effective 
date of this section shall contain notices in compliance with this 
section.
    30. The authority citation for part 558 continues to read as 
follows:

    Authority: 25 U.S.C. 2706, 2710, 2712.

    31. Revise Sec.  558.2 to read as follows:


Sec.  558.2  Eligibility determination for granting a gaming license.

    (a) An authorized tribal official shall review a person's prior 
activities, criminal record, if any, and reputation, habits and 
associations to make a finding concerning the eligibility of a key 
employee or a primary management official for granting of a gaming 
license. If the authorized tribal official, in applying the standards 
adopted in a tribal ordinance, determines that licensing of the person 
poses a threat to the public interest or to the effective regulation of 
gaming, or creates or enhances the dangers of unsuitable, unfair, or 
illegal practices and methods and activities in the conduct of gaming, 
a management contractor or a tribal gaming operation shall not license 
that person in a key employee or primary management official position.
    (b) All tribal gaming ordinances and ordinance amendments approved 
by the Chairman prior to the effective date of this section will 
require no changes to comply with this section. Future submissions, 
however, must comply.
    32. The authority citation for part 571 continues to read as 
follows:

    Authority: 25 U.S.C. 2706(b), 2710(b)(2)(C), 2715, 2716.

    33. Revise Sec.  571.12 to read as follows:


Sec.  571.12  Audit standards.

    (a) Each tribe shall prepare comparative financial statements 
covering all financial activities of each class II and class III gaming 
operation on the tribe's Indian lands for each fiscal year.
    (b) A tribe shall engage an independent certified public accountant 
to provide an annual audit of the financial statements of each class II 
and class III gaming operation on the tribe's Indian lands for each 
fiscal year. The independent certified public accountant must be 
licensed by a state board of accountancy. Financial statements prepared 
by the certified public accountant shall conform to generally accepted 
accounting principles and the annual audit shall conform to generally 
accepted auditing standards.
    (c) If a gaming operation has assessable gross revenues of less 
than $1,000,000 during the prior fiscal year, the annual audit 
requirement of paragraph (b) is satisfied if:
    (1) The independent certified public accountant completes a review 
of the financial statements conforming to the statements on standards 
for accounting and review services of the gaming operation;
    (2) Unless waived in writing by the Commission, the gaming 
operation's financial statements for the three previous years were 
timely received by the Commission in accordance with Sec.  571.13; and
    (3) The tribe must submit a statement to the Commission supporting 
the decision to use reviewed financial statements in place of audited 
financial statements. T