Management Contracts-Background Investigations, 47514-47516 [2012-19153]

Agencies

• DEPARTMENT OF THE INTERIOR
• National Indian Gaming Commission

[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Rules and Regulations]
[Pages 47514-47516]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19153]


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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Part 537


Management Contracts--Background Investigations

AGENCY: National Indian Gaming Commission, Interior.

ACTION: Final rule.

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SUMMARY: The National Indian Gaming Commission (NIGC or Commission) is 
amending its regulation to allow reduced scope background 
investigations for specific types of entities with a financial interest 
in, or having management responsibility for, a management contract, and 
to update the forms of payment that may be accepted by the NIGC for 
background investigation fees.

DATES: Effective Date: September 10, 2012.

FOR FURTHER INFORMATION CONTACT: Melissa Schlichting, National Indian 
Gaming Commission, 1441 L Street NW., Suite 9100, Washington, DC 20005. 
Telephone: 202-632-7003; email: Melissa_Schlichting@nigc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Indian Gaming Regulatory Act (IGRA) requires that each person 
with a financial interest in, or management responsibility for, a 
management contract for class II gaming, and in the case of a 
corporation, the individual members of the corporation's board of 
directors and stockholders who hold 10% or more of the issued and 
outstanding stock, submit background information to the Chair. 25 
U.S.C. 2711(a)(1). IGRA also requires that the Chair not approve any 
management contract if he or she determines that any person with a 
financial interest in, or management responsibility for, a management 
contract for class II gaming, and in the case of a corporation, the 
individual members of the corporation's board of directors and 
stockholders who hold 10% or more of the issued and outstanding stock 
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 the business and financial arrangements incidental 
thereto.'' 25 U.S.C. 2711(e)(1)(D). Pursuant to the Commission's 
authority to ``promulgate such regulations and guidelines as it deems 
appropriate to implement the provisions of [IGRA],'' 25 U.S.C. 
2706(a)(10), the Commission adopted a regulation, Part 537, requiring 
certain persons and entities undergo a background investigation, 
including entities with a financial interest in a management contract. 
25 CFR 537.1(a)(4). The Commission is amending Sec.  537.1(a)(4) to 
expand the types of entities with a financial interest in a management 
contract that may, at the discretion of the Chair, undergo a 
streamlined review, in the form of a reduced scope background 
investigation.
    In addition, it came to the attention of the Commission that it 
could no longer accept certain methods of payment, specifically the 
posting of a bond or letter of credit for background investigation fees 
pursuant to

[[Page 47515]]

Sec.  537.3(b),(c) and (d). Thus, the Commission is amending Sec.  
537.3(b),(c) and (d) to remove the following words: ``bond, letter of 
credit, or.''

II. Previous Rulemaking Activity

    On November 18, 2010, the National Indian Gaming Commission (NIGC) 
issued a Notice of Inquiry and Notice of Consultation (NOI) advising 
the public that the NIGC was conducting a comprehensive review of its 
regulations and requesting public comment. 75 FR 70680 (Nov. 18, 2010). 
After consulting with tribes, NIGC published a Notice of Regulatory 
Review Schedule (NRR) setting out a consultation schedule and process 
for review. 76 FR 18457 (Oct. 12, 2011). The Commission's regulatory 
review process established a tribal consultation schedule with a 
description of the regulation groups to be covered at each 
consultation. Part 537 was included in this regulatory review.
    The Commission conducted tribal consultations as part of its review 
of Part 537. Tribal consultations were held in every region of the 
country and were attended by numerous Tribes and Tribal leaders or 
their representatives. Comments received from the NRR and tribal 
consultations included a recommendation for the Commission to consider 
amending the regulations to provide a more streamlined or expedited 
background investigation for tribes, tribal entities, and certain other 
entities already required be licensed pursuant to a tribal-state 
compact or are otherwise required to undergo a background investigation 
as a federally regulated entity.
    Additionally, during the review of Part 537 the Department of the 
Interior brought to the attention of the Commission that it could no 
longer accept certain methods of payment, specifically the posting of a 
bond or letter of credit for background investigation fees pursuant to 
Sec.  537.3(b),(c) and (d).
    After considering the comments received from the public and through 
Tribal consultations, the Commission decided to amend Part 537. On June 
28, 2011, the Commission requested public comment on a Preliminary 
Draft of amendments to Part 537.
    On December 27, 2011, the Commission published a Notice of Proposed 
Rulemaking based on the comments received during the Tribal 
consultations and comments on the Preliminary Draft of Part 537. The 
Notice of Proposed Rulemaking proposed an expanded list of entities 
eligible for a reduced scope background investigation at the discretion 
of the Chair and removed the posting of a bond or letter of credit as 
an available form of payment for background investigation fees. 
Following the publication of the proposed rule, an additional 4 Tribal 
consultations were held. Comments to the proposed rule were due 
February 21, 2012.

III. Review of Public Comments

    In response to our Notice of Proposed Rulemaking, published 
December 22, 2011, 76 FR 79565, we received the following comments.

Section 537.1(a)(4) Applications for Approval

    Comment: Several commenters suggested that the Commission remove or 
define the terms ``institutional investor'' and ``federally regulated'' 
to clarify what entities or institutions would be eligible for a 
reduced scope background investigation.
    Response: The Commission disagrees with the commenters and believes 
that the terms ``institutional investor'' and ``federally regulated'' 
should remain in the regulation as they provide guidance as to the 
types of entities meant to be included therein. Also, the Commission 
believes that any necessary clarification of the terms ``institutional 
investor'' or ``federally regulated'' can be accomplished through 
guidance in the form of a bulletin rather than through formal 
regulation.
    Comment: Two commenters suggested that the proposed regulation be 
changed to create a rebuttable presumption that ``a tribe, a wholly 
owned tribal entity, national bank or institutional investor that is 
federally regulated or is required to undergo a background 
investigation and licensure by a state or tribe pursuant to a tribal-
state compact'' qualifies for a reduced scope background investigation.
    Response: The Commission believes the commenters' suggestion goes 
beyond the scope of the NOI and NRR and no answer is required. However, 
the Commission believes that such a presumption, even if rebuttable by 
the Chair, would be impermissible because it would be contrary to the 
express statutory language that requires the Chair obtain background 
information from a person or an entity with a financial interest in, or 
management responsibility for, a management contract, and use that 
information to determine if a management contract can be approved. See 
25 U.S.C. 2711(a)(1)(A) and (e).

Section 537.3 Fees for Background Investigations

    Comment: Several commenters suggested changing Sec.  537.3(d) to 
state at the beginning that ``any remaining balance of the deposit will 
be returned to the management contractor * * * '' in order to clarify 
what specific portion of the deposit, if any, is to be returned to the 
management contractor.
    Response: The Commission agrees with the comment and has added the 
following to the beginning of Sec.  537.3(d): ``[a]ny remaining balance 
of.''

IV. Regulatory Matters

Regulatory Flexibility Act

    The rule 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 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 
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 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 Mandate Reform Act

    The Commission, as an independent regulatory agency, is exempt from 
compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2 
U.S.C. 658(1).

Takings

    In accordance with Executive Order 12630, the Commission has 
determined that the rule does not have significant takings 
implications. A takings implication assessment is not required.

Civil Justice Reform

    In accordance with Executive Order 12988, the Commission has 
determined that the rule does not unduly burden the judicial system and 
meets the requirements of sections 3(a) and 3(b)(2) of the Order.

National Environmental Policy Act

    The Commission has determined that the rule does not constitute a 
major

[[Page 47516]]

federal action significantly affecting the quality of the human 
environment and that no detailed statement is required pursuant to the 
National Environmental Policy Act of 1969, 42 U.S.C. 4321, et seq.

Paperwork Reduction Act

    This rule does not require information collection under the 
Paperwork Reduction Act of 1995, 44 U.S.C. 2501, et seq., and is 
therefore not subject to review by the Office of Management and Budget.

List of Subjects in 25 CFR Part 537

    Gambling, Indians--tribal government, Indians--business and 
finance.

    For the reasons discussed in the Preamble, the Commission amends 25 
CFR part 537 as follows:

PART 537--BACKGROUND INVESTIGATIONS FOR PERSONS OR ENTITIES WITH A 
FINANCIAL INTEREST IN, OR HAVING MANAGEMENT RESPONSIBILITY FOR, A 
MANAGEMENT CONTRACT

0
1. The authority citation for part 537 continues to read as follows:

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


0
2. Amend Sec.  537.1 by revising paragraph (a)(4) to read as follows:


Sec.  537.1  Applications for approval.

    (a) * * *
    (4) Any entity with a financial interest in a management contract 
(in the case of any tribe, a wholly owned tribal entity, national bank, 
or institutional investor that is federally regulated or is required to 
undergo a background investigation and licensure by a state or tribe 
pursuant to a tribal-state compact, the Chair may exercise discretion 
and reduce the scope of the information to be furnished and the 
background investigation to be conducted); and
* * * * *

0
3. Revise paragraphs (b) introductory text, (c) introductory text, and 
(d) of Sec.  537.3 to read as follows:


Sec.  537.3  Fees for background investigations.

* * * * *
    (b) The management contractor shall post a deposit with the 
Commission to cover the cost of the background investigations as 
follows:
* * * * *
    (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 deposit available.
* * * * *
    (d) Any remaining balance of the deposit will be returned to the 
management contractor when all bills have been paid and the 
investigations have been completed or terminated.

0
4. Section 537.4 is revised to read as follows:


Sec.  537.4  Determinations.

    The Chair shall determine whether the results of a background 
investigation preclude the Chair from approving a management contract 
because of the individual disqualifying factors contained in Sec.  
533.6(b)(1) of this chapter. The Chair shall promptly notify the tribe 
and management contractor if any findings preclude the Chair from 
approving a management contract or a change in financial interest.

    Dated: July 31, 2012, Washington, DC.
Tracie L. Stevens,
Chairwoman.
Steffani A. Cochran,
Vice-Chairwoman.
Daniel J. Little,
Associate Commissioner.
[FR Doc. 2012-19153 Filed 8-8-12; 8:45 am]
BILLING CODE 7565-01-P