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AGENCY:

National Indian Gaming Commission.

ACTION:

Proposed rule.

SUMMARY:

The National Indian Gaming Commission proposes to amend its fee regulations. The proposed rule would require the Commission to adopt annual fee rates no later than November 1 of each year. In addition, the proposed rule defines the fiscal year of the gaming operation that will be used for calculating the fee payments. Finally, the proposed rule includes additional revisions intended to clarify the fee calculation and submission process for gaming operations.

DATES:

The agency must receive comments on or before December 28, 2017.

ADDRESSES:

You may send comments by any of the following methods:

• Email: 514_Comments@nigc.gov.
• Fax: 202-632-7066.
• Mail: National Indian Gaming Commission, 1849 C Street NW., MS 1621, Washington, DC 20240.
• Hand Delivery: National Indian Gaming Commission, 90 K Street NE., Suite 200, Washington, DC 20002, Start Printed Page 52254between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

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FOR FURTHER INFORMATION CONTACT:

Austin Badger, National Indian Gaming Commission; Telephone: 202-632-7003.

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SUPPLEMENTARY INFORMATION:

I. Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal.

II. Background

The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497, 25 U.S.C. 2701 et seq., was signed into law on October 17, 1988. The Act establishes the National Indian Gaming Commission (NIGC or Commission) and sets out a comprehensive framework for the regulation of gaming on Indian lands. The IGRA established an agency funding framework whereby gaming operations licensed by tribes pay a fee to the Commission for each gaming operation that conducts Class II or Class III gaming activity that is regulated by IGRA. 25 U.S.C. 2717(a)(1). These fees are used to fund the Commission in carrying out its regulatory authority. Fees are based on the gaming operation’s gross revenues. The rate of fees is established annually by the Commission and shall be payable on a quarterly basis. 25 U.S.C. 2717(a)(3). IGRA limits the total amount of fees imposed during any fiscal year to 0.08 percent of the gross gaming revenues of all gaming operations subject to regulation under IGRA. Failure of a gaming operation to pay the fees imposed by the Commission’s fee schedule can be grounds for a civil enforcement action. 25 U.S.C. 2713(a)(1).

The purpose of Part 514 is to establish how the NIGC sets and collects those fees, to establish a basic formula for tribes to utilize in calculating the amount of fees to pay, and to advise of the consequences for failure to pay the fees. Part 514 further establishes how the NIGC determines and assesses fingerprint processing fees.

Under the current fee regulations, the Commission adopts a preliminary fee rate by March 1 and a final fee rate by June 1 of every year. In addition, the NIGC annually reviews the costs involved in processing fingerprint cards and adopts a preliminary rate by March 1 and a final rate by June 1. The Commission believes that the current process would be improved by moving to an annual final fee rate announced on or before November 1 of each year. This change would improve the Commission’s analysis and budgeting process and simplify the fee calculation and payment process for gaming operations, thereby reducing the frequency of error in fee calculation. Proposed changes to the fee regulations were therefore included as a topic in a November 22, 2016, letter to tribal leaders introducing the Commission’s 2017 consultation series.

III. Development of the Proposed Rule

On March 24, 2017, in Tulsa, OK, April 5, 2017, in Scottsdale, AZ, April 13, 2017, in San Diego, CA, April 20, 2017, in Billings, MT, May 4, 2017, in Biloxi, MS, and on May 25, 2017, in Portland, OR, the NIGC consulted with tribes on the proposed change to the fee regulations. In addition, the Commission issued a discussion draft on January 30, 2017, and solicited written comments through July 1, 2017. Comments received were generally supportive of the proposed change to the fee regulations. The Commission developed the proposed rule after carefully considering the comments received.

A. Assessed Fiscal Year

The current regulation provides that the annual fee shall be computed using “the most recent rates of fees adopted by the Commission” and “the assessable gross revenues for the previous fiscal year.” As a result, the fee rate applied to a gaming operation’s fiscal year changes depending on when the gaming operation’s fiscal year ends. For example, if the Commission adopts a fee rate on November 1, 2014 (Rate A), a different fee rate on November 1, 2015 (Rate B), and the gaming operation’s fiscal year ends on December 31, the gaming operations quarterly payments would be calculated as follows: (1) First quarter, payable March 31, 2015, would apply Rate A to the fiscal year ending December 31, 2014, (2) Second quarter, payable June 30, 2015, would apply Rate A to the fiscal year ending December 31, 2014, (3) Third quarter, payable September 30, 2015, would apply Rate A to the fiscal year ending December 31, 2014, and (4) Fourth quarter, payable December 31, 2015, would apply Rate B to the fiscal year ending December 31, 2014.

The Commission intends for the annual rate to be applied consistently to a gaming operation’s assessable gross revenue for one fiscal year. The proposed rule therefore includes amendments intended to better describe the intended fee calculation. These amendments include defining “assessed fiscal year.” Under the proposed rule, the annual fee shall be computed using the “most recent rates of fees adopted by the Commission” and “the assessable gross revenues for the gaming operation’s assessed fiscal year.”

Assessed fiscal year means the most recent fiscal year ending prior to January 1 of the year the Commission adopted fee rates. For example, if the Commission adopted fee rates on November 1, 2018, the assessed fiscal year would be a gaming operation’s fiscal year ending prior to January 1, 2018. For gaming operations with fiscal years ending December 31, the assessed fiscal year would be the fiscal year ending December 31, 2017. For gaming operations with fiscal years ending September 30, the assessed fiscal year would be the fiscal year ending September 30, 2017. For gaming operations with fiscal years ending June 30, the assessed fiscal year would be the fiscal year ending June 30, 2017.

As a result, under the proposed rule, if the Commission adopts a fee rate on November 1, 2014 (Rate A), a different fee rate on November 1, 2015 (Rate B), and the gaming operation’s fiscal year ends on December 31, the gaming operation’s quarterly payments would be calculated as follows: (1) First quarter (of the gaming operation’s fiscal year), payable March 31, 2015, would apply Rate A to the fiscal year ending December 31, 2013, (2) Second quarter, payable June 30, 2015, would apply Rate A to the fiscal year ending December 31, 2013, (3) Third quarter, payable September 30, 2015, would apply Rate A to the fiscal year ending December 31, 2013, and (4) Fourth quarter, payable December 31, 2015, would apply Rate B to the fiscal year ending December 31, 2014. To continue the example, the subsequent quarterly payment, payable March 31, 2016, would apply Rate B to the fiscal year ending December 31, 2014.

As an additional example, under the proposed rule, if the Commission adopts a fee rate on November 1, 2014 (Rate A), a different fee rate on November 1, 2015 (Rate B), and the gaming operation’s fiscal year ends on September 30, the gaming operation’s quarterly payments would be calculated as follows: (1) First quarter (of the gaming operation’s fiscal year), payable December 31, 2015, would apply Rate A to the fiscal year ending September 30, 2013, (2) Second quarter payable March 31, 2016, would apply Rate A to the fiscal year ending September 30, 2013, (3) Third quarter payable June 30, 2016, would apply Start Printed Page 52255Rate A to the fiscal year ending September 30, 2013, (4) Fourth quarter, payable September 30, 2016, would apply Rate A to the fiscal year ending September 30, 2013. To continue the example, the subsequent first quarter, payable December 31, 2016, would apply Rate B to the fiscal year ending September 30, 2014.

B. Fees and Statements Required if a Gaming Operation Ceases Operations

In the course of developing the proposed rule, the Commission became aware that the current regulations do not describe the fees and statements required of gaming operations that cease operations. Section 514.7(b) of the proposed rule now provides that the gaming operation prepares and submits to the Commission the fees and statements required for the period from the end of the most recent quarter for which fees have been paid through the date the gaming operation ceased operations. For example, if a gaming operation with a September 30 fiscal year end ceases operations on July 31, 2017, the gaming operation will have submitted fees and statements through June 30, 2017. The gaming operation would therefore still owe a payment for the period from July 1, 2017, through July 31, 2017.

C. Transition Period

Comment: Some commenters recommended that the Commission take into account the transition period between the current regulation and the final rule, if adopted.

Response: The Commission agrees and will issue guidance to describe how gaming operations should calculate fee payments during the transition period. The Commission intends for the most recently announced fee rate to carry over until a new fee rate is announced once a final rule is promulgated.

D. Payment Adjustments

Comment: Some commenters recommended that the proposed rule make clear the gaming operation’s obligations regarding underpayment or overpayment of the annual fee.

Response: The Commission agrees that payment adjustments are warranted when the gaming operation becomes aware that prior submissions over or underpaid the required fee amount. Section 514.6(d)(5) of the proposed rule provides that the amount to be remitted be adjusted for prior amounts paid and credits received, if applicable. The Commission notes, however, that pursuant to section 571.13 copies of financial statements and audits are required to have been provided to the Commission within 120 days after the end of the gaming operation’s fiscal year. Therefore, under the proposed rule, audited financial statements for the assessed fiscal year are required to be complete before a fee payment calculated using the assessed fiscal year is due. The current regulation and the proposed rule continue, however, to require that the quarterly statements must be reconciled with a tribe’s audited or reviewed financial statements for each gaming location.

E. Advanced Payment

Comment: A commenter sought clarification as to whether the Commission would accept pre-payments under the proposed rule.

Response: The Commission accepts pre-payments under the current regulations and will continue to do so under the proposed rule. Section 514.5(a) of the proposed rule provides that the annual fee payable to the Commission optionally may be paid in full in the first quarterly payment.

F. Other Comments

Comment: A commenter asked whether the NIGC would issue late payment fees instead of issuing a notice of violation when payments are submitted late.

Response: The Commission notes that the current regulation provides for late fees for payments submitted between one and ninety calendar days late. Statements and/or fee payments over ninety calendar days late constitute a failure to pay and may result in enforcement action. The proposed rule does not substantively amend the late fee or failure to pay provisions of the current regulation.

Comment: A commenter asked whether the Commission would amend the definition of assessable gross revenue to be consistent with standards set by professional accounting organizations.

Response: The Commission acknowledges that professional accounting definitions of gross revenue differ from the Commission’s definition of assessable gross revenue. While the Commission’s definition of assessable gross revenue must remain consistent with the definition for gross revenues contained in IGRA at 25 U.S.C. 2717(a)(6), the proposed rule includes one change intended to conform the Commission’s definition of assessable gross revenue with appropriate accounting terminology. The proposed rule removes the word “amortization” from within the phrase “allowance for amortization of capital expenditures for structures” found in section 514.4(c) and 25 U.S.C. 2717(a)(6). The Commission understands that the term depreciation rather than amortization is appropriate for an allowance for capital expenditures for structures. The methods for determining the amount of the allowance provided for in section 514.4(e) remains unchanged.

Comment: A commenter asked whether the proposed rule would reduce fees for processing fingerprint cards.

Response: The proposed rule does not affect how the fees for processing fingerprint cards are determined. As provided by the current regulation and proposed rule, the fingerprint processing fee is based on the fees charged by the Federal Bureau of Investigation and the costs incurred by the Commission.

Regulatory Matters

Tribal Consultation

The National Indian Gaming Commission is committed to fulfilling its tribal consultation obligations—whether directed by statute or administrative action such as Executive Order (E.O.) 13175 (Consultation and Coordination with Indian Tribal Governments)—by adhering to the consultation framework described in its Consultation Policy published July 15, 2013. The NIGC’s consultation policy specifies that it will consult with tribes on Commission Action with Tribal Implications, which is defined as: Any Commission regulation, rulemaking, policy, guidance, legislative proposal, or operational activity that may have a substantial direct effect on an Indian tribe on matters including, but not limited to the ability of an Indian tribe to regulate its Indian gaming; an Indian Tribe’s formal relationship with the Commission; or the consideration of the Commission’s trust responsibilities to Indian tribes. As discussed above, the NIGC engaged in extensive consultation on this topic and received and considered comments in developing this proposed rule.

Regulatory Flexibility Act

The proposed 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 proposed rule is not a major rule under 5 U.S.C. 804(2), the Small Start Printed Page 52256Business 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 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 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 proposed 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 proposed rule does not unduly burden the judicial system and meets the requirements of section 3(a) and 3(b)(2) of the 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 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

The information collection requirements contained in this rule were previously approved by the Office of Management and Budget (OMB) as required by 44 U.S.C. 3501 et seq. and assigned OMB Control Number 3141- 0007, which expired in August of 2011. The NIGC is in the process of reinstating that Control Number.

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List of Subjects in 25 CFR Part 514

• Gambling
• Indian—lands
• Indian—tribal government
• Reporting and recordkeeping requirements

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Therefore, for reasons stated in the preamble, the National Indian Gaming Commission proposes to revise 25 CFR part 514 to read as follows:

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PART 514—FEES

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

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