;It's time to draw this bright line'

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Hogen;s last stand will take place on Class II regulations

WASHINGTON - Testifying before the Senate Committee on Indian Affairs April 17, National Indian Gaming Commission Chairman Phil Hogen staked sweeping regulation of the tribal Class II gaming industry to his retirement plans.

''Senator, I'm going home sometime soon,'' Hogen said, in response to a deferential but aggressive line of questioning from Sen. Byron Dorgan, D-N.D., the committee chairman. ''I'm going back to the Black Hills. When you hear that 'hurrah' out in Indian country, you'll know that happened. But the thing is, I gotta get this done. I mean, I've been at it now for more than five years. It's time to draw this bright line so that the industry, the manufacturers, the tribes, the states can know what's going on.

''Right now there's confusion. That's not good for the industry. And if and when there appears to be a loss of integrity in the [regulatory] system, then the goose that laid the golden egg [Indian gaming] would be at risk. I don't want to be responsible for that.''

With the hearing near adjournment, Kurt Luger, executive director of the Great Plains Indian Gaming Association, told Dorgan he's not sure a dateline for regulations should be predicated on Hogen's retirement.

In Hogen's view, a bright line of new regulations would clearly distinguish between Class II gaming, which tribes can engage in without a state compact, and more lucrative Class III gaming, which requires a tribe-state compact. Hogen, prodded at least once by the U.S. Department of Justice, has long contended that current machines at many tribal Class II gaming establishments are Class II in name only, while the characteristics of play they enforce demand a Class III categorization under the law. He told Dorgan that he considers more than half of all tribal Class II gaming unlawful now.

New Class II regulations, long in the making, would end any dispute by classifying ''one-touch bingo'' machines as Class III games of chance. Hogen said that in view of the estimated billion-dollar impact of the intended new regulations on the Indian Class II industry, a ''grandfather clause'' has been added. The offending machines would remain legal for five years from the date the new regulations are adopted, which is about the lifespan of the machines anyway, Hogen explained. But once they are defunct, he added, they could not be replaced in the absence of a Class III compact between the tribe and state in question.

Many tribes with Class II operations have resisted the new regulations at every turn. The criticism of several tribal and organizational leaders April 19 was that Hogen and the NIGC haven't consulted with them in good faith, but simply attended consultation meetings with their policy decisions already settled. Hogen insisted, as he has previously, that tribes want ''consultation'' to mean NIGC ''agreement'' with their views.

That position prompted a response from J.R. Matthews, vice chairman of the Quapaw Tribe of Oklahoma and a National Indian Gaming Association member. Matthews acknowledged the assistance NIGC has provided the Quapaw in establishing a strong tribal regulatory body over its Class II operations.

''On the other hand, what they're doing now, we do have a problem with, in consultations for regulations, with consultations that we don't feel is thorough, that we feel is - rushed, rush to judgment. ... Consultation does not mean agreement. But when you have so many tribes in Indian country that are against what they're doing, and the way they're doing it, there has to be some red flags thrown out there.''

Dorgan has apparently seen them. He leveled a series of questions at Hogen concerning NIGC's financial management. At one point Hogen answered a request for an NIGC financial statement by offering a PowerPoint budget presentation, a crucial distinction given that financial statements reveal actual past expenditures while budgets generally only project them.

NIGC spokesman Shawn Pensoneau said after the hearing that Hogen wasn't in any doubt about the difference, but meant to offer Dorgan more informative financials than he would find in the federal ''Green Book'' of agency budgets, NIGC being small enough that many of its activities don't register in detail at the million-dollar increments that guide the Green Book's compilers. Dorgan recommended that NIGC publish an annual financial report.

He criticized Hogen directly for bypassing the federal appointments process in order to retain a career federal employee, Penny Coleman, as acting general counsel since 2002, rather than expose her to the public scrutiny any political appointee has to contend with. An ''acting'' answers primarily to Hogen, who credited Coleman as NIGC's ''institutional memory.''

NIGC's relative independence from inter-agency review of its decisions by other federal departments did not come up in so many words.

Dorgan agreed with Hogen that a bright line of regulation is needed in Class II Indian gaming, but added that tribes should be able to embrace it.