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Monteau: Class II regulations: NIGC violates trust responsibility

The National Indian Gaming Commission recently released its long-dreaded revised regulations with regard to Class II machine gaming. The tribal and industry response was swift, vehement and absolutely correct. Communications from tribes to the NIGC called attention to several indisputable facts, most of which have been established by federal courts. Congress said in the Indian Gaming Regulatory Act that ''bingo-based'' electronic gaming is Class II and that technological advances are anticipated and allowed. Congress also said that Class II gaming is not subject to the tribal/state gaming compact processes in IGRA and is strictly in the purview of the tribes and the federal government. The state was to have no involvement in the Class II process.

Nowhere in IGRA does it say that the states will assist in the writing of regulations for IGRA; nor does it say that the states will have any involvement in the enforcement of IGRA. Yet the NIGC and the U.S. Department of Justice continue to be the voice of the states in the process of agency rulemaking at the NIGC and in DoJ enforcement actions against tribes. Witness NIGC Chairman Phil Hogan's recent reference to ''the states say we haven't gone far enough.'' Since when did the states have a say in a subject that Congress left to the tribes and the NIGC?

This fiasco with Class II regulations has become an ''Alice through the looking glass'' exercise. Everything is backward from what it's supposed to be, with our ''trustee'' saying how good this is going to be for the tribes because it lends a ''bright line'' certainty to Class II. The only uncertainty in Class II gaming has been and continues to be the meddling of the DoJ and the NIGC forgetting that it has an ''advocacy'' role for tribes under the IGRA.

How did it come to happen that two federal agencies with direct trust (fiduciary) responsibility to American Indians become advocates on behalf of the states against the Indian tribes with regard to Class II gaming? Well, it starts and ends with the interference of the DoJ in the NIGC rule-making process from day one. Tony Hope, the first NIGC chairman, welcomed the DoJ to come and assist in writing the initial regulations. The result was the formulation of NIGC regulations that defined anything that had a video face as a ''Johnson Act'' device and, therefore, Class III.

When the other new commissioner and I came in, we said we were going to re-examine those regulations because we knew Congress had intended that tribes could take advantage of ''technological advances in the play of bingo.'' The fight was on. The DoJ threatened to not provide administrative and judicial advocacy for the agency (NIGC) if we proceeded. Certain Democratic members of the U.S. Senate threatened not only our careers (one of the commissioners had a federal judiciary appointment pending), but also to do away with tribal gaming altogether if we didn't ''keep the lid on it.'' The threats and the intimidating phone calls from the Hill, and the calls to come to the ''spanking shed'' on the Hill, continued.

The deputy assistant attorney general during that time said the DoJ did not have to provide legal capability to enforce regulations with which they did not agree. My response was that I would not surrender the discretion of my agency (NIGC) to the DoJ, and if the DoJ would not act as our lawyers, we would find our own. The harassment continued until my departure in January 1997. It took another five years for two courageous Indian women (commissioners Elizabeth Homer and Teri Poust) to finally get regulations drafted and approved which best reflected Congress' intent. Chairman Montie Deer filed a ''dissenting opinion'' (which I believe was written by elements of the DoJ).

When the DoJ continued to go after bingo and pull-tab devices that clearly complied with the new regulations, the federal courts interpreted the IGRA as Congress intended, the Indians won and the arena became stable. The DoJ, which lost the court cases, decided it could get another bite at the apple by intimidating the NIGC into overturning the court decisions by regulatory fiat. The DoJ, through the NIGC, has again succeeded in destabilizing the entire Class II arena. The DoJ has secured and maintained its stranglehold on the NIGC since the new Republican administration came in.

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If you don't agree the NIGC and DoJ are acting as advocates for states, just look to the results these regulations will have on the compacting process. My home state of Montana has refused to negotiate meaningful and economically feasible Class III gaming compacts, and the tribes are little more than ''licensees'' of the state. Class III gaming allowed to tribes offers little or no incentive for gamers to drive to the reservation when they can play 20,000 Class III devices in the taverns. Even with new compact extensions signed with the new democratic administration of Gov. Brian Schweitzer, the limited numbers of machines, pot limits and prize limits make it economically infeasible for tribes to build anything more than a modest gambling joint. Schweitzer knew the tribes were at a disadvantage because the NIGC had already announced its intent to amend the existing regulations. He took advantage of it. Hopes for negotiating meaningful compacts with the new governor would not materialize. The only other choices would be to sue the new governor under IGRA with an uncertain outcome that would potentially take years, or to look to Class II gaming to attract gamers to the reservations.

The tribes met with the NIGC and expressed their frustration with the state and the commission. They warned the NIGC that some $50 million in financial contracts the tribes had borrowed to build Class II-based casinos would end up in default. The tribes even asked that the NIGC and DoJ intervene and either sue the state or intervene in tribally initiated ''bad faith'' litigation so that the state could not raise its sovereign immunity.

The Montana tribes' warnings of harm and requests for federal assistance fell on deaf ears. Instead, the NIGC put the state at even more of an advantage in Class III negotiations by promulgating regulations that will make Class II even less attractive to players who know they are playing bingo but like the ''slot'' look. (In Florida, our trustee takes the position that the Class II devices put the tribes at a disadvantage because they don't look and play enough like slot machines. Conversely and inconsistently, the trustee says they look and play too much like slots in other jurisdictions, and new regulations are needed so they don't look so much like slots.) Kind of Zen-like: down is up, up is down and sideways is straight ahead.

The state of Montana has taken great advantage of the tribes because they know that the DoJ will not intervene and, in fact, can be counted on to support the state's position with regard to the enforcement of IGRA against tribes. The actions of the DoJ and NIGC have put the states in a superior bargaining position with regard to meaningful Class III compacts or compact renewals. They have put the tribes in an inferior position such that they must accept the state's compact or confine gaming to what's left of Class II gaming under the proposed new regulatory program. Our ''trustee'' has sold us out. Our right to the statutory exemption to the Johnson Act, contained in IGRA, has been nullified by the DoJ and NIGC actions. Our inherent right to regulate gaming, our business affairs and our economic stability on our homelands has been denigrated by the actions of the DoJ and the NIGC.

The DoJ and the NIGC have relegated their trust responsibility to tribes to a secondary position in favor of enforcing states' rights and championing state causes. The monetary and societal damages that DoJ's position has caused to tribes by its position on Class II gaming and its failure to enforce the provisions of IGRA, when states raise their sovereign immunity against the tribes, has resulted in tens of billions of dollars in damage to tribal economies. It has also resulted in untold damages to the health, safety and welfare of the trust beneficiaries: the tribes and individual Indians.

Just like water or land rights, the United States has a responsibility to protect our reserved and statutory rights under Supreme Court rulings and the IGRA. Why should our economic rights under IGRA be any different than land or water rights? Even the U.S. Supreme Court recognized that our right to have gaming was not a statutory right, but a right reserved by inherent sovereignty. The DoJ cannot pick and choose which Indian rights it chooses to defend - not without exposing the U.S. government to tens of billions of dollars in liability for trust violations. If you thought Cobell was a doozy, wait until this one hits the courts.

Harold Monteau is a Chippewa Cree attorney practicing out of Missoula, Mont., and the former chairman of the National Indian Gaming Commission under President Bill Clinton. He can be reached at hmonteau@rosettelaw.com.