April 1, 1998

Good morning, Mr. Chairman and distinguished members of the conunittee. I am Ray Scheppach, executive director of the National Governors' Association (NGA). Thank you for the opportunity to appear before you today to convey the Governors' position on S. 1870, the proposed Indian Gaming Regulatory Improvement Act of 1998.

In the years since the enactment of the Indian Gaming Regulatory Act of 1988 (IGRA), the vast majority of negotiations between states and tribal governments have resulted in successfully completed compacts. As of today, 146 tribes have concluded 171 compacts with 24 states. In spite of the Supreme Court's Seminole decision, the process created by IGRA continues to work, and states and tribes continue to negotiate compacts. For example, last month California and the Pala Band of Mission Indians signed an historic and comprehensive tribal gaming compact.

With states and tribes continuing to negotiate new compacts, the nation's Governors do not feel that IGRA needs to be significantly altered. However, if Congress does amend IGRA, such amendments should be designed to keep states and tribes in active negotiations. The Governors have significant problems with the proposed legislation and will strongly oppose this proposal in its current form. The changes Governors would recommend should Congress proceed with this legislation include the following.

Scope of Gaming

A primary concern for states continues to be clarifying the scope of the gambling activities permitted to tribes under IGRA. Much of the confusion and conflict that has arisen out of IGRA implementation centers around determining which gambling activities and devices are permitted by a state. The Governors assert that permitted gambling must be determined by reading a state's laws and regulations.

Amendments to IGRA must define the scope of the gambling activities and devices subject to negotiation under the law. It must be made clear that tribes can negotiate to operate gambling of the same types and subject to the same restrictions that apply to all other gambling in the state' The Governors firmly believe that it is an inappropriate breach of state sovereignty for the federal government to compel states to negotiate tribal operation of gambling activities that are prohibited by state law.

The U.S. Court of Appeals for the Ninth Circuit reached a decision consistent with NGA policy in the case of Rumsey Indian Rancheria of Wintun Indians v. Wilson. In Rumsey, the court found that IGRA neither compels a state to negotiate for gaming activities or devices that are prohibited by state law, nor requires a court to refer to the U.S. Supreme Court's decision in California v. Cabazon Band of Mission Indians to interpret the law. The Court denied the tribe's request for review of the decision, effectively endorsing the Ninth Circuit's interpretation of IGRA.

Not all forms of Class III gaming are the same. States have a fundamental public policy interest and responsibility to distinguish among different gambling activities and devices, choosing to legalize some and prohibit others. The Governors agree with Rumsey that "a state need only allow

Indian tribes to operate games that others [in that state] can operate, but need not give tribes what others cannot have." Moreover, they believe that the Rumsey decision reflects what states believe to be the original intent of Congress. The Governors cannot support amendments to IGRA that would erode the Rumsey interpretation of the scope of gaming under IGRA.

The Governors thus object to S. 1870's references to Cabazon and its holding. The introductory sections of the proposed legislation, in particular, contain language similar to that used by the Court in Cabazon and would appear to change the standard under which tribal proposals for gaming are evaluated. Such a change to IGRA would create a great deal of confusion for states, tribes, and courts, reversing the progress made to date with respect to IGRA implementation and leading to continued litigation.

The Compact Negotiation Process

Any changes to the negotiation process should encourage active negotiation between states and tribal governments. The Governors oppose any efforts by Congress or the administration that would allow a tribe to avoid negotiation with a willing state in favor of compact negotiation with another entity, such as the secretary of the U.S. Department of the Interior. Section 10 of the proposed legislation would appear to do just that by creating a short 120-day period for states and tribes to negotiate a compact and allowing a tribe that has not reached an agreement with a state within 120 days to request that the secretary intercede and permit the desired gaming. The Governors oppose this provision.

S. 1870 also fails to address the Governors' concerns that the good faith requirement in IGRA applies only to states. This good faith negotiation standard should be clarified and applied to both states and tribes.

It is seldom the case that a state completely refuses to negotiate with a tribe. Most of the time, states come to the table-in good faith-ready to negotiate with a tribe. The:'question of a breach of good faith tends to arise when compact negotiations between states and tribes reach a stalemate over a tribe's demand to compact for gambling activities and devices that are prohibited by state law. A state's refusal to negotiate for gambling that is not legal in the state is not bad faith on the part of the state. NGA policy urges that any amendments to IGRA apply the good faith standard to both states and tribes and clarify that limiting the compact negotiations to gambling activities and devices permitted by state law is not an act of bad faith on the part of the state.

Federal Enforcement Against Illegal Gaming. The federal government should actively and aggressively use enforcement authority under IGRA to shut down Class III gaming conducted on Indian lands in violation of or in -the absence of a tribal-state compact, either by civil or criminal means. IGRA should be amended to grant a state the right to seek injunctive relief in federal court to enforce this law. Effective enforcement against illegal and uncompacted gaming would encourage tribes to actively negotiate in good faith with states. S. 1870 provides no such enforcement right to states and Governors request that such a provision be added.

Limitations on the Effect of Changes to State Law. Section 10 of the proposed legislation would limit states' ability to apply state law to Indian gaming. This section would appear to make applicable to existing tribal-state compacts only a change in state law that completely bans all class III gaming. By implication, any lesser ban of a particular game or games would not take effect with respect to existing compacts. Further, section 10 contains a provision that expands the significance of compact publication in the Federal Register. Under this provision, the compact's publication would serve as "conclusive evidence" that such gaming activity is subject to negotiation under state law and would override any contrary provisions of state law or determinations by a state's high court. The Governors oppose both of these provisions.

Trust Land Acquisition for Gambling Purposes. Congress must support its commitment to provide Governors with concurrent authority in the trust land acquisition process. Any amendments to IGRA should preserve the Governors' participation in this decisionmaking process-namely, that no trust land acquisition for gambling purposes should be possible without a Governor's concurrence.

National Indian Gaming Commissioners. Section 5 of the proposed legislation specifies that the two Native American members of the National Indian Gaming Commission must "have extensive experience or expertise in tribal government." To the contrary, if any change to the composition of the commission is proposed it should be to drop the tribal membership requirement altogether, or, if retained, expand the commission to five members with two members selected on the basis of their expertise with state government, after consultation with the states.

State Limits on Class II Gaming. Section 9 of the proposed legislation appears to have eliminated the former requirement that card games be conducted in accord with state limits on hours of operation, pot size, and wagering. This requirement should be retained.

Conclusion

In conclusion, let me reiterate that Governors feel that the negotiation process in IGRA continues to work, and that IGRA. does not require significant changes. The Governors respect the committee members' continuing efforts to resolve the complex issues arising out of IGRA implementation. However, they oppose S. 1870 as currently drafted. The proposed legislation would allow a tribe to avoid negotiation with a willing state in favor of working through the secretary of the U.S. Department of Interior. The legislation as introduced also fails to achieve Governors' policy on a number of significant issues including scope of gaming, dual good faith negotiation requirement for both tribes and states, and federal enforcement of IGRA against illegal and uncompacted gaming.

The Governors remain committed to resolving these issues and stand willing to assist the committee. You will find a copy of NGA's Indian gaming policy attached to my testimony. I would be happy to answer your questions.