Regulatory Updates

Behind the Controversy: A Review of the Justice Department’s Proposed Amendment of the Johnson Act

Elizabeth Homer
Elizabeth Homer

by Elizabeth Homer, Attorney at Law

The Justice Department's proposal to amend the federal Gambling Devices Act, more commonly known as “the Johnson Act,” has stirred considerably more controversy since it became available on the web several weeks after the announcement at the Global Gaming Expo in September. Fueling the controversy is a sense among tribes and others in the tribal gaming sector that the Justice Department's motives are something less than straightforward.

While the Justice Department clearly has the authority to seek amendment of the Johnson Act, which is under its administrative jurisdiction, the proposal intrudes deeply into the province of the National Indian Gaming Commission (NIGC). It directly amends the Indian Gaming Regulatory Act (IGRA), fundamentally altering the legal and regulatory framework for tribal gaming and conferring on the Justice Department considerably greater authority. It criminalizes NIGC regulations and provides DOJ the means to interfere with NIGC's rule making authority.

The most significant proposed revision of the Johnson Act from its present form is in the definition of “gambling device,” which would be amended to include electronic bingo terminals, pull tab dispensers, and bingo minders. The fact that this revision reverses a substantial body of controlling case law, and thus would legislatively effect limitations on Class II gaming under IGRA that the federal courts refused to countenance is not lost on the tribes and others in the tribal gaming sector.

Naturally, the most pressing concern is the impact the amendment would have on the economic viability of Class II gaming in terms of both lost investment and future income, especially since the proposal would retroactively incorporate the vast majority of electronically aided Class II games in common usage today into the Johnson Act definition of “gambling devices.” Hardest hit would be those tribes located in states that refuse to execute tribal-state gaming compacts, which, incidentally, in most cases, constitute the most economically disadvantaged of the gaming tribes.

It would, however, be a grave mistake to overlook or underestimate the impacts that the amendment would have in relation to the regulatory framework of tribal gaming were the proposal to be enacted into law. Of particular concern, the proposal would effect a breach in the “independence” of NIGC. In IGRA, Congress established the NIGC as an independent regulatory agency of the United States. The term “independent” is not mere statutory verbiage: important and legally significant principles are purposely invoked by its use.

Agency “independence” is designed to shield regulatory agencies from external pressures and influences, including those that might be brought to bear by other Executive Branch departments. Cabinet agencies like the Justice Department, in contrast, are subject to almost plenary executive control, and thus subject to abrupt changes in leadership, policy, resources, and organization with each new administration.

The purpose of agency “independence” is to advance continuity and objectivity in the interpretation, administration and enforcement of the law, particularly in highly specialized or technical areas requiring decision makers with particularized knowledge and expertise.Typically, such agencies are headed by a body such as a board or commission comprised of appointees representing a mix of both political parties appointed for fixed terms, usually staggered, and removable only for cause. These considerations are designed to enhance balance; produce sound decision making; provide stability, and mitigate the potential for sudden changes or reversals in agency policy likely to produce unnecessary or exceptionally severe economic harm to the regulated industry.

Congress' establishment of the NIGC as an “independent agency” implicitly reflects its recognition that the proper administration of IGRA entails highly specialized knowledge and expertise not only in relation to gaming, but also in relation to federal Indian law and policy. Bear in mind that Congress was well aware that IGRA impinges directly on the sovereign authority of Indian tribes to govern internal tribal affairs. To mitigate this intrusion, the NIGC was established as an independent agency not only to administer IGRA, but to do so on a government-to-government basis with tribes consistently with well-established principles of federal Indian law and policy. The very structure of IGRA reflects Congress' intent to create of “system of regulation” wherein NIGC's role is complementary to that of tribal governments.

The breach of the NIGC's independence will alter the dynamic between the NIGC and tribes, diminishing rather than strengthening the regulatory framework established by IGRA. Tribal consultation will be of little meaning, purpose, or value if the decisions and policies of the NIGC are subject to what, in effect, would amount to a veto by an agency that isn't accountable to its constituency or party to relationship. Furthermore, the degree of intrusion proposed by DOJ undermines the principles encompassed in the Administrative Procedures Act in relation to agency rulemaking.

In granting the NIGC rulemaking authority, Congress entrusted the agency with the power to legislate, but as unelected lawmakers, the NIGC, like all federal rulemaking bodies, has a duty to give full and fair consideration to the comments of those with an interest in its rules and regulations. The time and effort required to participate in the process would be for naught and the law undermined if the process can be hijacked by a third-party agency. It is critically important that the NIGC remain free to exercise rulemaking authority independently. Fundamental rights and important principles of governance are jeopardized if the NIGC's authority were subordinated to that of another agency, even that of the Justice Department.

The Indian tribes, and, for that matter, the NIGC, deserve something more by way of justification than the Justice Department's “desire to 'clarify' that 'technological aids' represent Johnson Act gambling devices.” The extremity of the proposal literally begs the question: has the NIGC been ineffective or remiss in its responsibilities so as to require DOJ's superintendence? Has it failed to act responsibly in any respect?

Were “yes” the answer to these questions, perhaps the proposal would be justified, but the Justice Department makes no such claim. In fact, its representatives vehemently deny any lack of confidence in the NIGC. Certainly, the record does not stand for the proposition that the NIGC has shirked its enforcement or rulemaking responsibilities. The NIGC's website reveals a marked consistency in enforcement activity over the past five years, which compares extremely favorably to the notable dearth of reported indictments of Johnson Act violations in Indian Country and elsewhere. The Bureau of Justice Statistics reports not one Johnson Act prosecution between FY-1999 - 2003 (information for subsequent years is not available).

As to its rulemaking activities, the NIGC has consistently forged ahead even in the face of considerable criticism. In fact, in just the past few months, a federal court ruled that the NIGC actually exceeded its delegated authority to promulgate and enforce certain regulations in relation to Class III gaming: hardly what one would expect of a weak and reticent agency. In fact, were it not for the intervention of the Justice Department, the NIGC would have promulgated proposed rules establishing technical standards for technological aids last spring.

Finally, the proposal presents important practical concerns as well. The proper administration and enforcement of the law is a fundamental responsibility of government most effectively advanced by clarity in the respective roles, responsibilities, and authorities of each agency. Today, the roles of the NIGC and the Justice Department are clear and complementary. Though “independent” the NIGC coordinates with DOJ; seeks its counsel; is represented by it in all litigation; and refers cases to it for
prosecution.

DOJ's proposal would blur these clear, bright lines, and to what end? The actions and decisions of one will impinge upon and even constrain those of the other. Efficiency will erode and decision-making processes will slow. The capacity of either agency to act unilaterally without compromising the other will be destroyed. The potential for inter-agency conflict will multiply, inevitably leading to bureaucratic inertia, an effect already foreshadowed by DOJ's role in the recent postponement of the publication of the NIGC's notice of proposed Class II technical standards regulation.

An adage oft repeated is that if something isn't broken, don't fix it. The regulatory framework for tribal gaming is not broken; it is evolving in precisely the correct manner: slowly, in small steps taken one at a time. Dramatic change of the kind proposed creates instability hindering the effective administration of the law and wreaking havoc on regulated industry. Seventeen years have passed since IGRA was enacted, a short time relatively speaking, but in that time the NIGC has promulgated rules, issued decisions, provided guidance, instituted enforcement actions, and, with the guidance of the courts from time to time, effected a substantial degree of “clarity” and “stability” in the law and in the system. The tribal gaming industry has a right to rely on the agency's record and the rule of law just as would any other American industry regulated by an independent agency of the United States.

Elizabeth Homer is a former Vice-chair of National Indian Gaming Commission as well as a former Justice Department prosecutor now engaged in the private practice of law in Washington, D.C. She can be reached by calling (202) 955-5601 or email ehomer@homerlaw.com