Coastal Zone Impacts of the Dockside Casino Industry: The Mississippi Experience Proceedings of a Workshop Held in Biloxi, Mississippi May 7-8, 1996. Compiled by Mary S. Veal Biloxi, Mississippi Technical Editor David D. Burrage Marine Resources Specialist Mississippi State University Extension Service Sea Grant Advisory Service Coastal Research and Extension Center Biloxi, Mississippi Published by the Office of Agricultural Communications, Division of Agriculture, Forestry, and Veterinary Medicine, Mississippi State University, Keith H. Remy, Senior Publications Editor.   Foreword In 1995 NOAA's Office of Ocean and Coastal Resource Management, Coastal Programs Division, announced the intention to address a comprehensive technical assistance initiative for Coastal Zone Management Programs, with the goal of transferring data from local or regional coastal experiences to the national arena. Priority focus areas were identified and ranked. First in priority was Cumulative and Secondary Impacts of Development, with a proposed strategy to assist states in developing procedures to assess, consider, and control the impacts of growth and development. Following a briefing on the initiative and concurrent announcement of the availability of Section 308 funds targeted for the goal of "Furthering the National Dimension," Mississippi Coastal Zone Management (CZM) staff members began assessing the state's ability to support and advance the goals of the initiative through Section 308 funding. Ultimately, this assessment focused upon a first-year action project identified for the initiative -- the establishment of a federal and state advisory group to discuss cumulative and secondary impact issues common to many coastal states and territories. Mississippi CZM staff reasoned that the burgeoning dockside gaming industry, which has the potential to affect all of the coastal zone states, fit this task quite well, and Mississippi's casino development experience could provide valuable, transferrable guidance. Over the past 4 years, Mississippi has become uniquely qualified in dealing with dockside gaming impacts. Since March 1992, when voters approved legalized dockside gaming, an explosion of new development has occurred along the Mississippi Gulf Coast. Regional and national attention has focused on Mississippi as it has rapidly grown to one of the top three gaming areas of the country and the premier area for dockside gaming. Through a special grant proposal, the Mississippi Department of Marine Resources Coastal Zone Management Program requested and received funds to sponsor and host a dockside gaming conference/workshop in support of the OCRM/CPD Technical Assistance Initiative. The Environmental Protection Agency's Gulf of Mexico Program was invited to cosponsor the workshop, and Mississippi State University's Coastal Research and Extension Center served as facilitator. The workshop featured national, regional, and local expert panelists who presented a broad range of issues dealing with cumulative and secondary impacts that can arise from the siting of dockside gaming in a coastal community. This publication of the workshop proceedings expands the workshop results to a wide audience and fulfills the goal of realizing a national perspective on cumulative and secondary impacts from growth and development. Acknowledgments Many collaborators contributed to the success of this conference. Financial assistance and logistical support were provided by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration through the Office of Ocean and Coastal Resource Management and the Mississippi-Alabama Sea Grant Consortium; the U.S. Environmental Protection Agency through the auspices of the Gulf of Mexico Program; the U.S. Department of Agriculture through the Mississippi State University Extension Service; and the Mississippi Department of Marine Resources. Gratitude is also expressed to the following agencies and individuals who participated in the conference: Mississippi State Senator Tommy Gollott; Mississippi Gaming Commission; Mississippi Department of Environmental Quality; U.S. Army Corps of Engineers, Mobile District; U.S. Environmental Protection Agency, Region IV; Mississippi Office of Secretary of State; Mississippi Casino Operators Association; University of New Orleans; City of Biloxi, Mississippi; Gulf Central Seafood, Inc.; Gulf Coast Association of Realtors; Mississippi Coast Crime Commission; Mississippi Council on Compulsive Gambling; Gulf Islands Conservancy; Sierra Club Legal Defense Fund; Harrison County, Mississippi Wastewater Management District; Brown and Mitchell, Inc.; Mississippi State Senator William G. Hewes, III; and the University of Maine School of Law. The knowledge and expertise provided by these participants were invaluable. The mention of trade names or commercial products herein does not constitute an endorsement or recommendation. Any errors of omission or commission are those of the editors. Introduction Mississippi Dockside Gaming Legislation Mississippi State Senator Tommy Gollott District 5 -- Harrison and Jackson Counties The gaming industry is relatively new to Mississippi. The first laws favorable to gaming were enacted in 1989. That legislation allowed cruise vessels on the Mississippi Sound to have gaming paraphernalia on board. Those vessels were required to cruise 1,500 feet from the boundary of the Mississippi Sound. At that time, the vessels were in international waters and gaming could begin. The boats circled in the international waters while gaming occurred and then returned. Because the vessels were licensed by the state of Mississippi, a problem occurred. There was no way to determine how much money the casinos were making in Mississippi and how much they were making in international waters. Therefore, in 1990, legislation made provisions for cruise vessels in the Mississippi Sound and riverboats on the Mississippi River. Regulations provided for cruise vessels underway-making way (meaning that boats could cruise in the Mississippi Sound and return to their ports with gaming on board during that time). Senators Gollott and Dearing introduced the legislation. Representative Sonny Meredith, chairman of the Ways and Means Committee, expressed concern over the underway-making way aspect of the bill. He believed that dockside gaming would be more advantageous to the state. He feared that vessels entering the Arkansas side of the Mississippi River might be confiscated with all the gaming paraphernalia by the State of Arkansas. The Mississippi House of Representatives was convinced that underway-making way should be removed from the legislation. Both bills returned to the Senate. The first bill on the docket was the bill for the Mississippi cruise vessels on the Gulf Coast. A battle ensued. Jackson County wanted to ensure that construction of the vessels could take place in their county. However, the county wanted to be certain they would not be affected by pollution as a result of sandblasting the vessels. The bill with that provision went into conference. The bill for the Coast, providing for underway-making way, also went into conference. The second bill from the House (the Senate bill) had the underway-making way provision removed. This bill passed. Now the stage was set for dockside gaming on the Mississippi River. Both bills passed. In June of 1990 Governor Ray Mabus called the Legislature into special session. In the special session, the Legislature enacted the Comprehensive Gaming Regulations Act. When the Senate was formulating the gaming regulations, Senator Hannon Miller was appointed subcommittee chairman of the Gaming Act (the Senator was opposed to gaming). The Assistant Attorney-General of Nevada was invited to Mississippi. He worked with the Mississippi Senate throughout the special session familiarizing the Senate with Nevada's gaming regulations. The Mississippi Senate took advantage of Nevada's expertise in formulating legislation. Special care was taken to include provisions to discourage undesirable people from participating in Mississippi's gaming industry. Senator Miller's expertise and Nevada's experience equipped the Mississippi Senate to propose and to pass effective gaming legislation. The next step was formulating the Gaming Commission through the Gaming Act. Mississippi determined that three people, to be appointed by the Governor and confirmed by the Senate, should constitute the Gaming Commission. A bonus of the gaming industry was the state's collection of $33.6 million in fiscal year 1993. In 1994, the revenue was $94.9 million. In 1995, the revenue climbed to $128 million. The projection for fiscal year 1996 is $132 million. Of that $132 million, $33 million will fund road construction and infrastructure in the counties that have gaming. The Highway Department can issue $323 million in bonds. The $33 million annual revenue will apply to the retirement of those bonds if and when they are issued. The bonds, however, have not been issued for the gaming counties. The present revenues are funding the roads, setups, and any other expenses of roadways in those counties. It is possible that bonds will not have to be issued for the gaming counties because of the incoming revenues. The projected income for 1997 is $140 million, an increase from $132 million in 1996. Of the increase, 25% will fund road construction in the counties that have gaming. In cities and municipalities where gaming exists, taxes on the casino earnings also contribute to the revenues. For example, in the City of Biloxi, legislation provides for an additional 3.2% in local and private taxes. Of this, 20% is directed to education. Another 20% is allocated for law enforcement. Revenues for the city of Gulfport are the same. The county receives from each vessel 20% of the 3.2%, with 10% allocated to education and 10% allocated to public safety. Then, 40% of the 3.2% is directed to the City of Biloxi for funding the infrastructure. All areas in Mississippi with gaming have similar allocations. In addition, tidelands funds have provided an allocation of more than $10 million. Tidelands funds provide for the infrastructure pertaining to the seafood industry and to sports fishing and marine-related activities. In the last 2 years, more than $800,000 have been appropriated to build fishing banks throughout the three coastal counties as well as in waters outside the State of Mississippi. Casinos have contributed to enlarging the coffers in many ways. The Convention Center in Harrison County has been expanded as a result of revenues from hotels and motels. The year before the inception of gaming, the 3% hotel and motel tax yielded a total of $700,000. The current yield of that revenue is $2.7 million. More hotels and motels are a direct result of the gaming industry. Recent legislation allowed the Coast Coliseum and Convention Center to issue $10 million in bonds. One-third of the 3% that the Coliseum and Convention Center presently receives will fund a 70,000-square-foot addition to the Center. Coastal ports have also benefitted from the effects of gaming. Legislation this year was designed to increase the bonded indebtedness of the Biloxi Port Commission from $3 million to $10 million. The commission plans to build a marina behind or in front of the Imperial Palace Casino. The 240-slip marina will be funded by the lease from the Imperial Palace, with the lease paying for the bonded indebtedness. The Port of Gulfport plans to double in size, using monies coming from both gaming and the port itself. Naturally, tourism is flourishing and is expected to grow. An international airport is projected to be located on the Mississippi Gulf Coast in 15 years, bringing tourists from around the world. Those tourists can enjoy playing at the already established 30-plus golf courses within a radius of 50 miles. With the mild coastal climate, golfing is a year-round pleasure. High-profile fishing also adds to the tourism scene. Completing the charm of Coastal Mississippi is its rich history. The effect of casinos on unemployment rates has been dramatic. Approximately 15,000 people work directly in the gaming industry. Another 15,000 people are employed in other casino-related businesses. Tunica County has seen a tremendous impact. Before gaming, that county's unemployment rate was between 23 and 25%. Currently, the rate is less than 5%. In coastal Mississippi, the Harrison County unemployment rate dropped from 8.7% to 5.2%. All in all, gaming has exerted a positive effect on the Mississippi Gulf Coast. With the expansion and building of infrastructure, gaming interests can continue to locate here. The saturation point with regard to casinos probably will not occur for another 10 years. Of the states involved in the gaming industry, it seems certain that Nevada and Mississippi will be the two leaders. Section I: The Regulatory and Permitting Process The Gaming Commission Permit Review Process and Industry Enforcement Gary McGee Chief of Investigations Mississippi Gaming Commission With the casino industry in Mississippi, a Gaming Commission was important. Before October 1, 1993, the Mississippi Tax commission exercised temporary powers and duties of the Gaming Commission. The Gaming Control Act had been passed by a special session of the Legislature in 1990. In April of 1991, the Legislature appropriated $300,000 for the overall operation of the Gaming Commission, with 16 positions being authorized. Eleven casinos opened and were licensed; eight manufacturers and distributors of gaming products were licensed. After October 1, 1993, the Gaming Commission was created as a separate entity. The Governor, with the consent of the Senate, appointed three nonsalaried commissioners. According to law, these commissioners are to meet on or after the fifteenth of each month. The Mississippi Gaming Commission meets the first Thursday after the fifteenth of the month and on special occasions when a need arises. The Executive Director of the Gaming Commission in Mississippi is General Paul Harvey. General Harvey has been an asset to gaming in Mississippi. The Commission operates on an annual budget of $11 million. Approximately 136 of the 164 approved employee positions are filled. The Mississippi Gaming Commission licensed and opened 23 casinos between October 1, 1993 and August 1, 1994, a 100% increase over the number licensed prior to October 1, 1993. In Mississippi, 29 casinos are now licensed and open, and they employ 27,140 people. Casinos are subject to relicensure every 2 years. The Governor is at the apex of the organizational structure of the Gaming Commission. The three commissioners are under the direction of the Governor, followed by the executive director and division directors. The executive director of the Commission was authorized to create additional divisions to implement the provisions of the Gaming Control Act. Consequently, General Harvey created the following divisions: Compliance, MIS, Police, Intelligence, Personnel, Administrative Training, Gaming Laboratory, Industry Relations, Research, and Public Relations. The Enforcement Division and the Investigative Division were established earlier by the Legislature. The Enforcement Division sends its agents out on a day-to-day basis ascertaining that all laws and regulations are being followed in the casinos. Members of the Investigative Division investigate those people who have potential control over and within the casinos. Examples of the subjects of investigation are owners, officers, surveillance directors, and stockholders. Within the casinos, key employees are pit bosses, shift managers, directors, security directors, or slot technicians. The purpose of the Gaming Commission is to implement the Mississippi Gaming Control Act. The Commission provides a process for licensing and regulating legalized dockside gaming on the Mississippi River and any of its navigable tributaries, and on the Gulf Coast south of the three southernmost counties. A gaming license is deemed a revokable privilege. The holder of the license has no vested rights in that license. The license is issued to the holder (corporation or partnership). The law authorizes the executive director of the Gaming Commission to investigate applicants and licensees. The executive director then makes a recommendation to the Commission on the suitability or denial of the applicant. The recommendations may have conditions or limitations. After the director's recommendation, the commissioners have the full and absolute power and authority to approve or deny any application. The commissioners can limit, condition, restrict, revoke, or suspend any license or finding of suitability that it has issued. In addition, commissioners can fine any licensed person for violations committed by the casino or its personnel. Along with monitoring the casinos, the Commission also monitors the manufacturers and distributors of gaming products, making certain that they are in compliance with the Gaming Control Act and its regulations. The legal geographic location for dockside gaming has been discussed often. That location is defined as "in the waters within the state of Mississippi, which lie adjacent to the State of Mississippi south of the three most southern counties in the State of Mississippi." Recently, the Mississippi Supreme Court rendered two decisions, one related to a casino on a bayou and the other on a manmade canal. The Court stated that any river, such as the Wolf, Tchoutacabouffa, Pascagoula; any manmade canal; or other bays are illegal for casino sites. The Mississippi Supreme Court ruled, however, that the Bay of St. Louis and the Biloxi Back Bay are legal sites. The second legal location for dockside gaming is on the Mississippi River or any of its navigable tributaries. Thus, dockside gaming is legal in the following nine counties in Mississippi: Adams, Claiborne, Coahoma, Hancock, Harrison, Issaquena, Tunica, Washington, and Warren. A specific procedure must be followed in applying for a gaming license in Mississippi. First, the applicant must provide the Mississippi Gaming Commission with a written notice of intent. The information in the notice identifies the exact site, the exact location of the boat at the site, and related infrastructure plans. Maps and pictures must also be included. Approval or disapproval is given to publishing the notice of intent in a local newspaper for 3 consecutive weeks. If approval is given to publication, then gaming application and fingerprint cards are provided. After the third week of publishing the notice of intent, the applicant submits a written request for a site assessment, and this request is submitted to the executive director. The applicant files the application, a $5,000 application fee, and two sets of fingerprint cards. Upon receipt of the application, the executive director will notify the board of supervisors of the county of the proposed casino site along with the mayor of that municipality, if applicable. The Gaming Commission then conducts a hearing to determine whether to approve the proposed site and site development plan for the casino. The hearing will consist of presentations by the applicant, which include the specific location of the property, the current use of any adjacent property, and the location of the nearest residential area, church, or school. The complete site development plan should include all structures planned and the expected completion date. Evidence is submitted that various agencies (U.S. Army Corps of Engineers, Coast Guard, Mississippi Department of Transportation, Mississippi Department of Environmental Quality, Department of Marine Resources, Board of Supervisors, Port and Harbor Commission, Levee Board, Mayor's office, City and County Planning Commission, and Preservation Commission) do not oppose the site development plan. Following the presentation, the public is provided time to comment on the proposal. After the hearing on the proposed site, the executive director will offer a recommendation to the Commission, which will then approve or disapprove the recommendation. The Commission may request additional information. The applicant is then subjected to in-depth background and financial investigation. Corporate investigations are also undertaken. Construction usually begins shortly after site approval. Following this process, a development plan consisting of vessel specifications and design, shore development plans, infrastructure plans, and an operation/implementation timetable is submitted. Detailed descriptions of the games to be played are required. The executive director then makes a recommendation for issuance or denial of a license. If the license is approved by the Commission, the director monitors the implementation of the approved operation implementation timetable and the licensee provides a monthly status report to the Commission detailing the progress. Before final approval can be given, the Gaming Commission makes a final inspection of the vessel and reviews compliance with all federal, state, and local laws and regulations and ordinances before giving final approval. Gaming is an asset to Mississippi. Jobs created directly by the casinos number 27,140. Throughout the state, 50,000 additional jobs have been created as a result of the gaming industry. Gross revenues generated from gaming were $122 million in 1992, $790 million in 1993, and $1.5 billion in 1994. In 1995, revenues climbed to $1.7 billion. In January and February of this year (1996), gross revenues were $287 million. The gaming revenues from casinos on the Mississippi River continuously exceed revenues on the Mississippi Gulf Coast. The economic future of Mississippi is bright. Wetlands Permitting -- Coastal Program Consistency Review Dave Ruple Chief of Wetlands Mississippi Department of Marine Resources The Mississippi Coastal Program is a joint state and federal tool that has been approved by the State of Mississippi and the U.S. Department of Commerce. This tool provides a mechanism by which the state manages its coastal resources in the coastal zone of Mississippi. The coastal zone of Mississippi is defined by the three coastal counties: Jackson, Harrison, and Hancock. Glade Woods is the Executive Director of the Mississippi Department of Marine Resources, which administers the Mississippi Coastal Program. The program incorporates all the provisions of the Coastal Wetlands Protection Law that were passed in 1973. In addition, the Coastal Program agencies include the Department of Marine Resources, the Department of Environmental Quality, and the Department of Archives and History. The wetland permitting activities that accompany most dockside gaming facilities on the Coast are covered by regulative activities that are described in the Coastal Wetlands Protection Law of 1973 and the Mississippi Coastal Program. The Coastal Program was adopted by the state in 1980 as its coastal management policy. The public policy of wetlands protection (defined in the Coastal Wetlands Protection Law) serves as a foundation and basis by which the Department manages the resources. The guidelines and plans of the policy are described in the Mississippi Coastal Program. The Department seeks to balance the preservation of coastal resources in their natural states with the alteration of those resources for the public benefit. In seeking a balance of development and environmental protection, important goals of the Coastal Program are protection of the environment, the enhancement of certain resources for the public benefit, and economic development of water-dependent industries along the Coast. When the program was initially developed, many sites along the Coast were primarily reserved for those commercial and industrial activities that require waterfront locations for siting. The advent of gaming has affected this program, and attempts have been made over the past 4 years to accommodate a degree of gaming development while keeping in mind the other developmental needs of waterfront sites on the Coast. The passing of the gaming legislation created a new water-dependent industry on the Coast, so the Department adapted the program to accommodate this industry. Now the Department has permitted 18 casino sites on the Coast. The permitting of those casino sites in some marina-designated areas and industrial areas has created an added pressure for additional marina space. In some cases, industrial spaces are now taken up by dockside gaming activities. It is important to balance these pressures and seek ways to revise the Program to accommodate future industry. Wetlands permitting begins with the submission of a permit application to the Department. These permit applications cover a variety of regulated activities that are spelled out in the Coastal Wetlands Protection Law and in the Mississippi Coastal Program. Within the program and the law, certain activities and entities are exempted from needing to secure permits, although activities must comply with provisions of the Mississippi Coastal Program. One of the most important aspects of the program sometimes drawing fire is the Coastal Wetlands Use Plan. This is a zoning of the public waters of the state along the Coast, establishing use districts allowing for certain activities in certain zones. In addition, a set of guidelines for regulated activities outlines specific ways that certain regulated activities are to be conducted along the Coast. Furthermore, provisions for federal consistency (any federal action or activity in the coastal zone, whether a license or permit or plan) call for compliance with enforceable policies of the Mississippi Coastal Program. The final permit decisions are determined by the Commission on Marine Resources when that body considers recommendations on a project that is evaluated by the staff of the Department of Marine Resources. Subsequently, the Department staff carries out the recommendations and the wishes of the Commission based on its findings; this would be either a recommendation of denying a permit request or an approval for one. The Wetlands Use Plan is a tool that has been utilized not only for casino development along the Coast but also for overall development. It serves to set aside specific areas for certain types of development. The predominant uses within the use plan are "C" zones, which are for commercial, recreational, marinas; "I" zones, which are for industrial, commercial, and manufacturing water-dependent activities; "S" zones, which are for areas that are leased by the Secretary of State's office; and "P" districts, which are preservation areas. Over the past 4 years, the Department has attempted to utilize the provisions of the Use Plan and the entire Coastal Program in managing the state's resources and in trying to accommodate an orderly development along the Coast. One very important aspect of the Mississippi Coastal Program and coastal programs in general across the nation are the provisions for federal consistency. The provisions cause a joint effort whereby all federal actions in a coastal zone have to comply with all of the provisions of the approved state and federal coastal management program. The Department of Marine Resources staff that deals with casino and other permitting activities has decreased from five to three members. Since the Commission deals with all of the other development and related regulated activities that occur along the Coast, the decrease in members has caused pressure. In 1992, approximately 400 actions relating to wetland permits, violations, or wetland determinations were taken by the staff. Last year, that number approached approximately 650. Obviously, the workload has increased dramatically with the increased development along the Coast. When evaluating wetland permits, it is important to look at secondary and cumulative impacts of the dockside casino industry on the Coast. Some areas of particular concern are the dredging that is proposed and the relative rate at which some of the dredge spoil areas are being utilized. One of the concerns of casinos is the best way to accommodate maintenance dredging activities after the casino barges are in place. There is no evaluation of wastewater treatment. In addition, the displacement of some of the traditional uses in the coastal zone by the casino industry is an important consideration. The issues of storm water runoff, drainage, and drainage patterns within all the cities along the Coast are matters of concern. The increased development along the Coast, with subdivisions and the filling of some nontidal wetlands, affects drainage patterns. Accommodating this new waterfront industry presents a challenge. However, the tools are in place to achieve a balance between environmental and public purpose wetlands protection that is defined in the Coastal Wetlands Protection Law. The Water Quality Review Process in Mississippi Robert Seyfarth Mississippi Department of Environmental Quality Office of Pollution Control The Mississippi Department of Environmental Quality is the state agency that regulates the environmental requirements of the Federal Clean Water Act and the Clean Air Act. Three agencies are within the Department of Environmental Quality. The Office of Geology regulates mining. The Office of Land and Water Resources issues permits for water usage, (surface and ground water usage), and the dam safety program. The third agency is Office of Pollution Control, which is comprised of a number of divisions. These divisions address matters like air pollution, solid and hazardous waste, ground water, surface water (which includes issuance of permits), and issuance of discharge permits for municipalities and industries. The Water Quality Management Branch handles the development of the state's water quality criteria for surface waters and water classifications and is responsible for the state's nonpoint source pollution program. This agency has worked closely with the Department of Marine Resources on the Coastal Nonpoint Source Program that evolved through the Coastal Zone Management Act. The Federal Clean Water Act requires states to conduct a water quality certification program. The Act also requires states to certify that federally-permitted activities, which may result in a discharge into waters of the state, will comply with applicable discharge limitations, water quality standards, and other requirements. Over the years the agency has gradually developed a process of reviewing projects. The type of federal permit that is most frequently dealt with is the dredge-and-fill permit issued by the U.S. Army Corps of Engineers. Regulations in the Department clearly define the review process. A number of things are considered in the review. First, the agency looks for feasible alternatives to what is being proposed. Although all projects are reviewed in a like manner, the agency does determine if an alternate location is feasible. Perhaps things can be done to minimize the impacts of the project, with particular regard to the footprint that may impact wetlands or waters. After that determination is complete, other effects are analyzed to attempt to determine what can be done to mitigate those impacts. Likewise, the agency evaluates the direct impacts of the project (the effects of the construction of a project) and attempts to determine the secondary impacts of the project in terms of the water quality standards or classified uses. Next, compliance with the water quality standards and classifications is analyzed. Also, the agency determines the degree of physical, chemical, and biological impacts of the project. Are there going to be any impacts to circulation patterns or water movement that may create some water quality problems, such as stagnant situations? In particular for casinos, the agency conducts an evaluation of the basin in which the vessel may be sitting looking for any water quality problems related to the design. Will an alteration to the natural ecosystem occur that will cause problems? Is the project consistent with any adopted water quality management plans that are in place? For example, across the state, numerous wastewater plans have been developed that contemplate regional wastewater systems. Consistency with those plans is important. Another area of concern and importance is storm water management. Because casino projects propose large paved areas for parking and other impervious type surfaces like roofs, storm water becomes a significant issue. In addition, the regulations allow the Department to evaluate other factors necessary to protect water quality. Many factors influence permit denial. Regulations specify factors that may trigger denial of water quality certification. Denial of water quality certification is significant because the federal agency (in this case the Corps of Engineers) cannot issue a federal permit. As a result, the project cannot be built. One instance that might trigger denial would be a project's altering of the ecosystem. Another example is waters not supporting designated uses, or a feasible alternative existing that the applicant could use that would reduce impacts to water quality. Furthermore, denial could occur if a project were to have adverse impacts to rare, threatened, or endangered species or to any habitat or outstanding resource waters. Likewise, if the project caused adverse cumulative impacts, or if the project did not adequately address the nonpoint source runoff during construction or storm water management, a permit would be in jeopardy. The project not receiving required wastewater permits would certainly trigger denial. Finally, denial would occur if the project would cause significant environmental impacts. For casino projects, several things have been particularly important in the review for water quality. First is the avoidance of wetlands. At this point, only about 0.3-acre of wetlands has been filled along the Gulf Coast. The small figure is a result of the diligence of the state and federal regulation agencies in avoiding development in wetlands. However, most of the easy sites have been developed. The avoidance of wetlands will become a more critical issue as more projects are initiated. Another area of concern is wastewater treatment. Because very large developments with land-based features (such as hotels) are being built and planned, the agency must ascertain that the capacity to treat the wastewater exists. It also must ensure that the development does not affect water quality standards. Finally, the impacts of dredging and disposal of dredge material are concerns applicable particularly to casino projects. Casino development has affected the workload of the agency employees. Two full-time workers review these projects, and until the advent of gaming, two employees could review all Section 404 projects statewide. These very large casino projects are on fast schedules. When very large industries locate in Mississippi and undergo a permitting and a review process, it generally takes months and months for the facility to be built. Eventually the industry operates. However, the casino industry is on a different timetable. The construction takes place 24 hours a day 7 days a week. Construction is completed quickly. The speed of construction has created difficulties for the agency in checking and verifying the conditions of certifications. Because of the increase in workload, the Legislature has been very kind to the agency this session. The legislators approved an increase in the number of positions in the agency, particularly in the area of monitoring Mississippi waters. Efforts to accelerate the monitoring process should lead to better water quality in the coastal community. The COE Review Process Ronald A. Krizman Regulatory Branch U.S. Army Corps of Engineers, Mobile District The U.S. Army is indirectly involved in gaming permitting in the State of Mississippi. In the early days of the country, the Corps was the federal agency that surveyed and mapped navigable waters of the United States. Later, the Corps began maintaining navigable waters and even built them. In the late 1800's, Congress passed a law that required that anyone doing work in navigable waters in the United States must first have a Department of the Army permit issued by the Corps of Engineers. As a result, the Army became involved in its first regulatory mission. Then, when the National Environmental Policy Act of 1968 and the Clean Water Act of 1970 came into being, the Corps' mission in the regulatory arena was increased. Today, the Corps' activities are really fourfold. One activity is the evaluation of the Department of the Army permit applications. Another is the making of decisions on those particular permits. The third is the investigation and resolution of any violations of several laws, sections of which the Corps administers. The fourth activity is making wetlands and navigability determinations. The Mobile District of the U.S. Army Corps of Engineers is one of 30-plus districts spread throughout the United States and overseas. In every way, the Mobile District is one of the largest of the Corps' districts. The regulatory boundary within the Mobile District encompasses the State of Alabama south of the Tennessee River watershed, as well as the eastern one-third of the State of Mississippi, including 98% of its coastal area. Any casino industry that comes into the coastal area of Mississippi has to apply to the Corps of Engineers for a permit. The casinos that are operating or locating on the Mississippi River in navigable waters will be working with either the Memphis or the Vicksburg Districts. Section 10 of the River and Harbor Control Act of 1899 is one of the basic laws that the Corps administers. Any work in, over, or under a navigable water dictates a Corps permit. Some types of work that normally occur in the navigable waters and require a permit are dredging, bulkheading, and building piers. The Corps becomes involved in areas outside of navigable waters because of Section 404 of the Clean Water Act. The Corps is responsible for the permitting through Section 404 of that same act, which states that any dredging or filling of waters in the United States requires a Department of the Army permit issued by the Corps. The term "waters in the United States" is a more encompassing term than "navigable waters." Navigable waters are those associated with interstate commerce. The Mississippi Sound and the Mississippi River are considered navigable waters. The waters of the United States include not only those navigable waters but also the tributaries, sloughs, and even wetlands that may be found behind one's home. These wetlands fall within the jurisdiction of Section 404 of the Clean Water Act. Therefore, casino builders who locate in coastal Mississippi need not only a Section 10 permit for locating a casino that floats on navigable waters but also a Section 404 permit for some of the amenities (parking lots, hotels, golf courses, etc.) that may impact other "waters of the United States," including wetlands. Presently, wetlands are probably one of the most controversial aspects of the whole Corps permitting program. A particular soil, the hydrology keeping the soil wet, and vegetation growing in the wet soil are the criteria for wetlands. These kinds of areas are considered jurisdictional wetlands of which a Corps permit would be required either to fill or excavate. The first of the three criteria is vegetation. If the vegetation includes plants that would typically grow in a wet soil and these are the predominant vegetation, the criterion is met for that category. Cypress trees and lizard tail vegetation typically grow in wetlands. Another typical wetlands site contains pitcher plant bogs, mulberry bushes, and pines. Another factor in determining wetland jurisdiction is whether the soil is a hydric one; that is, are the spaces between the soil particles typically filled with water as opposed to air. If the soil develops anaerobic conditions, then the second criterion to consider the area a jurisdictional wetland is fulfilled. The Natural Resource Conservation Service, formerly called the Soil Conservation Service, publishes soil maps that delineate the various types of soil found within an area. The soils are delineated in those maps as hydric or not. Therefore, looking at soil maps published by the Natural Conservation Service often determines whether a site is likely or not likely to be wetland. The third and most difficult factor to determine is the hydrology. Hydrology keeps the soil wet and the wetland plants thriving. There are some definitions or some criteria used to determine whether the hydrology is met. However, hydrology determination is somewhat of an inexact science because it is viewed as a spot-in-time as opposed to an overall year-round look at any particular site. If the three criteria are met, the Corps designates the area to be a jurisdictional wetland, and any development must be accompanied by a Corps permit. There are 36 various "Nationwide Permits." The permits relate to any work performed within a wetland area that individually or cumulatively has a very insignificant impact. Those Nationwide Permits are issued by the Chief Engineer's Office, in Washington, DC and typically are valid throughout the United States. Many of them are aids to navigation and fish and wildlife activities. It is not always necessary to apply to the Corps for permission to use these permits. For example, the placement of a crab trap or crab pot in navigable waters is a structure within navigable waters being used for a purpose. Therefore, one of the Nationwide Permits covers that kind of activity to prevent the Corps from being inundated by permits for crab traps. When a road project involves a road crossing (and less than 200 linear feet of road would cut across a wetland) a Nationwide Permit would apply. Thirteen of these 36 permits--actually 14 of 37 now--require advance notification. The Corps must be informed of the intent to use these 14 particular Nationwide Permits. The Corps is allotted 30 calendar days to inform the applicant whether the project meets the criteria of the Nationwide Permit program. Those Nationwide Permits can be used for both Section 10 and Section 404. Another type of permit is the "Regional Permit." These are for projects that have more impact than projects covered by Nationwide Permits. For example, there is a Regional Permit covering up to 2,500 cubic yards of dredging, as long as the dredged material is placed at an upland site. In that case, a "General Permit" or "Regional Permit" can be used. In Mississippi a working agreement with the Mississippi Department of Marine Resources allows the issuance of these permits in the name of the Corps. A one-stop permitting process occurs by the applicant going to the Mississippi Department of Marine Resources. These permits are for minor impact projects, either in navigable waters or in wetlands. The timeframe for issuing these permits is 10 to 14 days. Another type of permit is called the "Letter of Permission Permit" used when a navigable water only is involved. An example is a commercial pier or something similar that would impact only other navigational users. Issuing those types of permits is coordinated with the various state and federal agencies, as well as with the users of the navigable water in the area. Issuing a Letter of Permission takes from 2 weeks to a month. The larger permit and the most controversial one is the "Individual Permit." The Mobile District has a policy stating that any new casino siting will initially be evaluated as an Individual Permit. These large projects can cause big impacts. Individual Permits must be published with a 30-day public notice explaining the proposal. Federal and state agencies, as well as the general public interested in any of the resources, comment on the particular public notice recommending either denial, modifications, or expressing concerns. Public hearings are possible depending upon which issues arise during the public comment period. If the District Engineer feels that a public hearing is needed to better answer concerns, a hearing is planned. An environmental assessment (EA) is developed to determine exactly what the environmental impacts of that particular project will be. If there are significant environmental impacts, an environmental impact statement (EIS) would be made before a permit decision occurred. Finalizing an EIS is a lengthy procedure. The formality of holding meetings and public hearings takes time. Finally, when a decision is made by the District Engineer, the EPA (which has the federal oversight for the Clean Water Act) has the authority to veto the Corps' decision. A veto seldom occurs. In fact, in the last 18 years since the Clean Water Act and the Corps became involved in that Act, only one instance in the Mobile District involved the EPA's vetoing a permit decision by the Mobile District Engineer. Another law administered by the Corps is Section 103 of the Marine Protection Research and Sanctuaries Act of 1972, which is often termed the "Ocean Dumping Act." If a dredging project does not have a place for disposing material except in federal waters, a Corps permit is needed for the transportation of the material from state or state waters into the federal ocean waters. Some changes in Corps permitting have occurred recently. The number of Nationwide Permits has increased in the last 2 years. Existing Nationwide Permits expire next January. The Chief of Engineers office in Washington will publish new Nationwide Permits before the existing ones expire. Furthermore, additional new Nationwide Permits will be published at the same time. Excavation of "waters of the United States" requires a permit today. Until 3 years ago, a wetland could be excavated digging 50 feet deep, and a Corps permit would not be needed if the material were not allowed to fall back into the existing wetlands. As a result of a Department of the Army settlement of a lawsuit, regulation of excavation was begun. Thus, a Section 404 permit is required not only to fill wetlands, but also to excavate wetlands. Regulation of pilings has changed in the last 2 or 3 years. In the past, pilings outside navigable waters were not regulated by the Corps. Now, however, pilings can be regulated. Because people went to extreme lengths trying to avoid needing a Corps permit, parking lots were being built on pilings. The Corps now regulates structures built on pilings that would normally have been placed on fill material. The Clinton Administration has been responsible for a number of regulatory initiatives. While Mr. Bush was president, a "no net loss" goal for wetlands existed. While President Clinton has a no net loss goal, he has added an additional goal: "higher quality wetlands." There is an Administration goal to expect a permit decision within 90 days unless certain conditions arise. Exceptions might be endangered species issues, resource problems, or the need for an EIS. Otherwise, the President's goal is a 90-day permit decision. Today, the number of days spent on a typical permit is probably about 118 to 120 overall. That figure should be reduced to 90 days. Currently the only appeal from a Corps District Engineer's decision is through a federal court. President Clinton will be establishing an appeal procedure for two things: a permit denial from the party who was denied the permit, and wetland jurisdiction determinations. Today when engineers perform a wetlands identification on someone's property and state that it is jurisdictional wetland, a permit is needed to impact those wetlands. Right now, the only way to avoid that decision is to appeal to federal court. However, under the new appeal procedure it will be appealed to the Corps District. Flexibility in permit decisions is helpful to the Corps. Not all wetlands are created equal. A low-quality wetland does not require spending much time determining whether there are alternatives to impacting those low-quality wetlands. Wetland criteria in the past have been the basis for controversy, especially in the early 1990's. Different federal agencies had various definitions of a wetland. The Corps is the federal agency that delineates wetlands. At times, the EPA and Fish and Wildlife Departments did not agree with the Corps because they had their own criteria for determining a wetland. Therefore, in 1993 the Clinton Administration declared that all federal agencies will use the same (Corps) wetland criteria. As a result, some of the controversy has dissipated. Finally, the Clinton Administration has proposed and encouraged the use of mitigation banking. After trying to avoid and minimize impacts to wetlands, the next step is compensating for those wetland impacts to meet the goal of no net loss. That compensation is called "mitigation banking," and it is something that the Mississippi coastal counties are looking forward to, to prevent tiny mitigation sites that will probably have little chance of succeeding. However, a large area of wetland creation or wetland improvement used for mitigation would assist the permitting agencies and the recipient of the permit. The goals of the Corps' regulatory program are to protect the waters in the United States and to provide for clearly definable development making fair, reasonable, and timely permit decisions. EPA's Role in Wetlands Permitting Mike Wylie U.S. Environmental Protection Agency, Region IV Rapid development in coastal Mississippi has caused impacts on the state's infrastructure, its citizens, and on the state's environment. The effects are both good and bad. The Mississippi Legislature legalized dockside gaming on the Mississippi River and along the Mississippi Gulf Coast. Because both the EPA and the Corps have regulatory authority over waters of the United States, friction between the groups sometimes occurs. The 404 Permit Program is a conflict resolution process considering environmental issues, weighed alongside the public's interests. The Clean Water Act passed in 1972. The Act was a result of a continued degradation of our nation's waters. The degradation was a result of insults to the environment. One of the biggest examples of that degradation was the Cayahoga River, an Ohio river emptying into Lake Erie at Cleveland, which in the 1970's was depicted in newspapers in flames. Objectives of the Clean Water Act are the restoration and maintenance of the chemical, physical, and biological integrity of the waters. That mission statement has caused great joy and much consternation since its inception in 1972. EPA was created before passage of the Act in 1970. The waters of the United States are defined as the navigable waters, interstate waters, intrastate waters, tributaries, territorial seas, and wetlands. There is an overlapping jurisdiction between state statute and gaming statute in the Federal Clean Water Act authority. In the early 1990's, the rationale was that the dockside casino was to be sited in certain areas that overlap Corps jurisdiction, but there would also be secondary development coupled with the footprint of that casino. That thinking caused great consternation throughout the federal family because evaluating the footprint of the casino is one thing, but secondary and cumulative impacts of upland development to ensure that casinos remain cause additional concern. Casinos should be evaluated on a broader scale. One of EPA's roles in Section 404 is reviewing permits that the Corps has accepted. EPA, Fish and Wildlife Service, NMFS, and several other agencies review and make specific recommendations to the Corps of Engineers. Section 404 guidelines were written by EPA in 1975 and updated in 1981, creating specific guidelines that must be followed to be in conjunction with the Corps' compliance for a permit. These are some of the guidelines to which every casino, operator, or anyone applying for a Section 404 permit must adhere. However, under President Clinton's plan, additional flexibility is provided by issuing Nationwide Permits. The first step in the permitting process is the evaluation of possible alternatives. In the beginning, friction exists between the casino industry and federal regulators because regulators investigate areas that can be quite sensitive in nature. The stage is set for a dispute when the job of regulators is to grant a permit, deny a permit, or recommend another site for the casino. After alternative sites are evaluated, regulators evaluate the effects of the discharge to other environmental standards. Bucking water standards and using a toxic discharge in fill material are in violation of the Clean Water Act. In addition, an assessment is made in relation to significant degradation to the waters of the United States. If a project might cause significant degradation to waters, the permit is going to be denied. Regulators look at assessment of appropriate steps to minimize impacts of the discharge. Because of continuing development on the Coast, efforts to minimize and mitigate impacts have special significance. If EPA, NMFS, or Fish and Wildlife Service believe that a project does not comply with the guidelines and the Corps does not agree with that decision, another interesting conflict resolution process called the Section 404(a) elevation process is utilized. In 1993 a new memorandum of agreement between the agencies (Fish and Wildlife, the Corps, and EPA) was formulated. In the Section 404(a) elevation process, a dispute over a particular project results, documenting and evaluating problems with the environment. If a permit has unacceptable adverse impacts, EPA's 404 procedure is set into motion. If a discharge, an excavation, or any kind of secondary cumulative impact associated with the project has impacts on the inshore water supplies, shellfish beds, fishery areas (including spawning and breeding areas), wildlife areas, or recreational areas, EPA will be compelled to go to our 404(a) authority. This authority may be used before and after the fact. This very time-consuming project usually has a short timeframe. Political pressures intervene. However, Congress has left this seldom-used procedure in place. EPA and the Corps jointly administer the enforcement program of Section 404. On the Mississippi Gulf Coast, EPA has conducted two enforcement actions against casinos. One involved environmental remediation processes. The other one resulted in a penalty. EPA enforcement in Tunica County involved three enforcement matters (three penalties including environmental restoration). A significant penalty was issued by the Vicksburg Corps of Engineers against a casino. The casino industry on the Coast has tried to comply with Section 404. Direct impacts to wetlands have been minimal. However, secondary and cumulative impacts have been significant. The Mississippi Public Trust Tidelands Lease Program Margaret Bretz Public Lands Specialist Office of the Mississippi Secretary of State In the State of Mississippi, the Secretary of State is also the land commissioner; therefore, public lands, except agency lands, are under his administration. One of the two great land trusts that the state owns is the public trust tidelands and submerged lands. (The other is the Sixteenth Section School Land Trust.) Since these tidelands and submerged lands are publicly owned, compensation must be paid when some private exclusive use is made of these lands. The Secretary of State established an office here on the Coast in 1988 and thereafter adopted rules for the administration, control, and leasing of public trust tidelands. This tidelands lease program was in effect in March of 1992, when casino gambling was approved in Harrison County. Between August 1992 and August 1994, 10 leases were executed for casinos. Regulations specify that the leases be granted only to the adjacent upland owner or his assignee, so the applicant for the lease must own or control the adjacent uplands. The policy has been to preclude any new commercial leases off publicly funded sand beaches in the coastal counties. The policy has had the effect of confining additional development to the previously disturbed or impacted areas, ports, and harbors along the Coast and the area of downtown Biloxi, including the Broadwater, the old Sea & Sirloin Steak House, and Point Cadet. The applicant must submit an application, an application fee, and a survey, which shows everything that is to be placed on the waters and waterbottoms to be leased and on the adjacent uplands. Every lease requires the lessee to abide by all applicable state, federal, and local regulations or statutes; any zoning ordinances; and any governmental regulations that may apply to the activity. The lease process is usually triggered by the receipt of the public notice of the proposed project from the Department of Marine Resources. The office responds by advising that a lease will be required for the use. The Department is notified when a lease application is received and proceeds with its permitting process. In addition, the office coordinates with the Department to ensure that a lease is not authorized for an activity that is not permitted by the regulatory authorities. The lease is not issued until after all applicable permits have been obtained by the applicant. Next, a site-specific appraisal for each of these leases is obtained. The appraiser uses a three-part approach. First, he arrives at a value based upon direct comparison of the property, return on value of the property, and percentage gross casino revenues of the property. The appraiser then reconciles these three figures to arrive at fair market rental value. Finally, this figure (which was determined by independent appraisal) is nonnegotiable. The figure is presented to the lessee, and in each instance, the figure has been accepted and the lease executed. Other terms of the lease are negotiable to a certain extent. If there are provisions that the lessee would like to include, they are included if possible. Some provisions are statutorily mandated. Although the law allows a term of up to 40 years, terms of the leases have been limited to 10 years, with one instance of 15 years. A statutorily mandated rent review and an adjustment every 5 years is included as a provision of each lease. Public access to the leased areas is required if the lessee is able to provide it. In addition, the lessor recognizes that the lessee can take reasonable measures to protect the security of his property. The lease may be terminated upon the suspension or cancellation of the casino license. The state secures an indemnity and hold harmless provision in each of the leases. Moreover, liability insurance is required of the lessee. Although the lease program was in place prior to the passage of casino gambling on the Coast, the revenues, as one might expect, have increased dramatically with the 10 casino leases. The revenues from the tidelands are spent as directed by statute. The revenues are used first for the administration of the Public Trust Tidelands Act and, secondly, to replace any lost tax revenues. To date, none have been lost. Finally, the balance of the lease revenues is disbursed to the Department of Marine Resources. Mississippi law provides that the DMR use these monies for new and extra programs of tidelands management including preservation, conservation, public access, and public education. Recently the Legislature has made the fund expenditures part of the DMR appropriation process. Recommendations for Changes in Permitting Casinos in Mississippi Coastal Wetlands Richard McLaughlin Associate Professor of Law and Director Mississippi-Alabama Sea Grant Legal Program University of Mississippi Law Center In 1994 NOAA's office of Ocean and Coastal Resource Management issued a report that was part of its ongoing evaluation of state coastal management programs. That 1994 report was somewhat critical of the way the State of Mississippi permitted casino development within the coastal zone. In particular, the NOAA evaluation expressed concern regarding how the state was allowing casinos in certain areas that were designated in the formal coastal program for other uses, such as commercial fishing ports, recreational marinas, and water-dependent industries. In addition, the report expressed some concern regarding the procedures that were used to allow adjustments in the Coastal Use Plan. The procedures were deemed inadequate, and the report suggested that the state re-evaluate its current regulatory program to see if any changes were warranted. Upon that recommendation, the Department of Marine Resources contacted the Mississippi-Alabama Sea Grant Legal Program at the University of Mississippi Law Center. The Department of Marine Resources asked whether or not the legal program would be interested in taking on the project of evaluating the current regulatory structure and providing some recommendations. The Sea Grant Legal Program accepted the challenge and, in April 1996, submitted its findings. The recommendations of the legal program can be divided into two basic categories. The first category is composed of entirely discretionary recommendations. The reason that they are discretionary is that the state in these areas is in general compliance with existing federal and state law. Therefore, the recommendations may clarify or improve certain aspects of the management of the coastal zone, but changes are not absolutely required. Examples in this first category include a recommendation that the Commission on Marine Resources more diligently ensure that all applicants provide detailed descriptions of all associated and secondary developments that are likely to occur. The Commission should then make sure that these impacts are fully considered in all of the permitting decisions that are ultimately made. Another recommendation in the discretionary category encourages the state to re-examine the jurisdictional definitions within the coastal program. For example, some confusion exits regarding whether or not a recreational marina that is dredged from an upland area does or does not fall within the jurisdiction of the Coastal Program. The language is cloudy and needs to be clarified and tightened. Yet another discretionary recommendation encourages the Commission to better define water-dependent activities and water-dependent industry. This issue is discretionary because broad leeway has generally been granted to states like Mississippi to make the determination of what is defined as a water-dependent activity or industry. There is probably no legal problem with the way the state currently defines water-dependency. Most people acknowledge that casinos have to be viewed as water-dependent activities because the Mississippi legislation has required gaming to exist only on floating structures. However, water-dependent status does not mean that casinos should be placed without limits all along the Coast. For example, casinos should not be located on sites suitable for water-dependent industry. Sites suitable for water-dependent industry are those sites that are located adjacent to navigable channels, which are suitable for commercial water-borne commerce. Casinos do not need a position adjacent to a navigable channel that would support water-borne commerce. In fact, those locations are very limited in number. They are unique. Allowing casinos on those sites prevents other industries that are truly water-dependent from locating there. Consequently, the Commission on Marine Resources should re-evaluate the definitions of activities that can be allowed on sites suitable for water-dependent industry and close any loopholes that may allow casinos to be placed on industrial sites. Similarly, the Commission should tighten the definition on water-dependent activities to ensure that nongaming activities such as theaters, child care facilities, and hotels are not placed on floating structures over the state's submerged water bottoms. Generally, those services are already prohibited from being located on floating structures. However, there have been a growing number of requests to situate those kinds of activities on vessels. The policy therefore needs to be tightened and clarified. The second general category of recommendations comprises those that are not discretionary. They are not discretionary because they will bring the state into compliance with existing state or federal law. An example of a nondiscretionary recommendation would be for the state to redefine the "commercial" designation within its Use Plan in the Coastal Program. The Use Plan is similar to a zoning map. The entire coastal zone is mapped and certain zones are delineated where particular activities can take place and other activities cannot occur. Most casinos are located in these commercially designated zones. The Coastal Program allows in those commercial zones, according to express language, seafood processing, commercial fishing ports, recreational marinas, and associated development. Nowhere in the Coastal Program are casinos or casino-related development mentioned. Clearly, there is a difference in the impact between a commercial fishing port or a seafood processing plant and a casino and all the related casino development that is adjacent. Casinos were placed in the commercially designated zones because they were the most suitable locations at the time. Many of the casinos have been placed on what were once seafood processing plants or commercial fishing facilities. These sites may, in fact, be uniquely suitable for casinos. However, the state cannot ignore the express language within the Coastal Program. If the state wants to have casinos within this commercial designation, it should amend the Coastal Program to allow casino development within that designation. If the state does not choose to do that, there is a possibility that a legal challenge may arise at some point in the future, with someone challenging a permit saying that the state is allowing an activity that is expressly prohibited within the Coastal Program. Another nondiscretionary recommendation is that the Commission on Marine Resources provide full written findings of fact and law whenever it renders a permit decision. This requirement of full written findings is clearly required under the State Coastal Wetlands Protection Act, as well as in Administrative Procedures within the state. The requirement, in fact, was the reason a recent decision by the Commission on Wildlife, Fisheries and Parks was overturned by Chancery Court in Harrison County. The Commission failed to make formal written findings when it made a permit decision. The last few nondiscretionary recommendations will probably be viewed by some observers as controversial. The first is a recommendation that the Commission on Marine Resources clarify its requirements for adjustments in the Coastal Use Plan. On several occasions, casinos have requested adjustments in the Use Plan to allow a casino to locate within a zone that had been previously designated as a zone that prohibited casino-like activity. There is no express requirement within the Coastal Program that a test be used requiring an applicant either to show a mistake in the original zoning plan or a change in circumstances of the neighborhood or the neighboring area before they grant an adjustment. However, this so-called "mistake or change in circumstance rule" is one of the most well-entrenched common law rules in the State of Mississippi. The rule has been applied on dozens of occasions by the State Supreme Court in the zoning context, and although the Supreme Court has not yet ruled on this issue in the context of adjustments to the Coastal Program, a Chancery Court in Harrison County has done so. Recently in regard to a casino site on the Biloxi Back Bay, the court approved the "mistake or change in circumstance" test. As a result, the Commission on Wildlife, Fisheries and Parks applied the test and found that because there was a mistake in the original zoning, an adjustment to the Coastal Program could be made. The report recommends that the Commission on Marine Resources adopt the test as well because it is widely perceived that the State Supreme Court will require the test if it is confronted with this issue in the future. Finally, the last nondiscretionary recommendations involve a state statute known as the "One-Stop Permitting Act." This act requires that all agencies with related or interrelated jurisdiction or authority cooperate to the greatest extent possible in processing and issuing permits. The purpose of the One-Stop Permitting Act is to avoid the situation that was quite common several years ago in which an applicant had to go to several agencies to get a permit. This was viewed as inefficient, inconvenient for the permit applicant, and a waste of money because many duplicate expenses by various agencies occurred. Currently, there is little cooperation or coordination between the State Gaming Commission and the Commission on Marine Resources. In particular, there is not the kind of coordination that is required under the One-Stop Permitting Act. On the contrary, in some instances, the Gaming Commission will grant a preliminary permit based on its own very specific criteria, even in those circumstances where it is very unlikely that the particular preliminary permittee will be able to receive a permit from the Commission on Marine Resources, the U.S. Army Corps of Engineers, or the Secretary of State's office. Rather than streamlining and coordinating the permitting process, the current approach pits one state agency against another. If the Gaming Commission makes a preliminary decision, it puts undue economic and political pressure on the second state agency. Certainly, this is not the intent of the One-Stop Permitting Act. In fact, the two agencies should be working together, information should be shared, public hearings should be consolidated rather than held separately, and a single application process should be developed. If these steps are not taken, there is a chance that potential litigation will occur to force agencies to comply with state law. Mississippi should evaluate ways to implement these recommendations. Section II. Cumulative and Secondary Impacts of Dockside Gaming Development Economic Impacts Direct Effects of the Dockside Casino Industry on the Coastal Economy Bruce Nourse Past President-Mississippi Casino Operators Association Officer/Director-Mississippi Gaming Association Direct effects of the dockside casino industry on the coastal economy have been positive. There are some negative aspects: the effect on infrastructure and the crime rate. However, the problems are caused by an increase in tourism, more residents, and more construction. The increase in crime is in large part attributed to gang and youth criminal activities, as well as the fact that we have 50,000 more tourists on the Gulf Coast than before gaming. Therefore, a comparison of crime statistics now with pre-gaming crime statistics will reveal an increase without question. The positive aspects, though, seem to outweigh the negative factors. In 1973 the economy of Biloxi was depressed. Someone with a college degree did not have many options. Many college graduates moved to other areas where an industry and a lifestyle were more attractive. Then, when dockside gaming came to the Coast, it gave people who left this area because of the depressed economy, the opportunity to return. Some basic information about gambling will be helpful in understanding the industry. Gamblers, in fact, are really just a slice of America. They are above the national average in education, income and employment; gamblers have a median income of $41,000 a year with 19% of them holding college degrees. Forty-four percent have white collar jobs, and more than half of them are women. What is America's attitude about gaming? Studies have shown that in 1995, 91% of those surveyed said that gaming was an acceptable form of entertainment. Only 9% said that gaming was not acceptable for anybody. Of the 91% who believed gaming to be acceptable, 61% responded that gaming is acceptable for them. Thirty percent said that it is acceptable for other people but not necessarily for them. Therefore, the conclusion is that many people in the United States do not necessarily feel that gaming is for the morally corrupt. "Casino penetration" is the number of households that make casino visits each year. It has grown steadily since 1990, when other states began legalizing gaming. Seventeen percent of all households had gambled in 1990. That number grew to 27% in 1993. By 1995, 31% of all households in the United States had gambled at some point. How popular is gaming in the United States? In 1995 the number of U.S. casino visits was 154 million. That is a 23% increase over 1994 and three times the visits in 1991. Of the 154 million people visiting casinos in 1995, 58% of them went to places other than Las Vegas and Atlantic City. They went to casinos that were convenient for them. The average gambler likes the convenience of a local casino. He does not want to travel halfway across the country. In 1995, gaming visits even surpassed visits to amusement parks. Furthermore, the total number of all spectators present at sports events in 1995 (including baseball, NFL, NBA, NCA, NHL, and golf tours) was only 25 million more than the number of those visiting casinos. Gaming is growing in popularity as an entertainment option in the United States today. The gaming industry employs nationally, directly and indirectly, more than a million people. Casino employees alone received more than $7 billion in salaries and bought homes, cars, paid taxes, and got off welfare and Aid to Families with Dependent Children. Nationally, looking at various spots where gaming has been legalized over the last few years reveals some very positive figures. Of course, the negative factors exist also. In Joliet, Illinois, crime has increased, and infrastructure problems exist. On the other hand, property values have increased 23%. In Illinois, tax revenues from the 10 riverboats reached $236 million in 1995, surpassing the legislature's projection of $20 million. In Missouri in 1995, gaming provided $55.9 million in tax revenues specifically for the education system. In Louisiana the 11 riverboats in 1995 paid taxes of $204 million. Of the $40 billion earned by the casinos nationally, $1.5 billion were paid in tax revenues to the states and local governments where casinos exist. Those are positive aspects that cannot be denied. The casino industry increases capital investment, (e.g. $525 million by Golden Nugget in Biloxi). Casinos increase numbers of jobs. In Mississippi 29,000 new jobs have been created by this industry. Of course, the tax revenues to the state and local government are increased. Mississippi has been positively affected by gaming. Mississippi's present governor was elected when this industry was in its infantile stage and he was in the Governor's Mansion throughout the growth of gaming in Mississippi. The Governor stated that he had inherited casino gaming. Mississippi's economy was stagnant before gaming. This industry played a great part in stimulating the economy. The industry rose to the challenge with no hint of corruption or scandal. That is, in large part, due to the Mississippi Gaming Commission, Gary McGee, and his staff. Mississippi's governor stated that the Mississippi gaming industry has created 29,000 direct jobs and 20,000 indirect jobs. The casino companies are building and investing in Mississippi. More than 70% of the casinos' customers come from out of state, so money is not simply recycled within our state. Mississippi is second in the nation in casino square footage and third in gross gaming revenues. The Governor stated that the free market is a wonderful apparatus. He continued, saying that the strong will survive for the greater good of the industry. Lastly, he said, "Let the casinos thrive and watch the success." This response was from a governor who enjoyed the benefits of what he calls the "Mississippi miracle," the incredible turnaround of the state's economy in the last four years. The Governor gives credit for one-third of the Mississippi miracle to the gaming industry. The Harrison County Development Commission (a county of a fixed population of about 183,000 and Metropolitan Statistical Area of about 350,000) projects a 5.3% job growth, which includes about 11,000 new jobs in this county since 1991. The Commission projects $700 million in new construction costs in 1996 and 1997. That construction figure is not restricted to the casino industry. Casino Magic is investing about $30 million in its property over the next year building a hotel and a whole new entryway. Eventually, the casino will construct a very high-end shopping mall with a high-end hotel on top of that. The Golden Nugget and Imperial Palace are under construction, and at the same time many businesses and new businesses are being built. The Development Commission projects hotel occupancy trends at 70%-plus. That is figured at $60 per night totaling $83 million in sales in 1995 and an 8.7% increase over 1994. In 1995, apartment occupancy ranged from 90 to 95%, with an average monthly rental of $416. Office occupancy levels are at 90% or higher. Restaurant sales totaled $165 million in 1995, a 4.3% increase over 1994. Average sales price of residential real estate in Harrison County has risen from $68,500 in 1992 to $84,000 in 1995. That is a 23% increase in sales price of residential real estate since the advent of gaming. The University of Southern Mississippi Division of Business Administration's Mississippi Gulf Coast Economic Report indicates that the periods of rapid growth in 1993 and 1994 on the Mississippi Gulf Coast reveal that the economic variables examined appear to point toward a stabilization of economic activity in 1995, in contrast to the rapid growth periods of 1993 and 1994. The economic thread that seems to be running through the past growth appears to be in large part a result of the gaming industry. Although not shown in this report, annual average employment from 1992 to 1994 in the service sector or gaming sector increased by an unprecedented number from 15,600 to 29,300, a growth of more than 87%. The largest portion of this new employment was located in the gaming industry. An increase in jobs tied directly and indirectly to this industry has made a major impact on the coast economy. The gaming industry in Mississippi has been beneficial to Mississippi. It seems that this industry is here to stay, and the properties in the year 2000 are going to be larger. While there will be fewer casinos, they will be a department store of entertainment. They will offer something for everyone within every budget. In the year 2000, Mississippi will continue to see an increase in all economic indicators. At some point in time, Mississippi will be up there with some of the best economic states in the country. The Impact of Casino Gambling in New Orleans Janet Speyrer Director, Division of Business and Economic Research University of New Orleans The Louisiana Legislature allowed a land-based casino in New Orleans in 1992; the casino actually opened at a temporary 76,000-square-foot site on May 1st of 1995. Because of poorer than expected performance and other factors at the time, the casino downsized to 62,000 square feet and laid off about 500 workers. Continued poor performance and an increase in costs at the permanent site (the Rivergate, at the foot of Canal Street) caused Harrah's Casino to declare bankruptcy on November 22, 1995. The casino generated $88.7 million of revenue for the period that it operated. Actually, Harrah's (because it was getting $59 per admission) was still earning about $2,300 per square foot per year in revenue. So, one question is "why did it not perform up to expectations?" What kinds of things might have caused the project to be sustainable in the long run? One problem was that the taxes were much higher at that location than in any other place in the country. The tax on the win was 25% of gross revenues at the temporary site. For the permanent site, which would encompass more than 200,000 square feet at the foot of Canal Street, the tax was going to be a minimum of $100 million and about the same rate beyond. Therefore, the tax rate at the permanent site has been estimated to be between 40 and 47% at a performance level consistent with the kind of performance that was occurring at the temporary site (but increased because of the increased gaming space). Another problem was that, in the legislation, Harrah's was not allowed to offer any free food. Hotel rooms were also disallowed. In the casino business, complementaries are important, but they were excluded because the existing tourism industry in New Orleans was strong and Louisianans did not want to upset that balance. As a result, the legislation was very restrictive for this casino.These reasons for failure are only part of the story, however. First of all, the temporary casino site was on Basin Street. Basin Street is not on the main path of tourists. It is actually very close to a subsidized housing development in an area that has not been one of the best kept, historically, and not one of the newest and most tourist-oriented areas of the city. The permanent location at the foot of Canal Street was a more desirable location. In fact, many people wondered why Harrah's even bothered to open at the temporary site. The temporary site was not Harrah's choice. They were forced to open a temporary site at the old Municipal Auditorium on Basin Street in order to get the operational license for the permanent site. One other problem was that the New Orleans convention visitors who were coming were not planning ahead to gamble. When asked if they were planning to gamble, if they brought money to gamble and, ultimately, if they did gamble, tourists answered, for the most part, "no." Some tourists might visit the casino to play, but it was not something they planned ahead to do. Visitors who do not plan ahead to gamble cannot, in general, extend a stay that would lead to positive economic impact. In addition, these tourists were not, generally, big players. It is also true that having clusters of activities like those in the Biloxi-Gulfport area allows people to move from one casino to another, enjoying a variety of gaming entertainment. In New Orleans people do not come to hear one jazz singer or one jazz group but to hear a variety of jazz music on the whole. People do not go to Branson, Missouri because of one country singer, but rather because of groups of them. People want to have a variety. Moving from the land-based casino in New Orleans to one of the riverboats was not convenient because of the distance. One other problem was that most of the people who went to Harrah's casino were residents and existing visitors, not new visitors, and there were not as many visitors as residents. About 65 to 75% of the people who visited Harrah's temporary site were residents. And the fact is that the residents, especially the higher income suburban residents, tend to frequent the riverboats in their neighborhoods or go to Mississippi instead of going downtown to a casino. Another problem resulted from the long regulatory delays. People just underestimated Mississippi's growth. New Orleans was playing catch-up at the time because Mississippi was already offering hotels and other kinds of entertainment. New Orleans just "missed the boat," literally, on entertainment and hotels. At the same time, many felt that the investment that was going into the downtown area was not justified based on the numbers. Instead of the casino's getting 65 to 70% of visitors (as planned) and the remainder residents, the casino had been experiencing the reverse. When analysts looked further into casino performance, several other findings were noted. The revenue was off; the numbers were only less than half of the projected figures. Also, the number of visitors was off; only a third of the original projected number visited the casino. The implication is that the market may not have been sufficient to support the huge capital investment that was being called for at the gigantic Rivergate site. Alternatively, Harrah's may have just overestimated the activity at this temporary site. River City Casinos (two boats) were operating downriver from the downtown area. The original investment called for $40 million per boat. However, the operation ended up spending $280 million on two boats and went broke in less than 9 weeks. Again, the investment could not be supported by the local gaming market. In the riverboat industry, originally 15 riverboat licenses were allowed in Louisiana as a whole, with nine in the New Orleans area. This industry was governed by some interesting rules. First, all boats (except the ones on the Red River) had to sail. The boats had to be new and contain a maximum of 30,000 square feet of gaming space. The tax rates were high, with 18.5% of gross revenue going to Louisiana and $2.50 or $3.00 per passenger (or 6% of net gaming proceeds in the West Bank of Jefferson Parish) going to the local governments. The tax rate can be between 25 and 35% on a given boat, depending on its revenue per passenger. Legislation allowed for those boats to begin operating in 1991. The first boat, the Star, started operating in October of 1993. This was followed quickly by Player's International in Lake Charles. It is interesting to note that the New Orleans area was originally scheduled to have nine boats. Five boats were scheduled to be in New Orleans, and four boats would operate in the surrounding parishes. Looking at New Orleans now, one can see only four boats remaining in the area, with only two in the city: one downtown (Flamingo), and one at the lakeshore site (Bally's Belle of New Orleans). The Treasure Chest is in Kenner and the Boomtown Belle is on the west bank of Jefferson Parish. One other important fact is that the Flamingo, which started as the Queen of New Orleans with 20,000 square feet, expanded to 30,000 square feet, because of good initial performance. However, the Flamingo downsized to 20,000 square feet in January of this year. Figures for the Flamingo show that revenue per square foot actually increased in the first quarter of this year. The total revenue for Louisiana riverboats alone was $1.05 billion in 1995. In the coastal Mississippi area, revenues were $716 million. New Orleans' revenue exceeded that of the Coast, even with all of the Coast's highly-clustered activity. Mississippi's river casinos earned another $1 billion. Thus, the total revenue figure is $1.7 billion for Mississippi compared to $1.05 billion just for the riverboats in Louisiana. Some believe this shows that the Louisiana market is very strong, because this Louisiana revenue figure does not count the $89 million in revenues from Harrah's, or the revenues from the three operations on Indian reservations that are also doing very well and expanding at this time. To show that the trend does continue, in the first quarter of 1996, the riverboat casinos in Louisiana made $303 million, while all of Mississippi made $461 million in casino revenues. Some problems do occur in comparing revenue per square foot per year on boats that have to sail with boats that are dockside. In particular, a problem occurs when comparing boats that have to sail and that have a maximum square footage of 30,000 with boats that are unlimited in space. However, there is a sense in which the Louisiana riverboats and the New Orleans riverboats really were not doing as poorly as many had thought. These revenue-per-square-foot figures do not tell the whole story but certainly reveal some interesting facts. First of all, the most healthy boats were those operating in Shreveport and then those in Lake Charles. Shreveport faced slightly different regulations, but both Shreveport and Lake Charles were attracting significant numbers of Texas visitors. Estimates show that up to 85% of gaming visits come to these areas from Texas. This is an important factor; it means not only positive casino performance but also positive economic impact because money is coming from outside the state. The Lake Charles numbers are slightly lower (than in Shreveport) because the casinos there face substantial competition from the nearby Grand Coushatta Casino on an Indian reservation. The Grand Coushatta Casino is actually land-based and some people are going farther to the Coushatta Indian reservation to gamble instead of staying in Lake Charles. The future of gaming in New Orleans is uncertain. First the bankruptcy proceedings continue. There is a question of whether a casino can operate profitably at the Rivergate site at the foot of Canal Street given the high taxes and the big existing debt, the restriction on free food, and restrictions on hotels. At this point, the Legislature is not inclined to give the gambling industry anything. Gov. Foster has not only offered a statewide referendum on gambling but also said that he would support the anti-gambling movement. Therefore, it doesn't seem very likely that concessions will be given. The question is not just "Can the casino operate profitably at the Rivergate site?" but "Can a casino at the Rivergate site do for the State of Louisiana and for the local economy what it was predicted to do?" The second issue is the multipart referendum in the fall. One part deals with whether or not to allow Harrah's to open. Even if the vote is "no," Harrah's may be here for 30 years or more because that's the way the contract reads. If the contract is upheld in the Courts, Harrah's may be allowed to stay even if it is voted down. Many people suggest that the vote will not be negative, but that there is some question about the economic viability of the project. Another part of the referendum on the ballot will be whether to have riverboat gambling. This vote will take place in 43 parishes, including those with riverboats and the surrounding parishes. Many people thought the referendum on riverboat gambling was a "done deal," that there was definitely going to be riverboat gambling because of the boats' positive impact on the parishes where they operate. However, it is unclear what impact the vote by those in surrounding parishes will have. Even if the vote is "no," riverboat gambling can continue until the casino licenses are up (2 to 4 years). Another issue for the future is the fact that as of May 1, 1996, a single board governs all gambling activities (riverboat gambling, video poker, land-based casinos, the lottery). However, there are currently no approved commissioners. Consequently, many people who are operating in the industry wonder what they are supposed to do in the meantime. Getting people appointed to this kind of board takes quite some time. Dean Tim Ryan, of the College of Business of the University of New Orleans, and Janet Speyrer have been asked to head a panel of people from different universities to study the impact of casino gambling activity in New Orleans. This study is being commissioned by the City Planning Commission but paid for by the gambling interests of each riverboat and land-based casino. Six major universities with more than 30 researchers are involved. The studies are ongoing and will be finished soon. The studies include the effects on tourism, existing businesses, minorities, the revenue and expenditure of the local government; pathological gambling and its impact on social agencies and churches; crime and the criminal justice system; and real estate values and land use. Economic Impacts from the Municipal Perspective David Staehling Director of Economic Development & Cultural Affairs City of Biloxi, Mississippi To say that the gaming industry has been a natural catalyst for the City of Biloxi is a tremendous understatement. A more inherent economic catalyst could not have come to the city. The casino industry categorically touches every element of the city, including wholesale retail trade; food, beverage, entertainment, and lodging industries; and particularly housing (single-family, multi-family, and commercial). The amount of development for a city of fewer than 50,000 people is unprecedented anywhere in the United States of America. In the first 3 years of development, since the advent of dockside gaming in August 1992, $400 million in development has occurred. Today, $600 million in new development is underway. This trend is not expected to stop in the next 10 years. All of the market conditions are paramount to underwriting a casino development. Conditions show much upside potential. Biloxi prepared a waterfront plan, which focused on preservation enhancement. The plan evaluated the land-use element pertaining to that plan and incorporated an array of land uses that would support comprehensive redevelopment. At the time of formulating the plan, all the land on the outer perimeter of the peninsula was very distressed. Long-term economic decay existed with no real upside potential for redevelopment. Although this plan focused on preservation enhancement, it also focused on market analysis in land use as it pertained to the city and its future. This plan was adopted and ratified by the City Council, and it became ordinance. The other element that really helped the casino initiative was the fact that Biloxi has been a gaming destination since the 1850's. A successful casino industry existed until 1964, when the federal government shut it down. Consequently, the idea did not cause a social problem. The development process occurs with a change in land use from a lower-value use to a higher-value use. Of course, all of the geography delineated for gaming was on the waterfront district and was the most distressed property of the city. Consequently, a convergence from the lowest possible land use into the highest possible land use occurred. A high quality of development comes with this industry. The industry has presented tremendous opportunity for the city. However, the city held certain things sacred. The heritage, cultural values, and the character of the city have always been very important in the underwriting process in this development. The totals are a billion dollars of development in a 3½-year period, $400 million complete, and $600 million under development right now. This development was a tremendous task for the city. Another factor was the fact that the City of Biloxi had 30 to 40 years of deferred maintenance at the time this development occurred. The deferred maintenance included the areas of water, sewer, drainage, police, fire, education, and recreation. This was not the fault of any administration. The city simply had no money. At best, it could barely maintain its basic services. In 1992 the city could not buy tires for the police cars. Now police cars are being bought in volume. Needless to say, the revenue that came with this industry has been significant. A 3.2% diversion comes from the state to the city and county. Twenty percent of that fund goes into the school system; 20% of it goes into public safety, fire and police; and 60% of it goes into the general fund for the city. To make the proper investment of the public dollars, the city had to evaluate the transition that had really occurred in terms of the market forces imposed on the city and what could be expected in the future. The city commissioned a professional consultant firm with a tremendous background in land use planning that focused on the discipline of real estate development and had a detailed knowledge of the technical operation of a municipality, particularly as it pertained to water, sewer, drainage, and transportation. The purpose of the study was to help the city focus on spending tax dollars wisely. As a result, a needs analysis in the city was undertaken. The analysis considered the capacity required to take on the new development with the population increase, growth trends, and economic development. The elements of this comprehensive plan focused first on a base map system. A base map system is a parcel-by-parcel delineation of all the land in the city. It also focused on setting up this base map system in a high-tech electronic format, a GIS system, that would set up attribute tables and assign the appropriate attribute values as far as all the information and data that affect land use, water, sewer, drainage, land-use improvements, and anything the city needed in terms of doing the proper analysis and studies and making choices on the development process. Included in that system was all the hydric soil within the city to make sure that the wetland delineations and impact analysis were done properly. Land-use inventory was important, with the city evaluating undeveloped land and looking at market forces to determine what would be the best future land use for that particular land. The transportation factor is a major element. On a normal weekday, 10,000 to 15,000 people not from Biloxi come to town. On the weekend, 150,000 visitors are here. Traffic has increased dramatically. The city is dealing with many agencies to help people get from one destination to another as quickly as possible with the least inconvenience. The other element of focus was the goals and objectives element of the plan. The city commissioned the best polling corporation in the southeastern United States, MRI Corporation, and consulted a tremendous sampling of the population in terms of attitudes and behaviors related to perceptions of the problems in the city. In addition the poll asked how people thought the city should resolve those problems. First, the people wanted to be safe. They wanted total security and wanted to be able to get from one destination to the other safely. They also wanted very little increase in crime. Over the l