BILL ANALYSIS Ó
AB 517
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 517 (Hall)
As Amended April 26, 2012
2/3 vote. Urgency
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|ASSEMBLY: | |(May 2, 2011) |SENATE: |34-4 |(May 7, 2012) |
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(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : Ratifies the tribal-state gaming compact entered into
between the State of California and the Federated Indians of
Graton Rancheria (Tribe), executed on March 27, 2012.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Ratify a tribal-state gaming compact between the State of
California and Federated Indians of Graton Rancheria,
authorizing the Tribe to commence Class III gaming with up to
3,000 gaming devices, executed on March 27, 2012.
2)Provide that in deference to tribal sovereignty, certain actions
may not be deemed projects for purposes of the California
Environmental Quality Act (CEQA), as specified.
3)Provide that the compact will be valid until December 31, 2033.
4)Add an urgency clause.
EXISTING LAW :
1)Ratifies a number of tribal-state gaming compacts between the
State of California and specified Indian tribes.
2)Provides, under the Indian Gaming Regulatory Act (IGRA), for the
negotiation and conclusion of compacts between federally
recognized Indian tribes and the state for the purpose of
conducting Class III gaming activities on Indian lands within a
state as a means of promoting tribal economic development,
self-sufficiency, and strong tribal governments.
3)Authorizes the conduct of Class III gaming activities to the
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extent such activities are permitted by state law, a gaming
compact has been concluded by a federally recognized tribe and
the state, and the compact has been approved by the Secretary of
the United States Department of the Interior (DOI).
4)Requires the state to negotiate to conclude a compact in good
faith with an Indian tribe having jurisdiction over the Indian
lands upon which the Class III gaming activity is to be
conducted. Provides the United States district courts with
jurisdiction over any cause of action initiated by a tribal
government alleging that the state failed to negotiate in good
faith to conclude a compact. Prescribes the remedy, mediation
supervised by the courts, if it is found that the state failed
to negotiate in good faith to conclude a compact.
5)Authorizes the Governor, under the California Constitution, to
negotiate and conclude compacts, subject to ratification by the
Legislature.
AS PASSED BY THE ASSEMBLY , this bill added a new provision to the
Alcoholic Beverage Control Act that permits wholesalers and
manufacturers to accept the return of unsold and unopened beer
from an organization that obtained a temporary license.
FISCAL EFFECT : Unknown
COMMENTS : This bill was substantially amended in the Senate and
the Assembly-approved provisions of this bill were deleted.
Background on the Graton Tribe : According to the preamble to the
compact, the Tribe is a federally recognized Indian tribe
comprised of nearly 1,300 members of Coast Miwok and Southern Pomo
descent.
In 1966, the federal government terminated its relationship with
the Tribe pursuant to the California Rancheria Act of 1958 and
transferred title to the lands known as the Graton Rancheria into
private ownership.
In 2000, Congress restored federal recognition to the Tribe under
the Graton Rancheria Restoration Act which required the Secretary
of the DOI to take land identified by the Tribe and located in
Marin or Sonoma Counties into trust as the Tribe's reservation.
In 2003, the Tribe entered into an agreement with Station Casinos,
Inc. to acquire land on property located on Highway 37 in southern
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Sonoma County (County) for its reservation and announced plans to
develop a resort hotel and gaming facility on a portion of the
Highway 37 property once in trust and deemed eligible for gaming.
At the urging of community representatives and environmentalists,
the Tribe reconsidered its plans for the Highway 37 property and
thereafter donated its rights to a large portion of the Highway 37
property to the Sonoma Land Trust for perpetual preservation.
After consultation with the County and the City of Rohnert Park
(City) the Tribe acquired rights to purchase alternative property
located on Stony Point Road just outside the City's urban growth
boundary for its reservation and proposed project.
In August 2005, the Tribe abandoned its plans for the Stony Point
Road property and once again moved its proposed location in order
to address local land use and environmental concerns and
thereafter, purchased approximately 254-acres of land for its
reservation, a portion of which will be used for its proposed
project. The Tribe agreed to wait until the environmental review
of the proposed gaming facility was completed before exercising
its right under the Graton Rancheria Restoration Act to have the
254-acre parcel placed into trust.
The National Indian Gaming Commission (NIGC) conducted four public
hearings and provided over 160 days for public comment in
preparing an environmental impact statement with respect to
construction and operation of the Tribe's project on the 254-acre
parcel pursuant to the National Environmental Policy Act,
including an analysis of eight different project alternatives, and
a Notice of Availability of a Final Environmental Impact Statement
which was published in the Federal Register on February 19, 2009.
In October 2010, the federal NIGC issued its Record of Decision
for the Tribe's project, concluding that the 254-acre parcel is
eligible for gaming under IGRA and adopting a reduced intensity
casino and hotel project as the preferred action alternative that
is significantly smaller than the project initially proposed by
the Tribe.
In October 2010, the Bureau of Indian Affairs of the DOI accepted
the 254-acre parcel into trust on behalf of the Tribe.
On March 27, 2012, Governor Brown signed a gaming compact with the
Tribe to conduct Class III gaming.
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No General Fund Revenue in the Compact : The compact takes into
consideration a recent decision of the United States Ninth Circuit
Court of Appeals in Rincon Band of Luiseno Mission Indians of the
Rincon Reservation v. Schwarzenegger (9th Cir. 2010) 602 F. 3d
1019, which states in essence, that the state is precluded from
negotiating with tribal governments for payments into the general
fund. The Rincon decision has changed the dynamics of
tribal-state compact negotiations in the State of California.
This "post-Rincon" compact contains no revenue sharing requirement
between the state and the Tribe relating to payments into the
general fund.
Revenue and Related Compact Provisions : Limits the Tribe to the
operation of 3,000 slot machines at one Class III gaming facility,
to be located on the Tribe's reservation, and the compact will be
in full force and effect until December 31, 2033.
In light of the extraordinary pre-development debt (estimated to
be approximately $225 million) accrued by the Tribe, this compact
has been crafted in a manner which allows the Tribe to pay down
its debt during the first seven years. The authorized deductions,
which are detailed, in the compact, dissipate after year seven.
This compact requires payments into the Special Distribution Fund
(SDF), by the Tribe, of $1.4 million per year during the first
seven years of the compact and 3% of the net win from all gaming
devices thereafter, to reimburse the state for the costs of
regulating gaming activities and to provide programs for education
and treatment of problem gamblers.
The compact requires payments by the Tribe to the Revenue Sharing
Trust Fund (RSTF) to fund the tribal governmental programs of
non-gaming and limited-gaming tribes. The RSTF provides payments
of $1.1 million per year to non-gaming tribes, which are defined
as those tribes that do not operate more than 350 gaming devices.
If the Tribe operates the maximum number of gaming devices
authorized under the compact, the Tribe would pay the following
amounts to fund such programs: 1) $8.9 million (at 3,000 slots)
annually for years 1-7; and, 2) $12.1 million (at 3,000 slots)
annually for years 8-20.
The compact creates the "Tribal Nation Grant Fund" for
distribution of funds to non-gaming tribes, upon application of
such tribes for purposes related to effective self-governance,
self-determined community, and economic development. This fund
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was created to complement the RSTF. This new fund is designed to
be fluid, and payments are intended to be made to non-gaming
tribes on a "need" basis, upon application by non-gaming tribes.
Under this compact, the Tribal Nation Grant Fund would not be
funded significantly until after year seven.
The compact establishes the "Graton Mitigation Fund" for the
purpose of mitigating the impact of the Tribe's gaming operation
on the local community and requires that the Tribe pay 15% of net
win, subject to certain deductions during the first seven years of
the compact and 12% thereafter.
Revenues from the Graton Mitigation Fund will be distributed on a
quarterly basis to the City of Rohnert Park and Sonoma County in
amounts ranging from an estimated $14-15 million per year (in
years 1-7) to an estimated $38 million per year or more in the
later years of the compact, with the remainder paid to the RSTF or
the Tribal Nation Grant Fund, to provide grants to assist
California tribes for purposes related to effective
self-governance, self-determined community, and economic
development.
The Tribe entered into an enforceable and binding agreement (MOU)
with the City of Rohnert Park in October 2003 to provide the City
with approximately $200 million over 20 years to mitigate
potential impacts of the operation of the casino. The Tribe
entered into an MOU with the County of Sonoma in November 2004
establishing an enforceable framework for the negotiation of a
comprehensive mitigation agreement.
The Graton Mitigation Fund model is one of considerable
differences between this and past compacts negotiated by former
Governor Schwarzenegger. This compact focuses the contributions
by the Tribe to the local communities rather than to the General
Fund. This is the first compact to establish such a substantial
mechanism for mitigating the impacts on the local communities by a
tribal gaming facility.
Additional provisions of the compact include :
Exclusivity : Provides for the exclusive right to conduct Class
III gaming. If exclusivity is abridged anywhere in the state and
gaming devices are allowed to be operated legally at non-tribal
facilities, the Tribe may either terminate the compact and stop
conducting gaming activities, or reduce its contributions to the
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SDF, RSTF, and Tribal Nation Grant Fund pending negotiations with
the state for a new agreement.
Patron protections : The Tribe agrees to binding arbitration
before a single arbitrator, who shall be a retired judge, for
disputes over patron injuries and gambling.
Environmental protections : The Tribe must prepare a Tribal
Environmental Impact Report (TEIR) and negotiate mitigation of any
off-reservation impacts.
Labor provisions : If the Tribe employs 250 or more persons in a
tribal casino facility, then the provisions of the Tribal Labor
Relations Ordinance (TLRO) become effective. The TLRO provides
for a secret ballot election.
The Tribe and Hotel Employee and Restaurant Employee Union (UNITE
HERE) entered into a card-check neutrality agreement in August
2003. In addition, the Tribe and its general contractor have
entered into a project labor agreement with the Trades Council.
Employee protections : The Tribe has granted employees the right
to collectively bargain. The Tribe has agreed to participate in
the state's worker's compensation system and unemployment
insurance program, to comply with federal and state occupational
health and safety standards, and to consent to the jurisdiction of
the state agencies and courts enforcing all of those standards.
The Tribe also has agreed to enhanced employment discrimination
provisions.
Building and safety standards : The casino must meet or exceed the
applicable Building and Public Safety Codes.
Enhanced audit and compliance review procedures : In addition to
providing for an annual independent audit, the compact allows the
state to conduct its own annual audit and compact compliance
review.
Inspection of slot machines : Slot machines will have to be
tested, approved and certified by an independent gaming test
laboratory and the tribal gaming agency to ensure that they are
being operated according to specified technical standards. The
State Gaming Agency would be authorized to annually conduct up to
four random inspections of slot machines in operation to confirm
that the slot machines are operating in conformance with these
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standards.
Minimum internal control standards (MICS) : The Tribe must adopt
and comply with standards that meet or exceed the federal NIGC
standards. The MICS are incorporated into the compact as an
appendix, which shall be updated periodically by the State Gaming
Agency and Tribal Gaming Agency, to ensure the MICS keep up with
changing technology and industry standards.
Problem gambling : The Tribe must train supervisors and floor
employees on identifying and managing problem gambling, include a
responsible gaming message in advertising, provide signage and
education materials at conspicuous locations aimed at preventing
problem gambling, and adopt a code of conduct derived from the
American Gaming Association's code.
Tobacco : Requires the Tribe to provide a non-smoking area in the
gaming facility and not to offer or sell tobacco to anyone that is
under 18 years of age, and requires the Tribe to utilize a
ventilation system throughout the gaming facility that exhausts
tobacco smoke.
Alcohol sales : Makes it explicit that the purchase, sale, and
service of alcoholic beverages shall be subject to state law
(Alcoholic Beverage Control Act).
Child and spousal support : Requires the Tribe to comply with
employee earnings withholding orders for child or spousal support.
Effective date : The compact is not effective until it is ratified
in accordance with state law, and notice of approval by the U.S.
Secretary of the Interior is published in the Federal Register.
Upon all the necessary approvals, the compact will be valid until
December 31, 2033.
In support : The Tribe states this compact is the culmination of
nine years worth of diligent work, including, establishment of a
reservation for the Tribe which has been deemed eligible for
gaming, the preparation of an environmental impact statement (EIS)
for the project, negotiation of mitigation agreements with local
governments, approval of a management contract and complying with
other state and federal requirements.
The Tribe is satisfied that the compact addresses the unique
circumstances of the project and will significantly benefit the
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Tribe and its 1,300 tribal citizens. The Tribe is committed to
improving the education status, and the health, safety and general
welfare of its members and local residents. The Tribe reports
that it has agreed to mitigate potential impacts of the gaming
facility by entering into legally binding agreements with the
City, the County, the Trades Council and the Hotel Employees and
Restaurant Employees International Union. The Tribe maintains
that 2,200 permanent jobs will be created with the ratification of
this compact.
The Tribe states they are committed to environmental protection
and preservation and have taken meaningful steps towards long-term
ecological sustainability in the Sonoma County region. The Tribe
has worked to preserve open space and to restore native habitat in
the County. The Tribe identified land for its reservation which
is consistent with local land use planning while involving the
public in the environmental review process.
The Tribe maintains that they have complied with every requirement
necessary to develop the project including meeting environmental
standards, garnering local support, and having land taken into
trust for the Tribe's Reservation by the Bureau of Indian Affairs
which has been deemed eligible for gaming by the NIGC.
Writing in support, the State Building and Construction Trades
Council and the North Bay Labor Council emphasize that the
proposed gaming facility will create 900 needed construction jobs
with healthcare and other significant benefits and 3,000
additional full and part-time jobs at surrounding businesses.
The California State Council of Laborers and the Sheet Metal
Workers Local 104 state that Sonoma County has been hard-hit by
the economic downturn and the construction industry is certainly
no exception, particularly in this area of the state. The lives
of working families in the area have been greatly affected by job
loss, layoffs and the related problems that accompany them. The
opportunity to put our communities back to work by supporting this
compact is significant. The Tribe believes in creating good high
wage jobs that strengthen the middle class, and have committed to
this by entering into legally binding agreements.
Proponents further state the gaming facility will attract
increased tourism and revenue that will contribute to the
financial growth of local businesses and groups. The result will
be a positive impact on state and county tax revenue.
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Additionally, the gaming facility will bring an estimated $275
million in annual economic benefits to the region.
In opposition : The Robinson Rancheria Citizens Business Council
(RRCBC), the governing body of the Robinson Rancheria in Lake
County, expressed opposition to this compact despite its support
for "the general proposition that the government of every
federally recognized tribe has the right under IGRA to utilize
gaming to attain economic self-sufficiency." The RRCBC contends
that the "Compact was obtained through deception and
misrepresentation and would seriously threaten the continued
economic viability of not only the RRCBC's modest gaming
operation, but also those of the governments of other tribes in
Sonoma, Mendocino, Lake and Colusa Counties, as well as having
significant negative impacts on tribal governments in Solano, Yolo
and Placer Counties by effectively interdicting the customers from
the Santa Rosa and greater San Francisco Bay Area on which those
tribes depend for their survival." The RRCBC believes that
ratification of this compact is tantamount "to rewarding duplicity
and, punishing those tribes that have struggled to survive on
their own lands in an increasingly difficult economic
environment."
Writing in opposition, six of the seven City Council members from
the City of Petaluma have expressed concern with respect to the
serious regional traffic and water supply impacts associated with
the proposed gaming facility. These council members believe that
the Tribe should be responsible for paying its full fair share of
completed and future highway widening in Marin and Sonoma.
Additionally, the six council members are concerned that the
proposed gaming facility could deplete an aquifer that is already
overdrawn and thus increase water supply shortages.
The Stop the Casino 101 Coalition opposes this compact stating
that it is flawed in major areas of air quality, endangered
species, current and future impacts, flooding, vehicular,
pedestrians and traffic issues, and water quality and water
quantity issues and they believe it will lead to new urban
casinos.
Additional Background Information :
Indian Gaming Regulatory Act : In 1988, Congress enacted the
Indian Gaming Regulatory Act (IGRA) to provide a statutory basis
for the operation and regulation of gaming on Indian lands. IGRA
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provides that an Indian tribe may conduct gaming activity on
Indian lands if the activity "is not specifically prohibited by
federal law and is conducted within a State which does not
prohibit such gaming activity."
The statute divides gaming activities into three classes (Class I,
Class II, and Class III), each subject to different regulations.
Class III gaming includes such things as slot machines, casino
games and banked card games such as black jack and baccarat.
Class III gaming may only be conducted under terms of a compact
negotiated between an Indian tribe and a state. Class II gaming
is defined to include bingo and card games that are explicitly
authorized by the laws of the state, or that are not explicitly
prohibited by the laws of the state and are played at any location
in the state, so long as the card games are played in conformity
with those laws and regulations.
When a tribe requests negotiations for a Class III compact, IGRA
requires the state to negotiate with the Indian tribe in good
faith. IGRA provides a comprehensive process to prevent an
impasse in compact negotiations, which is triggered when a tribe
files suit alleging that the state has refused to negotiate or has
failed to negotiate in good faith.
Compact negotiation and ratification : The State Constitution, as
amended by Proposition 1A of March 2000, permits Indian tribes to
conduct and operate slot machines, lottery games, and banked and
percentage card games on Indian land. These gambling activities
can only occur if: 1) the Governor and an Indian tribe reach
agreement on a compact; 2) the Legislature approves the compact;
and, 3) the federal government approves the compact.
Rincon Decision : In 2004, the Rincon Band of Mission Indians sued
the State of California in federal court after negotiations for a
new gambling agreement with then-Governor Schwarzenegger fell
apart. The Tribe believed the Governor was violating federal law
by insisting that tribes pay money into the state's general fund
in exchange for more slot machines.
In July 2011, the U.S. Supreme Court declined to review a Ninth
Circuit Court's decision that ruled the state could not require
the Rincon Band tribe to pay a percentage of slot machine revenue
into California's General Fund for more gaming devices.
The Ninth Circuit had affirmed a lower court decision that the new
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financial concessions were nothing more than a state tax on tribal
casino revenues which is prohibited by IGRA. The court concluded
that a "non-negotiable, mandatory payment of 10% of net win into
the State treasury for unrestricted use yields public revenue and
is Ýtherefore] a tax and that the court was therefore required to
consider the State's demand as evidence of bad faith under IGRA's
statutes."
Indian Gaming Special Distribution Fund (SDF) : Existing law
creates the SDF in the State Treasury for the receipt of revenue
contributions made by tribal governments pursuant to the terms of
the 1999 model tribal-state gaming compacts and authorized the
Legislature to appropriate money from the SDF for the following
purposes: 1) supporting the RSTF to ensure that it can distribute
$1.1 million annually to each tribe that does not have a compact
or that has a compact and operates fewer than 350 devices; 2)
funding problem-gambling prevention programs managed by the
Department of Alcohol and Drug Programs; 3) paying the operating
costs for the Indian gaming regulatory functions of the California
Gambling Control Commission (CGCC) and the Department of Justice
(DOJ); and, 4) supporting local governments impacted by tribal
gambling. The law establishes a method of calculating the
distribution of appropriations from the SDF for grants to local
government agencies impacted by tribal gaming. The distribution
formula "sunsets" on January 1, 2021.
Indian Gaming Revenue Sharing Trust Fund (RSTF) : Existing law
also creates in the State Treasury the RSTF for the receipt and
deposit of moneys derived from gaming device license fees that are
paid into the RSTF pursuant to the terms of specified tribal-state
gaming compacts for the purpose of making distributions to
non-compacted Tribes (e.g., federally recognized non-gaming tribes
that operate casinos with fewer than 350 slot machines). Revenue
in the RSTF is available to CGCC, upon appropriation by the
Legislature, for making distributions of $1.1 million annually to
eligible tribes.
Prior legislation : AB 1418 (Hall) Chapter 412, Statutes of 2011,
ratifies a revised tribal-state gaming compact between the State
of California and Pinoleville Pomo Nation, authorizing the Tribe
to commence Class III gaming with up to 900 gaming devices,
executed on August 8, 2011, and requires contributions to the SDF
and the RSTF, as specified, instead of requiring revenue
contributions to the General Fund.
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AB 1020 (Chesbro), Chapter 27, Statutes of 2011, ratifies a
revised compact between the State of California and the
Habematolel Pomo of Upper Lake executed by Governor Brown on March
17, 2011. This revised compact authorized the Tribe to operate up
to 750 slot machines with up to 15% of the net-win from those
gaming devices be paid to the SDF and the RSTF, instead of
requiring revenue contributions to the General Fund.
AB 122 (Coto), Chapter 3, Statutes of 2010, ratifies a
tribal-state gaming compact between the State of California and
the Pinoleville Pomo Nation, executed on March 10, 2009.
SB 89 (Budget and Fiscal Review Committee), Chapter 1, Statutes of
2010, ratifies the tribal-state gaming compact between the State
of California and the Habematolel Pomo of Upper Lake, executed on
September 2, 2009.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0003495