BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING
          AB 1020 (Chesbro)
          As Amended  May 5, 2011
          2/3 vote.  Urgency 

           GOVERNMENTAL ORGANIZATION 17-0  APPROPRIATIONS      17-0        
           
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          |Ayes:|Hall, Nestande, Atkins,   |Ayes:|Fuentes, Harkey,          |
          |     |Block, Blumenfield,       |     |Blumenfield, Bradford,    |
          |     |Chesbro, Cook, Galgiani,  |     |Charles Calderon, Campos, |
          |     |Garrick, Gatto, Hill,     |     |Davis, Donnelly, Gatto,   |
          |     |Jeffries, Ma, Perea, V.   |     |Hall, Hill, Lara,         |
          |     |Manuel Pérez, Silva,      |     |Mitchell, Nielsen, Smyth, |
          |     |Torres                    |     |Solorio, Wagner           |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Ratifies a new tribal-state gaming compact (compact) 
          entered into between the State of California and the Habematolel 
          Pomo of Upper Lake (Tribe or HPUL), executed on March 17, 2011.  
          Specifically,  this bill  :  

          1)Repeals the ratification of the tribal-state gaming compact 
            entered into between the State of California and the 
            Habematolel Pomo of Upper Lake, executed on September 2, 2009, 
            and ratifies a new tribal-state gaming compact entered into 
            between the State of California and the Habematolel Pomo of 
            Upper Lake, executed on March 17, 2011. 

          2)Requires contributions to the Indian Gaming Special 
            Distribution Fund (SDF) and the Revenue Sharing Trust Fund 
            (RSTF), as specified, instead of requiring revenue 
            contributions be made to the General Fund (GF),

          3)States upon all the necessary approvals, the compact will be 
            valid until December 31, 2031.

          4)Contains an urgency clause, allowing the bill to take effect 
            immediately upon enactment.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee: 

          1)Unknown increase in revenue for both the SDF and the RSTF.  








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            The compact allows HPUL up to 750 gaming devices.

          2)HPUL is not required to make an RSTF payment for the first 350 
            devices.  However, it will be required to pay $900 per year 
            for each gaming device in excess of 350.  If HPUL places 750 
            gaming devices in the casino, their annual RSTF contribution 
            will be $360,000.

          3)Similarly, the HPUL is not required to make any contributions 
            to the SDF for the first 350 devices.  However, they are 
            required to contribute 7% of their net profits for each device 
            between 351 and 600.  For devices in excess of 600, they are 
            required to contribute 15% of the net profits.

           COMMENTS  :  The Habematolel Pomo of Upper Lake is a federally 
          recognized tribe of Pomo Indians in Lake County, California.  
          The Tribe has 216 enrolled members.  The HPUL is governed by an 
          elected, seven-member tribal council.  The Habematolel Pomo 
          operate their own housing, environmental, and educational 
          programs, including computer classes and general education 
          diploma preparation.
          The Tribe's original Rancheria was 564 acres.  The Tribe was 
          congressionally terminated in 1956 with the passage of the 
          California Rancheria Act then restored to federal recognition in 
          1983.  Once restored, the Tribe was landless until 2008.  

          The U.S. Department of Interior determined that the Tribe has 
          met the conditions of the restored lands exception Indian Gaming 
          Regulatory Act (IGRA), and on November 13, 2008, accepted 11.24 
          acres of land in Lake County in trust for the benefit of the 
          Tribe, thus making this 11.24 acre parcel of land eligible for 
          gaming.

          This compact will supersede a 2009 compact the Tribe signed with 
          former Governor Arnold Schwarzenegger.  The state and Tribe 
          executed a tribal-state class III gaming compact on September 2, 
          2009, which was ratified by the California Legislature with the 
          passage of SB 89 (Budget and Fiscal Review Committee), Chapter 
          1, Statutes of 2010, and subsequently submitted to the U.S. 
          Department of the Interior for approval.  

          On August 17, 2010, the U.S. Department of the Interior 
          disapproved the 2009 Compact in light of the decision of the 
          U.S. Court of Appeals for the Ninth Circuit in Rincon Band of 








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          Luiseno Mission Indians of the Rincon Reservation v. 
          Schwarzenegger (9th Cir. 2010) 602 F.3d 1019 (Rincon).  The 
          basis for the Department of Interior rejection was that the 
          compact was unfair to the tribe and it violated IGRA by 
          requiring revenue sharing payments to the state General Fund 
          (GF) and to the extent to which revenue sharing and variations 
          on tribal gaming exclusivity constituted "meaningful 
          concessions" under IGRA.  The rejection letter stated, "The 
          Department is committed to upholding IGRA and cannot approve a 
          compact where the State imposes a tax, fee, charge, or other 
          assessment on a tribally-owned gaming facility in violation of 
          lGRA, as set forth above. See § 25 D.S.C. 2710(d)(8)."

          The Governor's office reports that currently, "the State is 
          seeking review of the Rincon decision by the United States 
          Supreme Court and any review of the Rincon decision by the 
          Supreme Court and any potential federal court review of the 
          Department of the Interior's disapproval of the 2009 Compact 
          could take a significant amount of time, with uncertain 
          outcome."

          The Governor's office further states, "in light of the Tribe's 
          significant needs and investment of resources in furtherance of 
          its proposed gaming project and the limited economic 
          opportunities for the Tribe in light of its geographic location, 
          the State and the Tribe decided to enter into a new compact 
          rather than await the outcome of the Rincon case and any 
          potential federal court review of the August 17, 2010, decision 
          of the Department of the Interior." 

          On March 17, 2011, the Governor and the Habematolel Pomo of 
          Upper Lake signed a new tribal-state gaming compact.  According 
          to the Governor's office, "the compact funds programs in local 
          communities that mitigate the impact of gaming activities and 
          address gambling addiction.  It includes provisions to protect 
          employees and patrons, and measures that the tribe must take to 
          protect the environment during the construction and operation of 
          gaming facilities.  The compact allows the operation of a 
          maximum of 750 slot machines, and up to 15 percent of the 
          casino's net win from them will go to local communities, as well 
          as gambling mitigation and regulation provisions. The compact 
          requires regular audits of gaming operations, and supersedes the 
          2009 compact between the tribe and the State of California."  
          The compact will run through December 31, 2031.








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          Under the terms of the compact, the Tribe may engage in class 
          III gaming only on eligible Indian lands at a single gaming 
          facility located within the boundaries of an 11.24 acre parcel, 
          as the boundaries exist as of the execution date of the compact. 
           This compact will afford the Tribe primary responsibility over 
          the regulation of its gaming facility. 

          The main difference between this compact and the 2009 compact is 
          the amount for revenue sharing requirements between the state 
          and the Tribe and no revenue payments will be paid into the GF.

          This compact is intended to assist the Habematolel Pomo of Upper 
          Lake in improving the Tribe's socio-economic status, assist in 
          economic self-sufficiency and to promote the stability and 
          security of the Tribe and families.

          The casino is expected to create approximately 145 or more jobs 
          in Lake County.
           
          Other provisions of the compact include  :

           Authorized and permitted class III gaming  . The Tribe is 
          authorized to operate only the following gaming activities under 
          the terms and conditions set forth in this compact:  1) gaming 
          devices; 2) any banking or percentage card games; 3) Any devices 
          or games that are authorized under state law to the California 
          State Lottery, provided that the Tribe will not offer such games 
          through use of the Internet unless others in the state are 
          permitted to do so under state and federal law.  Nothing shall 
          be construed to preclude the Tribe from offering class II gaming 
          or preclude the negotiation of a separate compact governing the 
          conduct of off-track wagering at the Tribe's gaming facility.

           Patron protections  .  The Tribe agrees to binding arbitration 
          before a retired judge for disputes over patron injuries and 
          gambling.

           Environmental protections  :  The Tribe must prepare an 
          Environmental Impact Report (EIR) and negotiate mitigation of 
          any off-reservation impacts with Lake County. 

           Employee protections  .  The Tribe has granted employees the right 
          to collectively bargain.  The Tribe has agreed to participate in 








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          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.

           Revenue Contribution  :  The Tribe shall pay quarterly to the 
          Special Distribution Fund (SDF) created by the Legislature, in 
          accordance with the following schedule:
                                          
          Number of Gaming Devices inPercentage of Average
           Quarterly Device Base      Gaming Device Net Win  
          1-350                         0%
          351-600                       7%
          601-750                       15%

          The payment specified herein has been negotiated between the 
          parties as a fair contribution, based upon the Tribe's market 
          conditions, its circumstances, and the rights afforded under 
          this compact.

           Revenue Sharing Trust Fund (RSTF)  .  The Tribe agrees that it 
          will pay into the RSTF on January 30 of the following year for 
          distribution on an equal basis to Non-Gaming and Limited Gaming 
          Tribes the following amounts:

           Number of Gaming Devices Operated   Annual Payment 
          1-350                         $0 per Gaming Device
          351-750                       $900 per Gaming Device

           Enhanced audit and compliance review procedures  .  In addition to 
          providing for an annual independent audit, the amended 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 
          California Gambling Control Commission (CGCC) 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 standards.








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           Minimum internal control standards (MICS)  .  The Tribe must adopt 
          and comply with standards that meet or exceed the federal 
          National Indian Gaming Commission standards.  The MICS are 
          incorporated into the compact as an appendix, which shall be 
          updated periodically by the CGCC and the Tribal Gaming Agency, 
          to ensure the MICS keep up with changing technology and industry 
          standards.

           Building and safety standards  .  The casino must meet or exceed 
          the California Building Code and Public Safety Code as 
          applicable to Lake County. 

           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. 

           Labor provisions  .  If the Tribe employs 250 or more persons in a 
          tribal casino facility, the provisions of the Tribal Labor 
          Relations Ordinance (TLRO) become effective.  TLRO provides for 
          a secret ballot election. 

           When will compact become effective  ?  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, 2031

           Intergovernmental Agreement and Memorandum of Understanding 
          (MOU)  .  In June 2006, the Tribe entered into an enforceable 
          written mitigation agreement (Intergovernmental Agreement and 
          MOU) with Lake County that includes provisions for the 
          mitigation of any significant effect on the off-reservation 
          environment, as specified, as well as compensation for public 
          services, including law enforcement, fire protection, emergency 
          medical services, wastewater services, and transportation 
          enhancements.
           
          UNITE HERE Memorandum of Agreement  .  On September 15, 2009, the 
          Habematolel Pomo of Upper Lake negotiated a MOU with the Hotel 
          Employee and Restaurant Employee Union (UNITE HERE), recognizing 








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          HERE's ability to organize eligible employees of the casino.  
          Otherwise, the compact has the same Tribal Labor Relations 
          Ordinance from the 1999 compacts.  

           Revenue Sharing Trust Fund  :  The Tribe will continue to receive 
          the $1.1 annual payment from the RSTF established in the 1999 
          compacts, if the tribe operates less than 350 gaming devices.  A 
          tribe operating under 350 gaming devices is considered a 
          "non-compact" tribe and is eligible for revenue payments from 
          gaming tribes under the 1999 compacts.

           In support  .  Lake County writes, "The County has established an 
          exemplary government-to-government relationship with the Tribe 
          as a result of the Upper Lake area gaming project. The 
          cooperative working relationship we have enjoyed with this 
          tribe, from day one, has set a new standard in Lake County and 
          is truly a model for others to emulate.  The Tribe has gone well 
          beyond the County's expectations in its extraordinary efforts to 
          include County officials and the community at-large in the 
          preparation and planning of its gaming project, over a period of 
          several years.  The County, through its agencies and officers, 
          continues to meet regularly with the Tribe to ensure the local 
          community interests are adequately accounted for within the 
          project."

          Lake County further states, foremost in these planning efforts 
          is the existing MOU between the County and the Tribe that 
          ensures the County's interests are taken into consideration 
          throughout the Tribe's project.  The MOU sufficiently provides 
          for many mitigation measures including:  
          1) payment by the Tribe to the County of a payment in lieu of 
          property tax; 2) wastewater mitigation measures; 3) water 
          mitigation measures; 4) health and safety mitigation measures; 
          5) fire and safety mitigation measures; and, 6) security and law 
          enforcement mitigation measures.

          UNITE HERE states, "The Tribe has executed an enforceable 
          organizing agreement that will ensure the organizing rights of 
          the permanent work force.  With unemployment hovering around a 
          staggering 20%, many urgently needed new jobs in Lake County are 
          dependent upon this Compact and we are very hopeful that the 
          Tribe will be able to move forward at the earliest possible 
          date."
           








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          Prior legislation  .  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: 0000738