BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 1356
          Author:   De León (D), et al.
          Amended:  8/18/14
          Vote:     27 - Urgency

           
          NOTE:  On August 21, 2014, the Senate Governmental Organization  
                 Committee held an informational hearing on the amended  
                 tribal-state compact between the State of California and  
                 the Viejas Band of Kumeyaay Indians.


          PRIOR VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  74-0, 8/22/14 - See last page for vote


           SUBJECT  :    Tribal gaming:  compact ratification

           SOURCE  :     Viejas Band of Kumeyaay Indians


           DIGEST  :    This bill ratifies the amended and restated  
          tribal-state gaming compact (Compact) between the State of  
          California and the Viejas Band of Kumeyaay Indians, executed on  
          August 12, 2014.

           Assembly Amendments  delete the prior version of the bill  
          relating to counterfeit goods, and insert the current language;  
          change the author from Senator Lieu to Senator De Leon; add  
          coauthors; and add an urgency clause.

           ANALYSIS  :    
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          Existing law:

           1. 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.  

           2. Expressly authorizes a number of tribal-state gaming  
             compacts between the State and specified Indian tribes. 

           3. Authorizes the conduct of Class III gaming activities to the  
             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 Interior.  

           4. Limits the operation of Class III gaming activities to  
             Indian lands acquired on or before October 17, 1988.   
             Provides for certain exceptions to conduct gaming activities  
             on Indian lands acquired after October 17, 1988.

           5. Defines Indian lands to mean all lands within the limits of  
             any Indian reservation, and any lands title to which is  
             either held in trust by the United States for the benefit of  
             any Indian tribe or individual or held by any Indian tribe or  
             individual subject to restriction by the U.S. against  
             alienation and over which an Indian tribe exercises  
             governmental power.

           6. 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 U.S. 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.  

           7. Authorizes the Governor, under the California Constitution,  

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             to negotiate and conclude compacts, subject to ratification  
             by the Legislature.

          This bill ratifies the amended and restated Compact between the  
          State and the Viejas Band of Kumeyaay Indians (Tribe), executed  
          on August 12, 2014.  Specifically, this bill:

           1. Authorizes the Tribe to operate a maximum of 4,500 slot  
             machines at not more than two gaming facilities, and only on  
             those Indian lands held in trust for the Tribe as of the  
             execution date of this Compact, as described.  The Tribe may  
             combine and operate in each gaming facility any forms and  
             kinds of gaming permitted under law, except to the extent  
             limited under IGRA and any applicable regulations adopted  
             pursuant thereto, this Compact, or the Tribe's gaming  
             ordinance.

           2. Converts the Tribe's current fixed revenue share payment to  
             the State (which required the Tribe to pay a flat fee of  
             $17.4 million to the State's General Fund each year) into a  
             percentage-based payment in order to account for the impact  
             on revenue caused by changing economic conditions and to  
             enhance the economic development, long-term stability and  
             self-sufficiency of the Tribe.  The percentage-based payment  
             structure ensures that the Tribe remains the primary  
             beneficiary of its gaming operation as required by federal  
             law.  The Department of Finance estimates that the State will  
             receive reduced revenue of about $3 million to $5 million  
             annually if this Compact is ratified and casino operations  
             perform at the current level.

           3. Supersedes a 2004 amended compact (AB 687, Nuñez, Chapter  
             91, Statutes of 2004) between the Tribe and the State.  The  
             2004 amended compact replaced the Tribe's initial compact  
             signed in 1999 with Governor Gray Davis, who negotiated  
             gambling agreements with more than 60 tribes.  The 2004  
             amended compact allowed the Tribe to operate an unlimited  
             number of Class III slot machines in exchange for payments to  
             the state General Fund for machines added after ratification  
             of the compact.  Under the 1999 compact, the Tribe could not  
             operate more than 2,000 gaming devices.  Unlike the 1999  
             compact, the 2004 amended compact required payments to the  
             General Fund, as defined.  The 2004 amended compact also  
             required the Tribe to negotiate with local governments  

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             concerning enforceable memoranda of understanding (MOU's) to  
             address environmental, public safety, infrastructure, and  
             other demands related to gaming operations.  Additionally,  
             under the 2004 amended compact the Tribe agreed to pay $2  
             million into the Revenue Sharing Trust Fund (RSTF).  The  
             negotiated MOU's, RSTF disbursement, and designated payments  
             into the General Fund are still mandated in this Compact.

           4. Provides that, in deference to tribal sovereignty, certain  
             actions may not be deemed projects for purposes of the  
             California Environmental Quality Act.

           5. Provides that once effective (legislative ratification and  
             federal approval required), this Compact will be in full  
             force and effect for state law purposes until December 31,  
             2030 - this date remains unchanged from the Tribe's 2004  
             amended compact.  

           Background
           
          The Viejas Band of Kumeyaay Indians, one of the remaining 12  
          bands of the Kumeyaay Indian Nation (Barona, Campo, Ewiiaapaayp,  
          Inaja-Cosmit, Jamul, LaPosta, Manzanita, Mesa Grande, San  
          Pasqual, Santa Ysabel, Sycuan and Viejas) is a 252-member  
          federally recognized tribe located on a 1,600-acre reservation  
          in the Viejas Valley, east of the community of Alpine in San  
          Diego County, California.  The Viejas Band has a "trust"  
          relationship with the federal government, enforces federal laws  
          and participates in issues pertinent to its land and people on a  
          government-to-government basis.  The Tribe notes that  
          "membership in the Viejas Band of Kumeyaay Indians is determined  
          by direct descent from the families forced from their original  
          Capitan Grande Reservation, who contributed their share from the  
          sale of their lands for the El Capitan Reservoir to purchase the  
          current reservation in the Viejas Valley."

          According to information provided by the Tribe, the Viejas Band  
          has experienced tremendous economic prosperity that has  
          successfully helped increase access to health care, education  
          and general welfare to its people and their children, who will  
          carry on the Kumeyaay culture for years to come.  Under the  
          umbrella of Viejas Enterprises, the Tribe's properties include  
          Viejas Casino & Resort; Viejas Outlet Center, a 37-acre shopping  
          center; Alpine Springs Recreational Vehicle Park; and Ma-Tar-Awa  

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          Recreational Vehicle Park, the Tribe's first business venture  
          that opened in 1976.  Through revenues brought in by the Tribe's  
          business enterprises, "the Tribe has been able to reinvest  
          millions of dollars back into its community, with 90 percent of  
          dollars generated at Viejas Casino & Resort returning to the  
          local and state economy." 

          The Tribe's casino has approximately 2,000 slot machines, up to  
          86 table games, four restaurants, a deli, a bingo operation, an  
          off-track betting facility, lounge, concert venues and a poker  
          room.  The Tribe opened a five-story, $36 million hotel in March  
          2013 that is located on the east side of the casino with 99  
          rooms and 29 suites, a pool with a patio area and cabanas, a  
          business center, fitness room, and other amenities.  

          In 1999, the Tribe and the State entered into a tribal-state  
          compact, which enabled the Tribe, through revenues generated by  
          its gaming operation, to improve the governance, environment,  
          education, health, safety, and general welfare of its citizens,  
          and to promote a strong tribal government, self-sufficiency, and  
          to provide essential government services to its citizens.

          In 2004, the Tribe and the State via Governor Schwarzenegger  
          entered into an amendment to the 1999 compact, which, among  
          other things, significantly increased the gaming operation's  
          earning potential and revenue payments to the State.  

          The Compact's preamble states that since the time that the State  
          and the Tribe entered into the 2004 amended compact,  
          circumstances in the overall economy and the casino gaming  
          market have changed, which have caused and will continue to  
          cause a substantial reduction in revenues generated by the  
          gaming operation in comparison to those that were expected when  
          the parties entered into the 2004 amended compact.

          The Compact's preamble contends that the fixed quarterly revenue  
          share payments required of the Tribe under the 2004 amended  
          compact have not adjusted to changed economic and casino gaming  
          market conditions.

          Additionally, the Compact's preamble notes that after review of  
          the Tribe's financial condition, the Tribe and the State agree  
          that if the Tribe continues to make revenue sharing payments to  
          the State at the fixed level required by the 2004 amended  

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          compact, the Tribe would not be able to adequately fund its  
          Tribal government, to the detriment of the Tribe's ability to  
          provide for the governance, environment, education, health,  
          safety, and general welfare of the Tribe's citizens, and would  
          therefore be incompatible with the purposes and policies of  
          IGRA, Proposition 1A, the 1999 compact, and the 2004 amended  
          compact.

          The Tribe and the State agree that this Compact is designed to  
          enhance the Tribe's economic development and self-sufficiency  
          and to protect the health, safety and general welfare interests  
          of the Tribe and its citizens, the surrounding community, and  
          the California public, and to promote and secure long-term  
          stability, mutual respect, and mutual benefits. 

          The Compact's preamble indicates that the State and the Tribe  
          recognize that the exclusive rights the Tribe enjoys under this  
          Compact provide a unique opportunity for the Tribe to continue  
          to engage in the gaming activities in an economic environment  
          free of competition from the operation of slot machines and  
          banked card games on non-Indian lands in California and that  
          this unique economic environment is of great value to the Tribe.

          Furthermore, the Compact's preamble states the Tribe and the  
          State share an interest in mitigating the off-reservation  
          impacts of the gaming facility, affording meaningful consumer  
          and employee protections in connection with the operations of  
          the gaming facility, fairly regulating the gaming activities  
          conducted at the gaming facility, and fostering a good-neighbor  
          relationship.

           Key Provisions of the Compact
           
           Scope of Class III Gaming Authorized  .  The Tribe is authorized  
          to operate up to 4,500 gaming devices (slot machines), banking  
          or percentage card games, and any devices or games that are  
          authorized under state law to the California State Lottery.  The  
          Tribe may not operate roulette games (table or mechanical) or  
          any game that incorporates the physical use of a die or dice.   
          The Tribe shall not engage in Class III Gaming that is not  
          expressly authorized in the Compact.

           Exclusivity  .  Provides that in the event the exclusive right of  
          Indian tribes to operate Class III gaming in California pursuant  

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          to the California Constitution is nullified by the enactment,  
          amendment, or repeal of a state statute or constitutional  
          provision or the conclusive and dispositive judicial  
          construction of a statute or the state Constitution by a  
          California appellate court after the effective date of this  
          Compact, that gaming devices may lawfully be operated by  
          non-Indian entities, the Tribe shall have the right to:  (1)  
          terminate this Compact, in which case the Tribe will lose the  
          right to operate Class III gaming authorized by this Compact or  
          (2) continue under this Compact with entitlement to a reduction  
          of the rates specified in the chart below following conclusion  
          of negotiations, to provide for (a) compensation to the State  
          for the reasonable costs of regulation, as defined; (b)  
          reasonable payments to local governments impacted by tribal  
          government gaming; (c) grants for programs designed to address  
          gambling addiction; and (d) such assessments as may be  
          permissible at such time under federal law.   

           Amendment by Agreement  .  The terms and conditions of this  
          Compact may be amended at any time by the mutual and written  
          agreement of both parties, provided that each party voluntarily  
          consents to such negotiations in writing.  Any amendments to  
          this Compact shall be deemed to supersede, supplant and  
          extinguish all previous understandings and agreements on the  
          subject.

           Revenue Contributions to the State and the Indian Gaming Special  
          Distribution Fund (SDF)  .  The Tribe shall pay to the State  
          quarterly a revenue contribution, which shall be based upon the  
          average number of gaming devices in operation during such  
          quarter, equal to a percentage of the "net win" from such gaming  
          devices according to the following schedule:

           ----------------------------------------------------------------- 
          |  Average Number of Gaming Devices in Operation During Quarter   |
          |                         Percentage of                           |
          |                     Gaming Devices' Net Win                     |
          |                                                                 |
          |                           1 to 2,000                            |
          |                               8%                                |
          |                                                                 |
          |                         2,001 to 2,500                          |
          |                               10%                               |
          |                                                                 |

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          |                         2,501 to 3,000                          |
          |                               12%                               |
          |                                                                 |
          |                         3,001 to 3,500                          |
          |                               14%                               |
          |                                                                 |
          |                         3,501 to 4,000                          |
          |                               16%                               |
          |                                                                 |
          |                         4,001 to 4,500                          |
          |                               18%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
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          During the first five years in which this Compact is in effect,  
          a portion of the Tribe's quarterly revenue contribution to the  
          State will be deposited in the SDF in the amounts specified  
          below:

           (1)During years one and two, $5 million will be allocated to  
             the SDF;

           (2)During year three, $4 million will be allocated to the SDF;

           (3)During year four, $3 million will be allocated to the SDF;  
             and

           (4)During year five, $2 million will be allocated to the SDF.

          This requirement does not alter the total amount of the  
          contribution that the Tribe pays to the State, but specifies the  
          principal fund to which the Tribe's payments are deposited.

          During each year in which the Compact is in effect, the Tribe's  
          pro rata share of the state's regulatory costs will be deducted  
          from the Tribe's quarterly revenue contribution to the State.   
          The Tribe's pro rata share payment will be paid into the SDF, as  
          specified.

          In each year of this Compact, any amount of the Tribe's  
          quarterly revenue contributions due to be paid to the SDF that  
          is remaining after the Tribe's payments are made and deposited  

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          into the SDF will go to the General Fund.

          "Net Win" is defined as the drop from gaming devices, plus the  
          redemption value of expired tickets, less fills, less payouts,  
          less participation fees (e.g., payments made to gaming resource  
          supplies on a periodic basis by the gaming operation for the  
          right to lease or otherwise offer for play gaming devices), less  
          that portion of the gaming operation's payments to a third-party  
          wide-area progressive jackpot system provider that is  
          contributed only to the progressive jackpot amount. 

           Revenue Sharing Trust Fund (RSTF) or Tribal Nation Grant Fund  
          (TNGF) Contribution  .  The Tribe shall continue to maintain its  
          existing licenses to operate gaming devices by paying to the  
          State Gaming Agency for deposit into the RSTF or the TNGF,  
          within 30 days of the end of each calendar quarter, $500,000.00.  
           If any portion of the fee payment is overdue after the State  
          Gaming Agency has provided written notice to the Tribe of the  
          overdue amount with an opportunity to cure of at least 15  
          business days, and if more than 60 calendar days have passed  
          from the due date, then the Tribe shall cease operating all of  
          its gaming devices until full payment is made. 

          This particular revenue contribution mirrors a provision in the  
          2004 amended compact which required the Tribe to make annual  
          payments in the amount of $2 million to the RSTF.

           Quarterly Revenue Contribution Report  .  At the time each  
          quarterly payment is due, the Tribe shall submit to the State a  
          report, prepared and certified by an authorized representative  
          of the gaming operation, as defined.

           Gaming Facility Mitigation and Local Intergovernmental  
          Agreements  .  Before the commencement of a project, and no later  
          than the issuance of the final Tribal Environmental Impact  
          Report (TEIR) to the County, the Tribe shall offer to commence  
          negotiations with the County, and upon the County's acceptance  
          of the Tribe's offer, shall negotiate with the County and shall  
          enter into an enforceable written agreement with the County with  
          respect to the following matters:  (1) Provisions providing for  
          the timely mitigation of any significant effect on the  
          off-reservation environment, as defined; (2) Provisions relating  
          to compensation for law enforcement, fire protection, emergency  
          medical services and any other public services to be provided by  

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          the County to the Tribe for the purposes of the Tribe's gaming  
          operation as a consequence of the project; (3) Provisions  
          providing for reasonable compensation for programs designed to  
          address gambling addiction; and, (4) Provisions providing for  
          mitigation of any effect on public safety attributable to the  
          project, including any compensation to the County as a  
          consequence thereof.  

           Additional Provisions of the Compact
           
            Gaming Ordinance and Regulations  .  All gaming activities  
            conducted under this Compact shall, at a minimum, comply with  
            (1) a gaming ordinance duly adopted by the Tribe and approved  
            in accordance with IGRA, (2) all rules, regulations,  
            procedures, specifications, and standards duly adopted by the  
            National Indian Gaming Commission (NIGC), the Tribal Gaming  
            Agency, and the State Gaming Agency, and (3) the provisions of  
            this Compact, as specified.
                                                                            
            Environmental Protections  .  The Tribe must prepare a TEIR and  
            negotiate mitigation of any off-reservation impacts.  The  
            Tribe's failure to prepare an adequate TEIR when required  
            shall be deemed a breach of this Compact and furthermore shall  
            be grounds for issuance of an injunction or other appropriate  
            equitable relief.  A completed TEIR must be filed with the  
            County, the City, the Department of Justice, the State  
            Clearinghouse and the State Gaming Agency.  Also, provides for  
            binding arbitration if an intergovernmental agreement with the  
            County is not entered into within 55 days of the submission of  
            the final TEIR, or such further time as the Tribe or the  
            County may mutually agree in writing.  Any party may demand  
            binding arbitration before a single arbitrator pursuant to the  
            Commercial Arbitration Rules of the American Arbitration  
            Association as set forth in the Compact. 

            Employee Protections  .  The Tribe may create and maintain a  
            system that provides redress for employee work-related  
            injuries through requiring insurance or self-insurance, which  
            system must include a scope of coverage, availability of an  
            independent medical examination, right to notice, hearings  
            before an independent tribunal, a means of enforcement against  
            the employer, and benefits comparable to those mandated for  
            comparable employees under state law.  Not later than the  
            effective date of this Compact, the Tribe will advise the  

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            State of its election to participate in the statutory workers'  
            compensation system or, alternatively, will forward to the  
            State all relevant ordinances that have been adopted and all  
            other documents establishing the system and demonstrating that  
            the system is fully operational and compliant with the  
            comparability standard, as described.  Independent contractors  
            doing business with the Tribe must comply with all state  
            workers' compensation laws and obligations.

            The Tribe agrees that its gaming operation will participate in  
            the State's program for providing unemployment compensation  
            benefits and unemployment compensation disability benefits  
            with respect to employees employed at the gaming facility, as  
            described.  The Tribe has also agreed to adopt and comply with  
            standards no less stringent than federal and state employment  
            discrimination laws.  

            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 and Testing of Slot Machines  . Slot machines will  
            have to be tested, approved and certified by an independent  
            gaming test laboratory or state governmental gaming test  
            laboratory to ensure they are being operated according to  
            specified technical standards.  Also, requires the Tribal  
            Gaming Agency to maintain adequate records that demonstrate  
            compliance with software and hardware specifications.  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 standards. 

            Compliance Enforcement  .  It is the responsibility of the  
            Tribal Gaming Agency to conduct on-site gaming regulation and  
            control in order to enforce the terms of this Compact, IGRA,  
            any applicable NIGC and State Gaming Agency regulations, and  
            the tribal gaming ordinance with respect to gaming operation  
            and facility compliance, and to protect the integrity of the  
            gaming activities, the reputation of the Tribe and the gaming  
            operation for honesty and fairness, and the confidence of  
            patrons that tribal government gaming in California meets the  
            highest standards of regulation and internal controls.  To  

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            meet those responsibilities, the tribal gaming agency shall  
            adopt and enforce regulations, procedures, and practices.

            Labor Provisions  .  The Tribe entered into a collective  
            bargaining agreement with a labor organization (Communications  
            Workers of America, CWA Local 9400) before the enactment of  
            its Tribal Labor Relations Ordinance (TLRO), which governs the  
            organizational and representational rights of the employees at  
            the tribal casino and gaming facility.  The Tribe has renewed  
            that collective bargaining agreement and the parties agree  
            that no change in the TRLO is necessary to address employee  
            rights.  

            Prohibitions regarding Minors  .  The Tribe shall prohibit  
            persons under the age of 21 years from being present in any  
            room or area in which gaming activities are being conducted  
            unless the person is en route to a non-gaming area of the  
            gaming facility, or is employed at the Gaming Facility in a  
            capacity other than as a gaming employee.

            Alcohol Provisions  .  Makes it explicit that the purchase,  
            sale, and service of alcoholic beverages shall be subject to  
            state law - the Alcoholic Beverage Control Act.

            Protection of Public  .  The Tribe will not conduct Class III  
            Gaming in a manner that endangers the public health, safety,  
            or welfare; provided that nothing herein shall be construed to  
            make applicable to the Tribe any state laws or regulations  
            governing the use of tobacco.

            Health and Safety Standards  .  The Tribe has agreed to adopt  
            and comply with state public health standards for food and  
            beverage handling and federal water quality and safe drinking  
            standards applicable to California.

            Building Codes and Fire Safety  .  In order to assure the  
            protection of the health and safety of all gaming facility  
            patrons, guests, and employees, the Tribe shall adopt or has  
            already adopted, and shall maintain throughout the term of  
            this Compact, an ordinance that requires any covered gaming  
            facility construction to meet or exceed the California  
            Building Code and the Public Safety Code applicable to the  
            county in which the gaming facility is located.


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            Emergency Services Accessibility  .  The Tribe must make  
            reasonable provisions for adequate emergency fire, medical,  
            and related relief and disaster services for patrons and  
            employees.  

            Effective Date  .  The Compact shall not be effective unless and  
            until all of the following have occurred:  (1) The Compact is  
            ratified by statute in accordance with state law and (2)  
            Notice of approval or constructive approval is published in  
            the Federal Register.  Once effective, this Compact shall be  
            in full force and effect for state law purposes until December  
            31, 2030.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/22/14)

          Viejas Band of Kumeyaay Indians (source)
          Barona Band of Mission Indians
          Pala Band of Mission Indians
          Pechanga Band of Luiseño Indians
          Rincon Band of Luiseño Indians
          Santa Ynez Band of Chumah Indians
          Sycuan Band of the Kumeyaay Nation
          United Auburn Indian Community


           ASSEMBLY FLOOR  :  74-0, 8/22/14
          AYES:  Achadjian, Alejo, Allen, Ammiano, Bloom, Bocanegra,  
            Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,  
            Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Daly,  
            Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines,  
            Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove,  
            Hagman, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer,  
            Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,  
            Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,  
            Olsen, Pan, Patterson, Perea, John A. Pérez, V. Manuel Pérez,  
            Quirk, Quirk-Silva, Rendon, Rodriguez, Salas, Skinner, Stone,  
            Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,  
            Atkins
          NO VOTE RECORDED:  Bigelow, Dahle, Hall, Ridley-Thomas, Yamada



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          MW:k  8/22/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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