BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 291|
          |Office of Senate Floor Analyses   |                              |
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          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  AB 291
          Author:   Atkins (D) and Gonzalez (D), et al.
          Amended:  8/3/16 in Senate
          Vote:     27 - Urgency


           NOTE:  On August 9, 2016, the Senate Governmental Organization  
                 Committee held an informational hearing on the tribal  
                 gaming compact entered into between the State of  
                 California and the Barona Band of Mission Indians.

           SUBJECT:   Tribal gaming:  compact ratification

          SOURCE:    Author

          DIGEST:  This bill ratifies the tribal-state gaming compact  
          (Compact) entered into between the State of California and the  
          Barona Band of Mission Indians (hereafter "Tribe") executed on  
          June 22, 2016.  Additionally, this bill provides that, in  
          deference to tribal sovereignty, certain actions are not deemed  
          projects for purposes of the California Environmental Quality  
          Act (CEQA); and, stipulates, except as expressly provided, that  
          none of the provisions shall be construed to exempt a city,  
          county, or city and county, or the Department of Transportation  
          from CEQA requirements.


          Existing law:


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          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)Authorizes expressly a number of tribal-state gaming compacts  
            between the State of California 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  


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

          This bill ratifies the Compact entered into between the State of  
          California and the Barona Band of Mission Indians executed on  
          June 22, 2016 and supersedes the 1999 compact between the Tribe  
          and the State of California.  Currently, the Tribe operates  
          2,000 gaming devices (slot machines).  Under this Compact, the  
          Tribe may operate a maximum of 2,500 gaming devices at its  
          current facility, known as the Barona Resort and Casino in  
          eastern San Diego County (Lakeside, CA).

          The Tribe has agreed to pay the State its pro rata share of the  
          costs the State incurs for the performance of its duties under  
          the Compact as well as 4.75% of its "gross gaming revenue," to  
          be shared with tribes that are not gaming or that otherwise are  
          not substantially benefiting from gaming.  

          Additionally, the Compact provides a framework for the sharing  
          of gaming revenue with the County of San Diego and other local  
          jurisdictions.  Specifically, from its payments to the Revenue  
          Sharing Trust Fund (RSTF) or the Tribal Nation Grant Fund  
          (TNGF), the Tribe may take annual credits of up to 60% for  
          infrastructure improvements that in part benefit county  
          residents, fire, law enforcement, public transit, education,  
          tourism, youth programs and other services including investments  
          in renewable energy, water conservation or recycling projects  
          and payments to support capital improvements or operating  
          expenses for facilities that provide health care services to  
          tribal members and other members of the local community. 

          Furthermore, the Compact: (a) provides a regulatory framework  
          that respects the role of the tribal gaming agency as the  
          primary regulator while also ensuring that state gaming  


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          regulators fulfill their responsibilities; (b) requires the  
          Tribe to conduct its gaming activities pursuant to an internal  
          control system that implements minimum internal controls that  
          are no less stringent than those in federal regulations; (c)  
          requires the Tribe to adopt a Tribal Labor Relations Ordinance,  
          as specified; and, (d) contains provisions to protect the health  
          and safety of patrons, guests, and employees.    


          The Barona Band of Mission Indians is located in eastern San  
          Diego County, on an approximately 7,227-acre reservation, home  
          to a majority of the 549 enrolled members. The Tribe is governed  
          by a seven-member Tribal Council pursuant to custom and  
          tradition. Tribal Council members are elected by the General  
          Council, which includes all qualified voters 18 years and older.  
          Elections are staggered and held every two years.  In 1999, the  
          Tribe entered into a tribal-state gaming compact with the State  
          of California which has provided it with extensive economic  
          opportunities, including a profitable casino. 

          The Barona Resort and Casino is a major economic force in  
          eastern San Diego County.  The Tribe employs approximately 3,000  
          individuals and offers 2,000 slot machines, 80 table games, a 15  
          table poker room, and 10 restaurants and eateries.   
          Additionally, the Tribe operates a 400 room resort hotel and a  
          full service day spa. The resort also features an award winning  
          18-hole golf course, known as the Barona Creek Golf Club.

          The Tribe's efforts have brought substantial economic benefits  
          to the Tribe and the surrounding communities.

          Under the leadership and guidance of the Barona Tribal Council,  
          the Tribe has made significant investments in the reservation  
          and the surrounding community including roads, a water  
          reclamation plant and water recovery program, the Barona Fire  
          Department, Tribal Enforcement and contract Sheriff Deputy, the  


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          Barona Indian Charter School, children's park, gas station and  
          the Barona Museum and Cultural Center.  The Tribe has also  
          worked in collaboration with San Diego County on a number of  
          public safety issues and infrastructure development projects  
          during the term of its existing compact.  Additionally, the  
          Tribe has invested significantly in the region through  
          philanthropic contributions to a plethora of local public and  
          nonprofit organizations (e.g., cultural arts, educational  
          programs, civic organizations, local schools, pediatric centers,  
          disaster relief centers, etc.). 

          The success of the Tribe's businesses has enabled the Tribe to  
          provide its members with medical, dental and vision insurance,  
          death benefits, senior meal delivery services, education,  
          housing and jobs.  The Tribe provides programs for its tribal  
          members, especially youth, to ensure healthy and productive  
          lives.  These include scholarships for all education levels,  
          tutoring, a youth center, daycare, preschool, full service  
          library, recreation center, organized sporting events, and  
          cultural activities for all ages. 


             Scope of Class III Gaming Authorized.  The Tribe is  
             authorized to operate up to 2,500 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, provided that the Tribe will not  
             offer such games through use of the Internet unless others in  
             the state not affiliated with or licensed by the California  
             State Lottery are permitted to do so under state and federal  
             law.  The Tribe shall not engage in Class III Gaming that is  
             not expressly authorized in the Compact.

             Authorized Gaming Facility. The Tribe may establish and  
             operate not more than one (1) gaming facility and engage in  
             Class III Gaming only on eligible Indian lands held in trust  
             for the Tribe, located within the boundaries of the Tribe's  


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             reservation and trust lands as those boundaries exist as of  
             the execution date of this Compact, as legally described in  
             the Compact (Appendix A).  

             Exclusivity.  Provides that in the event the exclusive right  
             of Indian tribes to operate Class III gaming in California  
             pursuant 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 below following conclusion  
             of negotiations, to provide for (a) compensation to the State  
             for the 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.   

             Payments to the Special Distribution Fund (SDF).  The Tribe  
             shall pay to the State, on a pro rata basis, the costs the  
             State incurs for the performance of all its duties under this  
             Compact, as established by the monies appropriated in the  
             annual Budget Act for the performance of their duties under  
             the Class III Gaming Compacts each fiscal year for the  
             California Gambling Control Commission (CGCC), the California  
             Department of Justice, the Office of the Governor, the  
             California Department of Public Health Programs, Office of  
             Problem Gambling, the State Controller, the Department of  
             Human Resources, and the Financial Information System for  
             California, or any agency or agencies the State designates as  
             a successor to them.  The Tribe's pro rata share of the  
             State's costs in any given year this Compact is in effect may  
             not be increased more than 5% per year and shall be  
             calculated using the following equation: "The maximum number  


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             of gaming devices operated in the gaming facility for the  
             previous fiscal year as determined by the State Gaming  
             Agency, divided by the maximum number of gaming devices  
             operated by all federally recognized tribes in California  
             pursuant to tribal-state Class-III gaming compacts during the  
             previous State fiscal year, multiplied by the Appropriation,  
             equals the Tribe's pro rata share." 

             Payments to the RSTF or the TNGF.  If the Tribe operates  
             more than 350 gaming devices at any time in a given calendar  
             year, it shall thereafter, including in that calendar year,  
             pay to the CGCC, for deposit into the RSTF or the TNGF, 4.75%  
             of its "gross gaming revenue" from the operation of gaming  
             devices in excess of 350.

             "Gross Gaming Revenue" is defined as the win from gaming  
             devices, which is the difference between gaming wins and  
             losses before deducting costs and expenses or deducting  
             incentives or adjusting for changes in progressive jackpot  
             liability accruals.  Generally, the difference between patron  
             wagers and the payouts made on winning wagers. 

             Credits Applied to the RSTF or the TNGF.  The State agrees  
             to provide the Tribe with annual credits for up to 60% of the  
             payments otherwise due to be paid into the RSTF or TNGF for  
             the following: 

              1)    Payments or the value of services provided to San  
                Diego County, local jurisdictions, school districts,  
                charter schools, and nonprofit and civic organizations  
                operating facilities or providing services within the  
                County for fire, law enforcement, emergency medical  
                services, public transit, education, tourism, recreation,  
                youth athletics and other services and infrastructure  
                improvements intended to serve off-reservation needs of  
                County residents - such payments shall be subject to  
                approval by the State or Designated State Agency and at  
                least 20% of the annual credits must be utilized for the  


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                above stated purposes;

              2)    Non-gaming related capital investments and economic  
                development projects by the Tribe that provide mutual  
                benefits to the Tribe and the State because, for instance,  
                they have particular cultural, social or environmental  
                value, or diversify the sources of revenue for the Tribe's  
                general fund; 

              3)    Payments to support operating expenses and capital  
                improvements for non-tribal governmental agencies or  
                facilities operating within the County of San Diego;

              4)    Investments in, and any funds paid to the State in  
                connection with, renewable energy projects that, in part,  
                serve the gaming facility, to include projects that  
                incorporate charging stations for electric or other  
                zero-emission vehicles that are available to patrons and  
                employees of the gaming facility and the tribe, its  
                members and lineal descendants;

              5)    Payments to support capital improvements and operating  
                expenses for facilities within California that provide  
                health care services to tribal members, Indians, and  

              6)    Investments by the Tribe for water treatment or  
                conservation projects and recycling projects; 

              7)    Payments for providing general welfare benefits for,  


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                among other things, educational, healthcare, burial  
                assistance, cultural or vocational purposes, to non-tribal  
                members; and,

              8)    Payments by the Tribe to reimburse the County for any  
                loss of sales tax revenue that would otherwise be due for  
                retail sales at the Tribe's gaming facility or transient  
                occupancy tax at the tribe's hotel if it was not located  
                on Indian lands.  

             All excess authorized credits that cannot be applied in any  
             one year because they would exceed the 60% may be applied as  
             an annual credit in all following years that this Compact is  
             in effect, in the same percentages, until completely  

             Quarterly 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. The report must include: (a) calculation of  
             the maximum number of gaming devices operated each day, (b)  
             the gross gaming revenue calculation, (c) the amount due the  
             SDF, (d) calculation of the amount due to the RSTF/TNGF, and  
             (e) the total amount of the quarterly payment.


             Gaming Ordinance and Regulations.  Provides that 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.


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             Licensing Requirements and Procedures.   Provides that all  
             persons in any way connected with the gaming operation or  
             gaming facility who are required to be licensed or to submit  
             to a background investigation under IGRA, and any others  
             required to be licensed under this Compact, including,  
             without limitation, all gaming employees, gaming resource  
             suppliers, financial sources, and any other person having a  
             significant influence over the gaming operation, must be  
             licensed by the Tribal Gaming Agency and cannot have had any  
             determination of suitability denied or revoked by the CGCC.   
             Also, every gaming employee must obtain, and thereafter  
             maintain current, a valid tribal gaming license, as  

             Minimum Internal Control Standards (MICS).  Requires the  
             Tribe to conduct its gaming activities pursuant to an  
             internal control system that implements MICS that are no less  
             stringent than those contained in the MICS of the federal  
             NIGC standards, as specified. It requires gaming to operate  
             pursuant to a written internal control system that reasonably  
             assures that assets are safeguarded and accountability over  
             assets is maintained; liabilities are properly recorded and  
             contingent liabilities are properly disclosed; financial  
             records are accurate and reliable; transactions are performed  
             in accordance with the Tribal Gaming Agency's authorization;  
             access to assets is permitted only in accordance with the  
             Tribal Gaming Agency's approved procedures; recorded  
             accountability for assets is compared with actual assets;  
             and, functions, duties and responsibilities are appropriately  
             segregated and performed by qualified personnel.  The Tribe  
             is required to provide the CGCC, upon written request, a copy  
             of the independent certified public accountant agreed-upon  
             procedures report conducted annually for submission to the  
             NIGC pursuant to federal law.  This report verifies that the  
             gaming operation is in compliance with the NIGC's MICS. 

             Patron Disputes.  Provides that the Tribe (through its  
             Tribal Gaming Agency) must attempt to resolve patron disputes  
             within three days of the play or operation of any game,  


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             including refusal to pay to a patron any alleged winnings  
             from any gaming activities.  If a patron is dissatisfied with  
             the resolution, the Tribe shall inform the patron in writing  
             within 15 days of the right to resolution of the dispute by  
             the Tribal Gaming Agency.  The Tribal Gaming Agency shall  
             conduct an appropriate investigation, provide to the patron a  
             copy of its procedures concerning patron complaints, and  
             render a decision in accordance with industry practice.  The  
             decision shall be issued within 60 days of the patron's  
             request.  If dissatisfied with the resolution, the patron has  
             the right to seek resolution either in the Tribe's tribal  
             court system, once a tribal court system is established, or  
             by a three-member tribal claims commission consisting of one  
             tribal government representative and at least one non-tribal  
             member.  Any party dissatisfied with the award of the Tribe's  
             tribal court or tribal claims commission may, at the party's  
             election, appeal the matter to a tribal court of appeal, if  
             one is established, or invoke the JAMS Optional Arbitration  
             Appeal Procedure.  The cost and expense of arbitration shall  
             initially be borne equally by the Tribe and the patron but  
             the JAMS arbitrator shall award to the prevailing party its  
             costs and expenses (but no attorney fees).  The Tribe agrees  
             to wave its sovereign immunity in connection with the  
             jurisdiction of the tribal court system, the tribal claims  
             commission, JAMS Optional Arbitration Appeal Procedure and in  
             any action to enforce their judgments or the obligations  
             provided in this section. 

             Public and Workplace Liability.  Requires the Tribe to  
             obtain and maintain a commercial general liability insurance  
             policy which provides coverage of no less than $10 million.   
             Also, requires the Tribe to adopt a Tort Liability Ordinance  
             containing provisions that are the same as California tort  
             law to govern all claims of bodily injury, personal injury,  
             or property damage arising out of, connected with, or  
             relating to the casino.  

             Environmental Protections.  Requires the Tribe to prepare a  
                                                                                        Tribal Environmental Impact Report (TEIR) and negotiate  
             mitigation of any off-reservation impacts, including an  


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             evaluation of energy consumption, prior to initiating the  
             development of a Project for a facility.  The Compact  
             provides procedures regarding the (1) Notice of Preparation  
             of Draft TEIR, (2) Notice of Completion of Draft TEIR, and  
             (3) Issuance of Final TEIR.  The Tribe's failure to prepare  
             an adequate TEIR when required may warrant an injunction  
             where appropriate.  Before commencement of a Project, and no  
             later than the issuance of the final TEIR, the Tribe shall  
             negotiate an intergovernmental agreement with the California  
             Department of Transportation if state roads are impacted.  A  
             completed TEIR must be filed with the County, the Department  
             of Justice, the CGCC, and the State Clearinghouse.  Also,  
             before commencement of a Project, and no later than the  
             issuance of the final TEIR, the Tribe shall offer to commence  
             negotiations with the County to, amongst other things,  
             provide for the timely mitigation of any significant effect  
             on the off-reservation environment including provisions  
             relating to compensation for law enforcement, fire  
             protection, emergency medical services and any other public  
             services to be provided by the County to the Tribe as a  
             consequence of the Project.  

             Enhanced Audit and Compliance Review Procedures.  Allows the  
             State to conduct its own annual audit and Compact compliance  
             review, in addition to providing for an annual independent  

             Inspection and Testing of Slot Machines.  Provides that 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. 


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

             Labor Provisions.  Provides that the gaming activities  
             authorized by this Compact may only commence after the Tribe  
             has adopted an ordinance identical to the Tribal Labor  
             Relations Ordinance (TRLO), referenced as Appendix C of the  
             Compact, and the gaming activities may only continue as long  
             as the Tribe maintains the ordinance.  If the Tribe employs  
             250 or more persons in a tribal casino facility, then the  
             provisions of the TLRO become effective.   

              Workers' Compensation.  Provides that the Tribe agrees to  
             participate in the State's workers' compensation program with  
             respect to employees at the casino.  All disputes arising  
             from the workers' compensation laws shall be heard by the  
             State Workers' Compensation Appeals Board pursuant to the  
             California Labor Code.  The Tribe acknowledges the  
             jurisdiction of the Board in such manners.  In lieu of  
             participation in the State's system, the Tribe may create and  
             maintain a system through self-insurance, which includes  
             specified provisions, including hearings before an  
             independent tribunal. Furthermore, the Tribe agrees that it  
             will participate in the State's unemployment compensation  
             program for providing benefits and unemployment compensation  
             disability benefits to employees at the casino.  The Tribe  
             shall withhold all taxes due to the state, except for Tribal  
             members living on the Tribe's reservation, and forward such  
             amounts to the State.  


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              Prohibitions Regarding Minors.  Provides that the Tribe  
             shall prohibit persons under the age of 18 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 (ABC) Act.

             Tobacco Provisions.  Provides that the Tribe agrees to  
             provide a non-smoking area in the gaming facility and to  
             utilize a ventilation system throughout the gaming facility  
             that exhausts tobacco smoke to the extent reasonably feasible  
             under state-of-the-art technology existing as of the date of  
             the construction or significant renovation of the gaming  
             facility, and further agrees not to offer or sell tobacco to  
             anyone younger than the minimum age specified in state law to  
             legally purchase tobacco products.

             Problem Gambling.  Requires the gaming operation to  
             establish a program, approved by the Tribal Gaming Agency, to  
             mitigate pathological and problem gaming by implementing  
             specified measures. 

             Health and Safety Standards.  Provides that the Tribe has  
             agreed to adopt and comply with tribal health standards for  
             food and beverage handling that is no less stringent than  
             State public health standards.  Also, the Tribe has agreed to  
             comply with federal water quality and safe drinking water  
             standards applicable in California.  The Tribe must also  
             adopt and comply with federal and state laws forbidding  
             harassment, including sexual harassment, discrimination and  
             retaliation.  Furthermore, the Tribe must maintain a $3  
             million insurance policy for these purposes and adopt an  


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             ordinance that includes a dispute resolution process. 

             Building Codes and Fire Safety.  Provides that 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  
             applicable codes.  Gaming facility construction, expansion,  
             improvement, modification or renovation must also comply with  
             the federal Americans with Disabilities Act. 

             Emergency Services Accessibility and Possession of Firearms.  
              Requires the Tribe to make reasonable provisions for  
             adequate emergency fire, medical, and related relief and  
             disaster services for patrons and employees. Also, prohibits  
             the possession of firearms by any person in the gaming  
             facility at all times except for federal, state, or local law  
             enforcement personnel, or tribal law enforcement or security  
             personnel, as authorized. 

             Effective Date.  Provides that this Compact shall not be  
             effective unless and until all of the following have  
             occurred: (a) the Compact is ratified by statute in  
             accordance with state law and (b) notice of approval or  
             constructive approval is published in the Federal Register.   
             Once effective, this Compact shall be in full force and  
             effect for 25 years following the effective date.

             Amendment by Agreement.  Provides that 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.


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          Indian Gaming Regulatory Act (IGRA)

          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 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  

          IGRA distinguishes between three classes of gaming (Class I,  
          Class II, and Class III) and provides for different forms of  
          regulation for each class.  Class I gaming includes "social  
          games" for minor prizes or "traditional forms of Indian gaming."  
           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.  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.  

          IGRA was enacted against a legal background in which Indian  
          tribes and individuals generally are exempt from state taxation  
          within their own territory.  IGRA provides that with the  
          exception of assessments permitted under the statute, to defray  
          the State's costs of regulating gaming activity, IGRA shall not  
          be interpreted as conferring upon a State authority to impose  
          any tax, fee, charge, or other assessment upon an Indian tribe  
          to engage in Class III activity.  Nor may a State refuse to  
          enter into negotiations based on the lack of authority to impose  
          such a tax, fee, charge, or other assessment.


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          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.

          Before 2000, the California Constitution prohibited Class III  
          gaming.  In 2000, California voters approved Proposition 1A  
          which had been proposed by the Governor and passed by the  
          Legislature.  Proposition 1A amended the California Constitution  
          to permit the State to negotiate compacts with federally  
          recognized Indian tribes for certain Class III gaming  
          activities.  Because non-Indian parties were still forbidden  
          from operating gaming facilities, Proposition 1A granted Indian  
          tribes a "constitutionally protected monopoly on most types of  
          Class III games in California."

          Rincon Decision 

          The U.S. Supreme Court in July 2011 refused to consider the  
          decision of the Ninth Circuit Court of Appeals rejecting a Class  
          III Tribal-State Gaming Compact negotiated by then Governor  
          Schwarzenegger with the Rincon Band of Luiseno Mission Indians.  
          The issue of this case's impact on Indian gaming throughout the  
          country has been a topic of great debate.

          As noted, IGRA authorizes states to receive compensation for  
          costs related to tribal gaming such as regulation and gaming  
          addiction, and to offset the effects of casinos on surrounding  
          communities.  However, states are prohibited from assessing  
          taxes on tribal casino revenues, so unjustified payments to a  
          state's General Fund are no longer permissible unless the tribes  
          are getting something in return for the required payments, such  
          as those authorized by IGRA.  

          Any payments to the State, above those needed to mitigate  


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                                                                    Page  18

          impacts of gaming must be in exchange for a benefit deemed  
          "exclusive" to the tribe. 

          The Rincon Band challenged the legality of California's "second  
          generation" compacts pursuant to which the signatory tribes  
          would be entitled to increase their slot machine count in return  
          for paying percentages of the new slot machine revenue to the  
          state's General Fund.  The Ninth Circuit had affirmed a lower  
          court decision that the new financial concessions were nothing  
          more than a state tax on tribal casino revenues which is  
          prohibited by IGRA.  

          Rincon refused to sign the amended compact which had already  
          been executed by several other tribes choosing instead to demand  
          that it be given the expanded gaming opportunity without making  
          the new financial concessions.  The Ninth Circuit Court of  
          Appeals concluded that a "non-negotiable, mandatory payment of  
          10% of net win into the State treasury for unrestricted use  
          yields public revenue, and is [therefore] a tax, and that the  
          court was therefore required to consider the State's demand as  
          evidence of bad faith under IGRA's statutes."  

          The court noted that "the State could rebut the presumption of  
          bad faith by demonstrating that the revenue demanded was to be  
          used for the public interest, public safety, criminality,  
          financial integrity, and adverse economic impacts on existing  
          activities, but the State's need for general tax revenue was  
          insufficient to demonstrate good faith." 

          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 authorizes the Legislature to appropriate money  
          from the SDF for the following purposes:  (a) grants for  
          programs designed to address gambling addiction;  (b) grants for  


                                                                     AB 291  
                                                                    Page  19

          the support of state and local government agencies impacted by  
          tribal government gaming; (c) compensation for regulatory costs  
          incurred by the California Gambling Control Commission (CGCC)  
          and the Department of Justice (DOJ) in connection with the  
          implementation and administration of compacts; (d) payment of  
          shortfalls that may occur in the RSTF; (e) disbursements for the  
          purpose of implementing the terms of tribal labor relations  
          ordinances promulgated in accordance with the terms of the 1999  
          compacts; and, (f) any other purpose specified by law.   
          (Pursuant to compact renegotiations that took place with several  
          of the larger gaming tribes during the Schwarzenegger  
          administration, revenue from those tribes is directed into the  
          state General Fund, instead of the SDF.)

          The law establishes a method of calculating the distribution of  
          appropriations from the SDF for grants to local government  
          agencies impacted by tribal gaming.  This method includes a  
          requirement that the State Controller, in consultation with the  
          CGCC, deposit funds into County Tribal Casino Accounts and  
          Individual Tribal Casino Accounts based upon a process that  
          takes into consideration whether the county has tribes that pay,  
          or do not pay, into the SDF.  The distribution formula "sunsets"  
          on January 1, 2021.

          Existing law also establishes an Indian Gaming Local Community  
          Benefit Committee in each county in which gaming is conducted,  
          specifies the composition and responsibilities of that  
          committee, and requires that committee to make the selection of  
          grants from the casino accounts.  Among other things, the  
          committee is responsible for establishing all application  
          policies and procedures for grants from the casino accounts.  
          Additionally, existing law requires the State Auditor to conduct  
          an audit every three years and report its findings to the  
          Legislature regarding the allocation and use of SDF grant  

          Revenue Sharing Trust Fund (RSTF)


                                                                     AB 291 
                                                                    Page  20

          Existing law 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 California tribes (e.g.,  
          federally-recognized non-gaming tribes and 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 non-compact  
          tribes.  The RSTF was created as part of the 1999 compacts,  
          which, in conjunction with the passage of Proposition 1A,  
          created gaming compacts with approximately 60 California tribes.  
           Non-compact tribes are considered third-party beneficiaries of  
          the 1999 compacts.

          Tribal Nation Grant Fund (TNGF)

          This particular fund (referenced in recent compacts) was created  
          to complement the RSTF and provides for the 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.  Payments from this fund  
          are intended to be made to non-gaming tribes on a "need" basis,  
          upon application.

          Prior Legislation

          AB 795 (Atkins, Chapter 520, Statutes of 2015) ratified the  
          tribal-state gaming compact entered into between the State of  
          California and the Sycuan Band of Kumeyaay Nation, executed on  
          September 2, 2015.
          AB 1540 (Gray, Chapter 531, Statutes of 2015) ratified the  
          tribal-state gaming compact entered into between the State of  
          California and the Santa Ynez Band of Chumash Indians, executed  
          on August 26, 2015.   


                                                                     AB 291  
                                                                    Page  21

          AB 315 (Bigelow, Chapter 512, Statutes of 2015) ratified the  
          amended and restated tribal-state gaming compact entered into  
          between the State of California and the United Auburn Indian  
          Community, executed on August 14, 2015.   

          AB 475 (Bigelow, Chapter 8, Statutes of 2015) ratified the  
          tribal-state gaming compact entered into between the State of  
          California and Jackson Rancheria Band of Miwuk Indians, executed  
          on February 1, 2015.

          SB 1356 (De León, Chapter 314, Statutes of 2014) ratified the  
          amendment to the tribal-state gaming compact entered into  
          between the State of California and the Viejas Band of Kumeyaay  
          Indians, executed on August 12, 2014.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          SUPPORT:   (Verified8/15/16)

          Agua Caliente Band of Cahuilla Indians
          Barona Band of Mission Indians
          California Labor Federation
          California State Association of Electrical Workers
          California State Pipe Trades Council
          Pechanga Band of Luiseno Indians
          Viejas Band of Kumeyaay Indians

          OPPOSITION:   (Verified8/15/16)

          None received


                                                                     AB 291  
                                                                    Page  22

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/15/16 20:17:16

                                   ****  END  ****