BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 291|
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THIRD READING
Bill No: AB 291
Author: Atkins (D) and Gonzalez (D), et al.
Amended: 8/3/16 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
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.
ANALYSIS:
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.
BRIEF HISTORY OF THE BARONA BAND OF MISSION INDIANS
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.
KEY COMPONETS OF THE COMPACT
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
non-Indians;
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
exhausted.
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.
ADDITIONAL COMPACT ELEMENTS
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
specified.
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
audit.
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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ADDITIONAL BACKGROUND INFORMATION
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
activity."
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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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
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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
monies.
Revenue Sharing Trust Fund (RSTF)
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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.
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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
Teamsters
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
OPPOSITION: (Verified8/15/16)
None received
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Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/15/16 20:17:16
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