BILL ANALYSIS Ķ
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|SENATE RULES COMMITTEE | AB 315|
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THIRD READING
Bill No: AB 315
Author: Bigelow (R), et al.
Amended: 8/20/15 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
NOTE: On August 25, 2015, the Senate Governmental Organization
Committee held an informational hearing on the Amended
and Restated tribal-state gaming compact between the
State of California and the United Auburn Community.
SUBJECT: Tribal gaming: compact ratification
SOURCE: Author
DIGEST: This bill ratifies the amended and restated
tribal-state gaming compact (Compact) entered into between the
State of California and the United Auburn Indian Community
(hereafter "Tribe") executed on August 14, 2015. 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.
Senate Floor Amendments of 8/20/15 gut the contents of the
original bill relating to fairs and insert provisions pertaining
to tribal compact ratification.
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)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
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
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the Legislature.
This bill ratifies the Compact entered into between the State of
California and the Tribe executed on August 14, 2015 and
supersedes the amended 2004 compact between the Tribe and the
State of California. The Compact authorizes the Tribe to
operate a maximum of 3,500 slot machines at its current facility
in Placer County, known as the Thunder Valley Casino Resort, and
it refines and updates the regulatory framework. Additionally,
the Compact will result in a reduction in General Fund monies in
exchange for more revenue being distributed to local
jurisdictions and non-gaming and limited gaming tribes.
Currently, the Tribe contributes approximately $40.4 million per
year to the General Fund and an additional $2 million annually
to the Revenue Sharing Trust Fund (RSTF) for a total to the
State of $42.4 million in 2014.
Under this Compact, the Tribe will contribute $15 million per
year to the General Fund and the Tribe will have the ability to
direct up to $9 million of the $15 million to finance state and
local infrastructure projects on non-tribal lands in Placer
County that benefit the Tribe and the surrounding community.
Besides, the $15 million for the General Fund, this Compact
requires the Tribe to pay $18 million annually to the RSTF - of
that $18 million, the Tribe will also have the ability to take a
credit of up to $9 million per year for non-gaming economic
development investments and services to Placer County and other
local jurisdictions (e.g., fire, law enforcement, public
transit, renewable energy projects). Furthermore, this Compact
will require the Tribe to pay $3 million per year into the
Special Distribution Fund (SDF) to cover its pro rata share of
state agency costs relating to tribal gaming, including problem
gambling programs.
Background
The Auburn Rancheria was officially established in 1917 when the
United States government purchased 20 acres on the south side of
Auburn for a mixed group of Nisenan Maidu and Miwok Indians that
had been living at the site for many years. Many had fled to
join the Foothill Nisenan at the Auburn village and roundhouse
after being chased out of Sutter, Yuba and Sacramento counties
by American settlers in the late 1800s.
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In 1935, 36 adult members of the Auburn Rancheria participated
in self-governance elections conducted by the Bureau of Indian
Affairs. In 1953, Congress enacted the Rancheria Act, which led
to the termination of federal recognition of the Auburn
Rancheria in 1967. Most of the Tribe's land at the former
Auburn Rancheria was subsequently lost to tribal ownership.
In 1991, the Auburn Indians reorganized and adopted a new tribal
constitution. In 1994, the Auburn Indian Recognition Act was
passed by Congress, restoring the Tribe's federal recognition as
an Indian tribe, now called the United Auburn Indian Community.
The Tribe signed the 1999 tribal-state gaming compact and
acquired 50 acres in the Sunset Industrial Area for a casino and
1,100 acres in Sheridan for tribal housing. These parcels were
taken into trust by the federal government, and in 2003, Thunder
Valley Casino Resort opened in Lincoln, CA.
The Tribe notes that in 2000, it signed a ground breaking
memorandum of understanding with Placer County, which has been
recognized as meeting the local agreement requirement in
subsequent compact amendments. The casino operated for seven
years under a management contract with Station Casinos, based in
Las Vegas, NV. In 2010, the Tribe completed a casino expansion,
including a hotel tower and assumed management of its facility.
In 2004, the Tribe, among several other tribes, signed a new
compact with Governor Arnold Schwarzenegger. That compact
allowed for an unlimited number of slot machines, but those
numbers were effectively limited by a steeply escalating flat
fee per device over the Tribe's 2004 device count of 1,907. The
2004 compact also provided for a payment of $2 million per year
to the RSTF and payments to the State's General Fund that
amounted to $40.4 million in 2014.
In 2013, the courts ruled (See Rincon Decision below) that such
payments could not be required in a tribal-state compact unless
the State provided something to the Tribe of equal value. The
court ruled that since the California Constitution already
provided Class III exclusivity, the State was not giving
something of value in return for the payments. The court also
noted that its decision did not invalidate existing compacts
such as United Auburn's.
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The Tribe notes that it has 425 members, about half of whom are
under 18 years old. Since opening Thunder Valley Casino Resort,
the Tribe has been able to establish a K-8 school for tribal
children, a pre-school, foster care homes, and a program to
support tribal elders. The Tribe also provides health care and
wellness programs and free college and skills training to its
members.
The Tribe's 144,500 square foot casino has approximately 2,600
slot machines, table games and a poker room, nine restaurants,
five bars and lounges, a bingo operation, a 9,740 square foot
hall for various events and concerts, a 300 room hotel and a spa
and other amenities including a Johnny Miller designed golf
course nearby (Whitney Oaks Golf Course). The Tribe employs
approximately 2,500 individuals.
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 and that the Tribe and the State desire to
enter into this Compact to ensure that the Tribe is the primary
beneficiary of the gaming operation and can continue to fund
essential tribal government services through gaming revenue.
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.
Additionally, 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 that in consideration
of the exclusive rights enjoyed by the Tribe to engage in the
gaming activities and to operate gaming devices as specified in
this Compact for an extended term with a substantial reduction
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in payments, and the other meaningful concessions offered by the
State in good faith negotiations, and pursuant to IGRA, the
Tribe restates its intent, inter alia, to provide to the State,
on a sovereign-to-sovereign basis, and to local jurisdictions,
fair cost reimbursement and mitigation revenues from the gaming
devices operated pursuant to this Compact on a payment schedule,
as specified.
Key Components of this Compact
Scope of Class III Gaming authorized and financial terms. As
noted above, pursuant to the 1999 compact, the Tribe operated
1,907 gaming machines. When the 1999 compact was amended in
2004, it authorized the Tribe to operate an unlimited number of
additional gaming devices with an escalating fee per device
schedule as follows:
Number of Additional Devices to Annual Fee (per device)
1,907 to 2,000 $11,000
2,001 to 2,500 $12,000
2,501 to 3,000 $13,200
3,001 to 3,500 $17,000
3,501 to 4,000 $20,000
4,001 to 4,500 $22,500
4,500 and above $25,000
Furthermore, pursuant to the 2004 compact, the Tribe currently
pays $33.8 million annually to the State, which was calculated
to be at least 10 percent of the annualized net win between July
1, 2003 and May 31, 2004 for the 1,907 machines that it operated
at that point. Currently, the Tribe operates approximately 2,600
machines. Its payments to the State last year under the above
fee schedule were $40.4 million. In addition, the Tribe pays $2
million annually to the RSTF, for a total to the State of $42.4
million in 2014.
Under this Compact, the Tribe may operate a maximum of 3,500
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
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that is not expressly authorized in the Compact.
The Tribe will pay $15 million per year into the State's General
Fund but will receive a credit of up to $9 million per year in
exchange for payments to Placer County, state agencies, or other
local jurisdictions to finance infrastructure projects on
non-Indian lands in Placer County that benefit the Tribe and the
surrounding community.
The Tribe will pay $18 million per year to the State, which will
be deposited into the RSTF, from which the State has a trust
obligation to provide $1.1 million per year to non-gaming and
limited gaming tribes in California. When the RSTF is fully
funded, the State may deposit compact payments into the Tribal
Nation Grant Fund (TNGF). From the money slated for the
RSTF/TNGF, the State will provide the Tribe a credit of up to $9
million per year of this payment for:
1)Non-gaming economic development investments that benefit the
State and the Tribe because of their cultural, social or
environmental value and that provide economic diversification
for the Tribe;
2)Payments to support operational expenses and capital
improvements for non-tribal government entities in Placer
County;
3)Investments and associated taxes paid to the State for
renewable energy projects;
4)Capital improvements and operating expenses for facilities
that provide health care services to tribal members, Indians
and non-Indians;
5)Payments to Placer County for lost property, sales and hotel
taxes at the Tribe's casino;
6)Payments to Placer County and other local jurisdictions for
fire protection, law enforcement, public transit, education,
tourism and other services not otherwise required as
mitigation for significant off-reservation impacts of the
gaming operation in the required intergovernmental agreement.
Additionally, under this Compact the Tribe will pay $3 million
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per year into the SDF for the following purposes:
1)To cover its pro rata share of state agency costs relating to
tribal gaming, including problem gambling programs, the
California Gambling Control Commission (CGCC), the Department
of Justice and the Office of the Governor; and
2)Other uses of the SDF, including grants to state and local
agencies impacted by tribal gaming, compensation for costs
resulting from intra-tribal disputes, and backfilling any
shortfalls in the RSTF.
During each year in which this 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. 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.
Licensing and regulation. Stipulates that copies of tribal
gaming ordinances and all the tribal regulatory rules,
regulations and internal control standards must be provided to
the Bureau of Gambling Control (Bureau) and the CGCC.
Additionally, this Compact requires the Tribe to make available
to the public upon request documents relating to the gaming
operation, tribal gaming ordinances, and the rules of Class III
games, tribal ordinances governing torts, employment
nondiscrimination standards, and rules concerning patron
disputes if these documents are not otherwise publicly
available. Furthermore, this Compact allows the CGCC, if it is
reasonably necessary, to review materials and information
received by the Tribal Gaming Agency in connection with the
licensing of a gaming employee.
Labor relations. Recognizes the fact that the Tribe has entered
into a collective bargaining agreement with the Hotel Employees
and Restaurant Employees Union (UNITE HERE) as meeting compact
requirements for a Tribal Labor Relations Ordinance (TLRO). As
such, no change in the TLRO is necessary to address employee
rights. This Compact also specifies that the existence of such
a long-standing positive relationship between the Tribe and
UNITE HERE is a critical component of the terms and conditions
of this Compact.
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Memorandum of Understanding. Recognizes the Tribe's 2000
Memorandum of Understanding with Placer County as meeting
compact requirements for an intergovernmental agreement to
mitigate significant off-reservation impacts to the environment,
law enforcement, fire protection, public safety, medical
services, and problem gambling.
Patron disputes. Provides that the Tribe must attempt to
resolve patron disputes filed within seven days of the play or
operation of a Class III game, including refusal to pay any
alleged winnings. If a patron is dissatisfied with the
resolution, the Tribe shall inform the patron in writing within
15 days of his or her right to seek binding arbitration. Also,
provides that binding arbitration shall be settled by a retired
judge, in accordance with the streamlined arbitration rules and
procedures of Judicial Arbitration and Mediation Services.
Additionally, the Tribe agrees to wave its sovereign immunity in
order to be compelled in federal or state court to abide by the
resolution of arbitration.
Minimum internal controls. Requires the Tribe to provide to the
CGCC, upon written request, a copy of the independent certified
public accountant agreed-upon procedures report conducted
annually for submission to the National Indian Gaming Commission
(NIGC) pursuant to federal law. This report verifies that the
gaming operation is in compliance with the NIGC's minimum
internal control standards.
Tribal Environmental Impact Report. Requires the Tribe to
prepare a "Tribal Environmental Impact Report" (TEIR) to measure
off-reservation environmental impacts including an evaluation of
energy consumption prior to initiating the development of a
project for a facility. A completed TEIR shall be filed with
Placer County, the Department of Justice, and the State
Clearinghouse.
Building codes and fire safety. Requires that tribal facilities
meet or exceed the California Building Code and the Public
Safety Code applicable to Placer County. The Tribe must also
submit to fire safety inspections by the State, and to rectify
deficiencies, lest be subject to court order prohibiting
occupancy of the portion of the Gaming Facility with the
deficiencies.
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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. The Tribe
must also adopt a Tort Liability Ordinance stipulating that
California tort law governs claims. Additionally, provides that
California tort law shall apply to specified claims if the Tribe
fails to adopt a Tort Liability Ordinance.
Workers' compensation. Provides that, in lieu of participating
in the State's workers' compensation system, the Tribe may
create and maintain a system that provides redress for employee
work-related injuries through insurance or self-insurance. The
Tribe's system must include a specified scope of coverage as
well as a means of enforcement against the Tribe. Also,
requires the Tribe to provide 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 State of its election to participate in the statutory
workers' compensation system or, alternatively, will forward to
the State all relevant ordinances and documents establishing its
own system.
Inspections. Allows the CGCC to inspect all gaming devices in
operation at the casino, including all the software, hardware,
and associated equipment and systems that support the operation
of the gaming devices, on a random basis four times annually to
confirm that they operate and play properly.
Slot machine testing and inspections. 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. In addition,
authorizes the CGCC 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.
Independent auditor. Requires the Tribe to provide the CGCC
results from an independent auditor of a compliance audit with
the requirements concerning the manufacturer or distributor and
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the slot machine testing.
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 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. 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.
Prohibitions regarding minors. Provides that 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 standards for
alcohol service shall be subject to state law (the Alcoholic
Beverage Control Act).
Emergency services accessibility and possession of firearms.
Provides that the Tribe shall make reasonable provisions for
adequate emergency fire, medical, and related relief and
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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. Stipulates that this 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, 2041.
Additional Relevant Background Information
Rincon Decision
The U.S. Supreme Court in July 2011 refused to consider the
decision of the Ninth Circuit Court rejecting a Class III
Tribal-State Gaming Compact negotiated by 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.
Another vehicle for state receipt of casino payments above those
payments must be in exchange for some benefit deemed "exclusive"
to the Tribe. To this end, it is fact that a number of other
state (Governors) have attempted to create "exclusive grants" in
favor of compact signatory tribes in return for payments to the
state treasuries.
The Rincon Band of Luiseno Mission Indians challenged the
legality of California's "second generation" compacts pursuant
to which the signatory tribes would be entitled to increase
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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 had refused to sign the amended compact which already had
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
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."
Pauma Band of Luiseno Mission Indians Lawsuit
In 2010, the Pauma Band of Luiseno Mission Indians ceased
payments to the State and brought suit against the State in
federal court claiming that the State acted in bad faith by
misrepresenting significant information relative to the number
of gaming machines available for licensure. Prior to its 2004
amended compact, the Tribe was paying approximately $315,000 a
year to the State (into the SDF and RSTF) under terms of its
1999 compact. The payment rose to $7.75 million a year
(initially for securitizing the proposed transportation bond and
subsequently deposited directly into the General Fund) under the
Tribe's 2004 amended compact. In 2013, the court sided with
Pauma and, thus, the State no longer receives payments from the
Pauma Tribe. The State has appealed that decision.
As noted above, the 2004 Pauma compact amendments were
negotiated at the same time as the current United Auburn
compact, both of which were ratified by the same bill (AB 687,
Nuņez, Chapter 91). Both compacts provided for fixed payments to
the State for securitizing transportation bonds. The Rincon
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decision as well as the Pauma case, have limited some of the
State's options when negotiating and renegotiating compact
agreements.
Prior/Related Legislation
AB 475 (Bigelow, Chapter 8, Statutes of 2015) ratified the
tribal-state gaming compact entered into between the State of
California and the Jackson Rancheria Band of Miwuk Indians,
executed on February 1, 2015.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/25/15)
Blue Lake Rancheria Tribe
California Labor Federation
California State Association of Counties
City of Lincoln
City of Rocklin
City of Roseville
Jackson Rancheria Band of Miwuk Indians
Pala Band of Mission Indians
Placer County Board of Supervisors
Rincon Band of Luiseno Mission Indians
Santa Ynez Band of Chumash Mission Indians
UNITE HERE
OPPOSITION: (Verified8/25/15)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/26/15 16:53:19
**** END ****
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