BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 466|
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THIRD READING
Bill No: AB 466
Author: Brown (D), et al.
Amended: 8/17/16 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
NOTE: On August 23, 2016, the Senate Committee on Governmental
Organization held an informational hearing on the tribal
gaming compact entered into between the State of
California and the San Manuel 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
San Manuel Band of Mission Indians (hereafter "Tribe") executed
on August 16, 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
supervised by the courts, if it is found that the State failed
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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 San Manuel Band of Mission Indians executed
on August 16, 2016 and supersedes the Tribe's 2006 amended
compact. Under this Compact, the Tribe may operate a maximum of
7,500 gaming devices (slot machines) at no more than two (2)
gaming facilities located only on the tribe's Indian lands as
those lands exist on the effective date of this Compact. If the
Tribe chooses to operate a second facility, it may operate no
more than 1,000 gaming devices at that second facility.
The Tribe has agreed to pay into the Special Distribution Fund
(SDF) its pro rata share of costs the State incurs for the
performance of its duties under the Compact plus additional
amounts ($500,000 up to a total of $3 million) to cover a
portion of the share of regulatory costs for smaller gaming
tribes. The Tribe has also agreed to pay $19 million annually
into the Revenue Sharing Trust Fund (RSTF) or the Tribal Nation
Grant Fund (TNGF), to be shared with tribes that are not gaming
or that otherwise are not substantially benefiting from gaming.
Additionally, this Compact establishes the San Manuel Community
Credit Fund (SMCCF), to be managed by the Tribe for the purpose
of providing funding for infrastructure improvements that in
part benefit San Bernardino County residents, fire, law
enforcement, public transit, education, tourism, and other
services including investments in renewable energy projects,
water treatment or conservation projects and payments to support
capital improvements and operating expenses for facilities
within California that provide health care services to tribal
members, Indians, and non-Indians. The Tribe has agreed to make
quarterly payments into the SMCCF totaling $29 million per year
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- no less than $3 million of the $29 million annual payment
shall be applied to enhancement of Native American education in
the State of California.
The provisions of this Compact establishing or amending existing
revenue sharing obligations of the Tribe, including payments to
the SDF, the RSTF/TNGF, the SMCCF, and payments and
reimbursement to local government to mitigate significant
effects on the off-reservation environment will take effect on
July 1, 2017. Until that date, the revenue contributions set
forth in the 2006 amended compact will remain in effect.
The Tribe's 2006 amended compact authorized no more than 7,500
gaming devices; required an annual flat payment of $45 million
to the State's general fund, plus an annual payment of 15% of
the net win generated from the operation of between 2,000-5,000
gaming devices, plus an annual payment of 25% of the net win
generated from the operation of between 5,001-7,500 gaming
devices; and, provided for an annual $2 million payment into the
RSTF.
Once effective (legislative ratification and federal approval
required), this Compact will be in full force and effect for
twenty-five (25) years.
KEY COMPONENTS OF THE COMPACT
Scope of Class III Gaming Authorized. The Tribe is authorized
to operate up to a total of 7,500 gaming devices (slot
machines); banking or percentage card games; 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; and, off-track
wagering on horse races in the gaming facility pursuant to the
off-track wagering compact between the tribe and the State
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approved by the Department of the Interior on March 27, 1991.
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 two (2) gaming facilities and engage in
Class III Gaming within the Tribe's existing Indian lands. If
the Tribe chooses to operate a second gaming facility, it may
operate no more than 1,000 gaming devices at that second
facility.
Exclusivity. 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 and treat 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,
the administration and implementation of tribal-state gaming
compacts, and funding for the Office of Problem Gambling, as
determined by the monies appropriated in the annual Budget Act
each fiscal year to carry out those purposes. The Tribe's pro
rata share of the State's costs in any given year this Compact
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is in effect may not be increased more than 5% per year and
shall be calculated using the following equation: "The maximum
number 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."
The Tribe further agrees to pay an additional five hundred
thousand dollars ($500,000) into the SDF to ensure it remains
solvent. In the event the pro rata funding for the SDF
statewide has proven sufficient for three consecutive years, the
parties agree to meet and confer for the purpose of making an
appropriate reduction in the additional payment. Also, in the
event the Tribe's pro rata share exceeds $3 million after
application of the 5% limitation, the Tribe shall pay only its
pro rata share.
Payments to the RSTF or the TNGF. The Tribe agrees to pay $19
million annually to the California Gambling Control Commission
(CGCC) for deposit into the RSTF or the TNGF.
San Manuel Community Credit Fund (SMCCF). The Compact
establishes the San Manuel Community Credit Fund (SMCCF), which
is managed by the Tribe to make or provide funding for, or make
investments in projects that mutually benefit the Tribe, County,
local jurisdictions, and the State. The Tribe shall make
quarterly payments into the fund totaling $29 million per year
and the SMCCF may be used for the following purposes:
1)Payments by the Tribe to, or on behalf of, the County or local
jurisdictions including public utility agencies operating
facilities or providing services within the County for fire,
law enforcement, public transit, education, tourism, or other
services and infrastructure improvements intended to serve
off-reservation needs of County residents as well as those of
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the Tribe - such payments shall be subject to approval by the
County or local jurisdiction receiving the funds;
2)Cost of services provided by the Tribe, or payments made to
the County, local jurisdictions, school districts, charter
schools, or non-profit or civic organizations operating
facilities or providing services within the County, for
cultural programs, fire services, emergency medical services,
problem gambling programs, law enforcement, public transit,
education, tourism, youth athletics and other youth programs,
or other services or infrastructure improvements that in part
serve off-reservation needs of County residents;
3)To promote continued economic growth that benefits the Tribe
and the surrounding community through investments in
facilities, infrastructure, or other projects that generate
sustained job creation and ensure the financial longevity of
the Tribe, the Tribe may utilize up to 20% of the SMCCF
annually for the purpose of making payments to the principle
amount on its debt services which are secured by the assets of
the gaming operation;
4)Non-gaming related capital investments and economic
development projects by the Tribe, on or off tribal trust
lands, that provide mutual benefits to the Tribe and the State
because, for instance, they have particular cultural, social
or environmental value, create jobs, or diversify the sources
of revenue for the Tribe's general fund;
5)Investments, loans, or other financial obligations including
actual payments used to secure loans, to or for the benefit of
other federally recognized tribes for any purpose, including
gaming;
6)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
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stations for electric or other zero-emission vehicles that are
available to tribal members, patrons and employees of the
gaming facility or the Tribe;
7)Payments to support capital improvements and operating
expenses for facilities within California that provide health
care services to tribal members, Indians, and non-Indians;
8)Investments by the Tribe for water treatment or conservation
projects on real property owned by the Tribe, as well as costs
of recycling programs that, in part, serve the gaming
facility, or other on or off-reservation needs within the
County;
9)Grants to Native Americans who are not members of the Tribe,
or grants to other federally-recognized tribes or other Native
American tribes regardless of their federal-recognition
status, for educational, cultural, or vocational purposes, or
for governmental or general welfare purposes or funds or
donations provided for the purpose of aiding federally
recognized tribes in the wake of natural or man-made
disasters; and,
10) Contributions toward the enhancement of Native
American education in the state of California, which shall be
in the amount of no less than $3 million per year.
In the event the Tribe's annual gross gaming revenue is less
than its gross gaming revenue for fiscal year 2009, the Tribe
shall no longer be required to pay the credit amounts into the
SMCCF.
"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.
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Generally, the difference between patron wagers and the payouts
made on winning wagers.
ADDITIONAL COMPONENT 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.
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
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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 promulgate regulations, that meet
minimum specified standards, governing patron disputes over
the play or operation of any game, including refusal to pay
to a patron any alleged winnings from any gaming activities.
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 gaming facility.
Environmental Protections. Requires the Tribe to prepare a
Tribal Environmental Impact Report (TEIR) and negotiate
mitigation of any off-reservation impacts, including an
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
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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. In
addition to providing for an annual independent audit, the
Compact allows the state to conduct its own annual audit and
compact compliance review.
Inspection and Testing of Slot Machines. 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.
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
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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 in light of the fact that
the Tribe has maintained a long standing collective
bargaining agreement with a labor organization
(Communications Workers of America - CWA) and that agreement
was recently renewed and is in full force and effect, the
parties agree that no change in the Tribal Labor Relations
Ordinance (TLRO) is necessary to address employee rights at
this time. However, should the collective bargaining
agreement come to an end and not be renewed, the TLRO
included in this Compact and referenced as Appendix B, shall
be adopted by the Tribe in place of the existing TLRO.
Workers' Compensation. Provides that the Tribe agrees to
participate in the State's workers' compensation program with
respect to employees at the gaming operation and the gaming
facility. 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.
Prohibitions Regarding Minors. Provides that the Tribe
shall prohibit persons under the age of twenty-one (21) years
from being present in any room or area in which gaming
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activities are being conducted unless the person is en route
to a non-gaming area of the gaming facility.
Alcohol Provisions. Makes it explicit that the purchase,
sale, and service of alcoholic beverages shall be subject to
state law - the Alcoholic Beverage Control Act.
Tobacco Provisions. Provides that the Tribe agrees to
provide a non-smoking area in the gaming facility and to
incorporate ventilation, filtration, purification or other
technologies throughout the gaming facility, where reasonable
and feasible after consideration of engineering, economic and
scientific factors, and further agrees not to offer or sell
tobacco to anyone under twenty-one (21) years of age.
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 State public health standards
for food and beverage handling. 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 tribal law that is consistent with
federal and state laws forbidding harassment, including
sexual harassment, discrimination and retaliation.
Furthermore, the Tribe must maintain an insurance policy for
these purposes and adopt an 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
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gaming facility construction to meet or exceed the
construction standards set forth in the applicable codes.
The gaming facility and 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 twenty-five (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.
BRIEF HISTORY THE SAN MANUEL BAND OF MISSION INDIANS
According to information provided by the Tribe, the San Manuel
Band of Mission Indians is a federally recognized American
Indian tribe located near the City of Highland, California. San
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Manuel is one of several clans of Serrano Indians, who are the
indigenous people of the San Bernardino highlands, passes,
valleys, mountains and high deserts which share a common
language and culture.
The San Manuel Indian Reservation, named after its great leader,
Santos Manuel, and situated in a rugged hillside with little
flat land for development, was established by Executive Order in
1891 and recognized as a sovereign nation with the right of
self-government. The Reservation is home to the Yuhaaviatam
Clan of the Serrano Indians and consists of just over 900 acres.
There are more than 200 tribal members enrolled with the Tribe.
In a determined effort to turn around its economic position the
Tribe opened a bingo hall in 1986. Approximately 20 years later
the Tribe opened the San Manuel Indian Bingo & Casino that today
includes nearly 4,000 gaming devices, more than 120 tables, a
1,400 seat Bingo Hall, four restaurants, a food court and
multiple food kiosks as well as other amenities. The Tribe,
among the top employers in the County of San Bernardino, employs
nearly 4,000 people, 75% of whom live within the county. In
addition to the San Manuel Indian Bingo & Casino, the Tribe's
economic development efforts include businesses and investments
in the local region as well as state-wide, and in other states.
The tribe has continued to maintain its unique form of
governance and like other governments it seeks to provide a
better quality of life for its citizens by building
infrastructure, maintaining civil services and promoting social,
economic and cultural development. Today, the San Manuel tribal
government oversees many governmental units including the
departments of fire, public safety, education and environment.
The Tribe has made progress toward becoming a self-sufficient
tribal government with an established economic and social
outlook.
San Manuel is active in supporting projects in neighboring
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communities via government-to-government agreements for law
enforcement and public safety services. The Tribe has also
generously contributed to non-profit groups and community
organizations in the San Bernardino region in support of
cultural, social, and economic projects that benefit local
jurisdictions. Since 2007, San Manuel has contributed some $122
million to charities, including more than half of that amount
(approximately $70 million) to charitable groups in San
Bernardino where economic challenges remain among the greatest
in the state.
The San Manuel Indian Reservation, like other tribal lands in
the United States, is a sovereign territory with a tribal nation
and its own system of government. Tribal government consists of
two governing bodies: a General Council comprised of adult
members 21 years and older, and a seven-member Business
Committee elected by the General Council. The Business
Committee has a Chairperson, Vice-Chairperson, Secretary,
Treasurer, and three at-large Business Committee members elected
to two-year terms. As elected officials, the Business Committee
is responsible for enforcing by-laws, establishing policies,
protecting business interests and preserving the sovereignty of
the Tribe.
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,
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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.
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
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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
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
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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
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
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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)
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.
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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.
Related/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 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
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Indians, executed on August 12, 2014.
SB 941 (Padilla, Chapter 226, Statutes of 2007) ratified the
first compact amendment to the compact between the State of
California and San Manuel.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/23/16)
California Labor Federation
Communications Workers of America
San Manuel Band of Mission Indians
UNITE HERE, AFL-CIO
OPPOSITION: (Verified8/23/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/23/16 14:19:31
**** END ****