BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                        AB 466|
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          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  AB 466
          Author:   Brown (D), et al.
          Amended:  8/17/16 in Senate
          Vote:     21 


           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.


          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  

          Once effective (legislative ratification and federal approval  
          required), this Compact will be in full force and effect for  
          twenty-five (25) years.  


          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  

          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  

          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  

          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  

          "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.


             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  

             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  

             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.


          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  

          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.


          Indian Gaming Regulatory Act (IGRA)

          In 1988, Congress enacted the Indian Gaming Regulatory Act  
          (IGRA) to provide a statutory basis for the operation and  
          regulation of gaming on Indian lands.  IGRA provides that an  
          Indian tribe may conduct gaming activity on Indian lands if the  
          activity "is not specifically prohibited by federal law and is  
          conducted within a State which does not prohibit such gaming  

          IGRA distinguishes between three classes of gaming (Class I,  


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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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                                                                    Page  18

          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  


                                                                     AB 466  
                                                                    Page  19

          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  


                                                                     AB 466  
                                                                    Page  20

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

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

          Revenue Sharing Trust Fund (RSTF)

          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.


                                                                     AB 466  
                                                                    Page  21

          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  


                                                                     AB 466  
                                                                    Page  22

          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

          OPPOSITION:   (Verified8/23/16)

          None received

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/23/16 14:19:31

                                   ****  END  ****