BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 629|
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THIRD READING
Bill No: AB 629
Author: Gonzalez (D), et al.
Amended: 6/16/16 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
NOTE: On June 28, 2016, the Senate Governmental Organization
Committee held an informational hearing on the tribal
gaming compact entered into between the State of
California and the Pala Band of Mission Indians.
SUBJECT: Tribal gaming: compact ratification
SOURCE: Pala Band of Mission Indians
DIGEST: This bill ratifies the tribal-state gaming compact
(Compact) entered into between the State of California and the
Pala Band of Mission Indians (hereafter "Tribe") executed on May
6, 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:
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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
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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
the Legislature.
This bill ratifies the Compact entered into between the State of
California and the Pala Band of Mission Indians executed on May
6, 2016 and supersedes the 2004 amended compact between the
Tribe and the State of California. Currently, the Tribe
operates 2,000 gaming devices (slot machines). Under this
Compact, the Tribe may operate a maximum of 2,500 gaming devices
at its current facility in San Diego County.
The Tribe has agreed to pay the State its pro rata share of the
costs the State incurs for the performance of its duties under
the Compact as well as six percent (6%) of its "net win," to be
shared with tribes that are not gaming or that otherwise are not
substantially benefiting from gaming. Additionally, the Compact
provides a framework for the sharing of gaming revenue with the
County of San Diego and other local jurisdictions.
Specifically, from its payments to the Revenue Sharing Trust
Fund (RSTF) or the Tribal Nation Grant Fund (TNGF), the Tribe
may take annual credits of up to sixty percent (60%) for
infrastructure improvements and fire, law enforcement, public
transit, education, tourism and other services including
investments in renewable energy, water conservation or recycling
projects and payments to support capital improvements or
operating expenses for facilities that provide health care
services to tribal members and other members of the local
community.
Brief History of the Pala Band of Mission Indians
The Pala Band of Mission Indians is located in northern San
Diego County, on a 12,273-acre reservation, home to a majority
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of the 918 enrolled members. The Tribe is governed by a
six-member Executive Committee pursuant to a constitution
adopted in November 1994. Committee members are elected by the
General Council, which includes all qualified voters 18 years
and older. Elections are held every two years in November. In
1999, the Tribe entered into a tribal-state gaming compact with
the State of California which has provided it with extensive
economic opportunities, including a profitable casino. That
compact was amended in 2004.
The existing casino operation, a major economic force in
northern San Diego County, is known as the Pala Casino Resort
and Spa, offers 2,000 state-of-the-art slot machines, 85 table
games, eight restaurants, two lounges with live entertainment
daily, and a 2,000 seat Events Center. The resort hotel has 507
rooms and the resort complex also operates an RV park with 100
sites and picnic grounds. All told, the resort employs
approximately 2,000 individuals. The Tribe has had agreements
with UNITE-HERE concerning its casino employees, including
several collective bargaining agreements, for over 15 years.
Additionally, the Tribe owns and operates a 90-acre avocado
grove, managed by tribal members, on the south end of the Pala
reservation. The avocado operation has been producing nearly
one million pounds of avocados since 1989, and employs a crew of
over 40 seasonal workers who help harvest the avocados three
times each year - the fruit is sent to nearby packing houses for
processing and sale.
The Tribe established a fire department in 1978 (two
firefighters and a 300-gallon water tank) which has evolved into
a full-time, 30 personnel volunteer department, operating 24/7,
in a $9 million facility. The Pala Fire Department maintains
State Fire Marshal certification status and has established
mutual aid agreements with the surrounding fire departments,
including the Department of Forestry. The Tribe has also worked
in collaboration with San Diego County on a number of public
safety issues and infrastructure development programs during the
term of its existing compact.
Additionally, the Tribe has invested significantly in projects
benefitting youth in the area including contributions to a
plethora of local public and nonprofit organizations (e.g.,
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cultural arts, educational programs, civic organizations, local
schools, pediatric centers, disaster relief centers, etc.).
Furthermore, the Tribe provides programs for tribal members,
especially youth, to ensure healthy and productive lives. These
include scholarships for all education levels, tutoring, a youth
center, daycare, preschool, full service library, recreation
center, organized sporting events, and environmental activities
for all ages. The Tribe also provides medical, dental, vision
insurance, death benefits, and senior meal delivery and senior
transportation services.
Key Components of the Compact
Scope of Class III Gaming Authorized and Financial Terms.
Under this Compact, the Tribe may operate a maximum of 2,500
gaming devices, banking or percentage card games, and any
devices or games that are authorized under state law to the
California State Lottery, provided that the Tribe will not
offer such games through use of the Internet unless others in
the state not affiliated with or licensed by the California
State Lottery are permitted to do so under state and federal
law. The Tribe shall not engage in Class III Gaming that is
not expressly authorized in the Compact.
Authorized Gaming Facility. The Tribe may establish and
operate not more than two gaming facilities and engage in
Class III Gaming only on eligible Indian lands held in trust
for the Tribe, located within the boundaries of the Tribe's
reservation and trust lands as those boundaries exist as of
the execution date of this Compact, as legally described in
the Compact (Appendix A). If the Tribe chooses to operate
more than one gaming facility, then one of the two gaming
facilities shall have no more than five hundred (500) gaming
devices and shall have a primary purpose other than gaming
authorized under IGRA.
Exclusivity. Provides that in the event the exclusive right
of Indian tribes to operate Class III gaming in California
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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 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.
Payments to the Special Distribution Fund (SDF). The Tribe
shall pay to the State on a pro rata basis the costs the State
incurs for the performance of all its duties under this
Compact, as established by the monies appropriated in the
annual Budget Act for the performance of their duties under
the Class III Gaming Compacts each fiscal year for the
California Gambling Control Commission (CGCC), the California
Department of Justice, the Office of the Governor, the
California Department of Public Health Programs, Office of
Problem Gambling, the State Controller, the Department of
Human Resources, and the Financial Information System for
California, or any agency or agencies the State designates as
a successor to them. The Tribe's pro rata share of the
State's costs in any given year this Compact is in effect
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 fiscal year, multiplied by costs, equals the Tribe's
pro rata share."
Payments to the RSTF or TNGF. If the Tribe operates more than
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three hundred fifty (350) gaming devices at any time in a
given calendar year, it shall thereafter, including in that
calendar year, pay to CGCC, for deposit into the RSTF or the
TNGF, six percent (6%) of its "net win" from the operation of
gaming devices in excess of three hundred fifty (350).
"Net Win" means drop from gaming devices, plus the redemption
value of expired tickets, less fills, less payouts, less the
portion of the gaming operation's payments to a third-party
wide-area progressive jackpot system provider that is
contributed only to the progressive jackpot amount.
Credits Applied to RSTF or the TNGF. The State agrees to
provide the Tribe with annual credits for up to sixty percent
(60%) of the payments otherwise due to be paid into the RSTF
or TNGF for the following:
1) Payments or the value of services provided to San Diego
County, local jurisdictions, and nonprofit and civic
organizations operating facilities or providing services
within the County for fire, law enforcement, emergency
medical services, public transit, education, tourism,
recreation, and other services and infrastructure
improvements intended to serve off-reservation needs of
County residents - such payments shall be subject to
approval by the County or local jurisdiction in the County
and at least twenty percent (20%) of the annual credits
must be utilized for the above stated purposes;
2) Non-gaming related capital investments and economic
development projects by the Tribe that provide mutual
benefits to the Tribe and the State because, for instance,
they have particular cultural, social or environmental
value, or diversify the sources of revenue for the Tribe's
general fund;
3) Payments to support operating expenses and capital
improvements for non-tribal governmental agencies or
facilities operating within the County;
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4) Investments in, and any funds paid to the State in
connection with, renewable energy projects that, in part,
serve the gaming facility, to include facilities that
incorporate charging stations for electric or other
zero-emission vehicles that are available to patrons and
employees of the gaming facility;
5) Payments to support capital improvements and operating
expenses for facilities located on the reservation or
within California that provide health care services to
tribal members, Indians, and non-Indians;
6) Investments by the Tribe for water treatment or
conservation projects and recycling projects; and,
7) Grants to other federally-recognized tribes for
governmental or general welfare purposes.
All excess authorized credits that cannot be applied in any
one year because they would exceed the sixty percent (60%) may
be applied as an annual credit in all following years that
this Compact is in effect, in the same percentages, until
completely exhausted.
Quarterly Contribution Report. At the time each quarterly
payment is due, the Tribe shall submit to the State a report,
prepared and certified by an authorized representative of the
gaming operation. The report must include: (1) calculation of
the maximum number of gaming devices operated each day, (2)
the Net Win calculation, (3) the amount due the SDF, (4)
calculation of the amount due to the RSTF/TNGF, and (5) the
total amount of the quarterly payment.
Additional Compact Elements
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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
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
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gaming operation is in compliance with the NIGC's MICS.
Patron Disputes. Provides that the Tribe (through its Tribal
Gaming Agency) must attempt to resolve patron disputes within
seven days of the play or operation of any game, including
refusal to pay to a patron any alleged winnings from any
gaming activities. If a patron is dissatisfied with the
resolution, the Tribe shall inform the patron in writing
within 15 days of the right to resolution of the dispute by
the Tribal Gaming Agency, and if dissatisfied with the
resolution, the patron has the right to seek resolution by
binding arbitration before a single arbitrator, who shall be a
retired judge, in accordance with the streamlined arbitration
rules and procedures of Judicial Arbitration and Mediation
Services (JAMS). The Tribal Gaming Agency must conduct an
appropriate investigation, provide to the patron a copy of its
procedures concerning patron complaints, and render a decision
in accordance with industry practice. The decision shall be
issued within 60 days of the patron's request. The Tribe
agrees to waive its sovereign immunity in order to be
compelled in federal or state court to abide by the resolution
of arbitration. The cost and expenses of arbitration shall be
initially borne by the Tribe but the arbitrator shall award to
the prevailing party its costs and expenses (but no attorney
fees). Any party dissatisfied with the award of the
arbitrator may at the party's election invoke the JAMS
Optional Arbitration Appeal Procedure; provided that the party
making such election must bear all costs and expenses of JAMS
and the arbitrators associated with the appeal regardless of
the outcome.
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
stipulating that California tort law governs claims. In
addition, the Compact provides that California tort law shall
apply to specified claims if the Tribe fails to adopt a Tort
Liability Ordinance.
Environmental Protections. Requires the Tribe to prepare a
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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. A completed TEIR must be filed with San Diego
County, the Department of Justice, and the State
Clearinghouse. Before commencement of a Project, and no later
than the issuance of the final TEIR, the Tribe shall offer to
commence negotiations with San Diego 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.
Labor Provisions. Provides that the gaming activities
authorized by this Compact may only commence after the Tribe
has adopted an ordinance identical to the Tribal Labor
Relations Ordinance (TLRO), referenced as Appendix C of the
Compact, and the gaming activities may only continue as long
as the Tribe maintains the ordinance. If the Tribe employs
250 or more persons in a tribal casino facility, then the
provisions of the TLRO become effective. The TLRO provides
for a secret ballot election. The new TLRO proscribed by this
Compact is modeled after the Tribe's 1999 TLRO with several
modifications. The new TLRO provides for union neutrality.
The Tribe will not oppose a union organization but can
advocate the benefits of working for the Tribe. A labor union
must issue a Notice of Intent or Organize (NOIO). For a
period of 365 days following delivery of a NOIO, the union
shall not engage in strikes, picketing, boycotts, attack Web
sites, or other economic activity at or in relation to the
tribal casino or related facility. During the 365 days after
the Tribe received the NOIO, the union must collect dated and
signed authorization cards and complete the secret ballot
election. Failure to complete the secret ballot election
within 365 days shall preclude the union from delivering
another NOIO for a period of two years (730 days). After the
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certification that 30% of the employees have expressed an
interest in the union, a notice of election shall be issued
and the election shall be concluded within 30 calendar days
thereafter. Secret ballot elections shall be held at the
workplace and at least one neutral location. Employees may
mail in ballots provided they are received by election day.
Mediation for any collective bargaining agreement impasse
shall be made in conjunction with the Federal Mediation and
Conciliation Service. The mediation process is modeled on the
Agricultural Labor Relations Act and authorizes the mediator
to resolve the impasse. Disputes are presented to an
arbitrator with expertise in labor law and appropriate
challenges to the arbitrator's decision may be presented to a
state superior court.
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.
Prohibitions Regarding Minors. Provides that the Tribe shall
prohibit persons under the age of eighteen (18) years from
being present in any room or area in which gaming activities
are being conducted unless the person is en route to a
non-gaming area of the gaming facility, or is employed at the
Gaming Facility in a capacity other than as a gaming employee.
Health and Safety Standards. Provides that the Tribe has
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agreed to adopt and comply with tribal health standards for
food and beverage handling that are no less stringent than
State public health standards. Also, the Tribe has agreed to
comply with federal water quality and safe drinking water
standards applicable in California.
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.
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). The Tribe
shall prohibit persons under the age of 21 years from
purchasing, consuming, or possessing alcoholic beverages.
Tobacco Provisions. Provides that the Tribe agrees to provide
a non-smoking area in the gaming facility and to utilize a
ventilation system throughout the gaming facility that
exhausts tobacco smoke to the extent reasonably feasible under
state-of-the-art technology existing as of the date of the
construction or significant renovation of the gaming facility,
and further agrees not to offer or sell tobacco to anyone
under eighteen (18) years of age.
Emergency Services Accessibility and Possession of Firearms.
Provides that the Tribe must 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.
Workers' Compensation. Provides that the Tribe agrees to
participate in the state's workers' compensation program with
respect to employees at the casino. All disputes arising from
the workers' compensation laws shall be heard by the State
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Workers' Compensation Appeals Board pursuant to the California
Labor Code. The Tribe acknowledges the jurisdiction of the
Board in such manners. 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.
Effective Date. Provides 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 until twenty-five
(25) years following the effective date.
Amendment by Agreement. The terms and conditions of this
Compact may be amended at any time by the mutual and written
agreement of both parties during the term of this Compact,
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.
Additional Background Information
Indian Gaming Regulatory Act (IGRA)
In 1988, Congress enacted 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
tribes a "constitutionally protected monopoly on most types of
Class III games in California."
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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 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 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
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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."
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: (1) grants for
programs designed to address gambling addiction; (2) grants for
the support of state and local government agencies impacted by
tribal government gaming; (3) compensation for regulatory costs
incurred by the CGCC and the Department of Justice in connection
with the implementation and administration of compacts; (4)
payment of shortfalls that may occur in the Indian Gaming RSTF;
(5) disbursements for the purpose of implementing the terms of
tribal labor relations ordinances promulgated in accordance with
the terms of the 1999 compacts; and, (6) any other purpose
specified by law. (Pursuant to compact renegotiations that took
place with several of the larger gaming tribes during the
Schwarzenegger Administration, revenue from those tribes is
directed into the state General Fund, instead of the SDF.)
The law establishes a method of calculating the distribution of
appropriations from the SDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with the
CGCC, deposit funds into County Tribal Casino Accounts and
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Individual Tribal Casino Accounts based upon a process that
takes into consideration whether the county has tribes that pay,
or 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 also 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 Tribes (e.g.,
federally-recognized non-gaming and tribes that operate casinos
with fewer than 350 slot machines). Revenue in the RSTF is
available to the CGCC, upon appropriation by the Legislature,
for making distributions of $1.1 million annually to non-compact
tribes. The RSTF was created as part of the 1999 compacts,
which, in conjunction with the passage of Proposition 1A,
created gaming compacts with approximately 60 California tribes.
Non-compact tribes are considered third-party beneficiaries of
the 1999 compacts.
Tribal Nation Grant Fund (TNGF)
This particular fund was created to complement the RSTF and
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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. The designated purpose of the RSTF is
rigid and formulaic. This new fund is designed to be fluid and
payments are intended to be made to non-gaming tribes on a
"need" basis, upon application by non-gaming tribes.
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
Indians, executed on August 12, 2014.
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SB 1224 (Correa, Chapter 300, Statutes of 2014) ratified the
tribal-state gaming compact entered into between the State of
California and the Karuk Tribe, executed on December 4, 2013.
AB 1245 (V. Manuel Perez, Chapter 462, Statutes of 2013)
ratified the tribal-state gaming compact entered into between
the State of California and the Ramona Band of Cahuilla Indians
located in Riverside County, executed on June 10, 2013.
AB 277 (Hall, Chapter 51, Statutes of 2013) ratified two new
compacts entered into between the State of California and the
following tribes: North Fork Rancheria, executed on August 31,
2012, and the Wiyot Tribe, executed on March 20, 2013.
AB 1267 (Hall, Chapter 6, Statutes of 2013) ratified the amended
tribal-state gaming compact entered into between the State of
California and the Shingle Springs Band of Miwok Indians,
executed on November 15, 2012.
SB 668 (Fuller, Chapter 67, Statutes of 2013) ratified the
tribal-state gaming compact entered into between the State of
California and the Fort Independence Indian Community of Paiute
Indians, executed on February 28, 2013.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified 6/28/16)
Pala Band of Mission Indians (source)
California Labor Federation
California Tribal Business Alliance
City of Escondido
Ewiiaapaayp Band of Kumeyaay Indians
Fallbrook Chamber of Commerce
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Page 21
Jackson Band of Miwuk Indians
Jamul Indian Village
Picayune Rancheria of the Chukchansi Indians
Rincon Band of Luiseno Indians
United Auburn Indian Community
UNITE-HERE, AFL-CIO
OPPOSITION: (Verified6/28/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
6/29/16 15:50:34
**** END ****