BILL ANALYSIS Ó AB 795 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 795 (Atkins) As Amended September 4, 2015 2/3 vote. Urgency -------------------------------------------------------------------- |ASSEMBLY: | |(June 1, 2015) |SENATE: |40-0 |(September 9, | | | | | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (vote not relevant) Original Committee Reference: L. & E. SUMMARY: Ratifies the tribal-state gaming compact (Compact) entered into between the State of California (State) and the Sycuan Band of the Kumeyaay Nation (Tribe) executed on September 2, 2015. Additionally, this bill provides that, in deference to tribal sovereignty, certain actions are not deemed projects for purposes of the California Environmental Quality Act (CEQA); and, stipulates, except as expressly provided, that none of the provisions shall be construed to exempt a city, county, or city and county, or the Department of Transportation from CEQA requirements. The Senate amendments delete the Assembly version of this bill, and instead: AB 795 Page 2 1)Ratify a tribal-state gaming compact entered into in accordance with the federal Indian Gaming Regulatory Act of 1988 (18 United States Code (U.S.C.) Sections 1166 to 1168, inclusive, and 25 U.S.C. Section 2701 et seq.) between the State and the Tribe, executed on September 2, 2015, is hereby ratified. 2)Authorize the Tribe to operate a maximum of 2,500 gaming devices at no more than two gaming facilities, and only on those Indian lands held in trust for the Tribe as of the execution date of this Compact, as described. 3)Supersede a 1999 compact between the Tribe and the State. 4)State once effective, this Compact shall be in full force and effect for State law purposes for 25 years following the effective date. 5)Provide that, in deference to tribal sovereignty, certain actions may not be deemed projects for purposes of the CEQA. 6)Contain an urgency clause, allowing the provisions of this bill to take effect immediately upon enactment. AS PASSED BY THE ASSEMBLY, this bill required the Department of Industrial Relations (DIR) to submit a report to the Legislature the amount of time it takes for wage claims to receive a preliminary hearing date. FISCAL EFFECT: Pursuant to the 1999 compact, the Tribe currently pays $2.4 million annually into the Special Distribution Fund (SDF) and $2.3 million annually into the Revenue Sharing Trust Fund (RSTF). Under this Compact, it is estimated that the Tribe will pay approximately $1 million AB 795 Page 3 annually (its pro rata share) into the SDF and approximately $10.1 million annually into the RSTF or the Tribal Nation Grant Fund (TNGF). Thus, the 60% credit referenced above will equate to approximately $6.3 million per year. Therefore, the net annual increase to the RSTF, assuming the Tribe maximizes its offsets, would be approximately $1.5 million annually. COMMENTS: On September 9, 2015, the Assembly Governmental Organization Committee held an informational hearing on this tribal-state gaming compact between the State and the Tribe. Purpose of this bill: This bill ratifies the Compact entered into between the State and the Tribe executed on September 2, 2015 and supersedes the 1999 compact between the Tribe and the State. The Compact authorizes the Tribe to operate a maximum of 2,500 gaming devices (slot machines) at not more than two gaming facilities, and only on those Indian lands held in trust for the Tribe as of the execution date of this Compact, as described. If the Tribe chooses to operate more than one gaming facility, then one of the two gaming facilities shall have no more than 500 gaming devices and shall have a primary purpose other than gaming authorized under the Indian Gaming Regulatory Act (IGRA). Under the 1999 compact, the Tribe could not operate more than 2,000 gaming devices. The Tribe has agreed to pay the State its pro rata share of the costs the State incurs for the performance of its duties under the Compact as well as 4.75% of its "Gross Gaming Revenue" from the operation of gaming devices in excess of 350, to be shared with non-gaming and limited gaming tribes so that the economic benefits of gaming reach tribal governments that have chosen to not operate a casino. The Compact provides a framework for the sharing of gaming revenue with San Diego County, local jurisdictions, and other stated purposes. Specifically, the Tribe may take annual credits of up to 60% (of the 4.75% of its Gross Gaming Revenue) AB 795 Page 4 for infrastructure improvements, fire prevention, law enforcement, public transit, education, tourism and other services including investments in renewable energy or water conservation projects and non-gaming related economic development and health care facilities that provide a mutual benefit to the Tribe and the local community. It should be noted that recent federal court decisions, such as the Rincon decision (see below), have severely limited the ability of the State to collect revenues for general purposes from gaming tribes. As a result, many of the gaming tribes that had executed compacts with Governor Schwarzenegger which provided direct contributions of gaming revenue to the State's General Fund, have sought to renegotiate or amend those deals in a way that is consistent with this federal court decision. According to the Governor's office, the terms of the new Compact are consistent with provisions of more recent compacts related to licensing, compliance enforcement and mitigation of off-reservation gaming impacts but have been updated to reflect, among other things, the evolving nature of financial markets, as well as the professionalism of the Tribe's regulators and their constructive relationship with state gaming regulators. The Governor's Office contends that the terms of the Compact reflect a continued commitment by the Tribe to revenue sharing with non-gaming and limited gaming tribes through the RSTF and TNGF, so that the economic benefits of gaming reach tribal governments that have not chosen to operate a tribal casino. Once effective (legislative ratification and federal approval required), this Compact shall be in full force and effect until December 31, 2040. Brief History and Background: The Sycuan Band of the Kumeyaay Nation is a federally recognized tribe of Mission Indians from Southern California, near El Cajon in San Diego County. There are 220 members of the Tribe, approximately 160 of whom are voting members (over 18 years old). A democratically elected, seven-member tribal council governs the Tribe. Members of the Sycuan Tribal Council AB 795 Page 5 determine and administer laws, conditions and regulations for the benefit of the Tribe. The Tribe opened its first gambling facility, the Sycuan Bingo Palace, on its reservation in 1983. In 1999, the Tribe and the State entered into a gaming compact, which enabled the Tribe, through revenues generated by its gaming operation, to improve the governance, environment, education, health, safety, and general welfare of its citizens; and to promote a strong tribal government, self-sufficiency, and to provide essential government services to its citizens. The Tribe operates one of the more successful tribal casinos in California. Under the current 1999 compact, the Tribe operates 2,000 Class III gaming devices and 58 table games (Blackjack, Pai Gow, Sycuan-style craps, Poker). The Tribe also has off-track betting parlor for wagering on horse racing. The Sycuan Casino offers five different restaurants and a wide variety of top quality musical and theatrical entertainment. The Tribe's casino has become a premiere entertainment destination in San Diego County. The Tribe has a diversified business portfolio, including the Sycuan Resort, which has a hotel, golf course and lighted tennis facility. The Tribe owns the downtown San Diego landmark US GRANT Hotel and the Marina Gateway Hotel and Conference Center in National City. The Tribe has an extensive marketing and advertising agreement with the San Diego Padres Major-League Baseball team at PETCO Park, the team's home field. The Tribe is also an investor in the Hotel Solamar near the ballpark. The Tribe owns the UP Smoke Shop that is located on its reservation. The Tribe has two wastewater treatment plants and "a sequential batch reactor" used for their casino, administrative buildings, and maintenance buildings. They also own and operate a modular treatment plant and a water treatment facility that controls their nitrate levels. In addition, the Tribe operates a small medical clinic, dental office, a fire department and a tribal police force. The Tribe employs 2,700 people at its casino, golf course, AB 795 Page 6 hotel, and other properties. In 2006, the State and Tribe negotiated amendments to the Tribe's 1999 compact that provided for significant payments to the State's General Fund. Governor Schwarzenegger executed the compact amendments and the Legislature ratified them. However, the 2006 compact amendments contained a provision requiring ratification by the Tribe's General Council. Subsequently, the Council voted against ratifying the compact amendments therefore, the agreement was invalid. As a result, the Tribe's gaming operation continues to be governed by the provisions of the 1999 compact. The Tribe states, "We are committed to improving the environment, education status, and the health, safety and general welfare of our members and the surrounding community." The Tribe further declares, "The future of our Tribe's social and economic advancement depends on promoting education of Sycuan's future leaders. Education is important for the revitalization, retention, and maintenance of traditional knowledge that was passed on to our Tribe through ancestors." Scope of Gaming Authorized and Financial Terms: Scope of Class III Gaming Authorized: The Tribe is authorized to operate up to 2,500 gaming devices (slot machines), banking or percentage card games, and any devices or games that are authorized under state law to the California State Lottery. The Tribe may not operate roulette games (table or mechanical) or any game that incorporates the physical use of a die or dice. 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 only on those Indian lands located within the boundaries of the Tribe's reservation as those boundaries exist as of the execution date of this Compact, as legally described, and on which Class III Gaming may AB 795 Page 7 lawfully be conducted under IGRA. If the Tribe chooses to operate more than one gaming facility, then one of the two gaming facilities shall have no more than 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 pursuant to the California Constitution is lost and other non-Indian entities are able to engage in Class III gaming the Tribe shall have the right to terminate this Compact, in which case the Tribe will lose the right to operate Class III gaming authorized by this Compact; or continue under this Compact, as defined. Special Distribution Fund: The Tribe shall pay to the State on a pro rata basis for costs the State incurs for the performance of all its duties under this Compact as determined by the monies appropriated in the annual Budget Act for the performance of their duties under Class III Gaming compacts each fiscal year for the California Gambling Control Commission (CGCC), the California Department of Justice, the Office of the Governor and the California Department of Alcohol and Drug Programs, Office of Problem Gambling, or any agency or agencies the State designates as a successor to them. The Tribe estimates it will pay approximately $1 million annually into the SDF under the defined formula. Payments to the Revenue Sharing Trust Fund or Tribal Nation Grant Fund: If the Tribe operates more than 350 gaming devices at any time in a given calendar year, it shall thereafter, including that calendar year, pay to the CGCC, for deposit into the RSTF or the TNGF, 4.75% of its "Gross Gaming Revenue" from the operation of gaming devices in excess of 350. "Gross Gaming Revenue" is defined to mean means the win from gaming activities, which is the difference between gaming wins and losses before deducting costs and expenses or deducting incentives or adjusting for changes in progressive jackpot liability accruals. Generally, the difference between patron wagers and the payouts made on winning wagers. The Tribe AB 795 Page 8 estimates that the total RSTF/TNGF annual contribution will be approximately $10.1 million per year. Credits Applied to RSTF or the TNGF Payments: The State agrees to provide the Tribe with annual credits for up to 60% of the payments otherwise due to the RSTF or TNGF for the following: 1) The costs of services provided by the Tribe or payments made to the County, local jurisdictions, and non-profit and civic organizations operating facilities or providing services within the County for fire, emergency medical services, law enforcement, public transit, education, tourism, and other services and infrastructure improvements that in part serve off-reservation needs of County residents. Such payments shall be subject to approval by the State or State designated agency. At least 20% of the annual credits shall be utilized for this purpose; 2) Non-gaming economic development investments that benefit the State and the Tribe because of their cultural, social, or environmental value or diversify the sources of revenue for the Tribe's general fund; 3) Investments by the Tribe and any funds paid to the State for renewable energy projects, as defined; 4) Payments to support capital improvements and operating expenses for facilities within California that provide health care services to tribal members, Indians, and non-Indians; and, 5) Investments by the Tribe for water treatment and conservation projects. It is estimated that the 60% credit will equate up to approximately $6.3 million per year. The current contribution by the Tribe to the RSTF under the 1999 compact is $2.3 million. It is estimated that, even considering the 60% credit the Tribe receives back for off-reservation infrastructure projects, the net amount it will pay under this Compact to the RSTF/TNGF is approximately $4.1 million per year, or nearly double what it is currently paying under the 1999 compact. All excess authorized credits that cannot be applied in any one year because they would exceed the 60% may be applied as an annual credit in all following years that this Compact is in effect, in the same percentages, until completely exhausted. AB 795 Page 9 Cost Reimbursement and Mitigation to Local Governments: Before the commencement of a project, and no later than the issuance of the Final Tribal Environmental Impact Report (TEIR) to the County, the Tribe shall offer to commence government-to-government negotiations with the County, and upon the County's acceptance of the Tribe's offer, shall negotiate with the County on a government-to-government basis and shall enter into enforceable written agreements with the County with respect to: 1) Timely mitigation of any significant effect on the off-reservation environment, as defined; 2) Compensation for law enforcement, fire protection, emergency medical services and any other public services to be provided by the County to the Tribe for the purposes of the Tribe's gaming operation as a consequence of the project; 3) Reasonable compensation for programs designed to address gambling addiction; and 4) Mitigation of any effect on public safety attributable to the project, including any compensation to the County as a consequence thereof. 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 Gross Gaming Revenue calculation reflecting the quarterly gross gaming revenue from the operation of all gaming devices in the facility, 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. 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 as defined, 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. AB 795 Page 10 Additional Compact Components: 1)Gaming Ordinance and Regulations - all gaming activities conducted under this Compact shall, at a minimum, comply a) with a gaming ordinance duly adopted by the Tribe and approved in accordance with IGRA, b) with all rules, regulations, procedures, specifications, and standards duly adopted by the National Indian Gaming Commission (NIGC), the Tribal Gaming Agency, and the CGCC, and c) with the provisions of this Compact. 2)Tribal Ownership, Management, and Control of Gaming Operation - the gaming operation authorized under this Compact shall be owned solely by the Tribe. 3)Licensing Requirements and Procedures - 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 CGCC. Every gaming employee shall obtain, and thereafter maintain current, a valid tribal gaming license, as provided. The parties intend that the licensing process provided for in this Compact shall involve cooperation between the Tribal Gaming Agency and CGCC, as described. 4)Environmental Protections - the Tribe is required to prepare a TEIR to measure off-reservation environmental impacts including an evaluation of energy consumption prior to initiating the development of a project for a facility. The Compact provides procedures regarding the following: a) Notice AB 795 Page 11 of Preparation of Draft TEIR; b) Notice of Completion of Draft TEIR; and c) Issuance of Final TEIR. A completed TEIR shall be filed with San Diego County, the Department of Justice, and the State Clearinghouse. Projects that have commenced prior to the effective date of this Compact, including the hotel expansion project, will be subject to the relevant terms and conditions of the Tribe's 1999 Compact then in effect. The Compact provides that existing mitigation agreements between the Tribe and San Diego County regarding development at the Tribe's other properties remain in effect and are not subject to the TEIR provisions of this Compact. If those agreements expire and are not renegotiated (or negotiations fail), then the TEIR provisions of the Compact become applicable to those properties, as well. 5)Employee Protections - the Tribe agrees that it will participate in the State's workers' compensation program with respect to employees employed at the gaming facility. Disputes arising from the workers' compensation laws shall be heard by the Workers' Compensation Appeals Board pursuant to the California Labor Code and hereby consents to the jurisdiction of the State Workers' Compensation Appeals Board and the courts of the State of California for purposes of enforcement. Furthermore, the Tribe agrees that it will participate in the State's program for providing unemployment compensation benefits and unemployment compensation disability benefits with respect to employees employed at the casino, which participation shall include compliance with the provisions of the California Unemployment Insurance Code, and the Tribe consents to the jurisdiction of the State agencies charged with the enforcement of that Code and of the courts of the State of California for purposes of enforcement. 6)Participation in State Statutory Programs Related to Employment - as a matter of comity, with respect to persons, including nonresidents of California, employed at the gaming operation or gaming facility, the Tribe shall withhold all taxes due to the State as provided in the California Unemployment Insurance Code except for tribal members and shall forward such amounts to the State. The Tribe shall file AB 795 Page 12 with the Franchise Tax Board a copy of any information return filed with the Secretary of the Treasury, as provided in the California Revenue and Taxation Code and the regulations, except those pertaining to tribal members living on the Tribe's reservation. 7)Cooperation with Tribal Gaming Agency - the CGCC shall meet periodically with the Tribal Gaming Agency and cooperate in all matters relating to the enforcement of the provisions of this Compact and its Appendices. 8)Audit and Compact Compliance Review - in addition to providing for an annual independent audit, the Compact allows the state to conduct its own annual audit and compact compliance review. The Tribe shall provide to the CGCC, within 20 days of their submission to the NIGC, copies of the audited financial statements of Class III Gaming and management letter(s), if any, provided to the NIGC. 9)Regulations for Operation, Management and Minimum Standards - the Tribe shall conduct its g aming activities pursuant to an internal control system that implements minimum internal control standards for Class III Gaming that are no less stringent than those contained in the MICS of the NIGC (25 Code of Federal Regulations Section 542), as specified. This requirement is met through compliance with the provisions, as defined, or in the alternative by compliance with the statewide uniform regulation CGCC-8, as it exists currently and as it may hereafter be amended. 10)Inspection and Testing of Slot Machines - slot machines shall be tested, approved and certified by an independent gaming test laboratory or state governmental gaming test laboratory to ensure that 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 CGCC shall 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. AB 795 Page 13 The Tribal Gaming Agency shall prepare and maintain records of its compliance while any gaming device is on the gaming floor and for a period of one year after the gaming device is removed from the gaming floor, and shall make those records available for inspection by CGCC upon request. 11)Patron Disputes - the Tribe must attempt to resolve patron disputes filed within three days of the play or operation of a Class III game, including refusal to pay any alleged winnings. If a patron is dissatisfied with the resolution, the Tribe shall inform the patron in writing with 15 days of the right to resolution of the dispute by the Tribal Gaming Agency. If dissatisfied with the resolution, the patron has the right to seek resolution either in the Sycuan Tribal Court or before a three-member tribal claims commission consisting of a representative of the tribal government and at least one non-tribal commissioner. The Tribal Gaming Agency shall conduct an appropriate investigation, provide to the patron a copy of its procedures concerning patron complaints, and render a decision in accordance with industry practice. The decision shall be issued within 60 days of the patron's request. Any party dissatisfied with the award of the Sycuan Tribal Court (STC) or the tribal claims commission may, at the party's election, appeal the award to the Intertribal Court of Southern California Court of Appeals, provided that the party making the election must bear all costs and expenses associated with the appeal regardless of the outcome. The Tribe agrees to wave its sovereign immunity in connection with the jurisdiction of the STC, the tribal claims commission or Intertribal Court of Southern California and in any suit in state or federal court to enforce or execute a judgment based upon the award of the tribal court, claims commission, or appellate court. 12)Labor Provisions - provides that the gaming activities authorized by this Compact may only commence after the Tribe has adopted an ordinance identical to the Tribal Labor Relations Ordinance (TRLO), referenced as Appendix C of the Compact, and the gaming activities may only continue as long as the Tribe maintains the ordinance. If the Tribe employs AB 795 Page 14 250 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 websites, 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 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. According to the Administration, the appeals procedures have been streamlined significantly in comparison to the Tribe's 1999 TLRO. 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. 13)Prohibitions Regarding Minors - the Tribe shall prohibit persons under the age of 18 years from being present in any room or area in which gaming activities are being conducted unless the person is en route to a non-gaming area of the gaming facility, or is employed at the gaming facility in a capacity other than as a gaming employee. AB 795 Page 15 14)Program to Mitigate Problem Gambling - the gaming operation shall establish a program, approved by the Tribal Gaming Agency, to mitigate pathological and problem gambling. 15)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. 16)Tobacco - 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 18 years of age. 17)Possession of Firearms - the possession of firearms by any person in the gaming facility is prohibited at all times, except for federal, state, or local law enforcement personnel, or tribal law enforcement or security personnel authorized by tribal law and federal or state law to possess firearms at the gaming facility. 18)Health and Safety Standards - the Tribe has agreed to adopt and comply with State public health standards for food and beverage handling and federal water quality and safe drinking standards applicable to California. 19)Building Codes and Fire Safety - in order to assure the protection of the health and safety of all gaming facility patrons, guests, and employees, the Tribe shall adopt, or has already adopted, and shall maintain throughout the term of this Compact, an ordinance that requires any covered gaming facility construction to meet or exceed the applicable codes (California Building Code and the California Public Safety AB 795 Page 16 Code). The Tribe shall also take all necessary steps to reasonably ensure the ongoing availability of sufficient and qualified fire suppression services to the gaming facility, and to reasonably ensure that the gaming facility satisfies all requirements of titles 19 and 24 of the California Code of Regulations applicable to similar facilities in the County, as defined. 20)Emergency Services Accessibility - the Tribe shall make reasonable provisions for adequate emergency fire, medical, and related relief and disaster services for patrons and employees of the gaming facility. 21)Effective Date - the 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. 22)Term - once effective, this Compact shall be in full force and effect until December 31, 2040. Additional Background Information: Rincon Decision: In 2004, the Rincon Band of Mission Indians sued the State in federal court after negotiations for a new gambling agreement with then-Governor Schwarzenegger fell apart. The Tribe believed the Governor was violating federal law by insisting that tribes pay money into the state's General Fund in exchange for more slot machines. In July 2011, the United States Supreme Court declined to review a Ninth Circuit Court's decision that ruled the state could not require the Rincon Band tribe to pay a percentage of slot machine revenue into California's General Fund for more gaming devices. The Ninth Circuit had affirmed a lower court decision AB 795 Page 17 that the new financial concessions were nothing more than a state tax on tribal casino revenues, which is prohibited by IGRA. The 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 Rincon decision has changed the dynamics of tribal-state compact negotiations in California. Pauma Band of Luiseno Mission Indians Lawsuit: In 2010, the Pauma Band of Luiseno Mission Indians ceased payments to the State and sued the State in federal court claiming that the State acted in bad faith by misrepresenting significant information relative to the number of gaming machines available for licensure. Prior to its 2004 amended compact, the Tribe was paying approximately $315,000 a year to the state (into the SDF and RSTF) under terms of its 1999 compact. The payment rose to $7.75 million a year (initially for securitizing the proposed transportation bond and subsequently deposited directly into the general fund) under the Tribe's 2004 amended compact. In 2013, the court sided with Pauma and, thus, the State no longer receives payments from the Pauma Tribe. The State has appealed that decision. As noted above, the 2004 Pauma compact amendments were negotiated at the same time as the current Tribe compact, both of which were ratified by the same bill (AB 687 (Núñez), Chapter 91, Statutes of 2004). Both compacts provided for fixed payments to the state for securitizing transportation bonds. The Rincon decision as well as the Pauma case, have limited some of the state's options when negotiating and renegotiating compact agreements. SDF: Existing law creates the SDF in the State Treasury for the receipt of revenue contributions made by tribal governments AB 795 Page 18 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 CGCC and the DOJ 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. The distribution formula "sunsets" on January 1, 2021. 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 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 (2000), created gaming compacts with approximately 60 California tribes. Non-compact tribes are considered third-party beneficiaries of the 1999 compacts. TNGF: The TNGF was created in the Graton Rancheria compact [AB 517 (Hall), Chapter 12, Statutes of 2012], as a new destination for gaming revenue for distribution of funds to non-gaming and limited-gaming tribes, upon application of such tribes for purposes related to effective self-governance, self-determined community, and economic development. The 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. The TNGF currently does not receive funding. AB 795 Page 19 Related legislation: AB 1540 (Gray) of the current legislative session. Ratifies the tribal-state gaming compact entered into between the State and the Santa Ynez Band of Mission Indians, executed on August 26, 2015. AB 315 (Bigelow) of the current legislative session. Ratifies the amended and restated tribal-state gaming compact entered into between the State and the United Auburn Indian Community, executed on August 14, 2015. Prior legislation: AB 475 (Bigelow), Chapter 8, Statutes of 2015. Ratified the tribal-state gaming compact entered into between the State and the Jackson Rancheria Band of Miwuk Indians, executed on February 1, 2015. SB 1356 (De León), Chapter 314, Statutes of 2014. Ratified the amended and restated tribal-state gaming compact between the State and the Viejas Band of Kumeyaay Indians, executed on August 12, 2014. SB 1224 (Correa), Chapter 300, Statutes of 2014. Ratified the tribal-state gaming compact entered into between the State and the Karuk Tribe, executed on December 4, 2013. AB 277 (Hall), Chapter 51, Statutes of 2013. Ratified tribal-state gaming compacts entered into between the State and the North Fork Rancheria Band of Mono Indians of California, executed on August 31, 2012, and the State of California and the Wiyot Tribe, executed on March 20, 2013. AB 1245 (V. Manuel Pérez), Chapter 462, Statutes of 2013. Ratified the tribal-state gaming compact entered into between the State and the Ramona Band of Cahuilla Indians, executed on June 10, 2013. AB 795 Page 20 AB 1267 (Hall), Chapter 6, Statutes of 2013. Ratified the amended tribal-state gaming compact entered into between the State 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 and the Fort Independence Indian Community of Paiute Indians, executed on February 28, 2013. AB 517 (Hall), Chapter 12, Statutes of 2012. Ratified the tribal-state gaming compact entered into between the State and the Federated Indians of Graton Rancheria of Sonoma County, executed on March 27, 2012. AB 787 (Chesbro), Chapter 340, Statutes of 2012. Ratified the amendment to the tribal-state gaming compact entered into between the State and the Coyote Valley Band of Pomo Indians, executed on July 25, 2012. AB 1418 (Hall), Chapter 412, Statutes of 2011. Repealed those provisions ratifying the tribal-state gaming compact entered into between the State and Pinoleville Pomo Nation, executed on March 9, 2009 and instead ratified the tribal-state gaming compact entered into between the State and the Tribe, executed on August 8, 2011. AB 1020 (Chesbro), Chapter 27, Statutes of 2011. Repealed the ratification of the tribal-state gaming compact entered into between the State and the Habematolel Pomo of Upper Lake, executed on September 2, 2009, and instead ratified a new tribal-state gaming compact entered into between the State and the Tribe, executed on March 17, 2011. SB 89 (Budget and Fiscal Review Committee), Chapter 1, Statutes AB 795 Page 21 of 2010. Ratified the tribal-state gaming compact entered into between the State and the Habematolel Pomo of Upper Lake, executed on September 2, 2009. AB 122 (Coto), Chapter 3, Statutes of 2009. Ratified the tribal-state gaming compact entered into between the State and the Pinoleville Pomo Nation, executed on March 10, 2009. AB 3072 (Price), Chapter 334, Statutes of 2008. Ratified the first amendment to a tribal-state gaming compact entered into between the State and the Shingle Springs Band of Miwok Indians, executed on June 30, 2008. SB 106 (Wiggins), Chapter 37, Statutes of 2007. Ratified a new compact between the State of California and the Yurok Tribe of the Yurok Reservation. SB 174 (Ducheny), Chapter 39, Statutes of 2007. Ratified the first compact amendment to the compact between the State of California and Sycuan. SB 175 (Ducheny), Chapter 38, Statutes of 2007. Ratified the first compact amendment to the compact between the State of California and Morongo. SB 903 (Padilla), Chapter 40, Statutes of 2007. Ratified the first compact amendment to the compact between the State of California and Pechanga. SB 941 (Padilla), Chapter 226, Statutes of 2007. Ratified the first compact amendment to the compact between the State of California and San Manuel. SB 957 (Torlakson), Chapter 41, Statutes of 2007. Ratified the AB 795 Page 22 first compact amendment to the compact between the State of California and Agua Caliente. SB 470 (Ducheny), Chapter 527, Statutes of 2006. Ratified the first amendment to the compact between the State and the Quechan Tribe of the Fort Yuma Reservation (Quechan). SB 1117 (Burton), Chapter 856, Statutes of 2004. Ratified two new and two amended compacts entered into between the State and the following tribes: Coyote Valley Band of Pomo Indians (new compact); Fort Mojave Indian Tribe (new compact); Buena Vista Rancheria of Me-Wuk Indians (amended compact); and, Ewiiaapaayp Band of Kumeyaay Indians (amended compact). AB 687 (Nuñez), Chapter 91, Statutes of 2004. Ratified amendments to five compacts entered into between the State and the following tribes: Pala Band of Mission Indians; Pauma Band of Luiseno Mission Indians of the Pauma and Yuima Reservation; Rumsey Band of Wintun Indians; United Auburn Indian Communities; and, Viejas Group of Kumeyaay Indians. SB 930 (Burton), Chapter 802, Statutes of 2003. Ratified a compact between the State of California and the Torres-Martinez Desert Cahuilla Indians. SB 411 (Ducheny), Chapter 790, Statutes of 2003. Ratified compacts between the State of California and the La Posta Band of Diegueno Mission Indians and the Santa Ysabel Band of Diegueno Mission Indians in San Diego County. AB 1385 (Battin), Chapter 874, Statutes of 1999. Designated the Governor as the state officer responsible for negotiating and executing compacts between the state and federally recognized Indian tribes located in the state. Also, ratified 57 compacts and created two special funds in the State Treasury (SDF and RSTF), as specified. AB 795 Page 23 SB 287 (Burton), Chapter 409, Statutes of 1998. Ratified 11 compacts negotiated between the State and Indian tribes that permitted Class III video gaming devices on tribal lands and established a process for ratifying other compacts. Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0002337