BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1282|
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THIRD READING
Bill No: AB 1282
Author: Gray (D)
Amended: 8/8/16 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
NOTE: On August 9, 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 Buena Vista Rancheria of Me-Wuk
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
Buena Vista Rancheria of Me-Wuk Indians (hereafter "Tribe")
executed on June 28, 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
jurisdiction over any cause of action initiated by a tribal
government alleging that the State failed to negotiate in good
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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 Buena Vista Rancheria of Me-Wuk Indians
executed on June 28, 2016, and supersedes the 2004 amended
compact between the Tribe and the State of California.
The Tribe's 2004 amended compact authorizes the Tribe to operate
an unlimited number of gaming devices (slot machines) and
provides that the State will receive 15% of the net win on those
devices up to $200 million and 25% of the net win over $200
million. The 2004 amended compact also grants the Tribe
exclusivity against Class III gaming from non-tribal interests
within a 63-mile radius of its gaming facility; provides for
revenue sharing contributions to non-gaming tribes through the
Revenue Sharing Trust Fund (RSTF) for every slot machine that
the Tribe operates over 350 devices; and, requires the Tribe to
reach agreements with Amador County to mitigate environmental
impacts and pay for public services.
Under terms of this Compact, the Tribe is authorized to operate
2,000 gaming devices within the boundaries of the Tribe's
Reservation (Appendix A) in the County of Amador. The Tribe has
agreed to pay the State its pro rata share of costs the State
incurs for the performance of its duties under this 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, this Compact provides a framework for the sharing
of gaming revenue with the County of Amador and other local
jurisdictions. Specifically, from its payments to the RSTF or
the TNGF, the Tribe may take annual credits of up to sixty
percent (60%) for infrastructure improvements that in part
benefit county residents, fire, law enforcement, public transit,
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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 and other members of the
local community.
Furthermore, this Compact: (1) provides a regulatory framework
that respects the role of the tribal gaming agency as the
primary regulator while also ensuring that state gaming
regulators fulfill their responsibilities; (2) requires the
Tribe to conduct its gaming activities pursuant to an internal
control system that implements minimum internal controls that
are no less stringent than those in federal regulations; (3)
requires the Tribe to adopt a Tribal Labor Relations Ordinance,
as specified; and, (4) contains provisions to protect the health
and safety of patrons, guests, and employees.
Key Components Of The Compact
Scope of Class III Gaming Authorized. The Tribe is
authorized to operate up to 2,000 gaming devices (slot
machines), banking or percentage card games, and any devices
or games that are authorized under state law to the
California State Lottery, provided that the Tribe will not
offer such games through use of the Internet unless others in
the state not affiliated with or licensed by the California
State Lottery are permitted to do so under state and federal
law. The Tribe shall not engage in Class III Gaming that is
not expressly authorized in the Compact.
Authorized Gaming Facility. The Tribe may establish and
operate not more than one (1) gaming facility 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).
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Exclusivity. Provides that in the event the exclusive right
of Indian tribes to operate Class III gaming in California
pursuant to the California Constitution is nullified by the
enactment, amendment, or repeal of a state statute or
constitutional provision or the conclusive and dispositive
judicial construction of a statute or the state Constitution
by a California appellate court after the effective date of
this Compact, that gaming devices may lawfully be operated by
non-Indian entities, the Tribe shall have the right to: (1)
terminate this Compact, in which case the Tribe will lose the
right to operate Class III gaming authorized by this Compact
or (2) continue under this Compact with entitlement to a
reduction of the rates specified 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 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 (DOJ), the Office of Problem Gambling,
the State Controller, and any other agency or agencies
responsible for implementation and administration of Class
III gaming compacts. The Tribe's pro rata share of the
State's costs in any given year this Compact 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."
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Payments to the Revenue Sharing Trust Fund (RSTF) or the
Tribal Nation Grant Fund (TNGF). If the Tribe operates more
than three hundred fifty (350) gaming devices at any time in
a given calendar year, it shall thereafter, including in that
calendar year, pay to the 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" is defined as the drop from gaming devices, plus
the redemption value of expired tickets, less fills, less
payouts, less that 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 the 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 to the County of Amador and local
jurisdictions operating facilities or providing services
within the County for improved fire, law enforcement,
public transit, education, tourism, 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. Specified annual payments by the Tribe
made pursuant to an agreement between the County and the
Tribe and approved by arbitration on June 11, 2008 and
currently in effect are also eligible credits and will be
deemed to have the approval of the County until
termination of that agreement or its replacement with an
amended or new intergovernmental agreement;
2) Non-gaming related capital investments and economic
development projects by the Tribe on tribal trust lands
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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) Investments in, and any funds paid to the State for
water treatment or conservation projects that, in part,
serve the gaming facility or any improvements
incorporating water conservation or treatment technology
on real property owned by the Tribe, or its members and
lineal descendants;
4) Investments in, and any funds paid to the State in
renewable energy projects that, in part, serve the gaming
facility, and in projects 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 within California that provide
health care services to tribal members, Indians, and
non-Indians; and,
6) Payments for providing general welfare benefits for,
among other things, educational, healthcare, cultural, or
vocational purposes, to non-enrolled members of the Tribe
and other Native Americans in the community.
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 by the chief financial officer of the gaming
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operation. The report must include: (a) calculation of the
maximum number of gaming devices operated each day, (b) the
net win calculation, (c) the amount due the SDF, (d)
calculation of the amount due to the RSTF/TNGF, and (e) the
total amount of the quarterly payment paid to the State.
Additional Compact Elements
Gaming Ordinance and Regulations. Provides that all gaming
activities conducted under this Compact shall, at a minimum,
comply with (1) a gaming ordinance duly adopted by the Tribe
and approved in accordance with IGRA, (2) all rules,
regulations, procedures, specifications, and standards duly
adopted by the National Indian Gaming Commission (NIGC), the
Tribal Gaming Agency, and the State Gaming Agency, and (3) the
provisions of this Compact, as specified.
Licensing Requirements and Procedures. Provides that all
persons in any way connected with the gaming operation or
gaming facility who are required to be licensed or to submit
to a background investigation under IGRA, and any others
required to be licensed under this Compact, including, without
limitation, all gaming employees, gaming resource suppliers,
financial sources, and any other person having a significant
influence over the gaming operation, must be licensed by the
Tribal Gaming Agency and cannot have had any determination of
suitability denied or revoked by the CGCC. Also, every gaming
employee must obtain, and thereafter maintain current, a valid
tribal gaming license, as specified.
Minimum Internal Control Standards (MICS). Requires the Tribe
to conduct its gaming activities pursuant to an internal
control system that implements MICS that are no less stringent
than those contained in the MICS of the federal NIGC
standards, as specified. It requires gaming to operate
pursuant to a written internal control system that reasonably
assures that assets are safeguarded and accountability over
assets is maintained; liabilities are properly recorded and
contingent liabilities are properly disclosed; financial
records are accurate and reliable; transactions are performed
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in accordance with the Tribal Gaming Agency's authorization;
access to assets is permitted only in accordance with the
Tribal Gaming Agency's approved procedures; recorded
accountability for assets is compared with actual assets; and,
functions, duties and responsibilities are appropriately
segregated and performed by qualified personnel. The Tribe is
required to provide the CGCC, upon written request, a copy of
the independent certified public accountant agreed-upon
procedures report conducted annually for submission to the
NIGC pursuant to federal law. This report verifies that the
gaming operation is in compliance with the NIGC's MICS.
Patron Disputes. Provides that the Tribe (through its Tribal
Gaming Agency) must attempt to resolve patron disputes within
three 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. 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. If dissatisfied with the resolution, the patron has
the right to seek resolution either in the Tribe's tribal
court system, once a tribal court system is established, or
through binding arbitration of the dispute before a retired
judge. Any party dissatisfied with the award of the tribal
court or JAMS arbitrator may, at the party's election, invoke
the JAMS Optional Arbitration Appeal Procedure. The cost and
expense of arbitration shall initially be borne equally by the
Tribe and the patron but the JAMS arbitrator shall award to
the prevailing party its costs and expenses (but no attorney
fees). The Tribe agrees to wave its sovereign immunity in
connection with the jurisdiction of the tribal court system or
JAMS Streamlined Arbitration and JAMS Optional Arbitration
Appeal Procedure and in any action to enforce their judgments
or the obligations provided in this section.
Public and Workplace Liability. Requires the Tribe to obtain
and maintain a commercial general liability insurance policy
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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 casino.
Environmental Protections. Requires the Tribe to prepare a
Tribal Environmental Impact Report (TEIR) and negotiate
mitigation of any off-reservation impacts 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 negotiate
an intergovernmental agreement with the California Department
of Transportation (Caltrans) if state roads are impacted. A
completed TEIR must be filed with the County of Amador, the
DOJ, 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 of Amador 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 the extent
such services are to be provided by the County to the Tribe as
a consequence of the Project.
Enhanced Audit and Compliance Review Procedure. 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
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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 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 Provision. 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
250 or more persons in a tribal casino facility, then the
provisions of the TLRO become effective.
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
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
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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 activities
are being conducted unless the person is en route to a
non-gaming area of the gaming facility, or is employed at the
Gaming Facility in a capacity other than as a gaming employee.
Alcohol Provisions. Makes it explicit that 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 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 products,
including but not limited to smokeless tobacco products or
e-cigarettes, to anyone younger than the minimum age specified
in state law to legally purchase tobacco products.
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 tribal health standards for
food and beverage handling that is 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. The Tribe must also adopt
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and comply with federal and state laws forbidding harassment,
including sexual harassment, discrimination and retaliation.
Furthermore, the Tribe must maintain a $3 million 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 gaming
facility construction to meet or exceed the applicable codes.
Gaming facility construction, expansion, improvement,
modification or renovation must also comply with the federal
Americans with Disabilities Act.
Emergency Services Accessibility and Possession of Firearms.
Requires the Tribe to make reasonable provisions for adequate
emergency fire, medical, and related relief and disaster
services for patrons and employees. Also, prohibits the
possession of firearms by any person in the gaming facility at
all times except for federal, state, or local law enforcement
personnel, or tribal law enforcement or security personnel, as
authorized.
Effective Date. Provides that this Compact shall not be
effective unless and until all of the following have occurred:
(a) The Compact is ratified by statute in accordance with
state law and (b) Notice of approval or constructive approval
is published in the Federal Register. Once effective, this
Compact shall be in full force and effect for twenty-five (25)
years following the effective date.
Amendment by Agreement. Provides that the terms and
conditions of this Compact may be amended at any time by the
mutual and written agreement of both parties, provided that
each party voluntarily consents to such negotiations in
writing. Any amendments to this Compact shall be deemed to
supersede, supplant and extinguish all previous understandings
and agreements on the subject.
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Brief History of the Buena Vista Rancheria of Me-Wuk Indians
The Tribe is a federally-recognized Indian tribe that occupies a
67.5 acre Indian reservation, the Buena Vista Rancheria. Me-Wuk
Indians have occupied the area known as Buena Vista since at
least 1817, and the Tribe has occupied the land constituting the
Buena Vista Rancheria from as early as 1905. The Buena Vista
Rancheria was purchased in 1927 by the United States and held in
trust for the Tribe. In 1958, Congress adopted the California
Rancheria Act, which terminated the federal recognition of
several California Indian tribes, including the Buena Vista
Me-Wuk Tribe. The California Rancheria Act also terminated the
trust and reservation status of several California Indian
Rancherias, including the Buena Vista Rancheria, and, pursuant
to distribution plans established under the California Rancheria
Act, distributed the Rancheria's lands in fee to two individual
Indians of the Tribe, the great-grandparents of the Tribe's
current Chairperson, Rhonda L. Morningstar Pope.
In 1979, the Indian residents of the Buena Vista Rancheria
joined Indians from 16 other California Rancherias in a class
action lawsuit in federal district court against the United
States and the various counties in which the Rancherias were
located to restore their recognition as Indians and tribes, and
to restore the federal Indian reservation status of their lands.
In settlement of that litigation in 1983, the federal district
court entered as a stipulated judgment (as agreed to by the
plaintiffs, the United States, and the counties) an order (i)
restoring to federally-recognized status the involved tribes,
including the Buena Vista Me-Wuk Tribe, and (ii) further
restoring and confirming the involved individual Indian
plaintiffs as Indians, within the meaning of federal law. In
further settlement of that same litigation, in 1987, the federal
district court entered as a stipulated judgment an order
restoring the boundaries of the Buena Vista Rancheria.
The Tribe originally entered into a compact with the State in
1999 and in 2004, the Tribe negotiated amendments to its compact
making it consistent with several others entered into by the
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Schwarzenegger Administration. Although the Tribe has had
compacts with the state since 1999 a casino has not been built
on the Tribe's eligible Indian lands due in part to an ongoing
legal dispute with Amador County.
According to information provided by the Tribe, Tribal
Chairwoman Rhonda L. Morningstar Pope took office in December of
2004 and over the past 12 years the Tribe has built its
governmental infrastructure. The Tribe employs over 15
individuals that perform essential governmental and
administrative functions at tribal offices located on the
reservation and in Sacramento. The Tribe also operates a
nonprofit child development center in Sacramento which serves
native and low income families. Additionally, the Tribe
oversees an Environmental Department which administers various
programs, including cultural resource management, cultural
repatriation, solid waste management, and Clean Water Act
programs. The Environmental Department has developed and
operated a cultural monitoring program for over three years that
has been responsible for training over a hundred people to work
as monitors for several tribes throughout California. Most
importantly, the Tribe has revitalized and restored several
vital cultural components on its reservation, including a dance
arbor, riggings shacks, a sweat lodge, and an historic cemetery.
A new 4,000-square foot cultural center is expected to be
completed by the end of 2016.
The Tribe emphasizes that for the past eight years, it has
organized and hosted several annual events benefiting children,
elders and others in the local and native communities,
including: a Memorial Day Event at the Reservation attended by
over 800 people; an Elder's Dinner on Veteran's Days, serving
home-made turkey dinners to local veterans and elders; and a
Children's Christmas Party, attended by hundreds every year,
where local children watch Native dance groups and receive an
assortment of toys, bikes, and other Christmas gifts. The Tribe
routinely collaborates with other tribes and tribal
organizations on events and programs serving local and native
communities, including the Sacramento Native American Health
Center, the Inter-Tribal Council of California, the California
Indian Manpower Consortium and the California Rural Indian
Health Board.
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Pending Litigation
The Tribe has been involved in a legal battle that has gone on
for many years against local officials for the right to
construct the new casino on its land about five miles south of
the town of Ione. The most recent case went to the U.S.
District Court for the District of Columbia where, in March
2016, the Court ruled against the County's assertion that the
proposed site for the casino was not a legal reservation for a
gambling development. This Compact makes it explicit that the
Tribe may only engage in Class III gaming on "eligible" Indian
lands located within the boundaries of its reservation. The
District Court said yes, the land is eligible - the County of
Amador is appealing.
Additional background information
Indian Gaming Regulatory Act (IGRA)
In 1988, Congress enacted the Indian Gaming Regulatory Act
(IGRA) to provide a statutory basis for the operation and
regulation of gaming on Indian lands. IGRA provides that an
Indian tribe may conduct gaming activity on Indian lands if the
activity "is not specifically prohibited by federal law and is
conducted within a State which does not prohibit such gaming
activity."
IGRA distinguishes between three classes of gaming (Class I,
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
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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."
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.
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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
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
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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 DOJ in connection with the
implementation and administration of compacts; (4) payment of
shortfalls that may occur in the 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
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
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policies and procedures for grants from the casino accounts.
Additionally, existing law requires the State Auditor to conduct
an audit every three years and report its findings to the
Legislature regarding the allocation and use of SDF grant
monies.
Revenue Sharing Trust Fund (RSTF)
Existing law creates in the State Treasury the RSTF for the
receipt and deposit of moneys derived from gaming device license
fees that are paid into the RSTF pursuant to the terms of
specified tribal-state gaming compacts for the purpose of making
distributions to non-compacted California tribes (e.g.,
federally-recognized non-gaming tribes and tribes that operate
casinos with fewer than 350 slot machines). Revenue in the RSTF
is available to CGCC, upon appropriation by the Legislature, for
making distributions of $1.1 million annually to non-compact
tribes. The RSTF was created as part of the 1999 compacts,
which, in conjunction with the passage of Proposition 1A,
created gaming compacts with approximately 60 California tribes.
Non-compact tribes are considered third-party beneficiaries of
the 1999 compacts.
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
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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.
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/15/16)
Agua Caliente Band of Cahuilla Indians
Barona Band of Mission Indians
Buena Vista Rancheria of Me-Wuk Indians
AB 1282
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California Labor Federation
Jamul Indian Village
Pechanga Band of Luiseno Indians
Teamsters
UNITE HERE, AFL-CIO
Yocha Dehe Wintun Nation
Viejas Band of Kumeyaay Indians
OPPOSITION: (Verified8/15/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/16/16 12:52:37
**** END ****