BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1767|
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THIRD READING
Bill No: AB 1767
Author: Bigelow (R)
Amended: 6/30/16 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
NOTE: On August 9, 2016, the Senate Governmental Organization
Committee held an informational hearing on the amended
tribal gaming compact entered into between the State of
California and the Jackson Rancheria Band of Miwuk
Indians.
SUBJECT: Tribal gaming: compact ratification
SOURCE: Author
DIGEST: This bill ratifies the amended tribal-state gaming
compact (Amended Compact) entered into between the State of
California and the Jackson Rancheria Band of Miwuk Indians
(hereafter "Tribe") executed on June 22, 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
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conducted. Provides the U.S. district courts with
jurisdiction over any cause of action initiated by a tribal
government alleging that the State failed to negotiate in good
faith to conclude a compact. Prescribes the remedy, mediation
supervised by the courts, if it is found that the State failed
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 Amended Compact entered into between the
State of California and the Jackson Rancheria Band of Miwuk
Indians executed on June 22, 2016. The Amended Compact conforms
the revenue sharing provisions of the Tribe's existing compact
(ratified in 2015) to those of more recent compacts. All other
provisions of the existing compact remain intact.
In 2015, the Tribe entered into a new tribal-state compact that
authorized it to operate a maximum of 1,800 gaming devices (slot
machines) 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 the compact, as described.
Under terms of the 2015 compact, the Tribe agreed to contribute
into the Special Distribution Fund (SDF) its pro rata share of
the State's regulatory costs which include programs that provide
education, counseling and treatment for Californians affected by
problem gambling.
Additionally, the Tribe agreed to contribute 8% of the casino's
net win from its operation of gaming devices in excess of three
hundred fifty (350) to the Revenue Sharing Trust Fund (RSTF) or
the Tribal Nation Grant Fund (TNGF) to be shared with tribes
that are not gaming or that otherwise are not substantially
benefiting from gaming. Also, under terms of the 2015 compact,
during any quarter in which the Tribe operates less than nine
hundred (900) gaming devices the Tribe must pay to the State the
sum paid in the most recent quarter in which it operated at
least nine hundred (900) gaming devices to ensure the solvency
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of the RSTF.
Furthermore, the 2015 compact allowed the State to provide the
Tribe with annual credits for up to forty percent (40%) of the
payments otherwise due to be paid into the RSTF or TNGF for,
among other things, the following: incentives for investments in
renewable energy projects, non-gaming related economic
development projects and health care facilities that provide a
mutual benefit to the Tribe and the local community.
The 2015 compact allows the Tribe or the State to request the
reopening of negotiations regarding RSFT payments if, among
other things, the balance of funds within the RSTF is not
expected to fall short of the amount reasonably required to meet
the long-term obligations of that fund. The 2015 compact also
provides that its terms may be amended at any time by mutual
agreement of the parties.
The 2016 Amended Compact modifies the provisions regarding the
Tribe's payments to the RSTF and TNGF. Specifically, the 2016
Amended Compact provides for a six percent (6%) of net win, or
equivalent, payment instead of eight percent (8%), into the RSTF
or the TNGF, and an annual credit for the Tribe of up to sixty
percent (60%) instead of forty percent (40%), with no reference
to a minimum payment for nine hundred (900) gaming devices. This
Amended Compact also makes technical clarifications about the
use of credits, as specified.
Brief History of the Jackson Rancheria Band if Miwuk Indians
The Jackson Rancheria has been a federally recognized band of
Miwuk Indians since 1895 and occupies over 1,400 acres of land
near the city of Jackson in Amador County. The Tribe has
operated a bingo hall since 1985 and initially entered into a
compact with the State of California for Class III gaming in
1999. That compact 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,
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self-sufficiency, and to provide essential government services
to its citizens.
The Jackson Rancheria is a small tribe (18-voting members) that
is deeply involved in the community and economic life of Amador
County. The Tribe is a responsible steward of its tribal lands,
which encompass a diverse ecosystem in the Sierra foothills. The
Tribe references that its beautiful RV Park, which is tastefully
situated in a secluded forest setting, is a regional attraction
and nationally recognized as an elite facility.
The Tribe emphasizes that it has demonstrated its dedication to
economic development and public projects benefitting both the
Tribe and the community - these include long-standing tribal
contributions to law enforcement and other public safety
programs in Amador County, such as fire protection, as well as
significant contributions to the hospital, recreational
facilities (including the Indian Grinding Rock State Park), and
the County Fair. Additionally, the Tribe points out that in the
past ten years, it has provided millions of dollars to support a
host of community programs ranging from schools and the arts,
drug and alcohol abuse prevention, care for the elderly, and
employment of Native American youth. Furthermore, the Tribe
notes that it has invested in programs which have enhanced its
workforce (e.g., establishment of a local health clinic and
adoption of a minimum wage that exceeds California's minimum
wage).
The Tribe's current casino operation, known as the Jackson
Rancheria Casino Resort, has approximately 1,650 Class III
gaming devices (slot machines), offers 36 table games, five
restaurants, a hotel with 86 rooms, and both indoor and outdoor
entertainment venues. The casino resort complex also employs
approximately 1,200 people.
Details Of The Amended Compact
Payments to the RSTF or the TNGF. If the Tribe operates
more than three hundred fifty (350) gaming devices at any
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time in a given calendar year, it shall thereafter, including
in that calendar year, pay to the State Gaming Agency, for
deposit into the RSTF or the TNGF, six percent (6%) of its
"net win" from its 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 participation fees (e.g., payments made to
gaming resource suppliers on a periodic basis by the gaming
operation for the right to lease or otherwise offer for play
gaming devices), 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 an annual credit for up to sixty
percent (60%) of the payments otherwise due to be paid into
the RSTF or TNGF for the following:
1) Payments by the Tribe to the County of Amador and local
jurisdictions operating facilities or providing services
within the County for purposes of 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;
2) Payments by the Tribe to reimburse Amador County for any
loss of sales tax revenues to the County that would
otherwise be due for retail sales at the Tribe's gaming
facility or transient occupancy tax at the Tribe's hotel if
it was not located on Indian lands. Such reimbursements
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shall be subject to approval by the County;
3) Payments to support operating expenses and capital
improvements for non-tribal governmental agencies or
facilities operating within Amador County;
4) Non-gaming related capital investments and economic
development projects by the Tribe on tribal trust lands
that the State or State designated agency agrees provides
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;
5) 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; and,
6) Payments (not including direct or indirect state or
federal funding) to support capital improvements and
operating expenses for facilities within California that
provide health care services to tribal members, Indians,
and non-Indians.
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.
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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
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
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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.
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.
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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
activities, but the State's need for general tax revenue was
insufficient to demonstrate good faith."
Special Distribution Fund (SDF)
Existing law creates the SDF in the State Treasury for the
receipt of revenue contributions made by tribal governments
pursuant to the terms of the 1999 model Tribal-State Gaming
Compacts and authorizes the Legislature to appropriate money
from the SDF for the following purposes: (a) grants for
programs designed to address gambling addiction; (b) grants for
the support of state and local government agencies impacted by
tribal government gaming; (c) compensation for regulatory costs
incurred by the California Gambling Control Commission (CGCC)
and the Department of Justice (DOJ) in connection with the
implementation and administration of compacts; (d) payment of
shortfalls that may occur in the RSTF; (e) disbursements for the
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purpose of implementing the terms of tribal labor relations
ordinances promulgated in accordance with the terms of the 1999
compacts; and, (f) any other purpose specified by law.
(Pursuant to compact renegotiations that took place with several
of the larger gaming tribes during the Schwarzenegger
administration, revenue from those tribes is directed into the
state General Fund, instead of the SDF.)
The law establishes a method of calculating the distribution of
appropriations from the SDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with the
CGCC, deposit funds into County Tribal Casino Accounts and
Individual Tribal Casino Accounts based upon a process that
takes into consideration whether the county has tribes that pay,
or do not pay, into the SDF. The distribution formula "sunsets"
on January 1, 2021.
Existing law also establishes an Indian Gaming Local Community
Benefit Committee in each county in which gaming is conducted,
specifies the composition and responsibilities of that
committee, and requires that committee to make the selection of
grants from the casino accounts. Among other things, the
committee is responsible for establishing all application
policies and procedures for grants from the casino accounts.
Additionally, existing law requires the State Auditor to conduct
an audit every three years and report its findings to the
Legislature regarding the allocation and use of SDF grant
monies.
Revenue Sharing Trust Fund (RSTF)
Existing law creates in the State Treasury the RSTF for the
receipt and deposit of moneys derived from gaming device license
fees that are paid into the RSTF pursuant to the terms of
specified tribal-state gaming compacts for the purpose of making
distributions to non-compacted California tribes (e.g.,
federally-recognized non-gaming tribes and tribes that operate
casinos with fewer than 350 slot machines). Revenue in the RSTF
is available to CGCC, upon appropriation by the Legislature, for
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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.
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
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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
California Labor Federation
County of Amador
Jackson Rancheria Band of Miwuk Indians
Jamul Indian Village
Pechanga Band of Luiseno Indians
Teamsters
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
Yocha Dehe Wintun Nation
OPPOSITION: (Verified8/15/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/15/16 19:36:06
**** END ****
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