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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