BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2358|
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THIRD READING
Bill No: AB 2358
Author: Gonzalez (D) and Waldron (R), et al.
Amended: 8/9/16 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 tribal
gaming compact entered into between the State of
California and the Pechanga Band of Luiseno 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
Pechanga Band of Luiseno Indians (hereafter "Tribe") executed on
August 4, 2016. Additionally, this bill provides that, in
deference to tribal sovereignty, certain actions are not deemed
projects for purposes of the California Environmental Quality
Act (CEQA); and, stipulates, except as expressly provided, that
none of the provisions shall be construed to exempt a city,
county, or city and county, or the Department of Transportation
from CEQA requirements.
ANALYSIS:
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Existing law:
1)Provides, under the Indian Gaming Regulatory Act (IGRA), for
the negotiation and conclusion of compacts between federally
recognized Indian tribes and the State for the purpose of
conducting Class III gaming activities on Indian lands within
a State as a means of promoting tribal economic development,
self-sufficiency, and strong tribal governments.
2)Authorizes expressly a number of tribal-state gaming compacts
between the State of California and specified Indian tribes.
3)Authorizes the conduct of Class III gaming activities to the
extent such activities are permitted by state law, a gaming
compact has been concluded by a federally recognized tribe and
the State, and the compact has been approved by the Secretary
of the Interior.
4)Limits the operation of Class III gaming activities to Indian
lands acquired on or before October 17, 1988. Provides for
certain exceptions to conduct gaming activities on Indian
lands acquired after October 17, 1988.
5)Defines Indian lands to mean all lands within the limits of
any Indian reservation, and any lands title to which is either
held in trust by the United States for the benefit of any
Indian tribe, or individual, or held by any Indian tribe or
individual subject to restriction by the U.S. against
alienation and over which an Indian tribe exercises
governmental power.
6)Requires the State to negotiate to conclude a compact in good
faith with an Indian tribe having jurisdiction over the Indian
lands upon which the Class III gaming activity is to be
conducted. Provides the U.S. district courts with
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jurisdiction over any cause of action initiated by a tribal
government alleging that the State failed to negotiate in good
faith to conclude a compact. Prescribes the remedy, mediation
supervised by the courts, if it is found that the State failed
to negotiate in good faith to conclude a compact.
7)Authorizes the Governor, under the California Constitution, to
negotiate and conclude compacts, subject to ratification by
the Legislature.
This bill ratifies the Compact entered into between the State of
California and the Pechanga Band of Luiseno Indians executed on
August 4, 2016 and supersedes the Tribe's 2006 amended compact.
Under this Compact, the Tribe may operate a maximum of 5,500
gaming devices (slot machines) on eligible Indian lands held in
trust for the Tribe, located within the boundaries of the
Pechanga Reservation (Appendix A of the Compact) in Temecula,
CA.
The Tribe's 2006 amended compact authorized no more than 7,500
gaming devices, required an annual flat payment of $42.5 million
to the State's general fund, plus an annual payment of 15% of
the net win generated from the operation of between 2,000-5,000
gaming devices. The Tribe's 2006 amended compact also required
an annual $2 million payment into the Revenue Sharing Trust Fund
(RSTF).
With respect to this Compact, the Tribe has agreed to pay the
State its pro rata share of costs the State incurs for the
performance of its duties under the Compact plus additional
amounts ($500,000 up to a total of $3 million) to cover a
portion of the share of regulatory costs for smaller gaming
tribes. The Tribe has also agreed to pay $12 million annually
into the 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.
Additionally, this Compact establishes the Local Community
Credit Fund (LCCF), to be managed by the Tribe for the purpose
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of providing funding for infrastructure improvements that in
part benefit county residents, fire, law enforcement, public
transit, 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,
Indians, and non-Indians. The Tribe has agreed to make
quarterly payments into the LCCF totaling $21 million per year.
Furthermore, this Compact creates the California Native American
Education and Scholarship Fund to ensure that Native American
youth from tribes without substantial gaming revenue have the
financial support to pursue and obtain undergraduate, graduate
and professional degrees. Accordingly, the Tribe has agreed to
pay $3 million annually for deposit into the Scholarship Fund.
This Compact also: (a) 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; (b) 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; (c) requires
the Tribe to adopt a Tribal Labor Relations Ordinance, as
specified; and, (d) includes patron dispute, tort claims and
employment discrimination provisions.
Brief History of the Pechanga Band of Luiseno Indians
According to information provided by the Tribe, life on earth
began in the Temecula Valley, Exva Temeeku, the place of the
union of Sky-father and Earth-mother (Tuukumit 'pi Tamaayowit).
Temecula is named after Pechanga's ancestors, the Temecula
Indians (Temeekuyam), who lived in Temeekunga ("the place of the
sun").
The Pechanga Indian Reservation was established by Executive
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Order of President Chester A. Arthur on June 27, 1882, formally
recognizing the Tribe's sovereignty and land-base. The Tribe is
committed to improving the environment, education status, and
the health, safety and general welfare of its members and the
surrounding community.
The Pechanga Band is a fully functioning modern government which
derives its authority from the General Membership. The Pechanga
people are governed by a constitution and bylaws. Elected by a
majority of the General Membership, the Pechanga Tribal Council
is responsible for setting policy and administering a wide range
of governmental programs within the boundaries of the
reservation. The 7-member Pechanga Tribal Council is elected
every two years. The General Membership also elects the tribal
secretary, treasurer, and members and officers of the Pechanga
Development Corporation Board of Directors and the Pechanga
Gaming Commission.
The Pechanga Entertainment Center was the first major economic
investment undertaken by the Tribe and opened in 1995 with 135
employees. The current Pechanga Resort & Casino was opened in
2002.
Today, the Tribe employs more than 5,000 people and operates the
largest and most expansive resort/casino in the western United
States. The hotel was the first California hotel/casino to
receive the prestigious Four Diamond by AAA in 2003. The casino
offers more than 3,000 slot machines, 154 table games, a
700-seat bingo facility, headliner concerts and championship
boxing, 517 hotel rooms, nine restaurants, a spa, and golf. The
Tribe has continued to expand the Pechanga Resort & Casino and
in November 2008 opened Journey at Pechanga, an Arthur
Hills/Steve Forrest designed 18-hole championship golf course.
The Tribe also operates a recreational vehicle resort, food
mart, and a full service gas station and mini-mart.
The Pechanga Resort and Casino has been an economic success for
the Tribe, enabling members of the Pechanga Tribe to reverse
generations of poverty and begin achieving economic
self-sufficiency while allowing the Tribe to make investments in
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non-gaming assets that will ensure long-term economic
diversification. In addition, the Tribe's economic success has
helped to spur economic growth in the surrounding community. As
with other areas of the California economy, the Tribe's economic
activities and economic impact slowed during the Great
Recession. However, the ongoing economic activities of the
Pechanga Tribe continue to help stabilize the economy of the
surrounding communities and counties.
In 2013, the Tribe's total direct and indirect economic impact
resulted in the employment of 33,337 people; the payment of $1.1
billion wages, benefits, and tribal programs; and purchases
totaling $692 million with the direct employment effects of the
Tribe's activities concentrated in the Temecula Valley,
Riverside County, and San Diego County.
Key Components of the Compact
Scope of Class III Gaming Authorized. The Tribe is
authorized to operate up to a total of 5,500 gaming devices;
banking or percentage card games; 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; and,
off-track wagering on horse races at a satellite wagering
facility pursuant to certain requirements identified in
Appendix D. The Tribe shall not engage in Class III Gaming
that is not expressly authorized in the Compact.
Authorized Gaming Facility. The Tribe may establish and
operate not more than two (2) gaming facilities and engage in
Class III Gaming only on eligible Indian lands held in trust
for the Tribe, located within the boundaries of the Tribe's
reservation and trust lands as those boundaries exist as of
the execution date of this Compact, as legally described in
the Compact (Appendix A). If the Tribe chooses to open a
second facility, it may operate no more than 500 gaming
devices at that second facility.
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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 and treat
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, the administration and implementation of
tribal-state gaming compacts, and funding for the Office of
Problem Gambling, as determined by the monies appropriated in
the annual Budget Act each fiscal year to carry out those
purposes. 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."
The Tribe further agrees to pay an additional five hundred
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thousand dollars ($500,000) into the SDF to ensure it remains
solvent. In the event the pro rata funding for the SDF
statewide has proven sufficient for three consecutive years,
the parties agree to meet and confer for the purpose of
making an appropriate reduction in the additional payment.
Also, in the event the Tribe's pro rata share exceeds $3
million, the Tribe shall pay the greater of its pro rata
share or $3 million.
Payments to the RSTF or the TNGF. The Tribe agrees to pay
$12 million annually to the California Gambling Control
Commission (CGCC) for deposit into the RSTF or the TNGF.
This Compact specifies that, in no event shall the State's
general fund be obligated to make up any shortfall in the
RSTF or the TNGF or to pay any unpaid claims connected
therewith. It provides that the State's obligations related
to the RSTF or the TNGF under any Class III gaming compact,
non-gaming tribes and limited-gaming tribes are not
third-party beneficiaries of this Compact and shall have no
right to seek any judicial order compelling disbursement of
any RSTF or TNGF monies to them.
Local Community Credit Fund (LCCF. The Compact establishes
"Local Community Credit Fund" (LCCF), which is managed by the
Tribe to make or provide funding for, or make investments in
projects that mutually benefit the Tribe, County, local
jurisdictions, and the State. The Tribe shall make quarterly
payments into the fund totaling $21 million per year. The
LCCF may be used for the following purposes:
1) Payments by the Tribe to the County or local
jurisdictions operating facilities or providing services
within the County for fire, law enforcement, emergency
medical services, public transit, education, tourism, or
other services and infrastructure improvements intended to
serve off-reservation needs of County residents as well as
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those of the Tribe - such payments shall be subject to
approval by the County or local jurisdiction receiving the
funds;
2) Cost of services provided by the Tribe, or payments made
to the County, local jurisdictions, school districts,
charter schools, or non-profit or civic organizations
operating facilities or providing services within the
County, for cultural programs, fire services, emergency
medical services, problem gambling programs, law
enforcement, public transit, education, tourism, youth
athletics and other youth programs, or other services or
infrastructure improvements that in part serve
off-reservation needs of County residents;
3) To promote continued economic growth that benefits the
Tribe and the surrounding community through investments in
facilities, infrastructure, or other projects that generate
sustained job creation and ensure the financial longevity
of the Tribe, the Tribe may utilize up to 20% of the LCCF
annually for the purpose of making payments to the
principle amount on its debt services which are secured by
the assets of the gaming operation;
4) Non-gaming related capital investments and economic
development projects by the Tribe, on or off tribal trust
lands, 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;
5) Investments, loans, or other financial obligations
including actual payments used to secure loans, to or for
the benefit of other federally recognized tribes for any
purpose, including gaming;
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6) Investments in, and any funds paid to the State in
connection with, renewable energy projects that, in part,
serve the gaming facility, to include projects that
incorporate charging stations for electric or other
zero-emission vehicles that are available to tribal
members, patrons and employees of the gaming facility or
the Tribe;
7) Payments to support capital improvements and operating
expenses for facilities within California that provide
health care services to tribal members, Indians, and
non-Indians;
8) Investments by the Tribe for water treatment or
conservation projects on real property owned by the Tribe,
as well as costs of recycling programs that, in part, serve
the gaming facility, or other on or off-reservation needs
within the County; and,
9) Grants to Native Americans who are not members of the
Tribe, or grants to other federally-recognized tribes or
other Native American tribes regardless of their
federal-recognition status, for educational, cultural, or
vocational purposes, or for governmental or general welfare
purposes.
In the event the Tribe's annual gross gaming revenue is less
than its gross gaming revenue for fiscal year 2010, the Tribe
shall no longer be required to pay the credit amounts into
the LCCF.
"Gross Gaming Revenue" is defined as the win from gaming
devices, which is the difference between gaming wins and
losses before deducting costs and expenses or deducting
incentives or adjusting for changes in progressive jackpot
liability accruals. Generally, the difference between patron
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wagers and the payouts made on winning wagers.
California Native American Education and Scholarship Fund
(Fund). The Compact creates the "California Native American
Education and Scholarship Fund" (Fund), to ensure that Native
American youth from tribes without substantial gaming revenue
have the financial support to pursue and obtain
undergraduate, graduate and professional degrees.
Accordingly, the Tribe agrees to pay $3 million annually for
deposit into the Fund. The Fund will be managed by an
independent foundation, or similar non-profit third-party
organization with proper credentials, agreed upon by both the
Tribe and the State to manage, administer, and account for
the funds. If the balance in the Fund exceeds $10 million,
the excess funds shall be deposited into the RSTF or, if the
RSTF is fully solvent, the TNGF.
Additional Compact Components
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.
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Minimum Internal Control Standards (MICS). Requires the
Tribe to conduct its gaming activities pursuant to an
internal control system that implements MICS that are no less
stringent than those contained in the MICS of the federal
NIGC standards, as specified. It requires gaming to operate
pursuant to a written internal control system that reasonably
assures that assets are safeguarded and accountability over
assets is maintained; liabilities are properly recorded and
contingent liabilities are properly disclosed; financial
records are accurate and reliable; transactions are performed
in accordance with the Tribal Gaming Agency's authorization;
access to assets is permitted only in accordance with the
Tribal Gaming Agency's approved procedures; recorded
accountability for assets is compared with actual assets;
and, functions, duties and responsibilities are appropriately
segregated and performed by qualified personnel. The Tribe
is required to provide the CGCC, upon written request, a copy
of the independent certified public accountant agreed-upon
procedures report conducted annually for submission to the
NIGC pursuant to federal law. This report verifies that the
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 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
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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 arbitrator's jurisdiction and in any action, for the
sole and limited purposes, to (i) enforce the Tribe's or the
patron's obligation to arbitrate, (ii) confirm, correct,
modify, or vacate the tribal court award or the arbitral
award rendered in the arbitration, or (iii) enforce or
execute their judgments.
Public and Workplace Liability. Requires the Tribe to
obtain and maintain a commercial general liability insurance
policy which provides coverage of no less than $10 million.
Also, requires the Tribe to adopt a Tort Liability Ordinance
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 gaming facility. The Tribe consents to
binding arbitration before a single arbitrator, who shall be
a retired judge in accordance with the comprehensive
arbitration rules and procedures of JAMS. The cost and
expenses of arbitration shall be initially borne by the Tribe
but the arbitrator may award costs to the prevailing party
not to exceed those allowable in a suit in California
Superior Court, and that any party dissatisfied with the
award of the arbitrator may at the party's election invoke
the JAMS Optional Arbitration Appeal Procedure, provided that
the party making such election must bear all costs and
expenses of JAMS and the arbitrators associated with the
appeal procedure, regardless of the outcome. The Tribe
consents to the arbitrator's jurisdiction and any action to
enforce or execute a judgment based on the award.
Environmental Protections. Requires the Tribe to prepare a
Tribal Environmental Impact Report (TEIR) and negotiate
mitigation of any off-reservation impacts, including an
evaluation of energy consumption, prior to initiating the
development of a Project for a facility. The Compact
provides procedures regarding the (1) Notice of Preparation
of Draft TEIR, (2) Notice of Completion of Draft TEIR, and
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(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 if state roads are impacted. A
completed TEIR must be filed with the County, the Department
of Justice, 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 to, amongst other things,
provide for the timely mitigation of any significant effect
on the off-reservation environment including provisions
relating to compensation for law enforcement, fire
protection, emergency medical services and any other public
services to be provided by the County to the Tribe as a
consequence of the Project.
Enhanced Audit and Compliance Review Procedures. In
addition to providing for an annual independent audit, the
Compact allows the state to conduct its own annual audit and
compact compliance review.
Inspection and Testing of Slot Machines. Provides that slot
machines will have to be tested, approved and certified by an
independent gaming test laboratory or state governmental
gaming test laboratory to ensure they are being operated
according to specified technical standards. Also, requires
the Tribal Gaming Agency to maintain adequate records that
demonstrate compliance with software and hardware
specifications. The State Gaming Agency would be authorized
to annually conduct up to four random inspections of slot
machines in operation to confirm that the slot machines are
operating in conformance with these standards.
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
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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 Provisions. Provides that the gaming activities
authorized by this Compact may only commence after the Tribe
has adopted an ordinance identical to the Tribal Labor
Relations Ordinance (TRLO), referenced as Appendix C of the
Compact, and the gaming activities may only continue as long
as the Tribe maintains the ordinance. If the Tribe employs
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 gaming operation and the gaming
facility. 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
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.
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Alcohol Provisions. Makes it explicit that the purchase,
sale, and service of alcoholic beverages shall be subject to
state law - the Alcoholic Beverage Control (ABC) Act.
Tobacco Provisions. Provides that the Tribe agrees to
provide a non-smoking area in the gaming facility and to
incorporate ventilation, filtration, purification or other
technologies throughout the gaming facility, where reasonable
and feasible after consideration of engineering, economic and
scientific factors, and further agrees not to offer or sell
tobacco to anyone under eighteen (18) years of age.
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 and comply with tribal law that is consistent with
federal and state laws forbidding harassment, including
sexual harassment, discrimination and retaliation.
Furthermore, the Tribe must maintain an 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
construction standards set forth in the applicable codes.
Gaming facility construction, expansion, improvement,
modification or renovation must also comply with the federal
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Americans with Disabilities Act. Also, provides that any
construction of any Project that has taken place or has
commenced prior to the effective date of this Compact shall
be subject to the facility license rules outlined in the
tribal-state compact between the State and the Tribe executed
on August 28, 2006, provided that the Project was previously
approved.
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.
Horse Racing Satellite Wagering Facility. As noted above,
under the heading "Scope of Class III Gaming Authorized," the
Compact contains an appendix (Appendix D) which authorizes
the Tribe to establish and operate a horse racing satellite
wagering facility within its gaming facility. Specifically,
the Tribe must submit to the California Horse Racing Board
(CHRB) an application to operate such a facility and the
facility must be operated in conformity with IGRA, the
Appendix, and Compact. If provisions of the Compact are in
conflict with California Horse Racing Law or the CHRB's Rules
and Regulations specific to the conduct of satellite
wagering, California Horse Racing Law and the CHRB's Rules
and Regulations shall control. The amounts deducted from
pari-mutuel wagers at the Pechanga Satellite Facility, and
the distribution of such amounts, shall be the same as those
provided for under the California Horse Racing Law and the
CHRB's Rules and Regulations for satellite wagering
facilities, other than fairs, in the southern zone.
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.
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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.
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.
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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.
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
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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
activities, but the State's need for general tax revenue was
insufficient to demonstrate good faith."
Special Distribution Fund (SDF)
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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
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
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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.
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
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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
California Labor Federation
California State Pipe Trades Council
California State Association of Electrical Workers
City of Temecula
County of Riverside
Jamul Indian Village
Lake Elsinore Unified School District
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Pechanga Band of Luiseno Indians
Murietta Valley Unified School District
Teamsters
Temecula Valley Chamber of Commerce
Temecula Valley Unified School District
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
Visit Temecula Valley
Yocha Dehe Wintun Nation
OPPOSITION: (Verified8/15/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/15/16 19:39:51
**** END ****