BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2915|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 2915
Author: Eduardo Garcia (D), et al.
Introduced:8/16/16 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
NOTE: On August 9, 2016, the Senate Committee on Governmental
Organization held an informational hearing on the tribal
gaming compact entered into between the State of
California and the Agua Caliente Band of Cahuilla
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
Agua Caliente Band of Cahuilla 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
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
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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 Agua Caliente Band of Cahuilla Indians
executed on August 4, 2016 and supersedes the Tribe's 2006
amended compact. Under this Compact, the Tribe may operate a
maximum of 5,000 gaming devices (slot machines) on eligible
Indian lands held in trust for the Tribe, and located within the
boundaries of the Tribe's Reservation in Riverside County, as
legally described in the Compact (Appendix A).
The Tribe's 2006 amended compact authorized Agua Caliente to
operate up to 2,000 gaming devices at its Palm Springs casino,
2,000 gaming devices at its Rancho Mirage casino, and 1,000
gaming devices at any new third gaming facility in Riverside
County for a total of 5,000 devices. The Tribe's 2006 amended
compact required an annual flat payment of $23.4 million to the
State's general fund for the duration of the compact, plus an
annual payment of 15% of the net win generated from the
operation of all additional gaming devices over the existing
2,000 devices. The Tribe's 2006 amended compact also required
annual $2 million payments into the Revenue Sharing Trust Fund
(RSTF). In addition, the 2006 amended compact required the
Tribe to maintain its existing licenses, which included a
fee-per-machine totaling approximately $550,000 per year.
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. The Tribe has also
agreed to make payments into the RSTF and the Tribal Nation
Grant Fund (TNGF) that are based on a percentage of net win
generated from gaming devices - the percentage increases as the
number of slots increases. Specifically, the tribe will pay 6%
of net win on devices up to 2,500; 7% on devices between 2,501
and 3,000; 8% on devices between 3,001 and 3,500; 9% on devices
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between 3,501 and 4,000; 10% on devices between 4,001 and 4,500;
and, up to 11% on devices between 4,501 and 5,000.
This Compact also provides that from its payments to the RSTF
and the TNGF, the Tribe may take credits of up to 60% for
infrastructure improvements that in part benefit county or local
jurisdiction residents, as well as those of the Tribe, fire, law
enforcement, public transit, education, tourism and other
services including investments in renewable energy 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.
Furthermore, this Compact: (1) provides a regulatory framework
that respects the role of the tribal gaming agency as the
primary regulator while also ensuring that state gaming
regulators fulfill their responsibilities; (2) requires the
Tribe to conduct its gaming activities pursuant to an internal
control system that implements minimum internal controls that
are no less stringent than those in federal regulations; (3)
requires the Tribe to adopt a Tribal Labor Relations Ordinance,
as specified; and, (4) includes patron dispute, tort claims and
employment discrimination provisions.
BRIEF HISTORY OF THE AGUA CALIENTE BAND OF CAHUILLA INDIANS
According to information provided by the Tribe, the Agua
Caliente Band of Cahuilla Indians is a federally recognized
Indian tribe located in the Coachella Valley within Riverside
County. The tribal headquarters are located in Palm Springs,
which derives its name from the ancient hot mineral springs
located in downtown Palm Springs on the Tribe's reservation.
The Tribe's reservation covers approximately 32,000 acres of the
Coachella Valley in a "checker-board" pattern, and was created
by Presidential Executive Orders in the late 1870's and spans
large portions of the cities of Palm Springs, Rancho Mirage, and
Cathedral City. The Tribe is governed by a five-member Tribal
Council pursuant to the Tribe's Constitution and Bylaws, which
was adopted and approved by the Tribe and the federal government
in June of 1955. The Tribe has approximately 500 members. The
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tribal government provides a wide array of services and benefits
to tribal members related to healthcare, education, cultural
preservation, and general welfare. The capacity of the Tribe to
provide for its members and strengthen the tribal government has
greatly increased since the establishment of tribal gaming. The
Tribe previously entered into a tribal-state gaming compact with
the State in 1999 - that compact was amended in 2006.
With approximately 2,500 team members working within gaming and
non-gaming tribal economic development ventures, the Tribe is
one of the largest employers in the Coachella Valley. The Tribe
currently operates two casinos, two golf courses, multiple
restaurants, an entertainment venue, and also manages its real
estate holdings, which include numerous leases of reservation
lands for commercial and residential development and other
purposes. The Tribe also operates the Indian Canyons and
Tahquitz Canyon located on the Tribe's reservation. These
recreational areas located on Cahuilla ancestral lands are open
to the public and offer over 60 miles of hiking trails and other
activities so that all may enjoy the beauty of natural springs,
native palm groves, wildlife, and multiple waterfalls. Tribal
government departments, including but not limited to Economic
Development, Planning and Natural Resources, Tribal Historic
Preservation, and Emergency Services, closely partner with other
local governments and communities on infrastructure issues, as
well as other projects and initiatives to address shared
concerns.
The Tribe is a major contributor to local public and nonprofit
organizations and government agencies located within and outside
of the reservation in the cities of Palm Springs, Rancho Mirage,
Cathedral City, and in areas throughout the Coachella Valley and
beyond. The Tribe recently established the Richard M.
Milanovich Fellowship to provide funding for Native American
students who are members of any federally recognized Indian
tribe so that they may study, live and work in Washington D.C.
through the George Washington University's Native American
Political Leadership Program.
KEY COMPONENTS OF THE COMPACT
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Scope of Class III Gaming Authorized. The Tribe is authorized
to operate up to a total of 5,000 gaming devices (slot
machines); 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 six gaming facilities [only two of which may have
more than 500 gaming devices] 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).
Exclusivity. Provides that in the event the exclusive right of
Indian tribes to operate Class III gaming in California pursuant
to the California Constitution is nullified by the enactment,
amendment, or repeal of a state statute or constitutional
provision or the conclusive and dispositive judicial
construction of a statute or the state Constitution by a
California appellate court after the effective date of this
Compact, that gaming devices may lawfully be operated by
non-Indian entities, the Tribe shall have the right to: (1)
terminate this Compact, in which case the Tribe will lose the
right to operate Class III gaming authorized by this Compact or
(2) continue under this Compact with entitlement to a reduction
of the rates specified below following conclusion of
negotiations, to provide for (a) compensation to the State for
the costs of regulation, as defined; (b) reasonable payments to
local governments impacted by tribal government gaming; (c)
grants for programs designed to address gambling addiction; and,
(d) such assessments as may be permissible at such time under
federal law.
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Payments to the Special Distribution Fund (SDF). The Tribe
shall pay to the State, on a pro rata basis, the costs the State
incurs for the performance of all its duties under this Compact,
as established by the monies appropriated in the annual Budget
Act for the performance of their duties under the Class III
Gaming Compacts each fiscal year for the California Gambling
Control Commission (CGCC), the California Department of Justice,
the Office of the Governor, the California Department of Public
Health Programs, Office of Problem Gambling, the State
Controller, the Department of Human Resources, and the Financial
Information System for California, or any agency or agencies the
State designates as a successor to them. 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."
Payments to the RSTF and the TNGF. The Tribe shall make
payments, which shall be used exclusively for the RSTF and the
TNGF, based on the following schedule:
----------------------------------------------
|Gaming Devices in |Percentage of Gaming |
|Operation |Devices' Net Win |
|-----------------------+----------------------|
| | |
|350 but less than |Six percent (6%) |
|2,501 | |
|-----------------------+----------------------|
| | |
|2,500 but less than |Seven percent (7%) |
|3,001 | |
|-----------------------+----------------------|
| | |
|3,000 but less than |Eight percent (8%) |
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|3,501 | |
|-----------------------+----------------------|
| | |
|3,500 but less than |Nine percent (9%) |
|4,001 | |
|-----------------------+----------------------|
| | |
|4,000 but less than |Ten percent (10%) |
|4,501 | |
|-----------------------+----------------------|
| | |
|4,500 but less than |Eleven percent (11%) |
|5,001 | |
----------------------------------------------
"Net Win" is defined as the drop from gaming devices, plus the
redemption value of expired tickets, less fills, less payouts,
less that portion of the gaming operation's payments to a
third-party wide-area progressive jackpot system provider that
is contributed only to the progressive jackpot amount.
Credits Applied to the RSTF or the TNGF. The State agrees to
provide the Tribe with annual credits for up to 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, local jurisdictions, or
non-profit and civic organizations operating facilities or
providing services within the County for fire, law
enforcement, public transit, education, tourism, and other
services and infrastructure improvements intended to serve
off-reservation needs of County or local jurisdiction
residents as well as those of the Tribe;
2)Non-gaming related capital investments and economic
development or other projects by the Tribe that provide mutual
benefits to the Tribe and the State, the County or local
jurisdictions because, for instance, they have particular
cultural, social or environmental value, or diversify the
sources of revenue for the Tribe's general fund;
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3)Payments to support operating expenses and capital
improvements for non-tribal governmental agencies or
facilities operating within the County or local jurisdictions;
4)Investments in, and any funds paid to the State, including
excise taxes, 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;
5)Payments to support capital improvements and operating
expenses for facilities within California that provide health
care services to tribal members, Indians, and non-Indians;
6)Costs incurred by the Tribe to fund the construction and
operation of a museum or to preserve cultural resources within
the County;
7)Payments to Indians who are not members of the Tribe for
educational, healthcare, general welfare, or vocational
purposes, or to other federally-recognized tribes for
governmental or general welfare purposes; and,
8)Payments by the Tribe to reimburse the County for any loss of
property tax revenues, sales tax revenue 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.
All excess authorized credits that cannot be applied in any
one year because they would exceed the 60% may be applied as
an annual credit in all following years that this Compact is
in effect, in the same percentages, until completely
exhausted.
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Quarterly Contribution Report. At the time each quarterly
payment is due, the Tribe shall submit to the State a report,
prepared and certified by an authorized representative of the
gaming operation. The report must include: (1) calculation of the
average number of gaming devices operated each day and (2) the
total amount due the SDF and the RSTF/TNGF.
ADDITIONAL COMPACT ELEMENTS
Gaming Ordinance and Regulations. Provides that all gaming
activities conducted under this Compact shall, at a minimum,
comply with (1) a gaming ordinance duly adopted by the Tribe and
approved in accordance with IGRA, (2) all rules, regulations,
procedures, specifications, and standards duly adopted by the
National Indian Gaming Commission (NIGC), the Tribal Gaming
Agency, and the State Gaming Agency, and (3) the provisions of
this Compact, as specified.
Licensing Requirements and Procedures. Provides that all persons
in any way connected with the gaming operation or gaming
facility who are required to be licensed or to submit to a
background investigation under IGRA, and any others required to
be licensed under this Compact, including, without limitation,
all gaming employees, gaming resource suppliers, financial
sources, and any other person having a significant influence
over the gaming operation, must be licensed by the Tribal Gaming
Agency and cannot have had any determination of suitability
denied or revoked by the CGCC. Also, every gaming employee must
obtain, and thereafter maintain current, a valid tribal gaming
license, as specified.
Minimum Internal Control Standards (MICS). Requires the Tribe to
conduct its gaming activities pursuant to an internal control
system that implements MICS that are no less stringent than
those contained in the MICS of the federal NIGC standards, as
specified. It requires gaming to operate pursuant to a written
internal control system that reasonably assures that assets are
safeguarded and accountability over assets is maintained;
liabilities are properly recorded and contingent liabilities are
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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. Requires the Tribe (through its Tribal Gaming
Agency) to 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. 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. The Tribal Gaming Agency shall conduct an
appropriate investigation, provide to the patron a copy of its
procedures concerning patron complaints, and render a decision
in accordance with industry practice. The decision shall be
issued within 60 days of the patron's request. Any party
dissatisfied with the award of the Tribe's tribal court may, at
the party's election, seek binding arbitration which shall be
settled by a retired judge, in accordance with the streamlined
arbitration rules and procedures of Judicial Arbitration and
Mediation Services (JAMS). The Tribe agrees to wave its
sovereign immunity in connection with the jurisdiction of the
tribal court system and JAMS arbitrator's jurisdiction and in
any action to enforce their judgments or the obligations
provided in this section.
Public and Workplace Liability. Requires the Tribe to obtain and
maintain a commercial general liability insurance policy which
provides coverage of no less than $10 million. Also, requires
the Tribe to adopt a Tort Liability Ordinance containing
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provisions that are the same as California tort law to govern
all claims of bodily injury, personal injury, or property damage
arising out of, connected with, or relating to the casino. The
Tribe must consent to jurisdiction in the Tribe's tribal court
system, once a tribal court system is established, or by binding
arbitration before a JAMS operator, in accordance with JAMS
Comprehensive Arbitration. Any party dissatisfied with the
award of the arbitrator may invoke the JAMS Optional Arbitration
Appeal Procedure. The cost and expenses of arbitration shall be
initially borne equally by the parties but the JAMS arbitrator
shall award to the prevailing party its costs and expenses (but
no attorney fees). The Tribe consents to the jurisdiction of
the tribal court and the arbitrator's jurisdiction, the JAMS
Optional Appeal Procedure and any action to enforce their
judgments or the obligations in this section.
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 (3) Issuance
of Final TEIR. The Tribe's failure to prepare an adequate TEIR
when required may warrant an injunction where appropriate.
Before commencement of a Project, and no later than the issuance
of the final TEIR, the Tribe shall negotiate an
intergovernmental agreement with the California Department of
Transportation (Caltrans) if state roads are impacted. A
completed TEIR must be filed with the County, 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
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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 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. Rather than requiring side agreements between
the Tribe and labor organizations, this Compact incorporates
provisions of a Tribal Labor Relations Ordinance (TLRO) first
incorporated into the compact with the Santa Ynez Band of
Chumash Indians in 2015 and reflects significant changes from
the Tribe's 1999 TRLO. The Compact provides that the gaming
activities authorized by this Compact may only commence after
the Tribe has adopted an ordinance identical to the 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.
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Workers' Compensation. Provides that the Tribe agrees to
participate in the State's workers' compensation program with
respect to employees at the casino. All disputes arising from
the workers' compensation laws shall be heard by the State
Workers' Compensation Appeals Board pursuant to the California
Labor Code. The Tribe acknowledges the jurisdiction of the
Board in such manners. In lieu of participation in the State's
system, the Tribe may create and maintain a system through
self-insurance, which includes specified provisions, including
hearings before an independent tribunal. Furthermore, the Tribe
agrees that it will participate in the 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 18 years from being present in
any room or area in which gaming activities are being conducted
unless the person is en route to a non-gaming area of the gaming
facility, or is employed at the gaming facility in a capacity
other than as a gaming employee.
Alcohol Provision. 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 maintain
ventilation, filtration, purification or other technologies
throughout the gaming facility, where reasonably feasible after
consideration of engineering, economic and scientific factors,
and further agrees not to offer or sell tobacco products,
including but not limited to smokeless tobacco products or
e-cigarettes, to anyone younger than the minimum age specified
in state law to legally purchase tobacco products.
Problem Gambling. Requires the Tribe to continue to maintain
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safeguards against problem gambling by implementing specified
safeguards.
Health and Safety Standards. Provides that the Tribe has agreed
to adopt and comply with 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 federal
and state laws forbidding harassment, including sexual
harassment, discrimination and retaliation. Furthermore, the
Tribe must maintain a $3 million insurance policy for these
purposes and adopt an ordinance that includes a dispute
resolution process.
Building Codes and Fire Safety. Provides that in order to assure
the protection of the health and safety of all gaming facility
patrons, guests, and employees, the Tribe shall adopt or has
already adopted, and shall maintain throughout the term of this
Compact, an ordinance that requires any covered gaming facility
construction to meet or exceed the applicable codes. Gaming
facility construction, expansion, improvement, modification or
renovation must also comply with the federal Americans with
Disabilities Act.
Emergency Services Accessibility and Possession of Firearms.
Requires the Tribe to make reasonable provisions for adequate
emergency fire, medical, and related relief and disaster
services for patrons and employees. Also, prohibits the
possession of firearms by any person in the gaming facility at
all times except for federal, state, or local law enforcement
personnel, or tribal law enforcement or security personnel, as
authorized.
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 no more than two horse racing satellite
wagering facilities upon the Tribe's Reservation. Specifically,
the Tribe must submit to the California Horse Racing Board
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(CHRB) an application to operate such a facility and each
facility must be operated in conformity with IGRA, the Appendix,
and this 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
each 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:
(1) The Compact is ratified by statute in accordance with state
law and (2) Notice of approval or constructive approval is
published in the Federal Register. Once effective, this Compact
shall be in full force and effect for 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."
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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
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
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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.
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
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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: (1) grants for
programs designed to address gambling addiction; (2) grants for
the support of state and local government agencies impacted by
tribal government gaming; (3) compensation for regulatory costs
incurred by the California Gambling Control Commission (CGCC)
and the Department of Justice (DOJ) in connection with the
implementation and administration of compacts; (4) payment of
shortfalls that may occur in the RSTF; (5) disbursements for the
purpose of implementing the terms of tribal labor relations
ordinances promulgated in accordance with the terms of the 1999
compacts; and, (6) any other purpose specified by law.
(Pursuant to compact renegotiations that took place with several
of the larger gaming tribes during the Schwarzenegger
administration, revenue from those tribes is directed into the
state General Fund, instead of the SDF.)
The law establishes a method of calculating the distribution of
appropriations from the SDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with the
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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
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
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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
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.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/16/16)
Agua Caliente Band of Cahuilla Indians
Barona Band of Mission Indians
California Labor Federation
California Tribal Business Alliance
City of Cathedral City
City of Palm Springs
City of Rancho Mirage
Pechanga Band of Luiseno Indians
Teamsters
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
OPPOSITION: (Verified8/16/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/18/16 15:42:35
**** END ****