BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 187|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 187
Author: Hall (D)
Amended: 8/18/16
Vote: 27
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR: 78-0, 8/22/16 - See last page for vote
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 Jamul Indian Village.
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
Jamul Indian Village executed on August 8, 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.
Assembly Amendments delete the contents of this bill relating to
horse racing and instead add language pertaining to ratification
of the Jamul Indian Village Compact.
SB 187
Page 2
ANALYSIS:
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
SB 187
Page 3
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
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 Jamul Indian Village (hereafter "Tribe")
executed on August 8, 2016 and supersedes the 1999 compact
between the Tribe and the State of California. The Compact
authorizes the Tribe to operate a maximum of 2,500 gaming
devices (slot machines) at no more than two gaming facilities
located on eligible Indian lands held in trust for the Tribe,
and located within the boundaries of the Tribe's reservation in
the County of San Diego, as legally described in Appendix A of
the Compact.
The Tribe has agreed to pay into the Special Distribution Fund
(SDF) its pro rata share of costs the State incurs for the
performance of its duties under the Compact as well as 4.75% of
its "gross gaming revenue," to be shared with tribes that are
not gaming or that otherwise are not substantially benefiting
from gaming. Additionally, the Compact provides a framework for
the sharing of gaming revenue with the County of San Diego and
other local jurisdictions.
Specifically, from its payments to the Revenue Sharing Trust
Fund (RSTF) or the Tribal Nation Grant Fund (TNGF), the Tribe
may take annual credits of up to 60% for infrastructure
improvements that in part benefit county residents, fire, law
SB 187
Page 4
enforcement, public transit, education, tourism, and other
services including investments in renewable energy and
conservation projects, as well as, payments to support capital
improvements or operating expenses for facilities that provide
health care services to tribal members and other members of the
local community. In addition, credits may be applied for costs
associated with improving the protection of wildlife and
habitat, improving roadways, hiking trails, walkways and bike
lanes, and other beautification efforts in the community.
In recognition of the predevelopment expenses incurred by the
Tribe, the needs of the Tribe's citizens and the existence of a
binding and enforceable intergovernmental agreement with the
County of San Diego, providing for mitigation and other
investments in the local community (e.g., fire equipment and
personnel, road improvements), this Compact defers the Tribe's
contributions to the RSTF/TNGF for the first eight years.
Furthermore, the Compact: (1) provides a regulatory framework
that respects the role of the tribal gaming agency as the
primary regulator while also ensuring that state gaming
regulators fulfill their responsibilities; (2) requires the
Tribe to conduct its gaming activities pursuant to an internal
control system that implements minimum internal controls that
are no less stringent than those in federal regulations; (3)
requires the Tribe to adopt a Tribal Labor Relations Ordinance,
as specified; and, (4) contains provisions to protect the health
and safety of patrons, guests, and employees.
The Compact's preamble notes that the Tribe is one of only a
handful of tribes with a 1999 compact that has been granted the
right to operate a gaming facility but has been unable to do so
and that the State understands the Tribe has spent considerable
resources and incurred significant pre-development costs and
debt in connection with efforts to develop its casino project.
Construction of the existing casino project by the Tribe, while
benefiting the State's economy and the economies of the
surrounding communities, will result in more than $450 million
in tribal debt that in turn will reduce the income available to
SB 187
Page 5
the Tribe for a number of years.
BRIEF HISTORY OF THE JAMUL INDIAN VILLAGE
According to information provided by the Jamul Indian Tribe,
tribal members trace their roots 12,000 years back to a time of
independence and self-sufficiency. A part of the Kumeyaay
people, their ancestors hunted, fished and raised their families
in present day San Diego County and northern Mexico. After
decades of work by elders to engage with the federal government
in a meaningful way, the Tribe was formally recognized by the
United States as an Indian tribe in 1981. The Tribe is located
in eastern San Diego County, on a six acre reservation and is
governed by a five-member Executive Committee pursuant to a
constitution duly approved on July 7, 1981 and amended on August
31, 1996. Executive Committee members are elected by the
General Council, which includes all qualified voters 18 years
and older, and elections are held every two years in June.
In 1999, the Tribe entered into a tribal-state gaming compact
with the State of California and a year later attempted to
exercise its rights under the 1999 compact to develop a hotel
and operate a gaming facility on a 101-acre site contiguous to
the Tribe's reservation once in trust and deemed eligible for
gaming. After several years and spending over $80 million in
pre-development costs, the Tribe decided to reconsider its plans
on the proposed 101-acre site in an effort to address local
concerns. In 2012, the Tribe presented a new proposal for a
scaled-back gaming facility that would be located on the Tribe's
reservation and would not require the acquisition of additional
land and therefore, withdrew its fee-to-trust application for
the 101-acre site. The Tribe's new proposal incorporated input
from the local community including reducing the height and
footprint of the gaming facility and removing the hotel, all at
a significantly increased cost to the Tribe.
Today, together with their developer, lender, and manager of the
casino, Penn National Gaming, the Tribe is set to open the $400
SB 187
Page 6
million Hollywood Casino Jamul in early September 2016. The
casino is expected to employ approximately 1,000 permanent
workers, and will include a three-story gaming and entertainment
facility featuring slot machines, live table games, multiple
restaurants, bars and lounges and an enclosed below grade
parking structure with approximately 1,800 spaces. The Tribe
notes that it has used primarily union labor during construction
of the casino - employing thousands of workers. Additionally,
the Tribe has in place a Labor Peace and Recognition Agreement
with UNITE HERE, International Union and Local 30, dated July
2016.
To date, the Tribe has committed over $20 million to improve
State Highway 94 and has agreed to make annual payments of $2.5
million to the County of San Diego for fire service and to fund
training, personnel, and new fire trucks. The Tribe also
entered into an Intergovernmental Agreement dated May 16, 2016
with the County of San Diego and committed to pay over $3.7
million to improve the County roadways.
Despite the Tribe's good faith efforts, there have been over
forty administrative appeals, lawsuits, and appeals have been
filed against (or involving) the Tribe, all of which have been
favorably decided to allow the Tribe to exercise its legal
rights to develop, construct and operate a gaming facility.
This new Compact will allow the Tribe to transition into
self-sufficiency in light of the substantial pre-development
costs and delay.
The Tribe states that it looks forward to being able to invest
in projects benefiting youth in the area and is already
contributing to Noah Homes - a program designed to support
people with disabilities. The Tribe also provides various
community programs for tribal members to ensure healthy and
productive lives. One such program, Acorns to Oaks, is focused
on the prevention of teen pregnancy, alcohol and drug use, and
to educate the next generation of Tribal leaders on their
heritage and culture. In addition, the Tribe provides
scholarships for school age youth and it looks forward to
SB 187
Page 7
providing additional tribal programs once the casino opens,
including healthcare services and development of cultural
resources.
KEY COMPONENTS OF THE COMPACT
Scope of Class III Gaming Authorized. Provides that the Tribe
is authorized to operate up to 2,500 gaming devices (slot
machines), banking or percentage card games, and any devices or
games that are authorized under state law to the California
State Lottery, provided that the Tribe will not offer such games
through use of the Internet unless others in the state not
affiliated with or licensed by the California State Lottery are
permitted to do so under state and federal law. The Tribe shall
not engage in Class III Gaming that is not expressly authorized
in the Compact.
Authorized Gaming Facility. Authorizes the Tribe to establish
and operate not more than two 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).
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
SB 187
Page 8
negotiations, to provide for (a) compensation to the State for
the costs of regulation, as defined; (b) reasonable payments to
local governments impacted by tribal government gaming; (c)
grants for programs designed to address gambling addiction; and,
(d) such assessments as may be permissible at such time under
federal law.
Payments to the Special Distribution Fund (SDF). Provides that
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 Problem Gambling, and State designated
agencies in connection with the implementation and
administration of Class III gaming compacts. The Tribe's pro
rata share of the State's costs in any given year this Compact
is in effect may not be increased more than 5% per year and
shall be calculated using the following equation: "The maximum
number of gaming devices operated in the gaming facility for the
previous fiscal year as determined by the State Gaming Agency,
divided by the maximum number of gaming devices operated by all
federally recognized tribes in California pursuant to
tribal-state Class-III gaming compacts during the previous State
fiscal year, multiplied by the Appropriation, equals the Tribe's
pro rata share."
Payments to the RSTF or the TNGF. Provides that if the Tribe
operates more than 350 gaming devices at any time in a given
calendar year, it shall thereafter, including in that calendar
year, pay to the CGCC, for deposit into the RSTF or the TNGF,
4.75% of its "gross gaming revenue" from the operation of gaming
devices in excess of three hundred fifty (350).
"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.
SB 187
Page 9
Generally, the difference between patron wagers and the payouts
made on winning wagers.
In recognition of the predevelopment expenses incurred by the
Tribe, the needs of the Tribe's citizens and the existence of a
binding and enforceable intergovernmental agreement with the
County, providing for mitigation and other investments in the
local community, the Compact defers the Tribe's contributions to
the RSTF/TNGF for the first eight years.
Credits Applied to the RSTF or the TNGF. Stipulates that 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)Cost of services provided by the Tribe or payments by the
Tribe to the County, state agency, local jurisdictions and
non-profit and civic organizations operating facilities or
providing services within the County for fire, law
enforcement, emergency medical services, public transit, road
improvements, education, tourism, and other services and
infrastructure improvements intended to serve off-reservation
needs of local residents or the environment. Such payments
shall be subject to approval by the State and at least 20% of
the annual credits must be utilized for the above stated
purposes;
2)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;
3)Payments to support operating expenses and capital
improvements for non-tribal governmental agencies or
facilities operating within the County;
SB 187
Page 10
4)Investments by the Tribe 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 patrons and
employees of the gaming facility and the Tribe, its members
and lineal descendants;
5)Cost and payments to support capital improvements, the
purchase of property, and operating expenses for facilities
within California that provide health care services to tribal
members, Indians, and non-Indians;
6)Investments by the Tribe and any funds paid to the State for
water treatment or conservation projects;
7)Costs and payments made to support the preservation of
historical buildings, landmarks or objects within California
that have cultural significance to the Tribe and for providing
general welfare benefits for, among other things, educational,
healthcare, cultural or vocational purposes, to other Native
Americans in the community; and,
8)Costs associated with improving the protection of wildlife and
habitat, increasing tourism, establishing or improving
highways, roadways, hiking trails, walkways and bike lanes,
and other beautification efforts in the community. These
costs include but are not limited to:
a) Payment of $100,000 to the California Department of Fish
and Wildlife (CDFW) to conduct environmental studies of
wildlife within 30 days of this Compact's effective date;
and
SB 187
Page 11
b) Payment of $2 million to CDFW to conduct wildlife
mitigation activities to be paid commencing in year three
of this Compact, as specified.
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.
Quarterly Contribution Report. At the time each quarterly
payment is due, regardless of whether any monies are owed, the
Tribe shall submit to the State Gaming Agency, a report prepared
by the chief financial officer of the gaming operation that
includes: (1) calculation of the maximum number of gaming
devices operated each day, (2) the gross gaming revenue
calculation, (3) the amount due the SDF, (4) calculation of the
amount due to the RSTF/TNGF, and (5) the total amount of the
quarterly payment.
ADDITIONAL COMPONENT 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
SB 187
Page 12
influence over the gaming operation, must be licensed by the
Tribal Gaming Agency and cannot have had any determination of
suitability denied or revoked by the CGCC. Also, every gaming
employee must obtain, and thereafter maintain current, a valid
tribal gaming license, as specified.
Minimum Internal Control Standards (MICS). Requires the Tribe
to conduct its gaming activities pursuant to an internal
control system that implements MICS that are no less stringent
than those contained in the MICS of the federal NIGC
standards, as specified. It requires gaming to operate
pursuant to a written internal control system that reasonably
assures that assets are safeguarded and accountability over
assets is maintained; liabilities are properly recorded and
contingent liabilities are properly disclosed; financial
records are accurate and reliable; transactions are performed
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
five 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
SB 187
Page 13
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 by
a three-member tribal claims commission consisting of one
tribal government representative and at least one non-tribal
member. Any party dissatisfied with the award of the Tribe's
tribal court or tribal claims commission may, at the party's
election, appeal the matter to a tribal court of appeal, if
one is established, or invoke the JAMS Optional Arbitration
Appeal Procedure. The cost and expense of arbitration shall
initially be borne equally by the Tribe and the patron but the
JAMS arbitrator shall award to the prevailing party its costs
and expenses (but no attorney fees). The Tribe agrees to wave
its sovereign immunity in connection with the jurisdiction of
the tribal court system, the tribal claims commission, JAMS
Optional Arbitration Appeal Procedure and in any action to
enforce their judgments or the obligations provided in this
section.
Public and Workplace Liability. Requires the Tribe to obtain
and maintain a commercial general liability insurance policy
which provides coverage of no less than $10 million and adopt
a Tort Liability Ordinance stipulating that California tort
law governs claims. Also, provides that California tort law
shall apply to specified claims if the Tribe fails to adopt a
Tort Liability Ordinance.
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 - Projects that have
commenced prior to the effective date of this Compact,
including but not limited to the existing Project, as defined,
will be subject to the relevant terms of and conditions of the
Tribe's 1999 compact, and Projects not identified in any TEIR
issued before the effective date of this Compact, will be
subject to the terms and conditions of this Compact. The
Compact provides procedures regarding the (1) Notice of
Preparation of Draft TEIR, (2) Notice of Completion of Draft
SB 187
Page 14
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 if state roads are
impacted. A completed TEIR must be filed with the County, the
Department of Justice, the State Gaming Agency, 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 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 and its special districts 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
SB 187
Page 15
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. 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. The TLRO provides
for a secret ballot election and union neutrality. The Tribe
will not oppose a union organization but can advocate the
benefits of working for the Tribe. A labor union must issue a
Notice of Intent or Organize (NOIO). For a period of 365
days following delivery of a NOIO, the union shall not engage
in strikes, picketing, boycotts, attack websites, or other
economic activity at or in relation to the tribal casino or
related facility. During the 365 days after the Tribe
received the NOIO, the union must collect dated and signed
authorization cards and complete the secret ballot election.
Failure to complete the secret ballot election within 365 days
shall preclude the union from delivering another NOIO for a
period of two years (730 days). After the certification that
30% of the eligible employees in a bargaining unit have
expressed an interest in the union, a notice of election shall
be issued and the election shall be concluded within 30
calendar days thereafter. Secret ballot elections shall be
held at the workplace and at least one neutral location.
Employees may mail in ballots provided they are received by
election day. Union representation requires an affirmative
vote of 50% plus one of all votes cast. Mediation for any
collective bargaining agreement impasse shall be resolved
exclusively through the binding dispute resolution by three
SB 187
Page 16
members of the Tribal Labor Panel, consisting of ten
arbitrators appointed by a mutual selection of the parties;
however, if arbitrator schedules cannot be coordinated within
30 days of submission, a single arbitrator shall decide the
dispute. The arbitrators will generally follow the American
Arbitration Association's procedural rules relating to labor
dispute resolution.
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 21 years from being present
in any room or area in which gaming activities are being
conducted unless the person is en route to a non-gaming area
of the gaming facility, or is employed at the gaming facility
in a capacity other than as a gaming employee.
Alcohol Provisions. Makes it explicit that the purchase,
sale, and service of alcoholic beverages shall be subject to
state law - the Alcoholic Beverage Control Act.
Tobacco Provisions. Provides that the Tribe agrees to provide
a non-smoking area in the gaming facility and to utilize a
SB 187
Page 17
ventilation system throughout the gaming facility that
exhausts tobacco smoke to the extent reasonably feasible under
state-of-the-art technology existing as of the date of the
construction or significant renovation of the gaming facility,
and further agrees not to offer or sell tobacco products,
including but not limited to smokeless tobacco products or
e-cigarettes, to anyone younger than the minimum age specified
in state law to legally purchase tobacco products.
Problem Gambling. Requires the gaming operation to establish
a program, approved by the Tribal Gaming Agency, to mitigate
pathological and problem gaming by implementing specified
measures.
Health and Safety Standards. Provides that the Tribe has
agreed to adopt and comply with tribal health standards for
food and beverage handling that is no less stringent than
State public health standards. Also, the Tribe has agreed to
comply with federal water quality and safe drinking water
standards applicable in California. The Tribe must also adopt
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
SB 187
Page 18
emergency fire, medical, and related relief and disaster
services for patrons and employees. Also, prohibits the
possession of firearms by any person in the gaming facility at
all times except for federal, state, or local law enforcement
personnel, or tribal law enforcement or security personnel, as
authorized.
Effective Date. Provides that the 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."
IGRA distinguishes between three classes of gaming (Class I,
SB 187
Page 19
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
from operating gaming facilities, Proposition 1A granted Indian
SB 187
Page 20
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
SB 187
Page 21
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: (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
SB 187
Page 22
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
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.
SB 187
Page 23
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
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
SB 187
Page 24
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: (Verified8/22/16)
Agua Caliente Band of Cahuilla Indians
Barona Band of Mission Indians
California Labor Federation
Jamul Indian Village
Pechanga Band of Luiseno Indians
Teamsters
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
Yocha Dehe Wintun Nation
OPPOSITION: (Verified8/22/16)
None received
ASSEMBLY FLOOR: 78-0, 8/22/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,
Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty,
Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
SB 187
Page 25
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Roger Hernández, Melendez
Prepared by: Arthur Terzakis / G.O. / (916) 651-1530
8/22/16 22:49:35
**** END ****