BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 404|
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UNFINISHED BUSINESS
Bill No: SB 404
Author: De León (D), et al.
Amended: 8/11/16
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR: 78-0, 8/15/16 - See last page for vote
[NOTE: On July 21, 2016, the Senate Governmental Organization
Committee held an informational hearing on the tribal
gaming compact entered into between the State of
California and the Viejas Band of Kumeyaay 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
Viejas Band of Kumeyaay Indians (hereafter "Tribe") executed on
June 28, 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
criminal and traffic based fines and instead add language
pertaining to ratification of the Viejas Compact.
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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.
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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
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 Viejas Band of Kumeyaay Indians executed on
June 28, 2016. Under this Compact, the Tribe may operate a
maximum of 3,500 gaming devices (slot machines) on eligible
Indian lands held in trust for the Tribe, as described in
Appendix A of the Compact, in the County of San Diego.
The Tribe has agreed to contribute into the Special Distribution
Fund (SDF) its pro rata share of the State's regulatory costs
which include programs that provide education, counseling and
treatment for Californians affected by problem gambling. The
Tribe has also agreed to contribute four and three quarter
percent (4.75%) of its "gross gaming revenue" from the operation
of up to 2,500 slot machines to the Revenue Sharing Trust Fund
(RSTF) or the Tribal Nation Grant Fund (TNGF) to be shared with
tribes that are not gaming or that otherwise are not
substantially benefiting from gaming. The Compact provides for
an increase in percentage payments to the RSTF or TNGF, as
specified, if the Tribe operates between 2,501 to 3,500 slot
machines.
Additionally, the Compact provides a framework for the sharing
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of gaming revenue with the County of San Diego and other local
jurisdictions. Specifically, from its payments to the RSTF or
the TNGF, the Tribe may take annual credits of up to sixty
percent (60%) for infrastructure improvements and fire, law
enforcement, public transit, education, tourism and other
services including investments in renewable energy, water
conservation or recycling projects and 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.
Furthermore, the Compact: (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; (d) preserves the provisions in the Tribe's
existing compact that address mitigation of off-reservation
impacts of gaming related projects; and, (e) contains provisions
to protect the health and safety of patrons, guests, and
employees.
This Compact supersedes a 2014 amended compact [SB 1356 (De
León, Chapter 314, Statutes of 2014)] between the Tribe and the
State of California. The 2014 amended compact, among other
things, converted the Tribe's fixed revenue share payment to the
state into a percentage-based payment in order to account for
the impact on revenue caused by changing economic conditions and
to enhance the economic development, long-term stability and
self-sufficiency of the Tribe. The percentage-based payment
structure was intended to ensure the Tribe remained the primary
beneficiary of its gaming operation as required by federal law.
The 2014 amended compact superseded a 2004 amended compact [AB
687 (Nuńez, Chapter 91, Statutes of 2004)] between the Tribe and
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the State of California which replaced the Tribe's initial
compact signed in 1999 with Governor Gray Davis, who negotiated
gambling agreements with more than 60 tribes. The 2004 amended
compact allowed the Tribe to operate an unlimited number of
Class III slot machines in exchange for payments to the state
General Fund for machines added after ratification of the
compact. Under the 1999 compact, the Tribe could not operate
more than 2,000 gaming devices.
Key Components Of The Compact
Scope of Class III Gaming Authorized. The Tribe is authorized
to operate up to 3,500 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. The Tribe may 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
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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 in the chart 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.
Payments to the Special Distribution Fund (SDF). This Compact
requires the Tribe to 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 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 fiscal year, multiplied by costs,
equals the Tribe's pro rata share."
*It should be noted that the 2014 amended compact required the
Tribe to provide the State a revenue contribution based upon the
average number of gaming devices equal to a percentage of the
"net win," as defined, from such gaming devices according to the
following schedule:
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| Average Number of Gaming Devices in Operation During Quarter |
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| Percentage of Gaming Devices' Net Win |
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| 1 to 2,000 |
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| 8% |
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| 2,001 to 2,500 |
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| 10% |
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| 2,501 to 3,000 |
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| 12% |
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| 3,001 to 3,500 |
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| 14% |
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| 3,501 to 4,000 |
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| 16% |
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| 4,001 to 4,500 |
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| 18% |
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The 2014 amended compact also required that a portion of the
Tribe's quarterly revenue contribution to the State be allocated
to the SDF as follows: (a) During years one and two, $5 million
dollars; (b) During year three, $4 million dollars; (c) During
year four, $3 million dollars; and, (d) During year five, $2
million dollars.
In addition, the 2014 amended compact provided that in each year
of the compact, any amount of the Tribe's quarterly revenue
contributions due to be paid to the SDF that is remaining after
the Tribe's payments are made and deposited into the SDF shall
go to the General Fund.
Payments to the RSTF or the TNGF. This Compact requires the
Tribe to pay to the State a quarterly revenue contribution, for
deposit into the RSTF or the TNGF, which shall be based upon the
average number of gaming devices in operation during such
quarter, equal to a percentage of the "Gross Gaming Revenue" per
device according to the following schedule:
---------------------------------------------------------
| | |
| Average Number of Gaming | Percentage of Gaming |
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| Devices in Operation During | Devices' Gross Revenue |
| Quarter | |
|-------------------------------+-------------------------|
| | |
| 351 to 2,500 | 4.75% |
| | |
|-------------------------------+-------------------------|
| | |
| 2,501 to 3,000 | 6% |
| | |
|-------------------------------+-------------------------|
| | |
| 3,001 to 3,500 | 7% |
| | |
| | |
---------------------------------------------------------
"Gross Gaming Revenue" is defined as the win from gaming
activities, 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
wagers and the payouts made on winning wagers.
*It should be noted that the 2014 amended compact required the
Tribe to make annual payments of $2 million into the RSTF or the
TNGF.
Credits Applied to the RSTF or the TNGF. The State agrees to
provide the Tribe with annual credits for up to sixty percent
(60%) of the payments otherwise due to be paid into the RSTF or
TNGF for the following:
1)Payments or the value of services provided to San Diego
County, local jurisdictions, and nonprofit and civic
organizations operating facilities or providing services
within the County for fire, law enforcement, emergency medical
services, public transit, education, tourism, recreation, and
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other services and infrastructure improvements intended to
serve off-reservation needs of County residents - such
payments shall be subject to approval by the County or local
jurisdiction in the County and at least twenty percent (20%)
of the annual credits must be utilized for the above stated
purposes;
2)Non-gaming related capital investments and economic
development projects by the Tribe 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;
4)Investments in, and any funds paid to the State in connection
with, renewable energy projects that, in part, serve the
gaming facility, to include facilities that incorporate
charging stations for electric or other zero-emission vehicles
that are available to patrons and employees of the gaming
facility;
5)Payments to support capital improvements and operating
expenses for facilities located on the reservation or within
California that provide health care services to tribal
members, Indians, and non-Indians;
6)Investments by the Tribe for water treatment or conservation
projects and recycling projects; and,
7)Payments to other federally-recognized tribes for governmental
or general welfare purposes.
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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: (a) calculation of
the maximum number of gaming devices operated each day, (b) the
Net Win calculation, (c) the amount due the SDF, (d) calculation
of the amount due to the RSTF/TNGF, and (e) 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
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
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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. If dissatisfied with the
resolution, the patron has the right to seek resolution in
either the Viejas tribal Court or before an independent review
board. 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 Viejas Tribal Court or the
independent review board may, at the party's election, appeal
to the Intertribal Court of Southern California Court of
Appeals, provided that the party making the election must bear
all costs and expenses associated with the appeal regardless
of the outcome. The Tribe agrees to wave its sovereign
immunity in connection with the jurisdiction of the Viejas
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Tribal Court, the independent review board or the Intertribal
Court of Southern California, and in any suit in state or
federal court to enforce or execute a judgment based upon the
award of the tribal court, independent review board or
appellate court.
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 casino. In addition, requires the Tribe to expressly
provide for waiver of the Tribe's sovereign immunity and its
right to assert sovereign immunity with respect to the
resolution of claims in the Viejas Tribal Court, by the
independent review board, and the Intertribal Court of
Southern California Court of Appeals. Furthermore, the Compact
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. 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. A completed TEIR must be filed with San Diego
County, the Department of Justice, the CGCC, and the State
Clearinghouse. Before commencement of a Project, and no later
than the issuance of the final TEIR, the Tribe shall offer to
commence negotiations with San Diego 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,
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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
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
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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 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. 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, 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 (ABC) Act.
Tobacco Provisions. Provides that the Tribe agrees to provide
a non-smoking area in the gaming facility and to utilize a
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 to anyone
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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 are 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.
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 California
Building Code and the Public Safety Code applicable to the
county in which the gaming facility is located.
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.
Effective Date. Provides that the 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
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is published in the Federal Register. Once effective, this
Compact shall be in full force and effect until December 31,
2041.
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.
Brief History Of The Viejas Band Of Kumeyaay Indians
The Viejas Band of Kumeyaay Indians, one of the remaining 12
bands of the Kumeyaay Indian Nation (Barona, Campo, Ewiiaapaayp,
Inaja-Cosmit, Jamul, LaPosta, Manzanita, Mesa Grande, San
Pasqual, Santa Ysabel, Sycuan and Viejas) is a 252-member
federally recognized tribe located on a 1,600-acre reservation
in the Viejas Valley, east of the community of Alpine in San
Diego County, California. The Viejas Band has a "trust"
relationship with the federal government, enforces federal laws
and participates in issues pertinent to its land and people on a
government-to-government basis. The Tribe notes that
"membership in the Viejas Band of Kumeyaay Indians is determined
by direct descent from the families forced from their original
Capitan Grande Reservation, who contributed their share from the
sale of their lands for the El Capitan Reservoir to purchase the
current reservation in the Viejas Valley."
According to information provided by the Tribe, the Viejas Band
has experienced tremendous economic prosperity that has
successfully helped increase access to health care, education
and general welfare to its people and their children, who will
carry on the Kumeyaay culture for years to come. Under the
umbrella of Viejas Enterprises, the Tribe's properties include
Viejas Casino & Resort; Viejas Outlet Center, a 37-acre shopping
center; Alpine Springs Recreational Vehicle Park; and Ma-Tar-Awa
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Recreational Vehicle Park, the tribe's first business venture
that opened in 1976. Through revenues brought in by the Tribe's
business enterprises, "the Tribe has been able to reinvest
millions of dollars back into its community, with 90 percent of
dollars generated at Viejas Casino & Resort returning to the
local and state economy."
The Tribe's casino has over 2,000 slot machines, up to 86 table
games, numerous diverse dining options, a bingo operation, an
off-track betting facility, lounge, concert venues and a poker
room. The Tribe opened a five-story, $36 million hotel in March
2013 that is located on the east side of the casino with
approximately 99 rooms and 29 suites, a pool with a patio area
and cabanas, a business center, fitness room, and other
amenities. In October of 2015, the Tribe opened a second luxury
hotel tower with another 100 plus rooms and an additional 5
suites. Today, the expanded resort consists of 203 deluxe rooms
and 34 VIP suites, state-of-the-art meeting spaces, two modern
fitness centers, and a ballroom for hosting weddings and special
events.
In 1999, the Tribe and the State entered into a Tribal-State
compact, which enabled the Tribe, through revenues generated by
its gaming operation, to improve the governance, environment,
education, health, safety, and general welfare of its citizens,
and to promote a strong tribal government, self-sufficiency, and
to provide essential government services to its citizens.
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
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Indian tribe may conduct gaming activity on Indian lands if the
activity "is not specifically prohibited by federal law and is
conducted within a State which does not prohibit such gaming
activity."
IGRA distinguishes between three classes of gaming (Class I,
Class II, and Class III) and provides for different forms of
regulation for each class. Class I gaming includes "social
games" for minor prizes or "traditional forms of Indian gaming."
Class II gaming is defined to include bingo and card games that
are explicitly authorized by the laws of the state, or that are
not explicitly prohibited by the laws of the state and are
played at any location in the State, so long as the card games
are played in conformity with those laws and regulations. Class
III gaming includes such things as slot machines, casino games
and banked card games such as black jack and baccarat. Class
III gaming may only be conducted under terms of a compact
negotiated between an Indian tribe and a State.
IGRA was enacted against a legal background in which Indian
tribes and individuals generally are exempt from state taxation
within their own territory. IGRA provides that with the
exception of assessments permitted under the statute, to defray
the State's costs of regulating gaming activity, IGRA shall not
be interpreted as conferring upon a State authority to impose
any tax, fee, charge, or other assessment upon an Indian tribe
to engage in Class III activity. Nor may a State refuse to
enter into negotiations based on the lack of authority to impose
such a tax, fee, charge, or other assessment.
When a tribe requests negotiations for a Class III compact, IGRA
requires the State to negotiate with the Indian tribe in good
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
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gaming. In 2000, California voters approved Proposition 1A
which had been proposed by the Governor and passed by the
Legislature. Proposition 1A amended the California Constitution
to permit the State to negotiate compacts with federally
recognized Indian tribes for certain Class III gaming
activities. Because non-Indian parties were still forbidden
from operating gaming facilities, Proposition 1A granted Indian
tribes a "constitutionally protected monopoly on most types of
Class III games in California."
Rincon Decision
The U.S. Supreme Court in July 2011 refused to consider the
decision of the Ninth Circuit Court of Appeals rejecting a Class
III Tribal-State Gaming Compact negotiated by then Governor
Schwarzenegger with the Rincon Band of Luiseno Mission Indians.
The issue of this case's impact on Indian gaming throughout the
country has been a topic of great debate.
As noted, IGRA authorizes states to receive compensation for
costs related to tribal gaming such as regulation and gaming
addiction, and to offset the effects of casinos on surrounding
communities. However, states are prohibited from assessing
taxes on tribal casino revenues, so unjustified payments to a
state's General Fund are no longer permissible unless the tribes
are getting something in return for the required payments, such
as those authorized by IGRA.
Any payments to the State, above those needed to mitigate
impacts of gaming must be in exchange for a benefit deemed
"exclusive" to the tribe.
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
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court decision that the new financial concessions were nothing
more than a state tax on tribal casino revenues which is
prohibited by IGRA.
Rincon refused to sign the amended compact which had already
been executed by several other tribes choosing instead to demand
that it be given the expanded gaming opportunity without making
the new financial concessions. The Ninth Circuit Court of
Appeals concluded that a "non-negotiable, mandatory payment of
10% of net win into the State treasury for unrestricted use
yields public revenue, and is [therefore] a tax, and that the
court was therefore required to consider the State's demand as
evidence of bad faith under IGRA's statutes."
The court noted that "the State could rebut the presumption of
bad faith by demonstrating that the revenue demanded was to be
used for the public interest, public safety, criminality,
financial integrity, and adverse economic impacts on existing
activities, but the State's need for general tax revenue was
insufficient to demonstrate good faith."
Special Distribution Fund (SDF)
Existing law creates the SDF in the State Treasury for the
receipt of revenue contributions made by tribal governments
pursuant to the terms of the 1999 model Tribal-State Gaming
Compacts and authorizes the Legislature to appropriate money
from the SDF for the following purposes: (a) grants for
programs designed to address gambling addiction; (b) grants for
the support of state and local government agencies impacted by
tribal government gaming; (c) compensation for regulatory costs
incurred by the California Gambling Control Commission (CGCC)
and the Department of Justice (DOJ) in connection with the
implementation and administration of compacts; (d) payment of
shortfalls that may occur in the RSTF; (e) disbursements for the
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.
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(Pursuant to compact renegotiations that took place with several
of the larger gaming tribes during the Schwarzenegger
administration, revenue from those tribes is directed into the
state General Fund, instead of the SDF.)
The law establishes a method of calculating the distribution of
appropriations from the SDF for grants to local government
agencies impacted by tribal gaming. This method includes a
requirement that the State Controller, in consultation with the
CGCC, deposit funds into County Tribal Casino Accounts and
Individual Tribal Casino Accounts based upon a process that
takes into consideration whether the county has tribes that pay,
or do not pay, into the SDF. The distribution formula "sunsets"
on January 1, 2021.
Existing law also establishes an Indian Gaming Local Community
Benefit Committee in each county in which gaming is conducted,
specifies the composition and responsibilities of that
committee, and requires that committee to make the selection of
grants from the casino accounts. Among other things, the
committee is responsible for establishing all application
policies and procedures for grants from the casino accounts.
Additionally, existing law requires the State Auditor to conduct
an audit every three years and report its findings to the
Legislature regarding the allocation and use of SDF grant
monies.
Revenue Sharing Trust Fund (RSTF)
Existing law creates in the State Treasury the RSTF for the
receipt and deposit of moneys derived from gaming device license
fees that are paid into the RSTF pursuant to the terms of
specified tribal-state gaming compacts for the purpose of making
distributions to non-compacted California tribes (e.g.,
federally-recognized non-gaming tribes and tribes that operate
casinos with fewer than 350 slot machines). Revenue in the RSTF
is available to CGCC, upon appropriation by the Legislature, for
making distributions of $1.1 million annually to non-compact
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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.
Related/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
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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)
California Labor Federation
Teamsters
UNITE HERE, AFL-CIO
Viejas Band of Kumeyaay Indians
OPPOSITION: (Verified8/15/16)
None received
ASSEMBLY FLOOR: 78-0, 8/15/16
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,
SB 404
Page 25
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Roger Hernández, Olsen
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/16/16 12:49:20
**** END ****