BILL ANALYSIS                                                                                                                                                                                                    Ó




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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   |
          |                                                                 |
          |                                                                 |
          |              Percentage of Gaming Devices' Net Win              |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                           1 to 2,000                            |
          |                                                                 |
          |                                                                 |
          |                               8%                                |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                         2,001 to 2,500                          |
          |                                                                 |
          |                                                                 |
          |                               10%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                         2,501 to 3,000                          |
          |                                                                 |
          |                                                                 |
          |                               12%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                         3,001 to 3,500                          |
          |                                                                 |
          |                                                                 |
          |                               14%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                         3,501 to 4,000                          |
          |                                                                 |
          |                                                                 |








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          |                               16%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                         4,001 to 4,500                          |
          |                                                                 |
          |                                                                 |
          |                               18%                               |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 


          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  ****