BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 787|
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THIRD READING
Bill No: AB 787
Author: Chesbro (D), et al.
Amended: 8/9/12 in Senate
Vote: 27 - Urgency
PRIOR SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR VOTE : Not relevant
�NOTE: The Senate Governmental Organization Committee held
an informational hearing on 8/21/12.]
SUBJECT : Tribal gaming: Coyote Valley Band of Pomo
Indians
SOURCE : Author
DIGEST : This bill ratifies the amendment to the
tribal-state gaming compact entered into between the State
of California and the Coyote Valley Band of Pomo Indians,
executed on July 25, 2012. According to the Governor's
Office, the amended Tribal-state gaming compact between the
State of California and the Coyote Valley Band of Pomo
Indians, executed on July 25, 2012, is designed to address
fiscal challenges the Tribe has faced and to meet the
requirements of federal law that the Tribe be the primary
beneficiary of its gaming operation. The amended compact
is intended to help the Tribe continue funding programs in
local communities that mitigate the impact of gaming
activities and address gambling addiction. It includes
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provisions to protect employees and patrons as well as
measures that the Tribe must take to protect the
environment during the construction and operation of gaming
facilities. The amended compact allows the operation of a
maximum of 1,250 slot machines with up to 15% of the
casino's net win from these machines going to local
communities as well as gambling mitigation and regulatory
activities. The amended compact also requires regular
audits of gaming operations and supersedes the 2004 compact
between the Tribe and the State of California.
ANALYSIS : Existing law provides, under the Indian Gaming
Regulatory Act, 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.
Existing law expressly authorizes a number of tribal-state
gaming compacts between the State of California and
specified Indian tribes.
Existing law 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.
Existing law limits the operation of class III gaming
activities to Indian lands acquired on or before October
17, 1988. Existing law also provides for certain
exceptions to conduct gaming activities on Indian lands
acquired after October 17, 1988.
Existing law 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.
Existing law requires the state to negotiate to conclude a
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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. Existing law also
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. Furthermore, existing law
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.
Existing law authorizes the Governor, under the California
Constitution, to negotiate and conclude compacts, subject
to ratification by the Legislature.
Brief History and Description of 2004 Compact
The Coyote Valley Band of Pomo Indians is a federally
recognized Indian tribe comprised of just over 400 tribal
members on approximately 70 acres located in Mendocino
County. The Tribe and the State of California entered into
a 20-year compact in August of 2004 that authorized the
Tribe to operate up to 2,000 gaming devices. The 2004
compact provides that so long as the Tribe operates no more
than 750 gaming devices and generates no more than $30
million dollars in net win from its gaming devices on an
annual basis (based on a calendar year) its payments to the
state shall be based on the number of gaming devices
operated as follows:
Number of Gaming Devices Fee per
Device per Annum
0-250 $4600
251-500 $4800
501-750 $5100
At any time the Tribe generates more than $30 million
dollars in net win from its gaming devices on an annual
basis or if it operates more than 750 gaming devices at any
time in a given calendar year, the 2004 compact requires
the Tribe to pay the following percentages of its net win
to the state:
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Annual Net Win Percentage
$0-$50 million 12%
Over $50 million-$100 million 15%
Over $100 million-$150 million18%
Over $150 million-$200 million22%
Over $200 million 25%
Additionally, the 2004 compact also requires the Tribe to
make payments to non-gaming tribes through the Indian
Gaming Revenue Sharing Trust Fund (RSTF) if it earns over
$50 million in net win in any given calendar year.
Furthermore, the 2004 compact: (a) grants the Tribe an
exclusive region of all of Mendocino, Marin, and Sonoma
Counties against non-tribal class III gaming; (b) prohibits
persons under 21 years of age from admittance wherever
class III gaming is being conducted and alcohol is served
in the casino; (c) provides for independent audits and
access and inspection of premises by the state; (d)
requires adoption of minimum standards for operation and
management, including patron disputes; (e) contains
provisions relative to off-reservation environmental and
economic impacts; (f) grants state and local law
enforcement the authority to exercise criminal jurisdiction
within the tribe's boundaries in the same manner as outside
the reservation, to the fullest extent allowed by U.S.
Supreme Court decisions; (g) requires the tribe to amend
their Tribal Labor Relations Ordinance to include "card
check" and employer neutrality provisions to facilitate the
right of employees to organize and collectively bargain;
(h) provides that the tribe agrees to participate in the
state's workers' compensation system as well as the state's
unemployment compensation and unemployment compensation
disability benefits system; (i) provides that the tribe
will maintain an insurance policy of $5 million per
occurrence and entitles injured parties to seek recourse in
state court; (j) requires the tribe to comply with
specified health and safety standards; and, (k) provides
that the terms and conditions of the 2004 compact may be
amended at any time by the mutual and written agreement of
both parties.
The Tribe maintains that it has fully complied with the
terms of its compact and has made the negotiated payments
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described above to the State of California. However, those
payments have caused great hardship to the Tribe and
continued operation under the 2004 compact is neither
economically feasible nor beneficial. Since 2004, the
Tribe has been operating 250 gaming devices in temporary
structures that must be completely replaced.
Summary of Amended Compact between the State of California
and Coyote Valley Band of Pomo Indians
As noted above, on July 25, 2012, the State of California
and the Coyote Valley Band of Pomo Indians executed
amendments to the existing tribal-state compact for class
III Gaming, ratified in 2004, to occur on reservation land
off of Highway 101 north of Ukiah in Mendocino County. The
vehicle identified for providing the constitutionally
required Legislative ratification of these amendments to
the 2004 Tribal-State compact is this bill.
The amended compact is intended to allow the Tribe to
obtain long-term financing to meet its obligations to the
State of California, the County of Mendocino and its
primary creditor while at the same time allowing the Tribe
to continue improving the environment, education status and
the health, safety and general welfare of its members and
local residents.
Key Provisions of Amended Compact
Limits the Tribe to the operation of 1,250 gaming
devices (slot machines) at no more than two class III
gaming facilities, to be located on the Tribe's existing
Indian lands of the Coyote Valley Reservation, as
described, or on any new lands taken into trust for
gaming by the U.S. contiguous thereto. If the Tribe
operates two gaming facilities, one of the two is
limited to no more than 25 gaming devices. (The 1,250
gaming devices represent a reduction from 2,000 in the
original 2004 compact.)
Requires the Tribe to reach new agreements with the
County of Mendocino and the Tribe's primary creditor
that will provide material financial concessions that
will enable the Tribe to benefit from its gaming
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activities. (The amended compact recognizes that the
tribe has executed such an agreement with the county and
that negotiations with the primary creditor are
underway.)
Provides the Tribe with 30 months to conclude the
negotiations with the primary creditor. In the
meantime, the existing revenue sharing schedule, as
specified under the 2004 compact and referenced above on
page 2 of this document remain in effect. The
difference being that, instead of depositing the Tribe's
contributions into the state's general fund, revenue
will be held in trust by the California Gambling Control
Commission (CGCC) for the Tribe for the purpose of
assisting the Tribe to restructure and service its debt.
If the Governor determines that the Tribe has been
successful in its negotiations with the primary
creditor, the CGCC must reimburse all debt-service funds
to the Tribe and at that point, the new revenue
contribution calculations as set forth in the amendments
will take effect.
Requires the Tribe, for the first four years after
commencing operations of a new gaming facility, or if
the Tribe operates more than 350 gaming devices in its
existing temporary structures, to make payments into the
Indian Gaming Special Distribution Fund (SDF) in
accordance with the following schedule:
Number of Gaming Devices in Percentage of Average Gaming
Quarterly Device Base Device Net Win
1-350 0%
351-600 7%
601-750 10%
751-1000 12%
1001-1250 15%
The payment schedule above remains in effect for the
first four years of operations at a new facility or six
years after commencing operation of the 350th machine at
the temporary facility, whichever comes first. The
amended compact defines "new gaming facility" as a
gaming facility other than the Tribe's existing sprung
structures gaming facility, but does not include a
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gaming facility with 25 gaming devices or less.
Following the period identified above, and until the
termination of this amended compact, the Tribe must pay
quarterly to the CGCC, for deposit into the SDF, in
accordance with the following schedule:
Number of Gaming Devices in Percentage of Average Gaming
Quarterly Device Base Device Net Win
1-250 0%
251-350 7%
351-600 10%
601-750 12%
751-1250 15%
Furthermore, the amended compact provides that once the
new revenue sharing provisions of the amended compact
take effect, the Tribe will make payments for deposit
into the RSTF or the Tribal Nation Grant Fund (TNGF),
for distribution to Non-Gaming and Limited-Gaming Tribes
pursuant to the following schedule:
Number of Gaming Devices Operated Annual Payment
0-350 $0 per gaming
device
351-750 $900 per gaming
device
751-1250 $1950 per gaming
device
Also, provides that if in the 30 month period allotted
for renegotiating with its primary creditor the Tribe
operates 1100-2000 gaming devices (as allowed in the
2004 compact) and earns over $50 million in net win from
its gaming devices the Tribe agrees that it will pay
$900 per gaming device into the RSTF.
The TNGF was created by the Legislature as part of the
Graton Compact that was ratified by the Legislature this
past May for the distribution of funds to non-gaming
tribes and limited-gaming tribes upon application of
such tribes for purposes related to effective
self-governance, self-determined community and economic
development.
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Additional Provisions of the Amended Compact
Patron Protections - the Tribe agrees to binding
arbitration before a single arbitrator, who shall be a
retired judge, for disputes over patron injuries and
gambling. Also, provides that the Tribe agrees to waive
sovereign immunity in order to be compelled in federal
or state court to abide by the resolution of
arbitration.
Environmental Protections - the Tribe must prepare a
Tribal Environmental Impact Report (TEIR) and negotiate
mitigation of any off-reservation impacts. Provides for
binding arbitration if an agreement is not entered into
within 90 days of the submission of the final TEIR.
Employee Protections - the Tribe has agreed to
participate in the state's worker's compensation system
and unemployment insurance program and to consent to the
jurisdiction of the state agencies and courts enforcing
all of those standards.
Enhanced Audit and Compliance Review Procedures - in
addition to providing for an annual independent audit,
the amended compact allows the state to conduct its own
annual audit and compact compliance review.
Inspection and Testing of Slot Machines - slot machines
will have to be tested, approved and certified by an
independent gaming test laboratory and the tribal gaming
agency to ensure that they are being operated according
to specified technical standards. 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.
Minimum Internal Control Standards (MICS) - the Tribe
must adopt and comply with standards that meet or exceed
the federal National Indian Gaming Commission standards.
The MICS are incorporated into the amended compact as
an appendix (Appendix B), which shall be updated
periodically by the State Gaming Agency and Tribal
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Gaming Agency, to ensure the MICS keep up with changing
technology and industry standards.
Problem Gambling - the Tribal Gaming Agency must
establish a program to mitigate pathological and problem
gaming by implementing measures that train supervisors
and floor employees on identifying and managing problem
gambling. Additionally, the Tribe must include a
responsible gaming message in advertising, provide
signage and education materials at conspicuous locations
aimed at preventing problem gambling, and adopt a code
of conduct derived from the American Gaming
Association's code.
Labor Relations - provides that the gaming activities
authorized by this amended compact may only commence
after the Tribe has adopted an ordinance identical to
the Tribal Labor Relations Ordinance, referenced as
Appendix D of the amended compact, and the gaming
activities may only continue as long as the Tribe
maintains the ordinance.
Tobacco and Alcohol Provisions - the Tribe agrees to
provide a non-smoking area in the gaming facility that
exists as of the effective date of this amended compact
and to utilize a ventilation system throughout the
gaming facility that exhausts tobacco smoke to the
extent reasonably feasible and not to offer or sell
tobacco to anyone that is under 18 years of age. Makes
it explicit that the purchase, sale, and service of
alcoholic beverages shall be subject to state law (The
Alcoholic Beverage Control Act).
Exclusivity - in the event the exclusive right of
Indian tribes to operate class III gaming in California
pursuant to Article IV, section 19(f) of the California
Constitution is lost and other non-Indian entities
legally are able to engage in class III gaming in Marin,
Mendocino, or Sonoma Counties, the Tribe shall have the
right to terminate this amended compact and cease gaming
activities. If the Tribe chooses, it may continue under
the amended compact except that it may operate no more
than 1,100 gaming devices and may terminate its
contributions to the SDF, RSTF, and TNGF. It will still
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be expected to pay reasonable costs of regulation.
Once effective, this amended compact shall be in full
force and effect for state law purposes until December
31, 2032. However, if the conditions relative to the
period allotted (30 months) for renegotiating with its
primary creditor are not met, then the term of this
amended compact shall be that of the 2004 compact, which
is until December 31, 2025.
Local Agreements
Before the commencement of the gaming activities under
this amended compact, the Tribe is required to enter
into an enforceable written agreement with Mendocino
County to provide for the timely mitigation of any
significant effect on the off-reservation effects on the
environment where such affect is attributable, in whole
or in part, to the casino project. Additionally, the
Tribe and County must agree on provisions relating to
compensation for law enforcement, fire protection,
emergency medical services, and any other public
services to be provided by the County to the Tribe as a
result of the gaming activities.
The parties must agree on the mitigation of any effect
on public health and public safety attributable to the
gaming operation, including any compensation to the
County. Copies of these written agreements shall be
provided to the CGCC within 30 days of execution.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
DLW:k 8/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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