BILL ANALYSIS �
AB 787
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 787 (Chesbro)
As Amended August 9, 2012
2/3 vote. Urgency
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|ASSEMBLY: | |(May 19, 2011) |SENATE: | |(August 23, |
| | | | |37-0 |2012) |
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(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : Ratifies the amendment to the tribal-state gaming
compact entered into between the State of California and the
Coyote Valley Band of Pomo Indians (Tribe), executed on July 25,
2012.
The Senate amendments delete the Assembly version of this bill,
and instead:
1) Provide for the legislative ratification of an amended
tribal-state gaming compact between the State of California and
the Coyote Valley Band of Pomo Indians which was executed on
July 25, 2012. Allows the operation of a maximum of 1,250
gaming devices, as defined.
2) Require contributions to the Indian Gaming Special
Distribution Fund (SDF) and the Revenue Sharing Trust Fund
(RSTF), as specified, instead of requiring revenue contributions
be made to the General Fund (GF).
3) State upon all the necessary approvals, the amended compact
will be valid until December 31, 2032, and supersedes a 2004
compact between the Tribe and the State of California.
4) Add an urgency clause.
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,
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self-sufficiency, and strong tribal governments.
2)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.
3)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.
4)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 United States against
alienation and over which an Indian tribe exercises
governmental power.
5)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.
6)Provides the United States 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.
7)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.
8)Authorizes the Governor, under the California Constitution, to
negotiate and conclude compacts, subject to ratification by
the Legislature.
AS PASSED BY THE ASSEMBLY , this bill required the Fish and Game
Commission to permit California Native American tribe
members to continue fishing and gathering practices for
traditional religious, ceremonial and cultural purposes.
FISCAL EFFECT : Unknown
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COMMENTS : This bill was substantially amended in the Senate and
the Assembly-approved provisions of this bill were deleted.
On Tuesday, August 21, 2012, the Assembly Governmental
Organization Committee conducted an informational hearing on the
contents of this amended Compact.
Background and purpose of the bill : 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 governing body of the Tribe is the
Coyote Valley Tribal Council which is comprised of seven tribal
members who are elected by the Tribe's General Council. The
Coyote Valley General Council is comprised of all adult voting
members of the Tribe.
On July 25, 2012, Governor Brown and the Tribe concluded good
faith negotiations and executed amendments to an existing
tribal-state compact for Class III gaming, ratified in 2004, to
occur on the reservation. The Governor's Office states, that
this amended compact 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.
Currently, the Tribe is operating its gaming facility in
temporary structures that are decaying and must be completely
replaced. Changes in the economy and increased market
competition, both currently and anticipated in the near future,
have caused a substantial reduction in revenues generated at
casino. The Tribe maintains that if it were to continue
operating under the terms of the 2004 compact, its casino
operations would cease to be economically viable.
According to the Governor's Office, the Tribe has met all of its
financial obligations to the State pursuant to the 2004 Compact.
In addition, the Tribe represents that it has no disputes with
the County of Mendocino and its primary creditor pursuant to the
Tribe's financial agreements with these entities. The Tribe
states that its casino cannot currently generate enough revenue
for the Tribe to cover the Gaming Facility's operating expenses,
finance the required replacement and expansion of the existing
Gaming Facility, and make the payments that the Tribe is
obligated to make to the County of Mendocino and the Tribe's
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creditor.
The amended 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 activities in the
future. The amended compact recognizes that the Tribe has
executed such an agreement with the County of Mendocino and
independent negotiations with the primary creditor are underway,
as specified.
The amended compact reduces the number of Class III gaming
devices the Tribe is authorized to operate from 2,000 to 1,250
slot machines. The Tribe's current gaming operation utilizes
250 of the allowed devices. Up to 15% of the casino's net win
from these machines will go into the SDF to benefit local
communities as well as gambling mitigation and regulatory
activities. In addition, the Tribe shall pay an amended fee
into the RSTF based on the number of gaming devices utilized for
distribution to non-gaming and limited-gaming Tribes in
California. The amended compact also requires regular audits of
the Tribe's gaming operations.
The Tribe has stated that they're committed to improving the
environment, education status, and the health, safety, and
general welfare of its members and the local residents.
Revenue Provisions of the Amended Compact Include :
No General Fund Revenue in the Compact : The compact takes into
consideration a recent decision of the United States Ninth
Circuit Court of Appeals in Rincon Band of Luiseno Mission
Indians of the Rincon Reservation v. Schwarzenegger (9th Cir.
2010) 602 F. 3d 1019, which states in essence, that the state is
precluded from negotiating with tribal governments for payments
into the general fund. The Rincon decision has changed the
dynamics of tribal-state compact negotiations in the State of
California. This "post-Rincon" compact contains no revenue
sharing requirement between the state and the Tribe relating to
payments into the General Fund.
Prelude to the New Revenue Sharing :
Before the new, more advantageous revenue sharing system that
has been negotiated as part of the compact amendments can be
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enacted, the Tribe is required to renegotiate its financial
commitments with Mendocino County and with its primary creditor
that will provide "material financial concessions" enabling the
Tribe to benefit from its gaming 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. The amended compact provides the Tribe with 30
months to conclude the negotiations with the primary creditor.
While those negotiations are occurring, the existing revenue
sharing schedule, as specified under the 2004 compact, remains
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 ("Debt-Service
Funds"). If the Governor determines that the Tribe has been
successful in its negotiations with the primary creditor, the
CGCC shall reimburse all Debt-Service Funds to the Tribe. At
that point, the new revenue contribution calculations as set
forth in the amendments shall take effect.
Interlude to the New Revenue Sharing :
For the first four years after commencing operations at the new
gaming facility, or if the Tribe operates more than 350 gaming
devices in its existing temporary structures, the Tribe shall
make payments into the Indian Gaming Special Distribution Fund
(SDF) in accordance with the following schedule:
Number of Machines Percentage of Average Net Win
1-350 0%
351-600 7%
601-750 10%
751-1000 12%
1001-1250 15%
This payment schedule 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.
Postlude to the New Revenue Sharing :
Following the "interlude" period, the Tribe shall make payments
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into the SDF for the duration of the compact according to the
following schedule:
Number of Machines Percentage of Average Net Win
1-250 0%
251-350 7%
351-600 10%
601-750 12%
751-1250 15%
Contributions to the RSTF and Tribal Nation Grant Fund :
Once the new revenue sharing provisions of the amended compact
take effect, 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 Annual Payment Per Gaming Device
0-350 $0
351-750 $900
751-1250 $1950
If, in the 30 month period allotted for renegotiating with its
primary creditor, the Tribe operates more between 1,100 and
2,000 machines (as allowed under the 2004 compact) and earns
over $50 million in net win, the Tribe shall pay $900 per
machine into the RSTF.
The compact amendments provide that payments made by the Tribe
to the RSTF and TNGF "in a proportion to be determined by the
Legislature."
The RSTF funds the tribal governmental programs of non-gaming
and limited-gaming tribes by providing payments of $1.1 million
per year to non-gaming tribes (defined as those that operate
fewer than 350 gaming devices).
The Tribal Nation Grant Fund was created as part of the Graton
Compact, ratified by the Legislature in May, 2012 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. This fund
was conceived to compliment the RSTF. The designated purpose of
the RSTF is rigid and formulaic. This new fund is designed to
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be "fluid" and payments are intended to be made to non-gaming
tribes on a "need" basis, upon application by non-gaming tribes.
Other Key Provisions of the Amended Compact :
Authorized Class III Gaming : In addition to any Class II games,
the Tribe is authorized to operate 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. The Tribe may not operate roulette games (table
or mechanical) or any game that incorporates the physical use of
a die or dice.
Authorized Facilities and Number of Gaming Devices : The Tribe
may engage in Class III Gaming at no more than two facilities
located within the existing Indian lands of the Coyote Valley
Reservation. The Tribe is entitled to operate up to a total
1,250 gaming devices (a reduction from 2,000 in the original
2004 compact) if the Tribe operates two facilities, the second
one shall have no more than 25 gaming devices.
Exclusivity : Provides for the exclusive right to conduct Class
III gaming. In the event the exclusive right to operate Class
III gaming 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 Tribal Nation
Grant Fund. The Tribe would still be expected to pay reasonable
costs of regulation.
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 environment which is attributable
to the casino operation. Furthermore, 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
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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 of
execution.
On June 7, 2012, the County of Mendocino and the Tribe entered
into a Letter Agreement further modifying their original MOU
which was signed in January, 2009. The new agreement accounts
for the fact that the Tribe is proposing to modify its original
project as a result of the amendments to its compact. The
County and the Tribe have agreed to use the prior MOU and prior
"Tribal Environmental Impact Report" (TEIR) for the new project
as a basis for further discussions as the project moves forward.
Furthermore, the County states that it is prepared to move
forward with negotiating an updated Intergovernmental Agreement
between the County, Tribe, and Redwood Valley-Calpella Fire
Protection District concerning mitigation for off reservation
impacts from the casino project.
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, as specified.
Environmental protections : The Tribe is required to prepare a
TEIR prior to initiating a development project for a facility,
to measure off-reservation environmental impacts including an
evaluation of energy consumption. A completed TEIR shall be
filed with the County, the Department of Justice, and the State
Clearinghouse. In the event that no agreement on mitigation is
reached, either party may demand binding arbitration. Failure
to prepare an adequate TEIR when required may warrant an
injunction or other appropriate equitable relief where
appropriate.
Labor provisions : If the Tribe employs 250 or more persons in a
tribal casino facility, then the provisions of the Tribal Labor
Relations Ordinance (TLRO) become effective. The TLRO provides
for a secret ballot election.
Employee protections : The Tribe has granted employees the right
to collectively bargain. The Tribe has agreed to participate in
the state's worker's compensation system and unemployment
insurance program, to comply with federal and state occupational
health and safety standards, and to consent to the jurisdiction
of the state agencies and courts enforcing all of those
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standards. The Tribe also has agreed to enhanced employment
discrimination provisions.
Public and Workplace Liability : The Tribe is required to obtain
and maintain a commercial general liability insurance policy
which provides coverage of no less than $5 million. The Tribe
is not obligated to waive its sovereign immunity with respect to
punitive damages. However, the Tribe agrees to waive sovereign
immunity for claims up to the limit of the insurance policy.
The amended compact requires the Tribe to prepare a Tort
Liability Ordinance stipulating that California Tort Law shall
govern claims except for punitive damages. The ordinance shall
provide that the Tribe consents to binding arbitration. If the
tribe fails to prepare a Tort Liability Ordinance, all of
California Tort Law applies. 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.
Building and safety standards : The casino must meet or exceed
the applicable Building and Public Safety Codes.
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 of slot machines : The amended compact requires that
the software used for the play on a gaming device to be tested,
approved and certified by an independent or state governmental
gaming test laboratory. Slot machines are required to be tested
by a Gaming Test Laboratory and the Tribal Gaming Agency (TGA).
The CGCC shall inspect all gaming devices in operation at the
casino, including all the software, hardware, and associated
equipment and systems that support the operation of the gaming
devices, on a random basis four times annually to confirm that
they operate and play properly. The CGCC shall review the
Tribe's technical standards, regulations and internal controls
applicable to slot machines.
Minimum internal control standards (MICS) : The amended compact
requires the Tribe to conduct its Gaming Activities pursuant to
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an internal control system that implements MICS that are no less
stringent than specified MICS of the NIGC. 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 Tribe's
authorization. Furthermore, it requires the Tribe to contract
with an independent certified public accountant (CPA) at least
annually, at the Tribe's expense, to verify compliance with the
Tribe's written internal control standards.
Problem gambling : The Tribe must train supervisors and floor
employees on identifying and managing problem gambling, 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.
Tobacco : Requires the Tribe to provide a non-smoking area in
the gaming facility and not to offer or sell tobacco to anyone
that is under 18 years of age, and requires the Tribe to utilize
a ventilation system throughout the gaming facility that
exhausts tobacco smoke.
Alcohol sales : Makes it explicit that the purchase, sale, and
service of alcoholic beverages shall be subject to state law
(Alcoholic Beverage Control Act).
Effective date : The compact is not effective until it is
ratified in accordance with state law, and notice of approval by
the U.S. Secretary of the Interior is published in the Federal
Register. Upon all the necessary approvals, the compact will be
valid until December 31, 2032.
Prior legislation : AB 517 (Hall), Chapter 12, Statutes of 2012.
Ratified a tribal-state gaming compact between the State of
California and Federated Indians of Graton Rancheria,
authorizing the Tribe to commence Class III gaming with up to
3,000 gaming devices. The compact will be valid until December
31, 2033.
AB 1418 (Hall), Chapter 412, Statutes of 2011. Ratified a
revised tribal-state gaming compact between the State of
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California and Pinoleville Pomo Nation, authorizing the Tribe to
commence Class III gaming with up to 900 gaming devices,
executed on August 8, 2011, and requires contributions to the
SDF and the RSTF, as specified, instead of requiring revenue
contributions to the General Fund.
AB 1020 (Chesbro), Chapter 27, Statutes of 2011. Ratified a
revised compact between the State of California and the
Habematolel Pomo of Upper Lake executed by Governor Brown on
March 17, 2011. This revised compact authorized the Tribe to
operate up to 750 slot machines with up to 15% of the net-win
from those gaming devices be paid to the SDF and the RSTF,
instead of requiring revenue contributions to the GF.
AB 122 (Coto), Chapter 3, Statutes of 2010. Ratified a
tribal-state gaming compact between the State of California and
the Pinoleville Pomo Nation, executed on March 10, 2009.
SB 89 (Budget and Fiscal Review Committee), Chapter 1, Statutes
of 2010. Ratified the tribal-state gaming compact between the
State of California and the Habematolel Pomo of Upper Lake,
executed on September 2, 2009.
AB 3072 (Price), Chapter 334, Statutes of 2008. Ratified the
first amendment to a tribal-state gaming compact entered into
between the State of California and the Shingle Springs Band of
Miwok Indians, executed on June 30, 2008.
SB 106 (Wiggins), Chapter 37, Statutes of 2007. Ratified a new
compact between the state and the Yurok Tribe of the Yurok
Reservation (Yurok).
SB 174 (Ducheny), Chapter 39, Statutes of 2007. Ratified the
first compact amendment to the compact between the state and
Sycuan.
SB 175 (Ducheny), Chapter 38, Statutes of 2007. Ratified the
first compact amendment to the compact between the state and
Morongo.
SB 903 (Padilla), Chapter 40, Statutes of 2007. Ratified the
first compact amendment to the compact between the state and
Pechanga.
SB 941 (Padilla), Chapter 226, Statutes of 2007. Ratified the
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first compact amendment to the compact between the state and San
Manuel.
SB 957 (Torlakson), Chapter 41, Statutes of 2007. Ratified the
first compact amendment to the compact between the state and
Agua Caliente.
SB 470 (Ducheny), Chapter 527, Statutes of 2006. Ratified the
first amendment to the compact between the state and the Quechan
Tribe of the Fort Yuma Reservation (Quechan).
SB 1117 (Burton), Chapter 856, Statutes of 2004. Ratified two
new and two amended compacts entered into between the state and
the following tribes: Coyote Valley Band of Pomo Indians (new
compact); Fort Mojave Indian Tribe (new compact); Buena Vista
Rancheria of Me-Wuk Indians (amended compact); and, Ewiiaapaayp
Band of Kumeyaay Indians (amended compact).
AB 687 (Nu�ez), Chapter 91, Statutes of 2004. Ratified
amendments to five compacts entered into between the state and
the following tribes: Pala Band of Mission Indians; Pauma Band
of Luiseno Mission Indians of the Pauma and Yuima Reservation;
Rumsey Band of Wintun Indians; United Auburn Indian Communities;
and, Viejas Group of Kumeyaay Indians. Provides for the
issuance of bonds in an amount not to exceed $1.5 billion by the
California Infrastructure and Economic Development Bank and
requires the net proceeds of the sale of the compact assets to
be deposited in the Traffic Congestion Relief Fund and the
Transportation Deferred Investment Fund.
SB 930 (Burton) Chapter 802, Statutes of 2003. Ratified a
compact between the state and the Torres-Martinez Desert
Cahuilla Indians.
SB 411 (Ducheny), Chapter 790, Statutes of 2003. Ratified
compacts between the state and the La Posta Band of Diegueno
Mission Indians and the Santa Ysabel Band of Diegueno Mission
Indians in San Diego County.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0005516
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