BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1356|
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THIRD READING
Bill No: SB 1356
Author: De León (D), et al.
Amended: 8/18/14
Vote: 27 - Urgency
NOTE: On August 21, 2014, the Senate Governmental Organization
Committee held an informational hearing on the amended
tribal-state compact between the State of California and
the Viejas Band of Kumeyaay Indians.
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : 74-0, 8/22/14 - See last page for vote
SUBJECT : Tribal gaming: compact ratification
SOURCE : Viejas Band of Kumeyaay Indians
DIGEST : This bill ratifies the amended and restated
tribal-state gaming compact (Compact) between the State of
California and the Viejas Band of Kumeyaay Indians, executed on
August 12, 2014.
Assembly Amendments delete the prior version of the bill
relating to counterfeit goods, and insert the current language;
change the author from Senator Lieu to Senator De Leon; add
coauthors; and add an urgency clause.
ANALYSIS :
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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. Expressly authorizes a number of tribal-state gaming
compacts between the State and specified Indian tribes.
3. Authorizes the conduct of Class III gaming activities to the
extent such activities are permitted by state law, a gaming
compact has been concluded by a federally recognized tribe
and the State, and the compact has been approved by the
Secretary of the Interior.
4. Limits the operation of Class III gaming activities to
Indian lands acquired on or before October 17, 1988.
Provides for certain exceptions to conduct gaming activities
on Indian lands acquired after October 17, 1988.
5. Defines Indian lands to mean all lands within the limits of
any Indian reservation, and any lands title to which is
either held in trust by the United States for the benefit of
any Indian tribe or individual or held by any Indian tribe or
individual subject to restriction by the U.S. against
alienation and over which an Indian tribe exercises
governmental power.
6. Requires the State to negotiate to conclude a compact in
good 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,
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to negotiate and conclude compacts, subject to ratification
by the Legislature.
This bill ratifies the amended and restated Compact between the
State and the Viejas Band of Kumeyaay Indians (Tribe), executed
on August 12, 2014. Specifically, this bill:
1. Authorizes the Tribe to operate a maximum of 4,500 slot
machines at not more than two gaming facilities, and only on
those Indian lands held in trust for the Tribe as of the
execution date of this Compact, as described. The Tribe may
combine and operate in each gaming facility any forms and
kinds of gaming permitted under law, except to the extent
limited under IGRA and any applicable regulations adopted
pursuant thereto, this Compact, or the Tribe's gaming
ordinance.
2. Converts the Tribe's current fixed revenue share payment to
the State (which required the Tribe to pay a flat fee of
$17.4 million to the State's General Fund each year) 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 ensures that the Tribe remains the primary
beneficiary of its gaming operation as required by federal
law. The Department of Finance estimates that the State will
receive reduced revenue of about $3 million to $5 million
annually if this Compact is ratified and casino operations
perform at the current level.
3. Supersedes a 2004 amended compact (AB 687, Nuñez, Chapter
91, Statutes of 2004) between the Tribe and the State. The
2004 amended compact 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. Unlike the 1999
compact, the 2004 amended compact required payments to the
General Fund, as defined. The 2004 amended compact also
required the Tribe to negotiate with local governments
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concerning enforceable memoranda of understanding (MOU's) to
address environmental, public safety, infrastructure, and
other demands related to gaming operations. Additionally,
under the 2004 amended compact the Tribe agreed to pay $2
million into the Revenue Sharing Trust Fund (RSTF). The
negotiated MOU's, RSTF disbursement, and designated payments
into the General Fund are still mandated in this Compact.
4. Provides that, in deference to tribal sovereignty, certain
actions may not be deemed projects for purposes of the
California Environmental Quality Act.
5. Provides that once effective (legislative ratification and
federal approval required), this Compact will be in full
force and effect for state law purposes until December 31,
2030 - this date remains unchanged from the Tribe's 2004
amended compact.
Background
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 approximately 2,000 slot machines, up to
86 table games, four restaurants, a deli, 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 99
rooms and 29 suites, a pool with a patio area and cabanas, a
business center, fitness room, and other amenities.
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.
In 2004, the Tribe and the State via Governor Schwarzenegger
entered into an amendment to the 1999 compact, which, among
other things, significantly increased the gaming operation's
earning potential and revenue payments to the State.
The Compact's preamble states that since the time that the State
and the Tribe entered into the 2004 amended compact,
circumstances in the overall economy and the casino gaming
market have changed, which have caused and will continue to
cause a substantial reduction in revenues generated by the
gaming operation in comparison to those that were expected when
the parties entered into the 2004 amended compact.
The Compact's preamble contends that the fixed quarterly revenue
share payments required of the Tribe under the 2004 amended
compact have not adjusted to changed economic and casino gaming
market conditions.
Additionally, the Compact's preamble notes that after review of
the Tribe's financial condition, the Tribe and the State agree
that if the Tribe continues to make revenue sharing payments to
the State at the fixed level required by the 2004 amended
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compact, the Tribe would not be able to adequately fund its
Tribal government, to the detriment of the Tribe's ability to
provide for the governance, environment, education, health,
safety, and general welfare of the Tribe's citizens, and would
therefore be incompatible with the purposes and policies of
IGRA, Proposition 1A, the 1999 compact, and the 2004 amended
compact.
The Tribe and the State agree that this Compact is designed to
enhance the Tribe's economic development and self-sufficiency
and to protect the health, safety and general welfare interests
of the Tribe and its citizens, the surrounding community, and
the California public, and to promote and secure long-term
stability, mutual respect, and mutual benefits.
The Compact's preamble indicates that the State and the Tribe
recognize that the exclusive rights the Tribe enjoys under this
Compact provide a unique opportunity for the Tribe to continue
to engage in the gaming activities in an economic environment
free of competition from the operation of slot machines and
banked card games on non-Indian lands in California and that
this unique economic environment is of great value to the Tribe.
Furthermore, the Compact's preamble states the Tribe and the
State share an interest in mitigating the off-reservation
impacts of the gaming facility, affording meaningful consumer
and employee protections in connection with the operations of
the gaming facility, fairly regulating the gaming activities
conducted at the gaming facility, and fostering a good-neighbor
relationship.
Key Provisions of the Compact
Scope of Class III Gaming Authorized . The Tribe is authorized
to operate up to 4,500 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. The
Tribe may not operate roulette games (table or mechanical) or
any game that incorporates the physical use of a die or dice.
The Tribe shall not engage in Class III Gaming that is not
expressly authorized in the Compact.
Exclusivity . Provides that in the event the exclusive right of
Indian tribes to operate Class III gaming in California pursuant
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to the California Constitution is nullified by the enactment,
amendment, or repeal of a state statute or constitutional
provision or the conclusive and dispositive judicial
construction of a statute or the state Constitution by a
California appellate court after the effective date of this
Compact, that gaming devices may lawfully be operated by
non-Indian entities, the Tribe shall have the right to: (1)
terminate this Compact, in which case the Tribe will lose the
right to operate Class III gaming authorized by this Compact or
(2) continue under this Compact with entitlement to a reduction
of the rates specified in the chart below following conclusion
of negotiations, to provide for (a) compensation to the State
for the reasonable 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.
Amendment by Agreement . 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.
Revenue Contributions to the State and the Indian Gaming Special
Distribution Fund (SDF) . The Tribe shall pay to the State
quarterly a revenue contribution, which shall be based upon the
average number of gaming devices in operation during such
quarter, equal to a percentage of the "net win" 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% |
| |
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| 2,501 to 3,000 |
| 12% |
| |
| 3,001 to 3,500 |
| 14% |
| |
| 3,501 to 4,000 |
| 16% |
| |
| 4,001 to 4,500 |
| 18% |
| |
| |
| |
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During the first five years in which this Compact is in effect,
a portion of the Tribe's quarterly revenue contribution to the
State will be deposited in the SDF in the amounts specified
below:
(1)During years one and two, $5 million will be allocated to
the SDF;
(2)During year three, $4 million will be allocated to the SDF;
(3)During year four, $3 million will be allocated to the SDF;
and
(4)During year five, $2 million will be allocated to the SDF.
This requirement does not alter the total amount of the
contribution that the Tribe pays to the State, but specifies the
principal fund to which the Tribe's payments are deposited.
During each year in which the Compact is in effect, the Tribe's
pro rata share of the state's regulatory costs will be deducted
from the Tribe's quarterly revenue contribution to the State.
The Tribe's pro rata share payment will be paid into the SDF, as
specified.
In each year of this 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
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into the SDF will go to the General Fund.
"Net Win" is defined as the drop from gaming devices, plus the
redemption value of expired tickets, less fills, less payouts,
less participation fees (e.g., payments made to gaming resource
supplies on a periodic basis by the gaming operation for the
right to lease or otherwise offer for play gaming devices), less
that portion of the gaming operation's payments to a third-party
wide-area progressive jackpot system provider that is
contributed only to the progressive jackpot amount.
Revenue Sharing Trust Fund (RSTF) or Tribal Nation Grant Fund
(TNGF) Contribution . The Tribe shall continue to maintain its
existing licenses to operate gaming devices by paying to the
State Gaming Agency for deposit into the RSTF or the TNGF,
within 30 days of the end of each calendar quarter, $500,000.00.
If any portion of the fee payment is overdue after the State
Gaming Agency has provided written notice to the Tribe of the
overdue amount with an opportunity to cure of at least 15
business days, and if more than 60 calendar days have passed
from the due date, then the Tribe shall cease operating all of
its gaming devices until full payment is made.
This particular revenue contribution mirrors a provision in the
2004 amended compact which required the Tribe to make annual
payments in the amount of $2 million to the RSTF.
Quarterly Revenue 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, as defined.
Gaming Facility Mitigation and Local Intergovernmental
Agreements . Before the commencement of a project, and no later
than the issuance of the final Tribal Environmental Impact
Report (TEIR) to the County, the Tribe shall offer to commence
negotiations with the County, and upon the County's acceptance
of the Tribe's offer, shall negotiate with the County and shall
enter into an enforceable written agreement with the County with
respect to the following matters: (1) Provisions providing for
the timely mitigation of any significant effect on the
off-reservation environment, as defined; (2) Provisions relating
to compensation for law enforcement, fire protection, emergency
medical services and any other public services to be provided by
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the County to the Tribe for the purposes of the Tribe's gaming
operation as a consequence of the project; (3) Provisions
providing for reasonable compensation for programs designed to
address gambling addiction; and, (4) Provisions providing for
mitigation of any effect on public safety attributable to the
project, including any compensation to the County as a
consequence thereof.
Additional Provisions of the Compact
Gaming Ordinance and Regulations . 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.
Environmental Protections . The Tribe must prepare a TEIR and
negotiate mitigation of any off-reservation impacts. The
Tribe's failure to prepare an adequate TEIR when required
shall be deemed a breach of this Compact and furthermore shall
be grounds for issuance of an injunction or other appropriate
equitable relief. A completed TEIR must be filed with the
County, the City, the Department of Justice, the State
Clearinghouse and the State Gaming Agency. Also, provides for
binding arbitration if an intergovernmental agreement with the
County is not entered into within 55 days of the submission of
the final TEIR, or such further time as the Tribe or the
County may mutually agree in writing. Any party may demand
binding arbitration before a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association as set forth in the Compact.
Employee Protections . The Tribe may create and maintain a
system that provides redress for employee work-related
injuries through requiring insurance or self-insurance, which
system must include a scope of coverage, availability of an
independent medical examination, right to notice, hearings
before an independent tribunal, a means of enforcement against
the employer, and benefits comparable to those mandated for
comparable employees under state law. Not later than the
effective date of this Compact, the Tribe will advise the
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State of its election to participate in the statutory workers'
compensation system or, alternatively, will forward to the
State all relevant ordinances that have been adopted and all
other documents establishing the system and demonstrating that
the system is fully operational and compliant with the
comparability standard, as described. Independent contractors
doing business with the Tribe must comply with all state
workers' compensation laws and obligations.
The Tribe agrees that its gaming operation will participate in
the State's program for providing unemployment compensation
benefits and unemployment compensation disability benefits
with respect to employees employed at the gaming facility, as
described. The Tribe has also agreed to adopt and comply with
standards no less stringent than federal and state employment
discrimination laws.
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 . 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 . 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
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meet those responsibilities, the tribal gaming agency shall
adopt and enforce regulations, procedures, and practices.
Labor Provisions . The Tribe entered into a collective
bargaining agreement with a labor organization (Communications
Workers of America, CWA Local 9400) before the enactment of
its Tribal Labor Relations Ordinance (TLRO), which governs the
organizational and representational rights of the employees at
the tribal casino and gaming facility. The Tribe has renewed
that collective bargaining agreement and the parties agree
that no change in the TRLO is necessary to address employee
rights.
Prohibitions regarding Minors . The Tribe shall prohibit
persons under the age of 21 years from being present in any
room or area in which gaming activities are being conducted
unless the person is en route to a non-gaming area of the
gaming facility, or is employed at the Gaming Facility in a
capacity other than as a gaming employee.
Alcohol Provisions . Makes it explicit that the purchase,
sale, and service of alcoholic beverages shall be subject to
state law - the Alcoholic Beverage Control Act.
Protection of Public . The Tribe will not conduct Class III
Gaming in a manner that endangers the public health, safety,
or welfare; provided that nothing herein shall be construed to
make applicable to the Tribe any state laws or regulations
governing the use of tobacco.
Health and Safety Standards . The Tribe has agreed to adopt
and comply with state public health standards for food and
beverage handling and federal water quality and safe drinking
standards applicable to California.
Building Codes and Fire Safety . 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.
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Emergency Services Accessibility . The Tribe must make
reasonable provisions for adequate emergency fire, medical,
and related relief and disaster services for patrons and
employees.
Effective Date . The Compact shall not be effective unless and
until all of the following have occurred: (1) The Compact is
ratified by statute in accordance with state law and (2)
Notice of approval or constructive approval is published in
the Federal Register. Once effective, this Compact shall be
in full force and effect for state law purposes until December
31, 2030.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/22/14)
Viejas Band of Kumeyaay Indians (source)
Barona Band of Mission Indians
Pala Band of Mission Indians
Pechanga Band of Luiseño Indians
Rincon Band of Luiseño Indians
Santa Ynez Band of Chumah Indians
Sycuan Band of the Kumeyaay Nation
United Auburn Indian Community
ASSEMBLY FLOOR : 74-0, 8/22/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bloom, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Daly,
Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines,
Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove,
Hagman, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, John A. Pérez, V. Manuel Pérez,
Quirk, Quirk-Silva, Rendon, Rodriguez, Salas, Skinner, Stone,
Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,
Atkins
NO VOTE RECORDED: Bigelow, Dahle, Hall, Ridley-Thomas, Yamada
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MW:k 8/22/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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