BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 795|
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                                   THIRD READING 


          Bill No:  AB 795
          Author:   Atkins (D), et al.
          Amended:  9/4/15 in Senate
          Vote:     27  - Urgency

           PRIOR VOTES NOT RELEVANT

           NOTE:  On September 9, 2015, the Senate Governmental  
                 Organization Committee held an informational hearing on  
                 the tribal-state gaming compact entered into betwee the  
                 State of California and the Sycuan Band of the Kumeyaay  
                 Nation.

           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  
          Sycuan Band of the Kumeyaay Nation (hereafter "Tribe") executed  
          on September 2, 2015.  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.












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          Senate Floor Amendments of 9/4/15 gut the contents of the  
          existing bill; add a new lead author (Atkins); add an urgency  
          clause; and, insert provisions pertaining to ratification of the  
          tribal gaming compact recently executed by the Governor and the  
          Sycuan Band of the Kumeyaay Nation. 





          





          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  







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            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, 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 Sycuan Band of the Kumeyaay Nation executed  
          on September 2, 2015 and supersedes the 1999 compact between the  
          Tribe and the State of California.  The 1999 compact authorizes  
          the Tribe to operate no more than 2,000 gaming devices (slot  
          machines).  Under this Compact, the Tribe may operate a maximum  
          of 2,500 gaming devices at its current facility in San Diego  
          County.


          The Tribe has agreed to pay the State its pro rata share of the  
          costs the State incurs for the performance of its duties under  
          the Compact as well as four and three quarters percent (4.75%)  
          of its "gross gaming revenue," to be shared with tribes that are  
          not gaming or that otherwise are not substantially benefiting  
          from gaming.  Additionally, the Compact provides a framework for  
          the sharing of gaming revenue with the County of San Diego and  
          other local jurisdictions.  Specifically, from its payments to  
          the Revenue Sharing Trust Fund (RSTF) or the Tribal Nation Grant  
          Fund (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 or water  
          conservation projects and non-gaming related economic  







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          development and health care facilities that provide a mutual  
          benefit to the Tribe and the local community.

          Pursuant to the 1999 compact, the Tribe currently pays  
          approximately $2.4 million annually into the Special  
          Distribution Fund (SDF) and $2.3 million annually into the RSTF.  
           Under this Compact, it is estimated that the Tribe will pay  
          approximately $1 million annually (its pro rata share) into the  
          SDF and approximately $10.1 million annually into the RSTF or  
          the TNGF.  Thus, the RSTF will see an increase of revenue  
          estimated to be roughly $7.8 million per year.  However, this  
          amount may be offset by up to $6.3 million per year that the  
          Tribe is authorized to redirect to specified infrastructure  
          projects and services that mutually benefit the local community,  
          the Tribe and the state.  



          Brief History of the Sycuan Band of the Kumeyaay Nation 

          The Sycuan Band of the Kumeyaay Nation is a federally recognized  
          tribe of Mission Indians from Southern California, near El  
          Cajon.  The Tribe consists of 220 members, approximately 160 of  
          whom are voting members (over 18 years old).  The Tribe opened  
          its first gambling facility, the Sycuan Bingo Palace, on its  
          reservation in 1983.  In 1999, the Tribe entered into a  
          tribal-state gaming compact with the State of California which  
          has provided it with extensive economic opportunities, including  
          a profitable casino. The Tribe has a diversified business  
          portfolio which includes ownership interests in a variety of  
          businesses both on and off of the Sycuan Reservation, including  
          the historic U. S. Grant Hotel in downtown San Diego, the Marina  
          Gateway Hotel and Conference Center in National City, an  
          off-reservation golf course, and significant advertising  
          agreements with the San Diego Padres Major-League Baseball team  
          at PETCO Park.  The Tribe is also an investor in the Hotel  
          Solamar near the ballpark. 

          Furthermore, the Tribe funds the training and staffing of a fire  
          station and police station in San Diego County.  With respect to  
          the fire station that it funds, 90% of the calls for service are  
          off reservation, resulting in millions of dollars spent each  
          year benefitting off-reservation communities.  The majority of  
          the police station's calls are for off-reservation services, as  







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          well, although at a lower percentage.

          Under the 1999 compact, the Tribe operates 2,000 Class III  
          gaming devices and 58 table games and employs 2,700 people at  
          its casino, golf course, hotel, and other properties.  The Tribe  
          also offers an off-track betting parlor for its customers.   
          Pursuant to the 1999 compact, the Tribe currently pays $ 2.4  
          million into the SDF and $2.3 into the RSTF annually. 

          In 2006, the State and Tribe negotiated amendments to the 1999  
          Sycuan compact that provided for significant payments to the  
          State's General Fund in exchange for more gaming devices.   
          Governor Schwarzenegger executed the compact amendments, the  
          Legislature ratified the amended compact, and the U.S.  
          Department of the Interior published a notice in the Federal  
          Register that the amended compact was "deemed-approved."  
          However, the 2006 amended compact contained a provision  
          requiring ratification by the Tribe's general membership.  
          Subsequently, the Tribal membership voted NOT to ratify the  
          compact amendments and therefore, they never went into effect.   
          As a result, Sycuan's gaming operation continues to be governed  
          by the provisions of the 1999 compact.

          Key Components of this Compact
           
           Scope of Class III Gaming Authorized and Financial Terms.  Under  
          this Compact, the Tribe may operate a maximum of 2,500 gaming  
          devices, 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.  If  
          the Tribe chooses to operate more than one gaming facility, then  
          one of the two gaming facilities shall have no more than five  







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          hundred (500) gaming devices and shall have a primary purpose  
          other than gaming authorized under IGRA.
           
           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   
          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 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.   
           
           Payments to the SDF.  The Tribe shall 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  







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          pro rata share." 
           
           Payments to the RSTF or TNGF.  If the Tribe operates more than  
          three hundred fifty (350) gaming devices at any time in a given  
          calendar year, it shall thereafter, including in that calendar  
          year, pay to CGCC, for deposit into the RSTF or the TNGF, four  
          and three quarters percent (4.75%) of its "gross gaming revenue"  
          from the operation of gaming devices in excess of three hundred  
          fifty (350).

          "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. 
           
           Credits Applied to 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 by the Tribe 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, and 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 on or off tribal trust lands  
            that the State or State designated agency agrees provides  
            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)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  







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            charging stations for electric or other zero-emission vehicles  
            that are available to patrons and employees of the gaming  
            facility; 

          4)Payments to support capital improvements and operating  
            expenses for facilities within California that provide health  
            care services to tribal members, Indians, and non-Indians;  
            and,

          5)Investments by the Tribe for water treatment and conservation  
            projects.  

          All excess authorized credits that cannot be applied in any one  
          year because they would exceed the sixty percent (60%) may be  
          applied as an annual credit in all following years that this  
          Compact is in effect, in the same percentages, until completely  
          exhausted.
           
           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  
          gross gaming revenue 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 Compact 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,  







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               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 adopt and comply with standards that meet or  
               exceed the federal NIGC standards.  The MICS are  
               incorporated in this Compact as an appendix (Appendix D),  
               which shall be updated periodically by the State Gaming  
               Agency and Tribal Gaming Agency, to ensure the MICS keep up  
               with changing technology and industry standards. 

                 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 with 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 Sycuan Tribal Court system  
               or before a three-member tribal claims commission  
               consisting of a representative of the tribal government and  
               at least one non-tribal commissioner.  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 Sycuan Tribal Court or tribal claims  
               commission 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 Sycuan  
               Tribal Court, the tribal claims commission or Intertribal  
               Court of Southern California and in any suit in state or  







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               federal court to enforce or execute a judgment based upon  
               the award of the tribal court, claims commission 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 stipulating that California tort law  
               governs claims.  In addition, 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 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 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 San  
               Diego County, the Department of Justice, the State  
               Clearinghouse and the State Gaming Agency.  Also, projects  
               that have been initiated under the terms of the 1999  
               compact shall be subject to the relevant terms and  
               conditions of the 1999 compact.  Additionally, projects  
               commenced prior to the existing mitigation agreements  
               (January of 2012) between the Tribe and San Diego County  
               regarding development of the Tribe's other properties  
               remain in effect and are not subject to the TEIR provisions  
               of this Compact.  If those agreements expire and are not  
               renegotiated (or negotiations fail), then the TEIR  
               provisions of the Compact become applicable to those  
               properties, as well.

                 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 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  







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               employs 250 or more persons in a tribal casino facility,  
               then the provisions of the TLRO become effective.  The TLRO  
               provides for a secret ballot election.  The new TLRO  
               proscribed by this Compact is modeled after the Tribe's  
               1999 TLRO with several modifications.  The new TLRO  
               provides for union neutrality.  The Tribe will not oppose a  
               union organization but can advocate the benefits of working  
               for the Tribe.  A labor union must issue a Notice of Intent  
               or Organize (NOIO).   For a period of 365 days following  
               delivery of a NOIO, the union shall not engage in strikes,  
               picketing, boycotts, attack websites, or other economic  
               activity at or in relation to the tribal casino or related  
               facility.  During the 365 days after the Tribe received the  
               NOIO, the union must collect dated and signed authorization  
               cards and complete the secret ballot election.  Failure to  
               complete the secret ballot election within 365 days shall  
               preclude the union from delivering another NOIO for a  
               period of two years (730 days).  After the certification  
               that 30% of the employees have expressed an interest in the  
               union, a notice of election shall be issued and the  
               election shall be concluded within 30 calendar days  
               thereafter.  Secret ballot elections shall be held at the  
               workplace and at least one neutral location.  Employees may  
               mail in ballots provided they are received by election day.  
                Mediation for any collective bargaining agreement impasse  
               shall be made in conjunction with the Federal Mediation and  
               Conciliation Service (FMCS).  The mediation process is  
               modeled on the Agricultural Labor Relations Act and  
               authorizes the mediator to resolve the impasse.  According  
               to the Administration, the appeals procedures have been  
               streamlined significantly in comparison to the Tribe's 1999  
               TLRO.  Disputes are presented to an arbitrator with  
               expertise in labor law and appropriate challenges to the  
               arbitrator's decision may be presented to a state superior  
               court.

                 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  







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               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. 

                 Prohibitions Regarding Minors.  Provides that the Tribe  
               shall prohibit persons under the age of eighteen (18) 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.

                 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.

                 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. 

                 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).   


                 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 under 18 years of age.








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                 Emergency Services Accessibility and Possession of  
               Firearms.  Provides that the Tribe must 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.

                 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.  

                  Effective Date.  Provides that this 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 is published in the Federal Register.  
                Once effective, this Compact shall be in full force and  
               effect until December 31, 2040.

                 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 during the  
               term of this Compact, 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.  

           Additional Relevant Background Information 
            







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          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  
          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  
          gaming.  In 2000, California voters approved Proposition 1A  







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          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 rejecting a Class III  
          Tribal-State Gaming Compact negotiated by 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.  

          Another vehicle for state receipt of casino payments above those  
          payments must be in exchange for some benefit deemed "exclusive"  
          to the tribe. To this end, it is fact that a number of other  
          state (Governors) have attempted to create "exclusive grants" in  
          favor of compact signatory tribes in return for payments to the  
          state treasuries.

          Rincon 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  
          court decision that the new financial concessions were nothing  
          more than a state tax on tribal casino revenues which is  







                                                                     AB 795  
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          prohibited by IGRA.  

          Rincon had refused to sign the amended compact which already had  
          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  
          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." 

          Prior/Related Legislation

          AB 1540 (Gray, 2015) ratifies 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.  (Enrolled  
          and presented to the Governor on 9/3/2015)

          AB 315 (Bigelow, 2015) ratifies 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.  (Enrolled and presented to the Governor on  
          9/3/2015) 

          AB 475 (Bigelow, Chapter 8, Statutes of 2015) ratified the  
          tribal-state gaming compact entered into between the State of  
          California and Jackson Rancheria Band of Miwuk Indians, executed  
          on February 1, 2015.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified9/8/15)









                                                                     AB 795  
                                                                    Page  17


          Agua Caliente Band of Chauilla Indians
          Asian Business Association of San Diego
          Barona Band of Mission Indians
          Barrio Station
          Congressman Juan Vargas
          Downtown San Diego Partnership
          La Mesa Chamber of Commerce
          Mental Health America of San Diego County
          Ronald McDonald House Charities of San Diego
          San Diego City Councilman Scott Sherman
          San Diego County Building and Construction Trades Council,  
          AFL-CIO
          San Diego Police Officers Association
          San Diego Regional Chamber of Commerce
          San Diego Rescue Mission
          San Diego Tourism Authority
          San Ysidro Chamber of Commerce
          Santa Ynez Band of Chumash Indians
          State Building and Construction Trades Council, AFL-CIO
          Sycuan Band of the Kumeyaay Nation
          Urban Corps of San Diego County


          OPPOSITION:   (Verified9/8/15)


          None received



          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          9/8/15 16:58:25


                                   ****  END  ****