Existing federal law, the Indian Gaming Regulatory Act of 1988, provides for the negotiation and execution of tribal-state gaming compacts for the purpose of authorizing certain types of gaming on Indian lands within a state. The California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature. Existing law expressly ratifies a number of tribal-state gaming compacts, and amendments to tribal-state gaming compacts, between the State of California and specified Indian tribes.

The California Environmental Quality Act (CEQA) requires a lead agency to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project, as defined, that it proposes to carry out or approve that may have a significant effect on the environment, as defined, or to adopt a negative declaration if it finds that the project will not have that effect.

This bill would ratify the tribal-state gaming compact entered into between the State of California and the San Manuel Band of Mission Indians, executed on August 16, 2016. The bill would provide that, in deference to tribal sovereignty, certain actions are not projects for the purposes of CEQA.

Existing federal law, the Indian Gaming Regulatory Act of 1988, provides for the negotiation and execution of tribal-state gaming compacts for the purpose of authorizing certain types of gaming on Indian lands within a state. The California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature. Existing law expressly ratifies a number of tribal-state gaming compacts, and amendments to tribal-state gaming compacts, between the State of California and specified Indian tribes.

The California Environmental Quality Act (CEQA) requires a lead agency to prepare, or cause to be prepared, and certify the completion of, an environmental impact report on a project, as defined, that it proposes to carry out or approve that may have a significant effect on the environment, as defined, or to adopt a negative declaration if it finds that the project will not have that effect.

This bill would ratify the tribal-state gaming compact entered into between the State of California and the San Manuel Band of Mission Indians, executed on August 16, 2016. The bill would provide that, in deference to tribal sovereignty, certain actions are not projects for the purposes of CEQA.

The State Civil Service Act requires employment forms used by a state agency to require a person applying for employment to disclose whether the person has entered into an agreement with the state regarding any previous employment with the state and that agreement prohibits that person from seeking or accepting any subsequent employment with the state.

This bill would specify that this provision shall not be deemed to require employment forms used by a state agency to require a person applying for employment to disclose whether the person has entered into an a settlement agreement that prohibits him or her from seeking or accepting employment with a particular state agency. This bill would also make nonsubstantive changes.

Existing law requires, by July 1, 2015, the Department of General Services to complete a long-range planning study of the state-controlled and owned office buildings in the County of Sacramento and the City of West Sacramento for the management of the states space needs in the Sacramento region, as specified. Existing law requires the Director of General Services to issue one or more requests for proposals for the planning, design, construction, and acquisition of facilities recommended by the Legislature based on the planning study.

This bill would make nonsubstantive changes to these provisions.

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 466

Author:(Brown)

As Amended Ver:August 17, 2016

Majority vote

(vote not relevant)

Original Committee Reference: G.O.

SUMMARY: Ratifies the tribal-state gaming compact (Compact) entered into between the State of California and the San Manuel Band of Mission Indians (Tribe) executed on August 16, 2016. Additionally, this bill provides that, in deference to tribal sovereignty, certain actions are not deemed projects for purposes of the California Environmental Quality Act (CEQA); and, stipulates, except as expressly provided, that none of the provisions shall be construed to exempt a city, county, or city and county, or the Department of Transportation from CEQA requirements.

The Senate amendments delete the Assembly version of this bill, and instead:

1. Ratify the Compact entered into between the State of California and the San Manuel Band of Mission Indians executed on August 16, 2016.
2. The Compact supersedes an existing 2006 compact (SB 941 (Padilla), Chapter 226, Statutes of 2007) between the Tribe and the State.
3. Allows the Tribe to 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 the Compact, as defined.
4. Provides the Tribe may operate a maximum of 7,500 gaming devices (slot machines). If the Tribe chooses to open a second facility, it may operate no more than 1,000 gaming devices at that second facility.
5. Terms of the Compact regarding licensing, compliance enforcement, mitigation of off-reservation impacts and protections for patrons and employees are consistent with recent compacts. Maintains the existing 1999 Tribal Relations Labor Ordinance (TLRO).
6. Provides for an annual payment of $19 million into the Revenue Sharing Trust Fund (RSTF) or the Tribal Nation Grant Fund (TNGF), to be shared with tribes that are not gaming or that otherwise are not substantially benefiting from gaming. Establishes the San Manuel Community Credit Fund which requires a $29 million annual payment by the Tribe to provide funding for, or make investments in projects that mutually benefit the Tribe, County, local jurisdictions, and the State, including $3 million for Native American education. The Tribe will pay into the Special Distribution Fund (SDF) its pro rata share of costs the State incurs for the performance of its duties under the Compact plus additional amounts ($500,000 up to a total of $3 million) to cover a portion of the share of regulatory costs for smaller gaming tribes. Provisions of this Compact establishing or amending existing revenue sharing obligations of the Tribe, will take effect on July 1, 2017.
7. Provides that, in deference to tribal sovereignty, certain actions are not deemed projects for purposes of the California Environmental Quality Act (CEQA); and, stipulate, 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.
8. Provides this Compact will be in full force and effect for 25 years following the effective date.

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 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 (U.S.) 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.

FISCAL EFFECT: Unknown

COMMENTS: On August 23, 2016, the Assembly Governmental Organization Committee held an informational hearing on the tribal gaming Compact entered into between the State of California and the San Manuel Band of Mission Indians.

Brief History and Background: The San Manuel Band of Mission Indians is a federally recognized American Indian tribe located near the city of Highland, California. San Manuel is one of several clans of Serrano Indians, who are the indigenous people of the San Bernardino highlands, passes, valleys and mountains who share a common language and culture. The San Manuel reservation was established in 1891 and recognized as a sovereign nation with the right of self-government. The reservation is named after Santos Manuel, a former tribal leader, and consists of just over 900 acres of mostly mountainous land. There are more than 200 tribal members enrolled in the Tribe.

This will be the third compact between the Tribe and the State. In 1999, the Tribe and the State entered into a compact to enable the Tribe to achieve economic self-reliance, provide essential services to its citizens, and build a strong tribal government; to initiate a new era of tribal-state cooperation in areas of mutual concern. On August 28, 2006, Governor Schwarzenegger executed amendments to the 1999 gaming compact between the State and the Tribe. The 2006 compact increased the number of gaming devices the Tribe could operate from 2,000 to 7,500. The compact provided for annual payments of $45 million to the state's General Fund from the Tribe's existing 2,000 gaming devices. It also required an annual payment of 15% of the Net Win for additional gaming devices between 2,000 to 5,000 and 25% of the Net Win generated from the operation of gaming devices from 5,000 to 7,500. The compact required the Tribe to make an annual payment to the RSTF of $2 million annually. There was no change to the Tribe's 1999 Tribal Labor Relations Ordinance that provides for secret ballot elections. The 2006 compact is valid until 2030.

The San Manuel Indian Bingo & Casino, with more than 400,000 square-feet of overall space, includes more than 280,000 square-feet of gaming, which includes a Bingo Hall with more than 1,400 seats; nearly 4,000 gaming devices; more than 80 Table Games; upwards of 40 Poker Tables; and a High Limit Room. The Tribe states that it dedicates significant resources from gaming to various philanthropic causes through its charitable donations to others in the community. Additionally, the Tribe pays millions of dollars to local governments to improve roads, support local municipalities, and fund emergency services. Revenue from the San Manuel Indian Bingo and Casino is used to maintain governmental operations, provide for the general welfare of the Tribe and healthcare needs, supply infrastructure needs such as roads, and to support continued economic development. The Tribe is one of the largest employers in the Inland Empire area with over 3,000 employees.

The Tribe states, "that it works diligently to ensure a solid economic foundation for future generations by investing in diverse and strategic economic ventures, both on and off the reservation. Economic diversification creates ways for the tribe to build a strong economy and contribute to job growth, our surrounding communities, and the long-term self-reliance of our members." For instance, the Tribe owns a commercial real estate investment project near the reservation that includes a hotel and conference center, restaurants, retail space, and offices. In 2003, the Tribe collaborated with three other tribes: the Viejas Band of Kumeyaay Indians, the Forest County Potowatomi Community and the Oneida Tribe, both of Wisconsin, to form Four Fires to complete a $43 million hotel project-a 13-story, 233-suite Residence Inn by Marriott, near the Smithsonian's National Museum of the American Indian. Another partnership, Three Fires (the same tribes minus the Forest Potowatomi) built a Residence Inn by Marriott in Sacramento near the state capital and purchased an office building in Washington D.C. and commercial office buildings in other towns.

According to the Governor's office, this new Compact "affirms the Tribe's commitment to the residents of San Bernardino County and is intended to enable the tribal government to invest in worthy causes, including fire, emergency medical services, law enforcement, public transit, infrastructure improvements, education, renewable energy, recycling or water conservation projects, non-gaming-related economic development and health care facilities. It also will make the tribe one of the largest contributors to the RSTF, which distributes gaming revenue to non-gaming and limited gaming tribes so that the economic benefits of gaming reach all tribal governments within California."

The Compact's preamble states, the State and the Tribe have concluded that this Compact protects the interests of the Tribe and its members, the surrounding communities, and the California public, and will promote and secure long-term stability, mutual respect, and mutual benefits

Key Components of the Compact:

Authorized Gaming Facility: The Tribe may establish and operate not more than two (2) 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 open a second facility, it may operate no more than 1,000 gaming devices at that second facility.

Scope of Class III Gaming Authorized: Authorizes the Tribe to operate up to a total of 7,500 gaming devices (slot machines); banking or percentage card games; 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; and, off-track wagering on horse races in the gaming facility, as defined. The Tribe shall not engage in Class III gaming that is not expressly authorized in the Compact. Nothing shall be construed to preclude the Tribe from offering class II gaming at the Tribe's gaming facility.

Payments to the Special Distribution Fund (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, the administration and implementation of tribal-state gaming compacts, and funding for the Office of Problem Gambling, as determined by the monies appropriated in the annual Budget Act each fiscal year to carry out those purposes, as defined.

The Tribe further agrees to pay an additional five hundred thousand dollars ($500,000) into the SDF to ensure it remains solvent. In the event the pro rata funding for the SDF statewide has proven sufficient for three consecutive years, the parties agree to meet and confer for the purpose of making an appropriate reduction in the additional payment. In addition, if the Tribe's pro rata share exceeds $3 million; the Tribe shall pay the greater of its pro rata share or $3 million.

Payments to the RSTF or the TNGF: The Tribe agrees to pay $19 million annually to the California Gambling Control Commission (CGCC) for deposit into the RSTF or the TNGF for the benefit of non-gaming tribes and limited-gaming tribes.

San Manuel Community Credit Fund: Establishes the San Manuel Community Credit Fund (SMCCF), which is managed by the Tribe to make or provide funding for, or make investments in projects that mutually benefit the Tribe, County, local jurisdictions, and the State. The Tribe shall make quarterly payments into the fund totaling $29 million per year. The SMCCF may be used for the following purposes:

1. Payments by the Tribe to the County or local jurisdictions operating facilities or providing services within the County for fire, law enforcement, emergency medical services, public transit, education, tourism, or other services and infrastructure improvements intended to serve off-reservation needs of County residents as well as those of the Tribe – such payments shall be subject to approval by the County or local jurisdiction receiving the funds;
2. Cost of services provided by the Tribe, or payments made to the County, local jurisdictions, school districts, charter schools, or non-profit or civic organizations operating facilities or providing services within the County, for cultural programs, fire services, emergency medical services, problem gambling programs, law enforcement, public transit, education, tourism, youth athletics and other youth programs, or other services or infrastructure improvements that in part serve off-reservation needs of County residents;
3. To promote continued economic growth that benefits the Tribe and the surrounding community through investments in facilities, infrastructure, or other projects that generate sustained job creation and ensure the financial longevity of the Tribe, the Tribe may utilize up to 20% of the monies deposited into the San Manuel Community Credit Fund annually for the purpose of making payments to the principal amount on its debt services which are secured by the assets of the gaming operation;
4. Investments by the Tribe in, and any funds paid to the State (not including direct or indirect state or federal funding) in water treatment or conservation projects that, in part, serve the Gaming Facility or any improvements incorporating water conservation or treatment technology on real property owned by the Tribe;
5. Non-gaming related capital investments and economic development projects by the Tribe, on or off tribal trust lands, that provide mutual benefits to the Tribe and the State or to the Tribe and local political subdivisions because, for instance, they have particular cultural, social, or environmental value, create jobs, or diversify the sources of revenue for the Tribe's general fund;
6. Investments in, and any funds paid to the State in connection with, renewable energy projects that, in part, serve the gaming facility, , to include facilities that incorporate charging stations for electric or other zero-emission vehicles that are available to tribal members, patrons, and employees of the gaming facility or the Tribe;
7. Payments (not including direct or indirect state or federal funding) to support capital improvements and operating expenses for facilities or programs within California that provide health care services to tribal members, Indians, and non-Indians;
8. Grants to Native Americans who are not members of the Tribe, or grants to other federally-recognized tribes or other Native American tribes regardless of their federal-recognition status, for educational, cultural, or vocational purposes, or for governmental or general welfare purposes or funds or donations provided for the purpose of aiding federally recognized tribes in the wake of natural or man-made disasters;
9. Investments, loans, or other financial obligations including actual payments used to secure loans, to or for the benefit of other federally recognized tribes for any purpose, including gaming;
10. Costs of recycling programs, and any improvements incorporating recycling technology, that, in part, serve the Gaming Facility, or other on or off-reservation needs within the County; and
11. Contributions toward the enhancement of Native American education in the State of California, which shall be in the amount of no less than $3 million in contributions per year.

All excess authorized SMCCF monies that cannot be applied in any one year under, may be applied as an annual credit in all following years that this Compact is in effect, until completely exhausted.

Effective Date of Revenue Contribution Provisions: The provisions of this Compact establishing or amending existing revenue sharing obligations of the Tribe, including payments to the SDF, the RSTF/TNGF, the SMCCF, and payments and reimbursement to local government to mitigate significant effects on the off-reservation environment will take effect on July 1, 2017. Until that date, the revenue contributions set forth in the 2006 amended compact will remain in effect.

Treatment of Credits Paid by the Tribe in an Economic Downturn: In the event the Tribe's annual gross gaming revenue is less than its gross gaming revenue for fiscal year 2009, the Tribe shall no longer be required to pay the credit amounts into the San Manuel Community Credit Fund, as identified.

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 lost and other non-Indian entities are able to engage in Class III gaming the Tribe shall have the right to terminate this Compact, in which case the Tribe will lose the right to operate Class III gaming authorized by this Compact; or continue under this Compact, as defined.

Off-Reservation Environmental and Economic Impacts: The Tribe must prepare a Tribal Environmental Impact Report (TEIR) and negotiate mitigation of any off-reservation impacts, including an evaluation of energy consumption, prior to initiating the development of a Project for a facility. The Compact provides procedures regarding the 1) Notice of Preparation of Draft TEIR, 2) Notice of Completion of Draft TEIR, and 3) Issuance of Final TEIR. The Tribe's failure to prepare an adequate TEIR when required may warrant an injunction where appropriate. Before commencement of a Project, and no later than the issuance of the final TEIR, the Tribe shall negotiate an intergovernmental agreement with the California Department of transportation (Caltrans) if state roads are impacted. A completed TEIR must be filed with the County, the Department of Justice, the CGCC, and the State Clearinghouse.

Before commencement of a Project, and no later than the issuance of the final TEIR, the Tribe shall offer to commence negotiations with the County to, amongst other things, provide for the timely mitigation of any significant effect on the off-reservation environment including provisions relating to compensation for law enforcement, fire protection, emergency medical services and any other public services to be provided by the County to the Tribe as a consequence of the Project.

Cost Reimbursement and Mitigation to Local Governments: The Tribe shall enter into agreements with local jurisdictions or state agencies, as appropriate, for such undertakings and services that mitigate the impacts of the gaming facility, as defined, and thereby benefit the gaming facility, the Tribe, or other affected jurisdictions. Copies of all such agreements shall be provided to the State.

Additional Compact Components:

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.

Minimum Internal Control Standards (MICS): Requires the Tribe to conduct its Gaming Activities pursuant to an internal control system that implements MICS that are no less stringent 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. The Tribe is required to provide to the CGCC, upon written request, a copy of the independent certified public accountant agreed-upon procedures report conducted annually for submission to the NIGC pursuant to federal law. This report verifies that the gaming operation is in compliance with the NIGC's minimum internal control standards.

Public and Workplace Liability: The Tribe is required to obtain and maintain a commercial general liability insurance policy that provides coverage of no less than $10 million. The Tribe must adopt a Tort Liability Ordinance stipulating that California tort law governs claims. 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.

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 Gaming Devices: Gaming devices 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. The Tribal Gaming Agency is required to maintain adequate records that demonstrate compliance with software and hardware specifications. The CGCC will 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.

Labor Provisions: The new San Manuel compact maintains the existing 1999 Tribal Labor Relations Ordinance (TLRO). A collective bargaining agreement currently exists between the Tribe and the Communications Workers of America (CWA). This agreement governs the organizational and representational rights of employees at the gaming facility. The Tribe has negotiated and entered into several renewals of that collective bargaining agreement, including one that was recently renewed and is in full force and effect. The parties agree that no change in the TLRO is necessary to address employee rights at this time. However, should the collective bargaining agreement not be renewed, the TLRO included in the Compact as Appendix B shall be adopted by the Tribe in place of the existing TLRO.

Workers' Compensation: 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, with respect to persons, including nonresidents of California, employed at the gaming operation or gaming facility, withhold all amounts due to the State as provided in the California Unemployment Insurance Code and, except for tribal members living on the Tribe's reservation, as provided.

The Tribe agrees to participate in the State's workers' compensation program with respect to employees at the gaming operation and the gaming facility. 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. In lieu of participation in the State's system, the Tribe may create and maintain a system through self-insurance, which includes specified provisions, including hearings before an independent tribunal.

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.

Use and Sale of Tobacco: The Tribe agrees to provide a non-smoking area in the gaming facility and, consistent with the Tribe's commitment to the well-being of its employees and patrons, to incorporate ventilation, filtration, purification or other technologies throughout the gaming facility, where reasonable and feasible after consideration of engineering, economic and scientific factors, and further agrees not to offer or sell tobacco to anyone under 21 years of age.

Alcohol Provisions: If the Tribe permits the consumption of alcoholic beverages in the gaming facility, the Tribe shall prohibit persons under the age of 21 years from purchasing, consuming, or possessing alcoholic beverages. The Tribe shall also prohibit persons under the age of 21 years from being present in any room or area in which alcoholic beverages may be consumed, except to the extent permitted by the Department of Alcoholic Beverage Control, as specified.

Problem Gambling: The Tribe shall continue to maintain safeguards against problem gambling, as defined

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 gaming facility construction to meet or exceed the construction standards set forth in the applicable codes. Gaming facility construction, expansion, improvement, modification or renovation must also comply with the federal Americans with Disabilities Act.

Health and Safety Standards: The Tribe must also adopt and comply with tribal law that is consistent with federal and state laws forbidding harassment, including sexual harassment, discrimination and retaliation. In addition, the Tribe must maintain an insurance policy for these purposes and adopt an ordinance that includes a dispute resolution process.

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. The Tribe has also agreed to comply with federal water quality and safe drinking water standards applicable in California.

Emergency Services Accessibility: The Tribe shall make reasonable provisions for adequate emergency fire, medical, and related relief and disaster services for patrons and employees of the gaming facility.

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.

Effective Date: Once effective (legislative ratification and federal approval required), this Compact will be in full force and effect for 25 years following the effective date.

Additional Background Information:

Rincon Decision: In 2004, the Rincon Band of Mission Indians sued the State in federal court after negotiations for a new gambling agreement with then-Governor Schwarzenegger came to a standstill. The Tribe believed the Governor was violating federal law by insisting that tribes pay money into the state's General Fund in exchange for more gaming devices.

In July 2011, the United States Supreme Court declined to review a Ninth Circuit Court's decision that ruled the state could not require the Rincon Band tribe to pay a percentage of slot machine revenue into California's General Fund for more gaming devices. 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 prohibited by IGRA. The 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 Rincon decision changed the dynamics of tribal-state compact negotiations in California. While the compacts requiring these payments stood, any new compacts or amendments of existing compacts may no longer require General Fund contributions.

SDF: Existing law creates the SDF in the State Treasury for the receipt of revenue contributions made by tribal governments pursuant to the terms of the 1999 model Tribal-State Gaming compacts and authorizes the Legislature to appropriate money from the SDF for the following purposes: 1) grants for programs designed to address gambling addiction; 2) grants for the support of state and local government agencies impacted by tribal government gaming; 3) compensation for regulatory costs incurred by CGCC and the DOJ in connection with the implementation and administration of compacts; 4) payment of shortfalls that may occur in the Indian Gaming RSTF; 5) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, 6) any other purpose specified by law. The distribution formula "sunsets" on January 1, 2021.

RSTF: Existing law also creates in the State Treasury the RSTF for the receipt and deposit of moneys derived from gaming device license fees that are paid into the RSTF pursuant to the terms of specified tribal-state gaming compacts for the purpose of making distributions to non-compacted tribes (e.g., federally-recognized non-gaming and tribes that operate casinos with fewer than 350 slot machines). Revenue in the RSTF is available to CGCC, upon appropriation by the Legislature, for making distributions of $1.1 million annually to non-compact tribes. The RSTF was created as part of the 1999 compacts, which, in conjunction with the passage of Proposition 1A (2000), created gaming compacts with approximately 60 California tribes. Non-compact tribes are considered third-party beneficiaries of the 1999 compacts.

According to CGCC, which administers the RSTF, a revenue shortfall of approximately $15.5 million is anticipated this fiscal year. According to the Department of Finance (DOF), the SDF has sufficient funds in it for fiscal year 2016-2017 to cover the RSTF shortfall. However, DOF indicates that it projects a $1.6 million SDF balance deficiency in fiscal year 2017-2018 assuming a $25 million transfer to the RSTF. To cover the anticipated shortfall in 2017-2018, approximately $1.6 million will need to be transferred from the General Fund in order to ensure full RSTF payments are made to non-gaming and limited-gaming tribes. A similar amount was redirected in 2015-2016. Recent compacts, including this one, have attempted to alleviate the shortfall situation by requiring payments by Tribes directly to the RSTF. This model appears to be a template for future compacts, as well.

TNGF: The TNGF was created in the Graton Rancheria compact (AB 517 (Hall), Chapter 12, Statutes of 2012), as a new destination for gaming revenue for distribution of funds to non-gaming and limited-gaming tribes, upon application of such tribes for purposes related to effective self-governance, self-determined community, and economic development. The fund is designed to be fluid and payments are intended to be made to non-gaming tribes on a "need" basis, upon application by non-gaming tribes. The TNGF currently does not receive funding.

Related legislation: AB 2358 (Waldron) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Pechanga Band of Luiseno Indians, executed August 4, 2016.

AB 629 (Gonzalez), of the current legislative session 2016. Would ratify the tribal-state gaming compact entered into between the State and the Pala Band of Mission Indians, executed on May 6, 2016.

SB 187 (Hall) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Jamul Indian Village, executed August 8, 2016.

AB 2915 (E. Garcia) of the current legislative session. Provides for the ratification of a new Tribal-State gaming compact between the State and Agua Caliente Band of Cahuilla Indians, executed on August 4, 2016.

AB 1977 (Wood) of the current legislative session. Would ratify the first amendment to the 2006 tribal-state gaming compact entered into between the State and the Yurok Tribe, executed August 4, 2016.

SB 1313 (Hall) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Yocha Dehe Wintun Nation, executed on August 4, 2016.

AB 1282 (Gray) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Buena Vista Rancheria of Me-Wuk Indians, executed on June 28, 2016.

AB 1767 (Bigelow) of the current legislative session. Would ratify the first amendment to the 2015 tribal-state gaming compact entered into between the State and the Jackson Rancheria Band of Miwuk Indians, executed on June 22, 2016.

SB 404 (De León) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Viejas Band of Kumeyaay Indians, executed on June 22, 2016.

AB 291 (Atkins) of the current legislative session. Would ratify the tribal-state gaming compact entered into between the State and the Barona Band of Mission Indians, executed on June 22, 2016.

Prior legislation: AB 795 (Atkins), Chapter 520, Statutes of 2015. Ratified the tribal state gaming compact entered into between the State and the Sycuan Band of Kumeyaay Nation, executed on September 2, 2015.

AB 1540 (Gray), Chapter 531, Statutes of 2015. Ratified the tribal-state gaming compact entered into between the State and the Santa Ynez Band of Chumash Indians, executed on August 26, 2015.

AB 315 (Bigelow), Chapter 512, Statutes of 2015. Ratified the amended and restated tribal-state gaming compact entered into between the State and the United Auburn Indian Community, executed on August 14, 2015.

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

SB 1356 (De León), Chapter 314, Statutes of 2014. Ratified the amendment to the tribal-state gaming compact entered into between the State and the Viejas Band of Kumeyaay Indians, executed on August 12, 2014.

SB 1224 (Correa), Chapter 300, Statutes of 2014. Ratified the tribal-state gaming compact entered into between the State and the Karuk Tribe, executed on December 4, 2013.

AB 1245 (V. Manuel Perez), Chapter 462, Statutes of 2013. Ratified the tribal-state gaming compact entered into between the State and the Ramona Band of Cahuilla Indians located in Riverside County, executed on June 10, 2013.

AB 277 (Hall), Chapter 51, Statutes of 2013. Ratified two new compacts entered into between the State and the following tribes: North Fork Rancheria, executed on August 31, 2012, and the Wiyot Tribe, executed on March 20, 2013.

AB 1267 (Hall), Chapter 6, Statutes of 2013. Ratified the amended tribal-state gaming compact entered into between the State and the Shingle Springs Band of Miwok Indians, executed on November 15, 2012.

SB 668 (Fuller), Chapter 67, Statutes of 2013. Ratified the tribal-state gaming compact entered into between the State and the Fort Independence Indian Community of Paiute Indians, executed on February 28, 2013.

AB 517 (Hall), Chapter 12, Statutes of 2012. Ratified the tribal-state gaming compact entered into between the State and the Federated Indians of Graton Rancheria of Sonoma County, executed on March 27, 2012.

AB 787 (Chesbro), Chapter 340, Statutes of 2012. Ratified the amendment to the tribal-state gaming compact entered into between the State and the Coyote Valley Band of Pomo Indians, executed on July 25, 2012.

AB 1418 (Hall), Chapter 412, Statutes of 2011. Repealed those provisions ratifying the tribal-state gaming compact entered into between the State and Pinoleville Pomo Nation, executed on March 9, 2009, and instead ratified the tribal-state gaming compact entered into between the State and the Pinoleville Pomo Nation, executed on August 8, 2011.

AB 1020 (Chesbro), Chapter 27, Statutes of 2011. Repealed the ratification of the tribal-state gaming compact entered into between the State and the Habematolel Pomo of Upper Lake, executed on September 2, 2009, and instead ratified a new tribal-state gaming compact entered into between the State and the Habematolel Pomo of Upper Lake, executed on March 17, 2011.

SB 89 (Budget and Fiscal Review Committee), Chapter 1, Statutes of 2010. Ratified the tribal-state gaming compact entered into between the State and the Habematolel Pomo of Upper Lake, executed on September 2, 2009.

AB 122 (Coto), Chapter 3, Statutes of 2010. Ratified the tribal-state gaming compact entered into between the State and the Pinoleville Pomo Nation, executed on March 10, 2009.

AB 3072 (Price), Chapter 334, Statutes of 2008. Ratified the first amendment to a tribal-state gaming compact entered into between the State 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.

SB 174 (Ducheny), Chapter 38, Statutes of 2007. Ratified the first compact amendment to the compact between the State and Sycuan.

SB 175 (Ducheny), Chapter 39, 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 first compact amendment to the compact between the State and San Manuel Band of Mission Indians.

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.

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 (Núñez), 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.

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.

Proposition 1A, adopted by the people of California on March 7, 2000. Modified the prohibition against casinos and lotteries in the California Constitution to authorize the Governor to negotiate compacts, subject to legislative ratification, for the operation of slot machines, lottery games, and banking and percentage card games by federally recognized Indian tribes on Indian lands in California, in accordance with federal law. Authorized slot machines, lottery games, and banking and percentage card games to be conducted and operated on Indian lands subject to the compacts.

AB 1385 (Battin), Chapter 874, Statutes of 1999. Designated the Governor as the state officer responsible for negotiating and executing compacts between the State and federally recognized Indian tribes located in the State. Also, ratified 57 compacts and created two special funds in the State Treasury (SDF and RSTF), as specified.

SB 287 (Burton), Chapter 409, Statutes of 1998. Ratified 11 compacts negotiated between the State and Indian tribes that permitted class III video gaming devices on tribal lands and established a process for ratifying other compacts.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0004894

 THIRD READING  

Bill No: AB 466

Author:

:

Vote:

PRIOR VOTES NOT RELEVANT

NOTE: On August 23, 2016, the Senate Committee on Governmental Organization held an informational hearing on the tribal gaming compact entered into between the State of California and the San Manuel Band of Mission Indians.

SUBJECT:

SOURCE: Author

DIGEST: This bill ratifies the tribal-state gaming compact (Compact) entered into between the State of California and the San Manuel Band of Mission Indians (hereafter “Tribe”) executed on August 16, 2016. Additionally, this bill provides that, in deference to tribal sovereignty, certain actions are not deemed projects for purposes of the California Environmental Quality Act (CEQA); and, stipulates, except as expressly provided, that none of the provisions shall be construed to exempt a city, county, or city and county, or the Department of Transportation from CEQA requirements.

ANALYSIS:

Existing law:

1. Provides, under the Indian Gaming Regulatory Act (IGRA), for the negotiation and conclusion of compacts between federally recognized Indian tribes and the State for the purpose of conducting Class III gaming activities on Indian lands within a State as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments.
2. Authorizes expressly a number of tribal-state gaming compacts between the State of California and specified Indian tribes.
3. Authorizes the conduct of Class III gaming activities to the extent such activities are permitted by state law, a gaming compact has been concluded by a federally recognized tribe and the State, and the compact has been approved by the Secretary of the Interior.
4. Limits the operation of Class III gaming activities to Indian lands acquired on or before October 17, 1988. Provides for certain exceptions to conduct gaming activities on Indian lands acquired after October 17, 1988.
5. Defines Indian lands to mean all lands within the limits of any Indian reservation, and any lands title to which is either held in trust by the United States for the benefit of any Indian tribe, or individual, or held by any Indian tribe or individual subject to restriction by the U.S. against alienation and over which an Indian tribe exercises governmental power.
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 San Manuel Band of Mission Indians executed on August 16, 2016 and supersedes the Tribe’s 2006 amended compact. Under this Compact, the Tribe may operate a maximum of 7,500 gaming devices (slot machines) at no more than two (2) gaming facilities located only on the tribe’s Indian lands as those lands exist on the effective date of this Compact. If the Tribe chooses to operate a second facility, it may operate no more than 1,000 gaming devices at that second facility.

The Tribe has agreed to pay into the Special Distribution Fund (SDF) its pro rata share of costs the State incurs for the performance of its duties under the Compact plus additional amounts ($500,000 up to a total of $3 million) to cover a portion of the share of regulatory costs for smaller gaming tribes. The Tribe has also agreed to pay $19 million annually into the Revenue Sharing Trust Fund (RSTF) or the Tribal Nation Grant Fund (TNGF), to be shared with tribes that are not gaming or that otherwise are not substantially benefiting from gaming.

Additionally, this Compact establishes the San Manuel Community Credit Fund (SMCCF), to be managed by the Tribe for the purpose of providing funding for infrastructure improvements that in part benefit San Bernardino County residents, fire, law enforcement, public transit, education, tourism, and other services including investments in renewable energy projects, water treatment or conservation projects and payments to support capital improvements and operating expenses for facilities within California that provide health care services to tribal members, Indians, and non-Indians. The Tribe has agreed to make quarterly payments into the SMCCF totaling $29 million per year – no less than $3 million of the $29 million annual payment shall be applied to enhancement of Native American education in the State of California.

The provisions of this Compact establishing or amending existing revenue sharing obligations of the Tribe, including payments to the SDF, the RSTF/TNGF, the SMCCF, and payments and reimbursement to local government to mitigate significant effects on the off-reservation environment will take effect on July 1, 2017. Until that date, the revenue contributions set forth in the 2006 amended compact will remain in effect.

The Tribe’s 2006 amended compact authorized no more than 7,500 gaming devices; required an annual flat payment of $45 million to the State’s general fund, plus an annual payment of 15% of the net win generated from the operation of between 2,000-5,000 gaming devices, plus an annual payment of 25% of the net win generated from the operation of between 5,001-7,500 gaming devices; and, provided for an annual $2 million payment into the RSTF.

Once effective (legislative ratification and federal approval required), this Compact will be in full force and effect for twenty-five (25) years.

KEY COMPONENTS OF THE COMPACT

Scope of Class III Gaming Authorized. The Tribe is authorized to operate up to a total of 7,500 gaming devices (slot machines); banking or percentage card games; 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; and, off-track wagering on horse races in the gaming facility pursuant to the off-track wagering compact between the tribe and the State approved by the Department of the Interior on March 27, 1991. 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 (2) gaming facilities and engage in Class III Gaming within the Tribe’s existing Indian lands. If the Tribe chooses to operate a second gaming facility, it may operate no more than 1,000 gaming devices at that second facility.

Exclusivity. 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 costs of regulation, as defined; (b) reasonable payments to local governments impacted by tribal government gaming; (c) grants for programs designed to address and treat gambling addiction; and, (d) such assessments as may be permissible at such time under federal law. 

Payments to the Special Distribution Fund (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, the administration and implementation of tribal-state gaming compacts, and funding for the Office of Problem Gambling, as determined by the monies appropriated in the annual Budget Act each fiscal year to carry out those purposes.  The Tribe’s pro rata share of the State’s costs in any given year this Compact is in effect may not be increased more than 5% per year and 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 State fiscal year, multiplied by the Appropriation, equals the Tribe’s pro rata share.”

The Tribe further agrees to pay an additional five hundred thousand dollars ($500,000) into the SDF to ensure it remains solvent. In the event the pro rata funding for the SDF statewide has proven sufficient for three consecutive years, the parties agree to meet and confer for the purpose of making an appropriate reduction in the additional payment. Also, in the event the Tribe’s pro rata share exceeds $3 million after application of the 5% limitation, the Tribe shall pay only its pro rata share.

Payments to the RSTF or the TNGF. The Tribe agrees to pay $19 million annually to the California Gambling Control Commission (CGCC) for deposit into the RSTF or the TNGF.

San Manuel Community Credit Fund (SMCCF). The Compact establishes the San Manuel Community Credit Fund (SMCCF), which is managed by the Tribe to make or provide funding for, or make investments in projects that mutually benefit the Tribe, County, local jurisdictions, and the State. The Tribe shall make quarterly payments into the fund totaling $29 million per year and the SMCCF may be used for the following purposes:

1. Payments by the Tribe to, or on behalf of, the County or local jurisdictions including public utility agencies operating facilities or providing services within the County for fire, law enforcement, public transit, education, tourism, or other services and infrastructure improvements intended to serve off-reservation needs of County residents as well as those of the Tribe – such payments shall be subject to approval by the County or local jurisdiction receiving the funds;
2. Cost of services provided by the Tribe, or payments made to the County, local jurisdictions, school districts, charter schools, or non-profit or civic organizations operating facilities or providing services within the County, for cultural programs, fire services, emergency medical services, problem gambling programs, law enforcement, public transit, education, tourism, youth athletics and other youth programs, or other services or infrastructure improvements that in part serve off-reservation needs of County residents;
3. To promote continued economic growth that benefits the Tribe and the surrounding community through investments in facilities, infrastructure, or other projects that generate sustained job creation and ensure the financial longevity of the Tribe, the Tribe may utilize up to 20% of the SMCCF annually for the purpose of making payments to the principle amount on its debt services which are secured by the assets of the gaming operation;
4. Non-gaming related capital investments and economic development projects by the Tribe, on or off tribal trust lands, that provide mutual benefits to the Tribe and the State because, for instance, they have particular cultural, social or environmental value, create jobs, or diversify the sources of revenue for the Tribe’s general fund;
5. Investments, loans, or other financial obligations including actual payments used to secure loans, to or for the benefit of other federally recognized tribes for any purpose, including gaming;
6. Investments in, and any funds paid to the State in connection with, renewable energy projects that, in part, serve the gaming facility, to include projects that incorporate charging stations for electric or other zero-emission vehicles that are available to tribal members, patrons and employees of the gaming facility or the Tribe;
7. Payments to support capital improvements and operating expenses for facilities within California that provide health care services to tribal members, Indians, and non-Indians;
8. Investments by the Tribe for water treatment or conservation projects on real property owned by the Tribe, as well as costs of recycling programs that, in part, serve the gaming facility, or other on or off-reservation needs within the County;
9. Grants to Native Americans who are not members of the Tribe, or grants to other federally-recognized tribes or other Native American tribes regardless of their federal-recognition status, for educational, cultural, or vocational purposes, or for governmental or general welfare purposes or funds or donations provided for the purpose of aiding federally recognized tribes in the wake of natural or man-made disasters; and,
10. Contributions toward the enhancement of Native American education in the state of California, which shall be in the amount of no less than $3 million per year.

In the event the Tribe’s annual gross gaming revenue is less than its gross gaming revenue for fiscal year 2009, the Tribe shall no longer be required to pay the credit amounts into the SMCCF.

“Gross Gaming Revenue” is defined as the win from gaming devices, 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.

ADDITIONAL COMPONENT ELEMENTS

• Gaming Ordinance and Regulations. Provides that all gaming activities conducted under this Compact shall, at a minimum, comply with (1) a gaming ordinance duly adopted by the Tribe and approved in accordance with IGRA, (2) all rules, regulations, procedures, specifications, and standards duly adopted by the National Indian Gaming Commission (NIGC), the Tribal Gaming Agency, and the State Gaming Agency, and (3) the provisions of this Compact, as specified.
• Licensing Requirements and Procedures. Provides that all persons in any way connected with the gaming operation or gaming facility who are required to be licensed or to submit to a background investigation under IGRA, and any others required to be licensed under this Compact, including, without limitation, all gaming employees, gaming resource suppliers, financial sources, and any other person having a significant influence over the gaming operation, must be licensed by the Tribal Gaming Agency and cannot have had any determination of suitability denied or revoked by the CGCC. Also, every gaming employee must obtain, and thereafter maintain current, a valid tribal gaming license, as specified.
• Minimum Internal Control Standards (MICS). Requires the Tribe to conduct its gaming activities pursuant to an internal control system that implements MICS that are no less stringent than those contained in the MICS of the federal NIGC standards, as specified. It requires gaming to operate pursuant to a written internal control system that reasonably assures that assets are safeguarded and accountability over assets is maintained; liabilities are properly recorded and contingent liabilities are properly disclosed; financial records are accurate and reliable; transactions are performed in accordance with the Tribal Gaming Agency’s authorization; access to assets is permitted only in accordance with the Tribal Gaming Agency’s approved procedures; recorded accountability for assets is compared with actual assets; and, functions, duties and responsibilities are appropriately segregated and performed by qualified personnel. The Tribe is required to provide the CGCC, upon written request, a copy of the independent certified public accountant agreed-upon procedures report conducted annually for submission to the NIGC pursuant to federal law. This report verifies that the gaming operation is in compliance with the NIGC’s MICS.
• Patron Disputes. Provides that the Tribe (through its Tribal Gaming Agency) must promulgate regulations, that meet minimum specified standards, governing patron disputes over the play or operation of any game, including refusal to pay to a patron any alleged winnings from any gaming activities.
• Public and Workplace Liability. Requires the Tribe to obtain and maintain a commercial general liability insurance policy which provides coverage of no less than $10 million. Also, requires the Tribe to adopt a Tort Liability Ordinance containing provisions that are the same as California tort law to govern all claims of bodily injury, personal injury, or property damage arising out of, connected with, or relating to the gaming facility.
• Environmental Protections. Requires the Tribe to prepare a Tribal Environmental Impact Report (TEIR) and negotiate mitigation of any off-reservation impacts, including an evaluation of energy consumption, prior to initiating the development of a Project for a facility. The Compact provides procedures regarding the (1) Notice of Preparation of Draft TEIR, (2) Notice of Completion of Draft TEIR, and (3) Issuance of Final TEIR. The Tribe’s failure to prepare an adequate TEIR when required may warrant an injunction where appropriate. Before commencement of a Project, and no later than the issuance of the final TEIR, the Tribe shall negotiate an intergovernmental agreement with the California Department of Transportation if state roads are impacted. A completed TEIR must be filed with the County, the Department of Justice, the CGCC, and the State Clearinghouse. Also, before commencement of a Project, and no later than the issuance of the final TEIR, the Tribe shall offer to commence negotiations with the County to, amongst other things, provide for the timely mitigation of any significant effect on the off-reservation environment including provisions relating to compensation for law enforcement, fire protection, emergency medical services and any other public services to be provided by the County to the Tribe as a consequence of the Project.
• Enhanced Audit and Compliance Review Procedures. In addition to providing for an annual independent audit, the Compact allows the state to conduct its own annual audit and compact compliance review.
• Inspection and Testing of Slot Machines. Provides that slot machines will have to be tested, approved and certified by an independent gaming test laboratory or state governmental gaming test laboratory to ensure they are being operated according to specified technical standards. Also, requires the Tribal Gaming Agency to maintain adequate records that demonstrate compliance with software and hardware specifications. The State Gaming Agency would be authorized to annually conduct up to four random inspections of slot machines in operation to confirm that the slot machines are operating in conformance with these standards.
• Compliance Enforcement. Provides that it is the responsibility of the Tribal Gaming Agency to conduct on-site gaming regulation and control in order to enforce the terms of this Compact, IGRA, any applicable NIGC and State Gaming Agency regulations, and the tribal gaming ordinance with respect to gaming operation and facility compliance, and to protect the integrity of the gaming activities, the reputation of the Tribe and the gaming operation for honesty and fairness, and the confidence of patrons that tribal government gaming in California meets the highest standards of regulation and internal controls. To meet those responsibilities, the tribal gaming agency shall adopt and enforce regulations, procedures, and practices.
• Labor Provisions. Provides that in light of the fact that the Tribe has maintained a long standing collective bargaining agreement with a labor organization (Communications Workers of America – CWA) and that agreement was recently renewed and is in full force and effect, the parties agree that no change in the Tribal Labor Relations Ordinance (TLRO) is necessary to address employee rights at this time. However, should the collective bargaining agreement come to an end and not be renewed, the TLRO included in this Compact and referenced as Appendix B, shall be adopted by the Tribe in place of the existing TLRO.
• Workers’ Compensation. Provides that the Tribe agrees to participate in the State’s workers’ compensation program with respect to employees at the gaming operation and the gaming facility. 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. In lieu of participation in the State’s system, the Tribe may create and maintain a system through self-insurance, which includes specified provisions, including hearings before an independent tribunal. Furthermore, the Tribe agrees that it will participate in the State’s unemployment compensation program for providing benefits and unemployment compensation disability benefits to employees at the casino. The Tribe shall withhold all taxes due to the State, except for Tribal members living on the Tribe’s reservation, and forward such amounts to the State.
• Prohibitions Regarding Minors. Provides that the Tribe shall prohibit persons under the age of twenty-one (21) years from being present in any room or area in which gaming activities are being conducted unless the person is en route to a non-gaming area of the gaming facility.
• 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 incorporate ventilation, filtration, purification or other technologies throughout the gaming facility, where reasonable and feasible after consideration of engineering, economic and scientific factors, and further agrees not to offer or sell tobacco to anyone under twenty-one (21) years of age.
• Problem Gambling. Requires the gaming operation to establish a program, approved by the Tribal Gaming Agency, to mitigate pathological and problem gaming by implementing specified measures.
• Health and Safety Standards. Provides that the Tribe has agreed to adopt and comply with State public health standards for food and beverage handling. Also, the Tribe has agreed to comply with federal water quality and safe drinking water standards applicable in California. The Tribe must also adopt and comply with tribal law that is consistent with federal and state laws forbidding harassment, including sexual harassment, discrimination and retaliation. Furthermore, the Tribe must maintain an insurance policy for these purposes and adopt an ordinance that includes a dispute resolution process.
• Building Codes and Fire Safety. Provides that in order to assure the protection of the health and safety of all gaming facility patrons, guests, and employees, the Tribe shall adopt or has already adopted, and shall maintain throughout the term of this Compact, an ordinance that requires any gaming facility construction to meet or exceed the construction standards set forth in the applicable codes. The gaming facility and construction, expansion, improvement, modification or renovation must also comply with the federal Americans with Disabilities Act.
• Emergency Services Accessibility and Possession of Firearms. Requires the Tribe to make reasonable provisions for adequate emergency fire, medical, and related relief and disaster services for patrons and employees. Also, prohibits the possession of firearms by any person in the gaming facility at all times except for federal, state, or local law enforcement personnel, or tribal law enforcement or security personnel, as authorized.
• Effective Date. Provides that 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 for twenty-five (25) years following the effective date.
• Amendment by Agreement. Provides that the terms and conditions of this Compact may be amended at any time by the mutual and written agreement of both parties, provided that each party voluntarily consents to such negotiations in writing. Any amendments to this Compact shall be deemed to supersede, supplant and extinguish all previous understandings and agreements on the subject.

BRIEF HISTORY THE SAN MANUEL BAND OF MISSION INDIANS

According to information provided by the Tribe, the San Manuel Band of Mission Indians is a federally recognized American Indian tribe located near the City of Highland, California. San Manuel is one of several clans of Serrano Indians, who are the indigenous people of the San Bernardino highlands, passes, valleys, mountains and high deserts which share a common language and culture.

The San Manuel Indian Reservation, named after its great leader, Santos Manuel, and situated in a rugged hillside with little flat land for development, was established by Executive Order in 1891 and recognized as a sovereign nation with the right of self-government. The Reservation is home to the Yuhaaviatam Clan of the Serrano Indians and consists of just over 900 acres. There are more than 200 tribal members enrolled with the Tribe.

In a determined effort to turn around its economic position the Tribe opened a bingo hall in 1986. Approximately 20 years later the Tribe opened the San Manuel Indian Bingo & Casino that today includes nearly 4,000 gaming devices, more than 120 tables, a 1,400 seat Bingo Hall, four restaurants, a food court and multiple food kiosks as well as other amenities. The Tribe, among the top employers in the County of San Bernardino, employs nearly 4,000 people, 75% of whom live within the county. In addition to the San Manuel Indian Bingo & Casino, the Tribe’s economic development efforts include businesses and investments in the local region as well as state-wide, and in other states.

The tribe has continued to maintain its unique form of governance and like other governments it seeks to provide a better quality of life for its citizens by building infrastructure, maintaining civil services and promoting social, economic and cultural development. Today, the San Manuel tribal government oversees many governmental units including the departments of fire, public safety, education and environment. The Tribe has made progress toward becoming a self-sufficient tribal government with an established economic and social outlook.

San Manuel is active in supporting projects in neighboring communities via government-to-government agreements for law enforcement and public safety services. The Tribe has also generously contributed to non-profit groups and community organizations in the San Bernardino region in support of cultural, social, and economic projects that benefit local jurisdictions. Since 2007, San Manuel has contributed some $122 million to charities, including more than half of that amount (approximately $70 million) to charitable groups in San Bernardino where economic challenges remain among the greatest in the state.

The San Manuel Indian Reservation, like other tribal lands in the United States, is a sovereign territory with a tribal nation and its own system of government. Tribal government consists of two governing bodies: a General Council comprised of adult members 21 years and older, and a seven-member Business Committee elected by the General Council. The Business Committee has a Chairperson, Vice-Chairperson, Secretary, Treasurer, and three at-large Business Committee members elected to two-year terms. As elected officials, the Business Committee is responsible for enforcing by-laws, establishing policies, protecting business interests and preserving the sovereignty of the Tribe.

ADDITIONAL BACKGROUND INFORMATION

Indian Gaming Regulatory Act (IGRA)

In 1988, Congress enacted the Indian Gaming Regulatory Act (IGRA) to provide a statutory basis for the operation and regulation of gaming on Indian lands. IGRA provides that an 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 which had been proposed by the Governor and passed by the Legislature. Proposition 1A amended the California Constitution to permit the State to negotiate compacts with federally recognized Indian tribes for certain Class III gaming activities. Because non-Indian parties were still forbidden from operating gaming facilities, Proposition 1A granted Indian tribes a “constitutionally protected monopoly on most types of Class III games in California.”

Rincon Decision

The U.S. Supreme Court in July 2011 refused to consider the decision of the Ninth Circuit Court of Appeals rejecting a Class III Tribal-State Gaming Compact negotiated by then Governor Schwarzenegger with the Rincon Band of Luiseno Mission Indians. The issue of this case's impact on Indian gaming throughout the country has been a topic of great debate.

As noted, IGRA authorizes states to receive compensation for costs related to tribal gaming such as regulation and gaming addiction, and to offset the effects of casinos on surrounding communities. However, states are prohibited from assessing taxes on tribal casino revenues, so unjustified payments to a state's General Fund are no longer permissible unless the tribes are getting something in return for the required payments, such as those authorized by IGRA.

Any payments to the State, above those needed to mitigate impacts of gaming must be in exchange for a benefit deemed "exclusive" to the tribe.

The Rincon Band challenged the legality of California's "second generation" compacts pursuant to which the signatory tribes would be entitled to increase their slot machine count in return for paying percentages of the new slot machine revenue to the state's General Fund. The Ninth Circuit had affirmed a lower court decision that the new financial concessions were nothing more than a state tax on tribal casino revenues which is prohibited by IGRA.

Rincon refused to sign the amended compact which had already been executed by several other tribes choosing instead to demand that it be given the expanded gaming opportunity without making the new financial concessions. The Ninth Circuit Court of Appeals concluded that a “non-negotiable, mandatory payment of 10% of net win into the State treasury for unrestricted use yields public revenue, and is [therefore] a tax, and that the court was therefore required to consider the State’s demand as evidence of bad faith under IGRA’s statutes.”

The court noted that “the State could rebut the presumption of bad faith by demonstrating that the revenue demanded was to be used for the public interest, public safety, criminality, financial integrity, and adverse economic impacts on existing activities, but the State’s need for general tax revenue was insufficient to demonstrate good faith.”

Special Distribution Fund (SDF)

Existing law creates the SDF in the State Treasury for the receipt of revenue contributions made by tribal governments pursuant to the terms of the 1999 model Tribal-State Gaming Compacts and authorizes the Legislature to appropriate money from the SDF for the following purposes: (a) grants for programs designed to address gambling addiction; (b) grants for the support of state and local government agencies impacted by tribal government gaming; (c) compensation for regulatory costs incurred by the California Gambling Control Commission (CGCC) and the Department of Justice (DOJ) in connection with the implementation and administration of compacts; (d) payment of shortfalls that may occur in the RSTF; (e) disbursements for the purpose of implementing the terms of tribal labor relations ordinances promulgated in accordance with the terms of the 1999 compacts; and, (f) any other purpose specified by law. (Pursuant to compact renegotiations that took place with several of the larger gaming tribes during the Schwarzenegger administration, revenue from those tribes is directed into the state General Fund, instead of the SDF.)

The law establishes a method of calculating the distribution of appropriations from the SDF for grants to local government agencies impacted by tribal gaming. This method includes a requirement that the State Controller, in consultation with the CGCC, deposit funds into County Tribal Casino Accounts and Individual Tribal Casino Accounts based upon a process that takes into consideration whether the county has tribes that pay, or do not pay, into the SDF. The distribution formula "sunsets" on January 1, 2021.

Existing law also establishes an Indian Gaming Local Community Benefit Committee in each county in which gaming is conducted, specifies the composition and responsibilities of that committee, and requires that committee to make the selection of grants from the casino accounts. Among other things, the committee is responsible for establishing all application policies and procedures for grants from the casino accounts. Additionally, existing law requires the State Auditor to conduct an audit every three years and report its findings to the Legislature regarding the allocation and use of SDF grant monies.

Revenue Sharing Trust Fund (RSTF)

Existing law creates in the State Treasury the RSTF for the receipt and deposit of moneys derived from gaming device license fees that are paid into the RSTF pursuant to the terms of specified tribal-state gaming compacts for the purpose of making distributions to non-compacted California tribes (e.g., federally-recognized non-gaming tribes and tribes that operate casinos with fewer than 350 slot machines). Revenue in the RSTF is available to CGCC, upon appropriation by the Legislature, for making distributions of $1.1 million annually to non-compact tribes. The RSTF was created as part of the 1999 compacts, which, in conjunction with the passage of Proposition 1A, created gaming compacts with approximately 60 California tribes. Non-compact tribes are considered third-party beneficiaries of the 1999 compacts.

Tribal Nation Grant Fund (TNGF)

This particular fund (referenced in recent compacts) was created to complement the RSTF and provides for the distribution of funds to non-gaming tribes, upon application of such tribes for purposes related to effective self-governance, self-determined community, and economic development. Payments from this fund are intended to be made to non-gaming tribes on a “need” basis, upon application.

Related/Prior Legislation

AB 795 (Atkins, Chapter 520, Statutes of 2015) ratified the tribal-state gaming compact entered into between the State of California and the Sycuan Band of Kumeyaay Nation, executed on September 2, 2015.

AB 1540 (Gray, Chapter 531, Statutes of 2015) ratified the tribal-state gaming compact entered into between the State of California and the Santa Ynez Band of Chumash Indians, executed on August 26, 2015.

AB 315 (Bigelow, Chapter 512, Statutes of 2015) ratified the amended and restated tribal-state gaming compact entered into between the State of California and the United Auburn Indian Community, executed on August 14, 2015.

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

SB 1356 (De León, Chapter 314, Statutes of 2014) ratified the amendment to the tribal-state gaming compact entered into between the State of California and the Viejas Band of Kumeyaay Indians, executed on August 12, 2014.

SB 941 (Padilla, Chapter 226, Statutes of 2007) ratified the first compact amendment to the compact between the State of California and San Manuel. 

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/23/16)

California Labor Federation

Communications Workers of America

San Manuel Band of Mission Indians

UNITE HERE, AFL-CIO

OPPOSITION: (Verified 8/23/16)

None received

Prepared by:

8/23/16 14:19:31

**** END ****

 THIRD READING  

Bill No: AB 466

Author: McCarty (D), et al.

Amended: 7/6/15 in Senate

Vote: 21

SENATE PUBLIC EMP. & RET. COMMITTEE: 3-1, 7/13/15

AYES: Pan, Beall, Hall

NOES: Fuller

NO VOTE RECORDED: Morrell

SENATE APPROPRIATONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 47-27, 5/22/15 - See last page for vote

SUBJECT: State civil service: employment procedures

SOURCE: Service Employees International Union, Local 1000

DIGEST: This bill specifies that the requirement that state employment forms require an applicant to disclose whether he or she has ever entered into an agreement with the state employer prohibiting that person from seeking or accepting any subsequent employment with the state do not apply if the agreement prohibits him or her from seeking employment with a particular state agency (versus all state employment).

ANALYSIS:

Existing law:

1. Provides, pursuant to Section 1 of Article VII of the Constitution of California, that the civil service includes every officer and employee of the state except as otherwise provided, and that in the civil service, permanent appointment and promotion be made under a general system based on merit ascertained by competitive examination.

2. Requires, pursuant to the Civil Service Act, state employment to be based on the merit principle; that appointments are based upon merit and fitness ascertained through practical and competitive examination; and that tenure of civil service employment is subject to good behavior.

3. Establishes the State Personnel Board (SPB), which oversees the state disciplinary process, hears appeals of the disciplinary process, and assists state employers and employees in settling such appeals, which may include reaching agreements to not seek subsequent state employment with a particular state employer or all state employers.

4. Requires the California Department of Human Resources and the Department of Fair Employment and Housing to work cooperatively to develop uniform employment forms where possible pursuant to the provisions of the Civil Service Act and to coordinate their enforcement of the Civil Service Act.

5. Requires each state agency to use the standard employment forms.

6. Requires state employment forms to require an applicant for employment to disclose whether the person has ever entered into an agreement with the state, regarding previous employment with the state, which prohibits the applicant from seeking or accepting any subsequent employment with the state.

This bill modifies the disclosure requirement by specifying that employment forms used by a state agency shall not be required to require a state employment applicant to disclose if he or she has entered into an agreement that prohibits that person from seeking employment with a particular state agency.

Background

Currently, when a state employer terminates a civil service employee, the employee is entitled to appeal the dismissal to the independent SPB. The SPB has the discretion to sustain, revoke, or modify the termination. Generally, a prehearing and settlement conference is set to offer both parties a chance to meet and negotiate a settlement of their case prior to a full hearing before the SPB.

Comments

According to the author:

Settlement conferences offer an opportunity for both the employee and employer to address the issue without having to go through the expense and uncertainty of a formal evidentiary hearing. At these settlement conferences, a wide range of proposals can be made, including proposals that prohibit the employee from seeking or accepting subsequent employment with their particular department or with the state as a whole. The ability to negotiate such separation agreements is a key tool for both the State and the employee to effectively and efficiently resolve their differences in the settlement negotiation process.

Prior Legislation

SB 1240 (Anderson, Chapter 254, Statutes of 2014) required state employment forms to require an applicant for employment to disclose whether the person has ever entered into an agreement with the state, regarding previous employment with the state, that prohibits the applicant from seeking or accepting any subsequent employment with the state.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/18/15)

Service Employees International Union, Local 1000 (source)

California Association of Professional Scientists

California Association of Psychiatric Technicians

Professional Engineers in California Government

OPPOSITION: (Verified 8/18/15)

None received

ARGUMENTS IN SUPPORT:

As stated by the sponsor, SEIU, Local 1000:

While the intent of SB 1240 is clear, the language has created confusion as to whether all applicants, including those that have agreed to never seek or accept subsequent employment with a particular department, would be required to disclose such an agreement. The unintended consequence of a broad disclosure requirement is that it will discourage both the employee and the State from engaging in the settlement negotiation process, and result in higher numbers of cases in the more costly and time consuming hearing process before the SPB at taxpayers’ expense.

ASSEMBLY FLOOR: 47-27, 5/22/15

AYES: Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lopez, Low, McCarty, Medina, Mullin, Nazarian, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Williams, Wood, Atkins

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Levine, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Wagner, Wilk

NO VOTE RECORDED: Alejo, Gordon, O'Donnell, Olsen, Waldron, Weber

Prepared by: Pamela Schneider / P.E. & R. / (916) 651-1519

8/18/15 16:54:17

**** END ****

SENATE COMMITTEE ON

PUBLIC EMPLOYMENT AND RETIREMENT

Dr. Richard Pan, Chair

2015 - 2016 Regular

Bill No: AB 466 Hearing Date: 7/13/15

Subject: State civil service: employment procedures

SOURCE: Service Employees International Union, Local 1000

ASSEMBLY VOTES:

DIGEST: This bill specifies that the requirement that state employment forms require an applicant to disclose whether he or she has ever entered into an agreement with the state employer prohibiting that person from seeking or accepting any subsequent employment with the state do not apply if the agreement prohibits him or her from seeking employment with a particular state agency (vs. all state employment).

ANALYSIS:

Existing law:

1. Provides, pursuant to Section 1 of Article VII of the Constitution of California, that the civil service includes every officer and employee of the state except as otherwise provided, and that in the civil service, permanent appointment and promotion be made under a general system based on merit ascertained by competitive examination.

2. Requires, pursuant to the Civil Service Act, state employment to be based on the merit principle; that appointments are based upon merit and fitness ascertained through practical and competitive examination; and that tenure of civil service employment is subject to good behavior.

3. Establishes the State Personnel Board (SPB), which oversees the state disciplinary process, hears appeals of the disciplinary process, and assists state employers and employees in settling such appeals, which may include reaching agreements to not seek subsequent state employment with a particular state employer or all state employers.

4. Requires the California Department of Human Resources and the Department of Fair Employment and Housing to work cooperatively to develop uniform employment forms where possible pursuant to the provisions of the Civil Service Act and to coordinate their enforcement of the Civil Service Act.

5. Requires each state agency to use the standard employment forms.

6. Requires state employment forms to require an applicant for employment to disclose whether the person has ever entered into an agreement with the state, regarding previous employment with the state, which prohibits the applicant from seeking or accepting any subsequent employment with the state.

This bill modifies the disclosure requirement by specifying that employment forms used by a state agency shall not be required to require a state employment applicant to disclose if he or she has entered into an agreement that prohibits that person from seeking employment with a particular state agency.

Background

Currently, when a state employer terminates a civil service employee, the employee is entitled to appeal the dismissal to the independent State Personnel Board (SPB). The SPB has the discretion to sustain, revoke, or modify the termination. Generally, a prehearing and settlement conference is set to offer both parties a chance to meet and negotiate a settlement of their case prior to a full hearing before the SPB.

According to the author:

Settlement conferences offer an opportunity for both the employee and employer to address the issue without having to go through the expense and uncertainty of a formal evidentiary hearing. At these settlement conferences, a wide range of proposals can be made, including proposals that prohibit the employee from seeking or accepting subsequent employment with their particular department or with the state as a whole. The ability to negotiate such separation agreements is a key tool for both the State and the employee to effectively and efficiently resolve their differences in the settlement negotiation process."

Prior/Related Legislation

SB 1240 (Anderson, Chapter 254, Statutes of 2014) required state employment forms to require an applicant for employment to disclose whether the person has ever entered into an agreement with the state, regarding previous employment with the state, that prohibits the applicant from seeking or accepting any subsequent employment with the state.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

The Assembly Appropriations Committee cites minor and absorbable costs to CalHR and state agencies to update employment forms.

SUPPORT:

Service Employees International Union, Local 1000 (source)

California Association of Professional Scientists

California Association of Psychiatric Technicians

Professional Engineers in California Government

OPPOSITION:

None received

ARGUMENTS IN SUPPORT:

As stated by the sponsor, SEIU, Local 1000:

While the intent of SB 1240 is clear, the language has created confusion as to whether all applicants, including those that have agreed to never seek or accept subsequent employment with a particular department, would be required to disclose such an agreement. The unintended consequence of a broad disclosure requirement is that it will discourage both the employee and the State from engaging in the settlement negotiation process, and result in higher numbers of cases in the more costly and time consuming hearing process before the SPB at taxpayers’ expense.

ASSEMBLY THIRD READING

ATR Bill Id:AB 466

Author:(McCarty)

As Amended Ver:March 26, 2015

Majority vote

SUMMARY: Specifies that provisions requiring state employment forms to require an applicant to disclose whether he or she has ever entered into an agreement with the state prohibiting them from seeking or accepting any subsequent employment with the state do not apply if the agreement prohibits him or her from seeking employment with a particular state agency and not all state employment.

EXISTING LAW:

1. Provides, pursuant to the California Constitution Article VII, Section 1, that the civil service includes every officer and employee of the state except as otherwise provided, and that in the civil service, permanent appointment and promotion be made under a general system based on merit ascertained by competitive examination.

2. Requires, pursuant to the Civil Service Act, state employment to be based on the merit principle; that appointments are based upon merit and fitness ascertained through practical and competitive examination; and that tenure of civil service employment is subject to good behavior.

3. Requires the California Department of Human Resources and the Department of Fair Employment and Housing to work cooperatively to develop uniform employment forms where possible pursuant to the provisions of the Civil Service Act and coordinate their enforcement of the Civil Service Act.

4. Requires that each state agency to use the standard employment forms.

5. Requires, as enacted by SB 1240 (Anderson), Chapter 254, Statutes of 2014, state employment forms to require an applicant for employment to disclose whether the person has ever entered into an agreement with a state agency or department prohibiting the applicant from seeking or accepting any subsequent employment with the state.

FISCAL EFFECT: According to the Assembly Appropriations Committee, minor and absorbable costs to CalHR and state agencies to update employment forms.

COMMENTS: Currently, when a state employer terminates a civil service employee, the employee is entitled to appeal the dismissal to the independent State Personnel Board (SPB). The SPB has the discretion to sustain, revoke, or modify the termination. Generally, a prehearing and settlement conference is set to offer both parties a chance to meet and negotiate a settlement of their case prior to a full hearing before the SPB.

According to the author, "Settlement conferences offer an opportunity for both the employee and employer to address the issue without having to go through the expense and uncertainty of a formal evidentiary hearing. At these settlement conferences, a wide range of proposals can be made, including proposals that prohibit the employee from seeking or accepting subsequent employment with their particular department or with the state as a whole. The ability to negotiate such separation agreements is a key tool for both the State and the employee to effectively and efficiently resolve their differences in the settlement negotiation process."

The author concludes, "While the intent of SB 1240 is clear, the language is unclear if all applicants, including those that have agreed to never seek or accept subsequent employment with a particular department, would be required to disclose such an agreement. This could discourage both the employee and the State from engaging in the settlement negotiation process, and result in higher numbers of cases before the SPB at taxpayer's expense."

Analysis Prepared by: Karon Green / P.E.,R., & S.S. / (916) 319-3957 FN: 0000278

Date of Hearing: May 6, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 466

Author:(McCarty) – As Amended Ver:March 26, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill clarifies that provisions requiring state employment forms to require an applicant to disclose whether the applicant has ever entered into an agreement with the state prohibiting the applicant from seeking or accepting any subsequent employment with the state do not apply if the agreement only prohibits the applicant from seeking employment with a particular state agency and not all state employment.

FISCAL EFFECT:

Minor and absorbable costs to CalHR and state agencies to update employment forms.

COMMENTS:

1) Purpose. This bill clarifies a requirement adopted in SB 1240 (Anderson), Statutes of 2014, that amended state employment forms to require an applicant to disclose whether the applicant had ever entered into an agreement with a state department prohibiting the applicant from seeking or accepting any subsequent employment with the state. SB 1240 was enacted in response to a series of disciplinary actions initiated against several employees of the Department of Transportation (CalTrans) in connection with the Bay Bridge construction. At least one former employee entered into a settlement agreement with CalTrans whereby he agreed not to seek or accept any other employment with the state.

According to the author, while the intent of SB 1240 was clear, the language was unclear as to whether all applicants, including those who agreed not to seek or accept subsequent employment only with a particular department, would be required to disclose such an agreement on a subsequent application. The author contends that without AB 466, both employees and the state could be discouraged from settling dismissal appeals, leading to additional costly adjudication.

2) Dismissal Appeals. Under existing law, terminated civil service employees are entitled to appeal dismissals to the independent State Personnel Board (SPB). The SBP has the authority and discretion to sustain, revoke, or modify the terms of any employee's termination. Typically, a prehearing and settlement conference is convened to offer parties an opportunity to negotiate a settlement prior to a full hearing before SPB. According to the author, it is common for settlement terms to include a prohibition on the employee seeking or accepting employment with their department, and that without the ability to keep those agreements confidential, employees may be disincentivised from agreeing to them.

Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081