Assembly Standing Committee on Governmental Organization

Thank you, everybody here and the members who are here at this hearing. I want to go ahead and say that the Assembly Governmental Organization Committee is now called to order. We do some quick housekeeping things. Introduce myself for those who are new to the committee. Miguel Santiago, Assembly Member. I Chair this committee and I'd like to once again take the opportunity to thank everybody who's here today. The calling number for the public comment is 877-692-8957. That number again is 877-692-8957 and the access code is 18501100. 18501100.

This number can be found on the committee's website and is also displayed on your screens. For those calling in, please mute yourself while in the queue to eliminate any background noise. You will be placed in the queue until your opportunity to provide public comment. When it is your opportunity to provide public comment, press one, then zero, then unmute yourself. I'll repeat it one more time.

When it's your turn to provide public comment, press one, then zero, and unmute yourself in order to speak. Please be brief in limiting your comments to only your name, organization and your position only. And I will have to remind everybody of that.

The tribal compacts before us today were executed recently between Governor Newsom on behalf of the state of California, and the Cahto Tribe of Laytonville Rancheria, and the Manchester Band of Pomo Indians of the Manchester Rancheria California, and the Sherwood Valley Rancheria of Pomo Indians of California. Today we'll hear from the principal architects of the compacts, the Governor's office and the chair of each tribe. The negotiated compacts are the culmination of lengthy negotiation, process compromises, and careful consideration of requirements under the Indian Gaming Regulatory Act.

Each compact authorizes a tribe to operate a maximum number of gaming devices at a designated number of gaming facilities, located in eligible Indian lands, held in trust for the tribe, and located within the boundary of the tribe's reservation. Under each compact, the tribe has agreed to pay the state its pro-ratio share of revenue the state incurs for the performance of its duties under the compact.

I am pleased that these contracts mirror many of the recent compacts that have become before this committee in the area of environmental protections, meaningful consumer and employee protections, and labor provisions that allow workers to organize under specific conditions. Once effective, these compacts will be in full force and effective for 25 years following the effective date. I just want to remind all interested parties that no formal vote will be taken today.

It is only a hearing on this committee, so the committee members may be briefed on the contents of each compact, as they cannot be amended in any way, shape or form by the Legislature. SB 771 by Senator Dodd is the ratification Bill for three of these compacts. At some point SB. I said AB. I wanted to say SB. SB 771 will be taken up for consideration by the entire body on the Assembly floor.

I want to thank our witnesses in advance for taking the time out of their busy schedules to be with us here today. With no further ado, let's begin the hearing. The first compact that would be up would be the Cahto Tribe of Laytonville Rancheria. And we have the governor's office who will be presenting. Please begin.

Good afternoon, Mr. Chairman. Committee Members. My name is Nathan Voegeli. I'm the Senior Advisor for Tribal Negotiations for the Governor. Thanks for the chance to go over this new compact between the State of California and the Cahto Tribe of the Laytonville Rancheria. I'd like to begin by extending special thanks to Tribal Chair Norris and the tribal team engaged in the negotiations. The Federal Indian Gaming Regulatory Act, or IGRA, authorizes a tribe to offer Class III gaming subject to a compact negotiated between the tribe and the state.

Compacts generally are limited to subjects directly related to the operation of gaming activities. In California, voters in 2000 approved Proposition 1A, amending the California Constitution to permit tribes to operate Class III slot machines, banking and percentage card games, and lottery games on tribal lands. Prop 1A authorized the Governor to negotiate a tribal state compact, but they must be ratified by the Legislature. Once a compact has been ratified, it's submitted to the US. Department of Interior for a 45-day review.

The Secretary can approve or disapprove a compact. If the Secretary does not act within the 45-day period, then the compact is deemed approved. Tribal gaming in California is an important source of revenue for tribal governments that provides jobs and funds government activities like education and healthcare. The governor's office seeks to balance the interests of tribes, the state, and impacted stakeholders in order to find mutually beneficial terms. This is especially important for limited gaming tribes which face particular economic challenges operating small gaming facilities.

The Cahto Tribe is located in rural Mendocino County near Laytonville, and the Rancheria has about 200 residents. The Tribe was operating the Red Fox Casino in Laytonville, but recently announced its closure after more than 20 years of operation. Like many smaller tribes, the Cahto Tribe has limited staff and resources to meet its pressing needs. So compact negotiations and this agreement represent a significant investment in the Tribe's future. This is the second time in two years that the state and tribe reached agreement on a new compact.

The Governor and Tribe signed a compact in August 2021 that was intended to replace the 1999 compact that the Tribe currently operates under. Shortly after that compact was signed, the Department of Interior disapproved several compacts and the 2021 compact did not move forward for ratification. This new compact is modeled in part on the California compacts that Interior approved last year and earlier this year.

The compact term is for 25 years and includes force majeure language to address reduced operations or closures from events outside of the Tribe's control. If tribes gain the right to operate new forms of Class III gaming or lose the right to operate gaming devices, the tribe may request an amendment to address these issues. The compact recognizes the Tribal Gaming Agency as the primary regulator for the Tribe's gaming operation. The Tribe agreed to standard controls for fair play, honesty, and the integrity of gaming operations.

These include facility and employee licensing, gaming device testing and inspections, and tribal gaming regulations with internal control standards. Minors under 18 are prohibited from gaming, and those under 21 will be limited from being present in areas where alcohol is served, except as allowed under a California Alcoholic Beverage Control License. The Tribe agreed to provide a nonsmoking area and best available ventilation that is reasonably feasible for new or significantly renovated areas of a casino.

Before it closed, the Red Fox Casino, the Cahto Tribe was operating less than 100 slot machines. This new compact would allow the Tribe to operate three facilities and up to 1200 gaming devices, should the opportunity arise. The Cahto Tribe, as a non-gaming tribe, is eligible for an annual distribution of $1.1 million from the Revenue Sharing Trust Fund. It's also eligible for grants from the Tribal Nation Grant Fund.

If the tribe reopens its casino, it will remain eligible for the RSTF Distribution and Tribal Nation Grant Fund grants as long as it operates less than 350 slot machines. If the Tribe operates over that 350 up to the maximum of 1200 slot machines, it will no longer be eligible for the $1.1 million distribution, but it also would pay nothing into the Revenue Sharing Trust Fund. The Tribe committed to paying into the Special Distribution Fund its pro rata share of the state's regulatory costs.

As a limited gaming tribe, however, the Cahto Tribe's payment obligation may be reduced or eliminated entirely under state law when there are sufficient funds in the Special Distribution Fund. The Tribe and Governor's office negotiated a local mitigation component to this compact that reflects the economic reality of a small tribal gaming operation in an area with a limited population. The Tribe will set aside one half of 1% of its net win into an impact mitigation fund when it operates 350 or more slot machines.

The Tribe will be responsible for distributing that funding to local government, emergency services, and service agencies to mitigate impacts from the gaming facility. The Tribe is not required to set aside funds when it's a limited gaming tribe or to conduct an environmental review or enter into an intergovernmental agreement for new projects. The compact addresses health, safety, and labor protections for employees and visitors. The Tribe committed to maintaining water and food safety standards and ensuring that casino employees receive at least equivalent to the state's minimum wage.

The governor's office and the Tribe negotiated lower insurance amounts for torts and employment discrimination claims because of the limited size of the Tribe's gaming operation. While the 2021 Compact required a $7.7 million general liability policy, this new compact requires the Tribe to carry a policy of $2 million per occurrence and 5 million in the aggregate. The Employment Practices Policy must provide at least $2 million in coverage for claims of discrimination, harassment, and retaliation.

Compact also provides the Tribe greater discretion in establishing procedures for any claims, but ensures protections for all covered classes in California. This new compact maintains the same tribal labor relations ordinance that was included in the 2021 Unratified Compact. It takes effect when the Tribe employs 250 or more nontribal member employees at its gaming related facilities. The Tribal Labor Relations Ordinance includes reciprocal commitments by the Tribe and a labor organization if the labor organization agrees to the terms of the ordinance.

Disputes over collective bargaining or other issues can be submitted to binding arbitration. Finally, if the Tribe and the state have any disputes during implementation, the compact provides for a formal meet and confer process to try to resolve the issues. Should good faith negotiations fail to resolve those disagreements, either party may seek resolution through litigation. The Tribe and the governor's office work together to negotiate this compact, which protects the interests of the Tribe and the state.

It recognizes the challenges facing limited gaming tribes and is intended to help facilitate the Tribe's ongoing development. I'll be happy to answer any questions committee may have about the compact.

Thank you. If there's any committee members with any questions, we would take them now. Having seen none, let me just go to public comments. If there's anybody in the room who is in support, you may walk up now. Name, organization and position only. Anybody in opposition? Moderator, we will go to the phone. Same thing. Name, organization and position only.

Thank you. For any public comments, you may press one and then zero. Mr. Chair, we have no one in queue.

Thank you. We're going to go on to the next compact, and I believe we have a Chair here too, Chairperson Tisha Jones. Oh, and we're going to be doing it via remote, so I apologize about that and we may begin.

Thank you again. I'd like to first thank Tribal Chair Tisha Jones and her team for their engagement negotiating this compact with the Manchester Band of Pomo Indians. The compact is substantially similar to the compact with the Cahto Tribe that I reviewed earlier. So rather than going into similar detail, I'll highlight a few of the key terms. The Manchester Band is located near Point Arena in Mendocino County. It operates approximately 150 slot machines at the Garcia River Casino under its 1999 compact.

Under this new compact, the Tribe will remain eligible as a limited gaming tribe, operating under 350 slot machines to receive $1.1 million annually from the Revenue Sharing Trust Fund and to seek grants from the Tribal Nation Grant Fund. The compact entitles the Tribe to operate up to 1200 gaming devices at three facilities. It agreed to reimburse the state for its pro rata share of the state's regulatory costs, but this amount may be reduced or eliminated when there are sufficient funds in the SDF.

Similar to the Cahto Tribe's compact, the Manchester Band, when operating less than 350 gaming devices, is not obligated to contribute funds to mitigate impacts on local jurisdiction. This reflects the fact that the Tribe's gaming operation is small and the Tribe has significant funding challenges to meet the basic needs of its tribal members, particularly those living on the Tribe's Rancheria.

If the gaming operation grows to over 350 gaming devices, the Manchester Band will set aside and distribute one half of 1% of its net win to local jurisdictions and charitable organizations to mitigate impacts from its gaming facility. Patrons and visitors to the gaming facility will be protected by health and safety standards, and the Tribe will carry a $5 million policy for general liability. Minors under 18 will be prohibited from gaming, and alcohol sales and service will be subject to California law.

Gaming employees are subject to licensing and background checks to ensure the integrity of gaming. The Tribe agreed to establish procedures protecting employees from discrimination, harassment, and retaliation. It will carry an employment liability policy of at least $2 million to address any potential claims. The Tribe will continue to provide employees a wage equal to or greater than that required under California minimum wage laws.

It also agreed to adopt a tribal labor relations ordinance that would apply if it has over 250 employees at the casino, not counting tribal members. The ordinance provides for binding arbitration, including for collective bargaining disputes. This compact with the Manchester Band is designed to foster the Tribe's continued development over its 25-year term. I'm grateful to the Tribe for its time negotiating this agreement and will be available for any questions.

Thank you. Chairwoman Tisha Jones? Moderator, maybe we can connect?

Connect to?

Or maybe it's internally here. The sergeant can connect us via video conference. I've been advised that there will not be a presentation, and it just happened a second ago. So if I am inaccurate, then I'll be corrected in real time. Okay, so in the meantime, then, I'll just forward over to public comments. If there's any comments in support, in the room, or in opposition, you may come to the microphone. Name, organization and position only. Moderator, anyone on the phone?

For any public comment, you may press one, then zero. And we have no one in queue at this time.

Thank you. Thank you. We're going to proceed then to the third and last compact. You may begin.

Thank you. I'm happy to go over this compact with the Sherwood Valley Rancheria, which is also located in Mendocino County near Willits. I want to thank Tribal Chair Hazel Ramirez, prior Chair Melanie Rafanan, and the Tribe's negotiating team for working with the state on a government-to-government basis to develop this agreement. The Tribe and state previously reached agreement on a new compact in 2021, but it stalled after the US. Department of Interior's compact disapprovals that year.

This new compact builds on the 2021 compact terms, but provides improved economic terms and eliminates the requirement for an environmental review or intergovernmental agreement. As for the prior two compacts I discussed, the Sherwood Valley Rancheria will be able to operate up to 1200 gaming devices at three facilities. Currently, the Tribe offers less than 200 slot machines at the Sherwood Valley Casino. It will be eligible for $1.1 million annually from the Revenue Sharing Trust Fund and Tribal Nation Grant Fund grants, as long as it operates under 350 devices.

It has no obligation to pay into the Revenue Sharing Trust Fund, but will contribute its pro rata share into the Special Distribution Fund unless that obligation is reduced or eliminated, pursuant to California law. If the Tribe operates 350 or more gaming devices, it will set aside one half of 1% of its net win to mitigate gaming facility impacts to local governments and charitable organizations.

The Tribe will maintain a general liability policy of at least $5 million dollars and establish tort claim procedures to protect patrons and visitors. It will provide a nonsmoking area and ensure any significant renovations include best available ventilation that is reasonably feasible. Employees will receive at least equivalent to the state's minimum wage rate, and those classes protected under California law will be able to bring claims under the Tribe's procedures for allegations of discrimination, harassment, or retaliation.

The Tribe agreed to adopt and maintain a tribal labor relations ordinance that governs labor organization if the Tribe employs more than 250 nontribal members at its gaming related facilities. The Tribe, as the primary gaming regulator, will ensure compact standards regarding employee licensing, gaming integrity and fair play are met through its regulations, internal control standards and inspections.

If operations are impacted by another pandemic, wildfires or other events outside of the Tribe's control over the 25-year life of the compact, the state agreed to address any reduced operations through a meet and confer process. Like the other tribes I reviewed today, Sherwood Valley Rancheria and its tribal members have numerous unmet needs, and this compact represents a significant dedication of tribal resources. It is intended to support the Tribe's continued economic development in order to provide for its members, but also be respective of state interests. Thank you.

Thank you. Any comments or questions from committee members? Hearing and seeing none. I'm asking anybody in the public whether they have any comments. Again limiting it to name, organization and position only. If you're in support or in opposition, you may line up now and speak into the microphone. Not seeing anybody. Moderator, if there are any public comments, name, organization and position only.

For public comment, you may press one, then zero. And we have no one in queue at this time.

Unless there's any ending comments or questions from committee members, I believe the hearing has ended. I don't see any, so I'd like to conclude the government organizational meeting. And thank you very much for coming and doing these presentations. Thank you for your hard work.