By Andrew Grundman
Copyright © 2000 by University of the McGeorge School of Law
JD, McGeorge School of Law, University of the Pacific
to be conferred 2000
B.S., Agricultural Engineering and Technology, CSU Chico, 1991
Table of Contents
While Indian gaming is not a new activity, the relatively recent explosion in Indian Gaming facilities since the inception of the California lottery has caused great concern to the public and the government of California. Historically, California has not been receptive to most forms of gambling. The popularity and relatively uncontrolled climate of tribal Indian Gaming coaxes tens of thousands of Californians onto reservation lands each year. Law enforcement concerns brought the issue of whether gambling on tribal lands in California was permissible. This was ultimately decided in the affirmative by the United States Supreme Court.
In 1987, the United States Supreme Court determined that California could not prohibit Indian tribes from engaging in the same type of gaming activity that the state promoted. (California v. Cabazon Band of Mission Indians (1987) 480 U.S. 202.) Following this decision, Congress enacted the Indian Gaming Regulatory Act which, among other things, requires gaming tribes to negotiate a compact with the state as a condition of being allowed to operate certain types of gambling enterprises.
Responding to pressures from the United States Department of Justice, a handful of tribes, including the Pala Tribe, began negotiating a compact with Governor Wilson in 1996. By March of 1998, the majority of negotiations were completed, and the first compact was signed by the Pala Tribe and Governor Wilson. By August of 1998, a total of eleven compacts were executed.
Several months after the initial negotiations, a bill was introduced in the Assembly to designate the Governor as the state officer responsible for negotiating and executing compacts with Indian tribes for compliance with the Indian Gaming Regulatory Act. ("IGRA"). Eventually, similar language was incorporated into Senate Bill 287 ("SB 287") in addition to ratification of the ten other tribes that were signatories to the Pala Compact. The bill was signed into law on August 28, 1998, about a week after the eleventh tribe agreed to the terms of the compact.
Immediately following approval of SB 287, the voters of California approved the Tribal Government Gaming and Economic Self-Sufficiency Act, commonly referred to as Proposition 5. Since both the Pala Compact and the compact required by Proposition 5 contained language allowing the existence of other compacts, neither had any direct effect on the other. However, since Proposition 5 appeared to provide a vehicle for tribes to comply with the requirements of IGRA, the attractiveness of the Pala Compact diminished.
On December 10, 1998, enough signatures were gathered by opponents of the Pala Compact to place the matter on the March 2000 ballot as a referendum. Voters in the March 2000 election have the opportunity to ratify the compacts and designate the Governor as the state officer charged with negotiating compacts with tribes for the purpose of Indian gaming.
In August of 1999, the California Supreme Court ruled that Proposition 5 was unconstitutional because it would violate the State Constitution by allowing operation of Nevada and New Jersey Style Gambling in California. Immediately following this ruling, Senate Constitutional Amendment 11 was proposed to amend the State Constitution allowing Nevada and New Jersey style gambling activities to be conducted by federally recognized Indian tribes on Indian lands. This proposed amendment is subject to voter approval as Proposition 1A, Gambling on Tribal Lands, Legislative Constitutional Amendment in March 2000.
The Pala Compact provides a balance of authority between the State of California and sovereign Indian tribes. Both sides have ceded some of their power to create a workable agreement both parties can be satisfied with. The Compact provides an initial term of ten years, although tribes may request two additional renewals of five years each, rather than be forced to renegotiate an agreement after the initial term.
The main benefit for signatory tribes is that they are permitted to operate what IGRA deems Class III gambling activities. These activities are those of a nature other than bingo or simple card games. Specifically, because slot machines are not allowed in California, they are allowed to operate the new "video lottery" machines. Tribes that have not negotiated a compact with the State are precluded by federal law from using similar devices. Revenue sharing between tribes is also a benefit. Each signatory tribe would be allotted a specific number of lottery devices, and non-gaming tribes could lease their allotments to gaming tribes. Finally, the compact requires the State to incorporate more favorable provisions agreed to in subsequent compacts with other tribes.
The citizens of the State of California benefit in several respects. First, the tribes agree to meet local standards for health, fire safety, medical response, and patron security. Second, gaming employees will be entitled to worker’s compensation as provided by California law. Third, the compact allows certain non-gaming employees to collectively bargain with the tribe after a transition period. Finally, a signatory tribe can negotiate with the affected local government to mitigate impacts such as traffic or law enforcement requirements outside of tribal lands.
In September of 1999, the Governor negotiated gaming compacts with 57 tribes, including the 11 tribes that were signatories to the Pala Compact. These compacts will become effective if Proposition 1A is passed and the federal government approves the compacts..
Regardless of whether Proposition 1A or Proposition 29 receive the most affirmative votes, the mutually agreed terms of the approved compacts will become effective. Additionally, the Governor will be established as the state officer authorized to negotiate and conclude compacts, subject to approval by the Legislature. As a result, tribes will be able to comply with the terms of IGRA, and Indian gaming will remain in California.
Passage of Proposition 29 will allow implementation of the terms of the Pala Compact, allowing signatory tribes to conduct gaming pursuant to its terms, even if Proposition 1A fails voter approval. If Proposition 1A passes, and Proposition 29 fails, gaming may be conducted by signatories to the September 1999 compacts provided the compacts are approved by the federal government.
A "yes" vote on Proposition 29 and a "no" vote on Proposition 1A will limit the type of gaming activities permitted to tribes to no greater than Class II gaming under IGRA. In contrast, a ""no"" vote on Proposition 29 and a "yes" vote on Proposition 1A will expand the type of gaming allowed on tribal lands to Class III gaming under IGRA. Voting "no" on both measures will force the Governor to renegotiate, and the Legislature to approve, another series of compacts.
If both Proposition 1A and Proposition 29 pass, then presumably the compacts most recently approved by the Governor and the Legislature will prevail over the earlier Pala Compact, if the September 1999 compacts are federally approved. Otherwise, the signatories to the Pala Compact may operate under that compact until the existence of a federally approved compact.
A. Existing Law
1. California Law
Although there are various state and local laws prohibiting or regulating gaming activities, the main prohibition affecting Tribal Gaming is found in California’s Constitution. Section 19 of Article IV expressly prohibits "casinos of the type currently operating in Nevada and New Jersey." (Cal. Const. art. IV, § 19.)
Although precisely what activities are prohibited is unclear, permitted activities include bingo for charitable purposes, the California State Lottery, and in some circumstances, wagering on horse races. (Cal. Const. art. IV, § 19(b), 19(d), 19(e).) Prohibited activities include banked or percentage games played with cards, dice, or any device, such as faro, monte, roulette, lasquenet, rough et noire, rondo, tan, fan-tan, stud-horse poker, seven-and-a-half, twenty-one, and hokey-pokey. (1998 Indian Gaming Compacts, Referendum Statute Initiative, SB 287, Senate Rules Committee Analysis, p. 1 (1998) (prepared by Committee staff.))
2. The Indian Gaming Regulatory Act (IGRA)
Following Cabazon, Congress passed the Indian Gaming Regulatory Act in 1988 to clarify issues on both sides. Congress recognized the importance of gaming revenue to tribal governments. Accordingly, IGRA specifies for tribes to have the exclusive right to regulate gaming activity on Indian lands if that activity is not prohibited by either federal or state law. (25 U.S.C. § 2701 (1988).) Congress also realized that states have an interest to protect the health and welfare of its citizens when interacting with the tribes. IGRA provides States with a vehicle to enforce laws by requiring a tribe to request and negotiate a Tribal-State compact to regulate gaming activities. (25 U.S.C. § 2710(d)(3)(A) (1988).)
IGRA breaks down the various forms of gaming into three classes. Class I gaming, social games or traditional forms of Indian gaming, are exempt from IGRA, and do not require any negotiation with the State to continue. (25 U.S.C. § 2710(a)(1).)
Class II gaming consists mainly of "bingo" games and card games, but does not include banked card games such as baccarat, chemin de fer, or blackjack. (25 U.S.C. § 2703(7)(B)(i) (1992).) While not all card games are house banked, card games such as "pai gow" do not fit neatly into either Class II or Class III gaming even though all card games either expressly permitted or not expressly prohibited by state law are Class II. (25 U.S.C. § 2703(7)(A)(ii)(I-II).) Unlike bingo or card games, "electronic or electromechanical facsimiles of any game of chance or slot machines of any kind" are specifically excluded from the Class II category. (25 U.S.C. § 2703(7)(B)(ii).)
Class III gaming is by far the most controversial because it covers all forms of gaming that are not Class I or Class II gaming. (25 U.S.C. § 2703(8)) This would also include the slot machines and electronic games of chance expressly excluded from Class II.
The answer to whether Class III gambling is permissible in a state that prohibits that type of activity is unclear. (Marcy Lechner, Materials on Proposition 5: Tribal-State Gaming Compacts, Tribal Casinos, 1 Cal. Init. Rev. 6, ¶ 29 (November 1998) .) Class III gambling is a "catchall" category for all gaming that is currently unclassified as either Class I or II, which effectively prohibits introduction of any formerly unused or new types of gaming. This issue is effectively skirted by Article 3 of the Pala Compact, which allows the tribe to request a determination that a gaming activity is not a Class III activity. This option allows a compacted tribe to pay a $500 application fee to either receive a favorable opinion, or alternately, to have their fee refunded and seek an injunction. (Tribal-State Compact between the State of California and the Pala Band of Mission Indians § 3.41-3.413 (on file with the California Initiative Review).)
B. Roots of the Pala Compact
1. Tribal Gaming in California
Indian tribes exist as relatively sovereign nations and are generally subject only to federal law. However, the federal government permits states to address criminal issues on tribal lands. While gambling has probably occurred on tribal grounds since time immemorial, gambling operations on California tribal lands has increased exponentially since the inception of the California State Lottery and the expansion of similar gambling activities in other states. As a result of this growth, governmental and public scrutiny over the legality of Indian gaming has increased. Growing concern over possible increases in crime and protection of non-Indian employees has resonated throughout the states. In response to states’ concerns, Congress clarified the roles of federal and state government regarding this controversy through legislation.
"The California Constitution prohibits casino-style gambling – slot machines, roulette, blackjack and other Nevada-style games of chance." (Fact Sheet, Tribal Gaming in California: The Historic Pala Compact, p. 1 (March 6, 1998) (on file with the California Initiative Review).) Unfortunately, exact definitions of what types of gambling are precluded by California’s Constitution remains elusive. The Constitution merely prohibits "casinos of the type currently operating in Nevada and New Jersey." (Cal. Const. art. IV, § 19.) Concern over the meaning of "Nevada and New Jersey-style" gambling prompted the State of California to address perceived tribal violations of state law. One relatively recent attempt to prohibit Indians from engaging in specific types of organized gaming was rebuffed by the United States Supreme Court. Basically, the Court reasoned that since California was, on one hand, promoting state-authorized gambling through the state lottery, they could not, on the other hand, prohibit Indian tribes from engaging in essentially the same type of activity. (Cabazon Band of Mission Indians, 480 U.S. at 211.)
2. Initial Negotiation of the Compact
Much dispute surrounds why the original negotiations were initiated. The California Nevada Indian Gaming Association charges that the State of California was the impetus behind the Tribal-State compacts: "[o]nce again the State government has handed California Native Americans another mandate—‘sign the compact within 60 days or face the consequences of the U.S. Attorneys.’ There is not one business in California where the State Government has dictated similar terms without an opportunity to negotiate." (Pala Band of Mission Indians, Answers to Unfounded Attacks on the "Model" Tribal State Gaming Compact Between the Pala Band of Mission Indians and the State of California, at 2 (1998) (on file with the California Initiative Review) [citing California Nevada Indian Gaming Association, Ten Reasons Why the Tribal-State Compact Between the State of California and the Pala Band of Mission Indians is Not a "Model" for Anyone Other than Nevada and Some Politicians (undated packet circulated to California legislators and others in March 1998)].)
The Pala Tribe counters this argument by declaring that the only "mandate" to California tribes was from the federal government, and that mandate was independent of the Pala Compact. When the State of California began negotiations with the Pala Tribe in 1996 it was with the announced intention of developing a "model" compact for the guidance of all tribes. (Id. at 3 [citing a Letter from Daniel M. Kolkey, Legal Affairs Secretary and Counsel to Governor Pete Wilson, to Howard L. Dickstein, counsel for Pala (August 31, 1996)].) The Pala Tribe indicates they were eager to negotiate with the State of California because they were effectively precluded from offering gaming by virtue of the U.S. Attorney’s "stand still" agreement with existing gaming tribes. (Id. at 1.) Correspondence between Governor Wilson and Rep. Duncan Hunter further indicates that the "U.S. Department of Justice has been warning those California tribes engaged in illegal and uncompacted gaming that they must cease their illegal operations." (Letter from Pete Wilson, Governor of California, to Duncan Hunter, Representative in the U.S. House of Representatives 2 (June 10, 1998) (on file with the California Initiative Review); see also Marcy Lechner, Materials on Proposition 5: Tribal-State Gaming Compacts, Tribal Casinos, 1 Cal. Init. Rev. 6, ¶ 33 (November 1998) .)
Negotiations were conducted with a level of secrecy, and charges were leveled against Governor Wilson. "The compact is a sham and will ultimately fail because Governor Wilson failed to negotiate with all the tribes." (Max Vanzi, California, Tribe Reach Pact on Slot Machines, L.A. Times, March 7, 1998, at A1 [quoting California Senator Richard G. Polanco.)
It is undisputed that Governor Wilson did not negotiate with all tribes. However, some tribes in California were not engaged in gambling activities. Other tribes were engaged in Class III gaming in violation of IGRA. Governor Wilson made it very clear that any tribe desiring to negotiate a compact with the state would first have to be in compliance with federal law. (Letter from Pete Wilson, Governor of California, to Duncan Hunter, Representative in the U.S. House of Representatives 1 (June 10, 1998) (on file with the California Initiative Review).) There were several reasons for his refusal to negotiate with some tribes. First, federal law requires a compact to be negotiated prior to the commencement of Class III gambling. (25 U.S.C. § 2710(d)(1)(C).) Second, nothing in the IGRA indicates that tribes can operate Class III gambling activities before they enter into a compact. (25 U.S.C. § 2710(d)(1).) The Governor’s reasoning was also based on the notion that "[i]f tribes could commence Class III gambling without first entering a compact, they would never have an incentive to conclude a compact. (Letter from Pete Wilson, Governor of California, to Duncan Hunter, Representative in the U.S. House of Representatives 1 (June 10, 1998) (on file with the California Initiative Review).)
3. Signing the Compact
Between the months of April and August of 1998, eleven compacts were completed between various tribes and the State of California. Almost two years of negotiation went into designing a compact that would protect the legal interests of the parties. Even though one of the original intents of the negotiations was to create a "model" contract for other tribes to use, there was no requirement that all tribes would have to agree to its conditions. Tribes remained free to negotiate their own compact with the State, as provided by both IGRA and the subsequent codification of the compacts.
Following approval of the initial compact between California and the Pala Band, a California superior court ruled on June 25th, 1998, that the Governor had no authority to enter into the compacts without legislative action. (Indian Gaming Litigation, NAAG Gaming Developments Bulletin (May/June 1998.) (contact person Nelson Kempsky, Executive Director, Conference of Western Attorneys General, at (916)323-1939 or by e-mail firstname.lastname@example.org) (on file with the California Initiative Review).) At least partially because of the ruling, existing legislation regarding Indian gaming was expedited to address the issue.
C. Indian Gaming Legislation
1. Legislative History
On February 28, 1997, several months after the initial negotiations between the Pala Tribe and the Governor, a bill was introduced in the Assembly to make the California Horse Racing Board responsible for negotiating with the Indian tribes about entering into tribal-state compacts governing horseracing activities on Indian lands. This bill would also designate the Governor as the state officer responsible for negotiating and executing compacts with federally recognized Indian tribes in the State of California pursuant to IGRA, for conducting class III gaming on Indian lands.
Almost a year later, on February 5, 1998, Senate Bill 1502 ("SB 1502") was introduced by Senators Burton and Maddy for several purposes. First, SB 1502 recognized that the Governor is the constitutional officer with exclusive authority to communicate on an official basis with the government of another state and the United States. Second, SB 1502 authorized the Governor as the state officer responsible for negotiating and executing compacts between the state and federally recognized Indian tribes pursuant to IGRA. The Governor would also be authorized to waive the state’s immunity to suit in federal court regarding the compacts. Third, SB 1502 ratified the Compact entered into between the Pala Band of Mission Indians and the State of California. SB 1502 also ratified any subsequent compacts certified by the Governor that are materially identical to the Pala Band Compact, unless rejected by two-thirds of the members of both houses within 30 days of submission. Finally, SB 1502 provided that ratified compacts would not be considered a project under the California Environmental Quality Act ("CEQA"). However, on June 29, 1998 SB 1502 failed passage in the Assembly Governmental Organization Committee.
On August 25, 1998, Senate Bill 287 ("SB 287"), an act relating to elections was amended by eliminating existing language and substituting the language from Senate Bill 1502. The Governor approved SB 287 and filed it with the Secretary of State on August 28, 1998. The Act was chaptered as Stats. 1998, chapter 409. In 1998, subsequent to the approval of SB 287, California voters approved another Indian gaming action, the initiative known as Proposition 5, "The Tribal Government Gaming and Economic Self-Sufficiency Act of 1998." (Cal. Gov’t Code §§ 98000 et. seq. (West 1998).) Following the success of this measure, signatures were sought to prevent the Pala Compacts legislation from enactment.
In August of 1999, the State Supreme Court ruled that Proposition 5 was unconstitutional because it permitted Nevada and New Jersey style gaming in violation of the State Constitution. (Cal. Const. art. IV, § 19.) As a result, Proposition 1A was placed on the March 2000 ballot to amend the Constitution to allow Indian tribes to operate IGRA Class III gaming activities. New compacts were negotiated with the Governor, which, if approved will supersede the Pala Compact.
On December 10, 1998, the Secretary of State received the number of signatures required to qualify a referendum measure on the legislative ratification of the compacts. Titled "Referendum Vote to Overturn Previously Approved Gaming Compacts," the qualified measure is scheduled for the March 7, 2000 ballot. The Referendum measure nullifies the legislative ratification until the March election. If approved, the Initiative will become effective the day following the election. If the Referendum fails, the legislative ratification will be repealed. (Cal. Const. art. II, § 10(a).)
D. Effect of Ratification
Approval of Proposition 29 (a referendum measure) will allow section 12012.5 of the Government Code (Chapter 409, Statutes of 1998) to be enacted. Ratification of Proposition 29 also serves to ratify the eleven compacts entered into between the State of California and various Indian tribes. (See Indian Gaming Compacts, Referendum Statute, Proposition 29, California Voter Pamphlet, p. 79 (2000).) Because the language in Proposition 29 and Proposition 5 specifically provides for compacts beyond its own, the two propositions are not in conflict with each other. (See id.)
If approved, the Pala Compact will comply with the requirements of IGRA, and will authorize and regulate Class III gaming activities on tribal lands. (Id.) The Compact will serve the two purposes it was designed for: (1) the Compact will allow tribes to operate permitted Class III gaming for tribal revenue purposes; and (2) the State and the tribe will share regulatory aspects of those activities. (Id.)
The largest effect the approval of Proposition 29 would accomplish is the ratification of the legislature’s approval of SB 287, and the Governor’s act of signing the bill into law. SB 287 was codified into the Government Code. The Referendum will also ensure that compacts negotiated in "good faith" by tribes allow those tribes to comply with the requirements of IGRA. Approval or disapproval of Proposition 29 will have no impact on non-signatory tribes.
1. Major Provisions of Government Code Section 12012.5
The major provisions of § 12012.5 are:
Ratifies the compacts entered into between the State of California and eleven signatory
Provides that provisions of the compacts apply only to the signatory tribes, and do not bind non-signing tribes.
Allows future compacts to be "automatically" ratified unless rejected by 2/3 vote of each house of the State Legislature.
Allows the Governor to determine whether a compact complies with this section.
Recognizes the sovereignty of other tribes and their right to negotiate with the State for a different compact.
States that the Governor is the designated state officer for the purpose of negotiating tribal-state compacts pursuant to the IGRA.
Authorizes the Governor to waive state immunity in federal court for the purpose of suit regarding a compact.
Excludes the execution and compliance with a compact from the California Environmental Quality Act.
States that any limit on lottery devices does not apply to non-signatory tribes.
The enactment of section 12012.5 primarily ratifies the gaming compacts entered into between the State of California and eleven tribes; the Barona Band of Mission Indians, the Big Sandy Rancheria of Mono Indians, the Cher-Ae Heights Indian Community of Trinidad Rancheria, the Jackson Rancheria Band of Miwuk Indians, the Mooretown Rancheria of Concow/Maidu Indians, the Pala Band of Mission Indians, the Redding Rancheria, the Rumsey Indian Rancheria of Wintun Indians of California, the Sycuan Band of Mission Indians, the Table Mountain Rancheria, and the Viejas Band of Kumeyaay Indians. These tribes entered into compacts with the State of California between March 6, and August 17, 1998. The terms of each compact apply only to the State of California and the tribe that signed it, and the compact terms do not bind any non-party tribes. (Cal. Gov’t Code § 120125(a)(1-11) (West 1998.)
A related aspect of section 12012.5 is the provision that allows future compacts entered into between the State of California and a federally-recognized tribe to be automatically ratified by the Legislature. Two factors determine whether a compact is eligible for automatic ratification. First, the compact must be materially identical to any of the eleven approved compacts. (Cal. Gov’t Code § 12012.5(b).) The Governor may determine whether a compact is "materially identical" to the eleven approved compacts. "A compact will be deemed to be materially identical to a compact... if the Governor certifies that it is materially identical at the time he or she submits it to the legislature." (Id.)
2. Major Provisions of the Gaming Compact
Unlike Class I and Class II gaming activities, IGRA requires a tribe to negotiate and execute a compact with the state regarding the specifics of what type of activities will be permitted, and the circumstances in which they may be operated. Additionally, ancillary issues may also be addressed to allow for successful negotiation between the signatories. The compact does not address social or ceremonial games, bingo, pull-tabs, or non-banked card games. (See Tribal-State Compact between the State of California and the Pala Band of Mission Indians § 3 (on file with the California Initiative Review).)
The Tribal-State Gaming Compact allows each tribe to operate any lottery style game that the California State Lottery could offer. Specifically, new "video lottery" devices designed to comply with state law would be permitted. Each signatory tribe would be allotted a base number of 199 of the devices. Non-gaming tribes can lease their allocation of the devices to a gaming tribe at up to the rate of $5000 per device. However, no individual tribe would be allowed to operate more than 975 lottery devices. (See id. at §§ 9.4.1-9.6.2.)
According to the terms of the Pala Compact, the base allocation of 199 devices will be reconsidered in March of 1999, and a year later, the cap on lottery device lease rates will also be reconsidered. The terms of the Compact expressly preclude the use of slot machines. (See id. at §§ 9.4.1, 9.5.1, 9.7.3.)
In addition to the restriction on the number of lottery devices that a tribe may operate, there are also other provisions intended to prevent a tribe from carrying on a "Nevada or New-Jersey style" operations. For instance, there is a prohibition against serving complimentary alcoholic beverages, extending credit to gamblers, and the prohibition against participants under the age of 21. One interesting aspect of the Compact is that a physical barrier is required between Class III activities and Class II card games. The reason for the barrier is to address the Constitutional prohibition against certain types of gaming styles. (Id. at §§ 9.1, 9.2, 9.3.)
The Compact also provides a mechanism for sharing the determination of whether an employee or vendor to the gaming tribes can be engaged in a tribal gaming enterprise. Jurisdiction over the approval of gaming employees is shared between a Tribal Gaming Agency and the State’s Division of Gambling Control. (Id. at § 5.1.7.) The Tribal Agency is required to perform background checks and may issue or deny licenses to employees or individuals conducting gaming business with the tribe. The tribe provides the State with copies of the appropriate information. Tribal members are not subject to the same level of scrutiny that is applied to non-tribal employees. (Id. at § 22.214.171.124.)
In addition to providing the State with information on gaming employees, the tribe must maintain records and prepare financial statements to submit for annual financial audits by the State. (Id. at §§ 6.1, 6.2.) The Compact also specifies that the Department of Justice may monitor the tribe’s compliance with the Compact, and may periodically visit the gaming facility for the purpose of monitoring compliance. (Id. at § 7.1.) The State is required to keep all information received from the tribe confidential. (Id. at § 8.1.)
Patrons of tribal gaming establishments are also afforded additional protections. (See id. at § 10.) Any participants claiming that they are entitled to a prize that the tribe has not delivered may petition the Tribal Gaming Agency, and if not satisfied, may settle the claim through independent arbitration. (Id. at § 10.3.) Signatory tribes are also required to provide liability insurance of at least five million dollars for each occurrence, and may not raise sovereign immunity as a defense against any injuries caused by the tribe’s negligence. (Id. at §§ 11.1, 11.2.)
Signatory tribes also agree to work with local governments for the mitigation of potential problems caused by tribal gaming activities. For example, the Pala Tribe agreed to make any necessary improvements to state highways. (Id. at § 12.6.) Additionally, the Pala Tribe agreed to coordinate fire safety and suppression with San Diego County, and to comply with the County’s safety standards. (Id. at § 12.3.) In the event of a dispute, the Compact provides for independent arbitration. (Id. at § 12.7, 17.2.4, 17.2.10.)
The Compact also deals with employee interests. All employees of the tribe’s Class III gaming facilities, and any hotel that is appurtenant to the operation are entitled to worker’s compensation, unemployment, and disability benefits. (Id. at §§ 13.1, 13.3.) Employees may also engage in collective bargaining, if they choose, following a two-year transition period. (See id. at § 13.7.) As a condition of the collective bargaining provision, employees must agree not to strike, picket, or take similar actions against the gaming operation. (Id. at § 13.7.3.)
Jurisdiction over criminal activities remain essentially the same as provided under federal law. (See id. at § 14.1.1.) However, local law enforcement agencies may enforce state gambling regulations against gaming not authorized by the signatory. (Id. at § 14.1.) The tribes may enter into agreements with local law enforcement agencies for the purpose of assisting the tribe in enforcement and to assist local agencies in any increase in financial expenditure caused by the Compact. (Id. at § 15.1.2(B).)
Both parties agree to meet and discuss problems occurring as a result of the Compact prior to seeking independent arbitration or legal remedies. (Id. at § 17.2.3.) Emergency situations, such as if the tribe engages in illegal gaming activity, are excepted and the State may seek immediate redress in federal court. (Id. at § 17.2.5.) Tribes generally agree to reimburse the State for all reasonable financial expenses that occur as a result of the Compact. (Id. at § 18.1.)
The initial term of the Compact is for ten years. (Id. at § 2.2.) A tribe may request two additional extensions of the compact of five years each. (Id. at § 2.3.) If the tribe engages in illegal gaming activities, the compact may be nullified. (Id. at § 126.96.36.199.) The tribe will be allowed to renegotiate a new compact if that situation occurs. (Id. at § 2.7.) The Pala Compact also has a "Most Favored Tribe Clause," which states that a more favorable provision in a subsequent compact with another tribe will be amended to the Pala Compact. (Id. at § 19.6.)
A. NO STATE SHALL
The United States Constitution provides that "No State shall, without the Consent of Congress... enter into any Agreement or Compact with another state, or with a foreign Power..." (U.S. Const. art. I, § 10, cl. 3.) Arguably, to enter into the Wilson/Pala Compact, California received its permission from Congress through the terms of IGRA. (See 25 U.S.C. § 2710(d)(3)(A).)
B. DID THE GOVERNOR HAVE THE AUTHORITY TO ENTER INTO THE COMPACT?
Governor Wilson did not have express statutory authority to enter into the compact, nor is that power enumerated in the State Constitution. A Tribal-State compact has both a formal and a legal (or legislative) aspect. The formal aspect of a compact is within the authority of the Governor, since he or she is authorized as the sole communicator between California and other governments. (Cal. Gov’t Code § 12012 (West 1945).) The legal aspect of a compact, however, is not within the Governor’s power.
The adoption of a compact is essentially a legislative act. A compact is law of a very high order, as it cannot be repealed by unilateral legislation. (Green v. Biddle (1823) 21 U.S. 1, 90, 91.) State courts do not have the authority to interpret a compact. (Dyer v. Sims (1951) 341 U.S. 22, 28.) These factors are strong indications that the adoption of a compact is primarily a legislative act rather than an executive act.
The powers of the California government are legislative, executive, and judicial. Persons charged with the exercise of one power may exercise none of the others except as permitted by the California’s Constitution. (Cal. Const. art. III, § 3.) The Governor is charged with executive powers – "The supreme executive power of this State is vested in the Governor." (Cal. Const. art. V, § 1.) Legislative authority, on the other hand, "is vested in the California Legislature which consists of the Senate and Assembly..." (Cal. Const. art. IV, § 1.) The Constitution seems to contemplate the Legislature’s involvement in agreements that would bind the state. Of course, the Legislature is precluded from entering into a compact without the Governor’s assistance. Since a compact is an agreement between a state and another state or nation, communication would be necessary, and the Governor is the sole authorized communicator between the State and other governments. The structure for entering into a compact is well defined. First, the Governor must negotiate with another government and bring the resulting agreement to the Legislature for ratification. Second, the Legislature, with its vested legislative powers, must choose to either ratify the agreement, or reject it.
The issue of whether a Governor may execute or amend a compact on behalf of the State has been addressed before. Further insight into the Pala Compact dilemma may be gained by examining the 1977 amendment of the Interstate Civil Defense and Disaster Compact. In 1951, Governor Warren, in response to perceived civil defense needs, executed the Compact primarily to plan for and protect the safety of the citizens of California. There was some concern that the Compact was an interstate agreement. (Letter from Anthony Dougherty, Assistant to the Governor and Legislative Secretary, to Charles Manfred, Director of Governor’s Office of Emergency Services 1 (Dec. 3, 1976) (on file with the California Initiative Review).) However, that issue was resolved in 1977 by the codification of the Interstate Civil Defense and Disaster Compact and its amendments.
During the extreme fire season of 1976, Governor Brown was asked by the Nevada Governor to amend the Interstate Civil Defense and Disaster Compact. Even though section 8619 of the Government Code granted the Governor authority to enter in compacts "for the protection of life and property," other provisions limited the scope to emergency situations. Accordingly, and in similar fashion to the Tribal Gaming Compacts, the Legislature ratified the Interstate Civil Defense and Disaster Compact of 1950 and the 1977 amendments.
C. IS THE COMPACT VALID ANYWAY?
There is no clear answer as to whether the Compact is enforceable in its present state. According to the ruling of a California Superior Court, the answer is most likely that it would not be enforceable. While the Court acknowledged that the Governor has the power to negotiate compacts, it ruled that those compacts have no force and effect unless and until ratified by the Legislature. (Indian Gaming Litigation, NAAG Gaming Developments Bulletin (May/June 1998.) (contact person Nelson Kempsky, Executive Director, Conference of Western Attorneys General, at (916)323-1939 or by e-mail email@example.com) (on file with the California Initiative Review).)
The failure of Proposition 29 on the March 2000 ballot would leave the compact approved only by the Governor. If Proposition 29 is not approved in March 2000, the issue would be whether the Indian tribes can sue to enforce the terms of the compact.
However, why would a tribe sue to enforce the compact? The main reason tribes entered in negotiations was to comply with the negotiation requirements of IGRA. IGRA requires states to negotiate in "good faith" with the tribes, and the tribes are required to enter into agreements with the state as a condition to operating certain gaming activities. (See generally, 25 U.S.C. § 2710(d)(3)(A).) Accordingly, if the state fails to meet its obligations under a compact, the tribe may wish to enforce the compact.
However, generally, suits in federal court against states are permitted only if the state waives its immunity to suit. The 11th Amendment precludes suits against a state in federal court. "The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by... Citizens or Subjects of any Foreign State." (U.S. Const. amend. XI.) In 1996, the United States Supreme Court substantially expanded states’ immunity to suit under the 11th Amendment. (Seminole Tribe v. Florida (1996) 517 U.S. 44.) Seminole Tribe limited congressional authority to allow Indian tribes to sue a state for failing to negotiate in good faith for the purpose of allowing gaming on tribal lands. The Court determined that states can be sued in federal court only pursuant to federal laws conforming with the 14th Amendment. However, the 14th Amendment would preclude Indian tribes from bringing suit in federal court to address whether or not the compact, as it stands, is enforceable.
Whether an Indian tribe could bring suit against the state in a state court is less clear. The 11th Amendment applies only to suits brought in federal court, yet the common law concept of sovereign immunity, which allows the state to determine whether it will permit a suit against itself in state court, might similarly protect the state from suit.
Although unlikely, if Propositions 1A and 29 fail, the validity of the Pala Compact would be unclear. Unfortunately, there is no clear answer to whether a compact authorized by Congress and negotiated between the Governor and a tribe is binding. Arguably, because the Governor was not authorized to execute the compact, the compact is invalid and thus unenforceable. Nonetheless, affected tribes could argue that California’s sole communicator with other governments confirmed existence of a valid agreement once it was signed. California may not subsequently use its constitutional limits on the Governor as a shield against enforcement of a compact that the state was required under federal law to negotiate.
The importance of the Pala Compact and its impact on the State of California has greatly diminished since the signing of the compact. Initial policy questions ranged from the effects of the decreasing ability of certain tribes to conduct gaming activities to limitations on what type of activities should be allowed. However, in light of the approval of Proposition 5 (notwithstanding its unconstitutionality), the voting public appears to demand that a wide range of gaming be allowed on Tribal lands.
Hence, the only real issue is what types of gaming should be allowed. Should California amend its Constitution to allow Indian tribes to operate casinos of the type currently operating in Nevada and New Jersey or should California limit tribes to the Class II gaming allowed under the Pala Compact?
Any financial impact on California is uncertain at best, since there is no way to predict whether approval of the Pala Compact will affect Californians who traditionally gamble outside of the state, or whether there will be an increase in gambling among Californians that would otherwise not gamble.
Similarly, because there is no way to predict whether gambling will increase on Tribal lands located inside the state, there is no way to predict whether there will be an increased burden on local governments for medical, law enforcement, or similar services.
Regardless of these uncertainties, if Proposition 1A is approved, signatories to the Pala Compact may operate within the requirements of IGRA. Gambling and gaming activities in California cannot be eradicated simply by voting "no" on both Propositions 1A and 29. The California lottery will remain and California is still required to negotiate a compact with tribes desiring to operate gaming facilities. In fact, another measure, Proposition 17, seeks to expand operation of raffles and similar games to non-profit organizations.
As a result, the only policy that California voters will decide by voting on Proposition 29, is the extent of gaming to be allowed to tribes. A "yes" vote on Proposition 29 and a "no" vote on Proposition 1A will limit the type of gaming activities permitted to tribes to no greater than Class II gaming under IGRA. In contrast, a "no" vote on Proposition 29 and a "yes" vote on Proposition 1A will expand the type of gaming allowed on tribal lands to Class III gaming under IGRA. Voting "no" on both measures will force the Governor to renegotiate, and the legislature to approve another series of compacts. Of course, approval of these compacts could again be brought as a referendum on a future ballot, starting the cycle again.
Although tribal gaming in one form or another existed prior to the existence of the United States, it has enjoyed a great increase in interest since the inception of the California lottery. Government and public concern surrounding tribal gaming seems to have subsided somewhat since voter approval of Proposition 5. Even though California has not historically favored most forms of gambling, thousands of Californians visit tribal gaming establishments each year.
Following Congress’ enactment of the Indian Gaming Regulatory Act ("IGRA"), states were required to negotiate compacts with tribes regarding what types of gaming activities would be allowed in the state. In 1996, the Pala Tribe, as well as other tribes, began negotiating what would eventually become the Pala Compact, and what is currently on the March ballot for voter approval.
Following negotiation and initial approval of the Pala Compact, Proposition 5, the Tribal Government Gaming and Economic Self-Sufficiency Act was approved by the voters of California. Proposition 5 offered an alternative compact to the Pala Compact, but was subsequently found unconstitutional by the California Supreme Court. Advocates of the concept behind Proposition 5 have now brought a similar concept to the voters as Proposition 1A on the March 2000 ballot.
If Propositions 29 and 1A both fail, the State of California is still required under IGRA to negotiate compacts with tribes that desire to operate gaming facilities. If both Propositions are approved, however, Proposition 1A would render Proposition 29 moot because the provisions under the Proposition 1A compacts are more favorable to the tribes since they permit Class III gaming activities, such as slot machines.
Regardless of which Proposition receives the more affirmative votes, the terms of the approved compacts will become effective. Approval of the Proposition 29 compacts will limit the type of gaming activities permitted to tribes to no greater than Class II gaming under IGRA. In the alternative, approval of the Proposition 1A compacts will expand the type of gaming allowed on tribal lands to Class III gaming under IGRA. In any case, the Governor will be authorized to negotiate and conclude compacts, tribes will comply with IGRA, and Indian gaming will remain in California.