Legislature(2003 - 2004)

04/21/2004 01:53 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 552                                                                                                            
                                                                                                                              
     An Act relating to gambling and gaming.                                                                                    
                                                                                                                                
Co-Chair  Harris MOVED  to  ADOPT Committee  Substitute  Work                                                                   
Draft Version I  dated 4-20-04 as the version  of legislation                                                                   
before the  Committee. There  being NO  OBJECTION, it  was so                                                                   
ordered.                                                                                                                        
                                                                                                                                
TOM  WRIGHT, STAFF  TO REPRESENTATIVE  HARRIS, explained  the                                                                   
differences between the original  bill and Work Draft Version                                                                   
I.                                                                                                                              
                                                                                                                                
Mr. Wright stated that Version I deleted the following:                                                                         
                                                                                                                                
     -  all references  to the Alaska  Gaming Commission  and                                                                   
     its  supervision  of  charitable  gaming  found  in,  or                                                                   
     related to, AS 05.15;                                                                                                      
     - Section 2  from the original bill that  gave authority                                                                   
     to the Alaska Gaming Commission  to suspend a license or                                                                   
     permit for a violation of AS 05.15;                                                                                        
     - Section 3  from the original bill that  gave authority                                                                   
     to  the  Alaska  Gaming  Commission  to  administer  the                                                                   
     provisions of AS 05.15;                                                                                                    
     -  Section 4  from  the original  bill  that provided  a                                                                   
     definition  of the  Alaska  Gaming  Commission under  AS                                                                   
     05.15.                                                                                                                     
                                                                                                                                
Mr. Wright  stated that  Work Draft Version  I also  made the                                                                   
following changes:                                                                                                              
     - on page 2, line 21,provided a definition of a public                                                                     
     officer  of the State  and gave  it the same  definition                                                                   
     found in AS 39.52.960;                                                                                                     
     - on page 3, line 2, further defined the grounds for                                                                       
     removal of  a commissioner.   This includes  the failure                                                                   
     of  a  commissioner  to  attend  at  least  50%  of  the                                                                   
     meetings in any 12-month period;                                                                                           
     - on page 5, line 27, provided an appeals process which                                                                    
     allows  a person  to  seek judicial  review  of a  final                                                                   
     administrative order of the  commission as defined in AS                                                                   
     44.62.560  and  44.62.570  (judicial  review  under  the                                                                   
     Administrative Procedures Act);                                                                                            
                                                                                                                                
Mr. Wright continued explaining that Version I also:                                                                            
                                                                                                                                
     - deleted subsection 10 on  page 10 of the original bill                                                                   
     that  required  a  person  applying for  an  owner's  or                                                                   
     supplier's  license   to  provide  information   of  the                                                                   
     amount,  date   and  method  of  payment   of  political                                                                   
     contributions, loans,  donations or other  payments to a                                                                   
     candidate or  office holder for the previous  five years                                                                   
     before the date the person applied for a license;                                                                          
     - on  page 11, line  13, added subsection  (i). Requires                                                                   
     an applicant for a license  to submit to the commission,                                                                   
     fingerprints  and  fees required  by  the Department  of                                                                   
     Public  Safety for  criminal justice  information  and a                                                                   
     national criminal history  record check.  The commission                                                                   
     is  then required  to forward fingerprints  and  fees to                                                                   
     the  department   for  a  report  of   criminal  justice                                                                   
     information    under   AS   12.62   (Criminal    Justice                                                                   
     Information   Systems  Security   and  Privacy)   and  a                                                                   
     national  criminal history  record check.   The  results                                                                   
     will be used to then evaluate applicants.                                                                                  
                                                                                                                                
Mr. Wright emphasized that the change adding subsection (i)                                                                     
must be included for the department to get permission to                                                                        
request this information.                                                                                                       
                                                                                                                                
Mr. Wright noted the following changes in Version I:                                                                            
                                                                                                                                
     -  on  page 16,  line  5,  clarified language  that  any                                                                   
     income earned  on the principal of a cash  or negotiated                                                                   
     securities  bond will  be  paid to  the  benefit of  the                                                                   
     licensee;                                                                                                                  
     -  on  page 16,  line  25,  rewrote subsection  (h)  for                                                                   
     clarity purposes;                                                                                                          
     -  on page 30, line 22, added  security and surveillance                                                                   
     services  and supplies and  money counting  services and                                                                   
     supplies to the definition of supplier's license; and                                                                      
     - deleted  Sections 10  and 11  from the original  bill.                                                                   
     Section  10   repealed  the  definition   of  department                                                                   
     (Department  of  Revenue) since  the  commission was  to                                                                   
     provide  supervision  of charitable  gaming  activities.                                                                   
     Section 11  instructed the revisor to  change references                                                                   
     to  the  commissioner  and  department in  AS  05.15  to                                                                   
     commission.                                                                                                                
                                                                                                                                
Representative  Stoltze  asked  if  he had  looked  into  the                                                                   
ramifications of  the Indian gaming  issues. Mr.  Wright said                                                                   
that he  was in contact with  the Department of Law,  and the                                                                   
request is under review.  Mr. Barnhill could address it.                                                                        
                                                                                                                                
Representative Stoltze  asked if it  is the intent to  have a                                                                   
sole  source contract,  and  whether  there is  expertise  on                                                                   
Indian gaming  within the Department  of Law and  Legislative                                                                   
Legal Services.  Mr. Wright deferred to Mr. Barnhill.                                                                           
                                                                                                                                
Co-Chair  Harris  concurred  with   Representative  Stoltze's                                                                   
concerns.    He  thought  that  there  might  be  a  lack  of                                                                   
expertise in that area because  gaming is not a major part of                                                                   
Alaska's economy.                                                                                                               
                                                                                                                                
MIKE BARNHILL, ASSISTANT ATTORNEY  GENERAL, DEPARTMENT OF LAW                                                                   
(DOL),  agreed  that Representative  Stoltze's  concerns  are                                                                   
valid. As with  any unclear issue of law, the  decision falls                                                                   
to the  courts. While the DOL  can provide its  best analysis                                                                   
and evaluation  of legal  questions, it  cannot predict  with                                                                   
certainty what a court would decide.   Mr. Barnhill said that                                                                   
he  and  experts  in Indian  gaming  and  law  discuss  these                                                                   
issues.                                                                                                                         
                                                                                                                                
Representative  Stoltze asked  if it  should be a  legitimate                                                                   
concern  of the  policymakers  on  this Committee  that  with                                                                   
passage of  the bill, the  sole source contract  in Anchorage                                                                   
could  provide a  legal  remedy for  Native  gaming in  other                                                                   
communities  and  other sites  in  Anchorage.   Mr.  Barnhill                                                                   
replied that passage of the bill would allow Indian gaming.                                                                     
                                                                                                                                
Representative Joule  asked if the  State has a  concern that                                                                   
Indian gaming could result from  this bill. Mr. Barnhill said                                                                   
that the DOL  declines to express views on  policy issues. He                                                                   
was unaware of the Department having a concern.                                                                                 
                                                                                                                                
Representative Croft  asked if it would be possible  to get a                                                                   
ruling or  declaratory judgment on  the status of  the tribes                                                                   
and  their   lands.  Mr.   Barnhill  had   spoken  with   the                                                                   
Solicitor's Office  in the Department of the  Interior and he                                                                   
noted that  most of  the requests  for declaration  of Indian                                                                   
land were turned down. Indian  lands may have a different set                                                                   
of  facts pertinent  to  the  regulation of  each  particular                                                                   
parcel. He doubted  the possibility of getting  a declaratory                                                                   
judgment because it's on a case-by-case  basis. Only a few of                                                                   
the seven  or more Alaskan  cases before the  National Indian                                                                   
Gaming Commission  (NIGC) succeeded  in obtaining  a decision                                                                   
of being Indian lands: Metlakatla, Kake and Klawock.                                                                            
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Barnhill explained that these  were requests by the tribe for                                                                   
an  Indian  land  declaration   from  the  NIGC  rather  than                                                                   
lawsuits.  The Department intervened  in the Barrow case, and                                                                   
attempted  to intervene in  the Kake  and Akiachak  cases but                                                                   
was unsuccessful.                                                                                                               
                                                                                                                                
SUSAN BURKE, ATTORNEY,  JUNEAU, stated that she  was asked by                                                                   
Mr. Green to  look into the Indian gaming issues  relating to                                                                   
the bill.                                                                                                                       
                                                                                                                                
Representative  Croft  asked  if  there  is  a  procedure  to                                                                   
determine the status of Alaska  lands under the Indian Gaming                                                                   
Act before enacting this legislation.                                                                                           
                                                                                                                                
Ms. Burke  responded that  village lands  are not subject  to                                                                   
any  alienation  restrictions  and explained  that  the  only                                                                   
lands  held  with  federal  restrictions  on  alienation  are                                                                   
individual Native  allotments. It would be difficult  for any                                                                   
tribal entity to  persuade the Indian Gaming  Commission or a                                                                   
court  that  it exercised  governmental  authority  over  the                                                                   
allotment of  land.   She pointed out  that the courts  don't                                                                   
issue advisory opinions.                                                                                                        
                                                                                                                                
Ms. Burke  said  that she  did not see  the bill  as a  major                                                                   
threat  to the  proliferation  of gaming  in  Alaska for  two                                                                   
reasons.  The   Alaska  Gaming  Commission  would   have  the                                                                   
authority to determine the games  authorized in the Anchorage                                                                   
casino.  In  the Ninth  Circuit,  the  State is  required  to                                                                   
negotiate  with  an Indian  tribe  only over  specific  games                                                                   
authorized by law  or regulation. She stressed that  it is an                                                                   
economic  issue and  she thought  that  Metlakatla, Kake  and                                                                   
Klawock are  so isolated that  it would be difficult  to come                                                                   
up with an economically feasible proposal.                                                                                      
                                                                                                                                
In response to a question by Representative  Croft, Ms. Burke                                                                   
said that Eklutna had applied  in the past for authority from                                                                   
the Indian Gaming Commission.                                                                                                   
                                                                                                                                
TAPE HFC 04 - 92, Side B                                                                                                      
                                                                                                                              
Ms. Burke  continued discussing  Eklutna.   She thought  that                                                                   
Eklutna   would   be   unable  to   meet   the   governmental                                                                   
jurisdiction  aspect of  Indian lands.   She  didn't know  if                                                                   
there  was a  Native  allotment  within the  general  Eklutna                                                                   
area.                                                                                                                           
                                                                                                                                
Representative  Croft   pointed  out  that  the   two  issues                                                                   
involved in the  Indian Gaming Regulatory Act  (IGRA) are the                                                                   
lands  issue and  governmental  authority  by  the tribe.  He                                                                   
asked if  Native allotments would  be considered  Indian land                                                                   
and not Indian Country.                                                                                                         
                                                                                                                                
Ms. Burke answered  that Indian Country is not  irrelevant in                                                                   
relation  to   the  reservations,   and  after  the   Venetie                                                                   
Decision, people argued the issues  of Indian lands or Indian                                                                   
Country. The  ANCSA settlement  lands are not  Indian Country                                                                   
and  were deeded  to the  regional  and village  corporations                                                                   
without any  alienation on  restriction. The IGRA  definition                                                                   
of lands would not include the ANCSA lands.                                                                                     
                                                                                                                                
Representative   Croft  asked   if  the   Venetie  and   IGRA                                                                   
definitions  are  identical.   Ms.  Burke  said  that  Indian                                                                   
Country  and  Indian  land  are   distinct  definitions.  The                                                                   
definition of Indian lands must  be considered under the IGRA                                                                   
and these  include reservations,  e.g. Metlakatla.  Under the                                                                   
IGRA definition,  Indian lands also  are lands held  in trust                                                                   
with  restrictions  on  alienation  imposed  by  the  federal                                                                   
government.                                                                                                                     
                                                                                                                                
Representative  Croft asked  what it  takes to change  tribal                                                                   
governance  status. He  pointed  out that  President  Clinton                                                                   
changed some of the authority  given to tribes, allowing them                                                                   
to  operate  nonprofit  organizations.  Ms. Burke  said  that                                                                   
Congress has the  authority to change tribal  governance, but                                                                   
not the President.                                                                                                              
                                                                                                                                
Representative Croft  noted that Congress didn't  declare the                                                                   
Venetie Decision Indian Country  yet. Ms. Burke affirmed, and                                                                   
reiterated  that Congress  has authority  over Indian  issues                                                                   
involving lands or powers.                                                                                                      
                                                                                                                                
Representative  Hawker asked  if  passage of  the bill  would                                                                   
expose the State to the intrusion  of [indisc].  Mr. Barnhill                                                                   
affirmed,  and clarified that  he said  "yes" in relation  to                                                                   
Metlakatla. If  Class 3 gaming  were permitted  in Anchorage,                                                                   
Metlakatla would be able to conduct  the same kind of gaming.                                                                   
Outside  of the  known exceptions  of  Metlakatla, Kake,  and                                                                   
Klawock, he thought the odds were  low that another parcel of                                                                   
land  could qualify  as Indian  lands because  there must  be                                                                   
tribal  governance  over  the  land.  He  guessed  there  are                                                                   
relatively  few parcels  with tribal  governing power,  while                                                                   
noting that  no one has done  an exhaustive survey of  all of                                                                   
the potential parcels.                                                                                                          
                                                                                                                                
Representative Fate  asked if Indian  lands held in  trust by                                                                   
the Bureau  of Indian Affairs  (BIA) would become  available.                                                                   
Ms.  Burke said  that all  village  lands are  subject to  no                                                                   
restrictions  on  alienation,  and  she was  unaware  of  any                                                                   
village land qualifying as Indian lands under IGRA.                                                                             
                                                                                                                                
Co-Chair  Williams commented  that Congress  passed the  1991                                                                   
Amendments involving  a different type of trust  similar to a                                                                   
land bank wherein nothing can  be done on village corporation                                                                   
land. The land  can't be taxed or worked. Ms.  Burke affirmed                                                                   
that it applies to regional corporation land.                                                                                   
                                                                                                                                
In  response to  a question  by  Representative Stoltze,  Ms.                                                                   
Burk said no  one knows how Eklutna's application  would have                                                                   
fared  before  the  Indian  Gaming  Commission  because  they                                                                   
withdrew it  once the Legislature  repealed the  "Monte Carlo                                                                   
Nights."   She  was not  sure if  the Legislature's  concerns                                                                   
were reasonable or  unwarranted, or if Indian  Gaming was the                                                                   
only reason prompting  the repeal of the Monte  Carlo Nights.                                                                   
In  her view,  Eklutna would  have hard  time persuading  the                                                                   
Commission that  it exercises policing and taxing  powers and                                                                   
other governmental  authority  over its  lands to qualify  as                                                                   
Indian  lands under  the definition.  Lawyers always  dispute                                                                   
these issues, she said.                                                                                                         
                                                                                                                                
Representative Croft  brought up page  4 of 6 on  Fiscal Note                                                                   
Component  2476, expressing  surprise at  how little  revenue                                                                   
would  derive from  tourists visiting  the Anchorage  casino.                                                                   
He asked the source of the participation rates.                                                                                 
                                                                                                                                
LARRY MEYERS,  DEPUTY DIRECTOR,  TAX DIVISION, DEPARTMENT  OF                                                                   
REVENUE, replied  that the participation rates  were based on                                                                   
Oregon's 8 casinos  and Washington's 17 casinos.  Two percent                                                                   
of the tourist population would visit the Anchorage casino.                                                                     
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Mr.                                                                   
Meyers  clarified that  the  $50 million  in  revenue is  the                                                                   
"after prize receipts:"  not total money circulated,  but the                                                                   
profit to the industry.                                                                                                         
                                                                                                                                
Representative Hawker  referred to the  same chart on  page 4                                                                   
of 6 of  the fiscal note,  asking if Total  Tourists includes                                                                   
both domestic and international  tourists. Mr. Meyers replied                                                                   
that  the figure  is  derived  from Northern  Economics,  and                                                                   
reflects only the total domestic tourists statewide.                                                                            
                                                                                                                                
At Ease:     2:58 P.M.                                                                                                        
Reconvene:   3:02 P.M.                                                                                                        
                                                                                                                                
Representative  Foster MOVED to  report CSHB 552(FIN)  out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB 552(FIN)  was REPORTED out of Committee  with individual                                                                   
recommendations  and  two  new  indeterminate  fiscal  impact                                                                   
notes.                                                                                                                          
                                                                                                                                

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