The Committee on Government Affairs was called to order at 8:00 a.m., on Wednesday, February 3, 1999. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Mrs. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Ms. Gene Segerblom

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Debbie Cahill, Director of Government Relations,

Steve Williams, School Planner and Government Affairs Representative,

Washoe County School District

Martha Tittle, Legislative Representative, Clark County School District

Carole Vilardo, President, Nevada Taxpayers Association

Dino DiCianno, Deputy Executive Director, Department of Taxation,

David Howard, Greater Reno-Sparks Chamber of Commerce

Peter D. Krueger, Nevada Petroleum Marketers and

Georgi Cody, Nevada Motor Transport Association

Mary Lau, Executive Director, Retail Association of Nevada

Chas Horsey, Acting Director, Department of Business and Industry,

James Jeppson, Chief Insurance Assistant, Division of Insurance,

John Wiles, Division Counsel, Division of Industrial Relations,

Barbara McKenzie, Reno

Robert S. Hadfield, Executive Director,

Thomas J. Grady, Executive Director,

Douglas E. Walther, Senior Deputy Attorney General,

Amy Hill, Vice President, The McMullen Strategic Group, representing

Chairman Bache informed the committee the Senate Committee on Government Affairs requested a joint meeting with the Assembly Committee on Government Affairs on February 11, 1999, at 3:00 p.m. for the purpose of hearing comment from Southern Nevada Strategic Planning Authority. He asked the committee members to consider whether the proposed meeting time was acceptable in light of their other concerns.

· BDR 19-11 – Revises provisions governing public access to public records of governmental entities (A.B. 102).

ASSEMBLY BILL NO. 11 - Expands mandatory subject of bargaining relating to

Warren Hardy, Nevada Association of School Administrators and Clark County Association of School Administrators (hereafter referred to as the Associations), testified. He reminded the committee the legislature dealt with the subject matter of A.B. 11 during the last legislative session. He stated the Associations did not favor expansion of the scope of mandatory bargaining and did not view A.B. 11 as causing such expansion.

Mr. Hardy pointed out Nevada Revised Statutes (NRS) currently dealt with transfer and reassignment of teachers. The Associations believed, as a matter of equity, school administrators should be included under the same statutory provisions which covered teachers. The Associations had hoped to negotiate with Clark County School District, during the last legislative interim, for development of a policy regarding transfer and reassignment of school administrators; however, they were unsuccessful.

Douglas Byington, Nevada Association of School Administrators, testified. He referred to the Dodge Act and pointed out at the time that act was created, administrators were considered to be " . . . on one side of the fence . . . " and teachers on the other. An evolution had since occurred in the relationship between administrators and school superintendents and boards, and most school districts now conducted formal negotiations with their administrators.

Mr. Byington contended equity was the issue to be considered. Administrators could negotiate every item discussed in NRS 288.150 except transfer policy, and the Associations believed school administrators should have the right to negotiate that item also. He explained pursuant to the statutory definition of "teacher," a teacher was any person licensed to teach in Nevada, and most school administrators were so licensed. During the last legislative session, he stated, the Associations attempted to have NRS amended to read "licensed personnel of the county," and they supported the policy such an amendment would establish.

Debbie Cahill, Director of Government Relations, Nevada State Education Association (NSEA), testified. She declared NSEA supported A.B. 11 as written. She maintained amending the existing statute by the deleting the word "teachers" and inserting the words "persons employed by a school district" would cause inclusion of non-licensed, support personnel. NSEA believed policies governing transfer and reassignment of personnel had much to do with quality of life issues and on-the-job morale. In terms of the " . . . overall job family. . . ," support personnel were an important factor, and if individuals other than teachers were to be included under the statutory provisions being discussed, NSEA would like to see support personnel among those included.

Assemblywoman Segerblom asked whether NSEA opposed inclusion of the word "licensed" in A.B. 11. Ms. Cahill responded NSEA would like A.B. 11 to remain as written, because, in its present form, it included support personnel.

Charlotte Brothwell, Executive Director, Nevada Classified School Employees Association (NCSEA), testified. She informed the committee NCSEA represented approximately 2,500 classified professionals, such as clerical personnel, bus drivers, food service workers, and maintenance and custodial workers, who worked in Nevada’s public schools. She submitted a coloring book (Exhibit C), used by NCSEA as a public relations tool, to provide the committee with insight into the nature of NCSEA.

Ms. Brothwell declared NCSEA supported A.B. 11, as written, and said the amendment set forth on line 17, page 2, of the bill, removed the discriminatory flavor of existing law. All educational employees, she maintained, worked side by side for the benefit of Nevada’s students, and classified professionals sought the same opportunity to negotiate transfer and reassignment policies as was currently afforded teachers. She observed A.B. 11 appeared to have little or no fiscal impact.

Assemblywoman Gibbons referred to the change from the word "under" to the words "pursuant to," on page 3 of A.B. 11, and asked what was meant by that change. Ms. O’Grady, Committee Counsel, responded such changes were made to achieve statutory consistency, and the one to which Ms. Gibbons referred did not really alter anything.

Steve Williams, School Planner and Government Affairs Representative, Washoe County School District, testified in opposition to A.B. 11. He explained Washoe County School District was opposed to the bill because it would lengthen an already lengthy bargaining process and overburden the district’s limited staff. Even more important, he stated, was the issue of employee transfers within the district. In light of Washoe County School District’s transient and growing student population, the district needed more, rather than less, flexibility to employ its personnel resources. Although Washoe County School District supported fair and humane employee contracts and wanted to accommodate its employees regarding where those employees desired to work, its overriding consideration must be the needs of its 52,000 school children.

Larry Spitler, Legislative Representative, Clark County School District, testified in opposition to A.B. 11 by reading from prepared text (Exhibit D). He stated Clark County School District currently negotiated transfer policies only with respect to teachers and explained the procedure utilized when a teacher requested a transfer. He maintained expanding that procedure to encompass non-teaching personnel would create a system which lacked the needed flexibility to move administrative staff quickly in order to serve students’ needs. He pointed out A.B. 11 did not define "transfer" and contended making transfer negotiations available to all school employees would permit an employee to contest a transfer from one position to a like position within the same building.

Ms. Segerblom asked whether Mr. Spitler believed it was important staff employees remain at the school in which they were employed. She suggested principals and teachers became used to their schools’ staff and it was very important for staff employees to remain where they were. Mr. Spitler responded he believed it was desirable for staff employees to remain in the schools in which they were employed as long as their working-relationships were good; however, A.B. 11 would neither prevent that nor promote it.

Assemblywoman Tiffany asked for figures as to the number of support staff and the number of teachers. Mr. Spitler replied he did not have exact figures with him, but Clark County School District had approximately 13,000 teachers and 22,000 employees. He did not know the number of administrators relative to the number of teachers and employees but said he could obtain that information for the committee.

Ms. Tiffany asked whether Mr. Spitler’s point regarding the transfer process was that it required utilization of time and staff. Mr. Spitler responded his testimony pertained to the current process through which teachers could negotiate their assignments to particular locations. Ms. Tiffany asked whether the same process would be utilized if transfer negotiation procedures were expanded to include support staff. Mr. Spitler replied A. B. 11 would allow transfer of support staff to be subject to negotiation; the process utilized to effect such transfers would depend on the result of negotiations.

Ms. Tiffany asked whether the point of Mr. Spitler’s testimony was: 1) A.B. 11 would double the number of employees to be transferred while timing of the transfer process would remain the same; and 2) employees could request transfers anytime during a year rather than only in April, May, or June. Mr. Spitler responded the time period during which support staff could request transfers would be subject to negotiation, just as it was with respect to teachers. Clark County School District’s point was the issue of assignment must be dealt with at some point in time, and administrators needed the flexibility necessary to place their best employees where they were most needed. He asserted a school district was responsible for both academic results and the performance of its schools in their entirety.

Assemblywoman Berman inquired whether Mr. Spitler knew how many school employees, per year, currently requested transfers. Mr. Spitler asked whether Ms. Berman’s question referred to teaching staff. Ms. Berman replied affirmatively. Mr. Spitler responded he did not know the specific number but could obtain that information for Ms. Berman.

Assemblywoman Von Tobel asked whether, currently, a support employee could request transfer to another school if a position became open at that school. Mr. Spitler replied affirmatively.

Martha Tittle, Legislative Representative, Clark County School District, testified in further response to Ms. Von Tobel’s question. She explained vacancies in support staff positions in Clark County School District were advertised, and individuals could apply for those positions based on their qualifications.

Ms. Von Tobel inquired whether an employee who held one staff position could apply for another staff position for which there was an opening. Ms. Tittle replied in the affirmative.

Chairman Bache queried whether the issue of involuntary transfers rather than that of voluntary transfers gave rise to A.B. 11. Ms. Tittle responded affirmatively.

Chairman Bache closed the hearing on A.B. 11.

ASSEMBLY BILL NO. 12 - Makes various changes concerning administrative

Carole Vilardo, President, Nevada Taxpayers Association, testified. She advised the committee A.B. 12 was similar to the second reprint of Assembly Bill 171 of the Sixty-ninth Session.

Ms. Vilardo stated many businesses were very small, and if they knew the laws governing them, it was fortunate. However, it was nearly impossible for such small businesses to have knowledge of an agency’s internal documentation or interpretations of law. That difficulty was the reason for A.B. 12.

Ms. Vilardo maintained if a business was to be audited and fined, assessed fees or penalties, or have a deficiency determination imposed on it, that business had the right to know the basis for the audit. She pointed out A.B. 12 did not preclude fiscal or compliance audits. However, the bill provided if penalties, interest, or other fees were assessed as the result of such audits, they must be assessed on some basis, such as a regulation, of which the business against which they were assessed should, reasonably, have knowledge.

Ms. Vilardo said there were differences between A.B. 12 and A.B. 171 of the Sixty-ninth Session and explained the words "without limitation," which appeared on page 1, line 6, and on page 2, line 2, of A.B. 12, were added language.

Ms. Vilardo stated agreements were reached after several workshops were held to develop a bill which would protect business and provide state agencies with a level of comfort. However, Charlotte Crawford of the State of Nevada’s Department of Human Resources had expressed some valid concerns about A.B. 12. Those concerns pertained to federal regulations " . . . that come down that are not interpreted or anything else, and there’s a gray area in this, not clearly defined, but they take those federal regulations and strictly they are encoded. There’s no interpretation or anything else that is involved with the acceptance of those federal regulations."

Ms. Vilardo urged the committee to pass A.B. 12. She suggested for clarification, language should be included in the section of the bill, on page 2, which spoke of "a manual of internal policies and procedures" to provide that federal regulations which were merely encoded, not interpreted, would not be subject to the bill’s provisions. She discussed some of the steps involved in the procedure for establishing a regulation and pointed out that procedure would be extremely cumbersome if applied to encoding of federal regulations.

Ms. Vilardo said Secretary of State Dean Heller informed her of a potential problem with respect to his office. She pointed out one duty of the Secretary of State’s office was to interpret election laws, and there were instances when an immediate interpretation was necessary. She observed the Secretary of State’s office could not afford to be " . . . captured within these provisions . . . " which would require them to undergo a regulatory process because the election issues with which that office dealt were of great immediacy.

Ms. Vilardo reiterated the purpose of A.B. 12 was not to preclude compliance audits. Rather, its purpose was to ensure if an agency used an internal policy as the basis for citing a business for noncompliance, the business was aware of that policy. She maintained if such an internal policy was of general applicability, it should be made into a regulation and appear in the Nevada Administrative Code (NAC).

Ms. Vilardo said the fact regulatory agencies disseminated information regarding regulations via the Internet was brought up during discussions. She declared most businesses did not utilize the Internet, and although some agencies’ web pages were wonderful, it was necessary to know how to access those pages.

Assemblyman Lee referred to the language "signals and other traffic devices that conform", set forth on page 2, line 15, of A.B. 12, and asked why that language was sufficiently important to be included in the bill. Ms. Vilardo explained the Department of Motor Vehicles (DMV) was concerned about the bill’s effect on some of its activities which did not include imposition of monetary fines. The purpose of the language to which Mr. Lee referred, through and including line 17 on page 2, was to create an exclusion for DMV.

Ms. Vilardo stated Section 2 of A.B. 12 caused some local governments much consternation. She pointed out that section was not included in the first reprint of A.B. 171 of the Sixty-ninth Session. It was added at the behest of the city of Reno, whose city attorney wanted it included in the bill for clarification purposes. It now appeared other local governments were also concerned about that section.

Ms. Vilardo declared, "I would like to go on record, right now, as saying if the committee chooses to remove that entire section, I am perfectly happy. It is not a section I had any concern with. I was allowing the bill to be used as a vehicle for something that was represented was needed."

Assemblywoman Freeman asked, "When you talk about an interpretation . . . are you saying you have an A.G.’s (Attorney General’s) Opinion regarding the interpretation?" Ms. Vilardo responded she did not object to a published Attorney General’s Opinion which rendered an interpretation being excluded from the provisions of A.B. 12. However, she did object to the exclusion of advisory letters because such letters were not always made public.

Mrs. Freeman asked whether she could assume Ms. Vilardo’s earlier testimony about exclusions did not pertain to section 2 of A.B. 12. Ms. Vilardo replied the first section of the bill dealt with the State of Nevada, state agencies and the Administrative Procedures Act.

Assemblyman Neighbors voiced concern that the language on page 1, line 6, and page 2, line 2, was extremely broad and all-inclusive. Ms. Vilardo deferred to Eileen O’Grady, Committee Counsel, to address Mr. Neighbor’s concern. Ms. O’Grady explained the word "including" was subject to different interpretations by courts of law, and the language "includes without limitation" was utilized for purposes of clarification. She said if there was a desire to have a "non-exhaustive" list, the word "mean" could be utilized, followed by a precise list of those things deemed to constitute a regulation.

Ms. Vilardo asserted businesses expected to conduct their own business and not that of the state. Although businesses accepted obligations imposed on them by statute, they should have a reasonable expectation of knowing " . . . the basis on which that’s being done . . .."

Ms. Tiffany indicated one of her constituents was having problems with the State of Nevada’s Department of Taxation and asked whether businesses heard from that department more than others. Ms. Vilardo responded the major problems of which she was told had to do with the Department of Taxation, the Occupational Safety and Health Administration, and the Division of Environmental Protection.

Ms. Tiffany asked whether the agencies Ms. Vilardo enumerated were those with which business had the most difficulty. Ms. Vilardo replied affirmatively.

Ms. Tiffany referred to the problem her constituent encountered with the Department of Taxation and asserted, in addition to the problem of information concerning regulations reaching the public, there was a problem with the attitude some governmental agencies displayed in their dealings with people. She asked how the problem of attitude could be addressed. Ms. Vilardo responded she did not know how the "personality issue" could be resolved.

Ms. Vilardo declared there were major problems with dissemination of information. She recalled appearing before the legislative tax committees and money committees, in 1991, to request funds to enable a state agency to print information which needed to be provided to businesses. She said those funds were not granted. The Nevada Taxpayers Association, she stated, raised money to pay for printing of 100,000 pamphlets regarding the first tax payers bill of rights because funds were not allocated by the legislature for that purpose.

Dino DiCianno, Deputy Executive Director, Department of Taxation, State of Nevada, testified. He expressed the Department of Taxation’s support for A.B. 12 in its present form. The Department of Taxation favored clearly defining what was and was not a regulation as well as defining what constituted an internal policy of an agency and what that policy meant to a taxpayer. Succinct definition would provide clear and distinct language to assist the department’s hearing officers and afford a clear and distinct interpretation with respect to appeals presented to the department’s governing board, the Nevada Tax Commission.

Mr. DiCianno emphasized he was in favor of due process but expressed concern about the language "as if the hearing officer were a state agency," set forth in sections 2 and 3 of A.B. 12, on lines 24 and 32 of page 2, respectively. He explained NRS 233B contained definitions clearly defining "agency" as an executive agency of the executive branch of government. He questioned whether there was need for additional language to link sections 2 and 3 of A.B. 12 to NRS 233B.

David Howard, Greater Reno-Sparks Chamber of Commerce, testified. He declared the Greater Reno-Sparks Chamber of Commerce wished to go on record as being in favor of A.B. 12, which it perceived as continuing a process begun in approximately 1988 or 1989 to shed light on the regulatory process of state government.

Peter D. Krueger, Nevada Petroleum Marketers and Convenience Store Association (NPM & CSA), testified in support of A.B. 12. He cited an example of lack of dissemination of information to businesses. During the sixty-ninth session, a bill was passed which " . . . tightened up on the use of a dyed fuel on the highway . . . to help to eliminate fraud." However, a provision of federal law permitting state and local governments to use a dyed, diesel fuel product when operating their vehicles on the highways was overlooked. As a result, local governmental entities were first taxed and then given refunds, a situation costly for both state government and businesses. Working with the State of Nevada’s Department of Motor Vehicles and Public Safety, NPM & CSA was able to effect a change (in the way the state’s law was administered). However, although local governmental entities were notified of that change, no notification of the change, official or otherwise, had been provided to those who collected the taxes involved. Mr. Krueger maintained that example was representative of what occurred hundreds of times. He expressed the opinion dissemination of information by state agencies should be given higher priority.

Ms. Gibbons asked whether NPM & CSA favored eliminating sections 2 and 3 of A.B. 12. Mr. Krueger maintained common sense dictated any person who was aggrieved should have the right to judicial review. He stated he did not know what sections 2 and 3 had to do with the purpose of A.B. 12 nor why they were included in the bill, and would need to hear more testimony before he could comment on those sections.

Georgi Cody, Nevada Motor Transport Association, testified in support of A.B. 12. She said the addition of section 1, subsection 1(c), provided some protection for businesses which, otherwise, might be unaware of certain state agencies’ policies. The requirement to give public notice of a regulation would place businesses on notice certain regulatory procedures, fees, or similar matters had been adopted with the force and effect of statutory law. Section 1, subsection 1(c)(2), prevented imposition of unfair penalties in the event a state policy, interpretation, or finding of general applicability not subjected to prior public scrutiny was utilized as the basis for those penalties.

Ms. Cody declared Nevada Motor Transport Association urged the committee to support A.B. 12, which it believed protected businesses from being unfairly penalized.

Ms. Segerblom inquired how Nevada Motor Transport Association felt about section 2 of A.B. 12. Ms. Cody replied Nevada Motor Transport Association took no position on section 2.

Mary Lau, Executive Director, Retail Association of Nevada, testified, saying only that the association favored A.B. 12.

Chas Horsey, Acting Director, Department of Business and Industry (hereafter referred to as B & I), State of Nevada, testified. He explained B & I was a large agency comprised of 27 separate and distinct divisions. B & I was not, necessarily, opposed to A.B. 12. The department’s problem was there were many agencies within the department which were regulatory in nature, and many functions the department considered routine and necessary to its work might fall within the jurisdiction of the bill. He indicated James Jeppson and John Wiles would provide examples of the problems B & I perceived regarding the scope of A.B. 12.

James Jeppson, Chief Insurance Assistant, Division of Insurance, Department of Business and Industry, State of Nevada, testified. He stated the Division of Insurance regularly engaged in rulemaking and complied with all requirements of NRS 233B regarding adoption of regulations. In addition, the Division of Insurance frequently issued bulletins to the insurance industry and to the division’s licensees. Those bulletins provided a format to address an immediate need or emergency problem within the insurance industry and were used to:

• Provide instructions on how to comply with the law or succeed in a given endeavor;

• Clarify regulations and statutes;

• Provide reminders of deadlines; and

• Provide interpretations of various laws.

Mr. Jeppson declared the Division of Insurance was concerned section 1, subsection 1(c), commencing with line 9, on page 1, might interfere with the division’s ability to provide the kind of quick response use of bulletins allowed. He cited a situation in which the Division of Insurance learned a group of insurers was canceling contracts with medical providers on a basis the division considered unfair. The division issued a bulletin to the insurance industry stating the division had identified the practice, considered it a violation of law, and directed cessation of the practice.

Mr. Jeppson assured the committee the Division of Insurance made no attempt to sanction any of its licensees based on one of its bulletins. Sanctions were imposed based on violations of either statute or regulations. However, bulletins constituted an interpretation of statute or regulation and provided a means to give a quick reminder or instruction to the division’s licensees. Mr. Jeppson stated he merely wished to bring to the committee’s attention the fact the Division of Insurance engaged in activities such as the issuance of bulletins and that A.B. 12 might interfere with those activities.

John Wiles, Division Counsel, Division of Industrial Relations, Department of Business and Industry, testified. He contended issues which appeared to be black and white, as stated in statutory or regulatory language, often required interpretation.

Mr. Wiles explained the Division of Industrial Relations was administrator of the state’s Occupational Safety and Health Administration (OSHA) plan, and the standards adopted by the Federal Government pursuant to statute were deemed to be Division of Industrial Relations standards. In addition, the Federal Government provided the Division of Industrial Relations with both interpretive letters, based on questions posed to the Federal Government, and compliance letters. It was possible, based on the scope of A.B. 12’s language, such letters would be included under the bill’s provisions. If they were, it would present a problem for the Division of Industrial Relations. Mr. Wiles referred to the language in section 1, on line 9, page 1, of A.B. 12 and asserted the division could find itself constantly engaged in hearings pertaining to regulations.

Mr. Wiles observed there appeared to be no way around that issue for the Division of Industrial Relations. However, he said he would be happy to work with Ms. Vilardo regarding the issues she raised with respect to the state’s OSHA plan and determine whether or not letters from the Federal Government could be included under the language which created an exception to A.B.12

Mr. Wiles declared the Department of Business and Industry was not opposed to A.B. 12 but was merely expressing its concerns regarding the bill’s scope and application.

Ms. Segerblom asked Mr. Wiles in what manner he would change section 1, subsection 1(c). Mr. Wiles responded the word "interpretation" had an extremely broad scope, and he was uncertain how to narrow that scope to both serve the interests expressed by Ms. Vilardo and balance the interests of state agencies in their attempts to do their jobs. He contended there was no desire to create regulations to interpret other regulations.

Mr. Horsey expressed an additional concern of B & I. All state agencies wanted to respond as quickly as possible to their various constituents. If the regulatory process was further complicated, state agencies’ ability to respond in an expeditious manner might be handicapped, and they would receive even more complaints.

Barbara McKenzie, city of Reno, testified. She explained several years ago, the city’s charter was amended to allow provisions of NRS 233B to be utilized in appeals from civil service decisions in situations when the employees affected by those decisions were not represented by a union or other entity. She expressed the city of Reno’s concern about the effect of A.B. 12 on the city’s use of hearing officers with respect to parking violations. She said there was considerable consternation on the part of other local governments about the ramifications of sections 2 and 3 of the bill and requested local governments be given an opportunity to determine whether or not they wanted those sections retained.

Assemblyman Humke pointed out the provisions contained in sections 2 and 3 of A.B. 12 provided citizens with an opportunity for recourse. The drawback was those citizens must go to court, pay filing fees, and perhaps hire an attorney to represent them. However, if those sections were not included in the bill, the status quo, in which local hearing officers sometimes " . . . decline to give an answer . . . " would remain. He asked whether the two alternatives he described were the alternatives available. Ms. McKenzie expressed uncertainty about her qualifications to answer Mr. Humke’s question. She said recourse from the decision of a hearing office was precisely what the city of Reno wished to provide. She maintained representatives of other local governments would testify they would prefer, in some situations, the decisions of their hearing officers be final. Although the city of Reno’s position was that it desired to provide some type of appeal or review process with respect to its hearing officers’ decisions, she did not wish to be placed at odds with other local governments, which did things differently than Reno with respect to hearing officers.

Mr. Humke observed citizens who obtained a bad result from a hearing before a hearing officer believed they had no avenue of appeal and that the officer would ratify the position of the agency involved. Those citizens did not perceive a hearing officer as being neutral and detached. Mr. Humke asked Ms. McKenzie to respond to his observation. Ms. McKenzie replied the city of Reno’s response to the situation Mr. Humke described was embodied in statutory amendments enacted in 1997. She maintained it was up to local governments and the Assembly Committee on Government Affairs to determine whether the sections of A.B. 12 being discussed should be retained or modified to meet Reno’s needs without causing problems for other local governments.

Mr. Humke asked whether Ms. McKenzie’s testimony pertained, specifically, to hearing officers the city of Reno utilized to hold hearings on parking violations. Ms. McKenzie replied affirmatively. Mr. Humke asked whether those hearing officers were neutral and detached from the city of Reno. Ms. McKenzie replied they were. She explained those hearing officers were obtained through contracts, were usually attorneys, and were not employees of the city. Contracts were issued every 6 months to ensure the same individuals did not constantly serve as hearing officers.

Mr. Humke inquired whether Ms McKenzie could furnish statistics as to how many alleged parking violators wished to appeal decisions rendered by the city of Reno’s hearing officers. Ms. McKenzie responded she was certain there were such statistics, and she could obtain them for the committee.

Robert S. Hadfield, Executive Director, Nevada Association of Counties (NACO), testified. He stated NACO appreciated the problem perceived by the city of Reno. However, Reno appeared to have a unique way of addressing the issue of hearing officers, and NACO did not share the city’s concerns. NACO’s concern about A.B. 12 was the bill’s proposed language was very inclusive and, in attempting to address a very narrow issue pertaining to the city of Reno, would impact NACO’s membership. NACO hoped the city could address the issue through its city ordinances and did not believe it good public policy to impose on other local governments a broad solution to a problem which affected a single, governmental entity in a very narrow area of concern.

Mr. Hadfield expressed NACO’s willingness to work with the city of Reno to resolve NACO’s concern. However, if no resolution could be reached, NACO requested the committee process A.B. 12 without the inclusion of sections 2 and 3.

Thomas J. Grady, Executive Director, Nevada League of Cities and Municipalities (hereafter referred to as the League), testified. He said he was uncertain whether Ms. Vilardo requested section 2 of A.B. 12 be deleted, but he assumed it she meant to request that both sections 2 and 3 be deleted.

Mr. Grady explained some local governments utilized either municipal courts or "the counsel" to "handle these items," while some, larger, local governments utilized hearing officers. Although the League believed the provisions of A.B. 12 pertaining to hearing officers would affect few of Nevada’s cities, the League would like to work with the city of Reno, Ms. Vilardo, and the committee to reach a compromise which would make the bill acceptable to all parties.

Ms. Gibbons asked Ms. Vilardo to state her position regarding Section 3 of A.B. 12. Ms. Vilardo replied sections 2 and 3 paralleled one another. While she was happy to have A.B. 12 used as a vehicle for those provisions, if needed, they had nothing to do with her intent, and if sections 2 and 3 impeded the bill’s passage, she would request their removal.

Chairman Bache inquired of Ms. McKenzie whether any bills pertaining to the city of Reno’s charter would be brought before the legislature during the current legislative session. Ms. McKenzie replied the city had one such bill. Chairman Bache asked whether that bill would be an appropriate vehicle for language which would address Reno’s problem without impacting other cities and counties which had no similar problem. Ms. McKenzie responded Chairman Bache’s suggestion should be investigated. She expressed uncertainty as to how the city of Reno’s ordinance pertaining to hearing officers and parking violations was written. However, she said, making reference in the city’s charter to appeals from decisions of the city’s hearing officer was a possibility.

Chairman Bache asked Ms. McKenzie to report back to the committee regarding the possibility of utilizing his suggestion.

Mr. Humke posed the question of whether Chairman Bache’s suggestion would not exacerbate a problem described to the committee by its research staff on the preceding day, regarding lack of commonality among local government charters throughout the state. He suggested Ms. McKenzie give thought to that question.

Douglas E. Walther, Senior Deputy Attorney General, Office of the Attorney General (A.G.), State of Nevada, testified. He stated the A.G.’s concerns about A.B. 12 pertained solely to section 1 of the bill. However, the A.G. had no problem with the intent behind that section and did not believe agencies should create rules as they went along or keep their standards, policies, or expectations of those they regulated hidden from the public. Mr. Walther pointed out courts had addressed the issue of making up rules along the way and the term used to characterize such conduct was "ad hoc rulemaking." If an agency engaged in ad hoc rulemaking, it was, in essence, adopting a regulation without utilizing the procedures intended to inform the public and allow it an opportunity to comment, which was why ad hoc rulemaking was undesirable.

Mr. Walther explained the A.G.’s concern about A.B. 12 pertained to the attempt to place a "finer point" on the definition of "regulation." The A.G. understood the purpose of the bill was to provide clarification and to call state agencies’ attention to the need to establish regulations. However, from what he heard about the abuses which necessitated the bill, Mr. Walther believed those abuses were covered under the existing statutory definition of "regulation." If an agency exceeded its statutory authority and imposed a standard of conduct not covered by a regulation, imposition of that standard constituted a de facto regulation, which was invalid and could be challenged.

Mr. Walther said the language of section 1 of A.B. 12 had the potential to make the definition of what constituted a regulation less definite and more confusing to agencies and their counsel rather than more concise and clear. Therefore, that language might be counterproductive and hamper state agencies in carrying out the missions imposed on them by statute. In addition, there was the potential that agencies might interpret the language as requiring the adoption of regulations in many situations in which even the sponsors of the bill did not intend for that to happen. "For instance," he said, "regulations interpreting regulations that interpret a statute." He said he did not believe the desire existed to create a situation in which regulations were being layered on top of other regulations.

Mr. Walther pointed out the legislature sometimes established a standard or definition which it purposely left open to interpretation by state agencies when they applied that standard or definition to various situations they might encounter. As an example, he cited the phrase "an unsafe and unsound banking practice." He explained that broad phrase was contained in law because if an attempt was made to specifically define what constituted an unsafe and unsound banking practice, someone would engage in a practice not covered by that definition but equally as dangerous to the public as those practices which were covered.

Mr. Walther maintained the effect of requiring an agency to go through a rulemaking process before it could interpret either a statute or one of its own regulations might be to allow a wrongdoer to escape scrutiny for the period of time the agency was engaged in that process. Also, since rules, generally, could only be applied prospectively, previous wrong conduct might have to be forgiven.

Mr. Walther stated the A.G. had an obligation to advise state agencies and interpret law for them. He contended no matter how hard the legislature tried to define things and provide state agencies with guidance, those agencies regularly approached the A.G. to obtain interpretations of statutory definitions or standards. Although he understood there might be willingness to exempt A.G. opinions from the provisions of A.B. 12, under the bill’s current language, all A.G. opinions interpreting statutory or regulatory language would first be subject to a separate rulemaking procedure and then made a part of the regulations. For the most part, A.G. opinions were a matter of public record. However, sometimes the A.G. rendered an opinion which needed the protection of attorney-client privilege. Therefore, the A.G. could not have a policy imposed which required all A.G. opinions be published.

Mr. Walther contended amending the definition of "regulation" as proposed in A.B. 12 would, potentially, affect every state agency and every deputy attorney general in the A.G.’s office. Although the A.G. had attempted to work with the original language of the bill and include some exceptions in that language, on further reflection and review of the bill’s current language, the A.G. determined there was a fundamental flaw in the concept of attempting to more finely define "regulations." State agencies were different from one another. Although some could issue citations and impose fines immediately, most state agencies must first give notice and provide an opportunity for a hearing. If it was alleged an agency was exceeding its authority and either making up a rule or enforcing a hidden standard or rule, the opportunity existed to address that conduct.

Mr. Walther suggested, because there were many differences between state agencies and the procedures they used to interact with the public, a more appropriate way to address the abuses under discussion was to address them through the statutes governing those agencies which engaged in abuses.

Mr. Walther explained existing law contained methods of dealing with abuses by state agencies. One method was to bring a concern, informally, to the attention of the head of an agency. Mr. Walther maintained if his client’s auditors or examiners were creating a rule or imposing a standard of conduct not generally known to the industry it regulated, his client would want to know. Another legal remedy was a citizen’s right to petition an agency to adopt a regulation. If an agency either engaged in regulating through ad hoc rulemaking or was perceived as doing so, a business or citizen could petition that agency to adopt clarifying regulations. The agency would then have 30 days to respond to the petition.

Mr. Walther said the law also provided for advisory opinions. A citizen had the right to request an agency to clarify how the laws or regulations the agency used to regulate him applied to his conduct. The agency then had a specific period of time in which to respond and state its position regarding the individual’s conduct; its stated position would then be binding. Mr. Walther pointed out A.B. 12 would change the definition of "advisory opinion" to provide such an opinion could not be one of general applicability. However that change constituted no problem, because advisory opinions were intended to confine themselves to the specific set of facts described in them. He maintained advisory opinions were helpful to both state agencies and the public because they assisted state agencies in remaining consistent in their activities. Advisory opinions also provided guidance with respect to matters in the process of being defined or clarified.

Ms. Gibbons said it appeared part of the problem was the public’s inability to access information it needed, in order to comply with state agencies’ regulations, through the Internet. She asked whether information was contained on the Internet about the procedures Mr. Walther testified were available to the public. Mr. Walther replied some agencies had made more progress than others in providing information over the Internet. At the A.G.’s web-site, the A.G.’s formal opinions were available to the public, and he had observed some other web-sites at which informational materials regarding regulations were available. He stated during the previous legislative session, a bill was introduced which required the Legislative Counsel to post pending regulatory materials on the Internet. Therefore, if one had access to the Internet, one could track the progress of a proposed regulation and acquire information regarding changes to the regulation and pending workshops or hearings. Mr. Walther maintained progress was being made in making information available over the Internet; however, the ultimate goal had not been reached.

Ms. Gibbons asked in what situations an A.G. opinion would not be made public. Mr. Walther cited a situation dealing with an internal personnel matter, in which an agency asked for an opinion as to whether it had grounds to take action against an employee, as one in which an A.G. opinion would not be made public. Also, opinions pertaining to pending litigation would not be made public; it was not desirable to make such sensitive attorney-client issues public.

Mr. Walther submitted a fiscal note with respect to A.B. 12 (Exhibit E). He said virtually every deputy in the A.G.’s office, as part of his regular duties, advised agencies regarding rules and represented agencies in contested cases or judicial proceedings. Unless A.B. 12 was clarified and its provisions narrowed substantially, the bill would result in both more rulemaking proceedings in which the A.G. would be asked to participate and more agency actions against regulated industries. The issue of de facto rule making would arise more frequently, and agencies would request the A.G. to defend them against charges they had engaged in such rulemaking. The A.G. speculated whether it could absorb the greater amount of work it would be required to do. However, when it considered the number of agencies involved and the potential number of additional rulemaking procedures and instances of litigation, the A.G. believed it necessary to quantify the effect of A.B. 12.

Assemblyman Mortenson described a scenario in which an individual or business encountered a problem with ad hoc rulemaking and wrote to the agency involved to request that it establish a regulation, and the agency refused to do so. He asked whether such individual or business then had access to the assistance of the Attorney General. Mr. Walther replied affirmatively. He explained although there was no formal procedure for access, he received many calls from members of the public who interacted with his client and were unhappy with his client’s actions. Sometimes, it was necessary to advise his client it had exceeded its authority and could not proceed unless it first established a regulation. Sometimes, members of the public merely wished a second opinion regarding either the result of an investigation or an agency’s actions. It was the A.G.’s policy to deal with the public and attempt to address problems members of the public had with its clients.

Amy Hill, Vice President of The McMullen Strategic Group, testified on behalf of the Las Vegas Chamber of Commerce, the Retail Association of Nevada, and Barric Goldstrike Mines, Inc. She declared the entities she represented lent their support to A.B. 12 and would echo Ms. Vilardo’s testimony. She maintained from a business perspective, it was necessary A.B. 12 be passed by the legislature, and she requested the committee support the bill.

Ms. Vilardo explained the list of items which constituted a regulation, contained in A.B. 12, need only be applied when an agency intended to assess monetary penalties based on something of which the public had no reason to possess knowledge. She suggested, if the language concerning that list was confusing, it might be possible to clarify it.

Chairman Bache closed the hearing on A.B. 12.

• BDR 21-119 – establishes additional alternative procedure for annexation of territory by certain cities (A.B. 91).

**********

**********

**********

• BDR 37-455 – Revises provisions relating to account for veterans’ cemetery in northern Nevada and account for veterans’ cemetery in southern Nevada (A.B. 94).

**********

• BDR 21-542 – Authorizes creation of local improvement district for street beautification project (A.B. 95).

**********

• BDR 48-565 – Revises certain provisions governing projects for recharge and recovery or underground storage and recovery of water (A.B. 96).

**********

• BDR 48-590 – Expands circumstances under which public water system may receive credit for adding owners of certain parcels of land to system (A.B. 97).

**********

• BDR 36-784 – Requires chief of division of emergency management of department of motor vehicles and public safety to develop comprehensive coordinated plans for emergency management (A.B. 98).

**********

• BDR 36-745 – Increases maximum allowable age for commissioned officers of Nevada National Guard (A.B. 99).

**********

• BDR 18-662 – Eliminates prohibition against certain employees of state controller pursuing other businesses or occupations (A.B. 101).

**********

• BDR 25-744 – Increases permissible aggregate principal amount of outstanding obligations of housing division of department of business and industry (A.B. 100).

Discussions were held among committee members concerning the proposed joint meeting with the Senate Committee on Government Affairs.

Chairman Bache adjourned the meeting at 10:10 a.m.

Upon adjournment of the meeting, Chairman Bache directed the committee secretary to attach the following items to the minutes of the meeting, as exhibits: written testimony submitted by Tom Stauss and Michael Millerick on behalf of Washoe County school District (Exhibit F); and two letters submitted by Daniel C. Holler, County Manager, Douglas County, one pertaining to A.B. 11 (Exhibit G) and the other to A.B. 12 (Exhibit H).

RESPECTFULLY SUBMITTED:

Sara Kaufman,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: