The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:20 p.m., on Wednesday, May 5, 1999, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

STAFF MEMBERS PRESENT:

Angela Culbert, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell opened the meeting and asked for testimony on Assembly Bill (A.B.) 100.

Charles (Chas) L. Horsey III, Administrator, Housing Division, Department of Business and Industry, introduced the committee to Lon DeWeese, Chief Financial Officer, Housing Division, Department of Business and Industry.

Mr. Horsey stated A.B. 100 was a Housing Division measure with no known opposition. He indicated it had the support of realtors, mortgage brokers, home builders and all of the producers of affordable housing in Nevada. He explained the Housing Division is the state’s financial institution charged with the responsibility of helping finance affordable housing. He indicated the division has no savings account, and, therefore the source of its lendable proceeds come from the sales of millions of dollars of tax-exempt bonds on Wall Street.

Mr. Horsey drew attention to an informational packet submitted for the record (Exhibit C). He recognized the demand from the state’s first-time home buyers on the division has caused them to exceed their statutory debt limit, noting the limit has been raised by the Legislature 2 other times previously. He stated the demand experienced has exhausted the division’s capacity to go the debt markets. He stated A.B. 100 enables the division to stay in business and to keep providing the state’s first-time home buyers their first home loan. He mentioned the division sells tax-exempt bonds on Wall Street to produce affordable housing apartment complexes.

Mr. Horsey pointed out the division is entirely self-supporting and self-sufficient so there is no cost to the state’s taxpayers. He reiterated his knowledge of the unanimous support for the proposed legislation.

Chairman O’Connell stated many affordable housing bills come before the Senate Committee on Government Affairs. She questioned the status of affordable housing in terms of demand.

Mr. Horsey replied the growth in southern Nevada has been phenomenal and the need for affordable housing is great. He stressed the necessity of marshalling every available resource. He indicated the state has made significant and substantial progress in meeting the affordable housing needs, and currently the demand being experienced is manageable. He said the resources available seem to be sufficient to take care of the demand, though noted the last 5 years have been taxing on those resources. He recognized the private sector’s positive role in affordable housing issues. The private sector developers, he furthered, have responded to the need and have produced a product that the division can finance. He emphasized the success the state has obtained would not be possible without the private sector. He stated they do not have all the resources needed, but have been able to maximize those available.

Senator Care noted section 1, subsection 5 of the bill proposes raising the aggregate principal amount by $750 million without an increase in the amount allocated to veterans. He questioned whether there had been discussion about this subject.

Senator Neal asked for an explanation of the aggregate principal amount.

Senator Neal questioned if the aggregate amount was $2 billion. Mr. Horsey replied the division could go up to $2 billion before they would have to come back to the Legislature for another increase.

Written testimony in support of the bill was provided to committee members (Exhibit D). With no further questions from the committee, Chairman O’Connell closed the hearing on A.B. 100. Next, she opened the hearing on A.B. 182.

Chairman O’Connell pointed out the county is building "the beltway" and the state provides the maintenance. Mr. Spinello concurred. Chairman O’Connell questioned which entity provides sound walls. Mr. Spinello indicated this is either shared or determined on a case-by-case basis. Mr. Fontaine further clarified sound walls are handled on a case-by-case basis. He pointed out, "I think that on the beltway project, basically the entire construction of the beltway is being done by the county and then there will be agreements negotiated with NDOT to take over maintenance responsibilities and ownership of the beltway facility."

Chairman O’Connell questioned who was responsible for the infrastructure around the beltway. She indicated she and Senator O’Donnell have constituents that were promised a sound wall which has never been constructed.

Martin J. Manning, Director, Public Works, Clark County, testified the beltway is a facility that includes sound walls, noting the board of county commissioners have made it very clear that as a beltway or a full limited-access highway is completed, the surrounding residential areas are going to be accommodated sound protection. He pointed out this has been done on quite an extensive part of the beltway. He further explained that the areas designated as residential regardless of existing structures, have sound walls built as a part of the beltway construction. Mr. Manning stated the intent of the commission has always been that this type of mitigation is appropriate upon building a complete limited-access highway. He stated for the most part where there is a complete beltway with residential uses, sound walls are currently being installed. Even in depressed sections, he noted, berms and walls provide added protection for the adjacent residential properties.

Prompted by Senator O’Donnell, Mr. Manning stated the county is building sound walls as it builds the beltway. Senator O’Donnell indicated he and Senator O’Connell have constituents living between Russell Road and Tropicana Avenue. Senator O’Connell noted this was one of the first links on U.S. 95 that was built, stating these constituents were promised a sound wall and have never received it. She commented on the extreme noise in their yard during periods of high traffic.

Mr. Manning indicated U.S. 95 is not part of the county’s immediate responsibility, but is within NDOT’s jurisdiction. Currently, he pointed out there is a shared project with NDOT for a portion of sound wall on U.S. 95 that is located in the vicinity of the Grapevines Springs Park. Outside of this project, he noted, the county does not have direct jurisdiction on sound walls within the state’s control of access.

Chairman O’Connell indicated she has had trouble finding out who is responsible for building this particular sound wall. She questioned whether this type of jurisdictional confusion was the problem A.B. 182 attempts to address.

Mr. Spinello concurred this was part of the problem. He indicated the county would deal with standards and actual streets while highways would be considered NDOT’s responsibility. He indicated issues such as the sound walls addressed by Senator O’Connell are handled on a case-by-case basis. He stated there have been instances in which the county has started a project and then the state has taken it over by contract with the county.

Chairman O’Connell pointed out her constituents have been waiting 10 years for a sound wall to be constructed.

Mr. Fontaine indicated he was unfamiliar with the specific area being referenced. He indicated he would review this section of U.S. 95 and get back to Senator O’Connell with an answer. He explained NDOT has a sound wall program to address this issue statewide, indicating the funding works on a matching basis where there is a need for sound walls on existing facilities. He stated they will work with the local government and try to match funds to provide a sound wall. He pointed out there may be some local zoning ordinance or regulations dealing with the issue of allowing residential development on existing freeway’s or near existing freeways to prevent the need for sound walls in the future. He again told the chairman he would review this issue for further explanation.

Chairman O’Connell reiterated the poor situation her constituents are in due to the noise on the beltway.

Senator Neal questioned the names of the highways which the bill indicates ownership of must be addressed.

Senator Neal inquired as to the reason the county has a direct interest in these streets.

Senator Neal asked whether if the state paved the road, their responsibility would end at the side of the pavement.

Prompted by Senator Neal regarding the standards of construction, Mr. Manning explained:

Senator Neal commented by passing A.B. 182, the state would be required to have ownership of certain highways in which they would have complete control of streets and gutters.

Mr. Manning indicated this was correct, noting the interest was to be able to control, "those types of roadways like the Boulder Highway, and Rancho [Drive], Las Vegas Boulevard." He remarked this makes sense and said the county and the state have a good partnership.

Senator Neal asked whether the state would be responsible for putting in the curbs and gutters in this area. Mr. Manning confirmed on the aforementioned streets state standards would be in place.

Senator Care pointed out section 1, subsection 1 of A.B. 182 states, "concerning highways, excluding freeways." He indicated this would mean that a freeway is a highway but a highway is not a freeway. He questioned whether there is a statutory definition of a ‘freeway’ and a ‘highway.’ He inquired as to how these distinctions are made. Mr. Fontaine indicated he did not have the answer to this question. Discussion ensued as to the definitions of ‘highway’ and ‘freeway.’ Chairman O’Connell indicated this definition was under review.

Mr. Spinello drew attention to an amendment to A.B. 182 proposed by the Nevada Department of Transportation (Exhibit E). He noted the amendment represents the agreements made in the Assembly Committee on Transportation, though the bill contained errors from the drafting process. He indicated the chairman of the Assembly Committee on Transportation has been made aware of this amendment. On behalf of the county, Mr. Spinello voiced full agreement with the proposal, stating it embodies what had been agreed upon in the assembly. He stated:

Senator Neal indicated the mandatory language in the original bill had been removed, noting the purpose of an interlocal agreement is to address ownership. He questioned whether the change in language indicated a negotiation process. Mr. Spinello stated this to be true.

Senator Neal questioned the meaning of section 1, subsection 3 of the bill in which the Nevada Department of Transportation must consult with the county regarding construction standards until the agreement has been made. He pointed out the language would not mandate a negotiated agreement though the state would still have to abide by county standards.

Mr. Spinello drew the senator’s attention to section 3 of the proposed amendment (Exhibit E), noting the language has been softened considerably. He pointed out the original language would have required the state to follow county standards until an interlocal agreement has been entered into, though, he explained, the state has found that requirement to be onerous. He stressed the county believes through cooperation and good faith the amended language would meet the consulting needs of the county. He referenced a situation in which a misunderstanding resulted due to a lack of consultation between the county and the state.

Senator Neal questioned the way in which the county interpreted the consultation language.

Senator Neal questioned how the language would be received if the county was required to consult with the transportation department.

Mr. Manning indicated the county currently consults with the Nevada Department of Transportation. He explained use permits are submitted when developments are applied for through the zoning process. He stated the county consults with the state when roadways are involved so as to provide the state information on the results of traffic studies.

Senator Neal inquired how Clark County would respond to changing the language to read, ‘until the agreement has been entered into, Clark County shall consult with the transportation department in effort to ensure the standards of said construction of a highway is consistent with local and state standards.’

Mr. Manning reiterated the county currently consults with the state in jurisdictional matters. He indicated the change in language would not be disagreeable.

Senator O’Donnell indicated a definition for "highway" in the statutes means "roads, bridges, structures, culverts, curbs, drains, and all buildings, communications, facilities and services, and works incidental to a highway construction." He questioned whether the overpasses over the roads Flamingo Road and Tropicana Avenue in Las Vegas are state or county owned.

Mr. Manning explained the pedestrian bridges at Tropicana Avenue are state owned while the pedestrian bridges that presently exist at Flamingo Road are privately owned. He remarked the future bridges at Flamingo Road are presently awarded for contract and will be county owned ….

Discussion was had as to whether this issue concerning pedestrian bridges had been previously discussed in the Senate Committee on Transportation. It was found the proposal in the transportation committee referred to signage.

Chairman O’Connell said there were many definitions for "highway" in statute, though not any for "freeway." She suggested the proposed amendment also include the specific definitions referenced. Mr. Spinello agreed to this request.

Senator Care questioned the term "swap" previously used by Mr. Spinello. He asked whether this was referencing a "quit-claim deed."

Mr. Spinello agreed, noting the state would retain some of the aforementioned roads and county would take ownership of others. He indicated the word "swap" was not entirely accurate.

Referring to the previously mentioned pedestrian overpasses, Senator O’Donnell clarified two state-owned walkways had been contracted.

Mr. Manning explained the four bridges at Tropicana Avenue are currently owned by the state. The two bridges at Flamingo Road are privately owned. He said two more bridges at Flamingo Road and Las Vegas Boulevard have been awarded for construction contract by the county and will be county owned.

Senator O’Donnell questioned who maintains the pedestrian overpasses. Mr. Manning replied the bridges are currently maintained by their owners.

Senator O’Donnell asked whether the state wanted to be in the business of maintaining overpass walkways and escalators on Tropicana Avenue.

Senator Neal questioned which third parties were referenced in the language in section 1, subsection 3 of the proposed amendment (Exhibit E) concerning "third-party encroachment requirements."

Senator Neal questioned whether the state, in the case of a highway, would be responsible for putting in curbs and gutters for the third party.

Mr. Manning replied:

Senator Neal reconfirmed the state would not be obligated to put in the curbs and gutters for third parties under this provision. Mr. Manning replied, "No."

Mr. Spinello stated for the record, "… One more area of clarification. The original bill, it indicates on the face of the bill that it has a fiscal note. I believe that this amended version, NDOT believes there is no fiscal impact now."

Mr. Fountain agreed, "… That is correct. With the amendments we are proposing, the fiscal note goes away."

Senator Raggio asked for further explanation of third-party encroachment requirements.

Senator Raggio recognized the state’s current right to develop highways within its system. He questioned the limitations and requirements A.B. 182 would place on the state.

With no further questions on A.B. 182, Chairman O’Connell closed the hearing on the measure. Next, the committee discussed A.B. 606.

David Pursell, Executive Director, Department of Taxation, testified that A.B. 606 requests a fund be created to be used to loan money to local entities in severe financial emergency, citing examples of the White Pine County School District and the Nye County Regional Hospital of such entities in emergency situations.

Mr. Pursell indicated section 1 of A.B. 606 would establish guidelines that the director of the department would be able to use this money to loan to local governments that are defined to be in severe financial difficulty. He noted section 1 of the bill also outlines the criteria upon which the director would determine the need of this loan. He pointed out the loan would only be used for operating expenses and the money would have to be paid back in a 12-month period. Mr. Pursell stated that he, as the director of the Department of Taxation, would be responsible for reporting to the Committee on Local Government Finance and to the Nevada Tax Commission as to the reasons for the loan, the status of the loan, the purpose for which the loan would be used, and the resources that would be used to repay the loan.

Explaining further, Mr. Pursell drew attention to section 2 of the bill which outlines appropriate definitions. Section 3, he pointed out, references the current fund which will be transferred for the establishment of the new fund. He called the committee’s attention to a brief summary (Exhibit F) explaining the history of the funds. He indicated it originated in 1981 when the Supplemental City County Relief Tax (SCCRT), was created. He explained there was an emergency fund established at this time so if actual revenues were more than estimated, they could be used by local governments for emergency needs. Throughout the years, he commented, various legislative action has been taken regarding the distribution of these funds. In 1989, the decision was made that the Interim Finance Committee was to determine who was to receive these emergency funds as recommended through the Department of Taxation. At this time, he mentioned, many bills appropriated money to various local governments; one of which was A.B. 278 of the Sixty-fifth Session that appropriated $500,000 to the Clark County Conservation District as referenced in Exhibit F.

Mr. Pursell continued, explaining the $500,000 set aside in 1989 is the fund that would be used for loans to the local governments. He pointed out there were certain requirements included in A.B. 278 of the Sixty-fifth Session that were not met by the Clark County Conservation District resulting in a 1997 letter from the Department of Taxation questioning the reason this appropriation was not being requested. At this point, it was found the district was not able to meet all of the requirements set forth in A.B. 278 of the Sixty-fifth Session. The Department of Taxation, he noted, has always taken the position that because of A.B. 278 of the Sixty-fifth Session, they did not have the authority to do anything with the $500,000. He indicated the interest that has accrued on the appropriation since fiscal year 1991 has been put in the entity distribution pot. He remarked the $500,000 remains in the fund originally for emergencies despite its elimination in 1991.

Mr. Pursell explained A.B. 606 would allow the transfer of the $500,000 to be used for cash flow on the local governments in emergency situations. He remarked when the Department of Taxation first got involved in the White Pine County School District emergency situation, the first real problem area was cash flow. He pointed out a loan like the one proposed in A.B. 606 would enable the department to expedite the process of getting the local government back on track.

Chairman O’Connell reminded the committee S.B. 473 allows for the dissolutionment of the local government.

Marvin Leavitt, Chairman, Committee on Local Government Finance, explained:

Prompted by Chairman O’Connell, Mr. Pursell indicated he would make the loan determination based on the criteria set forth in A.B. 606. Then, he would be responsible for reporting to the Committee on Local Government Finance and the Nevada Tax Commission, and explaining the reasons for the loan, for what the loan would be used, how the loan would be repaid, and what revenues would be used to repay the loan. He drew the committee’s attention to section 1, subsection 5 of the bill which sets forth this reporting requirement.

Chairman O’Connell questioned whether interest would be required on the loan. Mr. Pursell confirmed there would be no interest to be paid

Senator Raggio clarified the funding would come from the aforementioned account. Mr. Pursell concurred. Senator Raggio pointed out because there was no interest being paid on the loan, the fund would not have a high rate of growth potential.

Mr. Pursell suggested the fund would grow as the department would only use the money for local governments in severe financial difficulty. He pointed out there are currently no local governments needing to use the fund, and he commented on the status of the White Pine County School District and the Nye County Regional Hospital District. He confirmed the money would stay in that fund and grow, noting it would be invested like other state money.

Senator Raggio commented he was unsure of how a fund of such a small size with limited growth potential would be of any help to local entities. He questioned whether less than $500,000 would be of great assistance in emergency cases.

Senator Raggio again commented on the limitations of such a fund due to the amount of money it would hold. He insisted there would be limited money remaining in the account, once paid out, prior to the point of repayment. Mr. Pursell recognized if three or four situations arose at one time, there may not be enough money in the fund to cover emergency expenses.

Chairman O’Connell clarified, "It could not be used for anything like a buy down … if indeed something were to happen with our bill, that would help keep a county within that $364 limit could it?" Mr. Pursell stated, "No … it would be used strictly for operating expenses."

Senator Neal maintained the large responsibility this would place upon the director of the Department of Taxation in determining a loan for severe financial emergency is necessary. He questioned the process by which the necessity of the loan would be determined.

Mr. Pursell responded the severe financial statutes are referenced in section 1, subsection 3, paragraph (a) of A.B. 606 and would make the Department of Taxation the responsible party for managing local governments in emergency situations in terms of what expenditures will and will not be made. In this instance, he recognized, the department is ultimately operating the local government. He restated that before the loan was made, it would be determined revenues would exist to pay it back within a 12 month period. He commented when a local government gets in a severe financial situation, the Department of Taxation manages the government through the Committee on Local Government Finance.

Senator Neal pointed out A.B. 606 adds new duties to the director of the Department of Taxation; determining whether or not a situation constitutes a financial emergency and whether or not the emergency is severe. He questioned the way in which these things would be determined.

Senator Neal drew attention to section 1, subsection 3, paragraph (b) of the bill which allows that the director may distribute the money, if the department takes over the management of the local government, and that the director determines the loan for severe financial emergency is necessary to pay the operating the expenses of the local government.

Mr. Leavitt pointed out section 1, subsection 3, paragraph (a) of the bill, reading "the department takes over the management of a local government pursuant to [Nevada Revised Statutes] (NRS) 354.685 to 354.725." He indicated the referenced statute contains a very detailed procedure that the director has to go through.

Senator Neal remarked section 1, subsection 3, paragraph (b) is set apart from paragraph (a) and indicates a determination needs to be made. The onus is put on the director to make this determination regardless of statutes referenced in paragraph (a).

Mr. Leavitt clarified, "The determination has already been made, of course, that they are in severe financial emergency. This is done through this process. Now he has got to make a determination, it seems to me, on two things. One, should the government be loaned the money and two, do they have the ability to repay that loan from their existing resources. And that is on his back in the way the bill reads. I agree."

With no further discussion before the committee, the chairman closed the hearing on A.B. 606. Next, the hearing on A.B. 638 was opened.

Ken West, Chief Deputy Controller, Office of the State Controller, summarized from a prepared text (Exhibit G). He testified A.B. 638 is a major strengthening compliance with Generally Accepted Accounting Principles. He pointed out the controller’s old accounting system operated on a cash basis, but they have recently implemented a new accounting system, called the Integrated Financial System, that allows better business practices. One of the better business practices, he explained, is the system that will allow recording receivables in a more timely manner. He indicated the Assembly Committee on Ways and Means amended the original bill to mandate agencies record receivables in the central accounting system. Prior to that, he noted, the language was permissible based on the controller’s requirements.

Senator Neal questioned whether the process was being changed to bring together all of the accounting systems within the state under one central body.

Mr. West indicated this was not the case. He pointed out the university, the Public Employees’ Retirement System (PERS), and Employers Insurance Company of Nevada (EICON) would still have their separate accounting systems. He stated the rest of the Executive Branch, the Judicial Branch, and the Legislative Branch use the state’s accounting system, noting the new system has the ability to record receivables.

Senator Neal questioned the way in which the operation of accounting would be enhanced by the proposed legislation. Mr. West explained the measure would provide the information to eventually complete interim financial statements. Prompted by Senator Neal, Mr. West explained one of the questions asked in obtaining bonds is whether or not they have updated financials. He indicated the current system does not allow them to produce updated financials because they do not have the ability to measure receivables and payables during the mid-part of the year. The newest system, however, allows the tracking of receivables. He commented the original bill was more permissive, but the Assembly Committee on Ways and Means mandated agencies would have to record receivables with the state controller."

Senator Neal questioned whether the new system would allow the controller’s office to do a monthly recounting of the billing and receivables. Mr. West indicated they must first start slowly as monthly reporting was an advanced stage. Senator Neal asked Mr. West to explain his intent, in reference to the term "interim," if monthly reporting was not conducted. Mr. West explained first they would go to half-year with quarter-year updates 5 years from now.

Chairman O’Connell questioned whether A.B. 638 was necessary to accomplish these needs. Mr. West indicated it was not necessary, but it would send a message to agencies that they should record receivables with the controller. He explained other statutes exist, but agencies do not always cooperate.

With no further questions, Chairman O’Connell closed the hearing on A.B. 638. She opened the hearing on A.B. 641.

Mike L. Baughman, Lobbyist, Eureka County, and Lincoln County, explained A.B. 641 has two component parts. The first part deals with county involvement in public land management and planning while the second deals with enabling legislation for counties to enact habitat conservation plans.

Peter J. Goicoechea, Chairman, Board of Commissioners, Eureka County, explained A.B. 641 will give the counties that have adopted master plans the right to have standing in the federal planning process. He noted Eureka County has been very involved with the federal agencies though there is nothing cited in NRS to give the counties jurisdiction by law. He drew the committee’s attention to a prepared packet (Exhibit H), containing testimony and letters regarding county involvement with public land management. He pointed out the two criteria used to determine whether a federal, state, or local entity should be considered for a cooperating-agency status is jurisdiction by law or special expertise. Eureka County, he noted, has been denied cooperating-agency status on several of the mine environmental impact statements (EISs) dealing with dewatering because they do not have jurisdiction by law or a hydrology department that can deal with the dewatering issue. However, he stressed, water is a big issue in rural Nevada. He indicated Exhibit H cites information regarding the county’s denied status on several cases concerning the Elko grazing district. He declared water is the lifeblood of Eureka County and has a great economic impact in the rural county. He explained the intent of A.B. 641 is to allow counties with adopted master plans, pursuant to chapter 278 of NRS, the legal jurisdiction needed for cooperating-agency status.

Chairman O’Connell questioned whether Mr. Goicoechea had been a part of the discussions concerning rural counties’ successes in dealing with the federal government.

Mr. Goicoechea indicated he had been involved with these discussions. He pointed out he had previously said that although there is a lot more cooperation and participation between federal and local agencies, Eureka County has not been as successful as Nye County. He stated when the situation gets tight, they tend to be denied cooperating-agency status.

Senator Titus questioned the definition of cooperating status and what it involves. Mr. Goicoechea responded if an agency has the jurisdiction, by law or by special expertise, they will be granted cooperating status. He indicated this status allows an agency to "sit at the table" and become involved in the management decisions prior to the public comment.

Senator Titus questioned whether this status allows them a vote in the process. Mr. Goicoechea stated, "The ultimate jurisdiction belongs with the federal agencies and we recognize that." Senator Titus clarified this status would give the counties more formal input. Mr. Goicoechea confirmed the process could be shaped much better this way.

Mr. Baughman drew the committee’s attention to the seventh page in the handout (Exhibit H), which contains a letter to Chairman Goicoechea from the U.S. Department of the Interior. He remarked this was received in response to the county’s request for cooperating-agency status in one particular case. The second page of that letter, he pointed out, reads, "There appears to be no authority or jurisdiction in the NRS for Eureka County on public lands." He stressed this statement to be true. He referenced page 2 of Exhibit H, which contains talking points and NRS citations including the existing statutory authority granted to the state. He indicated the same authority is not given to the counties, and he again called attention to the letter containing a very specific example of where the federal agency has referred to that exclusion by emphasizing the counties’ lack of authorization.

Mr. Goicoechea stated when the situation gets tight or when there is a true issue, the federal government calls attention to the fact that the counties do not have jurisdiction by law. He stressed the government closest to the people is the county government and sometimes the issues can be addressed in the local arena.

Chairman O’Connell clarified once the federal government denies cooperating status, debate is cut off. Mr. Goicoechea agreed, noting A.B. 641 would give counties the jurisdiction by law to allow them to participate in preliminary discussions.

Senator Neal questioned whether the lands being discussed were lands owned by the federal government which may be adjacent to a city.

Mr. Goicoechea concurred, explaining in most cases the counties would be involved through the Nevada Environmental Protection Agency (NEPA) process on any significant land action. He noted whether the issue was land exchange or a mine withdrawal, A.B. 641 would allow the county, through their master plan, to participate. He drew attention to the front page of Exhibit H, noting all of the black areas represent public land. He pointed out Eureka County does not control much land and therefore there are many impacts that occur on public lands that directly impact the counties’ tax base and local jurisdictions.

Senator Neal pointed out the bill indicates a city or county may not bring an action that would request a court to grant relief that would violate a state statute or to participate in any preceding of the federal government agency pursuant to section 3, subsection 1 of the bill, to request the federal agent to take any action that would violate the state statute. Other than this provision, he noted, the bill would give the counties the authority to bring a case before the international court in The Hague.

Mr. Goicoechea stated the counties technically would have the right in almost any EIS decision to appeal. He indicated counties currently have the right as a governmental entity to sue or be sued.

Senator Neal called attention to section 3, subsection 1, paragraphs (a) and (b), of the bill which indicates a city or a county may, "On its own initiative bring and maintain an action … Intervene on behalf of or bring and maintain an action on the relation of, any person in any meritorious case, in any court or before any federal agency, if an action or proposed action by a federal agency or instrumentality with respect to the lands, appurtenant resources or streets that are located within the city or county impairs or tends to impair the traditional functions of the city or county or the carrying out of the master plan." The senator suggested this language was overly broad, and he questioned its intent. He stated if land within the jurisdiction of a county, land designated as county land, is being referenced, then the language is understandable. But, he contended, it would put a limitation upon the action an entity could bring. He asked whether the lands in question referred to federal lands in which the county boundaries overlap.

Mr. Baughman responded Eureka County has a master plan which includes a land-use element. In that element, he explained, they have determined what the residents of the county feel to be the appropriate mix of land uses to get to where the county needs to be in 20 years. Immediately adjacent to Eureka, he pointed out, is the Homestake Mine which is situated over a slight rise, making it invisible from downtown Eureka. Immediately to the east of Eureka, he noted, is a very steep hillside which rises above the community. Had the Homestake Mine been built on the hillside instead, it would have had a devastating effect in terms of land use and the character of the community of Eureka. He stated Eureka has determined the hillside to remain open space as the appropriate land use.

Senator Neal asked whether the hillside was within the jurisdiction of the county. Mr. Baughman indicated the hillside is public land administered by the Bureau of Land Management. If through the planning process the county were to object because the development of that hillside was in conflict with the county’s master plan, and the agency proceeded with permitting the mine, A.B. 641 would authorize the county to pursue a remedy in court that might then preserve that hillside from development consistent with the master plan. He recognized currently the attorney general is the only party that has been vested with that authority. He pointed out the attorney general might not share the same interest and concern in all cases that Eureka County would and therefore might elect not to pursue the issue.

Senator Neal noted the bill would allow the county to take the place of the attorney general in this particular matter. He questioned the quality-of-life issues involved.

Mr. Baughman stated the quality-of-life issues are part of the master planning, noting these are decisions the residents make generally as a part of the public process. Referring to the hillside in Eureka, he said that because it is public land, there is nothing prohibiting a county from designating the area in the master plan however they choose. Master planning, he noted, acts as advice to the agency, and although they are not mandated to follow the advice, they are encouraged to in order to help the community to develop in a way that the residents feel is important. He said if the residents see the land as being open space as a way to enhance quality of life, then that may be part of the reason it was designated as such. He assured the committee quality of life is a very central part of a land-use planning exercise. He drew attention to language in section 3, subsection 2 of the bill which was added in the Assembly to ensure that a county or a city would not engage in or seek a court ruling which would contravene a state statute.

Mr. Goicoechea testified the county has the right to file a court action at this time without A.B. 641. Currently, if the county is denied status and the federal agency takes an action that is not in the best interest of the county, then the county can file suit and appeal that action. He indicated the bill attempts to avoid lawsuits from being filed by allowing the counties to have cooperating-agency status to shape the outcome of the situation.

Senator Neal pointed out the counties cannot sue if they do not have standing within the statute. Mr. Goicoechea said under the Code of Federal Regulations, the counties have the right to appeal a decision in court.

Senator Neal proposed a situation in which the bill passed and Eureka County had to bring a lawsuit resulting in counter actions that would put the county in dire straits in terms of financial capability to pursue the matter. He questioned who would bear the financial burden if the county had to drop out of the suit.

Mr. Baughman replied this situation currently exists with any county, their district attorney, and the county commissioners electing to pursue a matter. Senator Neal pointed out currently the attorney general has to come in and file a lawsuit to protect the state interest.

Mr. Baughman stressed the issue is not whether a county can file, but whether or not they are going to be granted standing in that action. He declared nothing prevents a county from filing today. He expressed the concern that because counties are not explicitly authorized in statute to be involved in matters pertaining to public lands, there is the risk that they will be found to not have standing. In many other areas, he noted, counties sue the federal government and they are granted standing.

Mr. Goicoechea stated standing in the court of law is completely separate from the request of A.B. 641. He reiterated the intent to establish cooperating-agency status to be involved prior to the public comment section of the process. At the point an action is taken through the public scoping, he explained, and if the county feels it is detrimental, a suit can be filed.

Senator Care asked if there are any counties in Nevada that are recognized as a cooperating agency by any agency of the federal government. Mr. Goicoechea explained Eureka County is and has been awarded this status, noting the cooperating-agency status is granted on each particular federal action. He stated the county requests to be a cooperating agency once a draft document comes out.

Senator Care noted any entity is free to sue for anything and a court can determine on the motion to dismiss whether there is actually jurisdiction. He questioned whether there was assurance the federal government would recognize a statute in such an issue. He indicated the measure had been brought forth by the invitation of the aforementioned letter (Exhibit H) containing a discussion regarding cooperating agency and special expertise. He suggested this is a federal agency question as so that even if a statute was enacted there is nothing to prevent a federal agency from changing the rules.

Mr. Baughman agreed indicating the agency continues to exercise discretion. He expressed hope, with the passage of the proposed legislation, the counties and the cities with adopted master plans will not be denied cooperating-agency status based upon lack of authorization in NRS. He admitted there may be other reasons for denying this status, but noted lack of statutory authority appears to be a current constraint.

Mr. Goicoechea added generally counties are granted cooperating-agency status and their participation is solicited by the federal agencies. He indicated the aforementioned letter was the catalyst for requesting jurisdiction from the Legislature. He clarified there is no animosity between the federal agencies and the counties, but he recognized the benefits of negotiating alternatives.

Senator Titus expressed agreement that the counties should have input in these situations, however, she pointed out, status is generally granted. She drew attention to the aforementioned letter (Exhibit H) which contains a memorandum of agreement for participation despite status. The senator indicated she would support the counties’ cooperating-agency status, though noted this could be accomplished by section 2 of the bill. She pointed out section 3 of the bill expands the authority unnecessarily. She expressed concern with the measure causing potential conflicts with a general state policy.

Mr. Baughman explained the senator’s concern is the reason section 3, subsection 2 was added in the Assembly.

Senator Titus inquired whether section 3 of the bill was necessary as section 2 covered the concern regarding cooperating-agency status.

Mr. Baughman indicated section 2 of the bill would allow counties access to the planning process. He noted there have been experiences where counties have participated in the planning processes and the outcome has not been satisfactory. He suggested in the case where the parties come to an irreconcilable difference, the county would then be able to seek recourse in the courts. He indicated section 2 would enhance the likelihood that the court might find the county does have standing in the issue.

Continuing with the remainder of the bill, Mr. Baughman explained the second half of A.B. 641 enables Lincoln, Nye, and Esmeralda counties to implement habitat conservation plans (HCP) concerning threatened or endangered species that might exist in their counties. Currently, he noted, the counties are dealing with the desert tortoise. Lincoln and Nye counties, he pointed out, are aggressively developing habitat conservation plans, working closely with the fish and wildlife service, and working closely with the Bureau of Land Management. He indicated the rural counties have been working very closely with Clark County, and the administrators of their plan, who have been very generous in sharing information and experiences. He remarked in each case, they are heading toward completed and subsequently adopted habitat conservation plans. He mentioned they became aware about 4 weeks previously that they were not authorized in statute to implement those plans and the mitigation fee which is a central part to the Clark County HCP and will be a central part to the Lincoln and Nye counties HCPs. Mr. Baughman remarked enabling legislation patterned very closely after the Clark County legislation has been sought by way of amendment to A.B. 641

Mr. Baughman noted both Lincoln and Nye counties have projects underway. Lincoln County has an industrial park they are developing in Alamo and an industrial park in Caliente. He pointed out the Caliente Park is impacted by an endangered species called the Southwest Willow Fly Catcher, and the Alamo Industrial Park is impacted by the desert tortoise. Getting these HCPs in place, he stated, will basically allow the county and all other private landowners to move forward with their projects, therefore allowing the county to pursue necessary economic development and growth. Mr. Baughman provided the committee with information as to the distribution of the desert tortoise in Nevada (Exhibit I).

James R. Marble, Director of Natural Resources Office, Department of Natural Resources and Federal Facilities, Nye County, testified the Nye County Board of Commissioners have acted on this habitat conservation plan issue three times in the last 6 months and directed staff to begin work on it. He indicated once they became aware of the provision in NRS 244.386 limiting the collection of that fee to counties of over 400,000, avenues needed to be sought for an amendment. He stated they have received letters from the fish and wildlife service indicating they soon intend to take action in the southern part of Nye County regarding the habitat for desert tortoise. He told the committee that according to the Nevada State Department of Conservation Natural Heritage Program 48 hot spots have been identified for conservation throughout the state; 11 being in Nye County. He recognized the need for a mechanism to deal with these things. He drew attention to the handout (Exhibit H), noting most of the private land within Nye is in the southern part of the county. If development on those lands is stopped by the Endangered Species Act, he contended, then the county will be in serious trouble.

Mr. Marble indicated he had been requested to read remarks from Cameron McRae, Commissioner, Board of Commissioners, Nye County, into the record:

Mr. Baughman drew attention to the end of the informational packet (Exhibit H), containing several resolutions from counties and the City of Yerington. He indicated the Nevada Association of Counties discussed and made a motion to pass a resolution supporting A.B. 641 prior to the amendment being added. He requested committee support of the legislation.

Mike Del Grosso, Deputy Administrator and Senior Planner, Division of State Lands, State Department of Conservation and Natural Resources, testified A.B. 641 affects some sections of NRS with which the division of state land works. He indicated the division does not object to the bill, and believes it would promote better working relationships between the federal government and the local counties.

Senator Neal requested someone from the attorney general’s office come before the committee to discuss A.B. 641.

With no further questions on A.B. 641, Chairman O’Connell closed the hearing and adjourned the meeting at 4:08 p.m.

RESPECTFULLY SUBMITTED:

Angela Culbert,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: